Ryan v Great Lakes Council

[1999] FCA 177

FEDERAL COURT OF AUSTRALIA
Ryan v Great Lakes Council [1999] FCA 177

NEGLIGENCE – Representative claim on behalf of consumers of oysters who contracted hepatitis A from contaminated oysters – Growing area management standards and practices – Whether local authority had a duty of care to oyster consumers in respect of the manner of exercise of its statutory powers – Whether breach of duty - Causal connection to hepatitis A epidemic – Whether State government had duty of care to consumers – Breach of duty and causal connection – Whether breach of duty by oyster growers and distributors – Quantum of damages – Apportionment.

TRADE PRACTICES – Proceedings “against manufacturers” of goods – Unsuitable goods – Goods that do not correspond with their description – Goods of unmerchantable quality – Defective goods causing injury – Misleading conduct in the form of an implied representation as to quality – Breach of implied condition of merchantable quality.

Trade Practices Act 1974, ss 52, 71, 74A, 74B, 74C, 74D, 75AA, 75AD and 75AK

GRANT RYAN, SCOTT CALLAGHAN, KEVIN GOWER, DAVID HOLNESS, GEOFFREY BENNETT, BRYAN HOCKING and BROSOW HARDY
v
GREAT LAKES COUNCIL, GRAHAM BARCLAY OYSTERS PTY LTD, CLIFT OYSTERS PTY LTD, M W & E A SCIACCA PTY LTD, TADEVEN PTY LTD, THE OYSTER FARMERS ASSOCIATION OF NEW SOUTH WALES PTY LTD, R A KING (WHOLESALE) PTY LTD, MANETTAS LIMITED, SHONID PTY LTD T/AS TIM & TERRY OYSTER SUPPLY, VICTORIAN FROZEN FOOD DISTRIBUTORS PTY LTD, GEORGES OYSTERS PTY LTD, SMITHS OYSTER SERVICE PTY LTD, STATE OF NEW SOUTH WALES and GRAHAM BARCLAY DISTRIBUTORS PTY LTD

NG183 OF 1997

WILCOX J
SYDNEY
5 MARCH 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 183 OF 1997

BETWEEN:

GRANT RYAN
FIRST APPLICANT

SCOTT CALLAGHAN
SECOND APPLICANT

KEVIN GOWER
THIRD APPLICANT

DAVID HOLNESS
FOURTH APPLICANT

GEOFFREY BENNETT
FIFTH APPLICANT

BRYAN HOCKING
SIXTH APPLICANT

BROSOW HARDY
SEVENTH APPLICANT

AND:

GREAT LAKES COUNCIL
FIRST RESPONDENT

GRAHAM BARCLAY OYSTERS PTY LTD
SECOND RESPONDENT

CLIFT OYSTERS PTY LTD
THIRD RESPONDENT

M W & E A SCIACCA PTY LTD
EIGHTH RESPONDENT

TADEVEN PTY LTD
NINTH RESPONDENT

THE OYSTER FARMERS ASSOCIATION OF NEW SOUTH WALES PTY LTD
TENTH RESPONDENT

R A KING (WHOLESALE) PTY LTD
ELEVENTH RESPONDENT

MANETTAS LIMITED
THIRTEENTH RESPONDENT

SHONID PTY LTD T/AS TIM & TERRY OYSTER SUPPLY
FIFTEENTH RESPONDENT

VICTORIAN FROZEN FOOD DISTRIBUTORS PTY LTD
SIXTEENTH RESPONDENT

GEORGES OYSTERS PTY LTD
SEVENTEENTH RESPONDENT

SMITHS OYSTER SERVICE PTY LTD
EIGHTEENTH RESPONDENT

STATE OF NEW SOUTH WALES
NINETEENTH RESPONDENT

GRAHAM BARCLAY DISTRIBUTORS PTY LTD
TWENTIETH RESPONDENT

THE COURT ORDERS THAT:

1.Judgment be entered in favour of the first applicant, Grant Ryan, in respect of his personal claim, in the sum of $30,000 against each of the following respondents:

.          Great Lakes Council;
.          State of  New South Wales;
.          Graham Barclay Oysters Pty Ltd; and
.          Graham Barclay Distributors Pty Ltd;

2.It be declared that the first applicant is entitled to succeed against each of the said respondents, in respect of so much of his representative claim as alleges negligence, but only on behalf of those group members who prove damage has been suffered by them;

3.The first applicant’s representative claim of breaches by Graham Barclay Oysters Pty Ltd of ss74B and 74D of the Trade Practices Act 1974 be reserved;

4.Otherwise the first applicant’s representative claim of breaches of the Trade Practices Act be dismissed;

5.The said respondents pay to the first applicant his costs of the action incurred to date, whether in relation to his personal or representative claim;

6.The burden of orders (1), (2) and (5) be apportioned between the said respondents as follows:

(a)Great Lakes Council – one third;

(b)State of New South Wales –one third;

(c)Graham Barclay Oysters Pty Ltd and Graham Barclay Distributors Pty Ltd – together one third;

and judgment be entered on the cross-claims accordingly;

7.The matter be listed for further directions at 9.30 am on Friday 9 April 1997 or such other time as my Associate may notify the parties.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 183 OF 1997

BETWEEN:

GRANT RYAN
FIRST APPLICANT

SCOTT CALLAGHAN
SECOND APPLICANT

KEVIN GOWER
THIRD APPLICANT

DAVID HOLNESS
FOURTH APPLICANT

GEOFFREY BENNETT
FIFTH APPLICANT

BRYAN HOCKING
SIXTH APPLICANT

BROSOW HARDY
SEVENTH APPLICANT

AND:

GREAT LAKES COUNCIL
FIRST RESPONDENT

GRAHAM BARCLAY OYSTERS PTY LTD
SECOND RESPONDENT

CLIFT OYSTERS PTY LTD
THIRD RESPONDENT

M W & E A SCIACCA PTY LTD
EIGHTH RESPONDENT

TADEVEN PTY LTD
NINTH RESPONDENT

THE OYSTER FARMERS ASSOCIATION OF NEW SOUTH WALES PTY LTD
TENTH RESPONDENT

R A KING (WHOLESALE) PTY LTD
ELEVENTH RESPONDENT

MANETTAS LIMITED
THIRTEENTH RESPONDENT

SHONID PTY LTD T/AS TIM & TERRY OYSTER SUPPLY
FIFTEENTH RESPONDENT

VICTORIAN FROZEN FOOD DISTRIBUTORS PTY LTD
SIXTEENTH RESPONDENT

GEORGES OYSTERS PTY LTD
SEVENTEENTH RESPONDENT

SMITHS OYSTER SERVICE PTY LTD
EIGHTEENTH RESPONDENT

STATE OF NEW SOUTH WALES
NINETEENTH RESPONDENT

GRAHAM BARCLAY DISTRIBUTORS PTY LTD
TWENTIETH RESPONDENT

JUDGE:

WILCOX J

DATE:

5 MARCH 1999

PLACE:

SYDNEY

REASONS FOR JUDGMENT (NO. 5)

1. WILCOX J:  During the first three months of 1997, there was a surge in the number of reported Australian hepatitis A cases, especially in New South Wales.  A New South Wales government Task Force ultimately attributed 444 of these cases to the consumption of oysters grown in Wallis Lake.  Having regard to the relevant incubation period, the contaminated oysters must have been consumed not earlier than November 1996. 

2. Wallis Lake is situated on the north coast of New South Wales, in the area lying generally between the Hunter River to the south and the Manning River to the north.  The lake is the estuary of a number of waterways, notably Wallamba River and Cooloongolook River. The lake is wholly contained within the Shire of Great Lakes. 

3. Wallis Lake is one of the largest oyster growing areas in Australia, with 48 aquaculture permit holders working oyster leases granted by the New South Wales Department of Fisheries.  The Wallis Lake oyster industry employs some 350 people and makes a substantial contribution to the economy of the Shire.  The hepatitis A epidemic no doubt had an adverse impact on the industry and the Shire economy.  But these reasons are concerned with a different impact of the epidemic:  the impact on consumers of the oysters.  The reasons are organised as follows:

   PART 1 - BACKGROUND

   (i)        The proceeding  paras 4 to 14

   (ii)       The hepatitis A virus  paras 15 to 19  

   (iii)      HAV and oysters  paras 20 to 25

   (iv)      Depuration of oysters  paras 26 to 33

   (v)       Water quality testing  paras 34 to 37

   (vi)      Flesh testing  paras 38 to 41

   PART 2 - GROWING AREA MANAGEMENT

   (i)        Sanitary survey  paras 42 to 43

   (ii)       The United States  paras 44 to 58

   (iii)      Europe  paras 59 to 68

   (iv)      Tasmania  paras 69 to 77

   (v)       NHMRC recommendations  paras 78 to 80

   (vi)      The Shoalhaven program  paras 81 to 85

   (vii)     Mr Bird’s approach  paras 86 to 87

   (viii)     Dr Burke’s view  para 88

   (ix)      Conclusions about growing area   

   management standards  paras 89 to 92

   PART 3 - THE NEW SOUTH WALES REGULATORY SYSTEM

   (i)The New South Wales Oyster Quality

   Assurance Program  paras 93 to 100

   (ii)       Oyster legislation  paras 101 to 110

   (iii)The New South Wales Quality

   Assurance Committee   paras 111 to 113

   PART 4 - MANAGEMENT OF WALLIS LAKE

   (i)        The 1989-93 water testing program  paras 114 to 120

   (ii)The Wallis Lakes’ Oyster Quality Assurance

   Committee  paras 121 to 125

   (iii)The Wallis Lake Oyster Management Plan                   paras 126 to 127

   (iv)      Evidence of Dr K R Brown  paras 128 to 132

   (v)       The Wallis Lake Estuary Management Committee        paras 133 to 135

   PART 5 - CONTAMINATION OF WALLIS LAKE

   (i)        The problem at Nabiac  paras 136 to 153

   (ii)       Flow from Nabiac to the lake  paras 154 to 160

   (iii)      Cooloongolook  paras 161 to 163

   (iv)      Shalimar Caravan Park  paras 164 to 173

   (v)       Wallamba Caravan Park  paras 174 to 187

   (vi)      The Little Street public toilet  paras 188 to 201

   (vii)     Islands in Wallis Lake  paras 202 to 203

   (viii)     Watercraft  paras 204 to 205

   (ix)      Stormwater drains  paras 206 to 210

   (x)       Other possible sources  paras 211 to 213

   PART 6 - COUNCIL’S POSITION

   (i)        Council’s legal responsibilities  paras 214 to 220

   (ii)       Council’s financial situation  paras 221 to 223

   (iii)      Council’s reaction to the septic tank problem                paras 224 to 232

   PART 7 - THE 1996-97 OYSTER SEASON

   (i)        The HAV outbreak and aftermath  paras 233 to 249

   (ii)       The cause of the epidemic  paras 250 to 269

   PART 8 - NEGLIGENCE:  THE CASE AGAINST THE COUNCIL

   (i)        Applicant’s submissions  paras 270 to 281

   (ii)       State and growers’ submissions  paras 282 to 285

   (iii)      Council’s submissions  paras 286 to 288

   (iv)      Conclusions  paras 289 to 316

   PART 9 - NEGLIGENCE:  THE CASE AGAINST THE STATE

   (i)        Applicant’s submissions  paras 317 to 324

   (ii)       Council’s and growers’ submissions  paras 325 to 327

   (iii)      State’s submissions  paras 328 to 330

   (iv)      Conclusions  paras 331 to 343

   PART 10 - NEGLIGENCE:  THE CASE AGAINST THE BARCLAY COMPANIES

   (i)        Applicant’s submissions  paras 344 to 345

   (ii)       Council’s and State’s submissions  paras 346 to 347

   (iii)      Barclay companies’ submissions  paras 348 to 349

   (iv)      Conclusions  paras 350 to 356

   PART 11 - THE TRADE PRACTICES ACT CLAIMS

   (i)        The applicant’s claims  para 357

   (ii) Section 74B paras 358 to 370

   (iii) Sections 74C and 74D paras 371 to 376

   (iv) Section 75AD paras 377 to 378

   (v) Section 52 para 379

   (vi) Section 71 paras 380 to 381

   PART 12 - RELIEF

   (i)        The quantum of damage  paras 382 to 391

   (ii)       Apportionment  paras 392 to 393

   (iii)      Orders  para 394

   1.        BACKGROUND
   (i)        The proceeding

4. On 13 March 1997 Grant Ryan commenced this proceeding by filing an Application so framed as to take advantage of the representative procedure available under Part IVA of the Federal Court of Australia Act 1976. He sought common law damages and statutory compensation, on behalf of himself and “all persons who as at the date of the filing of this Application had purchased and/or consumed oysters grown and/or cultivated in Wallis Lakes … which were the subject of the contamination alleged in paragraph 9 of the Statement of Claim accompanying this Application … and who as at the date of the filing of this Application had suffered loss and damage thereby …” Paragraph 9 of the Statement of Claim referred to oysters “not reasonably fit or fit at all for human consumption” by reason of contamination with the hepatitis A virus. The Application named as respondents the Great Lakes Council and 13 companies who were alleged to be growers or distributors of Wallis Lake oysters.

5. As a result of various applications, the parties were re-defined.  Some respondents were dismissed from the proceeding by consent.  New respondents were added.  An issue arose as to Mr Ryan’s capacity to act as a representative party in relation to claims against oyster growers and distributors whose product he had not himself consumed.  On 18 September 1997 I ruled Mr Ryan was not competent to maintain a representative action against a person in relation to whom he had no personal claim:  see Ryan v Great Lakes Council (1997) 78 FCR 309. However, I subsequently gave leave Mr Ryan to amend the proceeding in such a manner as to join additional applicants; each being a person who made a personal claim against a particular grower or distributor and was therefore competent to represent other group members who had claims against that grower or distributor.

6. Following that grant of leave, the applicant’s solicitors filed a Reamended Application in which they added new respondents, including the State of New South Wales, and substantially restructured the lines of claim.  This document re-defined the group members to whom the proceeding relates as being 185 people named in 11 annexures to a Re-Amended Statement of Claim.  Each annexure lists the group members who claim against a particular respondent.  All 185 people claim against Great Lakes Council (“the Council”, the first respondent) and the State of New South Wales (“the State”, the 19^th respondent).  Fewer people claim against each of the other 12 surviving respondents, all alleged to be growers or distributors of oysters.

7. The largest oyster grower at Wallis Lake is the second respondent, Graham Barclay Oysters Pty Ltd (“Barclay Oysters”), whose distributor is the 20^th respondent, Graham Barclay Distributors Pty Ltd (“Barclay Distributors”).  Not surprisingly, given their sales volume, these two companies (collectively “the Barclay companies”) attracted more claims than other growers and distributors.

8. Numerous cross claims were filed.  It was obvious that, if any applicant was held entitled to succeed, there would be a lively contest as to the location of the ultimate burden.

9. In this situation there was discussion at directions hearings as to the best method of managing the trial.  On 8 April 1998 I directed that the trial of the proceeding commence on 7 September 1998 but only as to:

   (a)issues of liability and quantum of damages in respect of Mr Ryan’s personal claims; and

   (b)issues of liability relating to Mr Ryan’s representative claims against the Council, the State and the Barclay companies.

10. The rationale behind this direction was that in complex litigation it is generally best to focus first on significant common issues.  Once they are determined, non-common issues tend to fall away or be agreed between the parties.  I envisaged a trial as directed would resolve the key issues raised by the claims:  whether the Council and/or the State was liable to all claimants (there being no suggestion of a reason for differentiating between them); the position of the largest grower and distributor in relation to the many group members who made claims against them (the determination of which was likely to cast light on the position of other growers and distributors); and the damages appropriate to be awarded in what was seen as a medically typical case.

11. Consistently with this approach, at a later date when all cross-claims were filed, I added a third topic to the September agenda:

    (c)all cross claims as between any of the first, second, 19^th and 20^th respondents and Mr Graham Barclay personally, but excluding the quantum of any damages (other than damages by way of indemnity or contribution) suffered by a cross-claimant.  (Some cross claimants alleged a loss over and above whatever damages or compensation they might be required to pay to group members; for example, loss of sales.  Most of these claims have now been abandoned.)

12. The trial commencement date was put back to Monday, 14 September.  On that day the Court convened at Forster, the largest town in the Shire.  Forster lies on the eastern and south-eastern shores of the lake.  It is separated from Tuncurry, which is on the northwestern shore of the lake, by a channel, Cape Hawke Harbour, that provides a permanent opening between the lake and the South Pacific Ocean.  A road bridge links the two towns.

13. At the commencement of the hearing appearances were announced as follows:  Mr T K Tobin QC and Mr J B R Beach for Mr Ryan (“the applicant”); Mr H Nicholas QC and Mr T G R Parker for the Council; Mr P Taylor SC and Mr M J Windsor for the State; Mr C R R Hoeben SC and Mr A Coleman for the Barclay companies; Mr D J Fagan SC for alleged growers M W & E A Sciacca Pty Ltd (“Sciacca”) and Tadeven Pty Ltd (“Tadeven”), the eighth and ninth respondents; Mr M Jones for alleged distributors, R A King (Wholesale) Pty Ltd, Manettas Limited, Shonid Pty Ltd, Victorian Frozen Food Distributors Pty Ltd and Smiths Oyster Service Pty Ltd (respectively the 11^th, 13^th, 15^th, 16^th and 18^th respondents); and Mr K P Rewell for another alleged distributor, the 17^th respondent Georges Oysters Pty Ltd.

14. After an opening address by Mr Tobin, and in company with representatives of the parties, I undertook an inspection of sites selected by the parties.  They included locations in Wallis Lake and Wallamba River and on land.  Next day the Court heard evidence from several local witnesses.  At the conclusion of that evidence, the hearing was adjourned until the following day at Sydney, where the hearing proceeded, with minor interruptions, until 2 October 1998.  Most parties later made additional submissions, in writing.

    (ii)       The hepatitis A virus

15. Alan Maxwell Murphy has worked as a virologist for some 50 years. He spent 25 years (1959 to 1984) as Chief Virologist at the Institute of Clinical Pathology and Medical Research, Sydney, an institution funded by the New South Wales government.  In 1984 he established a private practice in Sydney known as Viral Diagnostic and Referral Laboratory.  This laboratory is mainly concerned with doing tests for individuals suspected of having a viral infection.  Although Mr Murphy recently retired from full-time involvement in the practice, he is still a part-time consultant.  From time to time Mr Murphy has lectured in virology at the University of Technology and Sydney University.  He is the author or part-author of 84 published papers.

16. Mr Murphy gave evidence on behalf of the applicant concerning the hepatitis A virus (“HAV”).  He said the virus multiplies, and is symptomatic, only in humans.  The incidence of the disease viral hepatitis A (“VHA”) in the community is reported at about 11 cases per one hundred thousand persons per annum.  However, Mr Murphy said, infections are under-reported; some infections are subclinical and therefore not investigated, and some clinical cases are not reported.  In his statement of evidence Mr Murphy gave this additional information about the virus:

    “HAV is spread by the ‘faecal-oral route’.  This means that HAV spreads when excreted in faeces of humans and is contracted when humans ingest material contaminated with faeces.  A person suffering from HAV may excrete 10⁸  viruses per gram of faeces.  The greatest excretion is in the two weeks before the onset of jaundice.

    Once ingested it is thought that HAV multiplies in the lining of the gut.  It is then transferred to the blood stream and carried to the liver.  HAV attacks the cells in the liver and at this stage becomes symptomatic.  Common symptoms are anorexia, nausea, fever and jaundice.

    HAV is considered to be a highly infectious virus.  This means that only a small number of viruses are required for an infection to result.”

17. Mr Murphy went on to refer to studies that “show the prevalence of antibody to HAV increases steadily with age so that the antibody is thought to be present in approximately 40% of adults at 40 years and in excess of 95% of adults above the age of 60”.  This means only about 60% of adults aged 40 years who ingest the virus will contract the hepatitis A disease; and only about 5% of adults over 60. 

18. Another witness who spoke of the effects of HAV infection was Clement Boughton, Consultant Emeritus in Infectious Diseases to Prince Henry Hospital and the University of New South Wales.  Professor Boughton said in young children viral hepatitis A is commonly subclinical (no recognisable symptoms).  In older subjects a clinical attack of acute viral hepatitis A  has an incubation period of between 15 and 50 days; commonly about 30 days.  In his statement of evidence, Professor Boughton spoke about the symptoms and progress of the disease:

    “Initial symptoms are often non-specific influenza like, that is, shiveriness, generalised aches and pains, headache, malaise, anorexia and fever.  There may be a period of several days of acute fever with temperatures rising to 39 degrees Centigrade.  This is then commonly followed by nausea, vomiting and the appearance of dark brown urine.  Other symptoms of VHA include itchiness of the skin, profound lassitude, right upper abdominal discomfort due to a tender distended liver and pale bowel motions.

    The clinical presentation of VHA can be explained by the physiological effects of HAV on the human body.  HAV enters the body orally after being consumed.  It travels to the gut and is transported by the blood stream from the gut to the liver.  The virus invades cells of the liver.

    When healthy, the cells in the liver convert the haemoglobin from red blood cells into bile pigments.  The bile pigments are ordinarily excreted to the bile duct and the gut.  In the gut the bile pigments are broken down further before being excreted.  It is bile pigments that cause faeces to look brown.

    When HAV invades liver cells it damages and then destroys the cells.  The function of the liver cell is disturbed and bile pigments are not broken down.  The capacity of the liver to excrete bile pigments to the bile duct and gut is reduced.  Higher concentrations of bile pigments are instead retained in the blood stream.  The higher concentration of bile pigments in the blood stream can cause the skin and the whites of the eyes to appear yellow.

    Moreover, blood is filtered through the kidneys.  The higher concentration of bile pigments can cause urine to turn dark brown or black.  Because more pigments are passing into the bloodstream and kidneys and less are going into the gut, this causes the faeces to have a pale appearance.

    The attack on the cells of the liver also causes the liver to swell.  This causes a damming of venous blood from the gut into the liver which creates congestion in the stomach; this can result in loss of appetite and nausea.  The pylorus may then go into a spasm stopping food passing into the gut with which it cannot cope.  These spasms can cause vomiting.

    Any severe generalised infection causes tiredness and lassitude.  However, the liver is the powerhouse of the body.  It converts fat and starch to glucose and regulates the blood sugar level of the body.  Because HAV impairs the functioning of the liver, tiredness and fatigue are accentuated.

    Attacks can vary greatly in severity from person to person.  A mild attack may produce slight jaundice and indisposition lasting two to three weeks.  A severe attack, however, can be prolonged with jaundice lasting several months.

    It is not known conclusively what factors influence the severity of the illness in individuals.  The following general observations can be made:-

    a.the greater the infective dose the more severe the resulting illness.  This is because the virus is already present in the body in large numbers and can therefore invade many more liver cells in a short time;

    b.attacks are more severe for older sufferers;

    c.people with vigorous immune systems experience a particularly severe illness.  If a large number of liver cells are attacked by the virus the immune system may respond by very rapidly destroying the infected cells.  The loss of a large number of liver cells very quickly can cause severe inflammation of the liver and can be destructive to the liver.”

1. Professor Boughton said there was no antibiotic treatment for viral hepatitis A.  The disease does not commonly run a chronic course, but complications may occur.  In a small number of cases, the patient suffers continuing lethargy and rapid fatigability.  Dealing with the typical case, he said:

   “Whilst the presentation and severity of VHA varies between sufferers, generally sufferers recover following a period of rest.  Nursing care is often required during this period.  In severe cases hospitalisation may also be required, particularly when intravenous fluids are required to correct dehydration.  Where a VHA sufferer has nobody to provide nursing care admission to hospital may be indicated.

   In the very acute stage, sufferers often have a fever accompanied by sweating and shivering requiring bed linen to be frequently changed.  When sufferers are able to cope with food they need meals prepared for them.  Commonly, a person with the illness:-

   a.is unlikely to be capable of normal household tasks, such as cleaning, food preparation or looking after children;

   b.will need to be absent from work;

   c.may require assistance with personal hygiene such as toilet and washing.”

   (iii)      HAV and oysters

2. Oysters are filter feeders.  They process 10 to 20 litres of water per hour, sucking in the water by movement of their gills and extracting from it particles of matter that enter the oyster’s alimentary canal and are subjected to the oyster’s normal digestive processes.  Some particles are retained, others are excreted by the oysters.  Particles may contain, not only nutrients, but pathogens, including viruses.  HAV is one such virus.  Because the oyster relies on a process of concentrating matter, any viral contamination of the oyster is likely to be at a level of concentration far exceeding the concentration of the virus in the water.

3. HAV does not attack the oyster but will ordinarily be retained in the oyster’s flesh.  If a person consumes the oyster, Professor Boughton explained, the HAV will survive the consumer’s gastric acid and pass into the small bowel and on to the liver, where it will have the consequences set out above.  Professor Boughton noted that HAV “is able to survive for prolonged periods in the environment, in foods, in fresh, brackish or salt waters and in particulate matter suspended in such media”.  He said “This is of epidemiological importance should waters in which molluscs are cultivated become faecally contaminated.”

4. There is some uncertainty as to the longevity of HAV in the environment.  Mr Murphy said:

   “HAV is an extremely hardy virus.  It can survive pH levels ranging from pH3 to pH9, and heating to 60^oC  for one hour.  It can survive in the environment for periods of three months or longer.  The major factor which influences the survival of HAV in the environment is the exposure of virus particles to heat and light.  HAV particles that are exposed to these elements are likely to die off more quickly than three months.  However particles in sediment or in damp or dark surrounds (such as in septic tanks) are likely to remain viable for a more significant period of time.  HAV is inactive in the environment, which means that it does not multiply.”

5. Mr Murphy said viruses in the environment “tend to attach themselves to other particles either in sediment or in living organisms”.  He also stated:

   “HAV tends to be more difficult to remove from an oyster than E-coli bacteria.  There are a number of hypotheses as to why this is so:

   a.HAV is a smaller particle than E-coli and it is possible that it migrates from the gut of the oyster into the flesh of the oyster;

   b.HAV is more likely than E-coli to find a cell with which to link.  This can mean that the virus is more firmly attached to the oyster and less likely to be dislodged.”

6. Gerhard (Gary) Grohmann, has worked in the field of microbiology, particularly virology and public health, for over 20 years.  During that time he has worked with Mr Murphy on several projects and co-authored papers with him.  Dr Grohmann is currently a director and principal consultant of Environmental Pathogens Pty Limited, a private testing laboratory, and Chief Scientist and Head, Immunobiology (Vaccines), TGA Laboratories, Department of Health and Family Services, Canberra.  He also lectures in virology at the University of New South Wales.  Dr Grohmann was called in this case on behalf of the eighth and ninth respondents.  He put HAV’s ability to survive in the environment even higher than did Mr Murphy.  Dr Grohmann said:

   “In contrast to bacteria, which typically only survive for a matter of hours in the environment, enteric viruses, including Hepatitis A virus, are very hardy and can survive in the environment for weeks and sometimes years, remaining a potential threat for the whole of that time.”

7. Dr Grohmann went on to mention an American study that found viruses in sediment 17 months after sludge disposal had ceased.  He himself had found viruses in sediments near cliff edge sewerage outfalls up to two years after sewerage discharge had ceased.  He explained:

   “Viruses often attach themselves to debris and sediment and indeed to each other.  As a result, viruses can often accumulate in great numbers in sediment near sewage effluent outfalls….  These viruses … will survive for long periods in the environment, at least several weeks and possibly years.

   The result of this is that ‘reservoirs’ of viral material will form near effluent discharge points via virus attachment to sediment and debris.  When these reservoirs are disturbed by environmental forces such as tidal movements, rainfall, wind and the like, those viruses become resuspended into the water column, and may be redistributed into the surrounding area.  Due to the concentrations of viruses in these ‘reservoirs’, the impact on recreational and shellfish gathering areas of sediment re-suspension at such times can be much greater than the impact of ‘fresh’ effluent.  This is particularly the case where the ‘reservoirs’ consist of soft or ‘fluffy’ sediments which can be easily disturbed by turbulence (rain, tide, environmental disturbances)”.

   (iv)      Depuration of oysters

8. In June 1978 there was an outbreak of gastroenteritis, involving at least 2,000 people, that was traced to the consumption of oysters grown in the Georges River, Sydney.  The oysters were contaminated with Norwalk virus, a virus that has properties similar to HAV.  Mr Murphy explained:

   “They are both small viruses of similar size.  They are both relatively resistance to heat, liquid solvents, low levels of chlorine and other disinfectants.  They both have a high degree of infectivity.  This means that a small number of virus particles are capable of initiating an infection.  It has been calculated that 10-50 Norwalk particles will result in infection.  It is my opinion that a similar number of HAV particles will initiate infection.”

9. Following this outbreak, in the period 1981 to 1983, it became mandatory for oysters grown in New South Wales to be depurated for a period of at least 36 hours.  Mr Murphy described the process:

   “Depuration is a process where oysters are placed in tanks of clean and disinfected estuarine water.  The water is disinfected by ultra-violet radiation or ozone treatment.  I am advised that all of the depuration facilities in use at Wallis Lake use ultra-violet light as a disinfectant.  Ultra-violet light, given correct conditions, will destroy all viruses and bacteria it comes into contact with.  Ultra-violet light will not destroy viruses and bacteria with which it does not come into contact.  The effectiveness of ultra-violet light as a disinfectant depends on the following:

   a.The maintenance of the equipment used in the depuration tanks;

   b.The turbidity of the water in which the oysters are depurated;

   c.The capacity for ultra-violet light to come into contact with each viral or bacterial particle.”

10. Mr Murphy said that the effectiveness of depuration as a mechanism for eliminating HAV from oysters depends on the oyster excreting all particles of virus while in the depuration tank and the viruses then being destroyed by the ultra-violet light.  He went on:

    “If the surrounding water is heavily contaminated and an oyster takes up a large number of HAV particles, it is unlikely to excrete all these particles during a 36 hour of depuration.  In my opinion, 36 hours is an inadequate period of time for depuration.  The longer an oyster is depurated for the more likely it is that it will excrete more particles.  It therefore follows that the longer the period of depuration, the more HAV is likely to be excreted.  However depuration has been shown to be not entirely effective in ensuring the safety of shellfish.  While oysters depurated in tanks functioning properly will most likely reduce their viral and bacterial load, they will not necessarily excrete all viruses from their system.  In 1981 a study was published by the Institute of Clinical Pathology and Medical Research, Sydney; Health Commission of New South Wales; and New South Wales State Fisheries which found that oysters still contained Norwalk virus even after seven days of depuration.  The study concluded that depuration of shellfish was not entirely satisfactory as a means of protecting public health.” (Emphasis added)

11. Dr Grohmann expressed a similar view.  He said ultra-violet depuration, when carefully performed, yields satisfactory results but added:

    “However, virological results are not always satisfactory as shellfish may still contain enteric viruses after purification if the waters are heavily polluted due to uncontrollable environmental factors.  The fact that viral outbreaks still occur via contaminated oysters, despite oyster depuration, indicates that current depuration techniques are not always effective in removing pathogenic viruses.”

12. Mr Murphy was Chief Virologist at the Institute of Clinical Pathology and Research when depuration was introduced.  He said:  “Depuration for 36 hours was introduced in New South Wales as a compromise between scientific principles and commercial pressures.  Whilst depuration should in principle reduce the presence of human viruses in oysters it will not remove them completely”.

13. The truth of these statements is effectively conceded in a 60 page booklet published by the New South Wales Department of Health:  Purification Technology for New South Wales Oysters.  It was written by Philip D Bird, Technical Adviser to the Department’s Oyster Program.  In the second edition of the booklet, published in 1991, Mr Bird described the purification process and commented:

    “All micro-organisms are not removed including those organisms which invade the oyster tissue e.g. some types of viruses and vibrio bacteria under certain conditions.

    Given suitable lengths of time (months in some cases), the oysters have a high chance of overcoming the invasion of some types of viruses but this cannot always be guaranteed. …

    Purification has been used overseas since the 1920’s and extensive research has been conducted throughout the world including New South Wales to determine the optimum system and conditions for effective purification.

    Purification is the only current viable alternative today in New South Wales for the economic production of raw oysters which affords the least risk to public health.  It is not a perfect system and will not guarantee the absolute public health safety of raw oysters, however, on a cost-risk basis it is the only alternative.

    It must be supported by regular testing of oyster harvest areas to monitor large and extended periods of sewage pollution which are likely to pollute oysters to a degree which makes them incapable of effective purification.”  (Emphasis added)

14. The limitations of 36 hour depuration were graphically demonstrated in the summer of 1989/90 when some 1,200 people suffered gastro-enteritis as a result of Norwalk or Parvo viruses in New South Wales oysters, and again in the Tweed River viral outbreak of August-September 1996.

15. The expert witness called by counsel for the Barclay companies also conceded the limitations of depuration.  This was Christopher Martin Burke, a Lecturer in the School of Aquaculture in the University of Tasmania.  In a written report tendered in evidence Dr Burke said:

    “While it is apparent that most studies have reported reduced viral numbers after depuration, it is clear that depuration, as currently practised, is likely to fail to ensure the safety of shellfish all of the time.  This is not so much a case of if, but rather when.  The problem with viruses is that they are able to adsorb somewhere within the shellfish and resist removal.  If they are able to resist inactivation within the shellfish, then they will retain infectivity and present a health hazard.  Hepatitis A and Norwalk viruses fall within this category.  In my opinion it is NOT possible to state unequivocally that commercial deputation can always completely remove Hepatitis A and Norwalk viruses from shellfish.”(Original emphasis)

    (v)       Water quality testing

16. Mr Murphy commented that “the inadequacy of depuration magnifies the need for other devices to reduce the risk of viro contamination of oysters”.  One of these devices is the monitoring of water quality, a procedure that all the experts regarded as useful, although subject to significant limitations.

17. The experts who gave evidence in this case agreed there is presently no practicable method of directly detecting the presence of HAV in estuarine water.  However, it is possible to test water for bacteria, whose presence indicates the likelihood of human faecal contamination.  Dr Grohmann explained:

    “Bacterial indicators were developed to control enteric bacterial diseases particularly in the days when cholera, typhoid and dysentery were prevalent.  Bacterial indicators have no relationship to the absence of viruses in polluted waters or even in effluent.  The reasons for this include:

    (a)The different survival characteristics of bacteria and viruses; bacterial indicators and most bacterial pathogens do not survive well in the environment (with some exceptions, for example Salmonella and certain Vibrio species) and at least several thousand organisms are generally required to cause an infection in humans whereas enteric viruses have a very low infectious dose.

    (b)Differing transport mechanisms.  Bacteria do not attach to suspended sediment in the same way as viruses; and

    (c)Different treatment effectiveness.  Treatments that may eliminate most bacteria are much less effective against viruses.

    For these reasons the absence of bacterial indicators in polluted waters cannot predict the presence or absence of human viruses.

    Bacterial indicators are, however, useful to show how well a sewerage treatment system is managed and to measure how well a particular component of a treatment process is performing.  In addition, they are useful for indicating the presence of some bacterial pathogens … If adequate bacterial standards were not adhered to the risk of bacterial disease would also be extremely high from oysters and recreational swimming in polluted waters.  While the lack of bacterial indicators in treated sewage does not indicate the absence of viruses, where there are high bacterial levels from a human effluent source, one can safely assume that levels of viruses will be also high.  This is because any treatment which has failed to eliminate bacteria will also have failed to eliminate viruses." (Emphasis added)

18. Mr Murphy expressed similar views.  He favoured testing for faecal coliforms (correctly called “thermotolerant coliforms”).  There are apparently many subsets of faecal coliform.  Some of them appear naturally in the environment.  Some are found in the faeces of all warm blooded animals, not just humans.  The preferred indicator group is Escherichia coli (“E. coli”) which has a strong association with human faeces.  The presence of E. coli in water is, therefore, a good indication of recent contamination of the water by human sewage.  There was no technical or practical difficulty in 1996 in testing a water sample for the presence of E. coli.

19. It is important to note that the absence of E. coli or other faecal coliforms does not negative the possibility of viral contamination; viruses normally outlive faecal coliforms.  Nonetheless, Mr Murphy supported faecal coliform testing, “as a useful tool in detecting the presence of faecal contamination in water”.  He explained:

    “This is because faecal coliforms indicate the presence of faecal contamination.  The level of faecal coliforms excreted by humans remains relatively constant.  Therefore the higher the level of faecal coliform in the water the greater the level of faecal contamination.  An increase in the level of faecal coliform would indicate a pollution event.” (Emphasis added)

    (vi)      Flesh testing

20. Theoretically, there are several methods of detecting the presence of HAV in oyster flesh.  However, the only method that achieved any support among the experts, as being feasible from a grower’s perspective on a day-to-day basis, was Polymerise Chain Reaction (“PCR”).  Even that is problematic.  Nicholas John Ashbolt, an environmental microbiologist of 14 years standing, is currently an Associate Professor in the Department of Water Engineering at the University of New South Wales and Deputy Director of the Centre for Water and Waste Technology.  For the last 10 years he has specialised in water microbiology, during which time he has worked on projects in several countries.  Dr Ashbolt was called on behalf of the applicant.  He said this about PCR:

    “PCR testing involves biochemical amplification of the viral nucleic acids to facilitate their identification.  The test however does not discriminate between infectious or non-infectious virus particles.  The test must be performed under laboratory conditions by skilled personnel.  PCR testing costs between $50 and $200 per sample.”

21. Mr Murphy described PCR as “the current method of choice”, for flesh testing, and said the process and methodology was known and available in laboratories in November 1996. However, he agreed the test could be undertaken only by trained laboratory personnel.  Mr Murphy said some cost could be saved by initially testing for enteroviruses, treating them as a surrogate for HAV.

22. Dr Grohmann thought, at this stage of its development, PCR had no role to play in routine monitoring of viral contamination of oysters.  He said PCR tests were still at the research stage in November 1996; tests could be carried out only in a limited number of laboratories with specially-trained personnel.  For that reason, they were expensive.  But Dr Grohmann had more fundamental reasons for rejecting PCR as a routine testing mechanism.  First, at its present stage of development, PCR frequently gives false negatives.  Dr Grohmann has no difficulty about accepting a positive result; so he often uses PCR to confirm a suspected contamination.  But he said the test often failed to detect a virus; for that reason he does not offer PCR as a routine test at his laboratory.  Further, a PCR test destroys the subject.  Given that circumstance, PCR can only be used to test samples.  But it is legitimate to extrapolate from the result of a sample test only where there is relevant homogeneity between the items from which the sample is taken.  Dr Grohmann thought this cannot be assumed in relation to HAV in oysters; because of the propensity of the viruses to cluster together, there might be one contaminated oyster in a bed of uncontaminated oysters; because of the tiny quantity of the virus needed to infect a consumer, that one contaminated oyster may be enough to do so.  Even if reliable negatives could be obtained, they would only establish that the tested (now destroyed) oysters were not contaminated. 

23. PCR flesh tests are used in Europe to provide information about water quality.  There is no reason to doubt this is a useful procedure, both in determining whether particular waters are suitable for the growing of oysters for human consumption and, as an additional precaution, in determining whether to recommence harvesting after a closure caused by a pollution event.  However, I am satisfied by Dr Grohmann’s evidence it would be unsafe for an oyster grower or a regulatory authority to rely purely on PCR tests as an indication of the absence of viral contamination.  This applies whether the person tests immediately for HAV or uses an enterovirus test as an initial surrogate for HAV.

    2.        GROWING AREA MANAGEMENT
    (i)        Sanitary survey

1. Having regard to these problems, it is not surprising there was widespread agreement between the expert witnesses that the sensible course is to prevent contamination arising in the first place.  They agreed this can be done only by proper management of growing areas. One suggested component of a proper management regime is a sanitary survey.  A sanitary survey is a comprehensive and detailed inspection of the foreshores and tributaries of the relevant waterway, the purpose being to identify all points of pollution and determine their effect on the quality of the water in the growing area.  The shoreline inspection should be supplemented by a program of water testing designed to detect, and trace the source of, any faecal pollution of the waterway.

2. Although the parties agreed about the importance of proper management, there were differences between them as to what constitutes an acceptable regime.  As poor management of the lake and its tributaries lies at the heart of the applicant’s case, there is no escape from detailing the evidence on this issue.  In reading that evidence, it is relevant to bear in mind that no sanitary survey of Wallis Lake or its tributaries was ever conducted before the hepatitis A epidemic that gave rise to this proceeding.

   (ii)       The United States

3. The applicant’s leading witness on growing area management was David Warren Alton, a recently retired officer of the United States Food and Drug Administration (“FDA”).  Mr Alton has a first degree in bacteriology and public health and a Masters degree in sanitary engineering.  For a period of over 25 years, until February 1998, he was involved with shellfish sanitation programs in the United States and internationally.  From 1992 until February 1998, he was Associate Director for International Programs, Office of Seafood, in FDA.  In that capacity Mr Alton was concerned to ensure that foreign countries that sought to export shellfish to the United States met FDA standards, including in relation to growing area management.  In essence, as I understand the position, FDA required foreign countries to adopt and enforce a regime akin to the United States National Shellfish Sanitation Program (“the NSSP”).  Mr Alton described the NSSP as “a voluntary, tripartite program composed of shellfish producing and receiving states [that is, American States], the shellfish industry and federal agencies”.  FDA co-ordinates and administers the NSSP.  In each participating State, one or more regulatory agencies manages the local shellfish program.  Mr Alton said:

   “A principal objective of the NSSP is to provide a mechanism for certifying that shellfish shipped in interstate commerce meet agreed upon, specific sanitation and quality criteria.  The NSSP has procedures that allow a participating state to certify firms handling shellfish products that have passed state inspection.  This inspection and certification assures the public health officials in a receiving state that shellfish products from a certified dealer have been grown, harvested, transported, processed, and shipped in accordance with NSSP criteria.”

4. Explaining the program, Mr Alton commented that “the concentration of a toxic substance in an oyster can range between 1,000 and 70,000 times that in the water”.  Although “cleasing” the oyster in clean water is designed to confront this health problem,

   “it has been shown that cleasing or the commercial process of Depuration is only ever at best likely to partially decontaminate oysters.”

   Mr Alton went on:

   “Growing oysters in water of acceptable sanitary quality is the first critical control point with which the NSSP is concerned.  Growing area classification is thus central to the effectiveness of the NSSP.  The essential finding of many studies is that any seafood harvested in polluted water is by definition dangerous for the consumer.

   ‘For more than half a century it has been known that sea water can be significantly contaminated by human wastes and that this contaminated water may be a factor in the transmission of enteric diseases.  This may occur either through the direct use of water or indirectly through shellfish which have been exposed to it’.”

   The internal quotation is from a 1956 paper “Survival of Enteric Organisms in Sea Water” by Arnold E Greenberg.  The emphasis to Mr Alton’s words is mine.

5. Mr Alton described the NSSP approach in these terms:

   “Shellfish growing area classification under the NSSP is divided into two parts, the sanitary survey and the bacteriological survey.  The sanitary survey provides an overall view of pollution sources, types and volumes of sewage, locations of potential point and non-point sources of pollution and an overview of the total environment of the growing area and the impacts of known or potential pollution sources.  The bacteriological survey defines the level of viable sewage organisms in terms of indicator equivalents at any given point in the growing area.  The importance of the sanitary survey to classify shellfish growing areas can not be overstated.  This is the one classification step that experienced shellfish control agencies believe gives them the best answers on the appropriate classification of shellfish growing waters.  The bacteriological survey is a supplement to the sanitary survey and confirms the findings of the sanitary survey with some definition of the concentration of indicator organisms.” (Emphasis added)

6. Mr Alton said the principal components of a sanitary survey include:

   “a.      an evaluation of the pollution sources that may affect the areas;

   b.        an evaluation of the meteorological factors;

   d.a review of hydrographic factors that may affect distribution of pollutants throughout the area; and

   e.an assessment of water quality.”

7. After detailing what is involved in each of these components, Mr Alton emphasised that “a sanitary survey must be made of each growing area prior to its approval by the state as a source of shellfish for human consumption”; but it is updated annually and more comprehensively every third year.  Both updates involve evaluation of any changes in pollution sources and analyses of water quality samples taken in the preceding 12 months.

8. Dealing with the bacteriological survey, Mr Alton commented that “[as] zero tolerance goal is unachievable, the task for any regulatory agency is to determine what level can be tolerated and still maintain safety and quality”.  He noted “the most common bacterial indicator group used by the public health community to determine the presence of sewage has been the coliform group”.  The NSSP manual requires that the total coliform median not exceed 70  per 100 megalitres (with not more than 14 faecal coliforms) and not more than 10% of the samples ordinarily exceed 230 and 43 respectively.  A minimum of 15 water samples must be collected from each station in the approved area, the stations being located adjacent to actual or potential sources of pollution and sample collection being timed to represent adverse pollution conditions.  Mr Alton commented:

   “Both the coliform and faecal coliform indicator groups have been used successfully in the classification of shellfish growing areas.  Neither group fulfils all of the desirable characteristics of the ideal indicator.  The standards are based upon the public health assumption that the presence of viable faecal material in estuarine water establishes a potential for shellfish-borne illness.  The shellfish control agency must decide how much viable faecal material will be tolerated in waters that produce filter-feeding shellfish destined for the raw market, and then it must establish and enforce the appropriate standards.  With our present state of knowledge, testing for bacterial and viral pathogens in oyster flesh may be an adjunct to, but not a substitute for the use of indicator organisms for the detection of faeces in shellfish waters.” (Emphasis added)

9. Mr Alton explained how the information was used:

   “The results of the sanitary survey and bacteriological survey are utilised to give growing areas one of the following classifications:  approved; conditionally approved; restricted; conditionally restricted; or prohibited.  All areas that have not been the subject of a sanitary survey are prohibited.  Prohibited areas are established adjacent to each sewage treatment plant outfall and other waste discharges of public health significance.  An upward revision of an area classification must be supported by an adequate sanitary survey.  Maps showing the boundaries and classification of each shellfish growing area are maintained in a central file by the state shellfish control agency.

   Closures of growing areas are made when pollution conditions exist outside the database used to classify the area.  Re-opening of the area will not occur until the area returns to normal for a sufficient time to allow the shellfish to reduce the coliform group of indicator organisms or to reduce poisonous or deleterious substances that may be present in the shellfish meats to acceptable levels.” (Emphasis added)

10. Mr Alton continued:

    “Growing areas are designated as approved when the sanitary survey indicates that faecal material, pathogenic microorganisms, poisonous and deleterious substances are not present in the area in dangerous concentrations.  In order to satisfy the Approved classification, growing areas must satisfy stringent water quality standards.  These standards are outlined in the Manual at C-8.

    Growing areas that are subject to predictable pollution events, but otherwise for a reasonable period of time satisfy the approved classification, can be classified as ‘Conditionally Approved’.  A management plan accompanies the grant of conditional approval.  The plan includes:-

    a.An evaluation of the sources of pollution including the circumstances under which those sources are anticipated as actual pollutants of the growing area;

    b.The criteria and procedures for area closure and subsequent re-opening;

    c.The frequency and thoroughness with which the area will be monitored and re-evaluated.

    An area will be classified as restricted when the sanitary survey indicates a limited degree of pollution.  The levels of pollution must be low enough so that relaying (placing oysters in approved growing areas to allow a period of natural cleansing) or depuration are effective to make the shellfish safe for human consumption.  Water sampling data is relied upon to identify the level of faecal contamination to which the area is exposed during adverse pollution conditions.  Studies are relied upon as a basis for determining the bacteriological quality requirements necessary to ensure that relaying or depuration is effective.”

11. Mr Alton then commented on the international situation:

    “Shellfish sanitation is practiced internationally in a variety of ways.  In undeveloped countries there may be little if any control, while in developed countries there are high levels of control.  The procedures may vary but the end result sought is protection of consumers from illness caused by consumption of raw or partially cooked molluscan shellfish.  Currently there are two primary shellfish growing area classification models.  The NSSP, which is a sanitary survey and water sample based classification system and the European Union (EU) model which places emphasis on samples of shellfish meats for classification purposes.  A mutual recognition of the EU and US controls for bivalve molluscs is still in discussion in the framework of the Sanitary and Phytosanitary Agreement of the World Trade Organization.  Comparison of the US and EU legislative requirements show that they share a similar philosophy in many respects and are likely to deliver similar end results.  However, in one important respect they take a different approach, which makes direct comparison difficult.  Sanitary controls under both systems are underpinned by a classification of harvesting areas according to the degree of pollution as judged by faecal indicators.  The purpose of this classification is to ensure that shellfish are not harvested from polluted areas.  For these classifications or grading of mollusc harvest areas EU Directive 91/492 relies on microbiological analysis of shellfish flesh whereas the US FDA National Shellfish Sanitation Program relies on microbiological analysis of growing waters.  Unfortunately bacterial counts in shellfish do not directly correlate with bacterial counts in seawater and therefore the equivalence of these approaches for delivering the same level of public health protection is not immediately apparent.” (Emphasis added)

12. Mr Alton spoke about visits he had made to ten countries in relation to their shellfish programs.  He said that, in general, the countries which had signed memoranda of understanding have met or exceeded the NSSP requirements.  They have experienced “very limited numbers of illness outbreaks or problems”.  He added:

    “The NSSP requirements are not easy and it is not lightly that a nation undertakes the commitment to safe shellfish.  Some of these countries did or are applying the NSSP criteria to a few growing areas used for export of product under the NSSP because of the costs of following the program nationally.  Some are gradually applying the standards nationally or as discussed above already have.  Our experience is that the system works very well if followed as specified.  We are learning more about viruses and indicators yet the tried and true faecal coliform indicator applied to an in depth sanitary survey continues to protect the public health of raw and semi-raw shellfish consumers.”  (Emphasis added)

13. Mr Alton also commented:

    “It has been observed that when shellfish are routinely depurated prior to sale that the enforcement agencies and industry members develop a tendency to believe that the situation is well in hand and that the depuration process will solve pollution problems.  This unfortunately has been found to not be the case with numerous outbreaks of illness from depurated shellfish taken from improperly classified areas, grossly polluted areas, or areas impacted by human faecal material.  It is well documented internationally that virus particles do not completely depurate from shellfish in the short time period of the depuration process (48 – 72 hours).  It is also well documented internationally that the normal depuration process does not adequately remove from heavily polluted oysters:  bacteria, heavy metals/pesticides, or marine biotoxins (shellfish poisoning).  This means, shellfish control programs should have a classification limit on the quality of the growing area water from which shellfish are harvested for depuration.  This has been well known in the international community since the 1980’s.”  (Emphasis added)

14. Mr Alton also dealt with the incidence of HAV contamination in shellfish:

    “Hepatitis A is one of the most serious illnesses associated with shellfish-vectored disease, causing debilitating and chronic infection and even death.  The first documented outbreak of shellfish-borne hepatitis occurred in Sweden in 1956, when 629 cases associated with raw oyster consumption were reported.  Subsequent to that, hepatitis A cases were reported in the United States.  In 1961, several large outbreaks were reported among consumers of raw oysters in Mississippi and Alabama and consumers of raw clams in New Jersey and Connecticut.  Outbreaks of hepatitis A have been reported consistently since the early 1960's and the illness continues to be a public health concern today.  Worldwide, the illness is reported frequently.  The most disturbing recent incident occurred in China in 1988 when more than 292,000 cases (nine deaths) of hepatitis A (associated with the consumption of uncooked, contaminated cockles) were reported in the urban areas around Shanghai.  This outbreak clearly demonstrated the need for effective sanitation programs to prevent the introduction of contaminated shellfish into the marketplace and what can happen when the system breaks down or when there are no effective programs in place.” (Emphasis added)

15. In the course of cross examination, Mr Alton agreed with Mr Hoeben that a system of grower self-regulation was not effective; “even if there’s goodwill on the part of most growers, there’s always going to be the maverick … who’ll pursue the dollar and won’t really care about the general good”.  Mr Alton also agreed there was sometimes a problem of overlapping responsibilities and jealousies between agencies, so “someone has to actually take charge”.

16. Mr Taylor put to Mr Alton that “the United States regime has not had to deal with the situation of an established growing area being brought on stream as part of the NSSP”.  Mr Alton replied:

    “No, I wouldn’t agree with that.  There are growing areas coming on and off and areas that are new.  Particularly, we have that happening in States like Alaska or in States where the growing area was not considered, it wasn’t used whatever and they needed to classify that.”

17. Mr Alton agreed with Mr Taylor that the presence of E. coli is “a good indicator of the likelihood of viral contamination”, but the absence of E. coli immediately after the abatement of pollution may be misleading.  He gave this evidence regarding the relationship between classification and depuration:

    “Would you agree with this that current purification technology cannot itself always be relied upon to eliminate viruses from oysters?---That’s correct.

    And the answer would be the same whether or not you were taking oysters from a classified or a non-classified area and applying the US purification technology?---No, I wouldn’t agree with that because I believe that if you had a classified area the requirements of the NSSP is that shellfish for depuration have to be at least from an area that meets restricted growing area classification.  In the process of doing this you throw in some barriers to viral contamination.

    But if you don’t have those barriers before depuration then it’s certainly correct to say that depuration cannot always be relied upon to eliminate viral contamination?---Correct.

    …

    And even if one was, for example, in the NSSP program dealing with oysters that had come from a conditionally approved or conditionally classified area the result would be the same would it not that depuration applied to oysters coming from such a source would not even then provide an absolute guarantee of freedom from viral contamination?---No, there’s no absolute guarantee.  It’s designed to reduce the risk and it doesn’t happen very often but you could have a problem.

    Finally, I wonder if I could put this to you and ask you if you would agree with this that extreme caution should be exercised when resuming oyster harvesting operations after oysters and water have been polluted by faecal coliform contamination?---That's correct." (Emphasis added)

    (iii)      Europe

18. The European system of management was described by Christopher John Rodgers, an English fish and shellfish microbiologist, who was employed by the United Kingdom government from 1987 to 1993 to advise on the design and construction of shellfish purification plants and is now an aquaculture consultant providing advice to various international agencies.  Dr Rodgers gave evidence, by video-link with Spain, on behalf of Great Lakes Council.  He confirmed Mr Alton’s evidence that the European approach is to use flesh tests for classifying harvesting areas.  In his written statement of evidence, Dr Rodgers said Directive 91/492 of the European Union “requires all Member States to classify their shellfish harvesting areas into one of three categories (A, B or C) according to the degree of faecal indicator bacteria present in samples of shellfish flesh”.  The classification determines the required shellfish treatment regime.

19. Category A areas are those where shellfish flesh tests have shown less than 230 E. coli per 100 grams of flesh.  Shellfish from these areas may be sold without depuration.  Dr Rodgers said this standard “recognises the lack of an acceptable viral indicator”.  He went on:

    “Consequently, it stipulates that in the absence of routine virus testing procedures and the establishment of virological standards, health checks must be based on faecal bacterial counts.  In other words there is no routine test for virus presence in shellfish currently in existence in the EU.  A non-routine test, based on the polymerase chain reaction (PCR), is but used only by specialist laboratories for experimental and investigative purposes in cases of shellfish related viral infections.”

1. Category B areas are those where shellfish flesh tests do not exceed 4,600 E. coli per 100 grams of flesh in 90% of samples.  Shellfish from these areas must be depurated. 

2. Category C areas are those whose tests record up to 60,000 faecal coliforms in 100 grams of flesh.  Shellfish from these areas may be placed on the market only after a relaying period elsewhere of at least two months.  Dr Rodgers said:

   “… there is no provision for harvesting shellfish that exceed the upper limit of the most polluted category.  Shellfish from such areas cannot therefore be placed on the market for human consumption and are effectively prohibited for sale.”

3. Dr Rodgers referred to the Directive’s requirements for shellfish harvesting and transportation and for inspection and licensing of purification centres.  He went on:

   “The main reasons why the EU system (shellfish flesh testing) was adopted in preference to other systems elsewhere (water testing) are largely historical and related to the end product standard.  In the decades prior to the adoption and subsequent implementation of the Shellfish Hygiene Directive it was widespread practice across Europe to test shellfish flesh in order to determine their quality.  Countries such as the UK, France and Denmark all used various bacteriological methods, related to quality standards, for examination of shellfish, although before the Directive none were adopted as standard procedure.

   In addition, the end product standard was a measure designed to be applied to the shellfish themselves, since these are the objects of the retail sale and public consumption in their raw state, particularly for oysters.  In this way the shellfish were considered to act as sentinels and thus reflect the quality of the growing waters, although the relationship between the levels of faecal coliforms in water and shellfish can vary appreciably.  Nevertheless, in general, the levels in shellfish can be expected to be higher than in the surrounding waters.  This may be an important consideration after the onset of intermittent faecal contamination (e.g. storm water run-off or accidental spillage) because the shellfish would remain contaminated after the event and after a subsequent improvement in water quality.

   …

   The object of each system is ultimately to protect the consumer.  In the USA, they take the path of water quality testing, whereas in contrast the European Union takes the path of shellfish flesh testing.  Neither is completely able to guarantee freedom of the product from faecal pollution, due to a variety of factors.” (Emphasis added)

4. Dealing with viral contamination, Dr Rodgers said:

   “Heavily contaminated shellfish cannot be adequately depurated, particularly for viral contamination.  This natural, biological cleansing action is not sufficient for reducing the contamination to a sufficiently safe level in circumstances where the shellfish may initially contain high concentrations of virus.  Some outbreaks of viral hepatitis and gastroenteritis have been attributed to inadequately depurated shellfish taken from heavily contaminated waters.  In addition, experimental depuration studies have shown the prolonged persistence of HAV in oysters.

   Nevertheless, the operating conditions of a purification plant are important to the efficiency of any depuration process.  Conditions such as turbid water, old or dirty UV light sleeves, fluctuations in water temperature, incorrect salinity and excess density of shellfish all have a potentially deleterious effect on the tank-based cleansing of shellfish.  In addition, the re-contamination of shellfish by the inadvertent introduction of additional (possibly polluted) shellfish should be prevented.  For this reason, it is important that clean and polluted shellfish are kept apart, and a system used that ensures that uncleansed shellfish cannot be sent away in error.”

5. Dr Rodgers concluded:

   “In my opinion the system of shellfish hygiene control used in the European Union provides a good basis for ensuring a safe end product for shellfish consumers.  However, to my knowledge, no scheme will provide total protection against contracting a shellfish-related viral enteric illness.  One way to ensure such a situation does not occur is to prevent the retail sale of shellfish after pollution incidents, such as storm water run-off after heavy rain, in areas likely to contribute high levels of faecal contamination.  However, this can be difficult where there are other activities that conflict with growing shellfish.

   Nevertheless, the regulatory authorities have designed monitoring and control programmes for shellfish harvesting areas in order to protect the consumer.  This is despite any variability in methodology and the uncertainties linked to the relationships between the shellfish themselves and faecal pollution.

   The current control programmes are the best available, given the present understanding of all the variables involved, and they are periodically open to review and improvement.  This is achieved as further advances are made in the applied scientific research dedicated specifically to uptake, persistence, elimination and alternative indicators for enteric viruses.  Success in these areas will lead to additional consumer safeguards through enhanced monitoring strategies."  (Emphasis added)

6. In oral evidence Dr Rodgers mentioned the role of a sanitary survey:

   “… if you actually have a sanitary survey, and you have good monitoring in place prior to any sort of potential outbreak, you may not actually need to elevate the amount of testing which you routinely undertake, providing you have a historical database which indicates the sort of situation you would expect in any particular area.  This type of monitoring program is designed to reduce the risk, providing it is well designed statistically, and the samples are taken regularly.  Unfortunately for this type of viral outbreak there are no guarantees that these measures, these risk measures would actually prevent an outbreak because there is still a risk albeit small, even within a carefully designed program that such an outbreak could still occur."  (Emphasis added)

7. Under cross examination Dr Rodgers explained further:

   “But to determine whether something is in the first place a category A, B or C area you need to undertake a sanitary survey for that particular area?---In the case of a new classification the sanitary survey would be part of the initial classification program and in the case of the European Union you would then go on to support that with flesh testing, yes.

   But if you say had an initial classification of an area as area A you would on a regular, perhaps annual, basis update your sanitary survey for that particular area?---That’s right, following further regular testing which if you already have an historical picture of what’s happening in the area from a contamination point of view then perhaps your annual testing would be say once every month to maintain a classification or to change the classification if something has happened in the local area to downgrade or even improve a classification, yes, you would have to do that, yes.

   In terms of a sanitary survey, are you referring to identifying actual or potential points, sources or likely point sources of pollution in that particular area?---Yes, yes.” (Emphasis added)

8. Dr Rodgers agreed the European model permits prohibition orders to be made by the relevant local authorities, “closing down the harvesting area if it is unsafe for health reasons after a heavy rainfall event”.  He then gave this evidence about sample selection:

   “In terms of the meat testing of oysters that is part of the European model, it is correct to say is it not that you have to have a statistically representative selection procedure in terms of where you take oysters and the quantity of oysters from a harvesting area, for such a model to work effectively?---That’s correct.  You need to statistically design a monitoring program to cover the extent of your shellfish base and also take into account through the sanitary survey which you’ve already mentioned where the points of pollution might impinge upon the actual bed and then return to the same point and then once that data is built up it gives you a very good indication as to where the pollution is coming from and also how polluted the shellfish might be, if at all.”  (Emphasis added)

   (iv)      Tasmania

9. Ray Brown is a qualified microbiologist employed by the Tasmanian government.  Since 1987 he has managed the Tasmanian Shellfish Quality Assurance Program (“TSQAP”).  This program was established pursuant to a Memorandum of Understanding between the Tasmanian government and the Commonwealth Department of Primary Industries (“DPI”).  That Department, in turn, made an agreement with the FDA in respect of certification of the Tasmanian shellfish industry under the United States NSSP.  After that agreement was made, the DPI, or its successor in administration, the Australian Quarantine Inspection Service (“AQIS”), established a committee of Australian State governments and shellfish producers called the Australian Shellfish Sanitation Advisory Committee (“ASSAC”).  ASSAC adopted the Australian Shellfish Sanitation Control Program (“ASSCP”), the purpose of which, according to Mr Brown, “is to safeguard public health through the implementation of sound, uniform standards in relation to the cultivation, harvest, processing, storage and distribution of shellfish for human consumption”.  He said ASSCP, like the NSSP, “gives primacy to growing area classification … A principle philosophy of the ASSCP is that if shellfish are only harvested from clean, unpolluted waters, then the shellfish will not be contaminated and public health episodes will be averted”.  (Emphasis added)

10. Mr Brown said there are now about 100 oyster leases in Tasmania covering 1,300 to 1,400 hectares and producing oysters worth $15 to $20 million per year.  Under the TSQAP, leaseholders pay an annual fee of $960 per lease.  That contribution is matched by the Tasmanian government, to form a program management fund.  Mr Brown said all commercial bivalve shellfish growing areas are assessed and classified according to their sanitary quality by TSQAP.

    “[This] involves identifying and evaluating actual and potential sources of pollution and analysing the impact of these pollution sources on water quality in the growing area.”

11. He explained the sanitary classification had three main components:  a shoreline survey, bacteriological examination of water samples and bacteriological and chemical examination of shellfish.  The purpose of the shoreline survey is “to identify and evaluate all actual and potential point and non-point sources of pollution, which may affect the growing area”.  Faecal coliform levels are used to determine the bacteriological quality of the water.  In relation to bacteriological examination of shellfish, Mr Brown said:

    “Bacteriological examination is used less frequently than water testing.  When utilised, the TSQAP uses the e. coli standard from the food standards code.  We ensure that at a minimum 15 shellfish per sample are collected and analysed.  It is used particularly in association with analysing whether a growing area is suitable for re-opening after a closure.”

12. There are four classifications of proposed shellfish harvesting areas:  approved, approved conditionally, restricted and prohibited.  Harvest areas are classified as “approved” only where there is no detectable pollution impact and high water quality standards are met.  An area may be “conditionally approved” even though subject to occasional pollution impacts, provided these are well defined, predictable and manageable.  But there must be a management plan specifying criteria for closure of the harvest area and provisions to prevent harvesting during a closure period and specifying the conditions that need to be met before the area is reopened.  Mr Brown commented:

    “It is common for pollution events to occur after heavy rainfall.  In that case, a level of rainfall for the harvest area will be established as the criteria by which the lake must be closed for harvest.  A harvest area will not be conditionally approved if there are point sources of pollution directly impacting on the area.”

13. Mr Brown said a “restricted” harvest area “does not meet the ‘approved’ criteria but is not grossly polluted”.  Shellfish taken from restricted areas must be relayed to an approved area for at least two weeks or subjected to depuration.  However, depuration is accepted only “when sufficient studies have been concluded to demonstrate the effectiveness of the purification process to be adopted”.  Mr Brown sounded a warning about reliance on depuration:

    “There are known limitations to the capacity of depuration to purify shellfish.  If a significant event (such as unusually heavy rainfall) occurs within a restricted area then:-

    a.the level of pollution in the growing area may be increased;

    b.If the growing area is impacted by urban run-off then there will also be an increase in the risk of human viral contamination because of the increased presence of human faecal contamination in the water body; and

    c.The prevailing conditions may result is [sic: ‘in’] a physiological stress of the shellfish, which could reduce their capacity to filter feed.  These factors are known to combine to further reduce the effectiveness of depuration.  Under conditions where the effectiveness of depuration is reduced, a restricted area should be closed for relaying.”

14. Mr Brown concluded:

    “In the absence of a sanitary survey a shellfish growing area must be prohibited according to the ASSCP.

    Under the TSQAP, if an area is subject to severe rainfall conditions then irrespective of its classification (approved, conditionally approved and restricted) the area is closed for harvest.  The area will not be reopened until both water samples and oyster flesh samples have returned to within normal values, based on the database of existing samples.  The principle governing the closure policy under the TSQAP is that oysters should not be released for human consumption if there is an unacceptable risk to human health in so doing.

    It is equally important to examine the effects of secondary rainfall (i.e. after an initial downpour).  Additional rainfall may have a critical effect on the re-opening strategy.  In the North West of Tasmania, our experience has been that after period of drought, initial rainfall does not tend to cause a marked increase in pollution.  However, after the ground is soaked, subsequent rainfall can dramatically increase run off.

    In my opinion, a prudent person, with:-

    a.knowledge of the impact of heavy rainfall on an estuary system;

    b.a lack of information concerning the impact of pollution sources on the oyster growing areas in the system; and

    c.knowledge of the public health risks associated with human faecal contamination of oysters

    would do all things available to them to ensure the safety of oysters cultivated within that estuary system.  If there was a danger that depuration was unlikely to be effective in protecting public safety, the only option available to such a prudent person would be to recommend a closure of the growing area or to warn against continuing harvest.

    Consistent with public health principles, an estuary system should remain closed for harvest until such time as testing confirmed that oysters harvested from the area are fit for human consumption.” (Emphasis added)

15. During cross examination Mr Brown gave additional information about ASSAC.  Because Tasmania and Victoria were the first States to sign a Memorandum of Understanding with DPI or AQIS, they were the foundation members of the Committee. Subsequently, South Australia became a full member.  Other States sent observers, one representing the relevant State government and the other representing oyster growers in that State.  Mr Brown said that in November 1996 Western Australia and Queensland, “who had fledgling industries”, were “in the throes of implementing the program”.  Asked about New South Wales, he said “They were not embracing it at all”.  Mr Brown said the New South Wales government observer had always been Mr Philip Bird of the Health Department.  Mr Bird started to attend meetings in about 1990; in recent years he had not attended regularly.

16. Under cross examination by Mr Nicholas, Mr Brown made clear that responsibility for the Tasmanian management program rests with the State government (specifically, the Health Department), rather than local government or the growers.  The Health Department bears that part of the cost of the program that is not covered by the growers’ levy and provides the personnel needed for the shoreline surveys and water bacteriological examinations.

17. Mr Taylor and Mr Windsor, counsel for the State, did not challenge any of Mr Brown’s evidence.

    (v)       NHMRC recommendations

18. In 1987 the National Health and Medical Research Council (“NHMRC”) published a 20 page booklet entitled “Code of Hygienic Practice for Oysters and Mussels for Sale for Human Consumption”.  The code was stated to apply “to the estuarine bivalve molluscan shellfish of commercial importance in Australia, i.e. oysters (Crassostrea commercialis, C. gigas) and mussels (Mytilidae), which are filter feeders, may be eaten raw or cooked and are normally consumed whole including the viscera”.  Crassostrea commercialis  (“the Sydney rock oyster”) is the species grown in Wallis Lake.  After a section containing definitions, the code dealt at length with two subjects:  “raw material requirements”; and “plant facilities and other operating requirements”.

19. The raw material requirements section of the code was divided into “environmental sanitation in growing areas”; “hygienic harvesting and food protection”; and “transportation”.  It is necessary only to refer to the material on the first of these topics.  It includes the following:

    “1.      Sanitary disposal of human and animal wastes

    Adequate precautions should be taken to ensure that shellfish growing areas are free from pollution capable of causing pollution of the shellfish, and extreme care should be taken to protect the shellfish from contamination by any wastes.  A clean area surrounding the shellfish growing areas should be established and the dumping of all wastes of agricultural, domestic or industrial origin, including wastes from private residences or boats, should be prohibited.

    2         Determination of pollution types and sources

    Surveys of the shoreline should be conducted to determine sources of both domestic and industrial pollution.  Sources may include municipal sewage outfalls, industrial outfalls, mine wastes, geophysical contaminants, agricultural activities, nuclear power plants, refineries or other sources.  The need to reschedule sanitary surveys will be determined by changes in population shifts caused by commercial development of the shoreline or other factors affecting local population stability.

    3         Classification of the growing area

    When pollution sources have been identified and evaluated, sampling stations for water, shellfish and/or bottom mud should be established and studies conducted to determine the effects of the pollutants on water and shellfish quality.  The data should be evaluated by the official agency having jurisdiction and growing areas classified or designated according to official standards and criteria.  When interpreting growing area data, the official agency having jurisdiction should take into account variations which may affect the level of pollution during the most unfavourable hydrographic and climatic conditions as influenced by rainfall, tides, winds, methods of sewage treatment, population variations and other local factors, since shellfish respond rapidly to an increase in the number of bacteria or viruses in their environment by accumulating these agents.  The agency should also consider that shellfish have the ability to accumulate toxic chemicals in their tissue in concentrations greater than the levels found in the surrounding water.  FAO, WHO, or other international or national food standards may be used as a guide to acceptable levels.

    4.Growing area control

    (a)Designated growing areas should be routinely monitored for changes in water quality, and sub-standard areas patrolled to prevent harvesting for purposes other than that established by the official agency.

    (b)Shellfish unless they are to be purified should not be removed for sale from water which, when examined using the methods prescribed, does not meet the following specifications.

    (i)the coliform median MPN of the water should not exceed 70 per 100 mL, and not more than 10% of the samples taken should ordinarily exceed an MPN of 230 per 100 mL when examined by a 5-tube multiple dilution test; or

    (ii)the Escherichia coli median MPN of the water should not exceed 2.3 per 100 ml, and not more than 10% of the samples should ordinarily exceed an MPN of 7 per 100 mL.”

1. Section 74B of the Trade Practices Act provides as follows:

   “74B(1)          Where –

   (a)a corporation, in trade or commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re-supply;

   (b)a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer;

   (c)the goods are acquired by the consumer for a particular purpose that was, expressly or by implication, made known to the corporation, either directly, or through the person from whom the consumer acquired the goods or a person by whom any antecedent negotiations in connexion with the acquisition of the goods were conducted;

   (d)the goods are not reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied; and

   (e)the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not reasonably fit for that purpose,

   the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.

   (2)Sub-section (1) does not apply –

   (a)if the goods are not reasonably fit for the purpose referred to in that sub-section by reason of –

   (i)an act or default of any person (not being the corporation or a servant or agent of the corporation); or

   (ii)a cause independent of human control,

   or

   (b)where the circumstances show that the consumer did not rely, or that it was unreasonable for the consumer to rely, on the skill or judgment of the corporation.”

2. Section 74A defines the word “manufactured”, for the purposes of Division 2A of Part V, as including “grown, extracted, produced, processed and assembled”. These words of extension clearly cover the activities of a corporation such as Barclay Oysters which grows, harvests, cleans, depurates and packs oysters for distribution to retailers.

3. There are two possible ways of applying subs (1) of s74B to this case. On either approach, the requirements of the subsection are fulfilled.

4. In relation to para (a), it is clear the oysters consumed by the applicant were “manufactured” by Barclay Oysters and, in trade or commerce, supplied by that company to another person, Barclay Distributors, who acquired them for re-supply.

5. In relation to para (b), a question arises whether the applicant should be regarded as “a consumer” or whether the “consumer” was the relevant purchaser:  the applicant’s father or brother.  Because para (e) contemplates that the “consumer” is not necessarily at the end of the acquisition chain, I prefer the latter approach.  However, it does not matter.  If the applicant is thought of as the “consumer”, para (b) was satisfied when his father or brother, as the case might be, gave him the contaminated oyster or oysters.  If the father or brother is the “consumer”, the paragraph was satisfied at the time of sale of the oysters to that person by Barclay Distributors.  In either event, para (c) was satisfied.  There is only one purpose for which oysters can sensibly be used:  human consumption.  Accordingly, although there is no evidence anything was said about the purpose of the acquisition, it was implicit in the whole series of transactions that this was the purpose to which these oysters would be put.  That purpose was known at all times to both Barclay Oysters and Barclay Distributors.

6. It is clear the contaminated oysters were not reasonably fit for human consumption (see para (d)) and that the applicant – who was either “the consumer” or a person who acquired the oysters from a “consumer” - suffered loss as a result (see para (e)).

7. Counsel for the Barclay companies do not dispute this analysis.  Nor do they suggest para (a) subs (2) is relevant.  But they rely on para (b).  They say the circumstances demonstrate “the consumer”, whoever he was, did not rely on the skill or judgment of Barclay Oysters or, alternatively, it was unreasonable for him to do so.

8. I see no basis for the first submission.  There is no evidence of reliance; but that does not mean the circumstances demonstrate a lack of reliance.  A person will not normally seek an assurance that an item grown or manufactured for human consumption is fit for that purpose; in the absence of an obvious defect or special circumstance, fitness will be assumed.  The acquirer will rely on the skill and judgment of the grower or manufacturer in ensuring the article is fit for human consumption.  That was the situation in this case; if they had been asked, each of the Messrs Ryan would surely have said he assumed the oysters were fit for human consumption; they were purchased from a supplier associated with a reputable grower.

9. The argument about unreasonableness has a little more force.  Counsel for the Barclay companies say it was unreasonable for anyone to rely on the skill or judgment of the grower “since the expert evidence reveals that it was not possible to ensure that an oyster was free of viral contamination, even if viral testing had taken place before sale.  Viral testing, of its nature, involves destruction of the oyster and could not have been carried out in relation to every oyster sold”.

10. I accept it would not have been possible for Barclay Oysters to test the particular oysters sold to the applicant’s father and brother.  I also accept it is impossible to ensure that a particular oyster is free from viral contamination, although it is possible to minimise the risk of the oyster being contaminated at the time of sale. However, as counsel for the applicant submit in reply, the question is not whether the grower could reasonably have discovered the defect; the issue is the reasonableness of the consumer’s reliance, not the reasonableness of the manufacturer’s behaviour. The right of action created by s74B is a statutory cause of action. Its elements must be taken from the statute itself, free of any preconceptions that might arise by reference to principles governing common law negligence.

11. As counsel point out, neither of the Barclay companies gave any warning of the possibility that the oysters might contain a virus they could not detect.  It seems none of the Messrs Ryan was in fact aware of this possibility.  That is not surprising.  Probably many people are aware that, if hygienic procedures are not maintained, the consumption of oysters may result in gastroenteritis or other illnesses.  However, I think most people would assume there are procedures and tests that enable a grower to ensure its product is fit to eat.  I believe it would come as a surprise to most members of the public, as it has come as a surprise to me, to learn this is not necessarily so.  In the absence of a warning, each of the Messrs Ryan was entitled to rely on the skill and judgment of the grower.

12. The applicant is entitled to succeed under s74B as against Barclay Oysters in respect of his personal claim. I cannot make any concluded finding in relation to the applicant’s representative claim under s74B against Barclay Oysters; it is conceivable – although, perhaps, unlikely – that something was said or done, at the time of the supply of oysters to a particular consumer, to make it unreasonable for that consumer to rely on the skill or judgment of Barclay Oysters. The application of s74B to group members must be left for future determination, if that should prove necessary.

13. Section 74B has no application against Barclay Distributors, for two reasons. First, that company did not “manufacture” the goods, even within the expanded definition of that term; second, it is not shown that either Mr Thomas Ryan or Mr David Ryan acquired the unfit oyster or oysters for re-supply. The evidence suggests the oysters given to Mr Grant Ryan were simply part of a larger batch acquired for the family generally.

    (iii) Sections 74C and 74D

14. Section 74C is similar in format to s74B but concerns cases where goods are supplied to a consumer by description and the goods do not correspond with the description. That is not this case. There is no suggestion in the evidence that the description of the desired goods descended to any greater particularity than “oysters”, and oysters were supplied. There is a difference between description and quality: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 466-467 and 489.

15. Section 74D deals with goods that are not of “merchantable quality”. It reads:

    “74D(1) Where –

    (a)a corporation, in trade or commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re-supply;

    (b)a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer;

    (c)the goods are not of merchantable quality; and

    (d)the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not of merchantable quality,

    the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.

    (2)Sub-section (1) does not apply –

    (a)       if the goods are not of merchantable quality by reason of -

    (i)an act or default of any person (not being the corporation or a servant or agent of the corporation); or

    (ii)a cause independent of human control,

    occurring after the goods have left the control of the corporation;

    (b)as regards defects specifically drawn to the consumer’s attention before the making of the contract for the supply of the goods to the consumer; or

    (c)if the consumer examines the goods before that contract is made, as regards defects that the examination ought to reveal.

    (3)Goods of any kind are of merchantable quality within the meaning of this section if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to –

    (d)any description applied to the goods by the corporation;

    (e)the price received by the corporation for the goods (if relevant); and

    (f)all the other relevant circumstances.”

16. Subject to the definition of “merchantable quality”, subs (1) is clearly satisfied, as against Barclay Oysters, but not Barclay Distributors. Subsection (2) is irrelevant. The issue in relation to s74D arises out of the definition of “merchantable quality” in subs (3).

17. Counsel for the Barclay companies argue that the subject oysters were as fit for the purpose for which oysters are commonly bought, consumption as food by humans, as it was reasonable to expect, having regard to the circumstance that it is impossible for a grower to guarantee the absence of a virus.

18. The error in this approach is similar to that in relation to s74B. The issue posed by s74D(3) is not whether it was possible for the grower to ensure the oysters were free of viruses, but whether a purchaser would act reasonably in expecting they were. Unlike s74B(2)(b), which directs attention to the acts and omissions of the particular consumer, s74D(3) imposes an objective standard (“as it is reasonable to expect”), though that standard must be applied having regard to all relevant circumstances. In the present case those circumstances include the absence of any warning by the Barclay companies of the possibility of a virus in the oysters. Of course, this would not matter if it was well known to members of the public that viruses can survive even proper processing and depuration, but the evidence does not suggest it was.

19. The s74D claim should be determined in the same way as that arising under s74B: the applicant is entitled to succeed on his own behalf against Barclay Oysters, although not Barclay Distributors. His representative claim against Barclay Oysters should be reserved.

    (iv) Section 75AD

20. Section 75AD appears in Part VA of the Trade Practices Act. This Part was added in 1992 to provide remedies against manufacturers and importers of defective goods. Section 75AD covers the case of a loss by an injured individual. It reads:

    “75AD  If:

    (a)a corporation, in trade or commerce, supplies goods manufactured by it; and

    (b)they have a defect; and

    (c)because of the defect, an individual suffers injuries;

    then:

    (d)the corporation is liable to compensate the individual for the amount of the individual’s loss suffered as a result of the injuries; and

    (e)the individual may recover that amount by action against the corporation; and

    (f)if the individual dies because of the injuries – a law of a State or Territory about liability in respect of the death of individuals applies as if:

    (i)the action were an action under the law of the State or Territory for damages in respect of the injuries; and

    (ii)the defect were the corporation’s wrongful act, neglect or default.”

21. The term “manufactured” is defined in s75AA, for the purposes of s75AD, in the same terms as in s74A. Section 75AC(1) explains that “goods have a defect if their safety is not such as persons generally are entitled to expect”. Consistently with what I have already said, it seems to me the elements stipulated by s75AD are satisfied in this case. However, s75AK(1)(c) provides a defence to an action under s75AD (amongst other sections) “if it is established that … the state of scientific or technical knowledge at the time when they were supplied by their actual manufacturer was not such as to enable that defect to be discovered”. The paragraph obviously intends the defence be unavailable if the goods were supplied notwithstanding the possibility of discovery of the defect. Conversely, the defence is available if the defect was not capable of discovery before supply. In the present case, discovery and supply were mutually exclusive; the only test that would reveal the defect would destroy the goods. Accordingly, it seems to me the defence applies and the s75AD claim fails.

    (v) Section 52

22. In relation to the s52 claim, it is not contended either of the Barclay companies made an express representation about the quality of the oysters. The argument is that sale of the oysters without any warning of possible viral contamination amounted to an implied representation they were uncontaminated. While there are circumstances in which silence may constitute misleading conduct, within the meaning of s52, courts should be wary about treating mere silence as a basis for imposing liability under s52 of the Act (or s53, for that matter) in relation to the condition or quality of goods. Silence will generally constitute misleading conduct only where something has occurred between the parties rendering it necessary for one party to supply further information to the other if the latter is not to be misled; for example, it is necessary to qualify an otherwise absolute statement or update earlier information: see per Bowen CJ in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 489–490. As Lockhart J observed in the same case at 504: “It is difficult to conceive how mere silence by an alleged contravener could be sufficient to attract the operation of s52” (emphasis added). I reject the s52 claim.

    (vi) Section 71

23. The final Trade Practices Act claim depends on s71. That section reads:

    “71(1)Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business, there is an implied condition that the goods supplied under the contract for the supply of the goods are of merchantable quality, except that there is no such condition by virtue only of this section –

    (a)as regards defects specifically drawn to the consumer’s attention before the contract is made; or

    (b)if the consumer examines the goods before the contract is made, as regards defects which that examination ought to reveal.

    (2)Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation or to the person by whom any antecedent negotiations are conducted any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract for the supply of the goods are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the corporation or of that person.

    (3)Sub-sections (1) and (2) apply to a contract for the supply of goods made by a person who in the course of a business is acting as agent for a corporation as they apply to a contract for the supply of goods made by a corporation in the course of a business, except where that corporation is not supplying in the course of a business and either the consumer knows that fact or reasonable steps are taken to bring it to the notice of the consumer before the contract is made.”

24. If this section has any application to the present case, it would be against Barclay Distributors; that was the company which supplied the oysters to a “consumer” (Mr Thomas Ryan and Mr David Ryan). If either of those people had contracted hepatitis A as a result of eating the oysters purchased by him, it seems to me an action would lie under either s71(1) or s71(2). However, there was no privity of contract between the applicant and Barclay Distributors. The applicant’s counsel argue this does not matter because the situation is covered by the decision in Trident General Insurance Co Limited v McNiece Bros Proprietary Limited (1988) 165 CLR 107. In that case the High Court allowed recovery against an insurer by a contractor to a construction company that took out a public liability insurance policy in which the term “The Insured” was defined to include the construction company’s contractors. No doubt the full ramifications of that decision have yet to be assessed, but I am not persuaded it would justify allowing recovery in the present case. Each member of the High Court who favoured dismissal of Trident’s appeal emphasised that the parties had contracted on the basis of benefiting third parties. That was also the situation in each of the subsequent cases, of which I am aware, in which Trident has been applied to permit recovery.  See Nitschke v Rossair Pty Ltd (1989) 97 FLR 54 (Jacobs J), Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 (Brownie J) and SGIC v Giacomelli (1993) 9 SR (WA) 126 (Judge Keall) and compare Cousin v Grant (1991) 103 FLR 236 (Miles CJ). There is no evidence in the present case that the parties contracted on that basis.

    12.RELIEF

    (i)        The quantum of damage

25. As already mentioned, Mr Ryan first felt unwell on 30 January 1997.  He said in his witness statement he “felt hot and sick in the stomach and was off my food”.  He thought he might be coming down with influenza but he went to work as usual.  He is a self-employed plumber.

26. On the following day, Mr Ryan’s wife, Julie, gave birth to their fourth child.  He attended the hospital for the birth but “began to feel increasingly unwell” and thought he “might faint and pass out”.  Mrs Ryan returned home five hours after the baby’s birth.  Mr Ryan was too unwell to assist her with the baby.  On 1 February Mr Ryan attended the surgery of his local medical practitioner, Mary Bower-Williams.  According to a report from Dr Bower-Williams tendered in evidence, Mr Ryan complained of “feeling ill and feverish and passing dark urine”.  Dr Bower-Williams observed he was “extremely jaundiced and had a very tender liver on examination”.  Dr Bower-Williams arranged blood and urine tests.  On the following Monday, 3 February, Mr Ryan was informed he had infective hepatitis and advised to rest and refrain from fat and alcohol in his diet.

1. Mr Ryan subsequently attended Dr Bower-Williams on a number of occasions.  He underwent blood tests and an ultra-sound of his gall bladder.  Dr Bower-Thomas reported:

   “Mr Ryan was physically incapable of working at this time and it was felt that it could be 4-6 weeks before he would be fit for work.  His Liver Function Tests were checked weekly until he was reviewed on 18.2.97 when his jaundice was resolving but he was still feeling ill with aching kidneys.

   On 24.3.97 Mr Ryan was still very listless and felt he was not able to cope with his work load and tending to ‘flake out’ with exhaustion.  His LFT’s had settled considerably but were still abnormal.

   Mr Ryan’s wife had just delivered her fourth child and it caused considerable distress to the family to discover that Mr Ryan had infective hepatitis.  Consequently all members of the family including the newborn baby and Mrs Ryan’s father were given immunoglobulin to protect them from contracting Hepatitis A.”

2. Mr Ryan did not remain off work for four to six weeks.  He returned to work after about three weeks.  During his time off work, he felt “extremely unwell”.  He suffered abdominal pains and aches, he felt “very nauseous” and could not hold down his food, he had a fever, sweated profusely and was jaundiced.  He lost about eight kilograms of weight.  Mr Ryan was cared for by his wife.  In his written statement, Mr Ryan said:

   “In the beginning she performed all the household tasks, helped me with personal hygiene, ensured that I had plenty of fluids, washed my clothes and bed sheets daily and took me to the doctor and organised blood tests.  This placed a great strain on her as she was also caring for our newborn son and our three other school aged children.  I was also very distraught at not being able to hold my newborn son, or have contact with my other children for fear of infecting them.  The entire family, including my infant son had to be immunized against Hepatitis A virus.”

   At the end of three weeks, Mr Ryan returned to work but he said:

   “I was still very unwell.  I was unable to eat much food and I had back pain near my kidneys.  I was also very weak and lethargic.  I found strenuous physical work almost impossible and I was only able to perform lighter duties.  I was also only able to work reduced hours.  Normally I work from 7.00am to 5.00pm but after my infection with Hepatitis A I was only able to work until about 3.00pm.  When I returned home from work I would go to bed and sleep, then wake up for dinner and return to bed.  I depended on my wife to take care of all the household duties and also to look after our children.

   It was a number of months before I started to eat more normally and feel stronger.  After about 6 months I had regained the weight I had lost and was able to perform my normal work duties.”

3. Mr Ryan’s account of his illness was confirmed by his wife.  The symptoms he recounts conform with those of a typical hepatitis case, as described by Professor Boughton.  I have no hesitation in accepting Mr Ryan’s evidence.  He suffered a most unpleasant and distressing illness, albeit one that has left him with no permanent effects.

4. Mr Ryan incurred out of pocket expenses of $554.05, all for medical consultations and tests.  These were paid by Medicare but Mr Ryan will be obliged to refund that payment out of his damages award.

5. In addition Mr Ryan lost some income.  He operated through a family company, Grant Ryan Plumbing Pty Ltd.  He said in evidence the company’s gross receipts, through his labour, were about $1,000 per week.  That figure is consistent with the company’s financial statements for the year ended 30 June 1997.  There is a question what deductions from that figure ought to be made.  Some costs were fixed costs, incurred regardless of whether or not Mr Ryan was working; others would not have been incurred during his absence from work.  It is also necessary to make some allowance for the effect on his earnings of being obliged to work short days for some months.  Taking everything into account, it would be reasonable to allow a round figure of $4,000 for loss of income and medical expenses.

6. Mr Ryan also makes a claim for the nursing services provided to him by his wife.  In Van Gervan v Fenton (1992) 175 CLR 327 a majority of the High Court held that the true basis of a claim for damages with respect to care and services gratuitously provided to an injured person is the need for those services; it is unnecessary to prove payment. Damages are to be determined, not by actual cost to the plaintiff, but by reference to the market cost of providing the services. In that regard, the applicant tendered evidence from Shirley Wruck, a registered nurse who runs an agency called Macquarie Nursing Service, deposing to 1997 hourly rates for a “domestic carer” . The rates are $14.70 on Mondays to Fridays, $22.50 on Saturday and $29.40 on Sunday. The stated duties of a domestic carer extend beyond those performed by Mrs Ryan for her husband in his illness; and, of course, those duties were performed intermittently as the need arose. So it is difficult to translate Sister Wruck’s rates into a figure appropriate to this case. But I think it is reasonable to allow $1,000 for the value of Mr Ryan’s nursing services. This takes the progressive total to $5,000.

7. The suggestions made by counsel about the appropriate general damages figure range from $3,000 to $45,000.  The former figure seriously under-appreciates the significant physical effects of a bout of hepatitis A, suffered over a period of several months, and the stress and inconvenience this must cause any sufferer.  The latter figure seems too high, given the absence of any residual disability.  In my view the appropriate figure in this, fairly typical, case is $20,000.  I add this sum to the $5,000 previously assessed to reach a pre-interest total of $25,000.

8. It is now just over two years since the commencement of Mr Ryan’s illness.  Rounding out the period by allowing two years interest at 10% per annum, I add $5,000 for interest and assess total damages at the figure of $30,000.

   (ii)       Apportionment

9. A question arises as to the distribution of the burden of damages.  As I have indicated, each of the respondents whose liability is under present consideration maintains the burden should be borne by one or more of the others, to its complete exclusion.  In considering this matter, I think it immaterial that I have found against Barclay Oysters in respect of two Trade Practices Act claims, as well as the negligence claim; relative culpability is the critical issue.  I also think it inappropriate to take into account that I have found both Barclay companies to be negligent; nothing should turn on the fact that Mr Barclay operates through two companies rather than one.

10. Although I have given the matter considerable thought, I cannot distinguish between the degrees of culpability of the Council, the State and the Barclay companies.  The case I have found established is not unlike the type of case that would be described, in an industrial context, as a “system of work” case; that is, the injury stemmed from the failure of management to ensure the safety of the working conditions to which employees were exposed.  In their different ways, all three sets of the present respondents had management responsibilities in relation to Wallis Lake and the production of oysters grown in it.  All three knew of the risk of viral contamination of the oysters and its likely consequences for consumers.  None of them took any action to deal with that risk.  They are all equally culpable.  Further, there is an equality in the causal relationship between their negligence and the hepatitis A outbreak.  If any one of these three sets of respondents had fulfilled the duty of care they owed to consumers, the HAV outbreak would not have occurred.  I think the burden ought to be shared equally between them.

    ORDERS

11. I propose to order that:

    (i)judgment be entered in favour of the applicant in respect of his personal claim in the sum of $30,000 against the Council, the State, Barclay Oysters and Barclay Distributors;

    (ii)it be declared that the applicant is entitled to succeed against each of the said respondents in respect of that portion of his representative claim that alleges negligence, but only on behalf of those group members who prove damage has been suffered by them;

    (iii)the portion of the applicant’s representative claim that alleges breaches by Barclay Oysters of ss74B and 74D of the Trade Practices Act be reserved;

    (iv)otherwise the applicant’s representative claim concerning breaches of the Trade Practices Act be dismissed;

    (v)the costs of the applicant incurred to date, whether in relation to his personal or representative claim, be paid by the Council, the State, Barclay Oysters and Barclay Distributors;

    (vi)the burden of orders (i), (ii) and (v) above be apportioned as follows:

    (a)the Council – one third;

    (b)the State – one third;

    (c)Barclay Oysters and Barclay Distributors – together one third;

    and judgment be entered on the cross-claims accordingly.

    (vii)the matter be listed for further directions at 9.30 am on Friday 9 April 1997 or such other time as my Associate may notify the parties.

I certify that the preceding three hundred and ninety-three (393) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate:

Dated:             5 March 1999

Counsel for Applicants:	K Tobin QC and J B R Beach
Solicitor for Applicants:	Slater and Gordon
Counsel for the 1st Respondent:	H Nicholas QC and T G R Parker
Solicitor for the 1st Respondent:	Norton Smith
Counsel for the 2nd and 20th Respondents:	C R R Hoeben SC and A Coleman
Solicitor for the 2nd and 20th Respondents:	Dunhill Madden Butler
Counsel for the 8th and 9th Respondents:	D J Fagan SC
Solicitor for the 8th and 9th Respondents:	Minter Ellison
Counsel for the 11th, 13th, 15th, 16th and 18th Respondents:	M Jones
Solicitor for the 11th, 13th, 15th, 16th and 18th Respondents:	Dunhill Madden Butler
Solicitor for the 13th Respondent:	Ebsworth & Ebsworth
Solicitor for the 15th Respondent:	Abbott Tout
Solicitor for the 16th Respondent:	Corrs Chambers Westgarth
Counsel for the 17th Respondent:	K P Rewell
Solicitor for the 17th Respondent:	Henry Davis York
Solicitor for the 18th Respondent:	Dunhill Madden Butler
Counsel for the 19th Respondent:	P Taylor SC and M J Windsor
Solicitor for the 19th Respondent:	Crown Solicitor

Date of Hearing:  14-18, 21-25, 28-29 September and 1-2 October 1998