The Supreme Court of Western Australia handed down its decision this week in the well-publicised claim by an organic farmer against his neighbour who grew genetically modified canola. This article summarises the outcome of the decision and what it might mean for those operating or investing in farming in Western Australia.
The organic farm lost part of its ‘organic’ certification when swathes of GM canola were found on the organic property. The organic farmer made a claim for damages for purely financial loss against the neighbouring farmer, being the loss of profit from not being able to sell a product labelled as certified organic. He claimed that the loss arose because the GM canola had blown onto the organic farm from the neighbouring farm. The court dismissed the claim, both in negligence and in nuisance.
The case does not raise new principles of law, but rather applies law that has managed relations and risks arising from different land use on neighbouring farms for many years to a new factual situation. The new facts arise from the first growing season after the moratorium on growing genetically modified canola in Western Australia was lifted in 2010.
The case has gained a lot of publicity because it relates to GM canola, which is a new crop in Western Australia. This was not a case where the GM crop gave rise to physical damage to a neighbouring farm, people or animals. It also did not relate to a change to the physical nature or quality of the neighbour’s produce. There was no evidence of cross pollination, no evidence of risk of cross pollination and no evidence of GM material being mixed with the organic product sent to market. On the contrary, the damage was purely financial. The organic farm lost its organic accreditation under a private contract between the farmer and the accrediting organisation when inspectors observed swathes of GM canola on the organic farm.
The Court decided on the facts of this case that the GM farmer had met his duty of care to his neighbour and did not unreasonably interfere with his neighbours’ use and enjoyment of land. The facts leading to that decision included that the farming practices used by the GM farmer (including the harvest method called swathing) were longstanding farming practices, were recommended by experts and was undertaken for legitimate agricultural reasons (such as assisting weed control).
Questions were raised in the judgment about the application of the organic standard and whether the accrediting organisation correctly applied its standard and contractual rights when it remove the organic farm’s accreditation. Further, the organic farmer chose to leave the swathes of GM material on his farm for several months and despite that, only a few new plants of GM canola self seeded on the farm in the following year. Those plants were easily identified, removed and there was no evidence of harm to the organic crop.
The case is a demonstration of how the common law of negligence and nuisance is well suited to managing disputes about land use and land management between farmers because it provides general principles that can be applied to all factual circumstances. The case endorses that reasonable precautions should be taken to avoid risk of harm to neighbouring properties. In this case, the GM farmer’s actions were reasonable. Had there been actual or a real risk of physical harm to the neighbouring organic property, the outcome could well have been different.
As such, it is difficult to see how the case on its own will provide any justification for change to regulation of GM canola crops. Additional regulation would only be justified if a real risk of physical harm to neighbouring property and its produce is identified (such as through cross pollination) or if there is a reason to suggest that GM farmers are not properly assessing the risk from their produce nor taking adequate precautions to prevent damage to neighbours. Even then, the general principles of negligence and nuisance laws are arguably best placed to manage those risks on a case by case basis, as they have done in farming for a long time. Any other approach raises the risk that other unintended outcomes will occur.
The case does demonstrate that if a farmer is seeking to economically benefit from a contract to receive accreditation according to a premium standard, then that farmer should consider the nature of the standard and what it requires, seek to have that standard properly applied and do what he or she can to meet the standard. The judge commented that the facts raised questions about the way in which the standard was applied and suggested it was not consistent with the contract. Evidence suggested that this was a key factor that caused the loss claimed.
For agribusiness in Western Australia, the case highlights 2 key points:
- If you are operating or looking to invest in an operation that farms GM crops, or is proposing to undertake an activity that might adversely affect a neighbour, it is worth ensuring that the operation has measures in place to ensure that any risks to neighbours are appropriately identified, managed and addressed; and
- If you are seeking to rely on a premium product, such as organic certification, then it is important to understand the applicable standard and the contract by which it is applied. Do what is required to meet that standard and to seek to ensure it is properly applied by the accrediting agency that you have contracted with in your particular circumstances.