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Dovuro Pty ltd v Wilkins

Dovuro Pty ltd v Wilkins

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FEDERAL COURT OF AUSTRALIA
Dovuro Pty Ltd v Wilkins [2000] FCA 1902
NEGLIGENCE – duty of care – economic loss – absence of physical injury – risk of physical injury – cost of avoiding or minimising risk – standard of care – forseeability – existence of statutory scheme regulating conduct – compliance with statutory scheme – whether liability can be greater than arising under contract
CONTRACT – construction and interpretation – “undesirable species” – trade meaning – incorporated by conduct – custom or usage – how established – exclusion clause – causation
SALE OF GOODS – implied terms – whether purchaser relied on seller’s skill and judgment – whether goods of merchantable conduct
PRACTICE & PROCEDURE – appeal – point not argued at trial
Federal Court of Australia Act 1976 (Cth) ss 4, 24
Quarantine Act 1908 (Cth)
Sale of Goods Act 1908 (NZ) s 16
Trade Practices Act 1974 (Cth)
Perre v Apand Pty Ltd (1999) 198 CLR 180, discussed
Ward v McMaster [1988] IR 337, cited
Dynasty Pty Ltd v Coombs (1995) 59 FCR 122, cited
White v Minister for Immigration & Multicultural Affairs [2000] FCA 232, cited
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 74 ALJR 1348, cited
Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631, applied
Winnipeg Condominium Corporation No 36 v Bird Construction Co (1995) 121 DLR (4^th) 193, referred to
Leigh and Sillivan Ltd v Aliakmon Shipping Co Ltd [1985] QB 350, cited
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, distinguished
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, distinguished
FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, cited
Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31, cited
Donoghue v Stevenson [1932] AC 562, discussed
Winterbottom v Wright (1842) 152 ER 402, cited
Langridge v Levy (1837) 150 ER 863, cited
Haseldine v C A Daw & Son Ltd [1941] 2 KB 343, cited
Stennett v Hancock & Peters [1939] 2 All ER 578, cited
Maindonald v Marlborough Aero Club & New Zealand Airways Ltd [1935] NZLR 371, cited
Howard v FurnessHoulder Argentine Lines Ltd [1936] 2 All ER 781, cited
Malfroot v Noxal Ltd (1935) 51 TLR 551, cited
Watson v Buckley, Osborne, Garnett & Co Ltd [1940] 1 All ER 174, cited
Pack v County of Warner (1964) 44 DLR (2d) 215, cited
Fraser Henleins Pty Ltd v Cody (1944) 70 CLR 100, cited
Harris v Macquarie Distributors Pty Ltd [1967] VR 257, cited
Bourhill v Young [1943] AC 92, cited
Anns vMerton London Borough Council [1978] AC 728, referred to
South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282, cited
Caparo Industries plc v Dickman [1990] 2…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2000] FCA 1902
Decision Date: 21 DECEMBER 2000

CaseChat Overview and Summary

The case of Dovuro Pty Ltd v Wilkins involved a dispute between Dovuro, a seed merchant, and Wilkins, a farmer, over the sale of contaminated canola seed. The matter was heard in the Supreme Court of Western Australia, with Callinan J presiding over the case. The court was required to determine whether Dovuro owed a duty of care to Wilkins and other farmers in the Western Australian wheat belt who purchased contaminated canola seed. This involved examining the foreseeability of harm, the proximity of the relationship between the parties, and the special circumstances of the case.

The court found that Dovuro owed a duty of care to Wilkins and other farmers who purchased contaminated canola seed. Callinan J reasoned that Dovuro was aware of the potential risks associated with weed seed contamination and failed to warn farmers about the presence of weed seeds in the Karoo canola seed. The court determined that the class of potential claimants was limited and ascertainable, and that Dovuro had a large measure of control over the distribution of the seed. Furthermore, the court found that the special circumstances of the case, including the limited amount of contaminated seed and the lack of industry standards regarding the sale of contaminated seed, warranted a finding of a duty of care.

As a result of the court's reasoning, Callinan J dismissed the appeal against the declarations made by the trial judge that Dovuro owed a duty of care to Wilkins and breached that duty, causing damage. The court also dismissed the appeal against the order dismissing Dovuro's cross-claim against Cropmark. The final orders included dismissing the appeal against the declarations made by the trial judge, allowing the appeal against the order dismissing Dovuro's cross-claim, and setting aside the order dismissing the cross-claim. The court further ordered that the parties provide an agreed minute of the orders to be made, including orders as to costs, by a specified date.

Orders

Orders of the court

The Court orders that:

1. The appeal by Dovuro Pty Limited (“Dovuro”) against the declarations made by Wilcox J on 19 May 2000 be dismissed.

2. The appeal against the order of Wilcox J of 23 December 1999 dismissing Dovuro’s cross claim against the second respondent be allowed, and the order dismissing the cross claim be set aside.

3. The appeal otherwise be stood over to a date to be fixed for the purpose of determining what other orders, including orders as to costs, should be made.

4. The parties provide to the Associate to Branson J by 9 February 2001, an agreed minute of the orders to be made (including orders as to costs) and if agreement has not by then been reached, the minutes of orders for which they will respectively contend and brief outlines of submissions in support of the orders.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Callinan J found in favour of the respondent compensating the appellants for their losses because of factors identified by him which in combination established a sufficient degree of proximity, foreseeability, a special relationship, determinancy of a relatively small class of potential claimants, a large measure of control on the part of the respondent and special circumstances (para 406).CONCLUSIONS REGARDING DUTY OF CARE It seems to me that the conclusion of the learned trial judge in this case that Dovuro owed a duty of care to Wilkins and group members is consistent with the approaches adopted by the majority of the members of the High Court in Perre v Apand. Further, in my view, his Honour’s conclusion is correct. The features of this case which have caused me to adopt the view that Wilcox J rightly found that Dovuro owed to Wilkins and the group members a duty to take care not to cause them financial harm by failing to warn of the presence of the weed seeds are the following. Dovuro is a seed merchant which, through its officers and in particular Mr Tapp, appreciated the dangers inherent in the introduction of new weeds into areas of Australia where grain crops are commercially grown. It appreciated that the Australian canola seed industry could be adversely affected by weed seed contamination, and the seed merchants had a “duty to avoid such contamination”. It further appreciated the limitations inherent in the statutory requirements of Australian Quarantine Inspection Service, Western Australian Quarantine and Inspection Service and the Agriculture Protection Board (WA). That is, Dovuro had actual foresight of the likelihood of harm if it caused or allowed certified canola seed, contaminated by the seed of weeds not established in the Western Australian wheat belt, to be distributed without warning to farmers in that area. Dovuro knew from the seed analyses provided to it by Cropmark that the Karoo seed distributed by it did contain unusual weed seeds. It was alert to the fact that this was a matter of concern. The class of persons who were vulnerable to a failure by Dovuro to warn of the presence of the weed seeds was, in my view, limited and ascertainable in the relevant sense (see particularly Perre v Apand per Gaudron J at para 32, McHugh J at para 111-112, Hayne at para 336 and Callinan J at para 409). The class comprised the ultimate purchasers of the limited amount of Karoo canola seed imported by Dovuro from New Zealand who farmed in the Western Australian wheat belt. This class was vulnerable to incurring loss by reason of Dovuro’s conduct. The evidence and correspondence of the officers of Dovuro, particularly Messrs Tapp and Rath, is inconsistent with there being an industry standard, let alone a community standard, suggesting that it is ordinarily legitimate in the pursuit of commercial advantage for a seed merchant to fail to take reasonable steps to ensure that a farmer who purchases certified seed supplied by a seed merchant, which the seed merchant knows to be contaminated in a way which is “unusual” and “of concern”, is aware of such contamination.

Ratio Decidendi

Legal Principle Established

For the reasons set out below, I would dismiss the appeal against the declaration made by the learned trial judge (Wilcox J) on 19 May 2000 that the appellant (“Dovuro”) owed a duty of care to the first respondent (“Wilkins”) and group members and that it was in breach of such duty. I would also dismiss the appeal against his Honour’s declaration of the same date that some damage was suffered by Wilkins as a result of such breach of duty. Further I would dismiss the appeal against his Honour’s order of 23 December 1999 dismissing Dovuro’s cross-claim against the second respondent (“Cropmark”).FACTUAL CONSIDERATIONS A weed may well be only a plant growing where it is not wanted. However, as the judgment of the learned trial judge illustrates, it has been recognised since biblical times that “good seed” is seed that does not include the seeds of weeds (Matthew 13.27). So far as canola seed is concerned, it is not disputed that seed quality, and thus the price that can be achieved for it, is dependent on seed purity. Weed seeds detract from the purity of harvested crop seeds and, in the case of an oil seed such as canola, adversely effect the quality of the oil produced from such seeds. Weeds compete with crop plants for nutrients and moisture thus reducing yield at the time of harvest. Dovuro having decided to “bulk-up” in New Zealand the triazine tolerant strain of canola which came to be known as Karoo, imported the bulked-up seed into Australia in 25kg bags. The bags were labelled “Certified seed, 1st generation” and on the back of each label were the words “Minimum 99% Purity, Minimum 85% germination”. Before the seed was distributed in Australia, Dovuro received seed analysis certificates from the New Zealand Ministry of Agriculture and Fisheries (“MAF”). Of the eight lines of seed imported into Western Australia, six contained “redshank” seeds (the remaining two lines had seeds which could have been “redshank” seeds), two lines contained “cleavers” seeds and another “field madder” seeds. One line contained all three of these weed seeds. Dr Terence John Piper (“Dr Piper”), the Acting Manager, Weed Science Group, Agriculture Western Australia (“AgWest”), gave expert evidence which the learned trial judge accepted. Dr Piper expressed the opinion that none of the weeds cleavers, redshank and field madder was established in the Western Australian wheat belt. He further expressed the opinions that the relevant Weed Risk Assessments (“WRAs”) prepared by the officers of Agriculture Western Australia suggested that there was a moderate to high risk that cleavers was capable of becoming a problem in the Western Australian wheat belt, a slight chance of redshank becoming a problem in that area and a moderate chance of field madder becoming a problem in that area – although field madder “might not be a serious weed” in that there are only limited areas of its preferred soil type in the Western Australian wheat belt.