MARSH -v- BAXTER [2015] WASCA 169 (3 September 2015)

MARSH -v- BAXTER [2015] WASCA 169 (3 September 2015) - WASCA 2015 case summary — Zoe

[160]

In May 2001, the minister announced an interim five-year moratorium on the commercial production of GM food crops. He stated that the moratorium would allow issues associated with market impacts, identity preservation and feasibility and the risks and benefits of establishing GM and GM free zones to be fully debated in the community.

...

The Bill will allow the State Government to designate areas of the State, or the whole of the State, as areas where specified genetically modified food crops may not be grown. This will be done, by ministerial order, if it is believed to be necessary to protect the State's markets for conventional crops and to protect our reputation as a 'clean, green' source of agricultural products. The State's markets and its good reputation could be seriously damaged if the introduction of GM crops is allowed before proven segregation and identity preservation systems are in place.

...

The Gene Technology Regulator is currently considering applications for the commercial release of GM canola varieties by Monsanto Australia and Bayer CropScience. The Regulator's decision will be made after a comprehensive assessment of the risks to human health and safety, and to the environment, of the release of GM canola and the management of those risks. However, the regulator's decision will not take into account any risks to agricultural production systems or markets from the commercial release of GM canola; yet these are matters of great concern to the State, the community in general and farmers in particular.

...

The State's role in regulating for production and marketing risks associated with gene technology is acknowledged in section 21 of the Commonwealth's Gene Technology Act 2000.

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The [Commonwealth] legislation will not prohibit field trials of GM crops. These are subject to stringent licensing conditions and extensive monitoring by the [Regulator] in the trial and post trial phases; nor will it prohibit contained laboratory or greenhouse research involving GM food crops.

...

The Government's public consultation on GM-free zones found little support for the concept of GM-free areas interspersed throughout the landscape with areas where GM crops could be grown. Such a system was considered to be difficult and costly to establish and manage, and unlikely to be very effective. On that basis, the minister does not envisage using the legislation to designate either individual local government areas, or groupings of these, as GM-free zones.

...

In respect of GM canola, it is likely that the minister will designate the entire State as an area where GM canola may not be cultivated commercially. The Government will continue to adopt a cautious approach to the introduction of GM crops to Western Australian farming systems. It is not opposed to GM crops, but is prepared to intervene for marketing purposes. (emphasis added)

[259]

And it would have been obvious to you, wouldn't it, that by leaving the windrow crop in that way that it might get blown about by the wind?---Well, it's not obvious but there's always some little chance it can move a bit.

Well, move a bit. You knew then that one of the things that could happen would be that the windrow would be disturbed by the wind and the swathes would be blown?---Well, they can always move a little bit, the swathes, with a bit of wind blowing.

Yes. And once they're dislodged, you knew that they could be then blown further?---There's always a chance.

Yes. And given that the Marsh property was next door, you knew that there was a chance that the - over the weeks that it's left there, that the windrows would be dislodged by the wind and blow onto Eagle Rest?---Well, with our buffer zones and our road and the tree lines, I expected we had a further enough distance.

...

There was a real chance that it would blow off your property?---No.

You didn't think that there was a real chance that it would blow off your property?---No.

Why is that?---Well, I had never swathed before. It's the first time I had swathed. I hadn't noticed in previous years windrows blowing around and with the buffer zones and the border lines I left between Mr Marsh, I presumed nothing would get on his property.

...

Now, you observed during the swathing period - after you had swathed and before you had harvested, you observed that some windrows had been disturbed by the winds, did you?---Had I observed?

Yes?---I - just a little bit, yes.

Yes. And once disturbed, it was likely - there was a real chance that that would blow onto - off your property and onto the road. Do you agree with that?---Well, no, not necessarily.

Well, when you say not necessarily, it was a real prospect that that would happen, given that- - - ?---Not a real prospect.

You took the chance, did you, Mr Baxter, that it wouldn't happen?---Yes.

Did you turn your mind to the fact that it might happen?---No (ts 829 - 830). (emphasis added)

[473]

314 Another factually similar case is Dovuro where the defendant imported into Australia, and sold to distributors, canola seed produced in New Zealand. The seed had been tested by New Zealand authorities which, to the defendant's knowledge, revealed the presence of weed seeds. The canola seed was not sold as being free of weeds. At the time of the importation, no Australian government had declared any of the weeds in the canola seed to be prohibited. The plaintiff conducted a farming business in Western Australian and bought from a local distributor (not the defendant) canola seed imported by the defendant. After the plaintiff had planted the canola seed, the Ag Department became concerned about the presence of the weed seeds in the canola seed which resulted in declarations being made by the State Agriculture Protection Board prohibiting the introduction into Western Australia or movement within the State of those weeds and to require their eradication. As a result of the declarations, the plaintiff suffered pure economic loss which he sought to recover. Towards the end of the trial, the defendant conceded it owed the plaintiff a duty to take reasonable care but denied any breach. The defendant applied to withdraw the duty concession in the High Court. A majority said it was unnecessary to determine the application: Gummow J [58]; Hayne and Callinan JJ [154]; Heydon [177]. The other members of the High Court would have refused leave: Gleeson CJ [3]; McHugh J [29]; Kirby J [94]. However, a majority appeared to accept that the defendant owed a duty to exercise reasonable care not to expose the plaintiff and other farmers who planted the canola seed to a risk of injury of which the defendant knew or ought to have known: McHugh J [29]; Kirby J [96]; Hayne and Callinan JJ [159]. The High Court held there was no breach of duty because at the time the defendant imported and sold the canola seed in Western Australia it was not reasonably foreseeable that buyers of the seed would suffer damage by reason of the weeds subsequently being declared prohibited. In that context it was relevant that the weeds were not known to be 'dangerous' in a way that would justify prohibition.

[598]

The use of genetically modified organisms in farming, including GM canola seed (GMOs) has the potential to cause catastrophic commercial losses to non-GM farmers and particularly to non-GM farmers that have been accredited as being organic (or sustainable) farms (Organic Farmers) if GMOs enter upon and contaminate a non-GM farm or non-GM farm production cycle;
The principal cause of the commercial losses to Organic Farmers as a consequence of GMOs contaminating a non-GM farm or non-GM farm production cycle is as a result of the forfeiture of the price premiums attached to the sale of the produce grown by Organic Farmers and/or the withdrawal of their accreditation as Organic Farmers. There may also be other costs and expenses incurred as a direct consequence of such contamination by GMOs;
Because of the well known risks and perhaps the inevitability of GMOs eventually contaminating non-GM farms, most policies of insurance, including most public risk policies of insurance for farmers, have a specific exclusion denying the policy holder from any insurance cover for any claim arising from the contamination of non-GM farms or non-GM farm production cycles by GMOs;
The farming property ... known as 'Eagle Rest' ... [has] been declared as a non-GM farm and we are accredited as Organic Farmers ...;
We have been informed or otherwise have an understanding that you have already or are presently contemplating growing GM canola on your land or that you will be directly or indirectly involved in the seeding, transportation, swathing, harvesting or storage of GMOs and/or GM canola;
Contrary to some perceptions and some commentary in the media there is a zero tolerance for non-GM farms in Australia which means that any level of contamination of a non-GM farm by GMOs or GM canola will render the affected land as GM contaminated;
The legal principle in Australia commonly referred to as 'strict liability' means that a person ... will be liable for the expenses, commercial losses caused by the escape of a dangerous thing from land even where there has been no fault or negligence giving rise to or causing the escape;
The liability of a person ... in Australia pursuant to the principle of 'strict liability' as a consequence of the escape of a dangerous thing or a risk from other or adjoining land, as applicable to the escape of GMOs or the contamination of a non-GM farm with GMOs irrespective of the means by which the GMOs escaped or the unexpected intervention of another person ... resulting in the contamination of a non-GM farm with GMOs or with GM canola;
If ... our land ... becomes contaminated with GMOs or GM canola, we intend to immediately commence one or more legal actions to recover all our expenses, reductions in income and any other economic losses arising from such contamination, against any person ... who was involved or connected in any way to the escape of the GMOs or the GM canola being brought on or near to the general vicinity of our land, including any contractors who were in any way connected with the seeding, ... swathing ... or storage of the GMOs and/or the GM canola, notwithstanding that any one or more of them may not be at fault or in any way negligent ...;
In pursuing any such court actions against you and/or others ... we will rely on this Notice in writing to you ... as demonstrating that we specifically alerted you to our concerns before the event and to the foreseeability of the losses and damages that we would incur if the GMOs and/or GM canola escaped onto our land and the contamination by GMOs of our farm production cycle generally;
We hereby urge you to immediately seek appropriate legal advice in response to this Notice and if you continue with or elevate your involvement with GMOs ... after being served with this Notice we urge you to seek and obtain comprehensive indemnity cover ... from the supplier(s) to you of the GMOs ... as you are unlikely to be insured for any liability (including any strict liability) arising from your conduct ...;
Please refer to the attached schedule A for a non-exhaustive list of the likely ... economic losses we may incur if our land becomes contaminated by GMOs and/or GM canola. (emphasis added)

[928]

[A]t the time of the supply of the seed to the Sparnons, Apand knew or ought to have known that [Perre] grew commercial potato crops within the 20 km buffer zone, and knew of the special requirements of the Western Australian law with respect to importation of potatoes grown in adjoining areas to those where there was an outbreak of the disease. Apand was aware not only of the threat that bacterial wilt represented to growers, but of the presence of the disease in the ... area where [the Victorian grower]'s property was located.

...

The evidence was that, leaving aside the Saturna seed, the only potato seed which Apand sent into South Australia had been certified under the certification scheme. Apand appreciated that the major cause of the spread of bacterial wilt was through growers buying non-certified seed. As a practical matter, Apand was in control of the initiation and conduct of the experimental activities using the Sparnons' property. Apand both selected and supplied the seed and chose the location for the experiment.

The Perres had no way of appreciating the existence of the risk to which they were exposed by the conduct of the Apand experiment and no avenue to protect themselves against that risk. They thus stood in quite a different position from that of the financier in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords which had the power to deal from a position of strength in ordering its commercial relationship with the party to whom it provided financial accommodation. Here, the relevant risk to the commercial interests of the appellants was in the exclusive control of Apand. ... The effect of the Western Australian legislation upon the export market from South Australia was such that, within the buffer zone, the economic loss would flow directly and inevitably and the possibility of its occurrence would not be speculative.

The characteristics of the present case to which I have referred combined ... to bring the Perres and Apand into such close and direct relations as to give rise to a duty of care owed by Apand for breach of which purely economic loss may be recovered. (emphasis added) (footnotes omitted)

[991]

The immunity from liability referred to in that passage is a consequence of the common law's concern for the autonomy of the individual and its desire to give effect to the choices of the individual by not burdening his or her freedom of action. Nor is the immunity confined to traders. As long as a person is legitimately protecting or pursuing his or her social or business interests, the common law will not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons. And that is so even when that person knows that his or her actions will cause loss to a specific individual. ... However, where other indicia of duty are present, the cloak of immunity cannot extend to conduct which cannot be fairly described as a legitimate pursuit or protection of a person's interests. What then is not a legitimate protection or pursuit of one's interests?

Competitive acts not prohibited by law are legitimate unless they fall within the ambit of one of the economic torts to which I referred in Hill v Van Erp. Ordinary competitive conduct imposes no duty to protect others from economic loss. At the other end of the spectrum, conduct involving deceit, duress or intentional acts prohibited by law could seldom, if ever, be regarded as done in the legitimate protection or pursuit of one's interests. However, it does not follow that, other indicia of duty being present, a person will always lose the immunity given to protect the autonomy of the individual merely because his or her conduct has been done in breach of law. ... Between the extremes are acts whose legitimacy will no doubt affect minds differently. They are likely to involve sharp or ruthless conduct. Perhaps no more can be said in the abstract than that the line of legitimacy will be passed only when the conduct is such that the community cannot tolerate it.

Because protection of the individual's autonomy is the reason for the immunity conferred by the legitimate protection or pursuit of interest doctrine, that doctrine can have little, if any, application in a case where the defendant already owes a duty of care to do or not to do something. Thus, in Caltex, Stephen J, correctly in my opinion, thought a significant factor in support of the conclusion that Caltex was owed a duty of care was 'the infliction of damage by the defendant to the property of a third party ... as a result of conduct in breach of a duty of care owed to that third party'. (footnotes omitted)

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Judgment (1299 paragraphs)

MARSH -v- BAXTER [2015] WASCA 169 (3 September 2015)

Legislation Cited (10)

Cases Cited (33)