The Supreme Court of Western Australia was recently called upon to consider a rather novel but nonetheless significant claim by a farmer whose organically grown produce was devalued because of the way in which an adjoining farmer harvested their crop.
The scene for the dispute was Kojonup in Western Australia in an area which is about 256 kms to the south-east of Perth. The Plaintiffs, Mr and Mrs Marsh, conducted an organic farming business where they grew organic cereal crops and sheep. They held organic status certification pursuant to a private contract with the National Association of Sustainable Agriculture Australia (Limited) (NASAA). Their adjoining neighbour was also a career farmer who grew canola crops. In recent years he had begun growing genetically modified canola, which had become a legal practice and which was done on the advice of a local agronomist. The benefit of growing genetically modified canola was that it could be sprayed with Round-Up so as to kill weeds but not the crop.
The difficulty with the practice, however, was that on the first occasion that the canola was harvested in a particular way, wind caused the genetically modified canola seeds to be blown onto the neighbour’s organic farm and as a result, the contamination meant that the organic farmers lost their certification with NASAA and could no longer sell their produce as being “organically certified”. The Plaintiffs suffered a loss of about $85,000.00 which was the difference between what they would have achieved as a sale price of their crop if they had certification and what was in fact achieved.
From a legal perspective, the case was novel. The escaping canola seed caused no physical damage to the neighbour’s property but what is described as “pure economic loss”.
The Plaintiffs, Mr and Mrs Marsh, claimed damages both in negligence and in “private nuisance”.
Ultimately, Justice Martin of the Western Australian Supreme Court dismissed the claim finding that there was no duty of care owed to prevent pure economic loss through harvesting the canola as the Defendant had done, and as he had not acted unreasonably in adopting that practice and was therefore not liable in private nuisance.
The case is significant because it tends to reinforce the principle that a landowner is generally entitled to use their land as they see fit, provided they are not acting unreasonably and that the law is reluctant to impose a duty of care on one person to avoid doing something which might cause a financial loss (without any physical loss) to a neighbour.
The outcome in many ways seems unfair to the organic farmers who were largely unable to protect themselves from their organic farming property being contaminated, but on the other hand, would it be fair to their neighbour to make them pay loss on sale of the neighbour’s crop even though they had simply farmed their property in an appropriate way?
Practice Group Leader
Schultz Toomey O’Brien Lawyers, Part of the Slater & Gordon Group
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