Mallonland Pty Ltd & Anor v Advanta Seeds Pty Ltd

This case arose out of economic loss suffered by farmers who purchased contaminated sorghum seed produced by the respondent. At trial it was found that no duty of care was owed to the farmers, on account of a clear disclaimer of liability being printed on bags of the seed, which told against any assumption of responsibility. On appeal, the court unanimously upheld this conclusion, finding no error in the factual findings made, or in the legal reasoning concerning the non-existence of a duty of care.

Morrison and Bond JJA and Williams J

28 February 2023

Background

The appellants are farmers who purchased sorghum seed produced by the respondent, Advanta, between 2010 and 2014. [2]. The seed was purchased from intermediate suppliers or distributors. [6]. Unfortunately, the seed produced by Advanta had contaminating seed in it, known as “shattercane”, which competed with the normal sorghum when planted. [4]. The appellants all claimed that they had suffered economic loss as a result of this contamination. [7].

At trial the appellants failed on the basis that they had not established that Advanta owed a duty of care in the circumstances. The trial judge, Jackson J, found for the appellants on all the other aspects of its claim (including that, if a duty was owed it had been breached, and that it had caused loss). [8]. The appellants appealed against the finding that no duty of care was owed to them by Advanta. [9].

In the result, the Court unanimously dismissed the appeal. The lead judgment was given by Morrison JA, with whom Williams J agreed. [333]. Bond JA gave separate reasons in support of the same conclusion. [332].

The conclusion of the trial judge

The primary judge found that it was more likely than not that bags of seed produced by the appellants were sold with a set of terms and conditions printed on the bag. [63]. Those terms and conditions included the following:

“ATTENTION

CONDITIONS OF SALE AND USE

Upon purchasing this product and opening the bag, the purchaser (“you”) agrees to be bound by the conditions set out below. Do not open this bag until you have read and agreed with all the terms on this bag. …

CONDITIONS

You agree that:

…

–Pacific Seeds Pty Ltd [Advanta] will not be liable to you or any other person for any injury, loss or damage caused or contributed to by Pacific Seeds Pty Ltd (or its servants or agents), directly or indirectly arising out of or related to the use of the product in this bag, whether as a result of their negligence or otherwise;

–All warranties, conditions, liabilities or representations in relation to the product, whether expressed or implied, are excluded by Pacific Seeds to the extent permitted by law. …”

The trial judge concluded that the feature which denied the existence of a duty of care in this case was this disclaimer. [59]. In his Honour’s words:

“The substance of the point of the defendant’s reliance on the terms on the bags, in my view, is that they may negate the defendant’s assumption of responsibility, as a salient feature, in determining whether there is a duty of care to avoid economic loss only in the circumstances of this case.” [107].

 The appeal – why no duty of care was owed

On appeal, the appellants alleged error in the finding of fact that the conditions were printed on the bags; alleged that, if it was on the bags, then it was “not clear enough or prominent enough to negate the assumption of responsibility”; and alleged that a duty of care was owed, in any event, due to a range of other considerations. [60], [109], [145].

Morrison JA reviewed the evidence of witnesses who gave evidence about the existence of the terms and conditions on the bags of seed produced during the relevant time period. Having reviewed that evidence, his Honour concluded that there was “an ample evidentiary foundation” for the conclusion reached by the trial judge. [95]. Furthermore, the challenge to the factual finding also failed because the alleged deficiencies in the evidence were not raised at trial and were not put to any of the relevant witnesses in cross-examination. [96].

As to the suggestion that the conditions were not sufficiently clear or prominent, Morrison JA noted that they were in clear language and “easy for a lay person to understand”. [131]. It was “difficult to see how the conditions could have been made more prominent” given that they “occupied the bulk of one side of the bag; they could not have been made bigger”. [139]. Accordingly, this ground also failed.

The appellants also alleged a duty of care was owed for a number of other reasons, including because this case allegedly fell within an established category of case; that there was a close physical relationship (or proximity) between Advanta and the appellants; there was reasonable foreseeability of loss; and that there was vulnerability, known reliance, and an assumption of responsibility. All of these contentions failed, in short because:

–The cases relied upon by the appellants offered “no real support for the existence of a duty [of care]” in circumstances such as the present. [173].

–The contention that there was a “close physical relationship” that supported the existence of a duty of care had not been run at trial, and should therefore “not be allowed to be raised now”. In any event, such a relationship is not determinative of a duty of care. [198], [201].

–In relation to reasonable foreseeability and vulnerability, these were established, but did not automatically mean that a duty of care arose. As concluded by the trial judge, the “central reason for finding there was no duty” was “the negation of any assumption of responsibility” (by reason of the terms and conditions). [203].

–In relation to known reliance, this was not alleged in the pleadings. [221]. As for a case based on assumption of responsibility, the terms and conditions printed on bags of seed “negated an assumption of responsibility and, therefore, the existence of a duty of care”. [223].

In separate reasons, Bond JA noted that there is a “general rule” (quoting from Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185) that:

“damages for economic loss which is not consequential upon damage to person or property are not recoverable in negligence even if the loss is foreseeable.”

Bond JA considered that the salient features in this case did not justify a departure from this general rule. [318]. In particular, the terms and conditions on the bags meant that Advanta had “most assuredly had not assumed direct responsibility to the farmers”. [319].

Accordingly, the appeal was dismissed. [272], [332]–[333].

W Isdale