TORTS – NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS,
OMMISSIONS OR MISREPRESENTATIONS – DUTY OF CARE: EXISTENCE
–
GENERALLY – where the plaintiffs grew grain sorghum as part of their
Source
Original judgment source is linked above.
Catchwords
TORTS – NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS,OMMISSIONS OR MISREPRESENTATIONS – DUTY OF CARE: EXISTENCE–GENERALLY – where the plaintiffs grew grain sorghum as part of theirfarming businesses – where the defendantcarried on business producing andselling seeds for commercial planting, including grain sorghum seed –where the plaintiffsgrew grain sorghum in the summer of 2010/2011 from MR43seed produced by the defendant and acquired from a distributor – wheretheMR43 seed was contaminated with seed of another subspecies – where theplaintiffs allege that the contamination was dueto the negligence of thedefendant in producing the MR43 – where the defendant relies on terms itmarked on the bags of contaminatedMR43 seed to exclude a duty of care to theplaintiffs – whether the effect of the terms as a disclaimer negated theexistenceof a duty of care – whether the terms negated the
defendant’s assumption of responsibility, as a salient feature, in
determining whether there was a duty of care – whether a duty of care
would operate incoherently with the contractual rights
and obligations on which
the defendant sold the MR43 – whether the plaintiffs were able to protect
themselves against exposure
to the risk of economic loss caused by the
defendant’s failure to take care and were not vulnerable.
TORTS
– NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMMISSIONS OR
MISREPRESENTATIONS – SCOPE OF DUTY AND SUBSEQUENT
BREACH – where the
defendant did not carry out comprehensive crop inspection and rogueing to remove
off-type plants that would
or might produce contaminated seed – where the
defendant failed to conduct a grow out test of the seed produced for MR43 before
it was supplied to growers – where the defendant undertook two forms of
scientific testing of MR43 seed – where employees
of the defendant became
aware that there were off-type plants appearing in crops grown from the
contaminated MR43 seed but failed
to warn the plaintiffs that any off-type
plants needed to be removed before they dropped seed – whether the
defendant failed
to take reasonable precautions to avoid a risk of harm to the
plaintiffs through the sale of MR43 seed by producing and selling seed
that was
contaminated with off-type plant seeds.
TORTS – NEGLIGENCE –
PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMMISSIONS OR MISREPRESENTATIONS –
DAMAGE AND CAUSATION
– CAUSATION – where the defendant did not carry
out comprehensive crop inspection and testing – where the defendant
failed
to conduct a grow out test of the seed produced for MR43 seed before it was
supplied to growers – whether, “but
for” the defendant’s
failures, growers would have avoided the loss suffered.
TRADE AND
COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION
– CONSUMER PROTECTION – MISLEADING
OR DECEPTIVE CONDUCT OR FALSE
REPRESENTATIONS – MISLEADING OR DECEPTIVE CONDUCT GENERALLY –
GENERALLY – where the
defendant was silent with regard to the potential
that the 2010/2011 summer season MR43 seed was or might have been contaminated
and may not be safe to use – whether the defendant represented to the
plaintiffs that the seed contained no more than .1 percent
of other seed species
and did not contain any other seed which would compete against the sorghum seed
or otherwise harm or be detrimental
to the continued use of the land for the
commercial cultivation of crops – whether the defendant represented to the
plaintiffs
that the 2010 MR43 seed would have the same characteristics as the
previous MR43 seed produced and distributed by the defendant and
was safe to use
– where the defendant was silent with regard to the need for the
plaintiffs to eradicate the off-type plants
before they dropped seed –
whether the defendant engaged in misleading or deceptive conduct in connection
with the supply of
the contaminated MR43 seed – whether the plaintiffs
suffered loss or damage because of the defendant’s failure to advise
the
plaintiffs from end January 2011 to rogue any off-type plants in their
crops.
LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS
– SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS – ACCRUAL
OF CAUSE OF
ACTION AND WHEN TIME BEGINS TO RUN – TORTS – OTHER TORTS AND MATTERS
– where the losses alleged are
cash flow losses of increased operating
expenses and decreased crop production earnings from the 2011/2012 summer season
–
whether the contamination of land by the spread of weeds or off-type
plants was physical damage to the land – whether loss
or damage was
suffered before 24 April 2011 because off-type plants were planted, germinated
and grew before that date – whether
the alleged causes of action for
negligence and misleading or deceptive conduct did not arise or accrue until
after 24 April 2011.
Australian Consumer Law, s 2, s 3, s 11, s 18, s 54, s 236, s
Swick Nominees Pty Ltd v Leroi International Inc (No 2)
[2015] WASCA 35
(2015) 48 WAR 376, cited
Wallace v Kam [2013] HCA 19
(2013) 250 CLR 375,
cited
Wardley Australia Ltd v State of Western Australia [1992] HCA 55
(1992) 175
CLR 514, cited
Williams v Network Rail Infrastructure Ltd [2018] EWCA Civ 1514
[2019] QB
601, cited
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16
(2004)
216 CLR 515, discussed
Young & Marten Ltd v McManus Childs Ltd
[1969] 1 AC 454, cited
Judgment (498 paragraphs)
[1]
TORTS - NEGLIGENCE - PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMMISSIONS OR MISREPRESENTATIONS - DUTY OF CARE: EXISTENCE - GENERALLY - where the plaintiffs grew grain sorghum as part of their farming businesses - where the defendant carried on business producing and selling seeds for commercial planting, including grain sorghum seed - where the plaintiffs grew grain sorghum in the summer of 2010/2011 from MR43 seed produced by the defendant and acquired from a distributor - where the MR43 seed was contaminated with seed of another subspecies - where the plaintiffs allege that the contamination was due to the negligence of the defendant in producing the MR43 - where the defendant relies on terms it marked on the bags of contaminated MR43 seed to exclude a duty of care to the plaintiffs - whether the effect of the terms as a disclaimer negated the existence of a duty of care - whether the terms negated the defendant's assumption of responsibility, as a salient feature, in determining whether there was a duty of care - whether a duty of care would operate incoherently with the contractual rights and obligations on which the defendant sold the MR43 - whether the plaintiffs were able to protect themselves against exposure to the risk of economic loss caused by the defendant's failure to take care and were not vulnerable.
[2]
TORTS - NEGLIGENCE - PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMMISSIONS OR MISREPRESENTATIONS - SCOPE OF DUTY AND SUBSEQUENT BREACH - where the defendant did not carry out comprehensive crop inspection and rogueing to remove off-type plants that would or might produce contaminated seed - where the defendant failed to conduct a grow out test of the seed produced for MR43 before it was supplied to growers - where the defendant undertook two forms of scientific testing of MR43 seed - where employees of the defendant became aware that there were off-type plants appearing in crops grown from the contaminated MR43 seed but failed to warn the plaintiffs that any off-type plants needed to be removed before they dropped seed - whether the defendant failed to take reasonable precautions to avoid a risk of harm to the plaintiffs through the sale of MR43 seed by producing and selling seed that was contaminated with off-type plant seeds.
[3]
TORTS - NEGLIGENCE - PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMMISSIONS OR MISREPRESENTATIONS - DAMAGE AND CAUSATION - CAUSATION - where the defendant did not carry out comprehensive crop inspection and testing - where the defendant failed to conduct a grow out test of the seed produced for MR43 seed before it was supplied to growers - whether, "but for" the defendant's failures, growers would have avoided the loss suffered.
[4]
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - MISLEADING OR DECEPTIVE CONDUCT GENERALLY - GENERALLY - where the defendant was silent with regard to the potential that the 2010/2011 summer season MR43 seed was or might have been contaminated and may not be safe to use - whether the defendant represented to the plaintiffs that the seed contained no more than .1 percent of other seed species and did not contain any other seed which would compete against the sorghum seed or otherwise harm or be detrimental to the continued use of the land for the commercial cultivation of crops - whether the defendant represented to the plaintiffs that the 2010 MR43 seed would have the same characteristics as the previous MR43 seed produced and distributed by the defendant and was safe to use - where the defendant was silent with regard to the need for the plaintiffs to eradicate the off-type plants before they dropped seed - whether the defendant engaged in misleading or deceptive conduct in connection with the supply of the contaminated MR43 seed - whether the plaintiffs suffered loss or damage because of the defendant's failure to advise the plaintiffs from end January 2011 to rogue any off-type plants in their crops.
[5]
LIMITATION OF ACTIONS - LIMITATION OF PARTICULAR ACTIONS - SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS - ACCRUAL OF CAUSE OF ACTION AND WHEN TIME BEGINS TO RUN - TORTS - OTHER TORTS AND MATTERS - where the losses alleged are cash flow losses of increased operating expenses and decreased crop production earnings from the 2011/2012 summer season - whether the contamination of land by the spread of weeds or off-type plants was physical damage to the land - whether loss or damage was suffered before 24 April 2011 because off-type plants were planted, germinated and grew before that date - whether the alleged causes of action for negligence and misleading or deceptive conduct did not arise or accrue until after 24 April 2011.
[6]
Australian Consumer Law, s 2, s 3, s 11, s 18, s 54, s 236, s 271
Young & Marten Ltd v McManus Childs Ltd[1969] 1 AC 454, cited
[56]
D Campbell QC, N Andreatidis QC and B Hall for the plaintiffs
[57]
P Dunning QC, G Beacham QC, E Goodwin, L Judd, M Barnes and M Brooks for the defendant
[58]
[1] This proceeding is the trial of a claim for damages for negligence or misleading or deceptive conduct. The plaintiffs grew crops, including grain sorghum, as part of their farming businesses. The defendant carried on business selling seeds it produced for commercial planting by farmers, including grain sorghum seed. It was a subsidiary of a multi-national company. Each of the plaintiffs grew grain sorghum in the summer of 2010/2011 from seed produced by the defendant and acquired from a distributor to whom the defendant supplied the seed for on-sale.
[2] Although the defendant produced a number of different grain sorghum seed products, the one in question is named "MR43 Elite". I will refer to it as "MR43" even though that description could include "MR43 Premier", another similar product. In these reasons, "MR43" means MR43 Elite.
[3] MR43 is the seed for a hybrid dwarf grain sorghum plant.
[4] Grain sorghum is distinguished from forage sorghum. Grain sorghum is grown to produce seed which is used for livestock feed or ethanol production. Grain sorghum is bred to produce a high yield of sorghum seed as "grain". Forage sorghum is used to produce plants as grazing fodder for livestock in the paddock. Forage sorghum is bred to produce a high yield of leaf material.
[5] A dwarf sorghum plant is one that has been bred to grow to a lower height than other sorghum plants, typically about a metre from the ground.
[6] A hybrid sorghum plant is one that is bred to possess or not possess the male reproductive gametes responsible for fertilisation of the female gametes in the flowers of a sorghum plant. The line bred not to possess the male gametes is referred to as a female line or A line. The line bred to possess the male gametes is referred to as a male line or R line. In a crop grown from both A line and R line plants, the ratio of planting of A line to R line is typically 80:20. This was the method used by the defendant for commercial production of the seed to be treated and sold as MR43. The seed so produced grows plants that possess both male and female gametes.
[7] The botanical classification of the plant intended to be grown from MR43 is sorghum species bicolor, subspecies bicolor. The plaintiffs allege that the MR43 seed they acquired by purchase for the 2010/2011 summer season was contaminated with seed of another subspecies, probably drummondii ("contaminated seed"). In the final result, the precise classification of the subspecies of the contaminated plant is not important to the resolution of the issues in dispute.
[59]
"A Group Member to whom these proceedings relates is a grower (being either an individual or a corporation) who between 2010 and 2014 (the Claim Period):
[60]
(a) conducted a business in Queensland and/or New South Wales for the planting and commercial cultivation and sale of sorghum;
[61]
(b) purchased MR43 seed from a grain merchant who had been authorised by the Defendant to sell MR43 seed;
[62]
(c) purchased MR43 seed which contained shattercane seed;
[63]
(d) was not notified and was otherwise unaware that the purchased MR43 seed contained shattercane seed;
[64]
(e) planted the purchased MR43 seed in order to produce a crop of sorghum for commercial cultivation and sale;
[65]
(f) first suffered actual loss and damage in the form of reduced income and/or increased expenditure due to the presence of shattercane seed in the MR43 seed no more than 6 years prior to the commencement of this action; and
[66]
(g) has not commenced and settled any legal action against the Defendant for the sale and/or use of MR43 seed which had been contaminated with shattercane seed during the Claim Period."
[67]
[10] The common questions are stated as (omitting the references to the versions of the pleadings):
[68]
"1. Whether the term 'shattercane' as used in the statement of claim describes what is relevantly and materially the same thing as the term 'AGOTS' used in the defence.
[69]
Whether the MR43 produced by the defendant was produced substantially according to the process described in paragraph 4(c) and Annexure A of the defence.
Whether the MR43 production process included controls to obviate and preclude, or alternatively, minimise the occurrence of contamination by reason of outcross occurring, those controls including those described at paragraph 4(f) of the defence.
Whether that production process and those production controls accorded with, or exceeded, industry standards and practices.
Whether those production processes and those production controls were reasonable processes and controls to obviate or, alternatively, minimise any risk of contamination by, inter alia, shattercane or AGOTS.
Whether the level of the shattercane or AGOTS in the TREK batches was no more than 0.1%?
Whether any reasonable system of grow outs, or any other reasonable control, would have detected the shattercane or AGOTS in the TREK batches?
Whether, and to what extent, shattercane or AGOTS being present on land:
[70]
(b) has a deleterious effect on the commercial production of sorghum;
[71]
(c) once present on the land can spread vigorously;
[72]
(d) can germinate, propagate and multiply quickly, infesting and overrunning the land;
[73]
(e) can re-infest land as its seeds can lie dormant in soil for 3 or more years, meaning that germination can be staggered;
[74]
...
Whether the defendant knew or ought to have known:
[75]
(a) by 2008 that tall open-headed shattering grassy off-types plants were present in sorghum grown using MR43 seed;
[76]
(b) by 2009 that an off-type of sorghum with shattering characteristics had been identified in three varieties of sorghum produced by the defendant including MR43;
[77]
(i) about the character, nature and effect of shattercane on sorghum production;
[78]
(ii) that it would be used for cultivating commercial sorghum crops for sale;
[79]
(iii) that any contamination of MR43 seed by shattercane would cause loss and damage to growers;
[80]
(iv) that there had been earlier outbreaks of shattercane in sorghum grown in the Burdekin region of Queensland in 1977 and 1978;
[81]
(v) that it was necessary to test sorghum seed in order to determine whether it did contain shattercane seed and/or any other off-type contaminant;
[82]
(vi) that the production of sorghum seed required a production process to be implemented and followed in order to ensure that the seed produced was pure;
[83]
(vii) that growers using MR43 seed would rely on the information contained on the label attached to MR43 bags (the label);
[84]
(viii) that the eradication of shattercane or AGOTs is more [effective] if commenced in the first year that the contaminant is found;
[85]
(ix) that its production process was producing MR43 seed which was contaminated with an off-type of sorghum with shattering characteristics that may be shattercane or AGOTs;
[86]
(x) that the MR43 seed was likely to be so contaminated;
[87]
(xi) that the MR43 seed had not been tested to ensure that it was free of shattercane or any other off-type [contaminant];
[88]
(xii) growers would be unable to distinguish an off-type seed in bags of MR43 seed;
[89]
(xiii) the investigation into the presence of an off-type seed in 2008 and 2009 had not been completed;
[90]
(i) an off-type contaminant was present in some of the MR43 seed which had been sold;
[91]
(ii) if contaminated MR43 seed had been planted, in order to attempt to rid the land of the off-type contaminant an eradication management program was required.
[92]
Whether for seed batches numbered T100020C, T100021C, T1000022C, T1000023C, T1000024C and T1000025C (the TREK batches) the defendant:
[93]
(a) used parent seed grown in 2002 which had not been adequately checked for purity by a further grow out;
[94]
(b) used parent seed grown in 2002 which had not been released for use;
[95]
(c) failed to conduct a commercial grow out of the MR43 to check whether it was free from contaminants including shattercane or AGOTs;
[96]
(d) failed to ensure by adequate rogueing and inspection that the isolation distance at and around the area where the MR43 seed was produced was free from other plants which could [contaminate] the crop by cross-pollination;
[97]
(e) failed to adequately warn or advise the plaintiffs prior to MR43 seed germinating, maturing and dropping seed, that shattercane needed to be removed before they dropped seed on the land in or from January 2011.
[98]
Whether the information contained on the label represented that the MR43 seed;
[99]
(b) did not contain any other seed which would either compete against sorghum or harm or adversely affect the continued production of sorghum on the land.
[100]
Whether the defendant was silent and remained silent at the time the MR43 seed was sold as to the possibility that:
[101]
(a) it might be contaminated or contain off-type contaminant such as shattercane;
[102]
(b) the MR43 seed did not have the same characteristics as prior years and may not be safe to use;
[103]
(c) there was a need for growers to eradicate emerging shattercane before its germinations matured and dropped seed.
[104]
When does a grower in the position of the plaintiffs, or the sample group members, first suffer loss as a result of the purchase and use of the MR43 seed?"
[105]
[11] The statement of claim alleges loss or damage suffered by each of the plaintiffs. It also alleges that loss or damage was suffered by five other group members, namely Belandi Pty Ltd ("Belandi"), Lamipine Pty Ltd ("Lamipine"), Coslinco Farming ("Coslinco"), Morrice Farming and BA & MM Perkins Partnership ("Perkins Partnership"). I will refer to them as the "sample group members".
[12] As the trial was conducted, all parties accepted that there were off-type plants grown from the relevant batches of MR43 seed produced by the defendant in 2010 for the 2010/2011 summer season. In the statement of claim and the plaintiffs' evidence, the off-type species of sorghum plant was referred to as "shattercane". In the defence and the defendant's evidence, it was referred to as "Australian grassy off-type sorghum", shortened to the acronym "AGOTS". As will appear, in my view, the terminological difference is not critical to the resolution of the determinative issues.
[13] The defendant admitted that it produced five relevant "TREK" batches of MR43 for the 2010/2011 summer season that contained .03 percent AGOTS that had tall and shattering characteristics.[1]
[106]
[14] At relevant times, the first plaintiff was the trustee of the Andrew Jenner Family Trust and carried on the business of the commercial cultivation of crops, including sorghum, on land owned by others located at Headington Hill in Queensland ("Jenner Properties").
[15] In late 2010, the first plaintiff purchased ten 20 kilogram bags of contaminated MR43 from a distributor of the defendant's products. In December 2010, the first plaintiff planted the contaminated MR43 seed on the Jenner Properties as follows:
[107]
[16] In late 2011, the first plaintiff purchased seven 20 kilogram bags of uncontaminated grain sorghum seed from the defendant's distributor. In late December 2011, the first plaintiff planted seed from the contaminated MR43 and 2011 seed purchases on the Jenner Properties in the same areas.
[17] From May 2012, the first plaintiff alleges it suffered loss and damage by the presence of shattercane. From the end of 2012, the first plaintiff ceased growing sorghum on the affected areas of the Jenner Properties, apart from 36 hectares in the 2014/2015 summer season.
[18] Mr Jenner's usual practice was to grow sorghum as a summer crop, then leave the relevant areas fallow and spray them with glyphosate. For the next summer crop of sorghum, he would apply further glyphosate before planting and also spray S-Metolachlor just before or at planting. The glyphosate would kill everything in the paddock and the S-Metolachlor would help kill weeds that emerged after planting but not the newly planted sorghum.
[19] Occasionally, he also rotated corn and sunflowers as summer crops through some of the areas to control grassy weeds. That was because he could spray other herbicides such as Verdict (active ingredient haloxyfop) and Lightning (active ingredients imazethapyr and imazapyr) through those crops. Those practices were an effective means of controlling weeds in sunflowers, although they were not perfect in corn.
[20] Prior to planting the contaminated MR43 he did not need to rogue weeds or off-type plants at all in order to keep them in check. In agriculture, "rogueing" means manually identifying and removing plants with undesirable characteristics from the field.
[21] On or about 23 December 2010, Mr Jenner instructed his planting contractor to plant the contaminated MR43 into an 8 hectare area, a 26 hectare area and a 36 hectare area in the relevant paddocks. That was done. In January or February 2011, Mr Jenner noticed that what appeared to be forage sorghum was emerging in the crop. He was not concerned because in his experience forage sorghum was not difficult to control. He did not rogue the off-type plants.
[22] In May 2011, Mr Jenner harvested the sorghum crop. It was a normal harvest so far as he observed. There was no reduced yield that year.
[23] The relevant areas were left fallow over the winter of 2011. Mr Jenner sprayed glyphosate before instructing his contractor to plant for the 2011/2012 summer season in late 2011 and he sprayed S-Metolachlor immediately before or at the time of planting. Mr Jenner thought that spraying glyphosate and S-Metolachlor would deal with what he had thought was forage sorghum.
[108]
[31] The second plaintiff, ME & JL Nitschke Pty Ltd, was the trustee of the Nitschke Family Trust and carried on business farming the property known as "Park Head" at Dalby. There was some restructure of the Nitschke Family Trust and the Acacia Family Trust in 2018, but the details are not clear.
[32] Tony Hemmings was employed by the second plaintiff to manage farming operations. In September 2010, he purchased twelve 20 kilogram bags of contaminated MR43 seed from his local seed distributor.
[33] In September 2010, he planted approximately 100 hectares of Park Head on the Park Head 6 and Park Head 7 paddocks in what is identified as the "New West" area with contaminated MR43.
[34] In around late January 2011, Mr Hemmings noticed there were tall plants in the New West area, but he did not think anything of them. His previous experience with commercial varieties of grain sorghum was that they would produce tall plants that were not harmful and could safely be ignored. The tall plants were coming up within the planted rows of the sorghum crop, which reinforced his belief that they were not harmful, because they were not growing between the rows. They looked the same as tall plants that were usually produced by MR43, although he did not look at them closely.
[35] He did not rogue the tall plants because they had never caused an issue before. He had not found it necessary to have systematic rogueing in place previously, because in his experience sorghum could be managed generally by pre-emergent herbicides, post-emergent herbicides and zero tilling, in conjunction with a long fallow over a winter and following summer after three or four years.
[36] Later in the 2010/2011 summer season, Mr Hemmings noticed that the tall plants had different characteristics to commercial varieties of grain sorghum. They had a finer stem and leaf and the head was more open and looked different. Although he was not overly concerned, he spoke to the distributor's agronomist about it, who said it might be shattercane. Mr Hemmings did not know what shattercane was. The 2010/2011 summer season crop was harvested and achieved a normal yield.
[37] The New West area was left fallow over the winter of 2011. Following that, it was sprayed with glyphosate in the winter/spring period. In early September 2011, Mr Hemmings purchased grain sorghum seed of a different variety from the distributor to plant into the New West area. In September 2011, Mr Hemmings planted a 2011/2012 summer season sorghum crop into the New West area.
[109]
[45] Belandi was trustee of the Belandi Settlement Trust. Belandi was involved in the farming of three farms in the Liverpool Plains. One of them was named "Colly Blue" with an area of 2,001 hectares. Belandi jointly farmed with the Crossing family. Richard Burns was a farm manager in those operations.
[46] In late November 2010 he purchased thirty 20 kilogram bags of contaminated MR43 seed from a local seed distributor.
[47] On or about 25 November 2010, he planted approximately 271 hectares of Colly Blue in the following paddocks:
[110]
[48] Only part of the Western Island Paddock was planted. Mr Burns observed that there were some tall plants in the crop, but he thought they were just normal tall plants of the kind he had seen before in most of his sorghum crops. He knew those to be non-harmful. The tall plants came up in the rows, meaning they came up from the planted seed. When the 2010/2011 summer season sorghum crop was harvested, Mr Burns did not notice anything unusual about the crop or the yield.
[49] In the spring of 2011 or summer of 2011/2012, Mr Burns planted sorghum into the MCG Paddock. He did not plant sorghum into the Western Island Paddock for that summer crop, and left it fallow in line with his existing crop rotation practice at the time.
[50] In late December 2011 to early January 2012, he noticed a carpet of plants growing between the rows of sorghum in the MCG Paddock. It was clear to him that whatever plants they were had come up from the previous summer season's sorghum crop, because they came up between the rows and not in the rows which had recently been planted. The plants had heads that were shorter than normal sorghum, had a more prostrate stalk that grew very tall, the leaves were thinner and the seeds were much darker and appeared to be smaller than regular grain. The seeds would easily shatter by touching the heads of the plants.
[51] In February or March 2012, contract roguers went into the MCG Paddock. There were approximately 20 roguers and they worked for about three weeks. The rogueing was not successful in managing the off-type plants. In Mr Burn's view, it was done too late to prevent the plants from developing and dropping seed first.
[52] Mr Burns took the advice of an agronomist and decided to rotate out of sorghum following the 2011/2012 summer season and to plant winter crops instead, as a means to control the off-type plants.
[53] The smaller Western Island Paddock was left fallow in the 2011/2012 summer season. It was much smaller in area than the MCG Paddock and easier to rogue. Mr Burns was able to rogue that area in the 2012/2013 summer season crop.
[54] The larger MCG Paddock was fallowed and sprayed in each of the summers from the 2012/2013 summer season to the 2018/2019 summer season, with the exception of a cotton crop planted in the 2016/2017 summer season.
[55] In the 2018/2019 summer season, Mr Burns observed a significant amount of off-type plants coming up in the MCG Paddock. He did not identify the number or frequency of the off-type plants. In the 2019/2020 summer season, the MCG Paddock was not planted as it was too dry.
[111]
[57] Lamipine was the trustee for the Lance Ruhle Family Trust. Lamipine carried on the business of a farming enterprise on land owned by Lance Ruhle and his wife at Springvale in Queensland. Until 2013, Lance Ruhle managed the day to day running of operations. Since then, his son has taken responsibility for management. Lance Ruhle continued to be involved and still attended the farm regularly and consulted with his son about operations.
[58] Lamipine conducted operations in the following areas:
[112]
[59] Before planting the contaminated MR43 seed, Lamipine's usual farm management practice was to plant a summer crop of grain sorghum in those areas on a preferred basis. Mr Ruhle's practice was to spray the area with a post-emergent herbicide, being glyphosate, before planting. He would also spray S-Metolachlor just after planting. Those herbicides controlled grassy weeds within the crop. In order to maintain a low level of weeds, it was also necessary occasionally to rotate out of sorghum by planting a winter crop and fallowing the land in summer so that it could be treated comprehensively with herbicide to control any emerging grasses or grassy weeds. Mr Ruhle's practice was to plant sorghum for approximately two to three years in a row, then plant a winter crop and fallow through the following summer, before planting another sorghum crop the following year.
[60] In September 2010, Mr Ruhle purchased fourteen 20 kilogram bags of contaminated MR43 from the defendant's distributor. In September or October 2010, he planted it into the C4 paddock area, and into an area of 23 acres in the K4 paddock. As the crop grew, there was nothing particularly abnormal about it. He recalled seeing some tall plants, but as it was common to see tall plants, did not think anything of it.
[61] In February or March 2011, the 2010/2011 summer season sorghum crop was harvested. Mr Ruhle discussed with his son the possibility of some "off-type" issue with the MR43 seed. Neither of them was concerned at that stage.
[62] On 18 September 2011, Mr Ruhle and his son decided to plant a 2011/2012 summer season sorghum crop in the C4 paddock, but did not plant sorghum into the K4 paddock which was left fallow. Before planting, Mr Ruhle sprayed glyphosate in the paddocks. His son did the planting. Nothing appeared to be out of the ordinary.
[63] About a month after planting, Mr Ruhle noticed plants coming up between the rows. He knew from experience that was not sorghum from the seed recently planted, but had come up from the previous year's crop planted with the contaminated MR43. In December 2011, the off-type plants had head exposure, but that was at a pre-shattering stage.
[64] Mr Ruhle discussed the problem of the off-type plants with a number of people, including the defendant's representatives. The discussion ran to different methods of removing the off-type plants but no action was taken at that time. The 2011/2012 sorghum crop was harvested. Despite the off-type plants, the 2011/2012 crop was a very good crop in terms of yield.
[113]
[68] Coslinco was a partnership. Until about 12 to 18 months before the trial, it comprised John Cook, his wife and his parents. At trial, the partnership was Mr Cook and his wife.
[69] The contaminated MR43 seed was planted by Coslinco on three farms named Jacamel, Jimalay and Boxgrove at Dalby in Queensland. Jacamel and Jimalay are adjacent. Boxgrove is three kilometres away. The Coslinco farming operation was conducted in strips. Jacamel comprised strips 1 to 13, Jimalay comprised strips 1 to 8 and Boxgrove comprised strips 1 to 7. Coslinco share farms Jimalay with Mr Cook's sister and brother in laws, who received 25 percent of the proceeds of gross seed sales from that farm.
[70] Before planting the contaminated MR43 seed, Mr Cook's practice was to manage weeds simultaneously with crop farming. His practice was to spray areas with glyphosate in spring immediately prior to planting the next summer's sorghum crop. Following the glyphosate spray, he would then apply S-Metolachlor.
[71] In Mr Cook's experience, it was possible to grow sorghum for consecutive summer seasons as long as he used pre-emergent and post-emergent herbicides to manage weeds and grasses. When a gradual build-up of summer grasses and weeds occurred, it was necessary to have a fallow summer to allow the eradication of those weeds by applications of glyphosate. In general, he grew sorghum consecutively for three or more summer seasons before leaving the land fallow. He would then leave it for a summer fallow, followed by a winter crop other than sorghum, and then rotate the land back into sorghum the following summer season.
[72] In around October 2010, Mr Cook purchased fifty-four 20 kilogram bags of contaminated MR43 from the defendant's distributor. He planted fifty of those bags. About a month after planting, Mr Cook noticed that tall plants that were taller than usual were starting emerge.
[73] Mr Cook harvested the 2010/2011 summer season sorghum crop without incident.
[74] In September 2011, Mr Cook planted sorghum into the strips on Coslinco's farming paddocks as follows:
[114]
[75] Some time after planting, Mr Cook noticed that a large number of off-type plants were growing both within and between the rows of the crops. He was not able to rogue the off-type plants and the crops were harvested.
[76] After the 2011/2012 summer season crop, Mr Cook changed the crop rotation for the affected areas and took them out of sorghum. He planted mung beans in some of them so that he could spray the off-type plants with herbicide whilst the mung beans were growing. He planted winter crops so that he could leave the areas fallow in summer and spray them with herbicide. He sprayed S-Metolachlor, but his observation was that it did not help. For the two years following the 2011/2012 summer season crop, Mr Cook noticed that the affected areas experienced the worst levels of contamination that he had experienced. He spent many days rogueing by hand. The infestation level was high and he could not rogue all of the off-type plants.
[77] Following the 2011/2012 summer season crop, Mr Cook incorporated different herbicides into his farming practice. He used Verdict as a spray to kill herbs and grasses. He sprayed S-Metolachlor at a higher rate and amount as well. He continues to rogue off-type plants, which was not a necessary part of his farming practice before the off-type plants appeared.
[78] In the last couple of years before the trial, Mr Cook observed a decrease in the germination of the off-type plants, which allowed him to plant sorghum in the affected areas occasionally. However, he still regularly observed off-type plants in the strips.
[79] In the 2018/2019 summer season crop, Mr Cook observed the continuing emergence of off-type plants.
[80] Coslinco planted its 2019/2020 summer season sorghum crop on 26 January 2020. The crop was growing but was immature before the trial. Up to that point, no off-type plants had been identified.
[81] At the time of the trial, Mr Cook did not consider he was able to grow sorghum consecutively for three summer crops without an increase in the off-type plant population. With one exception, he considered that he might be able to grow sorghum for two consecutive summers on the affected areas before a summer fallow. The exception was strip 7 of Boxgrove.
[115]
[82] Andrew Morrice and his wife constituted the Weemala Partnership. Mr Morrice was also a director and shareholder of Corella Farming Pty Ltd ("Corella"). From prior to 2010 until 2016, the Weemala Partnership carried on the business of farming land at Quirindi in the Liverpool Plains. From 2016, Corella took over those farming operations.
[83] Before planting the contaminated MR43 seed, those farming operations rotated around growing a summer sorghum crop and winter crops, including growing sorghum crops in back to back summers. Mr Morrice's usual practice was to spray glyphosate as a post-emergent herbicide before planting a summer sorghum crop. He used Dual as a pre-emergent herbicide to control grassy weeds within the crop. He also sprayed LV Ester and Atrazine as selective post-emergent herbicides to control broad leaf weeds. He did not need to rogue the sorghum crops. He would fallow the land in winter to assist with weed management. Every four or five years, depending on the prevalence of grassy weeds, he would rotate a paddock out of the summer sorghum crop (presumably to leave it fallow and spray herbicides) and plant a winter crop.
[84] In spring 2010, Mr Morrice purchased between eighty and ninety 20 kilogram bags of contaminated MR43 from a distributor or distributors of the defendant.
[85] The seed was planted in October or November 2010 as follows:
[116]
[86] In late January or early February 2011, Mr Morrice noticed that the crop had grown nicely. He saw that some of the plants had a slightly different looking head and that the seeds were slightly darker, but he was not concerned then. The rate of those off-type plants was low. In April 2011, Mr Morrice harvested the relevant areas. The harvest was unremarkable. He did not notice anything different or concerning at the time and there was no impact on yield.
[87] In the 2011/2012 summer season, Mr Morrice planted sorghum into the Maundyn 4 and 5 paddock areas, but not into Weemala 1, 2, 3, 4 or 5. The planting was carried out in about October or early November 2011.
[88] In February 2012, Mr Morrice noticed clumps of off-type plants coming up between the rows. They were too many to be able to eradicate or contain at that point. The relevant area was the same as where he had noticed the different-looking plants in the year before. The seeds were black and tightly bunched together. The heads had flowered. In that season, there was some rogueing of the Weemala paddock areas and wick wiping was carried out at the Maundyn 4 and 5 paddocks.
[89] In the 2012/2013 summer season, Mr Morrice planted sorghum into the Weemala paddocks. The Weemala and Maundyn 4 and 5 paddocks were heavily rogued again in that season.
[90] From the 2012/2013 summer season, Mr Morrice fallowed the relevant land in summer subject to the following:
[117]
(a) in the 2013/2014 summer season, he planted mung beans in the Weemala paddocks so as to spray through the mung beans with Verdict herbicide; and
[118]
(c) in the 2016/2017 summer season, Mr Morrice planted sorghum in the Maundyn 4 and 5 paddocks. He used a spray rig to spray out the worst of the off-type plants. There were big clumps of those plants in areas throughout, so he sprayed glyphosate under the clumps to kill everything, including the sorghum that had been planted.
[119]
[91] Since the 2016/2017 summer season, Mr Morrice has not planted a summer sorghum crop on the Maundyn 4 and 5 paddocks.
[92] In the 2019/2020 summer season, off-type plants came up again in the Maundyn 4 and 5 paddocks. Mr Morrice intended to plant a new variety of sorghum named Sentinel which is treated so that it is possible to spray out the off-type plants while the sorghum crop is growing.
[93] If that did not work, Mr Morrice considered he would have to plant sorghum for one year, then plant a winter crop and long fallow (by inference in summer) before attempting to grow sorghum again. He believed that would have an impact on yield.
[120]
[94] From 1970 to 30 June 2018, the Perkins Partnership operated a farm at "Round Island" at Quirindi in the Liverpool Plains.
[95] In about October or November 2010, the Perkins Partnership purchased twenty-five 20 kilogram bags of contaminated MR43 and planted them on 162 hectares of Round Island as follows:
[121]
[96] Bernard Perkins was responsible for the management of the sorghum growing operations. He did not notice any emerging weed problems over the 2010/2011 summer season. He was not concerned about any of the tall plants, as previous crops of sorghum grown from MR43 had tall plants without causing any problems. He did not rogue any of the tall plants and was not in the habit of rogueing in prior seasons. In April 2011, the crop for that year was harvested. Mr Perkins was not aware of any problem and there was no impact on the yield of the harvest from any off-type plants.
[97] From April or May 2011, the areas were left fallow. In spring 2011, they were treated with glyphosate and S-Metolachlor before a 2011/2012 summer season sorghum crop was planted.
[98] In the middle of December 2011, the three areas were planted with sorghum. At the end of January or in February 2012, Mr Perkins noticed tall plants in clumps spread throughout the contaminated areas. Because the tall plants were coming up between the rows in tightly packed clumps, he inferred that the seed for those plants had not been planted by the GPS planter at the end of 2011, but must have dropped from plants grown in the previous year.
[99] In around mid-March 2012, contract roguers were deployed in the contaminated areas. Mr Perkins observed that there were missed plants and there were plants left cut on the ground that started growing low to the ground. The rogueing of the off-type plants was ineffective. Also, some or many of the seed heads had already shattered and the seed dropped.
[100] In the 2012/2013 summer season, the Perkins Partnership planted sunflowers in the Stack and 65s paddock areas. In the winter of 2013, the Perkins Partnership planted wheat in the Hill paddock area and left the Stack and 65s paddock areas fallow. In the 2013/2014 summer season, the Perkins Partnership left the Stack, 65s and Hill paddock areas fallow. In the winter of 2014, the Perkins Partnership planted a winter wheat crop in the Stack, 65s and Hill paddock areas and left those areas fallow in the following 2014/2015 summer season. In the winter of 2015, the paddock areas were again left fallow.
[101] In the 2015/2016 summer season, the Perkins Partnership planted a sorghum crop.
[102] In the winter of 2017, the Perkins Partnership planted barley, chickpeas and wheat in the affected paddock areas.
(b) that facts about shattercane or off-type sorghum were known within the industry for the commercial production of sorghum;[3]
[124]
(c) facts as to the risk of harm to the plaintiffs and group members from shattercane and as to the defendant's knowledge of that risk and its foreseeability.[4]
[125]
[106] The plaintiffs do not allege the existence of a duty of care in the statement of claim. Rather, the plaintiffs allege breaches of a duty of care.[5] However, the defendant explicitly denies the existence of any duty of care owed by the defendant to any of the plaintiffs or any group member,[6] on a number of grounds. In the reply, the plaintiffs deny those grounds of defence.[7]
[107] Summarising, the defendant alleges that:
[126]
(a) the plaintiffs' and group members' claims are for economic loss only;
[127]
(b) there was no reasonably foreseeable and not insignificant risk of economic loss to the plaintiffs or any group members prior to in or about February 2011; and
[128]
(c) the label attached to each bag of MR43 seed stated the contents of each bag and the terms on the bag stated the purchasing grower's rights and the defendant's obligations in respect thereof.
[129]
(a) none of the plaintiffs and group members was an identified person to whom the defendant owed a duty of care;
[130]
(b) the putative class of persons who would be owed a duty constituting the group members was indeterminate in character;
[131]
(c) none of the plaintiffs and group members was vulnerable because they had the benefit of implied warranties or statutory guarantees from the distributor from whom they purchased MR43 seed; and
[132]
(d) there was not an established category or any other circumstance going to policy to ground the existence of a duty of care.
[133]
[109] These issues of fact raise and inform a question of law as to whether the defendant owed a duty of care in negligence to any of the plaintiffs and group members to avoid the risk of economic loss of the kind claimed by the plaintiffs and group members in relation to the supply of the contaminated MR43 seed. As will be seen, a critical aspect of the issues is the contractual matrix in which the disputed duty of care is said to arise.
[134]
[110] The defendant did not sell seed directly to growers. MR43 and other seeds were sold or supplied to distributors who are also referred to as resellers, suppliers or agents.
[111] There were hundreds of such distributors around Australia who sold the defendant's seeds. Some were independently owned businesses and others were nationally owned by companies such as Elders Ltd, Landmark Ltd or Rural Co Ltd.
[112] The defendant supplied MR43 seed to distributors in two categories - by straight out sale[8] or on consignment.[9]
[113] There is no evidence of the terms of the contracts made by the defendant with distributors who purchased by straight out sales. Accordingly, putting to one side the terms alleged to be printed on the bags of MR43 seed, it is not known whether the terms of the contracts of sale to those distributors otherwise constituted agreements for the sale of goods without any express terms as to quality, or whether the contracts contained an express term or terms in addition to or different from those terms that would be implied upon a sale of goods under either the Sale of Goods Act1896 (Qld) in Queensland or the Sale of Goods Act1923 (NSW) in New South Wales.
[114] There is also no evidence of the terms of the contracts by which any of the plaintiffs purchased the contaminated MR43 seed from a distributor who had purchased that seed straight out from the defendant. Accordingly, the relevant purchase by a plaintiff may have been a contract of sale of goods without any express term or terms as to quality or may have contained an express term or terms in addition to or different from the terms that would be implied in a contract for sale of goods under either the (Qld) or the (NSW).
[135]
(a) exclude all implied conditions and warranties except any implied condition or warranty the exclusion of which would contravene any statute or cause any part of this clause to be void;
[136]
(b) limit their liability for any breach of any such condition or warranty that cannot be excluded, at Pacific Seeds' option:
[137]
(ii) to replacing the same quantity and type of the goods, in respect of which the breach occurred (except for goods of a kind ordinarily acquired for personal, domestic or household use or consumption, in respect of which the Stockist's and Pacific Seeds' liability is not limited under this Agreement); and
[138]
(c) accept the promises made by the customer for Pacific Seeds' benefit (in accordance with s 55 of the Property Law Act 1974 (Qld)).
[139]
#2 In consideration of the supply of the products by Pacific Seeds and the Stockist, and subject to the immediately preceding clause, the customer:
[140]
(a) acknowledges that it remains the customer's responsibility to satisfy itself that the goods are fit for its intended use; and
[141]
(b) agrees to release and indemnify the Stockist and Pacific Seeds from all liability and costs (including negligence) directly or indirectly arising out of or related to the delivery or use of the goods."
[142]
[122] Clause 7 provided that if the defendant considered it necessary to recall any quantity of the products, the defendant must give written notice of the product recall to the stockist.
[123] Clause 8 provided:
[143]
In this clause Manufacturer's Liability means Pacific Seeds' liability (if any) as a manufacturer under the Trade Practices Act 1974 that because of Part V (Consumer Protection) or Part VA (Defective Goods) of that Act may not be excluded, restricted or modified.
[144]
This clause does not exclude or limit the application of any statutory provision (including a provision of the Trade Practices Act 1974) where to do so would:
[145]
Pacific Seeds excludes all implied conditions and warranties except any implied condition or warranty the exclusion of which would contravene any statute or cause any part of this clause to be void (Non-Excludable Condition).
[146]
8.4 Limitation of liability for breach of Agreement or Non-excludable Condition
[147]
Pacific Seeds' liability to the Stockist for breach of any express provision of this Agreement or Non-excludable Condition (other than an implied warranty of title) is limited, at Pacific Seeds' option, to refunding the price of the goods or services in respect of which the breach occurred or to providing, replacing or repairing those goods or providing those services again (except in respect of any Non-excludable Condition relating to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption, in respect of which Pacific Seeds' liability is not limited).
[148]
Pacific Seeds excludes liability for consequential damage (including, but not limited to, lost profits and claims by any third parties), suffered by the Stockist arising out of one or more breaches by Pacific Seeds of this Agreement, except that this clause does not limit Manufacturer's Liability.
[149]
Subject to the preceding subclauses of this clause 8, except for Manufacturer's Liability Pacific Seeds excludes all further liability to the Stockist arising directly or indirectly out of or related to the delivery, use or on-supply of the Product or otherwise in connection with this Agreement, howsoever arising (including as a result of Pacific Seeds' negligence)."
[150]
[124] There is no evidence of the terms of the contracts by which any of the plaintiffs purchased the contaminated MR43 seed from a stockist distributor who had obtained the seed from the defendant under a stockist agreement. Accordingly, the relevant purchase by a plaintiff may have been a contract of sale of goods without any express term or terms as to quality or may have contained an express term or terms in addition to or different from the terms that would be implied in a contract of sale of goods under either the Sale of Goods Act1896 (Qld) or the Sale of Goods Act1923 (NSW).
[125] If a relevant purchase was a contract of sale of goods by a stockist distributor to one of the plaintiffs, it is possible that either the Factors Act1892 (Qld) or Factors (Mercantile Agents) Act1923 (NSW) may have applied to it. And, depending on the terms of the contract, terms may have been implied under either the Sale of Goods Act1896 (Qld) or the Sale of Goods Act (NSW).
[151]
[127] The defendant alleged that terms were marked on the bags of contaminated MR43 seed as follows:
[152]
Upon purchasing this product and opening the bag, the purchaser ("you") agrees to be bound by the conditions set out below. Do not open this bag until you have read and agreed with all the terms on this bag. If, before opening the bag, these conditions are not acceptable to you, the product should be returned in its original condition to the place of purchase immediately, together with proof of purchase, for a refund. The product contained in this bag is as described on the bag, within recognised tolerances.
[153]
- You acknowledge that, except to the extent of any representations made by Pacific Seeds' labelling of the product in this bag or made in official current Pacific Seeds literature, it remains your responsibility to satisfy yourself that the product in the bag is fit for its intended use;
- If the product in this bag does not comply with its description, within recognised tolerances, the liability of Pacific Seeds Pty Ltd ACN 010 933 061 will be limited, at Pacific Seeds' option, solely to the cost of replacement of the product or the supply of equivalent goods or the payment of the cost of replacing the goods or of acquiring equivalent goods;
- Pacific Seeds Pty Ltd will not be liable to you or any other person for any injury, loss or damage caused or contributed to by Pacific Seeds Pty Ltd (or its servants or agents), directly or indirectly arising out of or related to the use of the product in this bag, whether as a result of their negligence or otherwise;
- All warranties, conditions, liabilities or representations in relation to the product, whether expressed or implied, are excluded by Pacific Seeds to the extent permitted by law.
- Without limiting any of these terms, if you chemically treat the product in this bag, Pacific Seeds Pty Ltd will not be liable for any loss or damage whatsoever you might suffer, howsoever caused, and this warranty is void as a consequence; and
- You may only use the product in this bag for planting and growing crops. You must not use it for any form of plant breeding, genetic manipulation, genetic isolation, genetic analysis or genetic sequencing; and
- You must not and will not export this seed from Australia without the express written permission of Pacific Seeds Pty Ltd."
[128] The defendant does not allege that the terms on the bags operated strictly in accordance with the text that provided "You agree that..." That is, the defendant does not allege or submit that by a plaintiff or group member opening the bag and using the seed, a contract was made between the plaintiff or group member and the defendant under which the plaintiff or group member agreed to those terms and conditions. But it relies on the terms on the bags to exclude a duty of care in negligence to the plaintiffs and group members.
[129] The defendant alleges that each of the bags of contaminated MR43 seed (and other grain sorghum seed sold by the defendant) bore the terms set out above. The plaintiffs deny that allegation.
[154]
[136] Let it be accepted, therefore, that each of the plaintiffs purchased bags of contaminated MR43 seed on which the terms were printed, whether or not there was any other express term as to quality agreed between the plaintiff and distributor, and whether or not the sale was one made by the distributor as a straight out sale or of stock on consignment.
[137] In those circumstances, were the terms on the bags part of the terms of the contract of sale of goods under which the plaintiff and group members purchased the seed?
[138] There was no evidence of a course of dealings between any of the plaintiffs or sample group members and a distributor in purchasing MR43 seed in prior years that would have the effect of incorporating the terms on the bags into the contracts of sale of goods in 2010 of the contaminated MR43 seed for the 2010/2011 summer crop. Mr Anderson's evidence that the artwork containing the terms commenced to be used in 2009 is not sufficient to infer such a course of dealing.
[139] In the absence of any evidence of a course of dealing, the incorporation of the terms on the bags as terms of the contract of sale of goods by a distributor to a plaintiff or group member turns on notice of those terms being given to the relevant plaintiff or group member before or at the time when the contract was made to purchase the contaminated MR43 seed. There was no evidence of any notice of those terms at that time.
[140] It follows that the terms on the bag were not proved to be terms of the contract of sale of the contaminated MR43 seed by a distributor to any of the plaintiffs or group members.[10]
[155]
Operation of the terms on the bag as a disclaimer
[156]
[141] The unusual aspect of this case in relation to the organising principles of the tort of negligence is that the alleged duty of care is one to avoid economic loss owed by a producer or manufacturer of goods to an end user where the producer or manufacturer is not in a direct contractual relationship with the end user. Since the development of the law of negligence signalled by the New York Court of Appeals in 1916 by MacPherson v Buick Motor Co,[11] followed in 1932 by the House of Lords in Donoghue v Stevenson[12] and in 1935, for Australia, by the Privy Council in Grant v Australian Knitting Mills Ltd,[13] liability of a producer or manufacturer of goods to an end user in negligence for physical loss or damage has been a central concern of the law of negligence.
[142] But when it comes to loss or damage constituted by economic loss only, the path to liability in negligence has been more difficult. Again, the New York Court of Appeals was a pathfinder, in 1922 in Glanzer v Shepard,[14] but it was not until 1963 in Hedley Byrne & Co Ltd v Heller & Partners Ltd[15] in England, followed in 1970, for Australia, by the Privy Council in Mutual Life and Citizens Assurance Co Ltd v Evatt,[16] that the development of liability in negligence for economic loss only was accepted at the highest level in this country, before the modern cases in the High Court began.
[143] Glanzer is important as an early case where a relationship that gave rise to a duty of care in negligence was "equivalent to contract", which is an analytical tool or approach that has proved significant in later cases.[17] Another early case of that kind was Nocton v Lord Ashburton,[18] as explained later in Hedley Byrne.[19] But none of those initial cases of liability for negligence for economic loss only was a case of the liability of a producer or manufacturer of a thing to an end user, particularly where the relationship between them resulted from one or more contracts of sale of goods between the producer or manufacturer and the end user via intermediate purchasers.
[157]
"The preferable conclusion, at least until this issue is considered by the High Court, has been expressed by Southwell J., after a detailed examination of the authorities, in Opat v. National Mutual Life Association of Australasia Ltd.[1992] VicRp 19; [1992] 1 V.R. 283 at 292:
[158]
'However, I do not see in the High Court judgments support for the proposition that a chattel manufacturer owes a duty to any ultimate user who suffers economic loss from faulty manufacture.'"[45]
[159]
[156] Brooking J reasoned in greater detail as to the liability of a manufacturer to an end user for economic loss[46] in concluding that no duty of care was owed.
[157] More recently, in SwickNominees Pty Ltd v Leroi International Inc (No 2)[47] it was held that the manufacturer of air compressors did not owe a duty of care in negligence to an end user against economic loss caused by a defective unit. It was held that beyond cases of assumption of direct responsibility there is limited scope for a duty of care being owed by a manufacturer to non-contracting parties to avoid carelessly inflicting pure economic loss.[48] A number of significant points were made in the joint reasons of the majority. First, it was opined that Suosaari was closely confined to its facts in Minchillo.[49] Second, it was observed that Minchillo predated Bryan.[50] Third, it was held that there are a number of reasons for caution in the application of Bryan by analogy to a duty of care of the manufacturer of goods to an end user.[51]
[160]
[158] The plaintiffs rely heavily upon Dovuro Pty Ltd v Wilkins, both in the High Court[52] and the Full Court of the Federal Court.[53] As a matter of precedent, neither judgment is a binding authority on the question of the existence of a duty of care. The appeal to the High Court was allowed and the judgment in favour of the plaintiff in the court below was set aside, so it is no part of the ratio decidendi that the defendant seed merchant owed a duty of care to the end users of the seed. Because the appeal was allowed by the High Court, no part of the reasons in the Full Court is part of the ratio decidendi for the final judgment. A further reason why the reasoning upon the existence of a duty of care is not binding is that at trial the defendant admitted the existence of a duty of care, although it sought to withdraw the admission on appeal and to raise as a ground of appeal that no duty of care was owed. Nevertheless, the reasoning in both courts may be of persuasive authority in the present case.
[159] In the High Court, only a couple of the judges considered the question whether the seed merchant owed a duty of care against economic loss to an end user. Gummow J found it unnecessary to consider whether leave should be given to withdraw the admission of a duty of care at trial.[54] Gleeson CJ (who was in dissent) and Kirby J would have refused leave to withdraw the admission,[55] although Kirby J said he might have agreed with Gyles J on this issue in the Full Court. McHugh J also would have refused leave to raise the issue, but continued:
[161]
"It is beyond doubt that a manufacturer of any product owes a duty to a consumer to take reasonable care to prevent the product causing injury or loss to the consumer. As the facts in other judgments demonstrate, Dovuro's position was identical in principle with that of such a manufacturer. Because that is so, the only issue for determination at the trial as the concession of Dovuro acknowledged was whether it had breached that duty. This was not a case where there was any basis for contending that the losses suffered by the consumers might fall outside the ordinary duty owed by a manufacturer to a consumer. It was not a case where the Wilkins interests could succeed only on proof of a special duty to prevent economic loss to them."[56]
[162]
[160] Hayne and Callinan JJ also did not decide whether leave to withdraw the admission should be granted. They said, inter alia:
[163]
"Since Caltex Oil (Australia) Pty Ltd v The Dredge 'Willemstad' it has been clear that there is no absolute rule denying a duty to take reasonable care to avoid pure economic loss. Those who claimed to have suffered loss, in this case, were farmers who had used the seed which Dovuro had imported. They were, in effect, the users or consumers of the seed which Dovuro had distributed. If Dovuro failed to act with reasonable care, it was reasonably foreseeable that there could be circumstances in which those farmers may suffer economic loss as a result of their using the seed. The class likely to be affected, being those who used the seed, would not be an indeterminate class and they would be persons vulnerable to loss if care were not taken, although it may be that assumptions about the respective vulnerabilities of experienced large scale farmers and a seed supplier should not be made too readily. All this being so, a duty to exercise reasonable care not to expose the farmers (as users or consumers of the seed) to a risk of injury of which they knew or ought to have known could, in some circumstances, extend to the risk of purely economic loss. But as the Wilkins' case was presented at trial, the critical question in this matter was to identify whether Dovuro knew or ought to have known that there was a risk of the sort of injury which it was alleged had been suffered - financial loss occasioned by pursuing a course of action recommended by government authorities to guard against the possible emergence of plants which had been declared to be harmful only after Dovuro had distributed the seed and the farmers had acquired it. Only if that sort of loss was reasonably foreseeable by Dovuro would the duty asserted by the Wilkins have been engaged."[57] (footnotes omitted)
[164]
[161] On that reasoning, the defendant could owe a duty of care to the plaintiffs in the present case. But the decision of that question is not foreclosed by Dovuro. First, the passage cautions against high level assumptions about vulnerabilities. Second, Dovuro was decided in 2003, before more recent statements of principle in the High Court, including those in Woolcock Street Investments Pty Ltd v CDG Pty Ltd[58] and Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 & Anor.[59]
[165]
[162] It is not in dispute that recent binding statements of principle by the High Court relevant to the existence of a duty of care in the present case require identification of the "salient features"[60] that might give rise to a duty of care or that two important features are the "vulnerability"[61] of the plaintiffs and the "coherence"[62] of the disputed duty of care having regard to the existing legal frameworks that regulate or affect the relationships among the defendant, the plaintiffs and other relevant persons. It is convenient to begin with vulnerability.
[163] Vulnerability concerns the ability of a plaintiff to protect itself from economic loss or damage caused by lack of care by the defendant.[63]
[164] As a step in the analysis, the present case may be compared with a "string"[64] or "chain"[65] of contracts for the sale of goods. The defendant as producer of the contaminated MR43 seed sold it to a distributor who re-sold it to one of the relevant growers being one of the plaintiffs.
[165] The plaintiffs submit that each of the relevant transactions of sale by a stockist distributor to a plaintiff amounted to a sale by the distributor as agent of the defendant as a factor, in Queensland under the Factors Act1892 (Qld) and in New South Wales under the Factors (Mercantile Agents) Act1923 (NSW). But as previously discussed, there was no evidence that any of the plaintiffs or sample group members in fact purchased from a stockist distributor.
[166] But whether the relevant sale was a straight out sale by a distributor to the plaintiff, or a sale by a stockist distributor to the plaintiff, each of the relevant transactions of sale by a distributor to a plaintiff was a "sale" of goods because it was a "contract of sale". It was also an "acquisition" of goods. Each of the plaintiffs was a buyer under a sale that was subject to sale of goods legislation that implied a condition that goods bought by description should be of merchantable quality, unless such a term was excluded by the agreement.
[166]
"'Vulnerability', in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, 'vulnerability' is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant."[85]
[167]
[176] The importance of the concept of "vulnerability", in the context of a duty of care to avoid economic loss, clearly emerged in Perre. Specifically, Gleeson CJ referred to the known vulnerability of people in the position of the appellants in that case.[86] But McHugh J was the member of the court most concerned with vulnerability. First, his Honour identified Apand's knowledge of the risks associated with bacterial wilt and the vulnerability of potato farms and the effects of the disease,[87] in much the same way as Gleeson CJ.
[177] Second, McHugh J observed that in many cases, there would be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself[88] and continued:
[168]
"The vulnerability of the plaintiff to harm from the defendant's conduct is therefore ordinarily a prerequisite to imposing a duty. If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss."[89]
[169]
[178] Third, McHugh J expressed the view that reliance and assumption of responsibility are merely indicators of the plaintiff's vulnerability to harm from the defendant's conduct, and it is the concept of vulnerability rather than those evidentiary factors which is the relevant criterion for determining whether a duty of care exists.[90]
[179] Fourth, his Honour said that the most explicit recognition of vulnerability as a possible common theme in cases of pure economic loss was to be found in the judgment of Toohey and Gaudron JJ in Esanda Finance Corp Ltd v Peat Marwick Hungerfords.[91]
[180] The other judges in Perre did not rely on vulnerability as such.
[181] In Burnie Port Authority v General Jones Pty Ltd,[92] the High Court referred to vulnerability in discussing the concept of a non-delegable duty of care against physical damage as follows:
[170]
"Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person."[93]
[171]
[182] That statement was the source of the reference to vulnerability by Gaudron and Toohey JJ in Esanda Finance Corp Ltd v Peat Marwick Hungerfords in the context of liability for negligent misstatement.[94]
[183] Caltex Oil was not decided by reference to the concept of "vulnerability" as such. The word is not mentioned in the judgments. So, the invocation of vulnerability in Woolcock Street Investments by reference to cases since Caltex Oil should be taken to be to the effect of the reasoning in later cases.
[184] In Brookfield Multiplex Ltd v Owners Corp Strata Plan 61288,[95] the plurality referred to Woolcock Street Investments and vulnerability,[96] and observed that reliance may be a necessary element in demonstrating vulnerability, but it is not a sufficient element, and that vulnerability is concerned with the plaintiff's inability to protect itself from the defendant's want of reasonable care. They continued:
[172]
"It is neither necessary nor profitable to attempt to define what would or would not constitute vulnerability."[97]
[173]
[185] The concept of "vulnerability" is used in at least two senses in the references mentioned in the prior section of these reasons. First, in some contexts, it is used to refer to the plaintiff's exposure to the risk of damage if the defendant does not exercise care. That was the sense in which it was used by the court in Burnie Port Authority and by Toohey and Gaudron JJ in Esanda Finance Corporation. It was also one of the senses in which it was used by McHugh J in Perre, although in that case McHugh J was also specifically concerned with the ability of the plaintiff to protect itself. Second, at least from the time of Perre, "vulnerability" is used in the sense of the inability of the plaintiff to protect itself against exposure to the risk of economic loss caused by the defendant's failure to take care, as a factor supporting the existence of a duty of care, or as negativing the existence of a duty of care, if the plaintiff does not demonstrate vulnerability.
[186] As to the first sense, it would be counterintuitive to conclude that the plaintiffs and group members who had no opportunity to inspect or test the contaminated MR43 seed before purchase and use were not vulnerable to the defendant's failure to take reasonable care, but this is true also of a buyer of a building which has latent defects due to the designer or builder's failure to take care in respect of work that cannot be inspected, such as in Woolcock Street Investments and Brookfield Multiplex.
[187] As to the second sense, it must be observed that there is some lack of clarity around what constitutes an ability of a plaintiff to protect itself from economic loss (caused by the defendant's failure to take care) that negatives vulnerability. In Woolcock Street Investments it was held that the facts alleged in the statement of claim and those set out in the case stated did not show that the plaintiff was vulnerable to the economic consequences of any negligence of the respondents in their design of the foundations of the building.[98] Specifically, it was said that the pleading was silent about whether the plaintiff could (not) have sought and obtained the benefit of contractual terms to protect itself when it purchased the relevant property.
[174]
[192] That the defendant excluded or sought to exclude liability for contaminated seed by its contractual terms with stockist distributors and the terms on the bags raises coherence as another salient feature in relation to whether the defendant owed a duty of care to the plaintiffs. The incoherence in question is that between refusal of the defendant to undertake contractual responsibility for the quality of the contaminated MR43 seed to the distributor as buyer of the seed from the defendant, which it may legally do, with the conclusion that it has assumed or should be subjected to the same excluded liability to a sub-buyer who is a non-contracting party vis a vis the defendant.
[193] The leading case as to the effect of incoherence on a putative duty of care is Brookfield Multiplex. The plaintiff body corporate alleged that the builder of the strata plan apartment building owed a duty of care to the plaintiff as the owner of the common property in respect of building defects. It was held that the detailed provisions of the contract made between the builder and the developer under which the building was constructed before the incorporation of the body corporate (on registration of the strata plan) were inconsistent with the alleged duty of care.
[194] At this point, a potentially important consideration in the analysis for the present case emerges. As previously mentioned, the plaintiffs in the present case did not plead a duty of care against economic loss or the material facts from which the postulated duty arises. Instead, the issue arose upon the defendant's denial of the existence of any duty of care against economic loss only on stated grounds. A feature of the issue raised on the pleadings in that way is that the postulated duty is not identified with precision. This may matter in the present case.
[195] By way of analogy, although none of the judges in the High Court so expressed it, the duty identified in Perre in the court below was a duty to take reasonable care that the potato seed used for the further trial of the Saturna variety was free of pest or disease including bacterial wilt,[102] in circumstances where bacterial wilt was a foreseen risk.[103] Using that model, the duty in the present case might have been articulated as a duty to take reasonable care that the MR43 seed was free of shattercane or off-type grassy sorghum varieties. But formulating the duty that way begs another question, namely "free" from the contaminating sub-species of sorghum to what extent? Absolutely free from it, or something less than that? The answer to that question may be signalled by the breaches alleged by the plaintiffs of "failing to prevent contamination... by shattercane".
[175]
[197] Accepting that the terms on the bags were not proved to be terms of the contracts of purchase by the plaintiffs from their distributors, the defendant still relies on the effect of those terms as a disclaimer that negates the existence of a duty of care owed by the defendant to the plaintiffs.[107]
[198] The defendant submitted that the terms on the bags denied the plaintiffs' vulnerability. In Perre, McHugh J identified reliance and assumption of responsibility as included in vulnerability.[108] The defendant submitted that the plaintiffs were not vulnerable because they might have returned the seed, or purchased other seed from Pioneer, or grown a crop other than sorghum. All those points may be true, and may negate vulnerability, but none of them depends on the terms on the bag as such, except that those terms provided for the return and refund by the buyer if dissatisfied with the terms on the bag.
[199] The defendant submitted also that the terms on the bag support the argument that a duty of care in the present case would lead to incoherence. Incoherence is important if there would be inconsistency between an obligation created by a postulated duty of care and other rights and liabilities of the parties in the factual matrix. So, it is incoherent to find a duty to exercise reasonable care in respect of the risk of a particular loss or damage if the contractual rights and liabilities as between the same parties are inconsistent with the proposed obligation under the duty of care. But if the terms on the bags were not terms of the relevant contracts, as I have found, they do not operate incoherently as contractual rights and obligations.
[200] The substance of the point of the defendant's reliance on the terms on the bags, in my view, is that they may negate the defendant's assumption of responsibility, as a salient feature, in determining whether there is a duty of care to avoid economic loss only in the circumstances of this case.
[201] Assumption of responsibility has been identified as a salient feature in determining the existence of a duty of care to avoid economic loss since Hedley Byrne. As it was put by Lord Devlin in that case:
[176]
"... the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton are 'equivalent to contract', that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract."[109]
[177]
[202] As the defendant submitted, assumption of responsibility was an important feature of the finding of a duty of care in Bryan[110] and the lack of it was a reason why no duty of care existed in Woolcock Street Investments.[111]
[203] Assumption of responsibility may be negated by an express disclaimer of responsibility, as has been accepted since Hedley Byrne.[112] The point is further illustrated by Smith v Eric S Bush (a firm),[113] a valuer's negligence case, where there was an attempted disclaimer of liability by a valuer of a house for mortgage purposes. It was held that the disclaimer was invalidated by the Unfair Contract Terms Act 1977 (UK), but otherwise it would have negated a duty of care in tort owed by the valuer to the buyer.[114]
[204] It was not alleged in the present case that if the terms on the bags would otherwise operate to negate a duty of care, the court might still disregard them as unreasonable or unconscionable.[115]
[205] In my view, the defendant's submission that the terms on the bag operated as a disclaimer of an assumption of responsibility to negate the existence of a duty of care to avoid economic loss that the MR43 seed supplied would be free of contamination by shattercane or grassy off-types should be accepted.
[178]
[206] It follows that the plaintiffs do not establish that, for the tort of negligence, the defendant owed a duty of care to the plaintiffs to take reasonable care to avoid the risk of economic loss of increased expenses of farming operations and decreased revenue from sorghum sales if MR43 seed was contaminated by shattercane or other off-type grassy sorghum plants.
[179]
[207] From September 2009 until April 2013, Barry Croker was successively the acting managing director and managing director of the defendant. Prior to that period, he had long experience as an employee of the defendant. Beginning in 1992, he worked as a seed production agronomist in Kununurra in the Ord River region in Western Australia, dealing with the production of grain and forage sorghum seed, inter alia. In 1996, he became regional production manager located in Griffith, New South Wales in the Murrumbidgee Irrigation Area ("MIA") dealing with contract growers for the commercial production of grain sorghum seed, inter alia. In 2000, he moved to the defendant's head office in Toowoomba, having become the business manager for production of another seed. In 2003, he became the seed production manager for the defendant and part of the senior leadership team. In 2007, he became the supply chain manager, extending his responsibilities beyond seed production into quality assurance, processing and warehousing, and logistics. In September 2009, he was appointed acting managing director and thereafter was appointed managing director.
[208] Mr Croker made two lengthy written witness statements that were tendered in evidence. As well, he gave oral evidence for a day. Whilst many of the statements in his evidence are acceptable, I formed the distinct view that, in some respects, he had fallen into the position of an advocate of the defendant's position rather than being simply a witness of fact. There were a number of examples, and not all of them need be recounted.
[209] One is that Mr Croker's statement contained an explanation of the defendant's grain sorghum seed production process, including the various causes of off-type plants that occur in hybrid grain sorghum crops. Mr Croker said that "Australian grassy off-type" ("AGOT") is the term used to describe plants which result from crosses between grain sorghum and other members of the sorghum genus such as forage sorghums and wild sorghums. Neither Mr Croker nor the defendant could point to any documentary or accepted usage of that term before the defendant deployed it in this case. In my view, it was misleading for Mr Croker to describe the term as one that is used to describe the off-type of concern without disclosing that it was a term created for that purpose for this case, as far as the evidence showed. The apparent purpose of doing so was to distinguish the off-type of concern in the present case from a United States subspecies of sorghum known as "shattercane". It would have been better to do so frankly, rather than by pretence that there was an Australian industry usage of the term "AGOT" or "AGOTS" (the latter was the expression used in the defence).
[180]
"We also had seeds from the tall heads tested. They were found to contain the female marker but not the male one. In other words, they were the result of contaminant pollen onto the female in the production block."
[181]
[219] The production block referred to was the Cavaso Farming production block for the 2010/2011 summer season MR43.
[220] On 7 March 2011, Mr Croker sent an email to Mr Needham, Ms Crawford and Mr Supple in response to the email just referred to asking how that correlated with observations. Later the same morning, Mr Needham sent an email to Mr Croker, Ms Crawford and Mr Supple stating that field observations suggested that all three lines from Cavaso Farming were contaminated so the electrophoresis reflected what was seen in the paddock.
[221] In the 2011/2012 summer season, there was a much wider outbreak of second generation off-types appearing in growers' sorghum crops as a result of first generation off-type plants having grown in the prior season's MR43 crops. On a large number of occasions, the defendant's staff were engaged by growers seeking explanations and assistance. In that context, over the months of January, February and March 2012, the question of legal liability of the defendant was raised as the contemporaneous documents show on a number of occasions.
[222] On 16 April 2012, Mr Croker prepared a draft staff update document. Part of the document in evidence was covered up, possibly because of a claim of privilege. Under the next heading, titled "MR43", appeared the following:
[182]
"As most of you will be aware, we had a grassy off-type in a number of batches of MR43 in 2010 summer which we dealt with during that cropping season. However, a number of growers have replanted sorghum in these fields which we are dealing with this season. We have been very open with the issue with our customers and have worked with them to deal with the issue and find a mutually acceptable resolution.
[183]
This has involved many different management techniques to control the volunteers from interrow spraying/cultivating, wick wiping and probing. As a result, this has involved many staff and resources which have stretched us at times, but have been necessary to ensure we resolved the issue in true Pac seeds style.
[184]
So how did we end up with an off-type? It is a result of an oversight by the production team to not rogue out tall grassy off-types from the crossing block pre-flowering on the belief that they were sterile. This is outside of our standard procedures which are now being vigorously enforced, audited and combined with a grow out to ensure we have confidence moving forward. It is extremely disappointing that we have to go to these lengths to ensure procedures are adhered to but we need to ensure we have confidence in the products we sell."
[185]
[223] That section of the draft document was deleted by Mr Croker before the final document was sent to staff. Mr Croker said that the draft came from either Ms Crawford or Mr Supple, but he cannot recall. He said he was not able to substantiate the explanation and that is why it was changed. I do not accept that evidence as frankly given. No document suggesting any investigation to substantiate the explanation was produced by Mr Croker or anyone else. Mr Croker also said that it was "not the right forum" to address any potential performance issues. I am not sure what he meant by that. Perhaps he was concerned that if the information was communicated to territory managers, they might pass it onto growers and thereby increase the risk of claims against the defendant.
[224] It must also be observed that Mr Croker's explanation for the deletion, that the defendant did not know the cause of the MR43 issue, was made against the background of two other potential inconsistencies. First, the email sent by Mr Kaundinya on 28 May 2013 (although after the fact) is inconsistent. Second, if one follows through all of Mr Croker's statements, opinions, and explanations, the reader is left with no explanation for the cause of the contamination. Whatever else is true, that contamination must have occurred by the time of the commercial production of the seed for the 2010/2011 summer season MR43 in the Cavaso Farming crossing block in the early months of 2009. Either off-type plants grew in that crop or A line female plants in that crop were fertilised by pollen from off-type plants in sufficient proximity to cause the degree of contaminated MR43. It beggars belief that by the time of the trial Mr Croker was unable to offer any more likely than not explanation for the contamination.
[186]
[225] From 2007 until 2014, Maree Crawford was the defendant's summer grains crop business manager. The defendant's territory managers reported to her in relation to dealings with growers within her area. She reported to Gregg Supple and Mr Croker as her superiors.
[226] In early November 2010, she became aware of a complaint from Mr Cook about the presence of sorghum off-types in the Coslinco areas planted with contaminated MR43. She visited the property with two other representatives of the defendant and saw a low frequency of off-types that had the appearance of tall mutants. She formed the view, however, that they were true to type plants.
[227] Around 26 November 2010, she spoke on the telephone to a grower named Bill Yates, who had complained about the presence of an off-type plant in an area planted with MR43 on his land near Mungindi. She made arrangements for representatives from the defendant to attend his property.
[228] On 10 December 2010, Ms Crawford sent bagged samples that had been taken from the Yates property to the Queensland Herbarium for testing.
[229] On 13 December 2010, Ms Crawford attended the property of Lindsay and Jenny Holmes near Clifton with Bill Smith, to inspect an area planted with MR43 affected by off-types.
[230] On 14 December 2010, Ms Crawford started to prepare a paper entitled "Tall Mutants in Grain Sorghum". She discussed its contents with Trevor Philp. It was intended to be an internal document. It explained the observed increased incidence of tall potential off-types in that season's growing crop as a product of good weather conditions producing true to type tall plants. The next day, she discussed her views with a representative from the Department of Employment, Economic Development and Innovation ("DEEDI").
[231] On 17 December 2010, Ms Crawford received a letter from the Queensland Herbarium as to testing of the specimen from Mr Yates' property. The specimen was confirmed as "Sorghum Bicolor, Sorghum ssp, Forage sorghum" and reference was made to an article by B K Simon entitled "Naturalised Fodder Sorghums in Queensland and their Role in Shattering in Grain Sorghum". Because she was concerned about the reference to "shattering" in the title of that article, Ms Crawford telephoned the Queensland Herbarium and confirmed that the reference to the article was a suggestion that the tested off-type had a shattering capacity.
[187]
[258] From 2007 to 2014, Robert McCarron was the summer crops technical manager for the defendant. He lived at Gunnedah, near the Liverpool Plains. His responsibilities included helping younger territory managers dealing with some of the bigger farming clients and liaising with rural distributors in respect of different seeds. He reported to Mr Supple, who was the national sales and marketing manager for the defendant.
[259] In December 2010, he recalls visiting a friend at Christmas, whose property had a paddock growing the contaminated MR43 seed. He saw a number of leafy forage off-type plants rising above the canopy of the crop. He estimated there were about one or two plants per hectare. At about that time, from discussions held with others in the Gunnedah area, he became aware of complaints by growers in the Liverpool Plains about the presence of off-type plants in their crops. At that stage he did not think there was anything to be worried about.
[260] On 18 February 2011, he received an email from Ms Crawford and spoke to her on the telephone. He cannot remember the words of the conversation but the effect of the call was that she was concerned that Tony McCumstie was being overwhelmed by grower complaints and wanted him to assist Mr McCumstie in visiting growers and investigating their complaints.
[261] By that stage, the picture had changed from Christmas of the prior year.
[262] In early February 2012, he drove past a paddock owned by Mr Davidson, planted with contaminated MR43 seed. He estimated the paddock to be around 100 hectares in area and that he could see one or two off-type plants rising above the canopy of the crops. He jumped the fence and rogued the weeds himself over the course of two afternoons. In my view, it seems counter-intuitive that such a low frequency of off-type plants would take two afternoons to rogue.
[263] As to his estimate of the degree of the infestation, Mr McCarron neither made a note nor had reference to any other contemporaneous documents between those times and making his statement in March 2020.
[264] On 6 February 2012 and 16 February 2012, Mr McCarron attended grower meetings.
[265] On 18 February 2012, he received an email from Ms Crawford reporting on the 16 February 2012 meeting. Apart from the location of the meeting (it was on Mr Perkins' farm) he agreed with her description of events.
[188]
[270] From 2007, Nicholas Gardner was employed as the defendant's export manager. In March 2013, he was appointed acting managing director and from April 2013 was appointed managing director.
[271] On 28 May 2013, Ram Kaundinya sent an email to Mr Croker, Mr Gardner and others referring to a trip Mr Kaundinya had made to Australia in the prior week.
[272] The email referred, inter alia, to the quality of production of the defendant's sorghum seed products. Mr Kaundinya said there had been issues related to the presence of grassy off-type in four of the defendant's grain sorghum hybrids, that the problem had been building up for the last two years but apparently became more severe in the last six months. Mr Kaundinya said the quality of the parent seed was the reason for the mishap. He referred to a new parent seed becoming available in May 2014, so that the product to be supplied to the market would be fine by 2015. He referred to the number of employees in production being reduced over the years disproportionately to any reduction in sales volume and deviations from the standard production processes which might have led to lack of control of the quality of the products.
[273] Mr Gardner said in evidence that he did not agree with Mr Kaundinya's views. He said that in order to verify that the four commercial hybrid seed lines were not contaminated he ordered investigations to be carried out including a review of the historical grow out test for the contaminated MR43 parent seed lines and grow out tests on the commercial hybrid lines (as at 2013) which included harvested seed held in storage.
[274] Mr Gardner's recollection was that none of the test results for the relevant parent seed lines revealed any contamination. Also, none of the grow out tests done on the suspect commercial hybrid seed lines revealed any contamination.
[275] Mr Gardner accepted that there should be documentary evidence of the grow out test of the commercial hybrid lines but suggested that producing the relevant documents is difficult because they are entries in a computer database. However, there were numerous screen shots of such entries for grow out tests from the defendant's Cactus database in evidence.
[276] No document of the kind corresponding to the tests Mr Gardner referred to was produced in evidence. The defendant did not rely otherwise on a grow out test carried out in 2013 that showed no contamination of the parent seed or commercial seed, whether of the contaminated MR43 seed or otherwise. I reject Mr Gardner's evidence that there was such testing or that it showed that there was suspected contaminated MR43 seed planted on the grow out that was not contaminated.
[189]
[280] From July 2010, Andrew Short was employed by the defendant as a territory manager for North West New South Wales, Macintyre and Balonne. He was based at Goondiwindi. Prior to that he had experience working as an agronomist for two other businesses.
[281] As a territory manager, it was his responsibility to deal with grower complaints in accordance with the defendant's complaints process. He visited growers and was required to complete a crop report of the visit, with one copy to the grower, another to the defendant's head office in Toowoomba, and the third to remain in his territory manager's book.
[282] In (late) November 2010, Mr Short received a complaint from Bill Yates about the presence of off-type plants in his MR43 crop. On 26 November Mr Short and Trevor Philp visited the Yates properties and Mr Philp completed a crop report.
[283] Mr Philp estimated that the off-type plant frequency was "somewhere between 0.02 percent and 0.03 percent, and certainly less than 0.1 percent" tall sorghum plants. Mr Philp recorded that observation on the crop report relating to Mr Yates' complaint.
[284] On the same day Mr Short and Mr Philp visited Simon Cameron's property, "Tralee" and another property, "Beefwood". No complaint had been received at that point from the growers for those properties but they noticed off-type plants present in the paddocks. Again, Mr Short says they were at the frequency of between .02 percent and .05 percent, and certainly less than .1 percent. But there was no record of that observation.
[285] On 9 December 2010, Mr Short received a complaint from Colin Dight as to his MR43 crop. On 20 January 2011, Mr Short visited the Dight property and observed a large number of off-type plants in the paddock. He recalls that the level was about the same as at Mr Yates' property, that is somewhere between .02 percent and .03 percent and "certainly" less than .1 percent. Again, he kept no record of the observation.
[286] On 30 January 2011, Mr Short received an email from John Woods enclosing a copy of an earlier email from Mr Short to Mr Woods. In the earlier email, Mr Short had assured Mr Woods that DNA testing on the tall plants found no difference in DNA from the normal MR43 grain sorghum plants. Mr Woods' email of 30 January 2011 questioned that conclusion, having regard to the heads of the off-type plants that had emerged and dried down. Mr Woods said the off-type plants in his MR43 crop resembled shattercane.
[190]
[292] From 2000, Tony McCumstie was employed by the defendant as a territory manager for the Liverpool Plains. In that capacity, he received complaints from growers in his territory and attended properties and completed crop reports in relation to those complaints.
[293] On 10 February 2011, Mr McCumstie attended Keith Norman's property to inspect a paddock affected by off-type plants in an MR43 crop. He observed between two to five off-type plants per hectare.
[294] On 16 February 2011, he returned to the property with Ms Crawford and Bradley Jamieson.
[295] On 22 February 2011, Mr McCumstie attended the property of a grower named Philip Morgan and inspected an affected paddock. He completed a crop report. He observed about two to five off-type plants per hectare.
[296] On 23 February 2011, Mr McCumstie attended a property of a grower named Joe Fleming and inspected an affected paddock. He wrote a crop report. He observed there were between two to five off-type plants per hectare.
[297] On 23 February 2011, he attended the property of Morrice Farming and inspected an affected paddock. He prepared a crop report with respect to the infection. He observed there were between two to five off-type plants per hectare.
[298] He said that he had a conversation with Mr Morrice which was to the effect that the defendant's advice to growers was that they would need to rotate away from sorghum over a period of two years and spray the off-type plants as they came up.
[299] Mr Morrice's evidence is contrary to Mr McCumstie's. Mr Morrice said that he was first informed to rotate away from sorghum, by fallowing, by Mr McCarron in late 2012 or early 2013. Mr Morrice was not cross-examined.
[300] On 23 February 2011, Mr McCumstie attended a property of a grower named Gary Crombie to inspect an affected paddock. He wrote a crop report. He did not say what his estimate was of the frequency of the off-type plants in the paddock.
[301] On 23 February 2011, Mr McCumstie attended the property of a grower named Hugh Price and inspected an affected paddock. He completed a crop report. He did not say what his estimate was of the frequency of the off-type plants in the paddock.
[302] He said that he had a conversation with Mr Price which was to the effect that the defendant's advice to growers was that they needed to either fallow the paddock for some time or rotate into an alternative summer crop that would allow in-crop herbicide use to control the off-type.
[191]
[306] Since 1987, William (Bill) Smith had been employed by the defendant as a territory manager for the Burnett Wide Bay, Lockyer Valley and Northern Rivers Territories.
[307] On 13 December 2010, Mr Smith and Ms Crawford attended a property of growers named Lindsay and Jenny Holmes and inspected an affected paddock. Mr Smith wrote up a crop report. He returned to the property two or three times after the initial visit and observed the off-type plants. He estimated that he saw no more than five plants per hectare.
[308] On 19 January 2011, Mr Smith and Ms Crawford attended the property of Mal and Jeanette Hegarty to inspect an affected paddock. Mr Smith completed a crop report. He estimated he saw no more than five off-type plants per hectare. He took photographs on one of his subsequent visits to the Hegartys' property.
[309] On 16 February 2011, Mr Smith and Mr Philp attended a property of Lynn and Bobby Brazil. Mr Smith completed a crop report. He estimated he saw no more than five off-type plants per hectare.
[310] On 16 February 2011, Mr Smith and Mr Philp also attended a property run by DA Hall & Co. Mr Smith completed a crop report. He estimated he saw no more than five off-type plants per hectare.
[311] On 16 February 2011, Mr Smith and Mr Philp attended the property run by Michael Hegarty. Mr Smith wrote a crop report entry. He estimated he saw no more than five off-type plants per hectare. He took photographs.
[312] Also on 16 February 2011, Mr Smith and Mr Philp attended a property of growers named Rodney, Jason and Colleen Mundt. Mr Smith completed a crop report. He inspected the paddocks affected. He estimated that he saw no more than five of-type plants per hectare. He said he took photographs. One of the photographs was identified in paragraph 58 of Mr Smith's statement as DEF.600.000.000.0018D. It was inconsistent with Mr Smith's estimate that he saw no more than five off-type plants per hectare. In a supplementary affidavit, Mr Smith explained the discrepancy. It was that the photographs were taken in the 2011/2012 summer season, showing the increase in the incidence of off-type plants in the Mundts' fields, which was quite marked and obvious.
[313] It is unnecessary to deal with the other similar estimates made by Mr Smith on other inspections and completion of other crop reports in early 2011. I do not accept Mr Smith's estimates of seeing no more than five off-type plants per hectare as necessarily accurate. Like the other witnesses of the defendant who gave similar evidence, Mr Smith did not have documentary records to support that recollection given in his statement made many years after the events. I record that for a number of the relevant growers Mr Smith attended in early 2011, he said he took photographs. However, the photographs did not assist in identifying the number of off-type plants per hectare. Also, having regard to the error made in relation to the year in which the photographs were taken of the Mundts' property, I hesitate to rely on other photographs said by Mr Smith to have been taken in the earlier months of 2011 as necessarily being photographs of crops of that time.
[192]
[315] From January 2007, Trevor Philp was employed by the defendant as the summer grains agronomist. He reported to Ms Crawford, Mr Supple and Mr Croker. His core functions included looking after the trialling of advanced product already in train and of new products relative to existing commercial and competitor products. He was also responsible for training staff, including crop business managers and territory managers. He frequently undertook field inspections and took samples where issues were identified.
[316] In late November 2010, he was asked by Ms Crawford to visit the property of Bill and Andrew Yates at Mungindi with Mr Short. On 29 November 2010, he went with Mr Short to the Yates' property. He saw off-type plants in addition to the usual true to type talls. He thought they were the result of a forage outcross or forage sorghum contamination incident. On the same day, he and Mr Short stopped by the side of two other properties because they noticed similar off-type plants in the paddocks as they drove past. The off-type plants were in the rows of cultivation in all cases. The incidence of the off-type plants was low.
[317] On 10 December 2010, Mr Philp received an email from Matt Needham of test results from samples Mr Philp had collected on 29 November 2010.
[318] On 16 December 2010, he received an email from Ms Crawford attaching her paper entitled "Tall Mutants in Grain Sorghum". At that stage, based on the testing results outlined in Mr Needham's email, he considered the off-type plants, in general, were true to type tall plants.
[319] After that, he had several conversations with Ms Crawford about the issue and from time to time was involved with growers and territory managers as they kept in touch with growers to monitor the crops as the heads of the plants developed.
[320] On 30 January 2011, he was included in the email chain emanating from Mr Woods which raised Mr Woods having a plant which resembled "shattercane". Shortly after that date, he met with Mr Woods and Mr Short. It was at about the time of that meeting that it became apparent to Mr Philp that the off-type plant growing in amongst the MR43 seemed to have a propensity to shatter and drop seed, based on what was being said by growers.
[321] Thereafter, he engaged in discussions with Ms Crawford to develop and circulate a guide about how to identify the off-type plants and how growers could manage them.
[193]
(a) 16 February 2011 - Paul, Glen and Judy Krieg from Brookstead;
[194]
(b) 16 February 2011 - Rodney, Jason and Colleen Mundt from Brookstead;
[195]
[325] Except for Michael Coleman and Clapham, Mr Philp said that he gave the "standard guidance" about how to identify and manage the off-type plants, including by rogueing, rotating out of sorghum and using herbicides. In the absence of any documentary evidence to support that evidence, I do not accept that advice was given to growers to rogue their current crop in the 2010/2011 summer season. Such advice would have been inconsistent with the contents of the PowerPoint or slide display presented on 15 February 2011 and the first version of the Information and Management Document prepared at that time by Mr Philp and Ms Crawford. Specifically, Mr Philp did not identify any document at that time where advice to growers to rogue their existing crops was given or referred to, except for the possible meaning of the entry in the table of control options in the Information and Management Document that stated "yes" alongside the measure described as "Mechanical: in-crop".
[326] On 18 February 2011, Mr Philp asked the defendant's Quality Control Laboratory to perform germination and tetrazolium testing on the off-type plants collected from a range of growers' paddocks over the period leading up to that date. The testing was carried out from 21 February 2011. Mr Philp was of the view that the testing supported the conclusion that there would be no long-term dormancy issues with the off-type plants. That did not prove to be the case.
[327] Through April 2011 and over the succeeding weeks, Mr Philp carried out field tests in relation to the use of different herbicides to control the off-type plants.
[196]
[328] Matthew Toscan was a director of Cavaso Farming Pty Ltd that carried on a farming business on the Sturt Highway at Darlington Point in New South Wales in the MIA. Between 1997 and 2011, Cavaso Farming grew sorghum seed for the defendant's seed production business under contracts with the defendants entitled Seed Production Agreements including an agreement with a commencement date of 17 October 2009 ("the Agreement").
[329] Clause 6 of the Agreement stipulated a number of obligations of Cavaso Farming. Clause 6.12 required Cavaso Farming at its own expense to ensure the crop was isolated from relevant contaminating species in every direction by the isolation distances specified in Item 3(b) of Schedule 1. Relevantly, the distance for the contaminating species described as Forage, Sudan Grass, S. Sudanese and S. Halepense was 3,000 metres.
[330] Mr Toscan's evidence was that the required isolation distances were maintained and that he was never aware of any problems with the existence of any contaminant species. Cavaso Farming's production of commercial hybrid grain sorghum seed for the defendant was carried out by planting four rows of the female line of seed to one row of the male line of seed.
[331] Clause 10.5 of the Agreement provided that the defendant would throughout the term of the Agreement carry out rogueing of the crop for genetic off-types. In other words, that was not Cavaso Farming's responsibility. Mr Toscan said that rogueing during the commercial production of hybrid grain sorghum seed typically involved employees or contractors of the defendant conducting visual inspections of the crop by walking along the male rows prior to flowering to remove any off-types that may have grown.
[332] Mr Toscan did not recall any senior members of the defendant coming to inspect Cavaso Farming's land in the 2009/2010 summer season for production of the defendant's seed. His general recollection was that during all harvest years, the Advanta production team conducted regular inspections, meaning weekly visits at a minimum, but it was not uncommon for more than one visit per week to occur. He was not aware of any problem with the production of commercial seed for the defendant from the 2009/2010 summer season at Cavaso Farming.
[197]
[333] The plaintiffs allege that the defendant failed to take reasonable precautions to avoid the risk of harm to the plaintiffs[116] and group members[117] through the sale of MR43 seed that was contaminated with off-type plant seeds. There is no material difference between the acts or omissions alleged to constitute negligence in relation to the plaintiffs and group members. By the plaintiffs' opening, the negligence case was confined to four failures to take reasonable precautions alleged in the statement of claim, and the statement of claim was subsequently amended to reflect that, as follows.
[334] First, the plaintiffs allege that the defendant failed to ensure that production processes were implemented and followed that included isolation distances sufficient to prevent cross-pollination of production seed plants with seed shattering forage type wild sorghum plants and comprehensive crop inspection and rogueing to remove plants that would or might produce contaminated seed.[118]
[335] Second, the plaintiffs allege that the defendant failed to conduct a grow out of the contaminated MR43 seed before it was supplied to growers.[119]
[336] Third, the plaintiffs allege that the defendant failed to undertake or cause to be undertaken any scientific testing of the contaminated MR43 seed to determine whether it contained shattercane seed.[120]
[337] Fourth, the plaintiffs allege that the defendant failed in or from January 2011 to warn the plaintiffs and growers who had planted the contaminated MR43 seed that any shattercane plants needed to be removed before they dropped seed.[121]
[198]
Breach of duty - isolation distances and rogueing
[199]
[338] It is not in dispute that the relevant 2010/2011 summer season MR43 batches were contaminated with seed from an off-type plant, although the precise classification of that plant and the extent of the contamination were disputed questions.
[339] The precise source of the contamination was also disputed. Given that the MR43 seed produced for the 2010/2011 summer season was a blend of seed produced in 2009 and 2010, either or both of those sources might have been contaminated. However, although there were a few reports of off-type plant occurrences in another grain sorghum product sold by the defendant in the 2009/2010 summer season, there was no wide-spread off-type plant problem that occurred in the MR43 seed for that year. So, the more likely inference is that the contamination occurred in the 2010 production of seed for the 2010/2011 summer season MR43. That seed was produced by Cavaso Farming. It must be kept in mind that, assuming there was no external source of contamination of the 2010 seed produced by Cavaso Farming after harvest, the relevant hypothesis is that the Cavaso Farming seed production crop included plants that were of the off-type or were fertilised by pollen from an off-type plant that resulted in contaminated seed in the relevant 2010 MR43 batches.
[340] The evidence suggested that there might possibly have been two causes or sources of those off-type plants: first, that the female parent seed produced in 2002 numbered 71175 was itself contaminated; second that there was an outside pollen source from an off-type plant that fertilized some of the 2010 Cavaso Farming production crop.
[341] One of the expert witnesses, Peter Smith, favoured the 2002 female parent seed contamination theory. Another expert witness, Jim McDonald, favoured the outside pollen source theory. But it is unnecessary to resolve that difference of opinion.
[342] In either case, the hypothesis continues that fertile off-type plants growing in the 2010 Cavaso Farming production crop were able to contaminate the 2010/2011 summer season MR43 seed production because those plants were not rogued during the process of growing the Cavaso Farming production crop. Surprisingly, perhaps, the evidence did not canvass the mechanism of contamination on this hypothesis in much detail. Logic suggests that fertile off-type plants at some distance away could have pollenated plants in the female A line in the crossing field and the outcross seed was thereby produced. It was also possible that seed from off-type plants might have got into the field by some method (one suggestion was by being carried there in irrigation water) and the off-type plants from that seed produced further contaminated seed.
[200]
[347] As previously mentioned, the defendant entered into a contract in writing with Cavaso Farming for the production of seed that was destined to become the 2010/2011 summer season MR43. It provided for Cavaso Farming to plant the defendant's planting seed to produce resulting seed that would become complying production seed on land described as Paddock G1 of Woodlands Farm in an area of 38 hectares. Although the contract contained detailed provisions regulating the growing conditions to be provided by Cavaso Farming, cl 10 provided for the defendant to "carry out rogueing of the crop for genetic off-types."
[348] There are no records available of the rogueing, if any, that was carried out for the Cavaso Farming production crop because a flood some years later destroyed any relevant records. When those records did exist, Mr Croker asked to see them and may have done so.
[349] On 16 April 2012, he prepared the draft staff update document stating:
[201]
"So how did we end up with an off-type? It is a result of an oversight by the production team to not rogue out tall grassy offtypes from the crossing block pre flowering on (sic) the belief that they were sterile. This is outside of our standard procedures which are now being vigorously enforced, audited and combined with a growout to ensure we have confidence moving forward."
[202]
[350] There is no more likely explanation of what actually happened on the evidence. None was put forward by the defendant in evidence.
[351] Mr Toscan had no specific recollection of the rogueing carried out in early 2010. He said that during all years, employees of the defendant conducted regular inspections, with weekly visits at a minimum, and reported any relevant issues to him on at least a weekly basis. The same employees worked for the defendant over the relevant years, being Peter Trevorrow and Matthew Ginns, and possibly Luke Mackay. He did not recall any particular rogueing problem at any time. He was generally suspicious of any weeds. If something looked suspicious he would contact the defendant's staff. He has no recollection of any time when Cavaso Farming experienced problems from an off-type sorghum plant with a shattering head.
[352] Mr Croker's evidence was that the defendant had employees on staff whose duties included inspecting the growing Cavaso Farming production crop from time to time and organising and overseeing contract workers who would be employed and deployed as necessary to carry out rogueing. None of those staff or contract workers was called to give evidence. Accordingly, there was no evidence that the defendant followed its own procedures, except for Mr Toscan's indirect evidence.
[353] In my view, the inference that follows is that the rogueing of the early 2010 Cavaso Farming production was not carried out carefully enough to prevent the contamination of the 2010/2011 summer season MR43 seed that did occur. Even though there is an absence of specific evidence of failure by the defendant's staff to follow the rogueing protocols provided for in the Seed Production Manual, I find that the better inference to draw on the whole of the evidence is that there was a failure to exercise a reasonable standard of care by the defendant in rogueing the early 2010 Cavaso Farming seed production crop.
[354] As previously stated, it is unnecessary and ultimately a distraction to attempt to ascertain whether the source of the contamination was in turn the planting seed from the 2002 production of the female line of basic seed by the defendant or from an outside pollen source. There was some exploration of the isolation distances that applied to the early 2010 Cavaso Farming seed production crop but it did not reveal any clear or obvious error in the required or utilised distances and need not be discussed further. There was also some evidence as to the lack of proper production records and as to the quality of a batch of the 2002 female line of basic seed. But, in the end, the suggestions of a lack of care in either respect were not established by persuasive proof as to the more likely cause of the off-type plants in the early 2010 Cavaso Farming seed production crop.
[203]
[355] A "grow out" is an expression that refers to planting and growing a sample of seed from a production batch to assess whether, inter alia, the batch is contaminated with off-type or weed seed. It is an accepted procedure that may be undertaken to test seed intended for commercial sale for agriculture.
[356] Until 2006, the defendant conducted grow outs of samples of the sorghum seed it produced for commercial sale as part of its usual business practices.
[357] From 2006, the defendant discontinued that practice.
[358] After the 2010/2011 and 2011/2012 summer seasons, which are the subject of this case, the defendant reintroduced the practice of conducting grow outs of samples of the sorghum seed it produced for commercial sale, including MR43 seed.
[359] On 4 February 2011, Mr Croker sent an email to Mr Supple and others setting out the steps agreed to be taken in the light of the potential contamination issue as at that time stating, inter alia, "[g]row out all MIA grower lines during winter in a location that is easily accessible..." The change in practice is evidenced by the email sent by Mr Kaundinya on 28 May 2013, as follows:
[204]
"They have not been conducting Grow Outs for a few years. Apparent reason is to save costs. The same is the reason for the reduction in the production team size. Both of these are being set right now with the introduction of Grow Outs and with the build-up of the full team. The team has to learn that compromising on quality process is not intended in any cost reduction programs."
[205]
[360] The sample size now used by the defendant for a grow out is 30,000 seeds, which covers between half and one hectare in area. That gives a high probability of detecting a contaminant off-type seed. The cost of a grow out is about $50,000.
[361] The defendant alleges in the defence that no reasonable system of grow outs would have detected the subject off-type plants in the contaminated MR43 production seed and that under a reasonable system of grow outs, the hypothetical grow out would not have been fully completed before the contaminated MR43 seed was sold.[122]
[362] Two of the defendant's witnesses, in particular, dealt with this subject. Mr Croker, who must be accepted as well experienced in all the aspects of the business, said in his statement that the defendant now conduct grow outs of, inter alia, commercial seed. Grow outs of commercial seed produced in the MIA, where the Cavaso Farm is located, are done in the Ord River region, "contra season", meaning in the winter following the summer season of production of the commercial seed.
[363] The defendant now conducts grow outs by arranging for them to be planted in Northern Australia where temperature conditions in winter are appropriate to grow a sorghum crop in the months from April to August.
[364] The date of planting of grow outs in the Ord River region turns on the harvest dates in the MIA. The seed arrives in Kununurra in late April or early May or thereafter and is planted as it comes in. If the seed does not require observation to maturity, the finalised results are known prior to sale of the next summer season's seed product in August of that year. Mr Croker's statement emphasises the difficulties that may be experienced that may cause delay in the availability of information about the grow out before sale of the relevant year's seed production. His oral evidence was given along the same lines.
[365] In my view, that evidence sought to maximise the difficulties. The fact is that grow outs are now conducted each year. Whether or not there may be a difficulty in one year about the timeliness of the information so derived, does not mean that grow outs are not useful, generally speaking. No evidence suggested that timeliness would have been a problem in early 2010, because of seasonal factors. The problem in early 2010 was that in 2006 the practice of conducting a grow out of commercial seed produced in the MIA in the Ord River region, contra season, as a precaution or test of the quality of the seed produced for the next summer season was abandoned, as not being necessary. It was after the events the subject of this case, , that the practice and precaution were re-introduced.
[206]
[369] Because of those conclusions, it is strictly speaking unnecessary to consider the other allegations of breach of the standard of care. But, in case of appeal, it is appropriate to do so.
[370] The defendant undertook two forms of scientific testing of MR43. First, during the production process of the seed, it tested for germination, vigour, moisture content and purity. Second, the seed produced for commercial sale was further tested by electrophoresis of a sample to assess genetic and varietal purity. Electrophoresis can detect plant variety and whether the seed produced has expected male and female markers.
[371] None of the witnesses called by the plaintiffs or the defendant identified any scientific testing that could or should have been undertaken to ascertain whether MR43 contained seeds for other off-type sorghum plants. It was not in dispute that a visual purity test would not disclose any contaminant introduced through the female parent seed. Accordingly, it was irrelevant that the sample size of the seeds checked for visual impurity was small.
[372] The plaintiff opened that electrophoresis technology predated DNA technology and there was evidence that no DNA testing was undertaken on the seeds. But there was no evidence that DNA testing was available at the relevant time or that it was unreasonable not to have carried it out. Although there was some evidence that electrophoresis could show the existence of an impurity in tested seed,[126] there was no evidence it would detect differences in the seeds for the off-type plants that constituted the contamination in the present case. The electrophoresis testing that was conducted did not detect any relevant impurity.
[373] No other evidence was led in support of this allegation as to any scientific testing that could have been carried out but was not carried out that would have avoided the risk of injury to the plaintiffs. The plaintiffs have not proved that the defendant was negligent in this respect.
[207]
Breach of duty - failure to warn from January 2011
[208]
[374] From mid-December 2010, employees of the defendant became aware that there were off-type plants appearing in crops grown from the contaminated MR43 seed.
[375] On 29 November 2010, Mr Philp and Mr Short visited Bill Yates' property about his concern over "talls" that were growing in his crop and took samples. They observed similar talls in two other properties on that day.
[376] On 10 December 2010, Mr Needham sent an email to Mr Croker and others about the state of affairs at that date. Two batches of 2010/2011 summer season MR43 seed had been identified as the source of potential contamination. Analysis had been carried out on the retained seed samples of those batches and some leaf samples collected from Goondiwindi. DNA testing of the leaf samples confirmed that they were leaves of MR43 derived plants. Seed tests showed a potential contamination of .03 percent to .1 percent that was "considerabl[y] less than the observed occurrence of talls in the field... [of] up to 5 percent".
[377] On 10 December 2010, the defendant submitted a botanical specimen of the off-type plants to the Queensland Herbarium.
[378] On 13 December 2010, Ms Crawford and Mr Smith attended the property of Lindsay and Jenny Holmes and observed off-types in a paddock that had the appearance of tall mutants.
[379] On 13 December 2010, Ms Crawford sent an email to Mr Croker and others setting out a draft statement intended for territory managers on the issue, stating that the "talls" observed were "tall mutants" rather than other "outcross types" indicating that they were "true to type" MR43 tall mutants.
[380] On 14 December 2010, Ms Crawford commenced preparation of the paper entitled "Tall Mutants in Grain Sorghum", referring to the larger than normal amount of "talls" and stating that the document was put together to assist agronomists and farmers to understand the process of mutation that is the cause of tall plants. The thrust of the document was that the mutation was not an off-type and was no cause for concern.
[381] On 16 December 2010, Ms Crawford sent an email to a number of the defendant's staff attaching the document and other papers.
[382] On 17 December 2010, the Queensland Herbarium wrote to the defendant stating the specimen received "has been confirmed as , Sorghum ssp, Forage sorghum" and identified an article by BK Simon, "Naturalised Foder Sorghums in Queensland and their Role in Shattering in Grain Sorghum", as a useful reference.
[209]
"- Grassy sorghum off-types/outcross[e]s have a low potential to become problem crop weeds
[210]
- Control measures are the same as for all annual grass[e]s and volunteer grain sorghum
[211]
- Grassy off-types have significantly less weedy potential than Johnson grass
[212]
- Seed off these are not toxic and not declared weed seeds."
[213]
[400] Again, the overall message conveyed was optimistic. It was not stated that all current crops needed to be rogued as soon as possible.
[401] The document recorded that "[s]ome fields this season have increased frequency of this outcross; to .001 percent". That level was lower than the frequencies stated in some of the defendant's employees' internal documents to one another and was not supported by any clear documentary record of recorded frequencies produced at trial.
[402] Another notable feature was a statement that "the seed of these offtypes is generally low in fertility and are susceptible to S-Metolachlor formulations." No clear basis for that statement was shown in the evidence at trial and it does not appear to have been consistent with some of the plaintiffs' witnesses' subsequent experiences.
[403] On 23 February 2011, Mr Croker sent an email to Mr Needham and Ms Crawford requesting information as to the grower lines that were involved. On the same day, Mr Needham responded that it looked like Cavaso's productions from 2009 and 2010, which were mixed in the impugned batches, was the source.
[404] In March 2011, Mr Croker decided to recall all remaining stocks of 2010/2011 summer season MR43.
[405] On 1 March 2011, Liam Anderson sent an email to Mr McCumstie, attaching a copy of the Identification and Management for the purpose of printing in Gunnedah for use at an upcoming industry field day with growers in that area. Mr McCumstie did not in fact use the document on that day but subsequently distributed it to growers with whom he was dealing over the MR43 off-types.
[406] On 4 March 2011, Mr Needham sent an email to Ms Crawford and others referring to some retesting of off-type samples and stating that seeds from the tall heads "were the result of contaminated pollen onto the female in the production block".
[407] On 7 March 2011, Mr Needham sent an email to Mr Croker and others confirming the implication of the 2010 Cavaso line and that the "actual observed percentages of contamination vary from zero to 1 percent or more".
[408] On 11 March 2011, the Queensland Herbarium sent a letter to Long Island Pastoral Company Pty Ltd, a grower in the Western Darling Downs, stating that two samples of botanical material received on 23 February 2011 had been identified as " Forage sorghum, shattercane." On 14 March 2011, the grower sent a copy of the letter to Ms Crawford.
[214]
[412] I infer, in the absence of better evidence, that a failure to warn individual plaintiffs or sample group members to remove the off-type plants in the field by rogueing up to approximately mid-March 2011 (or later for Mallonland and Belandi) may have been causally relevant, in the sense that if warned of the risk or need to remove the plants the plaintiffs or sample group members might have done so successfully to some extent.
[413] However, there is no broad generalisation as to the extent of that loss that can safely be drawn beyond that conclusion, because of a number of factors. One is that it seems unexceptionable that once the heads of the off-type plants were sufficiently mature, the opportunity to rogue successfully was reduced significantly, because the seed would shatter in the process of rogueing. Another is that there is no set period when it could be said that maturity would be reached. An expert witness retained by the defendant, Jim McDonald, opined that the average seed on the average head would shatter between 125 and 134 days for a summer season planting in a typical year in Southern Queensland or New South Wales, with seed shattering commencing two to four days before that and ending two to four days later.
[414] Was it a breach of any duty of care for the defendants to fail to warn the individual plaintiffs or sample group members? It is significant that at 4 February 2011, Mr Croker instructed the defendant's staff that the MR43 commercial seed production crop for the 2011/2012 summer season then being grown was to be rogued as soon as possible. That was in the context that, as Mr Philp recalled, he attended a meeting with Mr Woods and Mr Short shortly after 30 January 2011 and that it was at the time of this meeting that it became apparent that the off-type plants growing in amongst the MR43 had a propensity to shatter and drop seed, based on what was being said by growers.
[415] However, neither the PowerPoint or slide presentation put forward at Goondiwindi and Moree on 15 February 2011, nor the 18 February 2011 version of the Identification and Management Document stated to growers that they should rogue any existing crop of MR43 as soon as possible, even though that was what the defendant was doing for its own production crop.
[416] The plaintiffs submit that the letter from the Queensland Herbarium to the defendant dated 17 December 2010, stating the specimen received "has been confirmed as , Sorghum ssp, Forage sorghum" and identifying the article by BK Simon, "Naturalised Sorghums in Queensland and their Role in Shattering in Grain Sorghum", as a useful reference, was not passed on to growers at a time when the crops were still likely to be immature.
[215]
[421] The plaintiffs allege a complex structure of causes of action for misleading or deceptive conduct in contravention of either s 52 of the Trade Practices Act1974 (Cth) ("TPA") for conduct before 1 January 2011 or s 18 of the Australian Consumer Law ("ACL") for conduct on or after that date.
[422] The causes of action are divided into two parts. The first part alleges a series of non-disclosures described as remaining silent as to various matters by the defendant that was misleading or deceptive as to:
[216]
(a) the possibility of MR43 seed being contaminated with shattercane or another off-type contaminant; and
[217]
(b) the need to prevent any shattercane or off-type plants from maturing and dropping seed in early 2011.
[218]
[423] The second part alleges a series of eleven representations, defined variously as the "Representations", the "Course of Conduct" and the "Eradication Representations". These representations were alleged to amount to misleading or deceptive conduct as to the existence of shattercane in MR43 as:
[219]
(a) the MR43 seed was in fact contaminated with shattercane which has a deleterious effect on the production of sorghum;
[220]
(b) the MR43 sold in the bags contained at least .1 percent of shattercane;
[221]
(c) the label did not state or otherwise mention that the bags of MR43 would also contain shattercane;
[222]
(d) the MR43 seed had not been tested or properly tested by the defendant to ensure that it did not contain shattercane and was safe for growers to use for the purpose of commercial sorghum cropping;
[223]
(e) the MR43 seed would in fact cause, or was likely to cause, damage due to the presence of shattercane or similar off-type seed; and
[224]
(f) it induced an error with regard to the quality, nature and composition of MR43.
[225]
[424] However, the plaintiffs' opening identified the misleading and deceptive conduct claim as being based on two misrepresented facts. The first was that the seed was represented as being at least 99 percent pure grain sorghum MR43 seed.
[425] The second was that the defendant remained silent at the time the contaminated MR43 seed was sold as to the possibility, which was known to the defendant, that it was contaminated with shattercane and it may not have the characteristics that growers were familiar with from their previous experiences with MR43.
[426] The plaintiffs' written submissions somewhat differently submitted that it relies upon four key allegations of misleading or deceptive conduct ("key allegations"):
[226]
(a) first, that the defendant was silent with regard to the potential that the 2010/2011 summer season MR43 seed was or might have been contaminated and may not be safe to use;
[227]
(b) second, that by the information contained on the label the defendant represented to the plaintiffs and group members that the seed contained no more than .1 percent of other seed species and did not contain any other seed which would compete against the sorghum seed or otherwise harm or be detrimental to the continued use of the land for the commercial cultivation of sorghum and other crops;
[228]
(c) third, that by virtue of the plaintiffs' previous use of the MR43 and the defendant's silence in regard to the sale of the MR43 not having the same characteristics as the previous years, the defendant represented that the 2010 MR43 seed would have the same characteristics as the previous MR43 seed produced and distributed by the defendant and was safe to use; and
[229]
(d) fourth, by remaining silent with regard to the need for the plaintiffs and group members to eradicate the shattercane before it dropped seed the defendant further misled the plaintiffs and group members.
[230]
[427] This way of putting the case rolled a number of discrete allegations in the pleading into groups for the purpose of deciding the case. But it is still necessary to consider some of the specific factual allegations that form parts of the four key allegations separately.
[231]
Silence that the 2010/2011 summer season MR43 seed was or might have been contaminated and may not be safe to use
[232]
[428] The first of the plaintiffs' four key allegations is based on allegations that prior to sale of the contaminated MR43 the defendant knew a large number of facts.[128] For present purposes, attention may be focussed on three of them.[129]
[429] It is alleged that the defendant knew by no later than 2008 that there had been the appearance of a tall, open-headed shattering grassy off-type plant or plants present in sorghum grown from MR43.[130] It is further alleged the defendant knew by at least 2009 that there had been the appearance of off-types of sorghum with shattering characteristics in the MR Buster, MR Striker and MR43 lines of sorghum produced and sold by the defendant,[131] and that the defendant knew by 2009 that an off-type of sorghum with shattering characteristics had been identified in three varieties of commercial sorghum that it produced and sold, being MR Buster, MR Striker and MR43.[132] Each of those allegations is supported by further allegations of facts going to the alleged knowledge that are not necessary to set out in these reasons.
[430] It is denied that, by no later than 2008, there had been the appearance of tall open-headed shattering grassy off-type plants in sorghum crops grown from MR43,[133] but admitted that the defendant knew in 2009 that sorghum off-types had been identified in three varieties of commercial grain sorghum it produced and sold, namely MR Buster, MR Striker and MR43. The MR Buster was grown by Cavaso Farming in the MIA, but the defendant says that none of the relevant off-types appeared in the 2009/2010 summer season, that the off-types present in the 2008/2009 summer season crop did not cause or contribute to any contamination of the MR43 produced for the 2010/2011 summer season and the appearance of the off-types in 2009 was not a predictor of the MR43 seed produced for the 2010/2011 summer season.[134]
[431] It is admitted that the defendant knew in 2009 that an off-type sorghum had been identified in three varieties of commercial grain sorghum, namely MR Buster, MR Striker and MR43, but denied that the defendant knew there was a need for growers to manage any problem before the 2010/2011 summer season off-type plants in MR43 germinated, matured and dropped seed, or that if a grower was a back to back sorghum grower, they were likely to have greater difficulty in controlling the spread of the off-type should they plant a back to back sorghum crop.
[233]
[444] The bags of contaminated MR43 bore a label branded as "Pacific Seeds". The label stated, relevantly:
[234]
A Seed Analysis Certificate is available on Request..."[136]
[235]
[445] The plaintiffs allege that by the information contained on the label the defendant represented to the plaintiffs that the seed:
[236]
(a) was grain sorghum MR43 seed which had been produced by the defendant;
[237]
(b) was at least 99 percent pure grain sorghum MR43 seed;
[238]
(c) contained no more than .1 percent of other seed species;
[239]
(f) did not contain any other seed which would either:
[240]
(i) compete against the sorghum seed and thereby reduce the commercial output of sorghum;
[241]
(ii) harm or otherwise adversely affect or be detrimental to the continued use for commercial cultivation of the land on which the seed was planted;
[242]
(g) had been the subject of expert testing which had been undertaken to ensure that the information contained on the label was correct and accurate; and
[243]
(h) had been the subject of expert testing to ensure that the seed was safe to be used for the purpose of commercial sorghum cropping.
[244]
[446] Further, the plaintiffs allege that the defendant represented to the plaintiffs and group members who used the seed that the contaminated MR43 seed would have the same characteristics as previous MR43 seed produced and distributed by the defendant and was safe to use.[137]
[447] In effect, the plaintiffs allege that the representations were misleading or deceptive conduct because:
[245]
(a) the MR43 seed was contaminated with shattercane seed;
[246]
(b) the bags contained at least .1 percent shattercane seed;
[247]
(c) the label did not disclose that the bags would contain shattercane seed;
[248]
(e) the MR43 was likely to cause damage due to the presence of shattercane or similar off-type seed; and
[249]
(f) they induced error as to the likely quality, nature and composition of MR43 seed. [138]
[250]
Representation - at least 99 percent pure grain sorghum MR43 seed
[251]
[448] There is no dispute that the defendant represented by the label that the bag contained at least 99 percent pure grain sorghum MR43 seed.
[449] However, although the plaintiffs submitted that the seed was not at least 99 percent pure grain sorghum MR43 seed, the impurity alleged in the statement of claim is confined on the evidence to there being contaminating off-type plant seed. Accordingly, it is unnecessary to consider this representation further than to the extent that the same factual material is considered in the next section of these reasons.
[252]
Representation - no more than .1 percent of other seed species
[253]
[450] The plaintiffs submitted that, at best, the contaminated MR43 seed was about 95 percent pure. The plaintiffs relied on two evidentiary sources for that conclusion of fact: one was Mr Kaundinya's email previously mentioned; the other comprised three emails from Matthew Needham, the defendant's manager of quality control, where Mr Needham opined that the level of contaminant in at least three of the relevant batches of 2010 MR43 was greater than 1 percent.
[451] On 10 December 2010, Mr Needham sent an email to Mr Croker and others as to testing of two of the relevant batches. He stated that electrophoresis tests had been carried out on seeds from each line and that analysis of some leaf samples had also been conducted. The results gave a "potential contamination range of .03 percent to 0.1 percent" that was "considerabl[y] less than the observed occurrence of talls in the growers paddocks" which was also stated as a "frequency (up to 5 percent) observed in the paddock." However, the source of that information was not identified. Importantly, as well, the leaf tests showed no genetic difference between the "talls" sampled and regular MR43 using microsatellite markers.
[452] On 22 February 2011, Mr Needham sent an email to Ms Crawford, Mr Supple and Mr Croker that included a table with a column that identified a "subjective score" for the "contamination level" of three of the relevant batch numbers of MR43 as "greater than 1 percent". The source of that information was not identified.
[453] On 7 March 2011, Mr Needham sent an email to Mr Croker and Ms Crawford that stated that the "actual observed percentages of contamination vary from zero to one percent or more." The source of that information was not identified.
[454] There was no direct evidence to support a finding that the number of seeds of the off-type plant in any of the bags of contaminated MR43 exceeded .1 percent of the total number of seeds in the bag, so it is unnecessary to consider the actual numbers of seeds in the bags further. Instead, the allegation that the percentage of off-type plant seeds exceeded the represented "maximum other seeds: .1 percent" was supported by evidence of the number of off-type plants growing in the planted fields of MR43 in the 2010/2011 summer season in comparison with the true to type MR43 plants, discounting for true to type "talls". For present purposes it is not necessary to distinguish between .1 percent by weight and .1 percent by number of seeds, although the regulatory context required that the percentage be specified by weight.
[254]
Representations - did not contain shattercane, free of any off-type contaminant and did not contain any other competitive or harmful seed
[255]
[460] These alleged misleading or deceptive representations were simplified by the second of the key allegations identified by the plaintiffs, as that the 2010 MR43 seed did not contain any other seed which would compete against the sorghum seed or would otherwise harm or be detrimental to the continued use of the land for the commercial cultivation of sorghum and other crops.
[461] First, there was no express statement by the defendant as to any of these alleged representations. If any of them was made, it was done impliedly. Second, the actual express representations as to the contents of the bags of seed were as set out above. They included statements as to the number of seeds in the bag, the treatment applied to the seed, the date on which it was packaged, the minimum germination rate, minimum purity, maximum other seeds, maximum inert matter, that a seed analysis certificate was available on request and that the seed was a product of Australia. Third, the bag terms stated, as set out previously, that except to the extent of any express representations it remained the acquirer's responsibility to satisfy itself that the product in the bag was fit for its intended use and all representations were excluded to the extent permitted by law.
[462] In my view, the label did not convey and the defendant did not represent that the 2010/2011 summer season MR43 seed did not contain any other seed which would compete against the sorghum seed or would otherwise harm or be detrimental to the continued use of the land for the commercial cultivation of sorghum and other crops.
[256]
Representation - same characteristics as previous MR43 seed and safe to use
[257]
[463] As set out in the third of the plaintiffs' key allegations of misleading or deceptive conduct the plaintiffs allege that the defendant represented the contaminated MR43 seed would have the same characteristics as the previous MR43 seed and was safe to use.
[464] The representation is said to be implied from the two facts of the plaintiffs' previous use of MR43 and the defendant's silence "in regard to the sale of the 2010 MR43 not having the same characteristics as previous years."
[465] The first alleged fact requires some analysis. The defendant did not sell or distribute MR43 to growers who had purchased the product in prior years, as such. There was no direct contractual relationship between the defendant and either of the plaintiffs at the time of the sale of the 2010/2011 summer season MR43. In a general sense, it might be inferred that the defendant was aware, at the time of producing, packing and distributing the 2010/2011 summer season MR43 that growers who had purchased that seed product in prior years were reasonably likely to buy it in the 2010/2011 summer season. But the plaintiffs were in no closer relationship to the defendant than that.
[466] The second fact is an allegation of silence or non-disclosure. The plaintiffs submit that because the plaintiffs and group members who acquired the contaminated MR43 had used MR43 in prior years without variability in the seed quality other than germination rates, they expected it to be a high yielding crop seed with the same characteristics as prior years. Again, this point requires close consideration. There was no question that the contaminated MR43 did not produce a high yielding sorghum crop. It did. So, the disappointed expectation was not that, but that the 2010/2011 summer season MR43 would have the "same characteristics", in the sense that it would be as free from weeds as previous years' MR43 seed. It can also be seen that the relevant alleged silence must be as to the contaminated MR43 not being as free from weeds as prior years' seeds.
[467] Once that point is reached, it can be seen how the relevant alleged silence intersects with the positive express representations made by the defendant as to the minimum purity and the maximum other seeds in the bags.
[468] Nevertheless, the plaintiffs submit that the circumstances gave rise to a reasonable expectation that if the characteristics of the 2010/2011 summer season MR43 were different that would be drawn to their attention and the failure to do so resulted in an implied representation that the seed would have the same characteristics and that was misleading or deceptive.
[258]
Silence after January 2011 with knowledge of likely contamination
[259]
[472] The plaintiffs allege that after January 2011, by which time the defendant knew that the contaminated MR43 seed was contaminated or was likely contaminated with shattercane, the defendant remained silent as to the need to eradicate any emerging off-type plants before they matured and dropped seed.[141] The plaintiffs further allege that by silence the defendant represented that it was safe to allow the off-type plants to mature in the summer of 2010/2011 and be dealt with in accordance with usual farming practices.[142] The plaintiffs allege that was misleading or deceptive conduct.[143]
[473] The plaintiffs opened that the defendant became aware in about December 2010 and January 2011, as the plants germinated from the contaminated MR43 seed were growing, that off-type plants were presenting themselves and it was misleading or deceptive for the defendant to remain silent as the crops grew in the plaintiffs' fields and presented the problem of off-type plants. At that time, the plaintiffs submitted in their opening, the plaintiffs could have treated their entire crops with herbicides, that is destroyed the whole crop, and thereby largely controlled the shattercane problem before it became established.[144]
[474] As I have found above, the defendant's managers were not aware in December 2010 that the off-type plants growing in the season's crops of MR43 were of a shattering variety. That awareness occurred later, in my view by the end of January 2011, but probably not long before then.
[475] Ultimately, I make no finding on the question whether the silence of the defendant from the end of January 2011 with regard to the need for the plaintiffs and group members to eradicate any emerging off-type plants before they matured and dropped seed was misleading or deceptive because, although the point is or may be open on the pleadings, the plaintiffs' written submissions did not contend for that finding (as opposed to from early January 2011).
[260]
Causation of loss or damage for failing to conduct a grow out
[261]
[476] Assuming (against my contrary finding) that the defendant owed a duty of care in negligence to the plaintiffs and group members and having regard to my finding that the defendant breached the standard of care in negligence for such a duty by failing to conduct a grow out, the next question is whether the breach of duty "caused particular harm"[145] to the plaintiffs and sample group members. The determination of that question for the tort of negligence requires the court to consider the elements of "factual causation" and "scope of liability".[146]
[477] Factual causation was considered by the High Court in Strong v Woolworths Ltd.[147] The majority held that the relevant section is a statutory statement of the "but for" test of causation,[148] that it requires proof that the defendant's negligence was a necessary condition of the occurrence of the particular harm, and that a necessary condition is a condition that must be present for the occurrence of the harm.[149] The majority continued:
[262]
"However, there may be more than one set of conditions necessary for the occurrence of particular harm and it follows that a defendant's negligent act or omission which is necessary to complete a set of conditions that are jointly sufficient to account for the occurrence of the harm will meet the test of factual causation within [the section]. In such a case, the defendant's conduct may be described as contributing to the occurrence of the harm."[150]
[263]
[478] The correct approach to the statutory causation question was re-emphasised by the High Court in Wallace v Kam[151] as follows:
[264]
"The distinction now drawn by [s 11(1)] between factual causation and scope of liability should not be obscured by judicial glosses. A determination in accordance with [s 11(1)(a)] that negligence was a necessary condition of the occurrence of harm is entirely factual, turning on proof by the plaintiff of relevant facts on the balance of probabilities in accordance with [s 12]. ...
[265]
'[T]he task involved in [s 11(1)(a)] is the elucidation of the factual connection between the negligence (the relevant breach of the relevant duty) and the occurrence of the particular harm. That task should not incorporate policy or value judgments, whether referred to as 'proximate cause' or whether dictated by a rule that the factual enquiry should be limited by the relationship between the scope of the risk and what occurred. Such considerations naturally fall within the scope of liability analysis in [s 11(1)(b)], if [s 11(1)(a)] is satisfied, or in [s 11(2)], if it is not.'[152] (footnotes omitted)
[266]
The determination of factual causation in accordance with [s 11(1)(a)] involves nothing more or less than the application of a "but for" test of causation. That is to say, a determination in accordance with [s 11(1)(a)] that negligence was a necessary condition of the occurrence of harm is nothing more or less than a determination on the balance of probabilities that the harm that in fact occurred would not have occurred absent the negligence." (footnotes omitted)
[267]
[479] In the present case, in my view, factual causation is proved by the plaintiffs in respect of the plaintiffs and the sample group members. In my view, had the defendant conducted a grow out of the contaminated MR43 seed after production of that seed in Northern Australia, it is more likely than not that the contamination would have been revealed and the defendant would not have supplied that seed into the market and would have recalled any of the relevant batches that may already have been sent to distributors before the plaintiffs or sample group members had planted that seed.
[268]
Causation of loss or damage for failing to rogue the Cavaso Farming production block
[269]
[480] As well, assuming (against my contrary finding) that the defendant owed a duty of care in negligence to the plaintiffs and group members and having regard to my finding that the defendant breached the standard of care in negligence for such a duty by failing to rogue the Cavaso Farming production block, in my view, it also follows that the plaintiffs and sample group members suffered loss or damage from that breach of duty, because had the rogueing been carried out with proper skill and care it is more likely than not that the contamination would not have occurred.
[270]
Causation of loss or damage suffered by misleading conduct that MR43 contained not more than .1 percent other seed
[271]
[481] Assuming (against my contrary finding) that the plaintiffs prove that the defendant contravened s 52 of the TPA by representing on the label that the bags of contaminated MR43 seed contained not more than .1 percent other seed, the next question is whether the plaintiffs or the sample group members suffered loss or damage by the contravention.
[482] The plaintiffs' and sample group members' witnesses generally gave evidence that had they been aware that the bags did or may contain shattercane seed they would not have purchased or planted the contaminated MR43 seed.
[483] However, that is not the precise question. The defendant made no express statement that there was no shattercane in the bags. It represented there was no more than .1 percent other seed (other than MR43 grain sorghum seed). That is the alleged misleading conduct. Accordingly, the question is whether the plaintiffs or sample group members would not have purchased or planted the contaminated MR43 seed if the defendant had not falsely represented that other seed was not more than .1 percent.
[484] There is no direct evidence on this question from the plaintiffs' witnesses. Accordingly, the question is whether it should be inferred that either the plaintiffs or group members would not have done so or whether the defendant's distributors would not have purchased the seed without the false representation.
[485] In my view it should be inferred that they would not have done so.
[272]
Causation of loss or damage because of failure to advise the plaintiffs to rogue from late January to mid-March 2011
[273]
[486] Alternatively, assuming (contrary to my decision to make no finding) that the plaintiffs prove that the defendant contravened s 18 of the ACL by not advising the plaintiffs or group members in or from the end of January 2011 that the contaminated MR43 contained or most likely contained off-type plants that needed to be removed before they dropped seed and the affected areas should be fallowed and sprayed for the following winter and summer to eradicate them, the next question is whether the plaintiffs or sample group members suffered loss or damage by or because of the contravention.
[487] In my view, it should be inferred that had the plaintiffs and sample group members been given that advice they would have followed it, if they could have done so, by rogueing in the later maturing stage 2010/2011 summer season crop and by fallowing the land in the summer of 2011/2012. It is more likely than not that some of the plaintiffs and group members who did those things would have suffered less loss or damage than the loss and damage they did suffer in the following seasons. It would be problematic to measure the extent of the difference as damages.
[274]
[488] The defendant alleges in the defence that the damage suffered by the plaintiffs and group members who owned or held an interest in land upon which the contaminated MR43 seed was planted was in the character of property damage, and that damage was suffered no later than when the seed was planted. Further, the defendant alleges that each of the plaintiffs and group members suffered more than negligible damage prior to 24 April 2011 because:
[275]
(a) the damage was suffered upon the grower's entry into or alternatively completion of or payment of price under the contract to purchase the contaminated MR43 seed before planting the 2010/2011 summer season sorghum crop, because the seed was worthless by reason of the contamination;
[276]
(b) alternatively, the damage was suffered on the planting or germination of the contaminant seeds;
[277]
(c) alternatively, the damage was suffered upon the off-type plants forming seed heads or upon such seed heads shattering (and seed dropping) prior to harvest of the 2010/2011 sorghum crop; and
[278]
(d) alternatively, the damage was suffered upon harvesting that caused the shattering of the seed head of the off-type plants. [153]
[279]
[489] Other variants of the same allegations do not need to be set out in these reasons.
[490] It is not in dispute that, for the alleged causes of action based in negligence, the relevant limitation provisions are s 10(1) of the Limitation of Actions Act1974 (Qld) ("LAA") for the plaintiffs and group members located on the Darling Downs and s 14(1) of the Limitation Act1969 (NSW) ("LA") for the group members located in the Liverpool Plains. Under those provisions, the limitation period is six years from the date on which the cause of action "arose" or "first accrues".
[491] Equally, it is not in dispute that for the alleged causes of action under s 82(1) of the TPA and s 236(1) of the ACL, the relevant limitation provisions are s 82(2) of the TPA and s 236(2) of the ACL, under which the relevant limitation period is six years after the day on which the cause of action "accrued".
[492] The alleged losses of each of the plaintiffs and group members are cash flow losses. On the cash outflow or expenditure side, they are additional expenses incurred in managing and eradicating the off-type plants that grew or grow in the affected areas generally comprising additional herbicide expenses and additional labour expenses for spraying herbicide or rogueing off-type plants. On the cash inflow or income side, they are losses of sales of sorghum seed that would have been produced by cropping the plaintiffs' and group members' cropping areas.
[493] The second plaintiff's and a number of the sample group members' pleaded losses are calculated by reference to the future increased cash outflows and decreased cash inflows using a period of 15 years from the 2011 calendar year when the relevant cropping areas were affected by seed dropped from the off-type plants.
[280]
"The various and complex economic relationships which are a feature of present day economic organisation suggest that loss may manifest itself in various forms, and it is for this reason that there may be occasions when it is necessary to identify precisely the interest which has been infringed."[157]
[281]
[502] In Commonwealth of Australia v Cornwell,[158] the High Court again considered the accrual of a cause of action in negligence for limitation purposes. The joint judgment observed:
[282]
"In Hawkins v Clayton, Gaudron J emphasised the importance for actions for negligence causing economic loss in identifying the interest said to be infringed, whether it be the value of property, the physical integrity of property, or the recoupment of moneys advanced."[159] (footnote omitted)
[283]
"Thereafter, in Wardley Australia Ltd v Western Australia, Mason CJ, Dawson, Gaudron and McHugh JJ observed:
[284]
'To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of under compensation or over compensation, the risk of the former being the greater.'
[285]
The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected. With economic loss, as with other forms of damage, there has to be some actual damage. Prospective loss is not enough.'"[160] (footnote omitted)
[286]
[504] The interest said to be infringed by the plaintiffs and group members is the financial interest in the lost cash flows which are alleged and claimed as damages. Accordingly, it is when the damage comprising the loss of those cash flows, which was not negligible, first occurred that the cause of action in negligence arose or first accrued, unless some other non-negligible loss was suffered earlier.
[505] As mentioned above, in Cornwell, the High Court referred to Wardley Australia Ltd v State of Western Australia.[161] In Wardley, the High Court considered when a cause of action under s 82(1) of the TPA accrued, within the meaning of s 82(2) of the TPA, for the purposes of a limitation defence. As already mentioned, the court referred to and applied the reasoning of Gaudron J from Hawkins v Clayton.[162]
[506] Subsequently, in Murphy v Overton Investments Pty Ltd,[163] the High Court returned to the question of when loss or damage is suffered within the meaning of s 82(2) of the TPA. The court observed:
[287]
"In Wardley Australia Ltd v Western Australia, a case about the application of s 82 of the Act, not s 87, a majority of the Court held that risk of loss is not itself a category of loss, and that, if a plaintiff enters a contract which exposes the plaintiff to a contingent loss or liability, that plaintiff 'sustains no actual damage until the contingency is fulfilled and the loss becomes actual'. Wardley illustrates that it is necessary to identify the detriment which is said to be the loss or damage which has occurred (or, when considering the application of s 87, has occurred or is likely to occur). In that case, the mere entry into obligations which might, but need not, have had detrimental consequences in the future was held not to have occasioned loss or damage to the party making the contract."[164] (footnotes omitted)
[288]
"It should not be assumed that the loss or damage which a person suffers as a result of a contravention of Pt V is necessarily singular. Nor should it be assumed that loss or damage is incurred either as a loss on capital account, or as a loss on revenue account which, if to be compensated by an award of damages, must be translated into a single capital sum. These assumptions find no support in the language of the relevant provisions."[165]
[289]
[508] In some categories of case, the law has struggled to determine when damage was first suffered for limitation purposes, in considering whether there was physical loss or economic loss. One example of that kind may be seen in negligence cases of latent defects in buildings or premises.
[509] At one stage, and in 1978 in Anns v Merton London Borough Council,[166] it was thought that such cases were cases of physical damage or loss first suffered when the fabric of the building was damaged or cracked. As late as 1985, Sutherland Shire Council v Heyman[167] proceeded on the footing that the majority thought the damage was physical damage or loss[168] rather than the alternative theory that it was economic loss.[169] However, by 1995, when Bryan was decided, it was accepted that the damage in such a case is economic loss.[170] The point of the difference in many cases is that damage for economic loss is suffered when the value of the affected thing is decreased by reason of the defect becoming known[171] or at least damage is manifest or discoverable.[172]
[510] In other kinds of case, it may be that the answer to the question of whether the loss is physical or economic is not clear. In a case like the present, it can be argued that the contamination of land of which a plaintiff is owner or lessor by the spread of weeds may be physical damage to the land. For example, in Williams v Network Rail Infrastructure Ltd[173] the spread of Japanese knotweed to a plaintiff's land was held to be damage for the purposes of the tort of nuisance, because the mere presence of its rhizomes imposes an immediate burden, although the fact of damage in nuisance is interference with the use or enjoyment of land.[174]
[511] The alternative argument is that the presence of a weed is not physical damage because the soil is not damaged, per se. For example, in Ranger Insurance Co v Globe Seed & Feed Company,[175] an infestation of noxious thistle from a contaminated grass seed mixture was held not to be damage to property for the purposes of an exclusion clause in an insurance policy, because:
[290]
"An infestation of weeds, by itself, does not damage anything. A weed is merely a plant that grows from a seed, like any other... the cost of removing weeds is not a loss that is a consequence of damage to the soil or any other property. It is merely the consequence of planting seeds that fail to conform to the variety specified. In that regard, a claim for losses that result from growing unwanted weeds is at least arguably the same as a claim for losses that result from growing unmarketable agricultural crops which has been held not to constitute 'property damage'."[176]
[291]
[512] In my view, on that reasoning, neither the planting of the contaminated MR43 seed that included the contaminant seed, nor the germination or subsequent growth of off-type plants, nor the dropping of seed by those plants either before or during harvest was physical loss or damage suffered by any of the plaintiffs or group members.
[513] In my view, for the same reasons as apply to the alleged causes of action for negligence, the alleged causes of action for damages under the TPA or the ACL did not accrue until after 24 April 2011.
[292]
[514] The plaintiffs and sample group members alleged damages are calculated as the difference between two scenarios. The first scenario measures the actual cash inflows and actual cash outflows attributable to the areas affected by the contaminated MR43 seed, that is, where it was planted. The second scenario measures the hypothetical cash inflows and cash outflows that would have been experienced if those areas had not been affected by the contaminated MR43 seed.
[515] An underlying assumption of calculating damages on that basis is that but for the negligence or misleading or deceptive conduct of the defendant the plaintiffs and group members would have wholly avoided the loss or damage suffered by planting the contaminated MR43.
[516] There is no scenario that measures the hypothetical cash inflows and outflows that would have been experienced if the areas planted with contaminated MR43 seed had been subjected to changed farm management practices from the end of January 2011 by rogueing followed by immediate fallowing of those areas so as to be able to spray herbicide to eradicate off-type plants.
[517] Accordingly, the evidence does not enable a finding to be made as to the quantum of the plaintiffs' or sample group members' damages caused by or suffered because of failing to advise that those management practices should be adopted in February 2011.
[518] The parties' cases on damages diverged in significant ways. There are a number of reasons for that. The plaintiffs' damages claims were presented on alternative bases. The first basis alleged individual losses for each of the plaintiffs and sample group members, based on particular assumptions and available information as to the actual crop revenues and expenses of operations, compared with a hypothetical or counter factual scenario based on what would have happened if the contaminated MR43 seed was not planted in the summer 2010/2011 season. In each case, the claim for damages alleged in the statement of claim resolved into three components, being a lost crop profit, increased costs (rogueing and herbicides) and diminution in value of the farming enterprise.
[519] Those claims are based on a number of disputed assumptions.
[520] The plaintiffs' calculations were made up to 31 December 2019, on the basis that claims for damages up until that date were and are to be treated as past losses. No information was presented as to the farming or financial performance of any of the plaintiffs or sample group members' farming operations for the 2019/2020 summer season. Accordingly, the evidence of actual performance was, generally speaking, limited until 2019.
[293]
(a) loss for the 2019 year is calculated as the average of the losses from 2012 to 2018; and
[294]
(b) loss for the future years assumes the same average continuing cashflow loss as for 2019, discounted by 10 percent for present receipt and contingencies.
[295]
[524] One underlying assumption for that methodology is that the plaintiffs and sample group members experienced lost grain sorghum crop income and increased expenses in 2019 and will continue to do so thereafter at the average rate of the 2012 to 2018 years. As to that:
[296]
(a) Mallonland did not experience losses in 2018 or thereafter as its properties had been sold;
[297]
(b) ME & JL Nitschke, through Mr Hemmings, left the relevant areas fallow in the 2017/2018 summer season and no off-type plants were seen. In the 2018/2019 summer season, sorghum was planted in the relevant areas in late December 2018. By the time of the trial no off-types were observed;
[298]
(c) Belandi through Mr Burns observed that a "significant" but unquantified number of off-type plants came up in the MCG paddock in the 2018/2019 summer season and that in the 2019/2020 summer season "it has come back again as described below", but there is no such description. At the time of the trial Mr Burns still believed the problem would continue;
[299]
(d) Lamipine, through Mr Ruhle, observed that despite best efforts the off-type plants had not been eradicated from its C4 paddock or K4 paddock, although rogueing prevented any plants dropping seed in the K4 paddock. There is no other information as to the quantity of remaining off-type plants in the 2018/2019 summer season;
[300]
(e) Coslinco through Mr Cook at 2019 had reduced the off-type plants so as to continue to plant sorghum but he considered it was still necessary to manage the off-type plants going forward, although no quantity of the remaining contamination is identified. At trial, there was no evidence of any off-type plants in the summer 2019/2020 crop;
[301]
(f) Morrice Farming through Mr Morrice has not planted a sorghum crop since the 2016/2017 summer season. One of the affected paddocks was sold in 2015. In the 2019/2020 summer season off-type plants came up again but there is no evidence as to their numbers or locations.
[302]
(g) Perkins Partnership through Mr Perkins, surprisingly, had worse numbers of off-type plants in the 2018/2019 summer season than in the immediately prior few years. This experience was inconsistent with other growers' experiences that the off-type plant numbers decreased over time, although they have proved exceptionally difficult to eradicate. There is no explanation for the difference, except that Mr Perkins postulated that the off-type plants in his case had delayed germination. But that does not explain the contrary experiences of other growers employing the same or similar management and eradication strategies and techniques.
[303]
[525] The last point serves to bring the plaintiffs' methodology of calculating the 2019 losses by averaging the 2012 to 2018 losses into focus. That methodology did not use the actual crop sales and expenses for the 2019 calendar year. By the time of the trial, there was no obvious reason why actual losses for the 2019 year could not have been calculated. Generally speaking, the evidence supported the inference that a year on year process of managing affected areas by rotating out of sorghum, spraying the affected areas with herbicide and rogueing off-type plants that grow reduced the "seed bank" of ungerminated off-type seeds in the soil over time, so that eventually the contamination should be eradicated. The plaintiffs' witnesses' evidence was broadly consistent with that process and expectation, although a number of them expressed ongoing fears about whether eradication would be achieved. However, the average of the 2012 to 2018 affected years' crop profit losses and increased expenses will notionally represent a time in the past, as the assumed conditions for assessment of the 2019 year. And using the calculated 2019 year's loss as the assumed cashflow loss for another five future years will represent the same point in the past as the expectation for the future. In principle, in my view, such an approach is unlikely to be the best representation of any losses for 2019 and future years.
[526] Having regard to those matters, in my view, there is no satisfactory evidence that the plaintiffs and other group members suffered or will suffer losses of significance after 2018. Two consequences follow: first, no losses for the 2019 year and following years based on the averaging methodology should be included in the damages assessment of lost crop profits and increased expenses; second, no damages should be allowed for a diminution of present value of a farming enterprise operated by any of the plaintiffs or group members as at or after 2018. The plaintiffs did not press any claim for loss of the last kind in final submissions.
[527] Another significant area of dispute consisted of the factual bases of farming operations for some of the plaintiffs and sample group members, in order to quantify lost crop profits and increased costs. The dispute further extended to assumptions used for the hypothetical alternative scenarios as to what would have occurred if the contaminated MR43 seed had not been planted.
[304]
"That is not to say that the failure to cross-examine in accordance with the rule means that the evidence led in contradiction of the evidence that should have been challenged, cannot be considered. It is a matter of weight for the court to take into account."[180]
[305]
[530] In cases where the evidence is exchanged in advance of trial, it can be said that the party whose factual or expert witnesses are contradicted may be put on notice by receiving their opponent's evidence before the trial. However, in the present case, the relevant statements by the plaintiffs and sample group members were for the most part exchanged well in advance of the final expert reports, some of which were only produced shortly before the trial. In the result, I approach the rejection of the evidence of the plaintiffs' witnesses or sample group members' witnesses as to factual matters with considerable caution.
[306]
[531] The first plaintiff claims lost crop profits commencing in the 2012 calendar year (presumably for the 2011/2012 summer season) and increased costs for the 2014/2015 (presumably summer) season and 2015/2016 (presumably summer) season by way of rogueing expenses. The amounts claimed for lost crop profit are as follows:
[307]
[532] The total of the first plaintiffs' claims are as follows:
[308]
[533] The evidence of those claimed losses is summarised as follows:
[309]
[534] The remaining differences lie in Mr McDougall expressing his own opinions as to the relevant planting areas, yields and crop production costs of the first plaintiff's crops in preference to the evidence of Mr Jenner and also using sale prices based on documents disclosed by the first plaintiff in preference to the prices stated in Mr Jenner's witness statement.
[535] The differences in planting areas are based on Mr McDougall's examination of satellite images at relevant times. For example, those images showed that 8 hectares of the 40 hectare Sugarloaf field was not planted to sorghum in the 2010/2011 summer season. The significance of that for the damages assessment is not clear, as no lost profit or increased expenses are claimed for that year. Second, because those images showed that none of the relevant areas was planted to sorghum or any other crop in February 2014, Mr McDougall rejected Mr Jenner's statement that the reason Mr Jenner decided not to plant sorghum in that season in the relevant areas was because of the off-type plants that had become apparent in the 2012/2013 summer season. In my view, this approach should not be accepted. It is not true expert opinion in the first place. Second, it should not be accepted when the defendant chose not to cross-examine Mr Jenner about his stated reason for not planting sorghum or any other crop in the 2013/2014 summer season in the affected areas.
[536] Further, Mr McDougall based his views on the opinion that the first plaintiff did not act reasonably in controlling the off-type plants, because Mr McDougall concluded that no rogueing was undertaken until 2014. Again, there is the difficulty that this point was not asked of Mr Jenner in cross-examination. As well, no failure by the first plaintiff to mitigate loss by not rogueing off-type plants before the 2014/2015 summer season is sufficiently alleged in the defence.[182]
[537] Lastly, as to the relevant yields, sale prices and production costs, the defendant chose not to cross-examine Mr Jenner about any of those matters. It is not acceptable in those circumstances to prefer the opinions of Mr McDougall as to the facts or assumptions that should be adopted for those matters for the calculation of the first plaintiff's losses over the contrary statements of Mr Jenner taken from his statement.
[538] The first plaintiff's damages should be assessed in the amount claimed for the relevant years being $185,708.
[310]
[539] The second plaintiff claims the following amounts for lost crop profits:
[311]
[540] The second plaintiff claims the following amounts for increased costs of rogueing:
[312]
[541] The total claimed for those past losses is as follows:
[313]
[542] The expert evidence of Mr Lytras and Mr McDougall agreed that the proved total of past losses, excluding 2019, was $114,278.
[543] The remaining difference is that the second plaintiff claims $16,771 for lost crop profit and $750 for increased rogueing costs for 2019, whereas the defendant allows nothing for 2019. Having regard to my earlier reasoning as to the proof of losses for the 2019 year, in my view nothing should be allowed for these amounts in the calculation of damages.
[544] The second plaintiff's damages should be assessed in the amount of $114,278.
[314]
[545] Belandi claims the following amounts as lost crop profits:
[315]
[546] Belandi claims the following amounts for increased costs of rogueing:
[316]
[547] Belandi's total past losses claimed are:
[317]
[548] The expert evidence of Mr Lytras and Mr McDougall agreed that past losses, excluding the 2019 year, were $452,553.
[549] The remaining difference is that Belandi claims $64,136 for lost crop profit for 2019, whereas the defendant allows nothing for 2019. Having regard to my earlier reasoning as to the proof of losses for the 2019 year, in my view nothing should be allowed for these amounts in the calculation of Belandi's damages.
[550] Belandi's damages should be assessed in the amount of $452,553.
[318]
[551] Lamipine claims the following amounts for lost crop profits:
[319]
[552] Lamipine claims the following amounts for increased expenses of rogueing:
[320]
[553] Lamipine's total past losses claimed are:
[321]
[554] Mr Lytras' assessment of Lamipine's claimed past losses was based on Mr Ruhle's statements and opined that the amount of those losses was $377,553, but that calculation was not altered to take account of Mr Ruhle's later statement that he would not have planted a barley crop in a relevant area in winter 2017.
[555] Mr McDougall's ultimate conclusions were that Lamipine's lost crop profit was either $179,143 or $134,063, depending on the hypothetical crop rotational scenario that is adopted. The difference between those amounts is represented by differences between Mr Ruhle's earlier statement that a barley crop would have been planted in winter 2017 as opposed to his second statement that the relevant area was left fallow, with a greater resulting loss.[183]
[556] Mr McDougall also utilised different bases for his calculation to those adopted by Mr Lytras, particularly as to yield and sale prices and some planting. For example, the planting records of 2018 showed a lower yield than the figures in Mr Ruhle's statement. There were also lower yields for other crops taken into account by Mr McDougall. And where Lamipine's sale documents differed from the sale prices set out in the statement, he has used the sale documents.
[557] As to the relevant yields, sale prices and planting, the defendant chose not to cross-examine Mr Ruhle about any of those matters. It is not acceptable in those circumstances to prefer the opinions of Mr McDougall as to the facts or assumptions that should be adopted for those matters for the calculation of Lamipine's losses over the contrary statements of Mr Ruhle taken from his statement.
[558] Lamipine's damages should be assessed based on Mr Ruhle's evidence as calculated by Mr Lytras, but with no allowance for the 2019 year. That amount is $329,506
[322]
[559] Coslinco claims the following amounts for lost crop profits:
[323]
[560] Coslinco's claim for increased costs of rogueing is nil. Accordingly, the total amount of its claim for past losses was $895,372.
[561] Mr Lytras' assessment of Coslinco's losses was based on the witness statement of Mr Cook. The statement also included evidence of eradication expenses being incurred. But no amount was calculated for increased expenses by Mr Lytras or Mr McDougall. On the basis of Mr Cook's statements, Mr Lytras finally assessed the total of Coslinco's past lost crop profits at $766,972, including $95,871 for 2019.
[562] Mr McDougall adopted different bases for his calculation, including a different assumption of yields, reduction of the profit because of a share farming agreement for one of the relevant areas and made other, less significant, adjustments. One of the most significant differences was the different assumptions used as to yield. Mr McDougall used alternative yields based on water use efficiency ("WUE") and on Lamipine's yields as a proxy instead of the yields stated by Mr Cook.
[563] Ultimately, the comparison of Mr Lytras and Mr McDougall's calculations as to Coslinco's losses was as follows:
[324]
[564] In my view, the WUE yield basis should not be used. First, it produces the counterintuitive outcome that Coslinco's inability to plant grain sorghum over the years from the 2012/2013 summer season to the 2018/2019 summer season as it would have done if there had been no contamination did not cause loss for Coslinco, contrary to the experience of the plaintiffs and other sample group members. Second, using the yield data from Lamipine as a comparator also highlights that counterintuitive outcome. Third, Mr Cook was not cross-examined as to the yields in his statements.
[565] It might have been useful to compare the McDougall calculation using the same yield assumptions as those made by Mr Lytras, so that the impact of the difference between the Coslinco yield data and the Lamipine data could be assessed. However, that information was not presented.
[566] Another significant change in the assumptions used by Mr McDougall for his calculations was that he took sale price data from sales documents disclosed by Coslinco and did not use Mr Cook's statements as to sale prices. In my view, Mr Cook's statements should not be rejected when he was not cross-examined as to that price information.
[567] Further, Mr McDougall's calculations proceeded on the basis that Coslinco's lost crop profit should be reduced because Coslinco had a share farming arrangement with another farmer for one of its relevant farming areas, named Jimalay. He assumed that the calculation should be made by reducing the tonnage that would have been available for sale by 25 percent. The plaintiffs submit that there was no cross-examination of Mr Cook about the effect of the share farming agreement and that no reduction should be made accordingly. However, in my view, as Mr Cook's statements referred to the share farming agreement, it should have been taken into account in the calculation of Coslinco's lost crop profits.
[568] Having regard to my earlier reasoning as to the proof of losses for the 2019 year, in my view, nothing should be allowed for that amount in the calculation of Coslinco's damages.
[569] In the result, in my view, Coslinco's damages should be assessed at $671,109 as calculated by Mr Lytras but to be reduced by decreasing the estimated tonnages for sale from Jimalay by 25 percent.
[325]
[570] Morrice Farming claims the following amounts for lost crop profit:
[326]
[571] Morrice Farming alleges it undertook additional rogueing, but makes no claim to any increased costs as such. Accordingly, the total amount of the past losses alleged was $2,203,174.
[572] Mr Lytras' reports as to Morrice Farming ultimately adopted a simplified approach of averaging the loss scenarios analysed by Mr McDougall, in the amount of $494,469 as representing the past losses, excluding 2019.
[573] Mr McDougall assessed Morrice Farming's past losses, excluding 2019, at $494,032, which is only marginally different from Mr Lytras' calculations up to that date.
[574] The remaining item in dispute is Mr Lytras' adoption of a further proportionate figure for 2019 of $38,825. Having regard to my earlier reasoning as to the proof of losses for the 2019 year, in my view nothing should be allowed for that amount in the calculation of Morrice Farming's damages.
[575] Morrice Farming's damages should be assessed in the amount of $494,469.
[327]
[576] The Perkins Partnership claims the following amounts for lost crop profits:
[328]
[577] The Perkins Partnership claims the following amounts for increased expenses for rogueing:
[329]
[578] The total past losses claimed were as follows:
[330]
[579] Mr Lytras and Mr McDougall agreed that the past crop profit losses were $199,881 and the increased costs were $10,500.
[580] Perkins Partnership's damages should be assessed in the amount of $210,381.
[331]
[581] The second alternative basis for the plaintiffs' claim for damages is a claim for assessment of the total amount of the damages for the plaintiffs and all represented group members (not just the sample group members) as follows:
[332]
[582] The assumptions on which that calculation are made include that a total of 33 New South Wales growers' losses are calculated from the New South Wales sample group members and other group information, on average, at $4,736.64 per hectare, whereas 70 Queensland growers' losses are calculated from the plaintiffs' and sample group members' and other group information, on average, at $2,815.21 per hectare. For both State groups, the period of the calculation of the total loss is over 15 years, that is starting in 2011 and ending at 2026, including 2019 as a year of past losses and 2020 to 2026 as future losses. As to area, the calculation is based on area information from 25 New South Wales growers' and 19 Queensland growers' information as to hectares planted, totalling 44 group members, extrapolated to 103 total group members.
[583] An alternative scenario, that is not pleaded as the alleged loss, substituted average calculations of loss on a per bag purchased or planted basis, for New South Wales growers and Queensland growers, using the plaintiffs' and sample group members' information and further information as to the number of bags of contaminated MR43 seed purchased or planted by 39 group members and extrapolating the loss per bag averages to the 103 group members by assuming an average number of bags purchased or planted.
(1) The court may do any 1 or more of the following in deciding a matter in a representative proceeding -
[334]
(f) award damages in an aggregate amount without stating amounts awarded in respect of individual group members;
[335]
(3) ... the court must not make an award of damages as mentioned in subsection (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members are entitled under the judgment." (emphasis added)
[336]
[585] The section does not authorise an award of damages that are not recoverable otherwise at common law or under statute,[184] or are proved. In some cases, the damages suffered by every group member will be the same, as in the case of a group of consumers all overcharged an illegal fee. But the damages suffered by any group member in the present case are not in the same amount as any other group member. The fact and quantum of damage in each group member's case is individual. It turns on the individual farming operations of the relevant grower. The use of the sample group members as a so-called "representative" sample does not alter that fact.
[586] It is not necessary in this case to decide whether aggregate damages can ever be awarded under the section in a case for damages in a representative proceeding involving operational lost crop profits or additional expenses or the like. Perhaps that can be done in some cases, if the range of variability in the data were limited in ways that enabled broad factual inferences to be drawn. In the present case, consideration of the data for the range of claims of the individual plaintiffs and sample group members leads me to the conclusion that no reasonably accurate assessment of the total amount can be made.
[587] Mr Lytras expressed the opinion that the sample size of the data of the plaintiffs and sample group members as to the areas planted with contaminated MR43 and the number of bags of contaminated MR43 purchased were sufficiently high percentages to be representative of the data as to the area planted by 44 growers and seed purchased by 39 growers but recognised that for the purposes of extrapolation to the larger total group of 103 members they represented less than 10 percent.
[588] The basis of his reasoning to reach those conclusions was not exposed in evidence. The acceptability of proof of a fact in a legal proceeding is not a matter of expert accounting opinion. Whether the proof is a reasonably accurate assessment of the total amount to which group members are entitled is also not a matter for expert accounting opinion.
[589] On this question it must be kept in mind that a judgment given in a representative proceeding binds both the parties and group members who have not opted out,[185] and that where an aggregate assessment is made, the individual entitlements of group members will have to be determined either at the same time or later. The individual entitlement of any group member in this case would turn on the sorts of variable information that was tendered in evidence for the plaintiffs and sample group members. How that would be done over the whole group, if the damages were calculated by reference to the extrapolated "average" areas planted with contaminated MR43 in the separate States, or the extrapolated "average" numbers of bags of seed across the same area divisions was not explained. How that would represent the entitlements of the group members , if those "entitlements will be calculated in accordance with the general law" was not explained. No attention was given to these matters in the plaintiffs' case. The defendant submitted that a number of variables were neither precisely nor reasonably captured by the plaintiffs' evidence of "average" area or bags purchased losses, including:
[337]
(a) that apart from the plaintiffs and sample group members, there was no information as to other group members except for the State location and, for 44 of them, the area of contaminated MR43 planted and, for 39 of them, the number of bags of seed purchased or planted;
[338]
(b) variability of the (uncontaminated) sorghum yields, sale prices and costs;
[339]
(c) variability of the area affected by planting contaminated MR43 seed;
[340]
(d) variability of farming practices and rotations and changes to those practices resulting from planting the contaminated MR43 seed;
[341]
(e) variability in the weed control and eradication practices and outcomes; and
[342]
(f) variability in the extent of continued farming operations.
[343]
[590] It is not necessary to analyse each of these points separately. An overall reading of the evidence as to the losses suffered by the plaintiffs and sample group members is itself enough to demonstrate the high degree of variability in the losses suffered by group members which cannot be simply averaged on either an area or per bag purchased or planted basis to give a reasonably accurate assessment of the individual losses.
[8]Timmerman v Nervina Industries (International) Pty Ltd[1983] 1 Qd R 1, 8; White v Cabanas Pty Ltd (No 2)[1970] Qd R 395, [27] and [50].
[348]
[9] A sale of goods on consignment was described by Fullagar J in Radio Corporation Pty Ltd v Bear[1961] HCA 26; (1961) 108 CLR 414, 430: "[w]hile they remained in his possession, he had authority to sell them, but any sale by him would be a sale by him as agent for the company, and, until they were sold, the company could take possession of them, as its own property, at any time. That is what is ordinarily meant, I think, when goods are delivered 'on consignment'".
[349]
[10] An interesting similar Colorado case is Lutz Farms v Asgrow Seed Company[1991] USCA10 1091; 948 F 2d 638, 643-644. However, there are too many differences in the underlying legal principles of law in that US State to give it much weight.
[350]
[11]217 NY 382 (1916). MacPherson v Buick Motor Co was referred to in Donoghue v Stevenson [1932] AC 562, 577, 598 and 617.
[64]Venerdi Pty Ltd v Anthony Moreton Group Funds Management Ltd[2015] 1 Qd R 214, [65]; Furber v Stacey[2005] NSWCA 242, [75]; Australian Coarse Grains Pool Pty Ltd v The Barley Marketing Board[1989] 1 Qd R 499, 502 and 510.
[395]
[65]Dowdell v Knispel Fruit Juices Pty Ltd[2003] FCA 851, [1]; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd[2003] VSC 27, [427], [1128] and [1139]; Hamilton Australia Pty Ltd v Milson Projects Pty Ltd[1997] 2 Qd R 355, 358-359; John Dunlop Pty Ltd v S & L Rubber Co Pty Ltd, unreported NSWSC, 30 March 1978.
[102] In the Federal Court, the duty was identified as "all reasonable steps to ensure that seeds... had not come from a source where there was a real risk which [the defendant] knew about or should have foreseen that the seeds might have been infected by pests and disease": [1999] HCA 36; (1999) 198 CLR 180, 207.
[115] Compare, for example, Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3)[2003] 1 Qd R 26, 48-49, or the law in Alabama as to similar terms in answer to a third-party beneficiary contractual liability analysis: Harris-Moran Seed Co v Phillips949 So 2d, 916 (2006), 925-933.
[136] A different form of label was copied into a crop report in March 2011 (DEF.600.000.000.0029) exhibited to Barry Croker's statement in Ex 21, at paragraph 301. The differences are not material for present purposes.
[141] Statement of claim, paragraph 43AB. The date of the alleged knowledge is "after January 2010", but logically it must refer to "after January 2011".
[177] Except for the first plaintiff, which sold its land before that season and the Perkins Partnership which the defendant alleged suffered no loss after the 2016/2017 summer season, the defendant alleged that no loss was suffered after the 2018/2019 summer season.
[8] The plaintiffs' case is that the contamination occurred because of the negligence of the defendant in producing the MR43 sold in 2010 for the 2010/2011 summer season or that the defendant engaged in misleading or deceptive conduct in connection with the supply of that seed. They allege that they suffered loss or damage caused by the negligence or contravening conduct, in the form of increased operating expenses of their farming operations and decreased grain sorghum production.
[9] The proceeding is a class action, tried under Part 13A of the Civil Proceedings Act 2010 (Qld). The class is defined as:
[24] On 8 November 2011, he purchased ten 20 kilogram bags of uncontaminated grain sorghum seed from the distributor. The 2011 seed was planted in late December 2011 into the same areas as were planted with contaminated MR43 in 2010. Additionally, Mr Jenner instructed the contractor to plant the 2011 seed in the Sugarloaf Super Block of approximately 40 hectares.
[25] In January or February 2012, Mr Jenner saw off-type type plants in quite defined clumps in the paddocks and noticed that they were quite dense. The clumps were coming up between the 2011 planted rows as well as in the rows. The extent of the contamination was significant and heavy in some parts, but there were other areas that had none at all. He called his agronomist. The off-type plants were of varying degrees of maturation, indicating that they had germinated at different times. Mr Jenner harvested the 2011/2012 sorghum crop as usual towards the end of summer in 2012.
[26] Between March and May and in October 2012, Mr Jenner met with Maree Crawford of the defendant about the off-type plants that had emerged in the prior seasons in the affected areas. From late 2012, Mr Jenner decided he could not plant sorghum back into the affected areas and that he needed to rotate out of sorghum to try to eradicate the off-type plants.
[27] In the summer of 2012/2013, Mr Jenner planted corn into the affected areas. Although he attempted to rogue the 26 hectare area and the 36 hectare area, there were too many off-type plants to rogue. He sprayed the off-type plants with Lightning but it was ineffective to kill them. He allowed his cattle into the paddocks to graze on the crops. In retrospect, he believes it would have been better to leave the paddocks fallow that summer and to spray them with glyphosate. In the 36 hectare area, the conditions were not as bad as the 26 hectare area. The off-type plant infestation was limited to approximately 30 percent of the 36 hectare area. He was able to harvest around the affected area. He fenced off the affected area and let his cattle go in and graze that section.
[28] In 2013, Mr Jenner left the 26 hectare area and the 36 hectare area fallow. From then on, his general practice was to fallow in the winter so as to use herbicides.
[29] Between 2013 and 2017, Mr Jenner grew alternative summer crops and focussed his efforts on rogueing the off-type plants as they emerged. In summer, he grew corn or sunflowers, with the exception of the 36 hectare area in the summer of 2014/2015, where he grew sorghum.
[30] The Jenner Properties have been sold. In December 2014, the 8 hectare area on Sugarloaf was sold. In January 2017, the Sugarloaf Super Block was sold. In late February 2017, the 26 hectare area and the 36 hectare area were sold.
[38] In around December 2011 or January 2012, Mr Hemmings realised that there was going to be a serious problem. He noticed that off-type plants were growing between the rows and believed, therefore, that they must have come from the planting in the previous 2010/2011 summer season.
[39] Later that season, Mr Hemmings found that the off-type plants were easier to identify, because when the seed head grew, it looked different to that of commercial varieties of grain sorghum. In around March 2012, he observed the off-type plants' heads were more open than regular sorghum and had black seeds.
[40] Before harvest, Mr Hemmings went through the contaminated area with another employee and rogued the off-type plants very thoroughly by hand. He spent 60 hours or more doing it.
[41] After harvest of the 2011/2012 summer season crop, he sprayed the New West area with glyphosate. He made a management decision to rotate out of sorghum in the New West area completely and plant winter crops instead.
[42] From the 2012/2013 summer season until the 2017/2018 summer season, the New West area was left fallow in summer. Mr Hemmings sprayed the area with glyphosate during summer and planted winter crops for about four years. In the 2017/2018 summer season, the New West area was fallow and no off-type plants came up. Mr Hemmings sprayed with glyphosate, however, and there was not much rain.
[43] For the 2018/2019 summer season, around 31 December 2018, Mr Hemmings planted the New West area with grain sorghum. The late planting was due to lack of rain. The crop had only approximately two months of summer with little rain. Mr Hemmings did not notice any off-type plants.
[44] In the 2019/2020 summer season, the New West area was fallowed due to the drought and lack of rain. Mr Hemmings did not see any off-type plants germinating in the paddock, but nothing had been growing.
[56] Mr Burns said that while the level had been decreasing, the re-emergence of off-type plants during the 2018/2019 summer season was concerning.
[65] From the summer 2012/2013 season onwards, Lamipine ceased planting sorghum in the C4 paddock. It grew winter crops instead in that paddock leaving it fallow in summer. The exception was in the 2013/2014 summer season when Lamipine planted a mung bean crop. It was possible to spray the off-type plants through the mung beans without affecting the crop.
[66] As for the K4 paddock, as it was left fallow in the 2011/2012 summer season, Lamipine planted grain sorghum in that paddock in the 2012/2013 summer season as per normal cropping rotations. However, work in the K4 paddock became more labour intensive than before, because of the need to clean the machinery to make sure no transfer of the off-type plants' seed occurred out of the K4 paddock area onto another paddock. It was also necessary to rogue the K4 paddock area to prevent the off-type plant heads maturing and dropping seed.
[67] Despite Mr Ruhle and his son's efforts up to the trial, the off-type plants had not been completely eradicated from either the C4 paddock or the K4 paddock. However, Mr Ruhle did not say the number or frequency of off-type plants that were still present.
[103] In the 2017/2018 summer season and in the winter of 2018, the paddock areas were left fallow.
[104] The Perkins Partnership ceased trading on 30 June 2018.
[115] As to supplies made by the defendant to distributors on consignment, the defendant entered into a "stockist agreement" with distributors who took stock on consignment. The stockist agreements for Landmark Ltd and Dalby Rural Supplies Pty Ltd were in evidence. They were in the same terms in relevant respects.
[116] Clause 3.1 of the stockist agreement provided that the defendant agreed to supply the products to the stockist for the purpose of storage and sale to a third party on the terms and conditions set out in the stockist agreement. Clause 3.2 provided that title to the products remained with the defendant until the products were purchased by the stockist or another authorised reseller.
[117] Under cls 3.3 and 3.4, the stockist agreed to receive, manage, store, handle and transport the products in accordance with the stockist agreement and to store the products at the stockist's facility. If any products remained unsold at the end of the selling season, upon notice from the defendant, they must be returned to the defendant's appointed seed depot at the cost of the stockist. The stockist agreed to permit representatives of the defendant to ensure the stockist was acting in accordance with the terms and conditions of the stockist agreement, including those as to quality and hygiene of the products.
[118] By cl 3.9, the defendant may notify a stockist that a quantity of product was to be relocated to another location for storage or resale purposes.
[119] Under cl 4.1, on sale and delivery to a consumer, the products may be withdrawn from the facility by the stockist, and that was to be done on a first in first out basis.
[120] By cl 5.1, the stockist was to keep records of each sale of a quantity of the products to a consumer or third party. Clause 5.2 required the stockist to notify the defendant of all sales or relocations of the products and provide end of month returns and reconciliations of the stock. Clause 5.4(a) required that a sale by the stockist to a consumer must be made in accordance with the stockist's standard conditions of purchase. Clause 5.4(b) provided that the defendant will invoice the stockist for all products sold to consumers within 14 days of receipt of the stockist's end of month return.
[121] Clause 5.4(c) provided that the stockist's standard conditions of purchase must include the following clauses:
[126] None of the parties sought to prove what the precise facts were on these matters.
[130] Barry Croker said that the terms were part of the artwork provided to the manufacturer of the defendant's bags for MR43 seed in 2010. He said that he can recall the size of the bag and design and layout on the bags used in 2010. He can recall the font of the conditions of sale and use that were printed on the bag in 2010. He said there is no discernible difference between the artwork and terms printed on MR43 seed bags in 2010 and that on the bag in a photo of the MR Buster variety hybrid grain sorghum seed that is attached to his statement. That photograph contains terms on the bags as set out above.
[131] From 2006, Liam Anderson was employed by the defendant as a marketing support manager, reporting initially to Gregg Supple and then to Nick Gardner. He was responsible for the artwork and branding that was printed on the bags of MR43.
[132] In 2007/2008 the defendant changed its label artwork including the seed bag labels and markings. The terms on the bags set out above were part of the artwork that was printed directly onto the bags when they were produced in China. They were printed on the bags for MR43 seed produced for the 2010/2011 summer season.
[133] Mr Hemmings and Mr Perkins said that there was no warning or disclaimer on the label of their bags of contaminated MR43 seed. But they did not deal specifically with the terms alleged by the defendant to have been printed on the bags. Mr Morrice identified the label attached to his statement as being in the same form as on the bags that he purchased but did not deal specifically with the alleged terms on the bags. Mr Jenner said that he did not read the label but did not deal specifically with the alleged terms on the bags. Otherwise, the plaintiffs' witnesses did not deal with the question.
[134] None of the parties' evidence on this question was completely satisfactory. On the defendant's part, it might have been expected that there would be direct evidence from those responsible for producing the bags that the terms were applied to them in the case of the relevant MR43 seed bags. On the part of the plaintiffs, it might have been expected that their attention and evidence would have been drawn specifically to the alleged terms on the bags.
[135] In the result, in my view, on this evidence, it is more likely than not that the contaminated MR43 seed bags did bear the terms alleged.
[144] There are reasons for this that are not purely historical. But before focussing on the particular contractual matrix that affects this case, it is useful to identify other questions that have centrally informed the development of principle relating to the liability in tort for negligence for economic loss only.
[145] A tectonic shift in the law for Australia occurred in 1976 with Caltex Oil (Aust) Pty Ltd v The Dredge "Willemstad".[20] In some ways the facts of that case may seem unremarkable. A dredge was negligently navigated so that it collided with and damaged an oil pipeline that ran across the seabed between an oil refinery and the storage terminal for petroleum products located on opposite sides of Botany Bay. Donoghue v Stevenson principles would cover the physical damage to the pipeline. But the damage claimed was not that. The physical damage to the pipeline interrupted use of the pipeline to transport oil between the terminal and the refinery, so that it had to be trucked at greater expense to the oil companies. The loss claimed was the increased expenditure. In modern taxonomical language, that loss is described as economic loss that is "relational loss".[21] It was reasonably foreseeable to the operator of the dredge that loss of that kind would be suffered. Salient features, beyond foreseeability alone, were held to justify the legal conclusion that the dredge operator owed a duty of care to the oil companies against loss of that kind.
[146] But the acceptance of a duty of care in relation to that loss in Caltex says little about the existence of a duty of care in circumstances like the present case. Liability for "relational loss" has troubled analysis of tort liability for negligence since 1875 in Cattle v Stockton Waterworks Co.[22] The competing arguments that affect that kind of case were canvassed in detail in the Supreme Court of Canada in Canadian National Railway Co v Norsk Pacific Steamship Co,[23] in both the plurality judgment of McLachlin J and the withering dissent of La Forest J.
[147] Something approaching an analogy to the present case first emerged in the High Court cases in 1995 in Bryan v Maloney.[24] The question in that case was whether a house builder owed a duty of care in negligence against the loss or damage that a subsequent purchaser sustained when the walls cracked because of inadequate footings. The analogy that it raises is that there was a contract between the builder and the owner of the land for whom the house was built that regulated their rights and liabilities inter se in relation to the quality of the house and a later separate contract between the owner and the subsequent purchaser that regulated their rights and liabilities inter se in relation to the quality of the house, yet the house builder was held to owe a duty of care to the subsequent purchaser against the relevant loss or damage.
[148] At this point in time, three features of Bryan must be noticed. First, when it was decided, there was acceptance in Australia of the concept of "proximity" as a determining factor in the existence or non-existence of a duty of care against economic loss only.[25] Proximity has since been discarded either as a "conceptual determinant"[26] or as a reliable tool of analysis[27] in this context, perhaps illustrating a slowing of the "imperial march of the modern law of negligence".[28] Second, by the time Bryan was decided, there was general consensus that the loss or damage against which the duty of care in Bryan was owed was economic loss only,[29] although opinion had divided in earlier cases over whether physical cracking to the structure of a house was physical or economic loss. Even in Bryan, Brennan J remarked that "it is artificial to classify defects in a building as pure economic loss".[30] Third, the joint judgment made it clear that the decision said nothing "determinative of the question whether a relationship of proximity can, in some circumstances, exist between the manufacturer and the purchaser or subsequent owner of a chattel in respect of the diminution in the value of the chattel which is sustained when a latent defect in it first becomes manifest";[31] that is, about the existence of a duty of care in negligence owed by a manufacturer or producer of goods to an end user over the quality of the goods.
[149] Against that, it must be recognised that, despite the close attention paid to the informing principles in subsequent analogous cases, the High Court has never overruled Bryan. It will be necessary to return to the subsequent cases later in these reasons.
[150] Thirteen years before Bryan, in 1982, the House of Lords decided another case that raises a possible analogy with the present case, Junior Books Ltd v Veitchi Co Ltd.[32] In that case it was held by majority that a specialist sub-contractor who supplied a floor in the construction of a building owed a duty of care in negligence to the building owner against the loss or damage of repairing the floor and consequential loss.
[151] At this point in time, four features of Junior Books may be noted. First, the reasoning revolved around the now abandoned conceptual determinant of proximity; in particular, that the proximity of the parties was extremely close, falling only just short of a direct contractual relationship.[33] Second, the case was decided on the basis of pleaded facts, so that the precise contractual matrix was not identified. Third, the strong dissent of Lord Brandon of Oakbrook in Junior Books was accepted in subsequent English cases, illustrated by D & F Estates Ltd v Church Commissioners for England,[34] where Junior Books was effectively confined to its own facts about the special relationship between the parties in that case.[35] It is not necessary to mention more than Brennan J's statement, in an equally strong dissent in Bryan, that the dissenting speech of Lord Brandon has subsequently been regarded in England as containing the sounder statement of principle.[36] Fourth, since the turn of the 21st century, Junior Books has not been referred to with approval in any case of persuasive authority.
[152] It is not practical to fully analyse the relevant case law of persuasive authority in all common law jurisdictions, in particular those in New Zealand[37] and Canada,[38] but before turning to other relevant High Court and other Australian cases, reference may be made to one other overseas decision, from 1986, in the United States Supreme Court in East River Steamship Corp v Transamerica Delaval Inc,[39] where Blackmun J said for the court: "the failure of the purchaser to receive the benefit of its bargain [is] traditionally the core concern of contract law" and the risk is for "contract to drown in a sea of tort".[40]
[153] After Junior Books but before Bryan, there were two other relevant cases decided by intermediate appellate courts in this country. First, in Suosaari v Steinhardt,[41] the defendant manufactured trailers for use in transporting sugar cane tramway bins. The trailer was negligently designed due to the position on it of a wire winching rope. A farm labourer employed by the plaintiffs was injured as a result. It was held that the manufacturer owed a duty of care in negligence to the plaintiffs against the economic loss of their liability as employers for negligence to the farm labourer.
[154] On the surface, there might be thought to be some similarity between Suosaari and a later case, Barclay v Penberthy and Ors,[42] where the High Court held, inter alia, that a pilot of a plane owed a duty of care to the charterer of the plane against the economic loss of the charterer in losing the services of employees when they were killed by the negligence of the pilot.[43] However, the kinds of loss were different. In Suosaari, the loss was the employer's liability to the farm worker. In Barclay, it was the loss of the value of the employees' services to the employer.
[155] In Minchillo v Ford Motor Company of Australia,[44] it was held, inter alia, that the manufacturer of a truck did not owe a duty of care in negligence to an end user against economic loss in operating the truck in a business caused by excessive vibration. Ormiston J held:
[167] The plaintiffs submit that the contracts of sale under which the plaintiffs purchased MR43 were not transactions "where goods were bought by description" because the requested purchase was of MR43 seed. However, the purchase of grain sorghum seed by a brand or trade name, such as "Pacific Seeds MR43 Elite" sorghum seed, does not mean necessarily that the goods are not bought by description.[71] Although the case was not mentioned, the plaintiffs' argument may be compared to an argument advanced in Helicopter Sales (Aust) Pty Ltd v Rotor-Work Pty Ltd.[72] In that case, it was held that in a contract for work (done) and materials (supplied),[73] the implied term as to the materials being of "good" quality[74] may be excluded by the circumstances.[75] But as Young & Marten Ltd v McManus Childs Ltd[76] showed, it was not enough to exclude the implied term that the goods were bought under a trade name.
[168] Accordingly, where a plaintiff bought the contaminated MR43 seed on a straight-out sale from a distributor who had bought that seed straight out from the defendant, if the MR43 seed was not of merchantable quality, any loss or damage suffered by the plaintiff caused by breach of the implied term of merchantable quality may have been recoverable from the distributor as seller of the contaminated MR43 seed as compensatory damages, unless such term was excluded by agreement. Correspondingly, the distributor as buyer from the defendant may have been entitled to recover damages suffered by the distributor, including liability to the plaintiff,[77] caused by breach of the implied term of merchantable quality on the distributor's purchase of MR43 seed from the defendant, unless such term was excluded by agreement. However, in that analysis, the common law would not give the plaintiff a right to damages for breach of contract against the defendant, because there was no privity of contract between them.
[169] Alternatively, where a plaintiff bought the contaminated MR43 seed from a stockist distributor, again the contract of sale was made by the plaintiff as buyer and the stockist distributor as seller. If the MR43 seed was not of merchantable quality, by similar reasoning, any loss or damage suffered by a plaintiff caused by breach of the implied term of merchantable quality may have been recoverable from the distributor as seller of the contaminated MR43 seed as compensatory damages, unless that term was excluded by agreement.
[170] On this analysis, at least in theory, each of the plaintiffs might have been able to protect itself from the risk of the loss or damage they allege that they have suffered by an appropriate contractual term in the contract under which it purchased or acquired the contaminated MR43 seed from the relevant distributor.
[171] As well, had any of the sales to a plaintiff of contaminated MR43 seed been a supply of goods by the distributor to that plaintiff as a "consumer", the Australian Consumer Law would have provided a guarantee of acceptable quality of the goods acquired,[78] which may be enforced directly against a manufacturer.[79] But neither of the plaintiffs alleged that they acquired the contaminated MR43 seed from a distributor as a supply to a consumer with a guarantee of acceptable quality from the defendant, perhaps because the seed was not acquired as a consumer.[80]
[172] This analysis may be contrasted with the vulnerability of the plaintiff in Perre v Apand Pty Ltd,[81] a case that was relied upon by the plaintiffs. In Perre, the plaintiff's loss was suffered because quarantine regulations prevented the plaintiff's land from being used to grow potatoes. The regulations were introduced because the defendant's activities on nearby land caused a disease outbreak on that land. The quarantine regulations prevented the use of any land for growing potatoes within a certain radial distance from the outbreak land. There was nothing that the plaintiff could have done to protect his position. He was held to be vulnerable to the defendant's breach of the standard of care.
[173] One of the leading cases as to the absence of required vulnerability is Woolcock Street Investments Pty Ltd v CDG Pty Ltd.[82] It was held that a purchaser of a commercial building was not shown to be vulnerable to negligence by the building's design engineer resulting in a latent defect in the building, because of the purchaser's ability to protect itself by obtaining contractual terms as to the building's quality from the seller.
[174] There may be an air of impracticality in the conclusion that any of the plaintiffs in the present case could or should have protected itself as buyer by extracting an appropriate contractual term on purchasing the contaminated MR43 seed from the distributor. There were only two manufacturers of commercial grain sorghum seed in the Australian market, being the defendant and Pioneer Seeds. The defendant sought to exclude liability for defective seed on sales of its MR43 seed having regard to the terms of the stockist agreements and the terms on the bags. There is no evidence that the distributors did or did not do the same on re-selling MR43 seed to any of the plaintiffs. And when a buyer of goods is moved to purchase by the reputation of the producer or manufacturer, and the goods are packaged and sold under a particular brand name as possessing particular represented qualities, the identity of the distributor may be of no real importance in the buyer's decision to purchase.
[175] In Woolcock Street Investments, the plurality of the majority of the High Court said that vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed since Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"[83] and "most notably" in Perre.[84] They said also that:
[188] On one view, this may be said to be the kind of high-level assumption about vulnerability against which Hayne and Callinan JJ cautioned in Dovuro as set out above. But it must be kept in mind that it is for a plaintiff to allege and prove the relevant facts necessary to give rise to a duty of care against economic loss.
[189] In the present case, there are facts which are or may be relevant to whether any of the plaintiffs could have protected themselves by appropriate contractual terms. The defendant submits that they could have done so, for example, by insurance contracts. The relevance of insurance has been argued in some overseas cases but was expressly discounted as a factor negativing a duty of care in both the judgment of Stephen J in Caltex Oil[100] and in the judgment of McHugh J in Perre.[101]
[190] In my view, it may be unrealistic, in many consumer-like transactions constituting a sale (and purchase) of or supply (and acquisition) of goods, to expect that the buyer from a producer or distributor of a thing is in a bargaining position to extract a warranty from the seller against a defect in the quality of the goods purchased that would protect against economic loss, that is not provided for by statute. Similarly, a retailer may be unlikely to agree to provide a contractual warranty to the buyer against the risk of such loss based on the quality of the goods if it cannot extract for itself, as buyer, a similar warranty from the producer or distributor as seller. When the goods are of a specific type or kind, and are being sold under their brand name by a retailer or distributor who has acquired them from the producer, and they are supplied in a packaged condition as new goods that are not examinable before purchase, it may be unrealistic to say that the end purchaser is in a position to protect itself against economic loss caused by the negligence of the producer by an appropriate contractual warranty obtained from the retailer.
[191] In other words, an everyday commercial transaction of sale of goods, like the purchase of seed for agriculture by a grower from a distributor, may test the logical utility or limits of the concept of vulnerability as a salient factor in determining whether a duty of care is owed by the producer of seed to the grower as end user against economic loss if the seed is contaminated.
[196] By way of further analogy, the duty in Dovuro might have been articulated as a duty to take care that the canola seed for sale was free of weeds, but as Gleeson CJ noted, the canola seed was not sold as being free of weeds. It was sold as of "minimum 99% purity".[105] The content of the duty of care that was conceded at trial was unclear and that concession was sought to be withdrawn on appeal. However, as already discussed, Dovuro was decided in the High Court on the footing that the existence of a relevant duty of care had been conceded below or did not need to be considered further.[106]
[210] Mr Croker set out in detail the risks in the commercial seed production process of contamination by cross-pollination of an A-line or female sorghum plant from other sorghum subspecies and the controls deployed by the defendant during production to maintain the genetic purity of the defendant's commercial production crop. The controls included crop inspections, bagging of seed heads to control pollination, isolation management, including maintaining isolation distances from foreign pollens, rogueing of off-type plants, restricting previous crops grown in the field to reduce the likelihood of volunteers and the use of a parent seed of sound genetic purity.
[211] Most of these factors were dealt with in the defendant's Seed Production Manual, which adopted standards exceeding the international standards for the production of grain sorghum seed under either the requirements of the Organisation for Economic Cooperation and Development Schemes for Varietal Certification of Seed Moving in International Trade or the Association of Official Seed Certifying Agencies in the United States. It is unnecessary to discuss all these measures in detail, because only a few are relevant to deciding the issues in the present case.
[212] A point to mention is that electrophoresis testing is used to determine that the seed grown is of the correct variety and has the male and female genetic markers expected. It is used to detect the existence of genetic contaminants but does not determine the nature of a genetic contaminant nor the phenotype of the contaminant. If the anticipated male genetic marker is missing from a tested seed, the seed has been pollinated by an external source (not the R line) or by self-pollination. Electrophoresis testing is conducted on relatively small samples.
[213] A more important point in Mr Croker's evidence was as to the efficacy of grow outs of commercial grain sorghum seed produced in the MIA contra season in the Ord River region. He said that the date of planting of the grow out seed in the Ord River region depends on the harvest date in the MIA that can range over a period of several weeks. The processed seed arrives in Kununurra by late April or early May. The weather and subsequent land preparation in the Ord River region can dictate when planting occurs, and he referred to delays and periods that occur before grow out results are finalised three weeks after flowering. Mr Croker said that even if there are no delays and everything goes according to plan, the best case scenario is that about 50 percent of the grow outs will be finalised before that summer season's seed goes on sale due to the periods of harvesting in the MIA and subsequent plantings in the Ord River region. He said that the difficulties conducting the grow outs pre-sale are an issue facing all grain sorghum seed producers in Australia. All that may be accepted. But, in my view, Mr Croker both in his statements and oral evidence maximised the difficulties in an effort to argue the defendant's case. This he should not have done, and it is among the reasons why I treat his evidence where contentious with circumspection.
[214] On 4 February 2011, when the problem of contamination of the 2010/2011 summer season MR43 seed clearly emerged, Mr Croker himself reinstituted the practice of conducting contra season grow outs of commercial production of grain sorghum seed in the Ord River region. That decision was reinforced by Mr Kaundinya's email sent on 28 May 2013 and the practices continued until the time of the trial. No instance of a contra-season grow out in the Ord River region for grain sorghum seed commercially produced in the MIA being too late to be useful was identified in evidence.
[215] Mr Croker's statement dealt at some length with the process of seed production from the A line and R line batches that were utilised in the Cavaso Farming commercial production of seed for the 2010/2011 summer season MR43. There are two specific points. First, in discussing the production records for the pre-basic and basic seed for those lines, Mr Croker omitted any reference to one of the field reports that noted the observer's view that there should be a full grow out of one line. Second, in commenting on prior season's commercial production of grain sorghum seed that utilised or may have utilised those lines, Mr Croker said that he cannot recall any unusual occurrences related to parent seed production, and that the parent seed used to produce MR43 was used as a parent seed for multiple cycles of hybrid production, and that he did not recall any complaints arising out of those cycles. It appeared that Mr Croker was not shown the three emails from Mr Needham dealing with complaints in MR Buster and MR Striker varieties of grain sorghum produced by the defendant for the 2007/2008 summer season, but in the end this was not a point of importance.
[216] Next, Mr Croker's evidence referred to the periodic inspections that may or may not have been conducted by the defendant's employees on the Cavaso Farming commercial production of MR43 seed for the 2010/2011 summer season. Mr Croker said that the defendant's production agronomists at the time "as a matter of habitual practice" conducted periodic inspections that occurred prior to the commencement of each growing season and during the production of each crop. No document was produced to or mentioned by Mr Croker as supporting that statement. No basis was identified by him for being able to say of his own knowledge that those inspections occurred. Notwithstanding that, Mr Croker purported to say that the areas within the isolation distances were inspected and particular attention was given to roadsides, irrigation channels and drainage channels. Again, how he was able to say that of his own knowledge did not appear, with the exception that he said that he was aware of the procedures as he routinely visited seed production crops and made his own observations as to those processes and asked questions regarding the proper completion of the same. However, he did not say, nor was any evidence adduced, that he had done any of those things during the commercial production of MR43 seed by Cavaso Farming in the summer of 2009/2010.
[217] Another aspect of Mr Croker's evidence is that he referred to a meeting held on 4 February 2011 attended by, inter alia, Mr Needham, Ms Crawford and Mr Supple. At that meeting a number of actions were decided upon to increase the protections for future production of MR43, including immediate rogueing of the then current commercial production crop, replacing parent lines and reintroducing grow outs for future production crops. But Mr Croker's evidence did not mention those actions or further deal with them. In my view, this was part of a process whereby Mr Croker's evidence was fashioned as much as possible to advocate the defendant's case rather than to frankly explain his involvement in relevant events.
[218] On 4 March 2011, Mr Needham sent an email to Mr Croker and others forwarding another email concerning electrophoresis tests saying that:
[232] In the first half of January 2011, Ms Crawford inspected a property run by Paul Griffiths in the Dalby area, where there were a small number of off-type plants that had a forage sorghum like appearance. She cut some seed heads off and bagged them as samples for further testing. There were other plants standing above the crop canopy that were immature and had not yet fully developed their type characteristics, but she formed the view that they were benign tall mutants only. Again, she sent the samples to the Queensland Herbarium.
[233] On 19 January 2011, Ms Crawford attended Mal and Jeannette Hegarty's property at Brookstead to inspect off-types.
[234] On 20 January 2011, Ms Crawford and Mr Smith attended the property of Robin and Cecilia Krieg near Brookstead.
[235] On 30 January 2011, Andrew Short forwarded an email to Ms Crawford he had received from Mr Woods expressing further concern about off-type plants on Coslinco's property which resembled shattercane. Ms Crawford responded to Mr Short with an email that pointed out some of the differences between the off-types. She said what the defendant's representatives were seeing in paddocks to that date was not shattercane and included photographs that showed some of the features of shattercane from the United States.
[236] In early February 2011, Ms Crawford spoke with Michael Widderick from DEEDI and said to him that the defendant's representatives were seeing an off-type plant in MR43 with a shattering head. She asked whether it was a noxious weed and for advice on the use of herbicides.
[237] In February 2011, Ms Crawford and another representative of the defendant met with Mr Cook on Coslinco's farming area. At the time the crop was close to harvest. Ms Crawford said because the off-type plants were already shattering, it was too late to remediate and it would be necessary to resort to a management program, such as going to a summer fallow and then to a winter crop such as wheat.
[238] On 4 February 2011, Ms Crawford received a copy of Mr Croker's email detailing the actions from the meeting of that date in relation to the defendant's ongoing production of MR43 seed, including that the current season's production in the MIA was to be rogued as soon as possible. On the same day, she had a meeting with Mr Supple, where he directed her to meet with growers who had lodged a complaint and to provide them with advice that was specific to the growers' individual needs concerning remediation of the crop or future management.
[239] Thereafter, due to the increasing number of grower complaints and their geographical spread, Ms Crawford delegated some of the management of growers' complaints to Robert McCarron for the Liverpool Plains region and Trevor Philp for the Darling Downs and Northern New South Wales regions.
[240] Ms Crawford set out in her statement in evidence a number of steps that she advised growers to take in relation to remediation or management, including advice as to spraying herbicides. However, the statement did not descend into any detail as to what advice was given to growers in the early months of 2011.
[241] As to remediation advice, Ms Crawford said that, if the off-type plants were immature, present in low numbers and isolated to the crop rows, she recommended that the off-type be removed by cutting its head off, together with a localised spray application of glyphosate. But if the off-type plants were mature and there was a risk that the seed heads might shatter, although present in low numbers and isolated to the crop rows, she recommended that the off-type be removed by cutting the head off after a plastic bag had been placed over the head and tied off, together with a localised spray of glyphosate.
[242] However, if the off-type plants were immature and present in high to very high numbers and clumping in and between the crop rows, she recommended wick wiping and sometimes their removal afterwards. She says the defendant imported a wick wiping machine from the United States of America for this purpose. If the off-type plants were mature and present in high to very high numbers and clumping in and between the rows, she did not recommend their removal. If the grower wanted them to be removed, she would attempt to coordinate a rogueing team to undertake the work.
[243] I do not accept that Ms Crawford provided advice in relation to off-type plants where there was clumping between the crop rows in the 2010/2011 summer season. Off-type plants from contaminated MR43 did not grow between the rows in that season. That occurred in the following season from seed that had fallen from the 2010/2011 summer season off-type plants.
[244] Further, Ms Crawford does not identify any occasion in the 2010/2011 summer season on which there were off-type plants that were immature, present in low numbers and isolated to the crop rows where she gave advice as to cutting off the seed head either before or after a plastic bag had been placed over it. None of the plaintiffs or sample group members, including Mr Cook, received such advice so far as the evidence reveals.
[245] The section of Ms Crawford's statement devoted to the remediation management and spray advice that she gave is quite possibly the product of reconstruction of numerous experiences over the years. It indicated that a consistent approach or policy was followed, when it is more likely that individual advice was given and that the strategies or recommendations that were made by way of advice developed over the relevant seasons after the 2010/2011 summer season when the extent of the contamination problem became more evident.
[246] The results of the samples that Ms Crawford took from the Griffiths' property in January 2011 and submitted to Queensland Herbarium were not identified in evidence.
[247] Following Mr Croker's email of 4 February 2011 and Mr Supple's instructions of the same day to her as to dealing with growers, Ms Crawford was involved with Trevor Philp in the production of the document entitled "Identification and management of grassy off types in Grain Sorghum fields" that was subsequently provided by the defendant to growers in various iterations over the succeeding days, months and years. I will term it the "Identification and Management Document".
[248] The material compiled for that document, in part, was also used for the preparation of a PowerPoint or slide display entitled "Information session MR 43 2010/11 season" presented to growers from the Moree and Goondiwindi districts at two information sessions held by the defendant on 15 February 2011. There were a number of important points made in the PowerPoint or slide presentation. One was that tests showed that the off-type was not United States shattercane. Another was that the contamination had been isolated to one grower line of parent seed, a point subsequently not established, although growers were advised that the parent seed had been disposed of (as had been directed by Mr Croker's 4 February 2011 email). A third point was that grow outs would be conducted in the future.
[249] Other important "key points", according to the presentation, included that the off-type plants had a low potential to become problem crop weeds and the seed was not dormant, both points not borne out by subsequent experience. The off-type plants were described as two metres tall and like Sudan grass in appearance, with swollen nodes, generally having three to four grain bearing heads, with seed that was red to brown with black glumes. The off-type plants were further described as similar in maturity (presumably to true to type plants) with some three to five days quicker (in maturity) with seeds that readily fell from the head at or just prior to harvest.
[250] Whether fortunately or unfortunately, only a small number of growers attended the information sessions on 15 February 2011. They did not include the plaintiffs or the sample group members.
[251] On 18 February 2011, Ms Crawford and Mr Philp finished the substance of the first iteration of the Identification and Management Document that the defendant's representatives subsequently gave to growers. It stated that tests to date to determine the fertility of the off-type showed a 70 percent germination rate at six days and that further testing was being conducted. It opined that monitoring of fields previously identified as having the off-type suggested that survival of the type was low. That opinion was not subsequently confirmed. As to management, it stated that the off-type should be controlled as any annual grass, including volunteer grain sorghum would be, but the level of viable seed and frequency in the original crop would determine the best management strategy. It recommended rotation or fallowing as the best control measure, with cheap, effective chemical and cultural control available. On the other hand, it opined that fields with low infestation did not have to be rotated out of sorghum as the seed of the off-type was generally low in fertility and was susceptible to S-Metolachlor formulations. Subsequent experience did not bear that opinion out.
[252] Nothing in the 15 February 2011 PowerPoint or slide presentation or the initial version of the Identification and Management Document suggested that, as at February 2011, growers were being advised to remediate the 2010/2011 summer season MR43 crop by cutting off the heads of or otherwise rogueing off-type plants.
[253] On 2 March 2011, Ms Crawford submitted a further sample of a shattering off-type plant for analysis by the Queensland Herbarium.
[254] On 14 March 2011, Ms Crawford received an email from Russell Carracher enclosing a copy of a letter sent to him by the Queensland Herbarium dated 11 March 2011 stating that two botanical specimens received from him on 23 February 2011 had been identified as "sorghum bicolour, forage sorghum, shattercane".
[255] On 18 March 2011, the Queensland Herbarium sent a letter of that date to Ms Crawford identifying the specimen received from her on 2 March 2011 as "sorghum bicolour, forage sorghum, shattercane".
[256] On 4 April 2011, in the face of the increasing number of grower complaints, Ms Crawford prepared a standardised management letter to be sent to growers who had experienced or were experiencing off-type plants in MR43 in that season. The letter advised as an update that the defendant was continuing a raft of testing on the seed from the off-type plants to provide a complete management package, that testing then showed the germination rates were ranging in the high 90 percents, which indicated a low degree of dormancy, that the current chemistry (herbicides) being used should provide good control measures, that the varying factor would be the difference in rotational plans, that the defendant's research was then focussed on the sorghum on sorghum scenario and that independent testing outside of the defendant's labs was being conducted as a checking mechanism.
[257] On 29 June 2011, the Queensland Herbarium sent a letter of that date to Ms Crawford advising that a botanical specimen received from her on 10 February 2011 (possibly the Griffith sample from January 2011) had been confirmed as "sorghum bicolor, sorghum SSP with shattering genetic association". The evidence did not explain the different terminology from the prior reports of the Queensland Herbarium as to the other specimens of off-type plants from growers of contaminated MR43.
[266] On 3 August 2012, Mr McCarron prepared a schedule identifying particulars of growers affected by the off-type plants.
[267] On 23 January 2013, he sent an email to Ms Crawford, Mr Supple and others. It attached a summary and position in relation to the Liverpool Plains growers contaminated by the MR43 seed as at the 2012/2013 summer season, and identified in the email particular growers who he considered the defendant needed to attend over the next month or so for the purpose of rogueing or wick wiping.
[268] On 21 February 2013, he sent an email to Ms Crawford and others enclosing a list of affected growers in the Liverpool Plains area including a statement of their crop rotations since the original planting of contaminated MR43 seed in the summer of 2010/2011 (with one exception). In the email he included a statement as to the current status of rogueing and wick wiping work. He concluded by stating that the defendant needed a strategy going forward as there would be a lot of farmers thinking a one year rotation out of sorghum would be sufficient. Impliedly, in his view, it was not. In oral evidence, he said his best guestimate was three years.
[269] I consider Mr McCarron's estimate of the frequency of the off-type plants per hectare in the two paddocks with caution.
[277] I also reject Mr Gardner's evidence that a review of the historical grow out test results for the MR43 parent seed lines showed that none of those tests revealed any contamination. Specifically, in my view, the 2002 **"**P" status of test lot B09134 of the 71175 variety of Amaland Ag Co A-line seed, together with the grow out field assessment sheet for that lot and variety on which it was noted that the seed should be replanted and the assessor wanted a really good look at this material for purity, showed that there was a question whether the relevant parent A line seed test results passed that seed from any risk of contamination.
[278] Mr Gardner said that given the outcome of his MR43 parent seed investigations in 2013, there was no need to replace the parent seed. However, as he agreed in oral evidence and the evidence of Mr Croker showed, the parent seed had been replaced, in any event, after February 2011.
[279] Mr Gardner also said that as the seed was found not to be contaminated after grow out tests were completed, he did not need to otherwise deal with the suspected commercial hybrid lines. So far as the contaminated MR43 seed was concerned, I do not accept that the relevant seed was subsequently demonstrated to be free of contaminations or was dealt with on that basis by the defendant.
[287] On 31 January 2011, Mr Short visited the Woods property, and he completed a crop report. Noticeably, Mr Short did not say what the frequency of the off-type plants on Mr Woods' property was.
[288] In late January 2011, Mr Short received a complaint from Andrew Thompson about off-type plants in his MR43 crop.
[289] On 20 January 2011, Mr Short visited the property and completed a crop report. He cannot recall the frequency of the off-type plants that he observed at the time.
[290] Mr Short organised meetings at the Royal Hotel in Goodiwindi and at the MAX Centre in Moree on Tuesday, 15 February 2011 where there were open sessions and presentations (previously referred to) by the defendant to growers in relation to the off-type plants in their MR43 crops.
[291] The only record of frequency of the off-type plants was that made by Mr Philp on the Yates crop report. In the absence of any documentary evidence to support Mr Short's estimates of percentage frequencies otherwise, I regard them with some caution.
[303] On 1 March 2011, Mr McCumstie attended a property of growers named Gordon and David Brownhills and inspected an affected paddock. He wrote a crop report. He recalled that the frequency of the off-type plants was not more than two to five off-type plants per hectare.
[304] On 12 April 2011, Mr McCumstie attended the property of growers named Ian and Marilyn Carter and inspected an affected paddock. He completed a crop report. He observed between two and five off-type plants per hectare in the paddocks.
[305] Accordingly, on every occasion, except one, Mr McCumstie said that he observed only two to five off-type plants per hectare. But he did not make a single note or contemporaneous record of any kind of any of those observations. I regard this evidence with some caution.
[314] I note that Mr Smith does not say that when he was present at any grower's property in February or March of 2011 with Ms Crawford or Mr Philp, that the grower was given advice to immediately rogue their 2010/2011 summer season crop.
[322] In February 2011, he developed with Ms Crawford the first iteration of the Identification and Management Document intended for distribution to staff, growers, selling agents and agronomists.
[323] In his statement, Mr Philp dealt with a number of the subject matters that were contained within the various iterations of the Identification and Management Document over the initial and subsequent months and years. He also set out a summary of options to control off-type plants or contamination that he said was delivered verbally to growers as well as being contained within versions of the Identification and Management Document. However, as in Ms Crawford's case, those various steps or strategies to control the off-type plants or contamination are neither related to any particular time nor identified as having been given to any particular grower, subject to a few exceptions.
[324] The exceptions are that Mr Philp stated that he visited a number of farmers in the 2010/2011 summer season as follows:
[343] The plaintiffs allege that failure to successfully rogue was a failure by the defendant to take reasonable care to avoid the loss of the kind that was suffered.
[344] The defendant's Seed Production Manual provided for rogueing in detail. Under the heading "Agronomy", it provided for "In-Field Rogueing Techniques" and "Rogueing Schedules", with documents setting out the relevant matters, including how frequently a rogueing schedule was to be carried out and the manner in which tall off-type plants were to be removed.
[345] The in-field rogueing technique for grain sorghum tall off-types was that "one worker can walk in the middle of a bed of female and cross rows to remove tall off-types", and that the removal required was "[f]or fertile flowers the head must be gathered in the hand of the worker; the stem is bent over to fall below the height of the crop and the stem is then removed from the ground by grasping the stem close to the ground. The plant is kept below the height of the crop at all times. The plant is then broken in half and lain in the top of the bed where it will dry out and die. If left intact on a moist surface the plant can continue to grow. Plants left in an irrigation furrow also interrupt the flow of water to the field."
[346] The rogueing schedule for the defendant's production of seed for grain sorghum was as follows:
inter alia
[366] Assuming that the seed produced for commercial sale has been produced in the summer months up to April of a particular year, in my view, a grow out in Northern Australia, whether in the Ord River region or in North Queensland, is feasible and could be conducted in time before the sale of the seed in the spring and summer of the second half of that year. Even if it could not, seed produced from one year could be stored before sale to the next season in order to facilitate a grow out. However, there was no evidence of the costs associated with that alternative, I infer because it has not been necessary to do it in subsequent years.
[367] Under ss 9 and 10 of the Civil Liability Act2003 (Qld) ("CLA") and their equivalents in New South Wales,[123] the fact of the change in practice by the defendant is not an admission.[124] Nevertheless, the fact that grow outs were conducted before 2006 and that they were reintroduced as a result of the change in policy introduced in or about 2011, together with the feasibility and cost of the practice of a commercial grow out procedure, lead me to conclude that the defendant failed to act with reasonable care in failing to conduct a commercial grow out of the contaminated MR43 seed in the winter of 2010 before it was sent to market and sold for the 2010/2011 summer season.
[368] The plaintiff submitted that conclusion is supported by a Growout Field Assessment Sheet from 2002 that related to the female or A line of basic seed used for the production of the 2010 MR43 seed, in which an unnamed author advised that it should be replanted, because they wanted a really good look at that material for purity, which put the defendant or should have put the defendant on notice as to a risk with the seed.[125] I do not consider that so-called notice to be critical for the conclusion that the defendant failed to act with reasonable care in failing to conduct a grow out of the contaminated MR43 seed before it was sent to market and sold. I do not consider that the failure to exercise reasonable care turned on whether the defendant was aware or ought to have been aware of the 2002 Growout Field Assessment Sheet.
[383] On 19 January 2011, Ms Crawford and Mr Smith visited the property of Mal and Jeanette Hegarty and inspected off-type plants. Ms Crawford said there were three to four off-type plants per hectare, although there was no note of that in the crop report.
[384] On 20 January 2011, Ms Crawford and Mr Smith visited the property of Robin and Cecilia Krieg. The crop report of the visit records "talls in the MR43 from 2010" and also refers to a meeting at the defendant's boardroom that day with Mr Krieg and discussion about crop rotations.
[385] On 20 January 2011, Mr Short attended Colin Dight's property and recorded in the crop report that there was a "[l]arge number of both true to type and off-type sorghum plants".
[386] On 30 January 2011, Mr Woods, from Coslinco in the Liverpool Plains who had previously queried the "talls" growing in his crop and been advised by the defendant's employees that they were true to type, sent an email to Mr Short stating that the heads of the plants had now emerged and the plant in his MR43 resembled "shattercane". He asked the defendant for more serious consideration, including taking of samples and testing, within the week.
[387] On 30 January 2011, Ms Crawford advised Mr Short, regarding Mr Woods' request, as to the procedures to obtain material to test. She stated as well that "what we are seeing in paddocks to date is not Shattercane." She attached material identifying the differences between USA shattercane and the plants she had previously looked at on the Liverpool Plains.
[388] On 30 January 2011, Ms Crawford sent an email to Mr Supple and others referring to her email exchange with Mr Short and saying of her visit to the Liverpool Plains and paddock inspections during the previous week that: "I took some photos and it is not pretty."
[389] Mr Philp recalled attending a meeting with Mr Woods and Mr Short shortly after 30 January 2011 and that it was at the time of this meeting that it became apparent that the off-type plant growing in amongst the MR43 had a propensity to shatter and drop seed, based on what was being said by growers.
[390] In early February 2011, Ms Crawford spoke to David Jordan, a weed specialist employed by DEEDI, and informed him that the defendant's employees were seeing an off-type plant in MR43 crops "with a shattering head" and asked for advice as to the use of herbicides.
[391] On 4 February 2011, Mr Croker sent the email to Mr Supple and others referring to the meeting held on that day and identifying the actions decided to be taken. For the defendant's 2011 commercial production of grain sorghum seed, it was: "[a]ll current MIA production to be rogued asap". For future production, it was: "current stocks of parent seed to be replaced" and "[f]uture grain sorghum production to be rogued pre-flowering to remove all offtypes and talls".
[392] On 11 February 2011, Ms Crawford and Mr Philp commenced preparation of a document for information about the contamination event. That draft may have informed the PowerPoint or slide display prepared by Mr Philp for the presentations to be made on 15 February 2011. It did form the basis for the Identification and Management Document attached by Ms Crawford to an 18 February 2011 email that was used from that time and updated from time to time thereafter.
[393] Before 15 February 2011, Ms Crawford directed staff to send an invitation to growers in the Moree and Goondiwindi districts to attend an information presentation covering the identification of the off-type and its management.
[394] On 15 February 2011, Ms Crawford, Mr Philp and Mr Short attended information presentations at the Royal Hotel Goondiwindi at 8:30 am and the MAX Centre Moree at 2:30 pm. The PowerPoint or slide presentation was made to a small number of attendees. It stated that there were two off-types in question, a tall mutant "true to type" and a "forage type outcross", that tests of the outcross showed it was "not USA shattercane" (although at that time no final genetic analysis had been done), referred to the measures taken by the defendant to prevent recurrence of the contamination, asserted that the seed of the outcross was "not dormant", advised that "control measures are the same as for all annual grasses and volunteer sorghum" (although that had not been carefully assessed at that time) and claimed that the "grassy off-types have significantly less weedy potential than Johnson's grass". By its terms, the presentation was intended to reassure presentees by giving an optimistic view.
[395] On 18 February 2011, Ms Crawford sent an email to Mr Needham and others, including Mr Croker, stating that at that date there was a further batch of the 2010/2011 summer season MR43 implicated in the outcross complaints being received by the defendant, bringing five batches sold in that season into contention.
[396] Also on 18 February 2011, Ms Crawford sent an email to Mr Croker and others setting out the state of affairs at that date, including that "[c]urrently we are obtaining a 70 percent germination rate on this seed which gives us... confidence that [it] should be controlled through current herbicides used and rotational practices" and "[o]ur advice from weed experts [is] that it is not presenting a weed spectrum that will proliferate - unlike Johnsons Grass. Trevor is working on producing a separate management plan for the sorghum on sorghum growers." The advice also referred to "the handout currently circulating".
[397] Also on 18 February 2011, Ms Crawford sent an email to David Jordan of DEEDI attaching the Identification and Management Document. There are aspects of both the email and the document that should be noticed.
[398] In the email, Ms Crawford identified the contamination source as from "Burdekin production", contrary to internal emails among the defendant's management group, including herself. As well, she said "Shattercane is a generic term for sorghums that shatter in Australia", contrary to the defendant's case in this proceeding that the term is not used in Australia.
[399] The document emphasised at the beginning by dot points that:
Sorghum bicolor,
[409] On 18 March 2011, the Queensland Herbarium sent a letter to Ms Crawford stating that a botanical specimen submitted by the defendant and received on 2 March 2011 was identified as "Sorghum bicolor Forage sorghum, shatter cane."
[410] The plaintiffs allege that the negligence of the defendant was that the defendant failed to take reasonable precautions in or from January 2011 by failing to warn the plaintiffs and growers who had planted the contaminated MR43 seed that any shattercane plants needed to be removed before they dropped seed.
[411] There is no clear evidence when the plaintiffs' or other growers' off-type plants dropped seed. However, in some cases it may be that it was after January 2011 and possibly after mid-March 2011. If an average growing period of 140 days from mid-October 2010 is assumed, an average harvest would be expected to have occurred by the second week of March 2011. The plaintiffs' and sample group members' planting and harvesting information was relatively more varied and vague, as follows:
Sorghum bicolor
[417] In my view, the defendant's managers were not aware generally at that time that the off-type plants growing in the season's crops of MR43 were of a shattering variety. That awareness occurred later, in my view by end January 2011, but probably not long before then.
[418] The defendant submitted that it was not possible to identify the risk that the off-type plants posed until they began to shatter, and that by early January 2011 the seed heads were still too immature to make a conclusion about their variety, relying on Ms Crawford's evidence, but her statement on that point was secondary hearsay evidence of an oral opinion of an expert who was not called to prove the opinion.
[419] The defendant also submitted that by end January 2011 it was too late to remove the off-type plants by rogueing, relying on a conversation between Ms Crawford and Mr Cook "around February 2011" where Ms Crawford said that because the plants in Mr Cook's crop were already shattering it was too late to "remediate". It is a logical proposition that if the plants were already shattering, rogueing would be too late, but I do not accept that was necessarily true for all growers as at the end of January 2011. It does not seem to have been too late for the defendant's own commercial seed production crop for the 2010/2011 summer season in the MIA.
[420] However, ultimately, I make no finding on this question whether the failure from the end of January 2011 to give advice to rogue off-type plants growing in MR43 as soon as possible was a breach of duty because, although the point is or may be open on the pleadings, the plaintiffs' written submissions did not contend for that finding.
[432] The plaintiffs' pleaded case as to the defendant's knowledge is based upon the contents of a number of emails.
[433] On 5 March 2009, Mr McCumstie sent an email to Ms Crawford and Mr Philp referring to his inspection of a crop of MR Buster that morning, where there were a few off-types in the crop. The plants were in the rows which suggested they came with the seed. Mr McCumstie said he had seen similar plants in MR43 for the past couple of years. The farmer had expressed a concern it may be shattercane. The level of infestation was small, maybe less than .1 percent, and some sections of the paddock had none of the off-type plants.
[434] On 5 March 2009, Ms Crawford sent an email to Mr McCumstie and others stating she would get some help on Mr McCumstie's enquiry, but that it could just be an outcross of Johnson's grass, by the look of it.
[435] On 16 March 2009, Ms Crawford sent an email to Mr Croker attaching Mr McCumstie's email and asking if they could speak about it.
[436] On 16 March 2009, Mr Croker sent an email to Mr Needham and another asking for them to check out the background on the relevant batch and grower line.
[437] On 17 March 2009, Mr Needham sent an email to Mr Croker referring to the limited test results available. One of the relevant batches had been produced by blending seed produced by Cavaso Farming and another producer.
[438] On 20 March 2009, Mr McCumstie sent an email to Mr Croker, Ms Crawford and another, attaching three photographs, stating that two of the photos were from John Benham's MR Buster, and that from the second photo, one could see it was a different plant type to the plants "seen the other day". The third photo was of off-type plants in another field of MR Buster. Mr McCumstie said he had been told of off-type plants in MR43.
[439] In my view, these emails do not carry the plaintiffs' case to a state of knowledge that will support the misleading or deceptive conduct case alleged.
[440] If the state of awareness as at April 2009 through to August 2010 is brought into focus, the question to ask is whether the circumstances required a disclosure as to the risk of a significant contamination of MR43 seed produced for the 2010/2011 summer season, because it would be misleading or deceptive not to do so.
[441] There were only three complaints made in the 2008/2009 summer season of off-type plants with shattering characteristics appearing in growers' crops (Benham, Brownhill and Norman). There were no specific complaints of that kind made in the 2009/2010 summer season. That may be compared with 37 or more specific complaints of that kind made during the 2010/2011 summer season. And even in that season a number of the witnesses for the plaintiffs gave evidence that although they noticed a number of tall plants in their crops they did not understand that the talls were off-type plants with shattering heads until the 2011/2012 summer season when the off-type plants appeared in greater numbers and between the rows.
[442] The fact that there had been minor occurrences of off-type plants in a few growers' crops in the 2008/2009 summer season MR43 or other grain sorghum crops for that season does not support that it was misleading or deceptive for the defendant not to disclose that the 2010/2011 summer season MR43 was or might have been contaminated and may not be safe to use. There was no significant contamination of the 2008/2009 summer MR43 crop. Had the 2010/2011 summer season MR43 been the same as the 2008/2009 summer season MR43 or the 2009/2010 summer season MR43, there would have been no significant level of contamination.
[443] In my view, the defendant did not engage in misleading or deceptive conduct by failing to disclose the potential that the 2010/2011 summer season MR43 was or might have been contaminated and may not be safe to use.
[455] If planting assumptions are made, a rough calculation can be made of how a contamination of .1 percent, or one tenth of one percent, of seeds would appear in a growing field of MR43 sorghum. First, an assumption must be made as to the rate of germination. For simplicity, let it be assumed 85 percent of seeds planted germinated as that was the represented minimum germination rate of MR43. Second, an assumption must be made as to the number of MR43 seeds planted in a given area. The evidence was that the rate of planting was not likely to be lower than 45,000 seeds per hectare and up to 65,000 seeds per hectare. Accordingly, at the maximum permitted rate of .1 percent, the range of number of off-type plants would be between 38 and 55 plants in a paddock area of 100 metres square, that is, per hectare.
[456] None of the plaintiffs' witnesses gave evidence as to the rate of any off-type plants in the plaintiffs' or group members' MR43 crops in the 2010/2011 summer season, except Mr Morrice. On the contrary, most did not observe a problem off-type at all in that season and those that noticed off-type plants considered them to be usual "talls", like those in previous years, at the time. Mr Morrice's observation was of a level of less than 1 plant per hectare, although I doubt the frequency was as low as that.
[457] Many of the defendant's witnesses gave evidence as to the number of plants per hectare that they observed when they attended growers' land that was growing the contaminated MR43 crop in the summer of 2010/2011. None estimated that they saw off-type plants in that season at a rate greater than 5 plants per hectare. However, with only two apparent exceptions, none of the crop reports contained any contemporaneous note or record of the rate. There were a few contemporaneous internal emails that suggested a higher rate, as previously discussed, but the source of those reports or by whom they were made and on what basis was not proved by the evidence. However, putting those emails to one side, the defendant submitted that the evidence of the number of plants observed by the defendant's witnesses should be treated as dispassionate and objective evidence given by trained and experienced observers. It was submitted that the "field staff were actually there counting off-types". I reject this overstated submission as unpersuasive. Had that been either the role or duty of the field staff in visiting growers, then the absence of any record of their observations in all of the relevant 37 crop reports, except two, is unexplained. In my view, the evidence given by the defendant's witnesses on this point should be treated as an after the fact estimate, given from recollection only after many intervening years from the observation in question without any supporting contemporaneous note of the observations.
[458] Nevertheless, failure to accept that evidence is no proof that the off-type plants that were not true to type talls grew in the 2010/2011 summer season at a rate of 38 plants per hectare or more.
[459] The plaintiffs submit that because the defendant failed to call Mr Needham to give evidence, a Jones v Dunkel[139] inference should be drawn as to the evidence he might have given about the three emails referred to above, or perhaps more broadly, on this question. However, drawing the inference that his evidence would not have assisted the defendant on the question of the percentage of off-type plants does not necessarily take the matter far. Mr Needham was not identified in the evidence as a person who attended the relevant properties and saw the rate of "talls" or off-type plants in the growers' fields. It is not to be assumed, therefore, that he could have given admissible evidence on that question. Overall, in my view, the plaintiffs have not proved that the representation on the label of the "maximum other seeds" of .1 percent in the bags of MR43 was misleading or deceptive.
[469] In my view those submissions should not be accepted. An important fact in reaching that conclusion is that it is not alleged for this cause of action that the defendant was aware that the 2010/2011 summer season MR43 seed did not have the same characteristics as previous years' seed before it was sold by distributors to and planted by any of the plaintiffs and group members in the spring and summer of 2010. In other words, the alleged implied representation is one that is submitted to arise simply from the history of prior use and satisfactory experiences of the plaintiffs with MR43 as seed for the production of grain sorghum. That is not enough, in my view, to amount to a representation that each year's seed will have the same characteristics as the previous years' seeds, in the sense that it will be as free from weeds as prior years' seeds.
[470] As to the part of the alleged implied representation that the 2010/2011 summer season MR43 was "safe to use", there was no express statement by the defendant that supports that representation. In my view, for the same reasons as discussed previously in relation to the alleged implied representation that the 2010/2011 summer season MR43 seed did not contain any other seed which would compete against the sorghum seed or would otherwise harm or be detrimental to the continued use of the land for the commercial cultivation of sorghum and other crops, that representation was not made.
[471] The plaintiffs may have had in mind the discussion of a cognate alleged representation in Costa Vraca v Bell Regal Pty Ltd.[140] In my view, it is distinguishable from the present case. The conclusion whether conduct is misleading or deceptive depends on the facts of the particular case. It is unnecessary to discuss Costa Vraca further in order to decide the present case.
[494] Cash flow losses from the 2011 calendar year to 30 June 2020 are treated by the plaintiffs as past losses, while the balance of the 15 year period is treated as a future loss of cash flows that are discounted for relevant risks and to arrive at a net present value of the future cash flows.
[495] There is no allegation or evidence that any of the plaintiffs or group members made any increased cash outflow or expenditure for labour for rogueing the off-type plants or for spraying before 24 April 2011. The evidence is all the other way, with increased rogueing starting only in the 2011/2012 summer season and increased herbicide expenditure after the harvest of the 2011/2012 summer season crop.
[496] There is also no allegation or evidence that any of the plaintiffs or group members suffered any loss of cash inflow or income from sorghum seed sales prior to 24 April 2011. Again, the evidence is all the other way. None of the plaintiffs or sample group members suffered any effect on cash inflows or income until the changes made to their farming practices from the 2012/2013 summer season.
[497] However, as appears from the summary of the defendant's limitation plea set out above, the defendant alleges that the plaintiffs and group members suffered damage by reason of facts which occurred earlier than 24 April 2011.
[498] As to the purchase of the contaminated MR43 seed, in my view, the plaintiffs and group members did not suffer damage at the time of purchase. The seed was not acquired for re-sale and was not re-sold. It was intended for and was used instead by planting for its intended purpose of producing the 2010/2011 summer season crop. That crop was produced and sold by the plaintiffs and group members to their customers without financial loss.
[499] As to the planting or germination of the contaminant seeds, in my view, the plaintiffs and group members did not suffer any damage at those times. The defendant does not plead or prove that the value of any interest of the plaintiffs or group members in the land on which the planting and germination of the contaminant seed occurred was decreased. There is a statement in Dovuro by way of obiter dictum that upon a contaminant seed growing weeds on the plaintiff's land, the plaintiff in that case suffered physical damage.[154] But that case is neither binding on this court, nor was the question discussed in any detail.
[500] As to the dropping of the off-type plants' seeds, whether on shattering of the plants' heads before harvest or on harvest of the MR43 crop, in my view the same considerations apply.
[501] For the purposes of the tort of negligence, the question when a limitation period begins to run, that is, when the cause of action accrues, was considered in Hawkins v Clayton.[155] The majority of the High Court reaffirmed the ordinary rule that a cause of action for negligence accrues when the plaintiff first suffers damage caused by the defendant's breach of duty.[156] Gaudron J said:
[521] The defendant pleaded that none of the plaintiffs or represented group members suffered loss caused by planting after the 2018/2019 summer season.[177] The defendant's evidence was presented on the basis that no assessment was made of any losses for the 2019 year.
[522] Another significant difference between the parties was the plaintiffs' claim for damages for loss suffered after 2019 as future losses, on the basis that the plaintiffs and group members will continue to experience losses until the end of 2026.
[523] The plaintiffs' case was that the claimed (past) loss for the 2019 year and future losses, from 2020 to 2026 inclusive, should be calculated by the following methodology:
[528] The plaintiffs' evidence was contained in the plaintiffs' witness statements and a number of expert reports produced by a forensic accountant, Elia Lytras, who acted on the assumptions he was given and the evidence tendered in support of those assumptions. The defendant's evidence as to those matters was contained in a number of reports of an expert witness, Mr McDougall, who challenged a number of the assumptions and factual bases for the plaintiffs' calculations using other sources of evidence or information as a benchmark and in preference to contradictory statements in the plaintiffs' witness statements.
[529] A difficulty that emerged is that the defendant did not cross-examine any of the plaintiffs' witnesses as to the factual assumptions challenged by Mr McDougall, in contravention of the rule in Browne v Dunn.[178] Where an expert witness makes observations or draws conclusions which are to be relied upon as being inconsistent with the evidence of other factual or expert witnesses, it is ordinarily for the party calling the contradictory evidence to put such matters to those other witnesses.[179] But as was said in one case: