In what has been described as a “landmark” decision for the genetically-modified (GM) crop industry, the Supreme Court of Western Australia has held that a farmer growing a GM crop was not liable for economic loss suffered by his organic farming neighbours. This much anticipated decision had the potential to expose GM farmers to significant liabilities which may have had repercussions throughout the industry.

Mr Marsh owned a farm, “Eagle Rest”, on which he and his wife farmed organically-certified produce. To the west of Eagle Rest was Mr Baxter’s farm, “Sevenoaks”. Mr Baxter was a conventional farmer of, among other things, GM canola. Mr Baxter harvested GM canola by a process of swathing, which involved cutting it and leaving it to dry before harvesting.

In November 2010, Mr Marsh found canola on Eagle Rest. Tests revealed that this was GM canola from Sevenoaks which had been blown onto Eagle Rest by strong winds. Consequently, the Marshes’ organic certifying agency, the National Association of Sustainable Agriculture Australia (NASAA), decertified 70% of Eagle Rest. For three years, the Marshes could not use the “certified organic” label and were unable to obtain premium prices for their produce.

The Marshes brought actions against Mr Baxter in negligence and in private nuisance, seeking damages of $85,000 and a permanent injunction.

The key issues were whether:

  • Baxter’s choice to harvest GM canola by swathing was a wrongful interference with the Marshes’ use and enjoyment of Eagle Rest.
  • Baxter owed the Marshes a duty to take reasonable care to ensure that they did not suffer loss as a result of GM canola being blown from Sevenoaks onto Eagle Rest.

The Court held that the Marshes had not made out their causes of action. It was relevant, in respect of both claims, that:

  • There was no evidence that GM canola was physically dangerous or toxic or that it could contaminate the organic produce on Eagle Rest.1
  • Consequently, the Marshes’ loss was purely economic, arising from their private contractual relationship with NASAA.2
  • The presence of GM canola on Eagle Rest was caused by it being swathed, not by it merely being grown on Sevenoaks.3

Private nuisance

This aspect of the judgment focused on the balance between what Mr Baxter was lawfully entitled to do on Sevenoaks and the Marshes’ right to not have their use and enjoyment of Eagle Rest unreasonably interfered with.4

The Court held that Mr Baxter’s choice to harvest GM canola by swathing was not an unreasonable interference with the Marshes’ enjoyment of Eagle Rest.5 Relevantly:

  • Baxter had legitimate agricultural reasons for swathing his GM canola crop as it would assist weed control.6
  • Baxter’s conduct was not unreasonable as swathing was not a novel or unconventional method of harvesting.7
  • GM canola being blown from Sevenoaks onto Eagle Rest was not reasonably anticipated by Baxter and was caused by unexpectedly strong winds.8
  • It was a further factor supporting Baxter that, in the Court’s view, NASAA had acted beyond the scope of its contractual rights in decertifying Eagle Rest.9

Negligence

The Court held that the duty of care alleged by the Marshes was conceptually misconceived and could not be made out.10 In addition to the factors outlined above, the Court noted the following:

  • The duty alleged was novel and faced a real conceptual difficulty given the law’s reluctance to expand the categories of cases in which economic loss is recoverable.11
  • The level of the duty asserted by the Marshes – “to ensure that that the Marshes did not suffer loss” – was absolute and set far too high in circumstances involving broad acre farming which was exposed to uncontrollable seasonal weather.12
  • The duty was, effectively, a duty not to grow GM canola. However, from the point of causation, the Marshes’ most viable grievance in negligence was Baxter’s choice to harvest by swathing.13

The Court also found that the Marshes’ vulnerability to economic loss arose from their contractual relationship with NASAA. This vulnerability was not a relevant vulnerability to found the duty of care contended for.14 Further, the cause of the Marshes’ loss was NASAA’s unreasonable and erroneous enforcement of its contractual rights, not Baxter’s swathing of GM canola.

GM farmers will be reassured by the Court’s decision that a farmer will not be liable, where no physical damage is caused, merely because they were growing a lawful GM crop and choosing to harvest it in a conventional way. It should be noted that the negligence claim arguably failed because of the break in the chain of causation arising from the conduct of NASAA. However, the primary finding (i.e. that a duty of care is not made out when, absent physical damage, loss arises as a mere incident of broad acre farming) will give GM farmers and the industry as a whole some comfort.

GM farming is controversial and this case has been the subject of much media coverage, with the Marshes and Mr Baxter having received support from influential anti-GM and pro-GM lobby groups, respectively. Therefore, an appeal seems likely.