Mallonland Pty Ltd Acn 051 136 291 & Anor v Advanta Seeds Pty Ltd Acn 010 933 061

[2023] HCATrans 138

[2023] HCATrans 138

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B18 of 2023

B e t w e e n -

MALLONLAND PTY LTD ACN 051 136 291

First Applicant

ME & JL NITSCHKE PTY LTD ACN 074 520 228

Second Applicant

and

ADVANTA SEEDS PTY LTD ACN 010 933 061

Respondent

Application for special leave to appeal

KIEFEL CJ
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON FRIDAY, 13 OCTOBER 2023, AT 1.00 PM

Copyright in the High Court of Australia

____________________

KIEFEL CJ:   In accordance with the protocol for remote hearings, I will announce the appearances for the parties.

MR W.A.D. EDWARDS, KC appears with MR B.A. HALL for the applicants.  (instructed by Creevey Horrell Lawyers)

MR P.J. DUNNING, KC appears with MR E.J. GOODWIN, KC and MS M.Y. BARNES for the respondent.  (instructed by Herbert Smith Freehills)

KIEFEL CJ:   Mr Dunning, the Court would be assisted to hear from you in the first place.

MR DUNNING:   Thank you, your Honours.  In our respectful submission, there is ultimately no utility in a grant of leave regardless of the point of interest our learned friends would refer to, and the most useful way of illustrating that is by taking your Honours to the proposed grounds of appeal.  Can I ask your Honours, please, to go to page 198 of the application book.  Your Honours, ground 1, if I can take you to the critical . . . . . for present purposes, is in the last couple of lines:

by reason of hidden defects in those goods.

Now, the difficulty with that is ‑ ‑ ‑

KIEFEL CJ:   Mr Dunning, forgive me for interrupting, but is not the central question, the real special leave question, that contained in (b)?  Whether the question of reasonable foresight of harm has an impact upon the general holding that there should be a disclaimer of liability.

MR DUNNING:   Yes, it does – but if I perhaps might deal with that ground, then, directly.  In our respectful submission, it is put – as it needs to be for the applicants to succeed – that somehow the courts below treated the issue of the disclaimer as overwhelming all other salient features, considerations.  That is, in our respectful submission, not so.  May I ask your Honours, please, to go to page 170, and the reasons of Justice Morrison.  At paragraph [227], your Honours will see his Honour recalled: 

None of the contentions referred to in paragraphs [145] to [223] rise to the level that, weighing the salient features applicable to this case, the disclaimer in the terms and conditions on the bags is deprived of its effect in negating the existence of a duty –

Far from treating as having overwhelmed it, the Court of Appeal, Justice Morrison, with whom Justice Williams agreed, went through the weighing exercise that this Court has mandated.  So, the ground of appeal, and the critical point, as the Chief Justice puts it, would never get anywhere in this case.  Can I demonstrate the manner in which the Court of Appeal had weighed those considerations.  If your Honours would start at paragraph [145] of Justice Morrison’s reasons, on page 150 of the record.  You will see that his Honour considers the “Duty of care – appeal issues”.

His Honour, then, at [149], gives careful consideration to Dovuro, and, in particular, to deal with the contention that this was an existing category.  Your Honours will see his Honour deals extensively at [150] as to why this Court’s holding did not have that effect, and consistently the decisions in the . . . . . so, his Honour carefully critiques . . . . . in the Full Court of the Federal Court in that regard.  Then, at [172], on page 157, and importantly, in our submission, at (a), (d), (f), (g) and (h), compellingly sets out the reasons why – including, in respect of (h), by reasons of later decisions of this Court – that that first contention of the applicant in the Court of Appeal was correct.

His Honour then goes on to consider the question of indeterminacy, starting at paragraph [174] of his reasons, weighs carefully the considerations in that case, and at [202] makes it clear that he was satisfied the judge below had taken that issue into account.  Indeed, as with the issue of vulnerability, the findings in the Court of Appeal are the most favourable which the applicant here could, in fact, hope for.  His Honour deals with the issue of reasonable foreseeability at [203], and says in the second line:

The matters set out above in paragraphs [23] to [26] make that –

that is, reasonable foreseeability:

conclusion inevitable.

Last sentence:

The central reason for finding there was no duty was not the question of foreseeability, but the negation of any assumption of responsibility.

It is not that his Honour did not consider the centrality of reasonable foreseeability, it is that his Honour weighed it and considered it to be negated by the assumption of responsibility.  Just while I am on reasonable foreseeability, despite what is contended before your Honours here, with the very greatest respect, reasonable foreseeability is firmly against the applicants ever succeeding in this matter.

Yes, it was reasonably foreseeable, as Justice Morrison had described as “inevitable”, but that which was reasonably foreseeable between the commercial producer of seed and the commercial user of seed, which is then the subject of a prominent disclaimer able to be acted upon, demonstrates that the issue of reasonable foreseeability in those circumstances tends powerfully against the imposition of a duty, not in favour of it, because the disclaimer was disclaiming that very issue that was well in view of both parties – that is, the reasonable foreseeability.

KIEFEL CJ:   Are you saying that the disclaimer, in terms, identified the very factors that led to damage?

MR DUNNING:   Yes, in that it identified that there was an assurance of only 99 per cent purity and, critically, that there could be up to 0.1 per cent of other seed in there, and Chief Justice Gleeson had observed in Dovuro and it was Justice Giles in the Full Court of the Federal Court, that is a ubiquitous thing amongst the commercial manufacturer of seed, that there will be some other seed there.  So, that which was reasonably foreseeable is that there might be other seed in the bag and that might be problematic.

KIEFEL CJ:   But the applicant’s case here is not that there might be seed but rather that it was known to the respondents that there was and that it might cause damage to the grower’s land, and that land could not be used to its full commercial potential during the eradication period.  I mean, this is actual knowledge, not possibilities, we are talking about.

MR DUNNING:   No, there was no knowledge that there was actual material in these bags that would be problematic on the farm.  The ‑ ‑ ‑

KIEFEL CJ:   Did Advanta not know that sorghum off‑types had been identified in the MR43 seed that it sold from 2009 onwards?

MR DUNNING:   Yes, it did, but that is not knowledge that there was presence of that particular seed in this bag, or in these bags.  What it knew was there was a risk amongst its stock of MR43 that there was or might be seed that did not meet the criteria, which is exactly what the bag told the informed reader, that is, the commercial grower, that in this bag we are telling you that there is 99 per cent purity, but there is up to half a per cent of inert material, and there is up to 0.1 per cent of other seed, and it was agitated below that that 0.1 per cent of seed – that failed at trial and was not pursued in the Court of Appeal, and so ultimately, that which is said to be reasonably foreseeable is exactly that which Advanta specifically adverted to in its bag, because reasonable foreseeability is not of the precise . . . . .  it is the risk of the kind ‑ ‑ ‑ 

KIEFEL CJ:   I am sorry, we just did not hear that, Mr Dunning.  You froze just for a moment.  Would you mind repeating that submission?

MR DUNNING:   My apologies.  Of course.  One is concerned with the risk of the kind, not the precise sequence that an individual plaintiff asserts it has suffered.  The risk here was that contained in the bag would be seed of another variety, and the risks that are attended of seed of another variety being sown with the seed to be cropped.

Your Honours, if I may then please return to page 166 of the record, Justice Morrison then turned to the issue of vulnerability from [204] through to [213], and again, in our respectful submission, the finding in the Court of Appeal of Justice Morrison is at the very highest the applicant could hope for.  We disputed there, and dispute again, that vulnerability was made out here, but on the strength that it was made out, as Justice Morrison was willing to conclude, that nonetheless led his Honour to weigh the matter as your Honours see in [213], page 168:

However, the defence put vulnerability directly in issue, and the learned trial judge was obliged to deal with it.

Then in the last sentence:

But that is to say no more than that vulnerability was one salient feature to assess in the whole process.

Then if one goes to . . . . . possibility and his Honour ‑ ‑ ‑

KIEFEL CJ:   Mr Dunning, I am sorry, you just froze again.  Could you just start that submission again, please.  Just after your reference to the end of paragraph [213], if you could repeat your submission.

MR DUNNING:   Of course, Chief Justice.  At [214] his Honour then goes to what was the critical issue, ultimately, or the most important, we submit, of issues in the case, and our friends do as well.  Paragraph [214]:

The fifth contention was that, for the same reasons, Advanta was the person with control of the risk coming home to the substantial exclusion of the farmers; therefore there was known reliance and there was assumption of responsibility.

At [215] his Honour rightly records that that could not be separated from the issue regarding the terms and conditions.  Plainly, it could not.  At [216] and onwards, his Honour deals with that the factual issue that had not been part of the case below to make good known reliance, and there was good reason for that.

At trial, in the Court of Appeal, there was dispute about the . . . . . case as to whether the label was prominently displayed on the bag at all, and one can well understand why the plaintiffs wisely did not endeavour then to prove actual reliance to draw attention to what was always going to be a problematic issue for them.  If one goes, then, to [221] on the next page:

In my view, if it was intended to plead known reliance, that is to say that Advanta knew the appellants relied on Advanta to protect them against the risk of economic loss –

Then his Honour goes on.  So, when it comes to the actual reliance, that was an issue that did not arise, because of the manner in which the plaintiffs had chosen to run the case.  Then his Honour at [223] says:

For the reasons explained . . . above the disclaimer negated an assumption of responsibility and, therefore, the existence of a duty of care.

Your Honours will see at paragraph [35] – and in the interest of time I will not take your Honours through all of it, but, your Honours, starting on page 128 of the book, the judge, starting at paragraph [35], deals with the conditions on the bag and sets out those conditions at 129.  He then ultimately, starting at paragraph [48] on page 131, critiques the relevant considerations regarding duty of care in a scenario such as this, and we particular notice paragraph [51] and 51(d) and (e) in that regard.  So, that is what his Honour is referring back to.

If I can take your Honours back to 169, having carefully found that the bag terms were there; found they were prominently displayed; found that they identified that other seed up to 0.1 per cent was identified for growers and the significance of that lay to them . . . . . that were asserted by the applicant, as appellant below, his Honour then set about applying the law.  Your Honours see that starting at paragraph [224] through to [227] – having earlier carefully dealt with Dovuro issue – and what his Honour’s reasons demonstrate is that, without difficulty, his Honour was able to apply the holdings of this Court – in particular, those to be found in Woolcock Street Investments and Brookfield Multiplex – in a way that would not be aided by a further revisitation by this Court.

So, in our respectful submission, if one returns to where the Chief Justice had directed my attention towards the outset of these submissions, if one views ground 2 – that is at paragraph 3, on page 198 of the book – as the critical issue, in our respectful submission, it was carefully weighed in the Court of Appeal, as it had been in the trial division – and I will just give your Honours the reference, but his Honour deals with that, starting at paragraph [51], on page 132.

This is a case where the salient features were taken into account, they were applied and they were weighed – even if your Honours had a different view, or even if their Honours on an appeal here had a different view, that would not be a reasonable matter for a grant of leave.  What this case demonstrates is, without difficulty, early decisions of the court have guided a trial judge and an appellate court to weigh the cases as they should . . . . . . in our respectful submission in . . . . . subject to questions your Honours have, can I just raise two matters very briefly, then, in the remaining minutes.  The first is where I started – that is in respect of ground 1.

For reasons I hope I have sufficiently covered, the question of hidden defects – which is the essence of proposed ground 1, paragraph 2, page 198 – is just not right.  That factualist issue was asserted at first instance and on appeal and, obviously, the plaintiff realised that as soon as those bag terms were there, it was highly problematic for them.  Once one has those facts, there is simply nothing hidden about it.  In fact, it was prominently displayed on a matter that was important to farmers because they wanted to know the germination rate.

As to ground 3, that is simply not a special leave matter.  As it suggests, in its terms, at paragraph 4, page 199 of the book, last three lines, “were matters which supported not expanding the protection available” – that is a relevant consideration for any court to weigh when dealing with a novel duty in the particular circumstances of a case.  It will not arise in every case but, in this case, it was capable of arising – consideration was given to it.  What our learned friends would seek to do, by that ground of appeal, is raise to something mandatory that which it has said in law ought not be treated as mandatory.

Your Honours, unless we could assist you further, they are our submissions.

KIEFEL CJ:   Yes, thank you, Mr Dunning.

MR DUNNING:   Thank you, your Honours.

KIEFEL CJ:   The Court will now adjourn to consider the course that it will take.

AT 1.30 PM SHORT ADJOURNMENT

UPON RESUMING AT 1.22 PM:

KIEFEL CJ:   We need not trouble you, Mr Edwards.  There will be a grant of special leave in this matter.  What is your estimate of time, Mr Edwards?  It will be finished within the day?

MR EDWARDS:   Yes, your Honour.

KIEFEL CJ:   Would you agree with that, Mr Dunning?

MR DUNNING:   Chief Justice, we would want to consider seeking leave to put in a notice of contention on the limitation point which was run by the courts below.  It took a day and a half in the Court of Appeal.  I am not suggesting that it would not be shorter in this Court, because the factual inquiry might – it would certainly, I think, still be a full day, or may be a full day.

KIEFEL CJ:   Yes.  But it would not need a second day.  It would not need to go into a second day.

MR DUNNING:   No, I do not think so.

KIEFEL CJ:   Right.  One day.  Yes, thank you, gentlemen.  The Court will now adjourn until 2.00 pm.

AT 1.23 PM THE MATTER WAS CONCLUDED