Mallonland Pty Ltd v Advanta Seeds Pty Ltd
[2021] QSC 74
•9 April 2021
SUPREME COURT OF QUEENSLAND
CITATION: Mallonland Pty Ltd & Anor v Advanta Seeds Pty Ltd [2021] QSC 74 PARTIES: MALLONLAND PTY LTD ACN 051 136 291 (AS
TRUSTEE FOR THE ANDREW JENNER FAMILY
TRUST)(First Plaintiff) AND ME & JL NITSCHKE PTY LTD ACN 074 520 228 (AS
TRUSTEE FOR THE NITSCHKE FAMILY TRUST)(Second Plaintiff) v ADVANTA SEEDS PTY LTD ACN 010 933 061 (Defendant) FILE NO/S: BS 4103 of 2017 DIVISION: Trial Division PROCEEDING: Trial ORIGINATING Supreme Court at Brisbane COURT: DELIVERED ON: 9 April 2021 DELIVERED AT: Brisbane HEARING DATE: 16, 23-26, 30-31 March 2020; plaintiffs’ written submissions 9 April 2020; defendant’s written submissions 14 April 2020. JUDGE: Jackson J ORDER: The judgment of the court is that the plaintiffs’ claim is dismissed. CATCHWORDS: TORTS – NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMISSIONS 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 TORTS – NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMISSIONS 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, OMISSIONS 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 cropsLIMITATION 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 2011Australian Consumer Law, s 2, s 3, s 11, s 18, s 54, s 236, s
271
Civil Liability Act 2002 (NSW), s 5B, s 5C, s 5D
Civil Liability Act 2003 (Qld), s 9, s 10, s 11
Civil Proceedings Act 2011 (Qld), s 103V, s 103W, s 103X
Limitation Act 1969 (NSW), s 14
Limitation of Actions Act 1974 (Qld), s 10
Sale of Goods Act 1896 (Qld), s 4, s 17, s 56
Sale of Goods Act 1923 (NSW), s 6, s 19, s 57
Trade Practices Act 1974 (Cth), s 52, s 82Advanced Wire & Cable Pty Ltd v Abdulle [2009] VSCA
170, cited
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Barclay v Penberthy and Ors (2012) 246 CLR 258, citedBrookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 & Anor (2014) 254 CLR 185, cited
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Dovuro Pty Ltd v Wilkins (2000) 105 FCR 476, discussed
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Junior Books Ltd v Veitchi Co Ltd [1983] 1 AC 520,
discussed
MacPherson v Buick Motor Co 217 NY 382 (1916), citedMelisavon Pty Ltd v Springfield Land Development Corporation Pty Ltd [2015] 1 Qd R 476, cited
Minchillo v Ford Motor Company of Australia (1995) 2 VR
594, cited
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388,
cited
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Nocton v Lord Ashburton [1914] AC 932, cited
Perre v Apand Pty Ltd (1999) 198 CLR 180, discussed
Ranger Insurance Co v Globe Seed & Feed Company 865 P
2d 451 (1993), citedSchutt Flying Academy (Australia) Pty Ltd v Mobil Oil Smith v Eric S Bush (a firm) [1990] 1 AC 831, cited
Strong v Woolworths Ltd (2012) 246 CLR 182, cited
Suosaari v Steinhardt [1989] 2 Qd R 477, citedAustralia Ltd (2000) 1 VR 545, cited cited
Swick Nominees Pty Ltd v Leroi International Inc (No 2) (2015) 48 WAR 376, cited Wallace v Kam (2013) 250 CLR 375, cited
Wardley Australia Ltd v State of Western Australia (1992)
175 CLR 514, cited
Williams v Network Rail Infrastructure Ltd [2019] QB 601,
cited
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004)
216 CLR 515, discussed
Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC
454, citedCOUNSEL: D Campbell QC, N Andreatidis QC and B Hall for the
plaintiffs
P Dunning QC, G Beacham QC, E Goodwin, L Judd, M
Barnes and M Brooks for the defendantSOLICITORS: Creevey Russell Lawyers for the plaintiffs Clifford Gouldson Lawyers for the defendant
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.
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.
The proceeding is a class action, tried under Part 13A of the Civil Proceedings Act 2010 (Qld). The class is defined as:
“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):
(a) conducted a business in Queensland and/or New South Wales for the planting and commercial cultivation and sale of sorghum; (b) purchased MR43 seed from a grain merchant who had been authorised by the Defendant to sell MR43 seed; (c) purchased MR43 seed which contained shattercane seed; (d) was not notified and was otherwise unaware that the purchased MR43 seed contained shattercane seed; (e) planted the purchased MR43 seed in order to produce a crop of sorghum for commercial cultivation and sale; (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 (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.”
The common questions are stated as (omitting the references to the versions of the pleadings):
“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. 2.
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.
3.
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.
4.
Whether that production process and those production controls accorded with, or exceeded, industry standards and practices.
5.
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.
6.
Whether the level of the shattercane or AGOTS in the TREK batches was no more than 0.1%?
7.
Whether any reasonable system of grow outs, or any other reasonable control, would have detected the shattercane or AGOTS in the TREK batches?
8.
Whether, and to what extent, shattercane or AGOTS being present on land:
(a) competes with planted sorghum; (b)
has a deleterious effect on the commercial production of sorghum;
(c) once present on the land can spread vigorously; (d)
can germinate, propagate and multiply quickly, infesting and overrunning the land;
(e)
can re-infest land as its seeds can lie dormant in soil for 3 or more years, meaning that germination can be staggered;
(f) is difficult to eradicate. 9. … 10. Whether the defendant knew or ought to have known:
(a)
by 2008 that tall open-headed shattering grassy off-types plants were present in sorghum grown using MR43 seed;
(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;
(c) at the time the MR43 seed was sold: (i) about the character, nature and effect of shattercane on sorghum production;
(ii) that it would be used for cultivating commercial sorghum crops for sale;
(iii) that any contamination of MR43 seed by shattercane would cause loss and damage to growers;
(iv) that there had been earlier outbreaks of shattercane in sorghum grown in the Burdekin region of Queensland in 1977 and 1978;
(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;
(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;
(vii) that growers using MR43 seed would rely on the information contained on the label attached to MR43 bags (the label);
(viii) that the eradication of shattercane or AGOTs is more [effective] if commenced in the first year that the contaminant is found;
(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;
(x) that the MR43 seed was likely to be so contaminated;
(xi) that the MR43 seed had not been tested to ensure that it was free of shattercane or any other off-type [contaminant];
(xii) growers would be unable to distinguish an off-type seed in bags of MR43 seed;
(xiii) the investigation into the presence of an off-type seed in 2008 and 2009 had not been completed;
(d) by May (sic) 2011 that:
(i) an off-type contaminant was present in some of the MR43 seed which had been sold; (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. 11. Whether for seed batches numbered T100020C, T100021C, T1000022C, T1000023C, T1000024C and T1000025C (the TREK batches) the defendant:
(a)
used parent seed grown in 2002 which had not been adequately checked for purity by a further grow out;
(b)
used parent seed grown in 2002 which had not been released for use;
(c)
failed to conduct a commercial grow out of the MR43 to check whether it was free from contaminants including shattercane or AGOTs;
(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;
(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.
12. Whether the information contained on the label represented that the MR43 seed;
(a) did not contain shattercane or AGOT seeds; (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. 13. Whether the defendant was silent and remained silent at the time the MR43 seed was sold as to the possibility that:
(a) it might be contaminated or contain off-type contaminant such as shattercane; (b) the MR43 seed did not have the same characteristics as prior years and may not be safe to use; (c) there was a need for growers to eradicate emerging shattercane before its germinations matured and dropped seed. 14. 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?”
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”.
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.
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][1] Defence, paragraph 4(j)(iii).
Mallonland Pty Ltd
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”).
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:
Paddock name Area cultivated for sorghum (ha) Sugarloaf 40.46 Wandervale 75.67 Sugarloaf Super Block 54.63
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
ME & JL Nitschke Pty Ltd
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Belandi
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.
In late November 2010 he purchased thirty 20 kilogram bags of contaminated MR43 seed from a local seed distributor.
On or about 25 November 2010, he planted approximately 271 hectares of Colly Blue in the following paddocks:
Paddock name Area (ha) MCG Paddock 231 Western Island Paddock 44
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.
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.
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.
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.
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.
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.
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.
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.
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.
Lamipine
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.
Lamipine conducted operations in the following areas:
Paddock Name Area (ha) C4 87 K4 87
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.
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.
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.
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.
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.
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.
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.
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.
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.Coslinco
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.
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.
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.
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.
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.
Mr Cook harvested the 2010/2011 summer season sorghum crop without incident.
In September 2011, Mr Cook planted sorghum into the strips on Coslinco’s farming
paddocks as follows:
(a) strips 5, 6 and 7 on Boxgrove; (b) strips 4, 7, 9 and 10 on Jacamel; and (c) strips 1, 7 and 8 on Jimalay.
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.
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.
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.
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.
In the 2018/2019 summer season crop, Mr Cook observed the continuing emergence of off-type plants.
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.
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.
Morrice Farming
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.
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.
In spring 2010, Mr Morrice purchased between eighty and ninety 20 kilogram bags of contaminated MR43 from a distributor or distributors of the defendant.
The seed was planted in October or November 2010 as follows:
Paddocks Area (ha) Maundyn 4 and 5 324 Weemala 1, 2, 3, 4 and 5 465
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.
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.
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.
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.
From the 2012/2013 summer season, Mr Morrice fallowed the relevant land in summer subject to the following:
(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 (b) in December 2015, he sold the Weemala paddock. (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.
Since the 2016/2017 summer season, Mr Morrice has not planted a summer sorghum crop on the Maundyn 4 and 5 paddocks.
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.
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.
Perkins Partnership
From 1970 to 30 June 2018, the Perkins Partnership operated a farm at “Round Island” at Quirindi in the Liverpool Plains.
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:
Paddock name Area (ha) Hill 64 65s 52 Stack 46
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.
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.
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.
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.
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.
In the 2015/2016 summer season, the Perkins Partnership planted a sorghum crop.
In the winter of 2017, the Perkins Partnership planted barley, chickpeas and wheat in the affected paddock areas.
In the 2017/2018 summer season and in the winter of 2018, the paddock areas were left fallow.
The Perkins Partnership ceased trading on 30 June 2018.
Negligence - duty of care
The statement of claim alleges:
[2] Statement of claim, paragraphs 14 to 20C.
[3] Statement of claim, paragraph 32A.
[4] Statement of claim, paragraphs 33 to 34.
(a) facts as to the defendant’s business;[2] (b) that facts about shattercane or off-type sorghum were known within the industry for the commercial production of sorghum;[3] (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]
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]
[5] Statement of claim, paragraphs 35 and 36.
[6] Defence, paragraph 34AA.
[7] Reply, paragraph 25.
Summarising, the defendant alleges that:
(a) the plaintiffs’ and group members’ claims are for economic loss only; (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
(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.
Further, the defendant alleges that:
(a)
none of the plaintiffs and group members was an identified person to whom the defendant owed a duty of care;
(b)
the putative class of persons who would be owed a duty constituting the group members was indeterminate in character;
(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
(d)
there was not an established category or any other circumstance going to policy to ground the existence of a duty of care.
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.
Terms of sales
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.
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.
The defendant supplied MR43 seed to distributors in two categories – by straight out
sale[8] or on consignment.[9]
[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].
[9] A sale of goods on consignment was described by Fullagar J in Radio Corporation Pty Ltd v Bear
[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 Act 1896 (Qld) in Queensland or the Sale of Goods Act 1923 (NSW) in New South Wales.
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 Sale of Goods Act 1896 (Qld) or the Sale of Goods Act 1923 (NSW).
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.
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.
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.
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.
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:
“#1 The Stockist and Pacific Seeds:
(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;
(b) limit their liability for any breach of any such condition or warranty that cannot be excluded, at Pacific Seeds’
option:
(i) to refunding the price of the goods; or
(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
(c) accept the promises made by the customer for Pacific Seeds’ benefit (in accordance with s 55 of the Property
Law Act 1974 (Qld)).
#2
In consideration of the supply of the products by Pacific Seeds and the Stockist, and subject to the immediately preceding clause, the customer:
(a) acknowledges that it remains the customer’s responsibility to satisfy itself that the goods are fit for its
intended use; and
(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.”
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.
Clause 8 provided:
“8. EXCLUSIONS AND LIMITATIONS 8.1 Definition 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.
8.2 No exclusion or limitation 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:
(a) contravene that statute; or (b) cause any part of this clause 8 to be void. 8.3 Exclusion of implied conditions and warranties 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).
8.4 Limitation of liability for breach of Agreement or Non-
excludable ConditionPacific 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). 8.5 Exclusion of liability for breach 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. 8.6 Exclusion of further liability 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).”
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 Act 1896 (Qld) or the Sale of Goods Act 1923 (NSW).
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 Act 1892 (Qld) or Factors (Mercantile Agents) Act 1923 (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 Act 1896 (Qld) or the Sale of Goods Act 1923 (NSW).
None of the parties sought to prove what the precise facts were on these matters.
Terms on the bags
The defendant alleged that terms were marked on the bags of contaminated MR43 seed as follows:
“ATTENTION
CONDITIONS OF SALE AND USE
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.
CONDITIONS
You agree that:
- 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.
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.
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.
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.
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.
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.
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.
Incorporation of the terms on the bags
[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.
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?
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.
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.
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]
[10] An interesting similar Colorado case is Lutz Farms v Asgrow Seed Company 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.
Operation of the terms on the bag as a disclaimer
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.
[11] 217 NY 382 (1916). MacPherson v Buick Motor Co was referred to in Donoghue v Stevenson [1932] AC 562, 577, 598 and 617.
[12] [1932] AC 562.
[13] (1935) 54 CLR 49.
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.
[14] 233 NY 236 (1922). Glanzer v Shepard was referred to in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, 487 and 537.
[15] [1964] AC 465.
[16] [1971] AC 793.
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.
[17] Barclay v Penberthy (2012) 246 CLR 258, 320 [171]; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, 434 [44], 446 [80]-[81]; Hill v Van Erp (1997) 188 CLR 159, 233; Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, 299.
[18] [1914] AC 932, 972.
[19] [1964] AC 465, 529 and 530.
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.
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
[20] (1976) 136 CLR 529.
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
[21] K Hogg, “Relational loss, the exclusionary rule and the High Court of Australia”, (1995) 3 Tort Law
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.
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.
[22] (1875) 10 QB 453, 457 and 458.
[23] (1992) 1 SCR 1021.
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.
[24] (1995) 182 CLR 609.
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
[25] (1995) 182 CLR 609, 617.
determinant”[26] or as a reliable tool of analysis[27] in this context, perhaps illustrating a
[26] (1995) 182 CLR 609, 619.
[27] Sullivan v Moody & Ors (2001) 207 CLR 562, 578-579 [48].
slowing of the “imperial march of the modern law of negligence”.[28] Second, by the
[28] Astley v Austrust Ltd (1999) 197 CLR 1, 23 [48].
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
[29] (1995) 182 CLR 609, 617.
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
[30] (1995) 182 CLR 609, 643.
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
[31] (1995) 182 CLR 609, 630.
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.
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.
[32] [1983] 1 AC 520.
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
[33] [1983] 1 AC 520, 533.
[34] [1989] AC 177.
[35] [1989] AC 177, 202.
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
[36] (1995) 182 CLR 609, 638.
century, Junior Books has not been referred to with approval in any case of persuasive
authority.
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
[37] For example, Carter Holt Harvey Ltd v Minister of Education [2017] 1 NZLR 78; Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324.
[38] For example, Bow Valley Husky (Bermuda) Ltd v St John Shipbuilding Ltd [1997] 3 SCR 1210.
[39] 476 US 858 (1986), 870.
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]
[40] 476 US 858 (1986), 866. I note this statement was made in respect of US (strict) products liability law.
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.
[41] [1989] 2 Qd R 477.
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
[42] (2012) 246 CLR 258.
[43] (2012) 246 CLR 258, 284-285 [42]-[49].
Those claims are based on a number of disputed assumptions.
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.[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
[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.
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.
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:
(a) loss for the 2019 year is calculated as the average of the losses from 2012 to 2018; and (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.
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:
(a)
Mallonland did not experience losses in 2018 or thereafter as its properties had been sold;
(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;
(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;
(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; (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; (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. (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.
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.
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.
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.
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:
[178] (1893) 6R 67
[179] Advanced Wire & Cable Pty Ltd v Abdulle[2009] VSCA 170, [14].
“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]
[180] Advanced Wire & Cable Pty Ltd v Abdulle [2009] VSCA 170, [14].
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.
Mallonland
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:
Period Lost crop profit 2011 Nil 2012 $36,516 2013 $51,467 2014 $58,767 2015 $43,578 2016 ($21,780)
The total of the first plaintiffs’ claims are as follows:
Lost Profit $168,548 Increased costs $17,160 Total $185,708
The evidence of those claimed losses is summarised as follows:
Lytras $196,277 McDougall $36,819[181] [181] Calculated as $26,000 (conceded in the defendant’s submissions at [483(d)]) - $17,160 (for increased
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.
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]
[182] In my view, paragraphs 31 and 46(j) of the defence did not raise this allegation sufficiently.
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.
The first plaintiff’s damages should be assessed in the amount claimed for the relevant
years being $185,708.
ME & JL Nitschke
The second plaintiff claims the following amounts for lost crop profits:
Period Lost crop profit 2011 Nil 2012 $51,560 2013 ($783) 2014 $30,090 2015 Nil 2016 $11,809 2017 $14,722 2018 $10,000 2019 $16,771
The second plaintiff claims the following amounts for increased costs of rogueing:
Period Expenditure 2011 $3,600 2016 $1,200 2017 $1,200 2019 $750
The total claimed for those past losses is as follows:
Lost crop profit $134,169 Increased costs $6,750 Total $140,919
The expert evidence of Mr Lytras and Mr McDougall agreed that the proved total of past losses, excluding 2019, was $114,278.
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.
The second plaintiff’s damages should be assessed in the amount of $114,278.
Belandi
Belandi claims the following amounts as lost crop profits:
Period Lost crop profit 2011 Nil 2012 Nil 2013 Nil 2014 $85,285 2015 $18,428 2016 $347,859 2017 Nil 2018 ($2,618) 2019 $64,136
Belandi claims the following amounts for increased costs of rogueing:
Period Expenditure 2014 $1,800 2017 $1,800
Belandi’s total past losses claimed are:
Lost crop profit $513,089 Increased costs $3,600 Total $516,689 [548] The expert evidence of Mr Lytras and Mr McDougall agreed that past losses, excluding the 2019 year, were $452,553.
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.
Belandi’s damages should be assessed in the amount of $452,553.
Lamipine
Lamipine claims the following amounts for lost crop profits:
Period Lost crop profit 2011 Nil 2012 Nil 2013 $46,053 2014 $65,712 2015 $50,097 2016 $6,983 2017 Nil 2018 $119,761 2019 $41,230
Lamipine claims the following amounts for increased expenses of rogueing:
Period Expenditure 2011 Nil 2012 Nil 2013 $6,000 2014 $8,500 2015 $7,600 2016 $5,200 2017 $6,000 2018 $7,600 2019 $6,817
Lamipine’s total past losses claimed are:
Lost crop profit $329,836 Increased costs $47,717 Total $377,553
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.
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][183] I note the assumption or statement made by Mr McDougall that the relevant area was in fact planted with barley in winter 2017.
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.
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.
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
Coslinco
Coslinco claims the following amounts for lost crop profits:
Period Lost crop profit 2011 Nil 2012 $379,797 2013 ($24,748) 2014 $32,753 2015 $176,514 2016 $222,905 2017 $354,533 2018 ($358,303) 2019 $111,922
Coslinco’s claim for increased costs of rogueing is nil. Accordingly, the total amount
of its claim for past losses was $895,372.
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.
Ultimately, the comparison of Mr Lytras and Mr McDougall’s calculations as to Coslinco’s losses was as follows:
Year Lytras McDougall (WUE McDougall
yields) (Lamipine yields)
2012 $391,167 $235,749 $428,749 2013 ($24,748) ($53,690) ($61,428) 2014 $9,800 $25,315 $71,574 2015 $176,514 $52,881 $52,328 2016 $168,324 ($19,021) ($160,748) 2017 $308,345 $9,034 $45,576 2018 ($358,303) ($328,520) ($232,368) 2019 $95,871 nil nil Total as at 2018 $671,109 ($161,880) $143,684 [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.
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.
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.
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.
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.Morrice Farming
Morrice Farming claims the following amounts for lost crop profit:
Period Lost crop profit 2011 Nil 2012 $689,034 2013 $148,734 2014 $446,503 2015 $613,795 2016 $44,067 2017 $112,885 2018 $71,879 2019 $76,277
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.
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.
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.
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.
Morrice Farming’s damages should be assessed in the amount of $494,469.
Perkins Partnership
The Perkins Partnership claims the following amounts for lost crop profits:
Period Lost crop profit 2011 Nil 2012 $93,197 2013 $6,443 2014 $37,371 2015 $21,363 2016 $9,180 2017 $62,870 2018 Nil 2019 Nil
The Perkins Partnership claims the following amounts for increased expenses for rogueing:
Period Expenditure 2016 $4,500 2017 $6,000
The total past losses claimed were as follows:
Lost crop profit $230,424 Increased costs $10,500 Total $240,924
Mr Lytras and Mr McDougall agreed that the past crop profit losses were $199,881 and the increased costs were $10,500.
Perkins Partnership’s damages should be assessed in the amount of $210,381.
Aggregate group damages claim
[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:
Total group Contaminated Total loss
members hectares planted
103 27,938.6 $104,833,855
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.
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.
The basis for the aggregate group damages claim is s 103V of the Civil Proceedings Act 2011 (Qld), that provides that:
“103V Judgment
(1) The court may do any 1 or more of the following in deciding a
matter in a representative proceeding -
(a) … (f) award damages in an aggregate amount without stating amounts awarded in respect of individual group members; (g) … (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)
[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.
[184] Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd (2000) 1 VR 545, 558.
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.
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.
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.
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.
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.[186] 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
[185] Civil Proceedings Act 2011 (Qld), s 103X(b).
[186] Civil Proceedings Act 2011 (Qld), ss 103V(2), 103V(4) and 103W.
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 inter se, if those “entitlements will be calculated
in accordance with the general law”[187] was not explained. No attention was given to
[187] Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd (2000) 1 VR 545, 558.
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:
(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;
(b) variability of the (uncontaminated) sorghum yields, sale prices and costs; (c) variability of the area affected by planting contaminated MR43 seed; (d)
variability of farming practices and rotations and changes to those practices resulting from planting the contaminated MR43 seed;
(e) variability in the weed control and eradication practices and outcomes; and (f) variability in the extent of continued farming operations.
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.
Jackson J:
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.
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.
MR43 is the seed for a hybrid dwarf grain sorghum plant.
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.
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.
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.
(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’”.
Review 26.
432.
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) 198 CLR 180, 207.
exhibited to Barry Croker’s statement in Ex 21, at paragraph 301. The differences are not material for
present purposes.
logically it must refer to “after January 2011”.
expenses assuming the rogueing hours claimed are accurate or reasonable) – $6,340.64.
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