Schneider v Hoechst Schering Agrevo Pty Ltd

Federal Court of Australia|2001-02-21|Before: Hely JJ

REASONS FOR JUDGMENT THE COURT: 1 1996 was not a good year for growing wheat in the Walgett/Coonamble area ("the area"), particularly when compared with 1995. In 1996 numerous crops in the area sustained damage, probably because of moisture stress and/or frost. Puma S was used extensively in the area in 1996 as a herbicide, and in the great majority of cases, the wheat crops sprayed with Puma S suffered either no ill effects, or at least no ill effects which the growers of the crop attributed to the use of Puma S. 2 Puma S was first released commercially for the wheat season in 1993. 1994 was a drought year and no wheat was sown by any of the represented wheat growers. 1995 was a good year, with generally high yields at harvest. Puma S was widely used throughout the area in 1995, without any complaint as to crop damage. Three of the wheat growers who complained of crop damage occurring after the use of Puma S in the 1996 season (Messrs Munns, Todd and Chapman), had used the herbicide in 1995, without any ill effect upon their crops. 3 Beginning in 1987, Puma S underwent numerous trials to measure both its efficacy in achieving weed control and its safety to wheat crops. The trials took place in all areas of mainland Australia where wheat is generally grown. Trials were undertaken at places within the area between 1989 and 1995. The respondent was of the opinion, as a result of the trials, that the reliable performance of Puma S over a wide range of geographical and environmental conditions had been demonstrated. 4 There was evidence before the primary judge that in the period between 1993 and 1995 about 939,000 hectares of wheat had been sprayed with Puma S. Before 1996, complaints had been received from only two growers, who claimed yield reductions in relation to three varieties of wheat during the 1993 season. One of these was in Moree and the other in Eumungerie, New South Wales. Subsequent investigations as to the cause of the losses were inconclusive. The areas involved in these complaints constituted 0.01 per cent of the total area sprayed with Puma S between 1993 and 1995. 5 A number of growers gave evidence at the trial as to the damage sustained by their wheat crops in the 1996 season after being sprayed with Puma S. Whilst there is no doubt that the crops were damaged, and that the damage occurred after the crops had been sprayed with Puma S, the primary judge found that the damage resulted from a combination of conditions which remained unexplained, even after the taking of evidence at the trial. Her Honour said: "In the present case, even hindsight cannot tell us what factors or combination of factors caused damage to the applicants' crops." Her Honour found that no one, experts or otherwise, could identify the process, by which damage was sustained by these crops. The damage occurred as a result of a combination of conditions "which remain unexplained to this day, and which may well have varied from crop to crop, or even within crops". 6 There was a close temporal link between the spraying of the crops, and the subsequent deterioration in the condition of the crops. But Her Honour found that there were a number of possible explanations for the damage to the crops, quite apart from spraying with Puma S. They included residual damage from black oats, low moisture, nutritional deficiency and frost damage. 7 However, in the case of some, but not all, of the growers who gave evidence, her Honour was satisfied that the application of Puma S was "in some way connected" with the damage sustained to the crop. In those cases, there was an observable difference between areas sprayed with Puma S and areas which were not, and this difference was later reflected in significant yield loss in the sprayed areas. 8 Thus in the case of Mr Munns, there were two adjoining properties which had a similar cropping history. One was sprayed, the other not. The sprayed area yielded 0.28 tonnes per acre, the unsprayed area yielded 1.2 tonnes per acre. Her Honour said that: "[I]t is difficult to identify any factor which can explain the differential damage other than the fact of spraying." However, prior to 1996 Mr Munns had sprayed with Puma S, or its predecessor Puma, without any ill effects. 9 In the case of Mr Todd, there was an unsprayed paddock, and other paddocks were partially sprayed with Puma S, and partially sprayed with Topik, another herbicide produced by a different manufacturer. There was a dramatic difference in appearance of the wheat in the sprayed and unsprayed areas, and the unsprayed paddock, although generally of a lower quality than the sprayed paddocks, produced a much higher yield than the others. The primary judge found that: - it was the spraying of the crops which made the difference between the occurrence and the non-occurrence of damage; - the damage was related to the application of a herbicide, being either Puma S or Topik. In the 1995 season Puma S had been applied to areas on Mr Todd's property which were infested with black oats. The chemical was effective in eliminating the weed, and did not appear to have any adverse effect on the crop itself. 10 A dramatic visual difference was observed between the stubble in the two "Letterbox" paddocks on Mr Chapman's property, "Capelle", but it was ultimately established that neither had been sprayed with Puma S. 11 In the case of Mr Lyons, 1200 acres were sprayed with Puma S and 220 acres were not sprayed. There was no real explanation for the observable damage to the 1200 acres of wheat which was sprayed with Puma S as opposed to the remaining 220 acres which were apparently undamaged. The primary judge found: "It would therefore appear that the application of Puma S was in some way connected with the damage sustained by Mr Lyons' crop." Mr Lyons had 150 acres of "volunteer" wheat (self-seeding wheat which was 12-16 days in advance of the sown wheat) which apparently remained normal and unaffected after being sprayed with Puma S. 12 In the case of Mr Edwards, his unsprayed 30 acres subsequently produced nearly three times the yield/acre of the 340 acres which were sprayed. There was no suggestion of other factors which might have caused the difference between the yield of the two areas. 13 In the case of Mr Masman, in the paddocks sprayed with Puma S, the wheat contained either no grain or very little grain and was not worth harvesting. The crop in an unsprayed paddock produced a reduced yield as a result of competition from black oats and other weeds, but was at least worth harvesting. In the sprayed paddocks, there were unsprayed areas around some drains and trees where the wheat had grown normally and contained full grain. 14 Neighbours of Mr Masman had a different experience. Mr Lyons' crop was damaged by adverse climatic conditions, presumably frost. The areas of his crop which had not been sprayed with Puma S were worse affected than those which had been sprayed. Mr Scott Harris sprayed 4000 acres of his crop with Puma S. He observed no subsequent damage to the wheat crop apart from the normal temporary setback that occurs after spraying. In one paddock only half was sprayed with Puma S as the other half had fewer black oats. At harvest, the yield from the sprayed half was approximately double that of the unsprayed half. 15 The appellant's case was based on negligence and on an alleged contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act").

Negligence 16 There are four elements of a claim based in negligence: - a duty of care owed to the appellant; - a breach of that duty on the part of the respondent; - the appellant must have suffered foreseeable loss or damage; - the respondents' breach of duty of care must have been the cause of the appellant's loss or damage. 17 In the circumstances of the present case, the respondent owed a duty to persons in the position of the appellant, to take reasonable care to prevent foreseeable damage to wheat crops as a result of their being sprayed with Puma S. Whether the respondent was in breach of that duty was an issue between the parties, as was the issue of foreseeability of damage and the issue of causation.

Causation 18 The primary judge first addressed the issue of causation. The question which her Honour posed for resolution was: "whether Puma S caused or contributed to the damage to the represented growers' wheat crop". It was not submitted by the appellant that the question as formulated was inappropriate, even though the question is couched in terms of whether the chemical caused or contributed to the damage to the crops, rather than in terms of whether a breach of duty on the part of the respondent had that result. The appellant accepted "her Honour's general findings of fact". The case was put by the appellant on the basis that her Honour's primary factual findings were such as to require the conclusion that the spraying of the crops caused or contributed to the damage to the represented growers' wheat crops. 19 It is sufficient for an applicant to establish that the damage of which he or she complains was "caused or materially contributed to" by the respondents' wrongful conduct. Causation is a question of fact to be determined by the application of commonsense to the facts of each case: March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 515. It is not sufficient merely to show that it is possible that the damage sustained by an applicant was caused by the respondents' default: St George Club Ltd v Hines (1961) 35 ALJR 106 at 107. The Court there pointed out that mere proof of default followed by injury does not show that the default caused the injury. 20 Causation in an individual case can be established by a process of inference from circumstantial evidence. A finding of causal connection may be open without expert evidence to support it, or when the expert evidence does not rise above the opinion that a causal connection is possible, as long as the expert evidence does not exclude a finding of causation: Commonwealth v McLean (1997) 41 NSWLR 389 at 410. The evidence will be sufficient if, but only if, the materials offered justify an inference of probable connection as opposed to possible connection: Seltsam Pty Ltd v McGuiness; James Hardie & Coy Pty Ltd v McGuiness [2000] NSWCA 29 at [83] to [91]. 21 The appellant's expert, Professor Kennedy, accepted that Puma S, properly formulated and applied, is not normally considered a dangerous product to use. To the contrary, he accepted that there is ample world-wide evidence that the active ingredient in Puma S, combined with a safener, provides a successful technology for controlling weeds. 22 Puma S is generally classified as a post-emergent selective herbicide. It is designed to eradicate weeds that have emerged during the growth of the wheat crops, without affecting the wheat itself. It contains an active ingredient and a "safener". Both weeds and wheat crop take up the active ingredient at the same time, which sometimes leads to a yellowing effect in the wheat. However, the wheat metabolises the active ingredient at a faster rate than the weeds, a process which is accelerated by the safener. The result is that the active ingredient is detoxified inside the wheat within a short time, so that no long term damage is suffered by the crop. 23 Before detoxification occurs, wheat plants suffer what was described in the evidence as a "setback period" or a "knockback period". During this phase, the effect of other stresses, such as disease, frost and nutrient deficiencies, might be accentuated. In the normal course of events these stresses have effects which are temporary only and do not lead to permanent damage. In virtually no case in the course of the trials was any permanent damage to crops or any significant loss of yield observed after the application of Puma S, even though in some cases frosts were known to have occurred after spraying. The primary judge found: "If stressful events occurring soon after spraying generally led to permanent (as opposed to transitory) damage, it is virtually inconceivable that this would not have been revealed through the trial process." 24 The setback period was described by the experts as normally being a "brief" or "short" period only. The experts agreed that, during the setback period, the wheat plant, being already under stress, might be more susceptible to other forms of stress. If it were the case that permanent damage to the wheat resulted from an accentuation of the effect of other stresses emerging in the setback period, then spraying the crop with Puma S could be a cause of the damage to the wheat. In such a case, the introduction of a stressful condition into the wheat arising from the spraying of the wheat with Puma S, when combined with external stresses, could be seen as the cause of the subsequent damage, as it would materially contribute to the occurrence of that damage. In such a case application of Puma S would produce an increased risk of damage to the wheat crop in the setback period, and if that risk eventuated, causation would be established, even if other factors contributed to the occurrence of the damage, unless the respondent could establish that the spraying had no effect at all, and that the damage would have occurred in any event: Naxakis v Western General Hospital (1999) 162 ALR 540, 547. 25 However, her Honour found it to be unlikely that the damage to the wheat and loss of yield was referrable to external stresses occurring during the normal setback period after spraying. On her Honour's finding, if permanent damage was caused by stressful events occurring during the setback period, this would almost certainly have been revealed during the very extensive trials of Puma S, yet her Honour found that the trials revealed no hint of this phenomenon. 26 Her Honour was not satisfied that Puma S played such an integral role in the chain of causation leading to damage as to make it a legal "cause" of the damage. Her Honour found: "Spraying the crops with Puma S - or, it seems, with Topik - might well have set the scene whereby subsequent adverse conditions combined to damage the crops, but the herbicide itself was not a relevant cause of it. Even if one adopts the reasoning in March and Bennett, the spraying with Puma S can only have amounted to an 'essential condition' of the occurrence of the damage to the five represented growers' wheat crops. It was not a true cause of that harm. The true cause or causes lay elsewhere, in the stressful conditions, whatever they were, that later beset those crops. The manufacturer and distributors of Puma S cannot be responsible in law for the consequences of those stressful conditions." (emphasis added) In her Honour's view, the most likely explanation for the fact that some crops sustained damage in sprayed areas, but not in unsprayed areas, is this: "... the application of the herbicide affected the subsequent stage of growth of the wheat plants so that they were at a particular stage of susceptibility when a later stressful event (or, more likely, a combination or series of stressful events) occurred. I include nutritional deficiency amongst possible stressful events, although this is in truth a condition rather than an event." (emphasis added) 27 At an earlier point in her judgment, her Honour had said: "Another possibility mooted during the hearing was that the growth of sprayed crops was set back after the application of Puma S, thus delaying the time when they came into flower and were most susceptible to frost. In other words, when a severe frost occurred, the unsprayed crops had already passed the crucial flowering stage, whereas the sprayed crops remained within the period of vulnerability. This hypothesis has the advantage that, unlike many others, it can explain the differential damage which was observed between sprayed and unsprayed areas of some of the affected crops. There is a real possibility that frost contributed to the damage observed on the represented wheat growers' crops." 28 The content of the phrases "set the scene" and "particular stage of susceptibility" are critical to the issue of causation. The effect of her Honour's findings is that as a result of the application of Puma S, the wheat plant was at a stage of its growth less advanced than it might otherwise have been, when subsequent adverse conditions, such as low temperatures, frosts, low moisture or other factors, occurred or combined so as to produce the resultant damage. 29 But for the spraying of the crops with Puma S, (or at least those crops where differential damage was observed) it may be that the crops would have been at a different stage of development, and may not have sustained permanent damage as a result of the emergence of external stresses. It is only in this sense that application of Puma S "set the scene" for the subsequent damage. The same "scene" would have been set if the crop had been planted a little later, or if the external stresses had emerged a little earlier, and there had been no spraying. On her Honour's findings, the application of Puma S resulted in a temporal coincidence - the crops were at a particular stage of their development when external stresses which caused or combined to cause the damage to the crops happened to emerge. The spraying with Puma S was, in the case of the crops where differential damage occurred, a necessary condition of the subsequent damage, but its application did not increase the risk of damage occurring except, perhaps, in the setback period itself, an exception which on her Honour's findings was of no relevance in the circumstances of the present case. 30 In the appellant's submission, if the "but for" test gives a "positive answer" that is the end of the enquiry on the question of causation. By that we understand the appellant to mean that if it is established that but for the use of Puma S the crops would not have suffered the damage which they did, then causation is established. It was established in the cases where differential damage was evident that but for the use of Puma S the crops would not have suffered the damage which they did, but this was not established in any of the other cases. 31 The appellant's submission in this respect is inconsistent with the decision of the High Court in March. As McHugh J observed in his dissenting judgment in Chappel v Hart (1998) 156 ALR 517, 524, March and other authorities establish that: "... the mere fact that injury would not have occurred but for the defendant's act or omission is often not enough to establish a causal connection for legal purposes." And in Commonwealth v Butler (1958) 102 CLR 465, 476-477, Taylor J said: "It should, however, be said that the cause of an event is not established in the legal sense by showing, without more, that in the absence of a proved set of circumstances the event would or may not have happened, or, that a proved set of circumstances, in the widest sense, contributed to the happening of the event." 32 Given her Honour's general findings of fact, which are not challenged on this appeal, no error was committed by her Honour in concluding that as a matter of commonsense, spraying the wheat crops with Puma S did not cause or materially contribute to the damage sustained by the wheat crops in question.

Foreseeability 33 Issues of reasonable foreseeability do not arise unless and until it appears that the negligent act or omission alleged has in fact caused the damage complained of: Chapman v Hearse (1961) 106 CLR 112, 122. For there to be recovery, the harm suffered must be of a kind, type or class foreseeable as a result of the respondent's negligence. The rarity of an injury does not deny the foreseeability of the class of injury into which it falls: Mount Isa Mines Ltd v Pusey (1971) 125 CLR 383, 390: "That it is sufficient that the class of injury as distinct from the particular injury ought to be foreseen as a possible consequence of particular conduct in order to establish liability for damages for the particular injury is well established." In Doughty v Turner Manufacturing Co Ltd [1964] 1 QB 518 the plaintiff was injured when an asbestos cover fell into a cauldron of molten liquid. The cover reacted with the liquid to cause an explosion of the liquid. The state of knowledge at that time gave no reason to expect such an occurrence. It was argued that it was foreseeable that the plaintiff might be injured by splashing and that what occurred was merely a variant by splashing. But the Court of Appeal held that it was a different, and unforeseeable type of injury. 34 In the present case, both at first instance and on appeal, the appellant's submissions on the issue of foreseeability were inextricably linked with its contention that the respondent was in breach of duty by failing to conduct adequate tests on Puma S which might have alerted the respondent to the existence of previously unperceived risks arising from the use of the product. 35 It is unsurprising that this is so, for, as the authors of The Law of Torts in Australia 3rd ed. 1999, Trindade and Cane, point out, issues of foreseeability also arise in the determination of whether the respondents were negligent in the first place (at 505). Thus in Doughty (supra) the eruption of the molten liquid was found to be an unforeseeable consequence of the falling of the asbestos cover into the vat. Hence, as no one knew, or ought to have known, that the asbestos cover would react as it did, the defendant had not been negligent in not taking precautions to prevent it falling in. 36 The appellant contends that such trials of the product as were undertaken prior to the winter of 1996 were deficient as they lacked specificity or direction. The appellant further contends that had adequate trials been conducted, the respondent would have been alerted to the possibility of damage occurring as it did in 1996. Presumably the case is that if the respondent was equipped with that knowledge, it would have given an appropriate warning, which would have been heeded by the represented growers, and the damage to the wheat crop thereby avoided. We interpolate the observation that there was an issue at first instance as to whether, if a warning had been given, it would have been heeded by any or all of the represented growers. In the light of her other findings, the primary judge concluded that it was not necessary for her to make a finding on that issue. It was common ground that if this Court came to a different conclusion on the issue of inadequacy of warning, the matter would need to be remitted to the primary judge to determine what, if anything, the represented growers would have done if confronted with an adequate warning. 37 The primary judge found that the respondent was not on notice as a result of the trials which it conducted, or as a result of any complaints which it received before 1996, that there was any danger to wheat crops inherent in the use of Puma S. That finding was not challenged on appeal. 38 Her Honour also made the following findings: "It is often possible, with the benefit of hindsight, to identify the chain of causation which has led to the sustaining of damage by plaintiffs. Even in those cases, foreseeability will not be established unless it can be shown that the defendant should have been alerted, before the event, to the possibility of damage of that type occurring. In the present case, even hindsight cannot tell us what factors or combination of factors caused damage to the applicants' crops. Still less was there anything, before the 1996 season, which should have alerted Hoechst, as a prudent manufacturer, to the possibility that other factors, combined with the application of Puma S, might cause damage to wheat crops. The trials which were conducted were, in my view, entirely adequate in the circumstances. Accordingly, the applicants have failed to show that Hoechst should have foreseen the risk of its product being part of a chain of causation whereby damage was sustained by crops upon which it had been sprayed." 39 The primary judge made a further finding which is fatal to the appellant's case, based on failure to conduct adequate enquiries. That finding is as follows: "... there is nothing to support the proposition that, had Hoechst conducted trials which were specifically directed to the conditions suggested by the applicants, any further information would have been obtained which might have alerted Hoechst to the possibility of damage occurring as it apparently did in 1996." 40 In the end, the appellant submitted that the respondent is liable for failure to carry out further scientific tests even though it could not be established that had those tests been undertaken, the respondent would have been alerted by the results of them to the possibility of damage occurring as it did in 1996. That is not the law. In a case such as the present, a failure to test could only be a source of liability if the result of testing would have equipped the respondent with knowledge which would have alerted it to the need to take steps calculated to prevent the occurrence of the type of damage which in fact occurred.

Breach of duty 41 At the completion of the evidence, the appellant's case in negligence rested essentially on two propositions; - failure to conduct adequate tests on Puma S; - failure to provide adequate warnings as to the possible adverse effects of Puma S upon wheat crops. 42 For the reasons already given under the heading of "foreseeability", the primary judge correctly dismissed the case insofar as it was based on supposed inadequacy of testing. The pleadings asserted that the respondent should have warned the applicants that Puma S could "destroy or substantially reduce a wheat crop". It was common ground that the issue was whether a warning in the terms pleaded ought to have been given. 43 The following description of the label attached to Puma S containers is taken from the primary judge's reasons for decision: "The label commences with directions for use in the following terms: DIRECTIONS FOR USE: (For Use in All States) Restraints: Do NOT apply if rainfall is expected within 4 hours. Do NOT apply to weeds or crop under stress due to, for example, very dry, very wet, nutrient deficient frosty or disease conditions." The label proceeds to specify the rate at which the herbicide should be applied (between 500-700 millilitres per hectare according to the weed involved and the time of application). It then describes a 'withholding period' during which Puma S should not be applied. In the case of wheat, this is a period commencing ten weeks before harvest. Under 'General Instructions' the following passage appears. 'Results are best under good growing conditions and application to weeds or crop under stress (eg due to continuous severe frosts, nutrient deficient, diseased, dry or waterlogged conditions) should be avoided.' The label contains detailed warnings relating to resistant weeds, directions relating to the method of application, and advice relating to the compatibility of Puma S with other herbicides. Protection of wildlife, protection of adjoining crops, and safety directions are all set out on the label. No further warnings are conveyed as to the possible effect of Puma S on wheat crops, other than as quoted above. The applicants, as already indicated, claim that the label was deficient in this regard." 44 The finding made by the primary judge on the warning issue is as follows: "However the warning as set out in their pleadings, to which the applicants must be restricted, is a warning that Puma S could 'destroy' or 'substantially reduce' the yield of wheat crops. Before the 1996 wheat growing season, as already discussed, there was nothing to alert Hoechst, as a reasonable manufacturer, that Puma S might have this effect upon wheat crops. Moreover, given the destructive effect of black oats on wheat crops, and the effectiveness of Puma S in killing this weed, it is at least possible that such a warning, if heeded, might have caused greater damage to wheat crops than was sustained by the represented growers. A warning in such general terms was clearly not called for. It was always open to the applicants to seek to amend their pleadings so as to rely on a more specific warning. Their failure to do so probably reflects the fact that it is difficult, if not impossible, to devise a specific warning which meets the circumstances of this case, given that the factors causing damage are still unknown." 45 In the appellant's written submissions it is put that the warnings on the label were inadequate, in that they did not refer to the effect of the chemical on wheat and in particular: - wheat growing in sulphur deficient soil; - effect of cold temperatures; - length of knock back effect; - reduced capacity of plant to cope with stress during the knockback period; - reduced capacity of plant to cope with frost. 46 That submission fails to come to grips with the concession made at first instance (properly) that the issue is whether a warning in the terms pleaded should have been given. The submission does not address that issue, and no error has otherwise been shown in her Honour's findings extracted in par 44 above.

Section 52 47 The claim under s 52 of the Trade Practices Act was based upon a failure on the part of the respondent to warn the appellant of the risk of damage to which their crops were exposed by reason of the application of Puma S. The claim assumes a finding that the respondent was aware of that risk. The primary judge did not so find. The finding was: "there was clearly no knowledge". No error has been shown in that respect. Her Honour correctly concluded that the claims under the Trade Practices Act must therefore fail.

Conclusion 48 The appeal is dismissed with costs. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Counsel for the Respondents: Mr I G Harrison SC, Mr G P McNally

Trade Practices Act 1974(Cth)s 52

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