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Australia – Genetically Modified Crops: No Duty Of Care To Neighbouring Organic Farms.

16 August, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Environment 

 

Marsh v Baxter [2014] WASC 187 (28 May 2014)

 

    WHAT YOU NEED TO KNOW ABOUT THE CASE

     

    • Growers of genetically modified (GM) crops are not generally liable in nuisance to neighbouring organicfarmers because the use of land to grow GM crops is not of itself unreasonable. In addition, they owe no general duty to take reasonable care to prevent GM organisms escaping from their land.
    • Claims in negligence or nuisance for economic loss from organic de-certification will fail if there is no GM contamination or genetic information transfer from the GM organism to a non-GM organism and no harm to any people, property or land.

     

      WHAT YOU NEED TO DO

       

      • Growers of GM crops need to comply with all legal requirements and licence conditions, including managing and harvesting GM crops using appropriate conventional farming methods, preferably with advice from agronomists.
      • Growers of GM crops should also determine whether their GM crops could transfer their genetic information or cause harm to plants, animals or land on neighbouring properties in the event of an incursion (eg because the crops are similar) and manage their GM crops to minimise any identified risks. Particular attention should be given for neighbouring properties holding organic certification that may be affected by GM contamination.
      • Certified organic producers should ensure that certification bodies apply certification standards properly.

       

      GM Crops And GM Contamination Claims In Australia

       

        In the first case of its kind in Australia, the Western Australian Supreme Court in Marsh v Baxter [2014] WASC 187 recently delivered judgment in a dispute concerning economic loss allegedly caused by crosscontamination from GM crops. Stephen and Susan Marsh, owners of a certified organic farm, alleged that their land was contaminated by GM canola plants grown at a neighbouring farm named Sevenoaks. The GM canola had been harvested using a method known as “swathing” and stacked in windrows. Two hundred and forty-five swathed heads of the canola plants were blown onto the Marshes’ property, Eagle Rest, in November 2010.

         

          The Marshes subsequently lost National Association of Sustainable Agriculture (NASAA) organic certification for approximately 70% of Eagle Rest, on the basis that the GM canola plants had created an unacceptable risk of GM contamination. The Marshes were forced to sell their produce at lower prices until they regained organic certification three years later.

           

            When the Gene Technology Act 2000 (Cth) was proclaimed in 2001 and the moratorium on GM crops lifted, legislators considered how to address liability for any loss or damage caused by disbursement of GM seed to neighbouring properties. Some countries, such as Germany, Norway and New Zealand, have implemented legislative regimes to deal with this issue. Australian legislators, however, determined that the issue was best left to be dealt with under the common law torts of negligence and nuisance. Marsh v Baxter is the first test of that decision.

             

              The claims

               

                The Marshes brought tort claims in nuisance and negligence against Mr Baxter, the owner of Sevenoaks. The Marshes sought damages of $85,000, being the difference between the relevant sale prices for certified organic produce and uncertified produce.

                The Marshes also applied for an injunction preventing Mr Baxter from growing GM canola within one kilometre of Eagle Rest.

                To succeed in the nuisance claim, the Marshes needed to show that the incursions of GM canola either:

                   

                  • unreasonably interfered with their use and enjoyment of Eagle Rest, taking into account the locality and all of the relevant circumstances; or
                  • caused material damage to their land or other property on the land.

                   

                    The negligence claim required the Marshes to prove  that:

                       

                      • there was a foreseeable risk of harm to the Marshes from GM organisms grown at Sevenoaks, giving rise to a duty of care for Mr Baxter to prevent incursions of GM organisms onto Eagle Rest;
                      • Mr Baxter breached that duty of care by allowing swathed GM canola to be blown onto Eagle Rest from Sevenoaks; and
                      • the Marshes suffered a loss as a result of Mr Baxter’s actions.

                       

                        Martin J observed the Marshes had placed greater emphasis on their claim in negligence even though the claim for nuisance was easier to make out because it did not require proof of fault.

                         

                          Pure Economic Loss

                           

                            The Marshes sought damages for pure economic loss. This presented a further difficulty for their negligence claim. To date, Australian courts have not recognised any general duty of care to avoid causing foreseeable financial loss. However, such a duty of care may exist where a plaintiff is particularly vulnerable to the defendant’s actions causing such loss.

                            The Marshes relied heavily on the case of Perre v Apand (1999) 198 CLR 180. In that case, the HighCourt upheld a claim from a potato farmer for pure economic loss caused by the negligent supply to a neighbouring farmer of seeds affected by bacterial wilt. Regulations prevented the plaintiff from selling produce into the intended (and more lucrative) market due to the outbreak of bacterial wilt, even though the plaintiff’s potatoes were physically unaffected. The High Court held that the plaintiff was particularly vulnerable to the negligent supply of the afflicted seeds and could not have protected his interests against the supplier’s actions. The particular circumstances of Perre v Apand justified imposing liability on the seed supplier for the potato farmer’s losses.

                            The Marshes asserted that they were particularly vulnerable to Baxter’s management of his GM canola crop due to Eagle Rest’s organic certification, and that Perre v Apand should be followed. In contrast, Baxter claimed that the Marshes’ vulnerability was to the certifying body, NASAA Certified Organic Pty Ltd (NCO). Baxter claimed that this vulnerability was contractual and self-imposed, and he should not be liable for the workings of a contract to which he was not a party.

                             

                              All Claims Dismissed At Trial

                               

                                Martin J dismissed the private nuisance and negligence claims, and declined to grant an injunction.

                                 

                                  No Unreasonable Interference With Eagle Rest 

                                   

                                  The Marshes’ nuisance claim could only succeed if the use of the swathing method and the incursions of GM canola were an unreasonable interference with the Marshes’ enjoyment of Eagle Rest. 

                                   

                                    Martin J found that, in all the circumstances, the GM canola incursions were not an unreasonable
                                    interference with the Marshes’ use of Eagle Rest. Baxter had lawfully grown GM canola at Sevenoaks and complied with the terms of his licence from the manufacturer. He had used a conventional method to harvest his crop, which he undertook competently, following the advice of a local agronomist. The canola swaths blown onto Eagle Rest were not physically dangerous and had not harmed the land or anyone or anything on it. Martin J found that a claim for nuisance could be made for purely financial loss but this was nonetheless a factor to be weighed in the balance. In addition, no genetic information could have transferred from the GM canola to plants or animals on Eagle Rest (where canola was not grown).

                                    The incursion was the first airborne incursion of canola from Sevenoaks, and Baxter neither expected nor intended to lose part of his crop in this manner. Further, there was little research available to help Baxter determine a sufficient separation distance between segregated crops, but he had still taken relevant precautions.

                                     

                                    No Duty Of Care Or Breach Of Duty By Baxter 

                                     

                                    The Marshes’ negligence claim failed for several reasons. Martin J held that the asserted duty of care owed by Baxter to prevent any incursions of GM canola onto Eagle Rest by GM organisms was misconceived as there was no general duty to prevent financial harm to another and no vulnerability of the kind found in Perre v Apand.

                                    He held that the Marshes asserted vulnerability to GM contamination at Eagle Rest was the self-imposed result of their voluntary contractual arrangements with NASAA and NCO. Martin J noted that the Marshes may have been contractually vulnerable to NCO’s actions. However, he concluded that this was an ineligible vulnerability for the purposes of imposing a duty of care on Baxter not to cause financial harm to the Marshes in respect of GM canola grown at Sevenoaks.

                                    Further, Martin J found that Baxter’s actions did not cause the Marshes’ loss. Rather, NCO’s unreasonable decertification of Eagle Rest under NASAA Organic Standard 3.2.9 was the true cause of the Marshes’ loss. Sections 5B and 5C of the Civil Liability Act 2002 (WA) were also relevant to Martin J’s conclusion that Baxter was not at fault and not liable for the Marshes’ loss.  NASAA and NCO were not parties to the litigation.

                                    However, Martin J considered that:

                                     

                                    • the decertification of Eagle Rest led to the Marshes’ financial loss;
                                    • NASAA and NCO’s asserted basis for decertifying Eagle Rest under the NASAA Organic Standard was not supported by the evidence; and
                                    • on the facts before the court, there was no other basis to revoke the certification of Eagle Rest.


                                    Insufficient Evidence To Grant Injunction 


                                    Finally, Martin J refused to grant a permanent injunction preventing Baxter from growing or swathing GM canola within one kilometre of Eagle Rest. There was no basis to do so (absent a private nuisance) and evidence led at trial did not identify an appropriate buffer zone for GM crops planted at Sevenoaks or any harm or risks caused by the GM canola growing at Sevenoaks.

                                    Lessons From The Case, Pending Appeal


                                    The Marshes lodged an appeal on 25 July 2014. Until judgment in the appeal is given, Marsh v Baxter should be assumed to be good law. With that in mind, the following points from the case are important.

                                     

                                    Important Points From The Case


                                    1. Liability for GM contamination requires more than the mere presence of GM organisms on land – there must
                                    be some transfer of genetic information from the GM organisms or another kind of harm to the affected land or to people, animals, plants or chattels on that land.
                                    2. The courts have not recognised any general duty of care at common law to prevent GM organisms from escaping from a grower’s property.
                                    3. Merely growing GM crops lawfully will not be a legal cause of loss or damage, but growers of GM crops may be liable for management (eg harvesting) practices that cause GM contamination on other properties where there is a known risk and the practice cannot be justified on agronomic grounds.
                                    4. Damages and injunctions against the GM crop grower may be available where a cause of action in negligence or (more likely) nuisance may be made out.

                                     

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                                    For further information, please contact:

                                     

                                    Jeff Lynn, Partner, Ashurst
                                    jeff.lynn@ashurst.com

                                     

                                    Ashurst Environment Practice Profile in Australia 

                                                 

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