Legal Research
Cases
Selected Seeds Pty Ltd v QBEMM Pty Ltd

Selected Seeds Pty Ltd v QBEMM Pty Ltd

Link copied

Case Copied 3 November 2010 17 min read

Contents

On this page

HIGH COURT OF AUSTRALIA
FRENCH CJ,
HAYNE, CRENNAN, KIEFEL AND BELL JJ
SELECTED SEEDS PTY LTD  APPELLANT
AND
QBEMM PTY LIMITED AND ORS  RESPONDENTS
Selected Seeds Pty Ltd v QBEMM Pty Limited [2010] HCA 37
3 November 2010
B16/2010
ORDER
1.        Appeal allowed with costs.
2.Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 22 September 2009 and, in lieu thereof, order that the appeal to that Court be dismissed with costs.

On appeal from the Supreme Court of Queensland
Representation
B W Walker SC with R S Ashton and L S Reidy for the appellant (instructed by Carne Reidy Herd Lawyers)
G A Thompson SC with K F Holyoak for the respondents (instructed by Barry & Nilsson)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

FRENCH CJ, HAYNE, CRENNAN, KIEFEL AND BELL JJ. The appellant, Selected Seeds Pty Ltd, is a grain and seed merchant carrying on business in Queensland. In December 2002 it purchased seed from a merchant in the Northern Territory, which was represented to be Jarra grass seed. At that time, the seed was substantially Summer grass seed or substantially contaminated with Summer grass seed, but the contamination was not identified in a certificate of analysis issued by an independent laboratory.
The appellant sold some of the seed to S and K Gargan and they supplied a portion of the seed to Michael Gargan. With each progressive harvest, the presence of Summer grass seed increased. By the time Michael Gargan sold some of the seed to Landmark Operations Limited ("Landmark"), a farming merchandise supplier, the seed was almost entirely Summer grass seed. Landmark sold a quantity of the seed to R and J Shrimp as Jarra grass seed in about December 2004. They grew only Summer grass.
Jarra grass is extremely palatable to all types of stock as green feed, dry feed or hay and is grown for these purposes. It is a perennial grass. Summer grass is fit only as low-quality stock feed and not for the production of commercial grass seed. Although an annual grass, Summer grass may be durable in subsequent seasons. It is regarded as a weed when present in commercial hay and seed crops.
The Shrimps brought proceedings claiming damages against Landmark in the Federal Court in April 2006. That part of the Shrimps' claim relevant to the appellant's policy of insurance, here in question, related to the damage to their land caused by planting the Summer grass seed. They claimed the costs of eradicating it from their land and the loss of use of the land during that period. Michael Gargan was joined to the proceedings by Landmark and he, in turn, joined the appellant to the proceedings. The appellant was subsequently given leave to defend the Shrimps' claim.
The proceedings were settled in March 2008. The appellant contributed $150,000 to the settlement of the Shrimps' claim. It…

Grounds of appeal

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

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

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

Consideration

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

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

Keep reading for free

Create a free CaseChat account to read Selected Seeds Pty Ltd v QBEMM Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2010] HCA 37
Decision Date: 3 November 2010

CaseChat Overview and Summary

Selected Seeds Pty Ltd (the appellant) appealed to the High Court of Australia against a decision of the Court of Appeal of the Supreme Court of Queensland concerning a product liability insurance policy. The dispute arose after the appellant sold contaminated seed, which, when planted by a third party, caused damage to that party's property. The insurer (the respondent) sought to rely on an exclusion clause within the policy.

The central legal issue before the High Court was the proper construction of an exclusion clause in the insurance policy. Specifically, the court had to determine whether the liability for the damage caused by the contaminated seed arose from "the failure of any Product to correctly fulfil its intended use or function," as stipulated in the exclusion clause, or whether it constituted damage caused by the product itself performing an unintended and harmful function.

The High Court reasoned that the exclusion clause was intended to exclude liability where the product itself failed to perform as expected, rather than where the product, while performing its intended function (i.e., germinating), also caused positive harm due to contamination. The court distinguished between a product failing to fulfil its intended use or function and a product causing positive harm. In this instance, the seed germinated and grew, fulfilling its intended function of growing. However, the damage arose not from this intended function failing, but from the unintended consequence of the seed carrying a weed. Therefore, the liability to the third party was for what the seed *did* (i.e., introduced a weed), not for what it *failed to achieve* (i.e., being free of contamination).

Consequently, the High Court allowed the appeal with costs, set aside the order of the Court of Appeal, and ordered that the appeal to that Court be dismissed with costs.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 22 September 2009 and, in lieu thereof, order that the appeal to that Court be dismissed with costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FRENCH CJ, HAYNE, CRENNAN, KIEFEL AND BELL JJ

The respondents sought to characterise the representation as one as to the quality, fitness or performance of the seeds, and so bring it within the latter part of the second limb of the Efficacy Clause. Such a contention had been raised in the Court of Appeal, but the Court, understandably, did not take it up in its reasons. The representation says nothing about specific attributes of the seed, which is what representations as to quality may be taken to convey. It says nothing of the fitness or performance of the seed. Moreover, the Efficacy Clause makes it plain that what it is concerned to exclude are representations which concern "the level" of the product's quality, fitness or performance. No such representation was made.Conclusion and orders McMurdo J was correct to hold that the appellant's liability was for damage to the Shrimps' land by the introduction of the weed, Summer grass. The Policy responds to such a claim. It was not damage caused by the seed sown failing to fulfil its intended use or function. The liability to the Shrimps was for what the seed did; not what it failed to achieve. That is the literal construction to be given to the Efficacy Clause. The appeal should be allowed with costs and the orders of the Court of Appeal should be set aside and in lieu thereof it be ordered that the appeal to that Court be dismissed with costs.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH CJ, HAYNE, CRENNAN, KIEFEL AND BELL JJ

Full text does not contain this section.