FEDERAL COURT OF AUSTRALIA Wilkins v Dovuro Pty Ltd [1999] FCA 1816 NEGLIGENCE – Supply of canola seed taken from lines contaminated by weed seeds Canola seed produced in New Zealand by second respondent on behalf of first respondent – Seed supplied to Western Australian farmers – Weeds not known in Western Australian agricultural areas but not prohibited from importation into Western Australia – Losses and expenses sustained by farmers in following recommendations of Western Australian Department of Agriculture – No evidence of an observed weed plant emanating from the seed – Claim for recovery of losses and expenses – Whether first respondent was negligent in failing to ascertain acceptability of the seed in Western Australia and/or warning farmers – Whether second respondent owed a duty of care to farmers – Whether second respondent breached any duty of care. TRADE PRACTICES – Whether either respondent was under a duty to speak, so that its failure to warn constituted misleading conduct. SALE OF GOODS – Implied terms – Whether first respondent relied on second respondent's skill or judgment – Whether seed was of merchantable quality. Trade Practices Act 1974, s52 Sales of Goods Act 1908 (NZ), s16 ROBERT JOHN WILKINS, EILEEN JOYCE WILKINS, TREVOR IAN WILKINS, SUSAN CAROLINE WILKINS and LOCHIEL NOMINEES PTY LTD AS TRUSTEE FOR THE R & E WILKINS FAMILY TRUST all t/as R & E WILKINS v DOVURO PTY LTD, CROP MARKETING NEW ZEALAND SOCIETY LIMITED, DOVURO PTY LTD – First Cross Applicant, CROP MARKETING NEW ZEALAND SOCIETY LIMITED – First Cross Respondent, CROP MARKETING NEW ZEALAND SOCIETY LIMITED – Second Cross Applicant and DOVURO PTY LTD – Second Cross Respondent NG297 of 1998 WILCOX J SYDNEY 23 DECEMBER 1999 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG297 of 1998 BETWEEN: ROBERT JOHN WILKINS, EILEEN JOYCE WILKINS, TREVOR IAN WILKINS, SUSAN CAROLINE WILKINS and LOCHIEL NOMINEES PTY LTD AS TRUSTEE FOR THE R & E WILKINS FAMILY TRUST all t/as R & E WILKINS Applicants AND: DOVURO PTY LTD First Respondent CROP MARKETING NEW ZEALAND SOCIETY LIMITED Second Respondent DOVURO PTY LTD First Cross Applicant CROP MARKETING NEW ZEALAND SOCIETY LIMITED First Cross Respondent CROP MARKETING NEW ZEALAND SOCIETY LIMITED Second Cross Applicant DOVURO PTY LTD Second Cross Respondent JUDGE: WILCOX J DATE OF ORDER: 23 DECEMBER 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Insofar as it relates to the claim against the second respondent, Crop Marketing New Zealand Society Limited, the principal proceeding be dismissed. 2. Each of the cross claims be dismissed. 3. The first cross applicant, Dovuro Pty Limited, pay to the first cross respondent, Crop Marketing New Zealand Society Limited, the costs incurred by the said cross respondent in relation to the proceedings, other than any costs that were incurred only by reason of the joinder of Crop Marketing New Zealand Society Limited as second respondent to the principal proceeding. 4. The applicants, Robert John Wilkins, Eileen Joyce Wilkins, Trevor Ian Wilkins, Susan Caroline Wilkins and Lochiel Nominees Pty Ltd all trading as R & E Wilkins, pay to Crop Marketing New Zealand Society Limited the costs incurred by Crop Marketing New Zealand Society Limited only as a consequence of its being joined as second respondent to the principal proceeding, including the costs incurred by Crop Marketing New Zealand Society Limited in connection with the second cross claim. 5. Insofar as it relates to the claim against the first respondent, Dovuro Pty Limited, the principal proceeding be stood over to a directions hearing to be held at 9.30am on Thursday, 3 February 2000. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG297 of 1998 BETWEEN: ROBERT JOHN WILKINS, EILEEN JOYCE WILKINS, TREVOR IAN WILKINS, SUSAN CAROLINE WILKINS and LOCHIEL NOMINEES PTY LTD AS TRUSTEE FOR THE R & E WILKINS FAMILY TRUST ALL T/AS R & E WILKINS Applicants AND: DOVURO PTY LTD First Respondent CROP MARKETING NEW ZEALAND SOCIETY LIMITED Second Respondent DOVURO PTY LTD First Cross Applicant CROP MARKETING NEW ZEALAND SOCIETY LIMITED First Cross Respondent CROP MARKETING NEW ZEALAND SOCIETY LIMITED Second Cross Applicant DOVURO PTY LTD Second Cross Respondent JUDGE: WILCOX J DATE: 23 DECEMBER 1999 PLACE: SYDNEY REASONS FOR JUDGMENT 1 WILCOX J: The gospel of St Matthew (13.24-30) records the parable of the tares. Tares, sowed by an enemy amongst the wheat "while men slept", came up with the wheat and caused a problem at harvest time. The present case sets that parable in Western Australian canola crops, but there is no evidence weeds came up. Nevertheless, fear of weeds caused many farmers to incur losses. They seek to recover those losses from two companies associated with supply of the canola seed. The proceeding 2 The proceeding is brought by five persons (Robert John Wilkins, Eileen Joyce Wilkins, Trevor Ian Wilkins, Susan Caroline Wilkins and Lochiel Nominees Pty Ltd) who conduct a farming and grazing business under the partnership name "R & E Wilkins". Their property is "Narbethong" at Kondinin, in the Western Australian wheatbelt. The applicants bring the proceedings under Part IVA of the Federal Court of Australia Act 1976, on behalf of themselves personally and as representatives of persons defined in the Further Amended Application as follows: "i. a group of identified canola growers who purchased and seeded Karoo canola seed in 1996, supplied by the First Respondent to distributors in Western Australia, and which allegedly included seeds of the plants known as Cleavers, Redshank and Field Madder and who claim costs of past and ongoing management for containment of eradication of the possibility of the weed contained in the Canola seed, production losses and down grading of their Canola crop with subsequent loss of income, together with losses of a capital nature associated with devaluation of their properties; and ii. all other Canola growers who purchased and seeded Karoo canola seed in 1996, supplied by the First Respondent to distributors in Western Australia, and which allegedly included seeds of the plants known as Cleavers, Redshank and Field Madder and who suffered loss in having to undertake past and ongoing management for containment or eradication of the possibility of the said weed, production losses and down grading of their Canola crop with subsequent loss of income, together with losses of a capital nature associated with devaluation of their properties." 3 The first respondent, a Victorian company Dovuro Pty Ltd ("Dovuro"), carries on business as a producer and distributor of agricultural seed. Dovuro supplied the seed in relation to which the present claims arise. The seed was produced by crops grown in New Zealand under the supervision and control of the second respondent, Crop Marketing New Zealand Society Limited ("Cropmark"). 4 The proceeding was instituted on 7 April 1998. At that time, Dovuro was the only respondent. On 4 September 1998, Dovuro filed a cross-claim against Cropmark. Service was effected in New Zealand and, on 28 October 1998, Cropmark filed a Notice of Appearance. The applicants then obtained leave to file an Amended Application and Amended Statement of Claim in which they named Cropmark as second respondent. This was filed on 23 November 1998. On 12 March 1999, I gave leave to Cropmark to complete the circle by filing a cross-claim against Dovuro. 5 The applicants' Further Amended Statement of Claim pleads two causes of action against each of the respondents: negligence and contravention of s52 of the Trade Practices Act 1974. The applicants allege that each of the respondents knew, or ought to have known, that the canola seed contained, or might contain, undesirable weed seeds including cleavers, redshank and field madder, but failed to warn the applicants or group members of that fact. It is alleged this omission was negligent and, under the circumstances, constituted misleading or deceptive conduct; and the omission caused the applicants and group members to suffer loss. Both respondents deny these allegations. 6 On 4 September 1998, I directed the matter proceed on the basis of an initial hearing on liability, the question of damages being postponed to a later date. That direction was made before Cropmark appeared in the case, but it was subsequently maintained with that party's consent. This was done on the basis that the initial hearing would also deal with liability on the cross-claims. 7 The hearing on liability took place over seven days in July and August 1999. During some of those days, the Court sat in Perth to hear the evidence of witnesses resident in Western Australia. At the conclusion of the hearing, I reserved my decision on issues of liability. These reasons concern those issues only. Uncontroversial factual matters 8 Some of the evidence in this case is controversial; much of it is not. I understand there to be no dispute between the parties as to the facts to be recounted in this section of my reasons. I will leave the disputed evidence until later. (i) Canola 9 The botanical name for canola is Brassica napus. It is grown in Western Australia for use in the manufacture of margarine and edible oils and as livestock fodder. During recent years the Western Australian crop has substantially expanded, mainly because of exports to Japan, where it competes with Canadian canola. Apparently Canadian canola farmers suffer weed problems, especially from Galium species and Western Australian canola has been promoted in the Japanese market as weed free. 10 Most of the Western Australian canola crop is grown in the "wheatbelt"; that is, the part of Western Australia which runs roughly north west to south east, between a line of latitude north of Geraldton and a line of latitude a few kilometres north of Albany, the eastern boundary being about 100 km east of Esperance. However, much of the wheatbelt is infested with a weed called wild radish, also a member of the Brassica family. This creates a problem for farmers wishing to grow canola. Like other members of the Brassica family, wild radish is a vigorous competitor and may seriously affect crop yield, even for canola. Moreover, if harvested canola is contaminated to the extent of more than 5% by a Brassica weed, it is unsuitable for margarine or edible oil production. It can be used only as animal fodder, for which it fetches a lower price. 11 Wild radish is controllable by a herbicide called triazine. However, triazine adversely affects the strain of canola traditionally grown in Western Australia, Narendra. 12 In about 1994, a triazine-tolerant strain of canola was developed. It was initially called "T17". During the winter of 1995, a crop of T17 canola was grown in Toowoomba, Queensland, under controlled conditions, to provide a quantity of "breeders' seed". Dovuro decided to obtain some of this seed and have Cropmark supervise its use by selected New Zealand farmers to grow, over the summer of 1995-96, a quantity of "first generation" seed. Dovuro believed many Australian farmers were anxious to obtain triazine-resistant canola seed for the 1996 (winter) season; it thought the seed could not successfully be bulked up during a summer in Australia, but this could be done in New Zealand's cooler climate. (ii) The bulk up crops 13 In August 1995 Rudolf Justin Kudnig, Dovuro's Technical Manager, had a meeting in New Zealand with Richard Grigor, Marketing Manager of Cropmark. The two men discussed the numbers of hectares and individual growers that would be needed for the bulking up crops. In his affidavit, Mr Kudnig said he explained the Australian seed certification system to Mr Grigor and Mr Grigor told him it was similar to the New Zealand system. Under cross-examination, however, Mr Kudnig described the conversation differently. He said he asked Mr Grigor how crops were certified in New Zealand "and I compared them in my own mind against how they were certified in different States in Australia". Mr Grigor said this included Western Australian seed standards, but he could not recall what Western Australian standards he knew. He did not have a copy of those standards with him at the time of the meeting. In his affidavit, Mr Kudnig went on: "I agreed with Richard Grigor that Cropmark would organise the growers, inspect the crops, organise seed testing, grading and certification in New Zealand before sending the seeds to Australia. Cropmark was to assist certification and ensure compliance with New Zealand requirements. Richard Grigor's role was to organise the finance and the contract. Bede McLoy organised the field work and crop production." 14 Dovuro and Cropmark entered into a contract on 8 September 1995. The contract took the form of a sales confirmation note issued by Cropmark to "confirm the sale to you of goods covered by this contract". Those goods were described in the following manner: "The resultant crop of 100 hectares expected to be about 250 tonne of machine dressed canola. Packed in 25 kg bags as supplied by the purchaser. First generation certified canola Minimum 85% germination Minimum 99% purity Maximum 0.5% weed and free of undesirable species including brassica and rumex in working sample Maximum moisture 9% To comply Australian import regulations" The place of delivery was noted as: "CIF Melbourne or Sydney, buyers option". The date of delivery was: "prompt ex 1996 harvest". Dovuro was to supply seed free of charge to the growers and to pay the cost of registration for certification. The sales confirmation notice was signed on behalf of Dovuro by its General Manager, William Alexander Tapp. 15 Although the sales confirmation note made no reference to it, there was in existence at that time a handbook issued by the New Zealand Grain & Seed Trade Association Inc, of which Cropmark was a member. This handbook contained a section entitled "General information on policy and trading procedures" which included a "list of undesirable weed seeds". The list named 12 plant species, not including any of the three species (cleavers, redshank and field madder) with which this proceeding is concerned, or Brassica or Rumex, mentioned in the sales confirmation note. There is a dispute between Cropmark and Dovuro as to whether the handbook is relevant to the contract made between them. 16 It seems the Toowoomba crop was harvested in early October 1995. It was cleaned and certified in New South Wales and 600kg was forwarded to Cropmark. Cropmark distributed the seed amongst eight selected farmers, apparently all located in New Zealand's South Island. 17 In January 1996, Mr Kudnig again visited New Zealand. He spent two or three days inspecting the growing crops. He walked around the fence lines and sometimes diagonally across the paddocks. The crops were maturing appropriately. Mr Kudnig noticed some weeds but they caused him no concern. He made notes of the weeds seen by him. At the time he did not know what cleavers or redshank looked like. He recognised oriental mustard, which is a member of the Brassica family. However, Mr Kudnig said he was not concerned about oriental mustard because it mainly cleans out in the heading process. One of the weeds noticed by Mr Kudnig was dock, a plant Mr Kudnig knew was "declared" in at least some Australian States, including Western Australia. 18 Following this visit, Mr Kudnig wrote a report directed to Mr Tapp and Keith White, a person with a major indirect interest in Dovuro, though not a director. Mr White is General Manager of Ag-Seed Research Pty Ltd of Toowoomba. A copy of the report was sent to Eamonn Rath, Dovuro's Western Australian Field Officer (now Western Region Manager). The report set out a five-stage procedure being used "to ensure the highest quality seed be produced in New Zealand". Stage 3 related to "Planting in New Zealand". It included: "(b) All T17 seed crops in New Zealand were inspected by MAF staff who have certified each of the paddocks and found them free of prohibited or noxious weeds". "MAF" is the acronym of the New Zealand Ministry of Agriculture and Fisheries. 19 Counsel for the applicants, Mr John Rowe, took Mr Kudnig to this comment during the course of cross-examination: "But you in fact knew that wasn't right, because on your inspection you had found weeds that were at least noxious; isn't that right?---I may not have known they were noxious at the time. Well, you inspected them and you identified weeds, first of all that you didn't know whether they were declared or prohibited, right? And you saw other weeds that you believe were either declared or prohibited like Dock?---Yes. So you knew that when you wrote this that, notwithstanding the MAF staff who had certified each of the paddocks and found them free of prohibited and noxious weeds, that there were in fact weeds that may have been declared or prohibited from your inspection?---Not in New Zealand to my knowledge. You have just told us you inspected these paddocks when we went through your notes?---Yes, I'm saying they may not have been prohibited or noxious in New Zealand. But you knew that they were prohibited or noxious in Australia?---That's not what you asked. … Where is the important part for the weeds to be prohibited or declared, New Zealand or Australia?---Well, firstly, New Zealand and then to be followed up by AQIS when they come into Australia. Suffice to say then that you did know that there were weeds that, at the very least may have been declared or prohibited in Australia?---Yes. In fact, in the case of Dock, a weed that you knew was at least declared in Australia?---Yes. … But you knew that Dock is a weed that is declared or prohibited in Western Australia?---At the time, yes. And you knew from the seed analysis the seed had Dock in it, didn't it?---Yes. You knew it did not meet the Western Australian Standard?---I don't agree with that. If AQIS passed it, then it must have met the standards." "AQIS" is an acronym for Australian Quarantine and Inspection Service, a Commonwealth government instrumentality. 20 During the course of his inspections, Mr Kudnig asked about weeds prevalent in the local area. One weed mentioned to him was cleavers, the botanical name of which is Galium aparine. (iii) Importation of the bulk-up cropseed into Australia 21 The bulk-up crops were harvested in March 1996. The seed was cleaned by a contractor to Cropmark, Seedlands NZ Ltd ("Seedlands"). Seedlands apparently used a process that involves putting the seed through a number of riddles, the objective being to achieve at least 99% purity. Seedlands then packed the seed into 25 kg bags and attached a blue label, or tag, which bore MAF's name and logo and the words "Certified seed, 1st generation". The species was identified as "Brassica napus L. Canola". There was a cultivar number (T17), a reference number, a number indicating the "region of production", a date in late March 1996 and the weight of the seed (25 kg). On the back of each label were the words: "Minimum 99% Purity Minimum 85% Germination." 22 The labelling of the bags was effected in anticipation of MAF certification. It appears that, while the seed was at Seedlands, samples were taken from each "line" of seed. One set of samples was sent to Cropmark's laboratory, where each sample was analysed by Cropmark employees. The other set of samples was sent to MAF. As it was expected there would be a delay of two or three weeks in obtaining the results of the MAF analyses, agreement was reached for the seed to be labelled and dispatched from New Zealand to Australia, in advance of those results being available. This was apparently done on the basis that the seed would not be distributed in Australia unless satisfactory MAF results were obtained. 23 After Cropmark completed its analysis of the samples, the seed was sent to Dovuro. Most of it went to Melbourne, but some was shipped to Fremantle. Also, some of the Melbourne seed was sent overland to Perth. Of the total quantity of 6,720 bags (168 tonnes) sent to Dovuro from New Zealand, 2,700 bags (67.5 tonnes) was made available to Western Australia. 24 Before distribution of the seed in Australia, MAF issued its seed analysis certificates. The applicants' legal representatives have used the Cropmark and MAF certificates to construct a seed flow chart whose accuracy is accepted by both respondents. The flow chart is based on "lines" of seed. A "line" is defined by the rules of the International Seed Testing Association ("ISTA") as a quantity of seed harvested from one location, but not exceeding ten tonnes plus 5%; that is, 10,500 kgs. If a quantity of a particular seed exceeds 10,500 kg, the excess must be treated as constituting one or more separate lines. However, it is usual to use an identification symbol that shows the association with the head line. For example, in this case there was a line of 10,400 kg numbered as 161B and two associated lines, 161B1 (3,600 kgs) and 161BA (2,475 kgs). 25 Of the 20 lines produced by the New Zealand crops, eight were imported into Western Australia. The analyses made in New Zealand establish that six out of the eight lines contained seeds of the species Polygonum persicaria (redshank). The remaining two lines had seeds of an unidentified Polygonum species, that could have been redshank. Two lines contained cleavers and another Sherardia arvensis (field madder). One line contained all three weed seeds. 26 Mr Tapp gave evidence that Dovuro received the Cropmark certificates of analysis, "but it didn't mean anything because it was not a germination test and it wasn't the official test". He said the presence of weeds "was of concern" but he was not aware of Cropmark's laboratory standards; the MAF test was "what we were waiting for". Mr Tapp agreed that it was unusual to find seeds of cleavers, redshank and field madder in cropseeds. His evidence went on: "Now, when you were confronted with some unusual weed seeds in your experience, did it occur to you to make an inquiry as to whether those particular weed seeds might adversely affect any growers who may buy your seed?---We relied on the information from AQIS, they passed it and any declared weed that they were unhappy with, they would have made us aware. I don't ever try and dictate to them what should or should not go into the State. So, you don't make any inquiry yourself, you just accept what the regulators say?---But with my background experience if I was concerned I did, and I had no concern with the experience that I had gained that these were weeds of concern." 27 Mr Tapp said the MAF certificates were sent to AQIS. He saw them "at about the same time", the end of March or early April 1996. Mr Tapp said "they were fine". He noticed there was "a fair number of weed seeds", in some lines, but they were small in relative terms. His evidence continued: "If [sic: Does] the fact that the weed seed count was high of an exotic weed but small in percentage terms mean that you would ignore it?---I would ignore it, yes. So you really weren't concerned too much about what the weed was, only how much of it was in the line?---I'm concerned, I am always concerned what the weed is. Well if you were concerned when you got the official test certificates, it wasn't very difficult for you to contact somebody at the department- - -?---The department had the – the department had the test. I accept that, but it wasn't very difficult for you to contact the department to ask them if this particular weed seed could be a problem?---It wouldn't have been very hard. No, you could have done it fairly easily, just pick up the phone?---Yes." (iv) Distribution of the seed 28 Sometime early in 1996, T17 was renamed Karoo canola. Mr Rath had already obtained orders for the seed in Western Australia, using for that purpose three seed distributors. At about the time of the arrival of the seed in Western Australia, Mr Rath had a telephone conversation with Mr Kudnig in which he asked Mr Kudnig what weed seeds were listed on the seed analysis statements. Mr Rath recalls Mr Kudnig mentioning redshank, cleavers, field madder, dock and fat hen. Apparently, Mr Kudnig stated the various levels of the weed seeds in particular lines but Mr Rath does not recall this detail. Mr Rath said in his affidavit: "I was not concerned at this response, as I knew that none of the weed seeds mentioned were prohibited or declared weeds in WA. I also knew that neither Redshank, Cleavers or Field Madder were 'weeds of agriculture' in WA. 'Weeds of agriculture' is a term used in the agriculture sector to describe weeds common to cropping systems in WA. Finally I knew that neither Redshank, Cleavers, and Field Madder were listed in AgWest's Seed Certification Rules for Canola as being not allowable under the seed standards listed there." 29 The evidence does not establish whether any AQIS officer inspected the seed on its arrival in Australia; although it does suggest AQIS saw the MAF certificates. Either AQIS or the Western Australian Quarantine and Inspection Service ("WAQIS") sent samples of the seed to the laboratory of AgWest Seed Quality, a unit of Agriculture Western Australia ("AgWest"), the Western Australian government department responsible for agricultural issues. AgWest Seed Quality identified Galium species in the samples but it was decided not to take the time and trouble to identify the particular species. No Galium species was on the list of prohibited imports into Australia, notwithstanding that it is an exotic plant originating in Europe. Presumably this is because Galium aparine (cleavers) is not uncommon in the eastern States of Australia and Galium tricornutum (bedstraw) is well known in South Australia. Nor was any Galium species prohibited or declared under Western Australian legislation, presumably because no such species had yet proved to be a "weed of agriculture"; that is, a known problem in cropping areas of the State. 30 The officers of Ag West Seed Quality who undertook the analysis made no inquiry of their colleagues in the seed section of AgWest before deciding to make a favourable report on the seed, as a result of which it was released for distribution. Nor did Mr Rath pass on to AgWest the information he had obtained from Mr Kudnig regarding the New Zealand analyses. Had officers of AgWest's seed section been alerted to the presence of Galium species seeds, they would almost certainly have taken steps to prevent release of the canola to farmers, at least pending further investigation. The evidence includes correspondence one year earlier, in May 1995, in which Jonathan Dodd of AgWest's Seed Science Section informed WAQIS of the seriousness of Galium aparine and Galium tricornutum weeds. 31 "Narbethong", the property farmed by the partnership known as R & E Wilkins, in 1996 comprised 2,709 ha, about 90% of which was used for cropping. The partners sowed small areas of Narendra canola seed in 1994 and 1995. In October 1995, Mr Trevor Wilkins heard about the new variety of canola, then known as T17, which was said to be triazine resistant. As "Narbethong" was prone to wild radish and ryegrass infestations, for the control of which he used triazine, Mr Wilkins ordered one tonne of T17 seed from Elders Limited at Kondinin. While he was awaiting delivery, he negotiated to sell 100 tonnes of the projected crop for use as bird seed, at a price $50 per tonne above the price for crushing seed. 32 In early May 1996, Elders Limited delivered to "Narbethong" forty 25 kg bags of the new seed. Mr Wilkins noticed that the bags were sealed, with blue labels attached. He read the labels and noted the reference to "minimum 99% purity" and "minimum 85% germination". Although he had not previously seen New Zealand certificates, he was familiar with their Australian equivalent. Indeed, in earlier years he had grown and sold certified clover seed to which he had attached similar certificates. The certificates had been obtainable by him only after Ag West inspected and tested the seed. He assumed the Karoo canola seed had been subjected to similar scrutiny. 33 Mr Wilkins immediately commenced spraying various paddocks and sowing them with the Karoo canola seed. This task extended through the month of May, by the end of which he had sown a total of 278 ha to Karoo. However, by then it was apparent that one 40 ha area had failed due to lack of moisture. This left 238 ha upon which he obtained a good Karoo canola crop. (v) The Karoo "incident" 34 In early June 1996 a canola producer from Kojonup, Digby Stretch, contacted Matthew Appelbee, AgWest's Canola Development Officer, querying some "foreign" seeds he had found in newly-purchased Karoo canola seed. Mr Appelbee arranged for samples to be analysed at the AgWest laboratory in Perth. He then contacted Dovuro and obtained copies of the MAF seed analysis certificates. On receipt of those certificates, there was formed within AgWest a group of officers called the "Canola Seed Incident Working Party". Mr Appelbee was asked to serve on that working party. The working party collected information about cleavers, redshank and field madder and attempted to identify all the Western Australian buyers of Karoo canola seed, for the purpose of sending them information about the three weeds. 35 About 22 June 1996 a friend told Mr Wilkins about media talk concerning the contamination of Karoo canola seeds. Shortly afterwards he received a copy of the 20 June issue of "Countryman", a Western Australian rural newspaper. This issue contained a news item about cleavers and redshank being found in canola seed and a comment by a journalist, Paul Ryan, on the need "for an urgent review of Australian and WA quarantine procedures". Mr Ryan set out his understanding of what had happened: "Trying to figure out where the system actually broke down reveals a Fawlty Towers-type comedy of errors. It seems to go something like this. The seed company, Dovuro, had the seed grown under contract in New Zealand, in an effort to satisfy on [sic] the local demand for triazine-tolerant canola. The seed was certified in New Zealand, meaning it was true to seed type, free of weeds and admixture and had high germination ability. Now, in New Zealand, where the weed cleavers is as common as ryegrass is over here (not that you'd want ryegrass in your canola seed), the seed was free of weeds. But in WA, it isn't. The seed was then brought to the various states of Australia for distribution. Dovuro says it did not know that the two weeks would be a problem in WA. AQIS says it looked at the list of weed seeds in the certified seed, and none of them were on the list of prohibited seeds for either Australia or WA, so it gave the seed the all clear. But Agriculture WA says if the seed was grown in WA it would not have achieved certification. So, since when has WA been using overseas certification standards for its own seed? And surely because a weed is not in WA, that is a very, very good reason to put it on the prohibited list. And what does this do (to) the credibility of seed certification? You can't thank the authorities for detecting the problem either. It was discovered by farmers, who heard of a another scare involving turnip seeds in uncertified canola coming in from the eastern States. Someone, luckily, misheard the message and checked his certified seed from New Zealand and found some funny looking seeds in them. If it hadn't been for this farmer, the first you might have heard of cleavers or redshank could have been halfway through the season when you noticed some strange plants in your canola crop. Farmers have been saying that our quarantine system needs attention for quite some time. It's about time someone took notice. " 36 As will be apparent, Mr Ryan's understanding of events was, at least, substantially correct. Although the evidence is not clear, it seems AQIS only checked the seeds shown in the New Zealand certificates against its list of prohibited imports. As with cleavers, redshanks and field madder were already present in the eastern States of Australia, so there was no prohibition on the importation of the seeds of those plants into Australia. WAQIS may have been aware of the presence of redshank and field madder in the imported seeds. However, these species were then virtually unknown in Western Australia. As with cleavers, neither of them had ever been found in Western Australian agricultural areas; so neither of them had ever been the subject of a Western Australian prohibition or declaration. In the absence of a relevant prohibition or declaration, and without further inquiry, WAQIS released the seed for distribution. It seems not to have occurred to anybody in authority that, as Mr Ryan put it, "because a weed is not in WA, that is a very, very good reason to put it on the prohibited list". Fortunately, according to the evidence, the system has since been changed. I was told that, if a particular seed is not known to be acceptable, importation into Western Australia is now refused. 37 The issue of "Farm Weekly" of 4 July 1996 reported an apology by Dovuro to growers "for neglecting to check for the presence of foreign weeds which were detected in packs of seed last week". This report was probably based on an undated media release put out by Mr Tapp headed "Weed Seeds in Karoo". The release read: "Weed seeds of Galium aparine (cleavers) and Polygonum persicaria (redshank), have been detected in certified seed of the triazine-resistant canola cultivar 'Karoo' imported from New Zealand in April/May 1996. The crops were inspected by a Dovuro seed production officer without detecting the weeds, in addition to regular inspection by Agronomists and Certification Officers in New Zealand without any indication of concern. The seed was cleared for Certification in New Zealand and subsequently by AQIS (Melbourne and Freemantle)[sic: Fremantle] for entry into Australia. Trace levels of the weed seeds were found in some analysis. This information is available directly upon request from Dovuro where an Agent or Grower can supply the line number that is printed on the bag. The seed of Karoo was imported under OECD Mutual Recognition Scheme, a large range of pasture grasses, legumes and field crops have also been imported under this Scheme for a number of years into Australia from New Zealand. Dovuro and Ag-Seed Research are seeking advice from weed scientists, field agronomists and herbicide experts to develop a management strategy to assist identification, monitoring and control of the weeds in field crops. A management information package is being forwarded to dealers and regional agronomists shortly. The two weeds are commonly found in New Zealand and treatment by several chemicals in following cereal crops is effective. Karoo crops treated with Trifluralin, Gesaprim a.i. atrazine, and Gesatop a.i. simazine, should give effective control. Regular monitoring is advised of these crops for all weeds including cleavers and redshank. We apologise to canola growers and industry personnel. This situation should not have occurred but due to strong-interest in Karoo the unusual step was made of undertaking contract seed production in New Zealand to assist rapid multiplication; whilst the urgency to process and distribute the seed of Karoo in time for planting caused additional time pressures. Dovuro in association with Ag-Seed Research has an enviable record of providing high quality planting seed of leading cultivars to Canola Growers in Australia. We can assure growers that seed production outside Australia in the foreseeable future is unlikely and that we will continue production under the existing strict guidelines set by our own internal quality standards and by individual State Certification Schemes." [Emphasis added] 38 During the course of cross-examination, Mr Rowe asked Mr Tapp about this document. Mr Tapp said the apology contained in the emphasised paragraph was "a sincere apology". But he would not concede Dovuro had been at fault; "I was apologising to the industry for the stir or the concerns it caused". When Mr Tapp was asked what he meant by the sentence in the release "This situation should not have occurred", he replied, "Well, I think it was blown out of proportion". He denied the "situation" was the presence of weed seeds in the canola seed. 39 Not long before Mr Tapp's apology, Mr White had written a letter to Russell Soderlund of Daratech Pty Ltd with copies to six other people. That letter contained the following paragraphs: "It is difficult to gain a realistic perspective on the weeds. Neither weed is prohibited in Australia and only Galium aparine is declared in several States, whilst both weeds are listed (ie. occur already) in Australia – at least in the eastern States. The seed was certified in New Zealand and was approved for import by AQIS and also was passed for entry into Western Australia though [sic: through] its separate quarantine procedures. There are indications from some weed experts and agrochemical agronomists with whom the matter has been discussed that both weeds should be readily manageable in field crops. Also it appears a reasonable proportion (20-25%) of significant seed imports from New Zealand, at least of pasture grasses and legumes but at times of field crops such as wheat and field peas, are likely to contain seeds of these weeds. Nevertheless we recognise that the seed should not have been released and that field production may cause a problem for some canola growers. It is easy to make excuses but the short time-frame for the importation (from harvest to processing, shipment and distribution) in association with the strong demand (perhaps euphoria) from dealers and growers for the seed, may have resulted in inadequate quality control checks. Perhaps we almost tried too hard. Protocols for seed release are being addressed within Dovuro and Ag-Seed Research; we are confident that future canola planting seed will have all necessary control checks to ensure that only high quality seed is released. We also have abandoned any thoughts of future seed production in New Zealand or Tasmania over Summer due to difficulty of adequate control procedures." Mr White sent a copy of this letter to Mr Tapp. Mr Tapp took no action to dissociate Dovuro from it. 40 On 9 July 1996 Ag West published a bundle of documents entitled "Information Package – Weed control in Karoo canola". Mr Wilkins received a copy of the package a few days later. The package contained a printed letter, addressed "Dear Canola Grower" from Rob Delane, Manager of Ag West's Pulses and Oilseeds Program. The letter read: "Agriculture Western Australia has been advised that a number of Western Australian growers have purchased and sown Karoo canola seed imported from New Zealand by the seed company Dovuro Pty Ltd. The seed has been found to contain undesirable weeds including Cleavers (Galium aparine), Redshank (Polygonum persicaria) and Field madder (Sherardia arvensis). Agriculture Western Australia has taken action to prevent further importation and spread of these weeds. Primary Industry Minister Monty House has agreed to prohibit entry of Cleavers, Redshank and Field madder into Western Australia under the Plant Diseases Act for a period of eight weeks to enable a review of the regulations. The Agriculture Protection Board included cleavers on the Declared Plant list at its meeting last month, and last week agreed to add Redshank and Field madder. Cleavers, Redshank and Field madder were all declared category P1 (Prevention: plants which cannot be introduced or spread) and P2" (Eradication: plants which must be eradicated). Agriculture Western Australia is currently reviewing the processes and standards governing the sale of seed in Western Australia originating from interstate and overseas. You will find enclosed a comprehensive information pack prepared by Agriculture Western Australia for growers who have sown contaminated seed. The package outlines the problem and provides relevant information to control these weeds in canola crops now and in subsequent years. The agency is currently seeking temporary registration for additional chemicals to treat these weeds in canola. Spraying for two of the problem weeds, Redshank and Field madder is not required until mid-August. In the meantime, we recommend spraying the crop with atrazine flowable at two litres per hectare for general weed control. Any growers who have not sown Karoo imported from New Zealand should return their seed to the point of sale. A coordinated approach will be required from Agriculture Western Australia, seed agents, growers and agronomists to monitor and inspect affected crops throughout the season and determine appropriate management for the future." 41 The accompanying documents contained information designed to enable farmers to identify the three weeds. There was also an "infonote" from the Agriculture Protection Board of Western Australia explaining the significance of the categories of declared plants and animals. Category P1 was for prevention, as distinct from control or containment. It applied to "plants which cannot be introduced or spread". The note read: "Most declared plants are placed in this category. It is most important for potentially devastating weeds, such as perrenial [sic: perennial] thistle, water hyacinth or artichoke thistle. These must be prevented from establishing in W.A." Category P2 was for "plants which will be eradicated". The note explained: "This category includes the potentially serious weeds which are not yet widely established in W.A. Examples are skeleton weed, salvinia, gorse and Noogoora burr." A reader would, understand that every effort should be made to detect and eradicate any plant declared in both categories P1 and P2; as cleavers, redshank and field madder had recently been. 42 However, AgWest was not content to leave it to the farmers to work out what action to take. Included in the package was a 17 page booklet which included detailed instructions for action. The booklet identified the weeds in each of the eight lines of Karoo seed imported into Western Australia, with a note of the region of production number shown on their labels. Region of production number W990AA, shown on the labels attached to the bags received by R & E Wilkins, correlated to line 605529, contaminated by cleavers and an unidentified species of Polygonum. Under the heading "The weeds and their current status", the booklet said: "· Redshank has not been detected previously in Western Australia. Cleavers is not present as an agricultural weed, while Field madder is found only in native woodlands along the west coast. · Cleavers is notorious as a weed of cropping in Europe and Canada. Its weed status and the level of threat that it poses to Western Australia were assessed before this incident occurred. This led to Cleavers being Declared at the Agriculture Protection Board meeting (19 June 1996) as a P1, P2 Declared Plant – this category prohibits its entry and allows for its eradication when found. · Assessment of the weed risk and potential distribution of Redshank and Field madder has shown that the south coastal farming regions between Albany and Esperance are at risk from Redshank. The potential distribution of Field madder includes most high rainfall areas of the south-western agricultural region; however, this weed is considered unlikely to maintain itself in the wheatbelt. · Redshank has developed resistance to triazine herbicides in New Zealand. If this tolerance is expressed in crops of triazine-tolerant Karoo canola in this State, then Redshank will be unmanageable by this class of herbicide. This will defeat the purpose of growing Karoo. Both Redshank and Cleavers are hardseeded to varying degrees and will possibly survive up to five years. There is no comparable information for Field madder." 43 The booklet referred to the establishment of a working group "to manage this incident in accordance with the agency's emergency response plan". There was a list of recommendations, including for a series of inspections and chemical control measures in 1996 and inspections in later years. The instructions included this note: "Important The contaminating weeds will be at very low levels. For example we would only expect to find one Redshank plant in every 200 square metres of the worst affected line. Cleavers and Field madder will be at lower levels. However, these few plants could multiply quickly if not controlled. Keep a constant look out for these weeds over the next 10 years. If found remove and burn the parent plants and spray to run off an area, 10 metres wide, with a mixture of one litre of Tordonâ 75-D in 100 litres of water. Chemical control advice for other crops will be forwarded at a later date." 44 One of the recommendations was that, due to potential weed seed dormancy, growers should not retain seed from affected paddocks for at least five years. Farmers were advised to avoid grazing affected paddocks over summer because of the risk of stock transporting the weed seeds, especially cleavers. Special instructions were given about harvesting, including advice to clean windrowers and headers thoroughly before moving onto other paddocks. 45 A section of the booklet was devoted to detailed information about each of the three weeds. The following statements were made about cleavers: "Cleavers is a serious weed of temperate crops and is listed among the world's worst weeds. It is regarded as a serious or principal weed in 10 countries and as a common weed in over 20 others. It is a serious competitor in cereal crops and is also a problem in vegetable crops and pastures. More recently, it is developing as a serious weed of canola, particularly in Canada. … The climate of south Western Australia is well suited to this weed especially the central wheatbelt and the Great Southern district. The fact that this species has not yet become widespread is probably due to lack of opportunity." 46 In connection with redshank the booklet said: "Redshank is a weed in a wide range of crops including cereals, vegetable crops and pastures. It is considered a weed in 40 countries and is a serious/principal weed in 16, mostly European, countries. Resistance to triazine was demonstrated for Redshank in New Zealand in 1987 and in Holland in 1988. Control of Redshank in maize crops in New Zealand is now a major problem because of triazine resistance. The likelihood of triazine resistance in the imported Karoo seed is low, however, because the area where the Karoo seed was produced was not treated with triazines according to sources in New Zealand. … Although Redshank will probably grow well throughout the south-west, as indicated by its almost global distribution, it appears that it would become a weed of concern only in south coastal areas. … An area along the south coast from Albany east towards Esperance and beyond is most suitable for the growth of this weed. In addition to the threat posed to Canola crops, Redshank could put at risk root crop industries and horticultural crops in general. The possibility of it developing atrazine resistance should not be overlooked." 47 The authors of the booklet apparently felt less concern about field madder. They said: "Although Field madder is not considered a serious/principal weed in any country, it has been noted as a weed in ryegrass seed crops, olives, strawberries and clover seed crops. Resistance to simazine has been demonstrated for Field madder in olive groves. … The whole of the south west of Western Australia appears to be climatically suitable for the growth of this weed. … Although Field madder has been present in this State for some time, it could become weedy in future cropping systems. The report of simazine resistance in Field madder is cause for concern because this herbicide is widely used in Western Australia." 48 The evidence includes letters that Mr Rath wrote to people who had complained to him about the Karoo contamination. Those letters contained an apology. A typical example is to be found in the following paragraph of a letter of 1 August 1996 to the Katanning Zone Co-ordinators of the Western Australian Farmers Federation, Wally and Linley Filmer: "I'd like to stress at this stage that this does not excuse Dovuro in failing in its duty of care to inform growers as to the presence of these weed seeds. We got it wrong in this case, and new varieties will not be brought on the market again in this manner. Dovuro will not be producing seed in New Zealand again. The company will continue in bulking up its varieties (as it does every year) in Western Australia. Dovuro currently has eight growers contracted to bulk up its varieties in Western Australia. Furthermore, Dovuro has always made available Seed Analysis Certificates to anyone who asks. Dovuro would like again to apologise unreservedly to all growers who purchased New Zealand Karoo seed. Dovuro did not break any regulation, and all its actions were legal at the time." Mr Rath sent copies of his letters to Mr Tapp. Mr Tapp took no action to disclaim their contents. (vi) The sustaining of damage 49 Mr Wilkins followed the recommendations contained in the information package. This involved his spending considerable time inspecting the areas sown to Karoo canola and additional expense for chemical sprays. Mr Wilkins claims he sustained substantial losses at harvest time from four causes: production inefficiencies caused by the need to dismantle and minutely clean the header and other equipment; loss of opportunities to hire out to other farmers his services and equipment; loss of the opportunity to sell the canola crop for bird seed, rather than crushing; and loss of the opportunity to graze the paddocks sown to Karoo canola. These claims have not yet been fully investigated. However, I am satisfied the applicants have suffered some damage; if they are able to establish the existence of a duty of care to them by either respondent and breach of that duty, their negligence claim is made out. 50 Mr Wilkins said in his affidavit: "Had I been warned that the Karoo canola seed available to fill my orders in 1996 may have contained weeds which were not known to broad acre farming in the State of Western Australia, I would have refused to accept that seed in satisfaction of my orders because it was not worth all the hassle." Mr Wilkins was not challenged in relation to that statement. In cross-examination, he conceded he knew there would always be some impurities in bags of seeds purchased from dealers, but he added "most of them were listed on the bag". However, Mr Wilkins agreed he knew in April 1996 that impurities were not always listed; so that, in buying seeds, he would "buy weeds from time to time as well". 51 Evidence was also given by Bruce Leslie Piper. Mr Piper conducts a farming operation in partnership with five other members of his family at "Woolandoon", Bindi Bindi. The partnership purchased and sowed Karoo canola seed imported by Dovuro from New Zealand in early 1996. Mr Piper said, without challenge, that he would not have used the Karoo canola seed if he had known of the possibility of its contamination with weeds not known in Western Australia. Mr Piper also gave evidence of losses and expenses sustained in following the recommendations set out in the information package. I need not go into detail. Bearing in mind the number of people in each of the two partnerships (Wilkins and Piper), I am satisfied at least seven persons suffered damage as a result of sowing the Karoo canola seed, the amount of which has yet to be quantified. 52 Neither Mr Wilkins nor Mr Piper claimed to have identified any of the three subject weeds on his property. Nor is there evidence from any other source of any of the weeds being observed in a canola crop. The reason for this is uncertain. I am satisfied many Western Australian farmers were sold canola taken from lines in which one or more of the three weeds was detected in the Cropmark and MAF analyses. Of course, it does not follow from that circumstance that weed seeds were present in the particular bags taken by individual growers. However, it is common ground that post-harvest processing tends to distribute any quantity of foreign seed fairly evenly through the line. So it seems unlikely any grower escaped receiving some representatives of any species of seed that was found in significant volume in the line from which his or her bags were taken. In any case, the luck of distribution would not explain why no farmer reported finding the growing weeds. There are more likely explanations of that phenomenon. One possibility is that the weed seeds failed to germinate because of unfavourable soil or climatic conditions. Another possibility is that, having germinated, the weeds were smothered in infancy by the vigorously growing canola. A third possibility is that the young weeds were killed by the substantial doses of chemicals applied by growers to the crops in obedience to the instructions in the information package. (vii) The incidence of the three weeds in Western Australia 53 At the time of his giving evidence, Terence John Piper was Acting Manager, Weed Science Group. He is an organic chemist of 27 years standing. Dr Piper has been employed by AgWest since 1982, being concerned with the chemistry of herbicides, problems of herbicide residues and herbicide resistant weeds and weed control in broad area crops, especially lupins and canola. He supervises AgWest's Weed Risk Assessment Unit. This unit comprises two officers, each of whom holds the degree of Bachelor of Applied Science (Biology) from Murdoch University. As its name suggests, the unit evaluates the risk to Western Australian agriculture of particular weed species. During the course of his evidence, Dr Piper produced and verified reports by the Weed Risk Assessment Unit concerning cleavers, redshank and field madder. He said cleavers had "never been reported as a problem weed by farmers in the wheatbelt, and it has never been seen by Agriculture Western Australia staff. On that basis I would say it is not established". He thought there was "a moderate to high chance" of cleavers becoming a problem in the wheatbelt, although he noted "the plant does not seem to have encroached outward from the present isolated occurrences". Those occurrences were "a few rocky sites in the NE wheatbelt" which may have been used as overnight camps by early travellers to the goldfields. However, Dr Piper expressed doubt about the accuracy of the identification of the plant at these places. 54 Dr Piper said redshank was formally recognised and identified in Western Australia only in 1996-97, apparently as a result of the publicity arising out of the Karoo canola incident. After that publicity, redshank was found to be growing in some areas near Perth, in market gardens and some home gardens and on some golf courses. There has been no report of redshank in the wheatbelt, although the Weed Risk Assessment Unit thought there was "a slight chance" of the weed establishing itself there. 55 Field madder, also, had not been reported in the wheatbelt, although it had been found in disturbed ground near Albany. Dr Piper thought there was a "moderate chance" of it becoming a problem in the wheatbelt although it would probably be confined to its preferred soil types. 56 Dr Piper also provided information about herbicides. It is enough to say his evidence supports the advice contained in the information package sent to the affected farmers. 57 During the course of Dr Piper's evidence, counsel for the applicants tendered a letter written by his instructing solicitors to Dr Piper and Dr Piper's reply. The solicitor asked Dr Piper to confirm his oral advice that the presence of seeds of cleavers, redshank and field madder "in canola seed imported into WA for the purposes of broad acre farming would make them undesirable weeds as far as the WA canola growing industry, or in fact the WA broad acre farming industry is concerned". Dr Piper responded: "As far as agriculture and broadacre farming is concerned, all weeds are undesirable. Indeed the very definition of a weed is a plant growing where it is not wanted. Some weeds however are more undesirable than others. As an extreme example, the most rapidly increasing weed of Western Australian agriculture at the moment is actually canola. Seed spillage is unavoidable during harvesting and carting operations, and canola is appearing on roadsides and in wheat crops the year after a canola crop. Yet farmers will accept this as no more than a nuisance, since they deliberately seeded the plant for economic reasons themselves. In a similar vein, they will accept volunteer wheat as a weed of their lupin and canola crops, and volunteer lupins as a weed of their cereal crops. Another widespread weed in Western Australia is wild radish. This plant has no redeeming virtues, and is a serious problem especially in lupin crops. Its seeds will often be present in lupin seed that farmers hold on-farm to feed to their stock over summer, yet they will trail these contaminated lupins out without too much concern about the accompanying wild radish seed. After all, there is such a reserve of seed in the soil already that a bit more makes little difference. The 'most undesirable' status would have to go to weeds that combine both traits; they are not already present, and they have no redeeming features. The three weeds of concern certainly fall into this category." [Emphasis added] 58 Dr Piper also identified an article written by him for the May 1999 issue of a departmental publication "Agricultural Memo". In that article he said: "If you are planting lupins in a paddock that was sown with contaminated Karoo canola seed in 1996, don't stint on your herbicide program, and monitor the crop closely. The protocol developed for managing paddocks sown with contaminated Karoo canola seed, where cleavers, redshank or field madder could possibly establish, recommended that lupins not be grown for the next two years. This was because control of these weeds in lupins was not expected to be as effective as in cereals. Farmers following the guidelines would now be ready to sow a lupin crop on the area. Given the long dormancy of some of the seeds, it is possible that some plants will emerge in this lupin crop. The following recommendations have been extrapolated from known control measures for the target weeds, or their close relatives. There is no experimental evidence to support them, as we have no large lupin growing areas of the weeds to do such trials, and we don't want them!" 59 The article went on to set out recommendations regarding inspections and the application of herbicides. These recommendations were substantially similar to those contained in the information package, which had been followed by Mr Wilkins and others. 60 I am satisfied, from the evidence of Dr Piper and other AgWest officers that: (a) As at early 1996, cleavers, redshank and field madder were not present (except perhaps in a few isolated places) in the Western Australia wheatbelt; and (b) There was good reason for regarding the introduction of those weeds into the wheatbelt as most undesirable, especially if they affected canola crops intended to be used for the manufacture of magarine or edible oils. 61 I am also satisfied, by Mr Wilkins' evidence, that the steps taken by him to cope with the threat of the weeds growing on "Narbethong" were steps that reasonably reflected the recommendations made in the information package published by the AgWest working party. There is an issue between the parties as to whether those recommendations went beyond what was reasonably required in the situation in which AgWest found itself in June/July 1996. The respondents say that, to the extent they did, they should not be held responsible for the expense and losses incurred by the applicants and group members in following the recommendations. Contentious matters (i) Did AgWest overreact? 62 During the course of his evidence, Mr Tapp made clear his opinion that AgWest overreacted to its discovery of contamination of the canola seed. This was not the first time he had indicated that view; he did so in 1996, about the time the working party published its information package. 63 Mr Tapp's view received a little support from evidence given at the trial by Peter McKenzie Falconer, a farm management consultant and valuer. Mr Falconer holds a Diploma of Agriculture and a Diploma in Valuation and Farm Management from Lincoln College in New Zealand. He farmed for some years in New Zealand before establishing, in 1962, a business that provides consulting and management services to farmers and investors. The business is now operated through Planfarm Pty Ltd, of which Mr Falconer is a director. Planfarm has offices in Perth and in four Western Australian regional centres. Mr Falconer has held official positions in two organisations involved with farm management and agricultural consultancy and is a member of the Wheat Industry Research Committee of Western Australia. 64 Mr Falconer gave evidence that he had been asked to comment about two issues relevant to this case: "the likelihood of cleavers, field madder or redshank … becoming a problem in Western Australian agricultural crops" and the effect of those weeds on canola crop production. 65 In relation to those matters, Mr Falconer said in his statement of evidence: "6. I believe that there is little, if any, likelihood of any of the weeds becoming a problem in Western Australian crops in the agricultural area. My reasons for this statement are as follows: 6.1.1 The weeds have been present in Western Australia for many years without becoming generally established in the wheat belt. 6.1.2 The weeds require a longer growing season than is normal in the wheat belt area. 6.1.3 The weeds would all be controlled by the normal spray and other weed control measures adopted as normal practice in the wheat belt. 7. In relation to the second question, as would be the case with any severe weed competition, the production and quality of canola would suffer if there was a heavy burden of any one of the weeds. It needs to be recognised, however, that the weeds are relatively slow growing in the early stages and would therefore tend to be smothered by the aggressive growth of a normal canola crop unless they were very thick. 8. Further, I am informed that the percentage of the weeds in the imported canola seed is very small as the majority of lines of the canola seed imported from New Zealand contain 99.9% canola seed and the lowest percentage of any line is 99.7%. I believe that at that level there would have been no discernible effect on the resultant canola production or quality." 66 In oral evidence Mr Falconer revealed he had previously seen the information package sent to Karoo canola growers by the AgWest working party. Some of his clients had sought his advice about the recommendations it contained. He said he advised them "to follow the normal practice which was very much in line with the recommendations made by the Department of Agriculture". One exception was that he thought it unnecessary to apply dicamba. This exception seems relatively unimportant. As I understand the information package, AgWest recommended that dicamba be used only if redshank was found growing in the canola crop. Another possible exception was that, although AgWest recommended the growing of cereal crops on affected areas in both 1997 and 1998, Mr Falconer said his clients "did not plan to grow two consecutive wheat crops after the canola". He said he meant that clients "should plan on not doing (this). The final decision wouldn't have to be made until two years after this discussion was taking place". Mr Falconer said he advised his clients to "keep an eye out while they were spraying and while they were harvesting in case there was any germination of those weeds in their crops", but no client reported having found any of the weeds. 67 During the course of his cross-examination, Mr Rowe asked Mr Falconer when he formed his belief that there was little likelihood of any of the three weeds becoming a problem in Western Australia. Mr Falconer replied: "I guess I hadn't considered it as a serious question until it was general knowledge that the imported canola had these weed seeds present. But I had a general belief that the majority of annual English weeds are unlikely to be a problem in cereal crops in Western Australia. That view would have been formed, I guess, after I had been here for several years and observed the growth habit and persistence and so on of other weeds." Even so, Mr Falconer said, he would not ignore the presence of any of these weeds in seed that any of his clients might propose to sow; it was a factor he would take into account in recommending whether or not to sow the seed. Mr Falconer discounted both soil conditions and climatic conditions as relevant considerations, but he said he would take into account the concentration of the weed seed in the cropseed and the likely capacity of the weed to establish in the area. He said he would consider "the effect generally to agriculture in the wheatbelt in Western Australia". Mr Falconer's evidence went on: "I suppose there are other factors you would also take into account if you knew them?---Yes. When you weigh up all these factors, you would then, with all those into account, formulate your advice to your clients?---Yes. In giving that advice, if in all those factors there was a risk, which you regarded as slight, [sic: more than slight] would you advise the clients of the potential risk and your assessment of its magnitude?---Yes. So at the end of the day then, the client would make the decision with the benefit of your advice?---Yes. That would be the case except for clients where we had management executive responsibility. In which case you would exercise their decision?---Yes. Would you ever ring or contact the manufacturer or provider of the seed to ascertain the identity of weeds that may be in the seed?---Yes. Do you do that often?---Frequently. In relation to canola, have you ever made that enquiry?---No. Why not?---Because the certification certificates have been quite adequate to provide that information. When you refer to the certification certificate, what are you referring to?---Certification certificate issued by the Department of Agriculture. Their seed testing division. Is that the analysis?---Yes. If you see on the analysis the presence of weed seed but the weed seed not being identified, is that a circumstance that would lead you to enquire as to the identity of the weed seed?---If it was from an area that I wasn't familiar with and knew what weed seeds were present, yes, it would prompt further enquiry. So you would use your considerable professional expertise in deciding whether or not your [sic: you] would make an enquiry?---Yes. Is it fair to say that obviously your expertise is greater than what you would expect from the average farmer?---Yes. I mean you hold yourself out with that expertise?---Yes." 68 The principal evidence justifying AgWest's recommendations came from Paul Cornelius Carmody, AgWest's Oil Seed Industry Development Officer. Mr Carmody graduated from the University of Melbourne in 1982 as a Bachelor of Agricultural Science. He worked on the family farm for a time before obtaining employment with an oil seeds company in South Australia and, subsequently, New South Wales. He then spent a year reviewing the marketing and training programs of the Australian Wheat Board before becoming a freelance technical writer for two years. In 1992 he joined AgWest as its Canola Industry Development Officer. During the following seven years he saw the Western Australian canola crop expand from an area of about 10,000 ha to over 100,000 ha. Mr Carmody said the majority of the Western Australian crop has, "for many years now", been exported - mainly to Japan - and that "(q)uality assurance for such exporting customers has always been a premium concern". In July 1995 Mr Carmody received a grant from the Grain Research and Development Corporation to travel to Canada and Europe for the purpose of studying the canola industry. In Canada he noted the quality control effort being made by the Canadian Grains Commission. In his first affidavit, Mr Carmody said this in relation to Canada: "21. Grain destined for export which needed to be graded to satisfy the stringent export standards is graded at the port prior to being loaded onto ships for export. The grading equipment so far as its scale in sophistication and thoroughness was concerned was superior to anything I had ever seen in the Australian bulk handling systems. 22. I formed the opinion that it was essential that the Western Australian Canola Industry ensure that its level of contaminants in Canola was kept to an absolute minimum if it was to compete with Canadian exports, particularly since they were also destined for the Japanese market. 23. There were already contaminant or admixture problems in Canola in Western Australia and new contaminates would seriously compromise our competitive position in export markets. 24. This was in addition to the adverse effects that flowed from having weeds competing with the crop for nutrients and moisture. 25. A very serious problem for the Canadian Grains Commission and the Canadian exporters was contamination of Canola seed by the seeds of a weed known as Cleavers, which did not have the same pod segment as wild Radish and was therefore more difficult to grade out. 26. As cleavers was not known to the Canola growing areas of Western Australia I felt we had a valuable advantage over the Canadians which we should protect at all costs and so I decided to meet with the Western Australian Farmers Federation upon my return and to get the backing of the organisation to have that weed declared in this State." The evidence does not disclose what happened about that decision, but obviously it did not bear fruit before May 1996. 69 In cross-examination Mr Carmody expanded on the situation concerning exports: "The problems were with export to Japan. The Grain Pool was getting feedback from the Japanese that admixture was going over one up to three per cent in the exported samples and the admixture was made up of canola pod material, stems and also rye grass seed and some radish in some of it. So the admixture was a problem for the Japanese and in terms of crushing it, it decreased the efficiency of the processing plants and the Japanese were putting a lot of pressure on the Grain Pool to actually reduce the level of admixture or otherwise they were going to start incurring dockages on those exports." 70 In a second affidavit Mr Carmody revealed the thinking of the working party, of which he was a member: "2. Given the seriousness of the weeds detected in some of the lines and the level to which they were detected, the Department needed to take action in order to minimise the risk of the weeds, especially cleavers, becoming established in the broad acre farming districts of Western Australia. 3. Although some certificates revealed a line free of the three weeds, Cleavers, Redshank and Field Madder, the Working Group managing the event decided to rule out any possibility of other lines allowing the weed into Western Australia. Therefore the safest option, and this was not without lengthy discussion by the working group, was to provide all growers who had obtained seed from New Zealand with appropriate management strategies to minimise the risk of the weeds becoming established in Western Australia. 4. The reasons for this were as follows: (a) there was very limited information on how and where the seed was produced in New Zealand. (b) it was the first time Agriculture WA had experienced Canola seed being produced in New Zealand for sale in Western Australia and had no prior knowledge of the level of Canola seed certification standards in New Zealand. (c) the quality control procedures adopted in New Zealand when the crop was grown were unknown at the time but enquiries revealed that no atrazine was used on some of the seed crops which left doubt as to the chemical regime adopted for all of the seed crops and therefore required extra precaution. (d) it was necessary to warn Western Australian growers that there could be a risk that all the lines from New Zealand may have weed seeds in them. At the time it was the Department's responsibility to do this. (e) there was no information available to the Working Group as to whether or not, and how thorough, the seed cleaning company had cleaned down machines between contaminated lines and uncontaminated lines. Given the number of weed seeds in some lines, there were doubts on the company's proficiency. There could have be [sic: been] cross-contamination between lines, but at levels not detectable by standard sampling methods. (f) the primary purposes of seed tests is to check for germination of the seed and secondly, to determine if unacceptable levels of weed seeds are present. They are not infallible when it comes to detecting weed seed, especially in Canola. There is always a possibility that some weed seeds will get through undetected, thereby creating an unacceptable risk in all the circumstances. (g) also given what I already knew of admixture problems for Western Australian Canola in the export market and the potential for cleavers to become a serious contaminant I advised the working group not to take any risks with these weeds. The last thing a rapidly emerging industry needed was another potential threat to its attempts to develop new markets." 71 Although Mr Carmody was cross-examined by both Mr Stephen Walmsley SC, who appeared with Mr Mark Macrossan for Dovuro, and Mr Paul Donohoe QC, counsel for Cropmark, he was not challenged in relation to any of these reasons. Nor was it put to him that the working party overreacted to the problem or that the recommendations made in AgWest's information package were incorrect or excessive. Mr Carmody agreed he was also concerned about the sheer number of weed seeds revealed by the certificates of analyses, regardless of species. He admitted having been "horrified" when he saw the certificates and having been critical of Dovuro for importing the seed into Western Australia; but those circumstances do not establish an over-reaction. 72 I was impressed with Mr Carmody's depth of knowledge of the problem. He was not unwilling to speak frankly, as was evident from his acceptance of a system failure in AgWest in relation to the importation of this seed into Western Australia. Having regard to his knowledge, and the lack of any challenge to his stated reasons for the working party's recommendations, I am not prepared to say those recommendations involved an over-reaction to the problem confronting AgWest in June 1996. I am fortified in this conclusion by Mr Falconer's view that the recommendations were substantially appropriate; he disagrees only with the suggestion of a dicamba spray and in his preference for a "wait and see" attitude to a second wheat crop. Although Mr Tapp thought the working party went too far, he did not spell out his reasons for that view. 73 I do not think the circumstance (where it occurred) that expenses and losses stemmed from following the recommendations contained in the information package is a reason for denying that those expenses and losses were caused by any breach of duty that may be established against one or both respondents. (ii) Labelling good practice 74 Keith Donald Glasson is the Managing Director of Pioneer Hi-Bred Australia Pty Ltd ("Pioneer"), a competitor of Dovuro in the seed market. Mr Glasson has been involved in the Australian seed production industry since 1969. He is Vice President of The Seed Industry Association of Australia Limited ("SIAA") and Chair of its Plant Breeders and Proprietary Marketers Group. 75 Mr Glasson was shown the MAF seed analysis certificates relating to the subject Karoo canola seed and asked to assume that none of the labels on the bags of canola imported by Dovuro into Western Australia revealed the presence of the weed seeds shown in the certificate. He said: "Truth in Labelling required in 1996 that the customer, in this case the farmer, be informed of the presence of the weed seeds in the Canola seed that he or she was acquiring." By "Truth in Labelling"; Mr Glasson explained, he meant labelling in accordance with the accepted industry practice. In 1996 that practice was in accordance with what is now set out in section 6 of the SIAA Code of Practice. Section 6 includes the following provisions; "6 Minimum Details Required on Label or Parcel This Code of Practice requires that a person shall not sell seeds contained in a parcel unless there is clearly written or printed thereon, or on a label securely attached thereto, a statement setting out the particulars referred to in sub-sections 6.1-6.12 below. 6.1 Species The COMMON or BOTANICAL name of each species present in the seed lot in a proportion by mass or by count of: . 1% or more in lawn or turf seed, or; . 5% or more in other seed. 6.2 Pure Seed The proportion of each species named, (by mass or by count – if expressed by count then the words 'by count' must be included in the statement); . as the actual percentage, determined by examination, or; . a minimum percentage. If stated as a minimum the word 'minimum', or 'min' must be included. … 6.5 Other Seeds The total proportion of seeds, other than those named as per sub-section 6.1 above, present in the lot of seeds by mass as an actual or maximum percentage, or by number per kilogram, or by number per unit mass. … 6.11 Analysis Certificate All labels attached to parcels of agricultural seeds to include the following: 'A seed testing analysis certificate is available on request' and this is to be printed and immediately visible on the label. 6.12 Summary To summarise, the following label format would be acceptable: LOT NO: ………….. CROP SPECIES: ………….. CULTIVAR: ………….. PURE SEED (MIN): ………….. GERMINATION (Min): ………….. HARD SEEDS (Max): ………….. OTHER SEEDS (Max): ………….. NET WEIGHT: ………….. CAUTION: TREATED WITH BENOMYL FUNGICIDE – DO NOT USE FOR FOOD, FEED OR OIL PACKER: Tassie Seeds, 1 Main Road, Hobart, TAS. A SEED TESTING ANALYSIS CERTIFICATE IS AVAILABLE ON REQUEST." 76 Mr Glasson said that, faced with lines of canola containing weed seeds in the bulk indicated by the seed analysis certificates, Pioneer would have regraded the canola seed "to remove the vast majority so as to ensure that the ultimate consumer of that seed received seed that was reasonably fit for the purpose of broad acre planting". Any weed seeds still present after regrading would have been identified on the label, if declared in their State of destination; otherwise their percentage would have been recorded on the label as "other seeds". He said that, if weed seeds remained present after regrading, Pioneer officers would make inquiries of the Department of Agriculture in the State of destination "as to whether those weeds were either present and/or undesirable in the district or State" where they were to be sown. 77 During the course of his cross-examination, Mr Glasson agreed that (except in the case of seed intended for lawn or turf use) cl 6.1 of the Code required identification only of those species of seed that amounted to not less than 5% of the whole. He also agreed that cl 6.2 was concerned with stipulating how the obligation imposed by cl 6.1 should be discharged. Where cl 6.1 did not apply, as in this case in relation to the three weeds, there remained an obligation under cl 6.5 to name the "total proportion of seeds" other than canola. Mr Glasson did not accept this obligation was discharged by a label that referred only to "minimum 99% purity"; those words did not indicate whether the remaining 1% consisted of seeds other than canola or inert material such as dirt or plant fragments. 78 Although this obligation is not stated in the code, Mr Glasson said it would have been good practice in 1996 to identify by name any seeds in the sample that were declared weed seeds in the State of destination; otherwise it would suffice to say "other seeds". In either case, if the quantity was less than 0.5% of the whole, it would be appropriate to use the word "trace"; if between 0.5% and 1%, the usual practice would be to state "1%". 79 Mr Glasson said, if he were importing seed into Australia, he would rely on AQIS to determine whether it complied with the regulations but he would also look at the seed analysis certificate "to satisfy ourselves that the weed seed … was something we were not concerned about commercially". He explained he meant by this "something that's going to be harmful to the industry". In such a situation, he said, "we would probably talk to our agents and if they showed concern we would talk to the department." 80 Mr Glasson was cross-examined at some length. However, in the end, the only challenge to his evidence seemed to be by counsel for Dovuro in relation to the last point, about talking with agents. This challenge must be considered in the light of evidence given by Mr Kudnig that seems to suggest he accepted this was the proper approach; but there is a question as to whether he followed it in this instance. The evidence came out unexpectedly. It was not contained in Mr Kudnig's affidavit and it had not been foreshadowed by any question asked by Mr Walmsley, who called Mr Kudnig to give evidence. During the course of cross-examination by Mr Rowe about the seed analysis certificates, Mr Kudnig said "Then I went and spoke to Michael Moerkerk who I believe was a leading weed scientist in Victoria and asked him about the weeds". Afterwards, Mr Kudnig said, he spoke to Mr Tapp. Mr Rowe asked Mr Kudnig about Mr Moerkerk: "And he is an expert in weeds in Victoria, is he?---Especially in Victoria but he does do courses and he's reasonably familiar with weeds around Australia. Did you ask him about these weeds in Western Australia?---I asked him what he thought of those weeds. I asked him where would they grow, and did he think they would be a problem in where we were going to market the seed. Well, where did you tell him you were going to market?---Into low rainfall, acid soils, drier regions around southern Australia. You made a note of this conversation, did you?---No, it was a verbal conversation. Did you make a note of the conversation with Mr Tapp?---No. Did you make a note of it in a diary or anywhere of this conversation?---No. It was fairly important, wasn't it, to ascertain the standing of these weeds?---Yes. And yet you made no record of this enquiry at all?---No. I then used some books out of his library to research the weeds a bit further, and then rang Mr Tapp. Did you think of ringing the Western Australian agricultural department?---No. Why not?---Because I thought that, once the seed came and was tested by AQIS, that they would make sure that it was suitable. That would have been the easiest way of ascertaining whether or not there was a problem, wouldn't it?---Well, I was relying a lot on Mr Moerkerk's information as what - - - All right?---But predominantly on AQIS. But you are in a situation, aren't you, where you see this weed announcement and the seed is on its way. Is that right?---I believe so, yes. Surely if you have got a concern you would want to ascertain then whether or not it was going to be a problem with WAQIS?---It is my understanding that AQIS is to look into weed seeds, diseases and insects, and it is their responsibility to make sure that that seed was appropriate. But surely, from your point of view, with it on its way you would want to know as soon as you can whether it is going to be a problem, or do you just hope it goes through?---No, that's why I checked with Michael Moerkerk." 81 In re-examination, Mr Walmsley asked Mr Kudnig some questions about his contact with Mr Moerkerk. Mr Kudnig said it was "March, April, somewhere in 1996", as soon as he received the seed analysis certificates from Cropmark. He revealed that, in about the middle of 1996, Mr Moerkerk had been retained by AgWest to advise it regarding the three weeds. Mr Kudnig said his conversation with Mr Moerkerk was at the latter's office in Horsham, Victoria. Mr Kudnig said: "He told me that he didn't believe that those weeds would grow in the area where the seed was going to be sold and that the weeds were from areas that were high rainfall, alkaline soils, wet, swampy regions and that the seed was being sold into low rainfall, predominantly acid soils, light sandy type soils and it didn't suit those weeds whatsoever." 82 Although Mr Kudnig stated he spoke to Mr Tapp about the seed after consulting Mr Moerkerk, Mr Tapp had made no reference in his evidence to Mr Moerkerk. Having regard to that fact, the failure of Mr Kudnig to mention Mr Moerkerk earlier in his evidence and the seeming unlikelihood that AgWest would have made the recommendations it did if it had been advised by a weed expert who held the views attributed to him by Mr Kudnig, I indicated to Mr Walmsley that, without corroboration, I would not be prepared to accept Mr Kudnig's evidence about his contact with Mr Moerkerk. 83 Following that intimation, the solicitors for Dovuro obtained a statement of evidence from Mr Moerkerk. On a later day, he was called to give evidence. Mr Moerkerk's evidence reveals that he is a Bachelor of Agricultural Science who has been employed since 1989 as a weed agronomist by the Victorian Department of National Resources and Environment. In his statement, Mr Moerkerk said: "4. I have known Justin Kudnig for some years. In 1996 he came to see me in my office in Horsham. I cannot now recall the date when he came to see me. There was a time in mid 1996 when I was contacted by members of the Western Australian Farmers Federation and asked to go to Western Australia to assist in dealing with problems arising from cleavers, redshank and field madder seeds which had been apparently brought into Western Australia with canola seeds. The conversation with Mr Kudnig occurred before that. To the best of my recollection the conversation occurred around the time when some Dovuro canola seed came into Victoria. I cannot recall the conversation except to this limited extent. He said words to this effect: 'We have a problem with these foreign weeds which are about to come into Victoria. What do you know about them? Do you know what the seeds are? What are the implications of the seeds?' 5. During the conversation he named the weeds as cleavers, redshank and field madder. I recall that when Mr Kudnig came to see me he looked at some of my books concerning weeds. 6. I do not recall in connection with the conversation and visit any reference to the seeds having come from New Zealand." 84 It will be noted this account does not include any response Mr Moerkerk might have made to Mr Kudnig's questions. It is consistent with this account that Mr Moerkerk offered no opinion about the weeds but simply allowed Mr Kudnig to have access to his books for the purpose of conducting his own research. 85 In cross-examination, Mr Moerkerk told Mr Rowe that he went to Western Australia on about 15 July 1996 at the request of members of the Western Australian Farmers Federation. Mr Rowe referred Mr Moerkerk to a news report in the "Countryman" newspaper of 25 July 1996, bearing a heading "Karoo canola weeds 'can be eradicated' ", in which views were attributed to Mr Moerkerk. Mr Rowe took Mr Moerkerk through part of the report. Mr Moerkerk confirmed its accuracy in respect of that part, which reads: "It will take three years of strict management to deal with the weeds introduced in New Zealand-grown Karoo canola but they could be eradicated, according to a visiting Victorian weed expert. Michael Moerkerk, a weed agronomist with Agriculture Victoria, delivered his assessment of the Karoo canola infestation during a trip to WA sponsored by the WA Farmers Federation, the Grain Pool and Agriculture WA. Mr Moerkerk said two of the weeds, field madder and redshank, could be controlled in this year's canola crop but cleavers could not be sprayed out using current registered chemicals. 'As a weed it (cleavers) is quite manageable,' Mr Moerkerk said. 'There are good herbicide options in cereals and lupins. Anything with bromoxynil will work in cereals but we are not yet sure about post-emergent atrazine.' Mr Moerkerk said redshank and field madder would probably not become established in WA because of the acid soils and low rainfall. They would also be controlled by the two litres of atrazine which was normally applied to triazine-tolerant canolas. But cleavers would be more difficult to control." This part of the news report was followed by the following paragraph: "Farmers should continually inspect their paddocks for cleavers, and any paddock which was sown to New Zealand Karoo should be treated as though cleavers were present, he said." In relation to that paragraph, Mr Moerkerk said: "That was not my view at the time, that was the view of the Western Australia Farmers Federation, but I did [sic: 'did think'] from my professional point of view, that would be the most appropriate manner to deal with these paddocks." Mr Moerkerk confirmed he thought this was the safe approach. 86 Mr Moerkerk said the views he expressed in Western Australia "would have been refined from the views I'd held in the month prior to that". He agreed it was sound agronomic practice for "farmers to manage paddocks as if the weed had been there, if they were unable to find out the seed lines they had". He said this was what AgWest was recommending. 87 In the light of Mr Moerkerk's evidence, I accept Mr Kudnig spoke to him about the three weeds at some stage. I am less confident that this conversation took place at about the time of the arrival of the Karoo canola seed in Australia. It seems to me more likely that Mr Kudnig spoke to Mr Moerkerk when he first learned of the problem in Western Australia. Making an inquiry of Mr Moerkerk seems to be inconsistent with Mr Kudnig's often repeated stance that he relied, and was entitled to rely, on the regulatory authorities. Moreover, if he had done that, it would be strange for him to have omitted to mention it to Mr Tapp; but neither Mr Kudnig or Mr Tapp claims he mentioned the inquiry. Moreover, it is difficult to reconcile the relaxed attitude attributed by Mr Kudnig to Mr Moerkerk at the meeting at Horsham with the views expressed by Mr Moerkerk in Western Australia. 88 Possibly any views of Mr Moerkerk about these weeds were less well formed at the time of his conversation with Mr Kudnig (whenever it was) than subsequently, when he was required to offer firm advice to Western Australian farmers. Even so, it is difficult to accept that he gave Mr Kudnig the sweeping reassurance that Mr Kudnig claims. 89 Even if Mr Moerkerk did indicate a view that the weeds would be unlikely to prosper in areas of low rainfall, with predominantly light, sandy acid soils, this was not enough to satisfy Dovuro's obligation towards the farmers. First, the evidence does not disclose any basis for Mr Kudnig to be able to be satisfied that the canola seed would be sown only in such areas. Second, even if the agronomically correct view was that the weeds would be unlikely to prosper in the places where the canola seed was to be actually sown, that does not mean there would be no disadvantage in using the seeds; farmers might have to undertake precautionary action, either of their own initiative or at the behest of a governmental authority. The case against Dovuro (i) Negligence 90 Dovuro accepts it was under a duty of care to those to whom it supplied the seed in relation to its nature and the quality; the question is whether it breached that duty. 91 During the course of his submissions on behalf of the applicants, Mr Rowe mentioned a number of authorities relating to the care that a supplier of a product is bound to exercise. I need not to refer to all of them. However, I mention authorities relating to three matters. 92 First, the general principles relating to standard of care. In Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty Ltd [1967] 1 AC 617 at 642, Lord Reid, speaking for the Judicial Committee of the Privy Council, emphasised at 642 the connection between the degree of a given risk and the effort to eliminate it. He said a reasonable man would only neglect a risk of small magnitude "if he had some valid reason for doing so, e.g. that it would involve considerable expense to eliminate the risk. He would weigh the risks against the difficulty of eliminating it". Referring to Bolton v Stone [1951] AC 850, Lord Reid said at 642-643: "What that decision did was to recognise and give effect to the qualification that it is justifiable not to take steps to eliminate a real risk if it is small and if the circumstances are such that a reasonable man, careful of the safety of his neighbour, would think it right to neglect it." In Burnie Port Authority v General Jones Pty Limited (1994) 179 CLR 520, Mason CJ, Deane J, Dawson J, Toohey J and Gaudron J said at 554: "Where a duty of care arises under the ordinary law of negligence, the standard of care exacted is that which is reasonable in the circumstances. It has been emphasized in many cases that the degree of care under that standard necessarily varies with the risk involved and that the risk involved includes both the magnitude of the risk of an accident happening and the seriousness of the potential damage if an accident should occur. Even where a dangerous substance or a dangerous activity of a kind which might attract the rule in Rylands v. Fletcher is involved, the standard of care remains 'that which is reasonable in the circumstances, that which a reasonably prudent man would exercise in the circumstances'. In the case of such substances or activities, however, a reasonably prudent person would exercise a higher degree of care. Indeed, depending upon the magnitude of the danger, the standard of 'reasonable care' may involve 'a degree of diligence so stringent as to amount practically to a guarantee of safety." Mr Rowe makes the point that it required little effort to eliminate the risk in the present case. 93 Secondly, it is now established that, although accepted professional practice is material to the question whether particular conduct breaches a relevant duty of care, this is a matter for determination by the court itself: see Rogers v Whitaker (1992) 175 CLR 479. In that case the High Court rejected the English approach, based on Bolam v Friern Hospital Management Committee [1957] 1 WLR 582, that a medical practitioner is not negligent if he or she acts in accordance with accepted medical practice. At 487 Mason CJ, Brennan J, Dawson J, Toohey J and McHugh J said: "In Australia, it has been accepted that the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill. But, that standard is not determined solely or even primarily by reference to the practice followed or supported by a responsible body of opinion in the relevant profession or trade. Even in the sphere of diagnosis and treatment, the heartland of the skilled medical practitioner, the Bolam principle has not always been applied. Further, and more importantly, particularly in the field of non-disclosure of risk and the provision of advice and information, the Bolam principle has been discarded and, instead, the courts have adopted the principle that, while evidence of acceptable medical practice is a useful guide for the courts, it is for the courts to adjudicate on what is the appropriate standard of care after giving weight to 'the paramount consideration that a person is entitled to make his own decisions about his life." 94 Although Rogers v Whitaker, like Bolam, was a medical negligence case, there is no reason to confine their Honours' observations to evidence about accepted medical practice, or even professional practice as distinct from trade. The principle applies wherever a defendant asserts, in answer to a negligence claim, that he or she followed the usual practice. 95 Thirdly, the question whether a person charged with negligence contravened a relevant regulation is also relevant to determination of the issue of breach of duty of care; but, once again, it is not determinative of the issue: see Franklin v The Gramophone Company Limited [1948] 1 KB 542 and Sibley v Kais (1967) 118 CLR 424. The same situation applies to a decision of a regulatory authority: see Thompson v Johnson and Johnson Pty Ltd [1991] 2 VR 449 at 494. The Appeal Division of the Supreme Court of Victoria there said: "Whether or not the NHMRC recommended that a warning be given was not determinative of the question of reasonable care, for to accept that proposition would permit the respondents to abrogate the duty of reasonable care owed by them. It is not the response of such a body which determines whether a person in the position of the respondents is or is not negligent. That is for the courts to decide. However, it is a relevant fact to be taken into account when determining whether reasonable care has been exercised." 96 Mr Rowe uses these authorities to argue it is not conclusive against the applicants' claim that the standards generally adopted by seed merchants in 1996, as now set out in the SIAA Code of Practice, did not require the identification of seeds constituting less than 5% of the bulk in the relevant bag, where these seeds were neither prohibited nor declared under the regulations of the importing State; neither is it conclusive against the applicants' claim that the seeds were in fact neither prohibited nor declared under those regulations. Mr Rowe argues the relevant principle is that expressed in Burnie Port Authority; where a "dangerous substance" is involved, the relevant standard of care is that which is reasonable in the circumstances, including the cost of eliminating the risk. He argues that the evidence establishes the following: "16.1 Both respondents are manufacturers of the seed. 16.2 Both respondents had a duty to the consumers of the seed to exercise reasonable care not to expose the consumers to a risk of injury of which they knew or ought to have known. 16.3 The risk of injury was to introduce a weed seed to the consumers' farm that had the potential to cause him loss in eradicating it or in restricting his income potential in the use of his farm. 16.4 Both respondents understood the seed was to be marketed in Australia over a vast area with different soil types, climatic conditions, established weeds, State Governments, legislation and variations within state boundaries. Such diverse distribution made it incumbent upon the respondents to consider the potential risk of the known weed seeds in their product. 16.5 Both Respondents failed to exercise adequate quality control to detect and remove undesirable weed seeds. The inadequacy of the quality control is evidenced by the diversity of weed seeds that had been declared in Australia and Western Australia, the number of weed seeds in the working samples, lack of adequate inspections of crops by either Respondent, preparedness of both Respondents to rely on inspections of crop by a third party being the officers of MAF and preparedness of both respondents to rely on the seed analysis certificates getting passed by the authorities rather than exercising their own control and judgment as to the quality of the product. 16.6 The First Respondent knew the seed was to be marketed in W.A. Rath knew since early 1996 of Carmody's work on cleavers. The First Respondent had contacts in AGWA and could easily have made enquiry. If the enquiry had been made there is no doubt the seed would have been rejected at least due to the presence of cleavers, but probably also because of the presence of field madder and redshank and/or the very poor quality of the seed with the high number of weed seeds. The first respondent knew of the defects and poor quality. Moerkerk is likely to have given Kudnig the same advice he gave to WAFF and with its past experience with 'pattersons curse' weed seed in Canola it should have known of the likelihood of the seed being rejected. The First Respondent demonstrates very poor communication within itself, a lack of acceptance of its duty of care and your honour will find that Messrs. Tapp, Kudnig and Rath are witnesses of doubtful veracity. We submit your honour should find the First Respondent should have made an enquiry of AGWA but intentionally refrained from doing so. 16.7 The First Respondent has admitted 'breach of duty' in writing through Rath and White. The admissions were not rejected by Tapp, the General Manager of the First Respondent. They were made by Rath in an attempt to be honest and open with the growers. We submit these admissions can and should be given full weight by the Court. 16.8 The respondents could have discharged their duty of care by providing a warning or, perhaps, by labelling the bags thereby advising the consumers of the presence of the weed seeds. 16.9 The product was distributed in W.A. through only three distributors. The warning could have been published by way of documents accompanying the goods or by tags attached to the bags at bagging (Cropmark seed analysis certificates were available at that time) or delayed the bagging until MAF certificates were available, or subsequently before delivery. 16.10 It was foreseeable the State Government would take action to contain, evaluate and deal with the potential threat to the Canola seed and oil market. The action taken by the Government and the response by the Applicant was what might reasonably be expected. 16.11 The applicant has suffered damage including incurring the cost of additional herbicide, loss of grazing, loss of contracting opportunity, interruption to farm plan and associated costs (fuel etc.)" It follows, according to Mr Rowe, that the Court should find against both respondents in relation to the negligence claim. 97 As indicated, Dovuro concedes the existence of a duty of care to the applicants and group members; but it denies breach of duty. Mr Walmsley contends that "the reasonable seed merchant, not an insurer, in response to the risk that buyers and sowers of its seeds might suffer injury if it failed to take reasonable care, would not have done more than Dovuro did". He refers to the evidence of Mr Rath, Mr Tapp and Mr Kudnig that each of them relied on AQIS and/or AgWest to ensure the canola was safe to use. There is no need to detail that evidence. Each of these witnesses made clear he did rely on these agencies. The question is whether to do so was a sufficient discharge of Dovuro's duty of care. 98 In considering that question, it is necessary to bear in mind the extent of Dovuro's knowledge of relevant matters. By "Dovuro's knowledge" I mean the knowledge of Mr Tapp, Mr Kudnig and Mr Rath. That knowledge may be summarised as follows: (i) The canola seed was bulked up in New Zealand. This was the first occasion on which Dovuro had canola bulked up in New Zealand. So Dovuro had no previous experience concerning the possibility of contamination of canola seed by New Zealand weed seeds. (ii) There are significant climatic differences between New Zealand and Australia; especially between New Zealand and many parts of Australia used for broad acre cropping. It was those very climatic differences that had caused Dovuro to choose New Zealand for a summer bulk-up crop. It followed there was a strong chance that plants not commonly found in Australian broad acre cropping areas (or at least some of them) would be present in and around the paddocks used to grow the bulk up canola crop, with the possibility they would contaminate the canola seed. (iii) Mr Kudnig discovered weeds during this January inspection of the growing crops, including redshank. He also learned of the presence of cleavers in the immediate locality. Through Mr Kudnig, Dovuro had knowledge of a potential problem of weed contamination. (iv) There was always a hope (perhaps even an expectation) that any weed seeds harvested with the canola crop would be removed during the cleaning process undertaken by Seedlands. However, the analysis certificates issued to Dovuro, first by Cropmark and then by MAF, put an end to that hope. The certificates demonstrated the existence of actual, as distinct from merely potential, contamination. (v) The importation of the canola seed into Australia had to be cleared by AQIS; and importation into Western Australia perhaps by WAQIS as well. 99 It is not clear whether Mr Kudnig or Mr Rath realised that decisions on importations by AQIS and WAQIS were made by reference only to the question whether identified seeds appeared on the relevant list of prohibited or declared plants. Mr Tapp certainly did so. In order to confirm my understanding of the position, I asked Mr Tapp whether he understood at the time that, as government organisations, AQIS and WAQIS: "… have to deal in the way of fixed rules and their fixed rule in the case of AQIS was, we will refuse to admit it into Australia if it doesn't already exist in Australia and the West Australian authorities had a similar rule except they say, if it doesn't already exist in Western Australia." He responded: "It was what we went by at that time." Mr Tapp's evidence went on: "…the fact that a weed exists somewhere in Australia doesn't make it all right to sell it to a particular farmer in a particular part of Australia, does it?---No, it doesn't make it – weeds are the biggest burden to the canola industry and it is difficult to produce canola without some weeds in it. I understand that but I'm just discussing with you the proposition, well, we can rely on the government authorities. You see, the government authorities have painted with a broad brush, they look at least at the whole of the State and you've only got to look at the map of Western Australia to say, that's a lot of land and any of us who know anything about Western Australia, know that it's also extraordinarily diverse in every way for agricultural purposes. So, really to say it's already in Western Australia doesn't say anything about whether it is a suitable weed to be introduced into a particular part of Western Australia, does it?---The answer is, no. The only way of determining that, perhaps it's two-fold; one is to make a specific inquiry of some expert say, in the West Australian Department of Agriculture and say, we've got this weed seed, is it going to do any harm in the wheat belt, make a phone call and ask that question, that would be one way. Would that be right?---That's one way. Another way perhaps is to let the farmer make the judgment by specifically stating what the seed is?---The farmer has always upon request been able to examine - - - No but sometimes you've got to tell more than just on request, you see. You know what it is. You know that it is a seed – well, you don't know that it is going to be all right for his area. You didn't feel there was some obligation to do one of those two things?---Weeds are all the time, and the list is just that long, and at that stage we were completely quality – our system was a certified system and it was quality controlled and inspected by particular government officers that we relied on. I understand what you did. Looking back at it now, do you think you should have done one of those two things?---I think looking back at it now I probably wouldn't have even grown seed in New Zealand. Well, if you had grown seed in New Zealand, and I understand what the pressures that made you do that, would you then have done one of those two things?---I think I would have done a lot of things a little bit differently. Well, specifically one of those two?---Yes." 100 In 1993 Mr Tapp had seen a letter from Mr Carmody of AgWest complaining about the contamination of canola seed by paterson's curse. In that letter, Mr Carmody spoke of the contamination being "an unfortunate incident that seemed to (be) becoming more frequent when canola seed was imported from one district to another". He went on to say: "Growers always risk importing a weed seed they have not experienced in their district before". After some prevarication, Mr Tapp agreed that, as a seed merchant, he recognised this danger. He also agreed this was a risk he should guard against. In the case of the Karoo canola, he did not do so; even though, as he conceded, it would have been easy to check specifically with AgWest or notify purchasers of the identity of the weed seeds. 101 Mr Tapp's excuse for Dovuro's failure to take either of these steps was that none of the three weeds was prohibited or declared in Western Australia at the time of the importation. However, he agreed with Mr Rowe that the point Mr Carmody made in 1993, in connection with the paterson's curse episode, was that, "irrespective of it (that is, paterson's curse) being prohibited or declared the industry has to be careful to avoid such contamination". The evidence went on: "And do you see that as part of your duty, to be careful, to avoid such contamination?---Yes. And I go back to my original question, why didn't you make inquiries about the unusual seed in these particular lines of seed?---Well, they weren't declared. They passed all seeds acts, all the acts of seed in Australia on the official forms. That means, does it, that you relied on the regulators, not on your own experience?---We relied on the regulators." On Mr Tapp's own admission, it was not enough for Dovuro to rely on the regulators. 102 In submissions on behalf of Dovuro, Mr Walmsley said it is rarely (if ever) possible totally to exclude weed seeds from a consignment of cropseed. That proposition is supported by the evidence. He also emphasised the fact that Dovuro was working under time constraints; there was significant demand for Karoo canola seed from farmers anxious to sow the seed in May-June 1996. I accept this was so. But it would not have taken any significant time for an officer of Dovuro to contact the Weed Seeds Unit of AgWest (and comparable sections of other State Departments of Agriculture) and obtain advice on the acceptability of the foreign seeds identified in the Cropmark analysis certificates. This step could have been undertaken during the two or three weeks that elapsed between Dovuro's receipt of the Cropmark certificates and its receipt of the MAF certificates, before which it could not in any event commence distribution of the seed. Enquiries may have revealed that the foreign seeds were not considered a problem in some places, in which case marketing might have been directed to those places. At the least, enquiries would have alerted Dovuro to the necessity to convey an explicit warning to purchasers located in a district that might attract the concern of the relevant Department of Agriculture. 103 Mr Walmsley further submitted there was no causal connection between any breach of duty by Dovuro and the loss claimed by the applicants. The foundation of this submission is that the applicants have not proved that the Karoo seed delivered to them contained any of the three weed seeds. The statement is true; the applicants can only show that they received seed that emanated from a line that was shown to contain cleavers. Bearing in mind the expert evidence about mixing of foreign seeds through the line during processing and the fact that the applicants took one tonne of seed, almost 10% of the line, it is probable the seed delivered to them did contain cleavers. However, it is unnecessary for the applicants to establish that probability. Their case does not depend on proof that the seed delivered to them was in fact contaminated, but merely on proof that it was reasonably suspected of being contaminated. AgWest did not limit its advice about precautionary measures to those farmers who were found to have received contaminated seed; it gave the advice to all farmers who had received Karoo canola seed. In the case of any farmers who received seed from a line that, on analysis, showed no contamination, there may be a question about the reasonableness of the farmers claiming from Dovuro the cost of following that advice; but there can be no such question in relation to those who received seed from a line known to be contaminated. Plainly, a precautionary approach was warranted. Dovuro's own expert witness, Mr Falconer, agreed with this. 104 In para 96 above I set out the submissions of Mr Rowe in respect of his clients' negligence claims. Confining myself for the moment to the case against Dovuro, I accept what is contained in paras 16.1 to 16.5 inclusive. It is important, in particular, to emphasise Dovuro's knowledge of the diversity of the areas in which the canola seed would be sown. The extent of the problem likely to be created by the presence of a particular foreign seed in a quantity of cropseed depends on the place in, and circumstances under, which the crop is sown. It is not enough to rely on broadbrush government controls. 105 I need not deal with all the matters mentioned in para 16.6 of the submission. I am not certain Mr Rath was aware, prior to the distribution of the canola seed, that Mr Carmody was concerned about cleavers (Galium aparine). He was aware that Mr Carmody was concerned about bedstraw (Galium tricornutum). This appears from a comment volunteered by Mr Rath in the course of his cross-examination. The whole passage indicates Mr Rath's line of thinking, which mirrors that of Mr Tapp and Mr Kudnig: "Are you aware that the presence of weed seed in your product may well be detrimental to its value as a commodity?---Only if those weed seeds are declared or prohibited weed seeds, not any other weed seeds. … And you had no interest at all in relation to any other weed seed that may be in the sample?---No. Did you understand that the list of prohibited or declared weeds might not include every weed that was known in Western Australia?---No. You did not understand that---No. As far as I was concerned, the weed science branch in Western Australia drew up the list of prohibited and declared weeds and they were the ones who knew which weed seeds were a problem, and which weren't. In your experience and training, did you recognise that an exotic weed, an exotic weed to Western Australia, might be a problem if it were in your product?---Not necessarily, no. Well, I said 'might'. Did you just close your eyes to that possibility?---No. So you were alert and aware that a seed may be a risk, even though it was not on the list of prohibited or declared weed seeds?---That would be reasonable to say that. Yes. But so far as you're concerned, you were more interested in the commercial reality that if they were not on the list, then the seed could be sold in Western Australia?---That's correct. Did you ever turn your mind to the nature of the weed known as cleavers or Galium aparine in other parts of the world?---Not really, no. Paul Carmody had raised it some time earlier in 1996 and said the department had been considering it as a potential problem weed, although with a related species called bedstraw, but the department hadn't taken any action." But around May 1996 you were told by Justin Kudnig, of the presence of the weeds redshank, cleavers, field madder, dock and fat hen?---Yeah. In various levels in various lines, right?---Yes. Did you make any inquiries as to whether any of those weeds were known in Western Australia?---No. …you knew that neither redshank, cleavers or field madder were weeds of agriculture in Western Australia?---Yes. That's correct. Would you just tell me again what you understand and what you mean by weeds of agriculture?---Well, these are weeds that are typical to cropping systems and if you grew a wheat crop you'd have problems with say wild oats or rye grass. If you were growing canola, problem weeds would be other weeds that would be a similar family, like wild radish and wild turnip and so on, so they would be weeds that growers would commonly have to spray for to control. … Are you saying that to your knowledge, the weeds of redshank, cleavers and field madder were commonly in the crops of canola in Western Australia in 1996?---No. They wouldn't be commonly in the crops because they're not weeds of agriculture. Then if they are not weeds of agriculture, did that not ring a bell in your brain that there was a real risk in introducing these weeds if they were not common?---No. You just closed your mind to that?---Yes, because they're not prohibited or declared weeds. I know you're saying prohibited or declared weeds but I want you to deal with this phrase that you've used here, weeds of agriculture?---Okay. Do I understand by that you're saying that you knew that those weeds were not in the agriculture in Western Australia?---As far as I was aware. I wouldn't know because that would be the department's job to know if they were problem weeds. What I am trying to say is I'm not a weed scientist. I don't make decisions on what are or aren't problem weeds. That's up to the Ag Department. I understand that but you are the marketer of this canola that has in it weeds that you know are not weeds in the agriculture of Western Australia. Is that right?---Well, I didn't know whether they were or weren't. Well, why didn't you make some inquiries , surely?---Why would I? What would be the point. Is there any interest in your company in protecting the canola industry from the effects of weeds?---Oh yeah. We wouldn't sell seeds that had declared or prohibited weeds in it. But you would sell a seed, at that stage, without any inquiry if it had an exotic weed that was not known in the Western Australian agriculture, is that right?---Well, no. I don't agree with that. I mean, if we were aware that the weeds were a problem, we wouldn't have sold the seed but we weren't aware that anyone thought they were a problem. And you made no inquiry?---No. But you know it's an exotic weed. How do you know it's going to be a problem or not?---I didn't know it was an exotic weed. But you knew they weren't in Western Australia?---I knew they weren't weeds of agriculture in Western Australia. In other words, already a problem in the cropping area?---Yes. That would be my only reference point. I wouldn't have any other reference point." [Emphasis added] 106 It seems to me the approach evinced in this evidence was inadequate, especially in light of the fact that Mr Rath knew of Mr Carmody's recently expressed concern about another member of the Galium family which, also, was not prohibited or declared or an existing "weed of agriculture" in Western Australia. It should have been readily evident, especially to a person trained in agricultural science, that it would be impossible for any regulatory authority to anticipate by declaration every exotic weed that might enter Western Australia and turn out to be a threat to Western Australian agriculture, if introduced to the wheatbelt. It should have been equally apparent that the concept of "weed of agriculture" is necessarily limited to plants that have already proved a problem in the agricultural areas of the State; it could provide no guidance about plants, that might prove to be a problem if introduced into those areas. And the possibility of that occurring would have been obvious to anybody with even a superficial knowledge of Australian agriculture and agricultural history. Many of our worst agricultural and environmental scourges are plants and animals that are useful, ornamental or, at least, innocuous in their native habitat and had no reputation as pests before arriving in Australia. 107 Contrary to Mr Rowe's submission, I do not think the evidence justifies a finding that Dovuro intentionally refrained from making an inquiry of AgWest; I think it failed to do so because of an attitude that came from Mr Tapp, at the top of the company, that Dovuro was bound to do no more than comply with the relevant quarantine regulations. It was an attitude that sloughed off responsibility for quality control onto regulatory authorities. It plainly was insufficient to discharge Dovuro's duty of care to users of the seed. 108 I accept the contentions contained in para 16.7 to 16.11 of Mr Rowe's written submission. 109 It follows that I find Dovuro breached its duty of care to the applicants and group members. There was a causal connection between that breach and the suffering of some loss by the applicants. The amount of that loss has still to be quantified but there must be a finding in their favour on the preliminary issue of liability in negligence. (ii) The defence of contributory negligence 110 In its Second Further Amended Defence, Dovuro pleaded that any damage proved to have been suffered by the applicants or group members was caused, or contributed to, by their own negligence. The alleged contributory negligence was particularised in this way: "a) Failing to make sufficient enquiries about the information on seed analysis certificates, before planting Karoo canola. b) Failing to make sufficient enquiries about the manner and extent of remedial work to avoid loss. c) Failing to follow the procedures for control of cleavers, redshank and field madder in agricultural crops by means of herbicide use recommended by Agriculture Western Australia." 111 There is so far no evidence to support either para (b) or para (c), although conceivably that may emerge in relation to individual claimants at the damages assessment stage. It is possible immediately to deal with para (a) because that depends on the information contained on the labels affixed to the bags in which the canola seed was sold. The proposition is that the farmers were negligent in failing to seek from Dovuro a copy of the seed analysis certificates relating to the bags delivered to them. I accept they might have done so and, in all probability, would then have received this information. However, I do not accept that the farmers' failure to take this step was an act of contributory negligence. I think the farmers were entitled to assume that any impurities in the bags were not such as would be likely to cause a problem in a canola crop; on the basis that, if they were, they would have been warned. After all, the purpose of purchase was obvious, as was the place where the seed was likely to be sown. 112 Insofar as it is a general allegation against all purchasers of the canola seed, I reject the defence of contributory negligence. (iii) Section 52 113 Section 52 of the Trade Practices Act provides that a "corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". In the present case, Dovuro concedes, all its material acts were "in trade or commerce"; but it denies misleading or deceptive conduct. 114 Mr Rowe's s52 argument is based on Dovuro's failure to inform purchasers of the presence of the seeds of the three weeds. In his written submissions, he put the matter in this way: "16.13 Both Respondents knew of the potential of the presence of the weed seed in the canola to cause damage to the applicant. 16.14 Both respondents should have known that the weed seed would in fact cause the applicant damage. 16.15 In the circumstance of the respondents' knowledge they had an obligation to inform the Applicant of the danger. 16.16 The respondents remained silent and did not inform the Applicant." 115 In developing his argument, Mr Rowe drew attention to decisions of this Court to the effect that the concept of misleading conduct is not limited to a positive misrepresentation; an omission to communicate information may amount to misleading conduct: see Rhone-Poulenc Agrochimie SA v Uim Chemical Services Pty Ltd (1986) 12 FCR 477; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83; Demogogue Pty Ltd v Ramensky (1992) 39 FCR 31. The basis of those decisions, as Lockhart J said in Henjo at 95, is that "silence may be relied on in order to show a breach of s52 when the circumstances give rise to an obligation to disclose relevant facts". In Rhone-Poulenc at 489-490, Bowen CJ gave examples of such circumstances: an omission to mention a qualification, in the absence of which an absolute statement is rendered misleading; and an omission to mention a change which has occurred after an earlier, correct, statement, where the result of the change is to render the statement incorrect and thereafter misleading. However, these are mere examples. It is important to remember the observation of Black CJ in Demagogue at 32: "Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of 'mere silence' or of a duty of disclosure can divert attention from that primary question. Although 'mere silence' is a convenient way of describing some fact situations, there is in truth no such thing as 'mere silence' because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed." 116 These decisions were considered by Hill J in Winterton Constructions Pty Ltd v Hambros Australia Limited (1992) 39 FCR 97, a case involving a complaint by a builder that a merchant bank had misled it by failing to disclose the worsening financial position of a mutual client, a developer. Hill J commented at 114 that the "duty to advise" cases depend on the same principle as that underlying Bowen CJ's second example. Hill J went on: "Obviously, it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive or likely to mislead or deceive. However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. Thus, where a duty to speak is imposed, silence may constitute misleading and deceptive conduct. Whether such a duty exists will clearly depend upon all the circumstances of the case. However, contrary to the applicant's submissions, I do not think that a duty will arise in every case where the common law would impose a duty of care, namely, where there is a sufficient relationship of proximity. No doubt a duty of care might exist between a banker and a third person, to whom disclosure is made of the affairs of the banker's customer. But it does not follow from this that the bank would owe a duty to disclose to third persons the business of its customers." I agree with these observations. Although a common law duty of care and a duty to speak will often co-exist, the circumstances in which the latter duty arises are likely to be somewhat narrower. A duty of care arises out of a relationship between persons; it does not ordinarily depend on what has already passed between them. In contrast, a duty to speak ordinarily arises out of something (usually speech) that has already happened or is now happening. 117 In the present case, I do not think Dovuro was under a duty to speak, in a s52 sense; or, more correctly, that it was guilty of misleading conduct in failing to identify the particular weed seeds contaminating the canola seeds. The labels claimed the contents of each bag delivered to the applicants and the group members were 99% pure; that is, at least 99% of the contents constituted Karoo canola seed. It is not suggested this claim was incorrect. The complaint is that Dovuro did not identify the nature of the remaining 1%; in particular, it did not reveal that the remaining 1% contained seeds of plants that would be regarded as problematic in the Western Australian wheatbelt. However, nothing had passed between Dovuro and its purchasers that bore on that subject, and it could hardly be said that the information being given by Dovuro on the label was a half-truth. Dovuro's fault was to fail to obtain authoritative information about the acceptability of particular foreign seeds in the wheatbelt, or alternatively to put purchasers on notice of the identity of those seeds and so enable them to make their own inquiries or to assess the risk of failing to do so. There was a failure to take care not to cause damage to purchasers but not, I think, conduct that might properly be called misleading or deceptive. 118 I reject the s52 claim made against Dovuro. The case against Cropmark (i) Negligence 119 As will be apparent from para 96 above, the case made by the applicants against Cropmark is substantially identical to that made by them against Dovuro. However, there is a difference between the positions of the respondents. Cropmark does not concede it had a duty of care to the persons who purchased the seed for sowing, at least in respect of defects ascertainable by intermediate inspection. This submission is based upon the statement by Lord Atkin in Donoghue v Stevenson [1932] AC 562 at 599 about the effect of the view of that case that prevailed: "My Lords, if your Lordships accept the view that this pleading discloses a relevant cause of action you will be affirming the proposition that by Scots and English law alike a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer's life or property, owes a duty to the consumer to take that reasonable care." [Emphasis added] Mr Donohoe draws attention to the emphasised words. He contends the common law liability of a manufacturer to an end-user of the manufacturer's product continues to depend upon the absence of a reasonable possibility for intermediate examination. 120 I think this contention overstates the position. In The Law of Torts 9th ed. 1998 at 542 Professor John Fleming summarised post-1932 developments in this way: "Progressive interpretation, however, has dispelled the view that a mere opportunity for inspecting the product after the defendant has parted with it is sufficient to excuse him. Indeed, with the decay of older causal theories of 'last opportunity' and 'last wrongdoer', a defendant cannot any longer even claim exemption merely because an intermediary was under a duty of inspection and was negligent in either failing to carry it out or in doing it improperly. Rather, the dual fault in such cases gives rise to concurrent liability, enabling the victim to have recourse against both. If 'possibility' of intermediate examination will not excuse, would 'probability'? The answer is – only if the defendant was justified in regarding the expected test as sufficient to defuse the danger prior to use and thus provide a safeguard to persons who might otherwise be harmed. A vague warning, for example, that the repair carried out on a car was only 'temporary', might not be enough to alert an ordinary customer. Nor would the mere fact of a governmental certification. On the other hand, a hair dye manufacturer may well be entitled to rely on professional hairdressers heeding instructions specially addressed to them before applying the product to customers. All the more is it a defence that some person, duty bound to deal with such a situation, acquired actual knowledge of the defect; as when a foreman, after being himself hurt by a defective tool, failed to either withdraw it from circulation or report the incident." I have omitted Professor Fleming's citations. They support the text. The cited authority concerning government certification is a Canadian case, Willis v FMC Machinery & Chemicals Ltd (1976) 68 DLR (3d) 127. The case involved a claim by a turnip grower for damage to his crop caused by the interaction of an insecticide manufactured by one defendant with a herbicide manufactured by another defendant and distributed by the first defendant. The herbicide had been registered for use by a Canadian government agency, but the trial judge held this did not carry with it even a presumption of no negligence by the manufacturer; the federal authorities might themselves have been negligent in registering the product without sufficient trials. 121 One of the hairdresser cases, Holmes v Ashford [1950] 2 All ER 76, is of particular interest. The plaintiff contracted dermatitis as a result of being treated with a hair dye by a hairdresser. The manufacturer was aware the dye might cause dermatitis. It attached to the hair dye bottle a label containing a warning and recommending a test before use. The hairdresser read and understood the label but failed to test the plaintiff before using the dye. The English Court of Appeal held the manufacturer was not liable. Tucker LJ, with whom the other members of the Court agreed, said at 77: "Every person who puts on the market a dangerous article … must take reasonable steps in all the circumstances. This is not an article the nature of which can be ascertained by intermediate examination, and, therefore, it is an article which requires some warning. The question in this case is: Was the warning attached to this bottle a sufficient and adequate warning to be given in cases where the material is supplied to hairdressers for use on their customers? We must presume that the material is supplied to reasonable people, and the first defendant has said that he read the warning, appreciated what it meant, and ignored it. I find it, therefore, impossible to hold that the warning which was, in fact, given in the present case was insufficient. Cases may possibly arise where criticism may be made that the warning is not in sufficiently large print, or complaints may be made where the substance is used by a woman on her own hair, and by holding that the warning was sufficient in the present case I must not be taken to imply that a similar warning would be sufficient in those circumstances. The question is whether it was sufficient in the circumstances of this particular case, and, it having been established that the warning came to the knowledge of the man who was going to use it, namely, the first defendant, I think that it is impossible to say that the second defendants were in breach of their duty to take reasonable steps to give sufficient warning of the nature of the substance which they were putting on the market by delivering it to hairdressers to use on their customers." At 80 his Lordship said: "In the present case the substance was not entrusted to a competent person, but it was supplied to a hairdresser with the knowledge of the manufacturers, and it must have been in the contemplation of the manufacturers supplying these goods to hairdressers that hairdressers may be expected to interpose their judgment and reason whether they are going to use a hair dye or not. In my view, if they give a warning which, if read by a hairdresser, is sufficient to intimate to him the potential dangers of the substance with which he is going to deal, that is all that can be expected of them. I think it would be unreasonable and impossible to expect that they should give warning in such form that it must come to the knowledge of the particular customer who is going to be treated." 122 The authority cited by Professor Fleming for the final proposition in the passage quoted in para 120 is Taylor v Rover Company Ltd [1966] 1 WLR 1 491. In that case, the causal connection between the negligent manufacture of a chisel and the injury suffered by the plaintiff (an automotive process worker) was held to have been broken by the failure of the leading hand of the plaintiff's work team to withdraw the chisel from service when he became aware of its dangerous condition through a previous accident. 123 It will be apparent from the above discussion that there is no doubt that a manufacturer owes a duty of care to an end-user; the critical questions are, first, what must be done to fulfil that duty, and, second, whether any intermediate negligence has broken the chain of causation between negligence by the manufacturer and damage sustained by the end-user. 124 Of the cases cited by Professor Fleming, it seems to me the most useful for present purposes is Holmes v Ashford. In that case, like this, the product was supplied by the manufacturer to an intermediary, rather than the end-user, with information (the warning label in Holmes v Ashford, the certificates of analysis in the present case) designed to enable the intermediary to assess its suitability for use by particular end-users In each case, the intermediary was involved in the relevant trade for reward. In each case, the intermediary read and understood the information supplied by the manufacturer but failed to act on it. Just as the Court of Appeal held it would be unreasonable to require the hair dye manufacturer to convey a warning to the hairdresser's customer as well as the hairdresser, I think it would be unreasonable in this case to hold Cropmark was required to convey a warning to farmers who purchased the canola seed for sowing. 125 The major reason for the Court of Appeal's decision in Holmes v Ashford was the manufacturer's reasonable expectation that hairdressers would use their professional judgment about use of the hair dye. That this is the critical point is supported by the reasoning of Windeyer J (with which Dixon CJ and Owen J agreed) in Voli v Inglewood Shire Council (1963) 110 CLR 74 at 86. That case arose out of the collapse of a stage in a Shire Hall. The cause of the collapse was the insufficient size of the joists supporting the stage. This insufficiency was the result of underdesign of the floor joists by an architect in private practice. In designing the building, the architect was aware his plans and specifications needed to be approved by the Queensland Public Works Department, for the purpose of securing a Government subsidy for the building, and also the Council's building officers. But neither the departmental nor council officers noticed the inadequate floor joists. After referring to the statement of Lord Atkin cited by Mr Donohoe in the present case, Windeyer J said: "Analysis and discussion of this statement in later cases have established that what is significant is not whether an intermediate examination of the article was possible. It is whether it was contemplated that, in the ordinary course, the article would be examined, or tested, or in some way treated before it was taken into consumption or use." In the present case, there is no doubt that consideration of the content of the parcel of canola seed by Dovuro was contemplated by the supplier (Cropmark). That was the reason for Cropmark forwarding to Dovuro the certificates of its own analysis of the seed and those obtained by it from MAF. 126 There is a further reason for distinguishing the position of Cropmark, in relation to the applicants and group members, from that of Dovuro. As Dr Piper pointed out in evidence, the presence of any foreign seed in a quantity of cropseed is undesirable. However, as is common ground in this proceeding, it is virtually impossible to obtain a substantial quantity of cropseed that is totally free of foreign seed. Whether the presence of particular foreign seed amounts to a substantial defect in the quality of the cropseed depends not only upon the quantity of the foreign seed but also on the place where the crop is sown. Relevant factors include climate, the season and circumstances of sowing the crop, and the presence of otherwise of the foreign seed in the place where the crop is to be sown. These were matters in relation to which Cropmark had little information. Cropmark despatched the Karoo canola seed to Australia. Its officers knew canola is usually a winter crop in Australia. They knew the seed was urgently required. So they must be taken to have realised it was likely to be sown in Australia within a couple of months of dispatch from New Zealand. But that is all they knew. They had no information about the incidence of the three weeds in Australia. They did not know whether Dovuro would sell the seed to farmers in parts of Australia where cleavers, redshank and field madder were already well known and controlled, or alternatively known not to create a problem, in either of which cases the foreign seeds would be unlikely to cause damage to purchasers, or to farmers in parts of Australia where the weeds were unknown and might excite concern. It was reasonable for Cropmark to assume that Dovuro, an Australian company with an Australia-wide information network, would give consideration to matters such as these and make sound decisions as to the ultimate destination of the seed. 127 There may be room for criticising Cropmark, or its seed cleaner, Seedlands, in relation to the number of foreign seeds contained in the canola seed shipped to Australia. However, it was not the number of weeds that caused the problem, but rather their particular identity; and this problem arose only because of the place in which they were to be sown. Having regard to the principles discussed above, it would not be reasonable to hold Cropmark liable in negligence to the applicants and group members. (ii) Section 52 128 There may be a question whether Cropmark is bound by the Trade Practices Act in relation to this transaction. That matter was not argued. Mr Donohoe was content to argue his client did not contravene s52 of the Act. I agree. The considerations that cause me to reject the applicants' s52 claim against Dovuro apply even more strongly to the Cropmark claim. In considering s52, it must be remembered that Cropmark had no dealings with the ultimate purchasers of the seed. It dealt only with Dovuro, to whom it made full disclosure of the content of the seed parcels. Dovuro's cross claim (i) Nature of the cross claims 129 Dovuro puts its cross claim against Cropmark on five bases: (a) breach of an express condition of the contract between Dovuro and Cropmark that the delivered canola seed be "free of undesirable species"; (b) breach of an implied condition that the seed be reasonably fit for the purpose of sowing a canola crop; (c) breach of an implied condition that the seed be of merchantable quality; (d) misleading or deceptive conduct in contravention of s52 of the Trade Practices Act; and (e) contribution under s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) or its Western Australian equivalent. I will deal separately with each of these bases of claim. (ii) Express condition 130 In para 14 above, I set out the terms of the contract made between Dovuro and Cropmark in September 1995. Those terms include the condition: "Maximum 0.5% weed and free of undesirable species including Brassica and Rumex in working sample." Dovuro does not suggest that the seed supplied by Cropmark contained more than 0.5% weed or any Brassica or Rumex species. It is accepted by counsel for Dovuro and Cropmark that their clients treated the reference to a "working sample" as covered by the certificates of analysis. However, Dovuro asserts that, if the applicants' claim against it is accepted, Cropmark supplied to it seed containing "undesirable species". 131 The words "undesirable species" are not defined in the contract. Counsel for Dovuro argue they include all weeds that were undesirable anywhere in Australia where Dovuro might reasonably be expected to sell canola seed. Counsel for Cropmark submit the words have to be construed by reference to their use in the New Zealand Grain & Seed Trade Association handbook. 132 Mr Grigor prepared the contract on behalf of Cropmark. He said he understood the words "free of undesirable species" to mean free of any of the twelve species or genera listed under the title "List of undesirable weed species" in the handbook. This list did not include any of the species the subject of the present action. Nor did it include any Brassica or Rumex species. Mr Grigor said that, in preparing contracts for the sale of seeds in 1995-96, it was not his practice to refer specifically to the handbook. He said the three subject weeds were common in New Zealand and not problematic there. When he prepared the contract, he had no idea where in Australia Dovuro would sell the canola seed. Because the contract required delivery in Melbourne or Sydney, he assumed the seed would be distributed in eastern Australia. However, he made no inquiry about this; he regarded Dovuro as his customer. Mr Grigor maintains he had only a broad knowledge of Australian seed certification requirements; he knew they varied from State to State. Mr Grigor said Mr Kudnig never informed him about the various State requirements. He agreed that, in a sense, all weed seeds might be regarded as undesirable. 133 Evidence was given by Brent Alexander Stirling, a seed trader with Cropmark who has been employed in the New Zealand seed industry for over 20 years, that the words "as per terms of trade rules" were commonly used in contracts between members of the New Zealand Grain & Seed Trade Association. He said "otherwise we spell that out, as I assume the way it is spelt out here is 'undesirable species'". Mr Stirling said he would class as "undesirable species" those weeds that are listed in the Trade Association handbook. He maintained he had seen this term used in other contracts between Cropmark and persons outside New Zealand. 134 It will be recalled that Mr Kudnig negotiated the contract on behalf of Dovuro but it was signed on behalf of the company by Mr Tapp. Neither Mr Kudnig nor Mr Tapp gave any evidence regarding the inclusion of the words "free of undesirable species". 135 Counsel for Dovuro and Cropmark have both referred me to cases concerning the circumstances under which custom and usage warrant the implication of terms in a commercial agreement. Counsel for Dovuro also make the legitimate point that there is no reason why the term "undesirable species" should be looked at only from the seller's perspective; any undesirability of species will be important primarily to the buyer. They say the meaning ascribed to the words should be the meaning which "would have been understood by seed purchasers in Australia". Counsel say the inclusion of a reference to Brassica and Rumex is explicable on the basis that it is an exercise in caution; it demonstrates that the category of "undesirable species", "whilst an ascertainable class, is not necessarily a readily ascertainable one". They also make the point that, if the parties had intended to limit the term to the plants listed in the handbook, it would have been easy to say so; in which case, it would have been appropriate to use words like "as well as" rather than "including" in referring to Brassica and Rumex. 136 As is so often the case, it would have been helpful for the parties to have specified more clearly what they had in mind regarding unacceptable weeds. It is not relevant to consider authorities relating to implications based on custom and usage; here there is an express term, the problem is to construe it. This must be done by determining the likely intention of the parties. 137 I do not think it likely that either party intended the words "undesirable species" to bear the meaning advanced by counsel for Dovuro. It seems improbable that Cropmark would have been willing to make the performance of its contract, and its entitlement to payment, dependent upon a view, of either Dovuro or the ultimate purchasers, about acceptability of the seed in particular locations. Cropmark had no knowledge of the likely locations of plantings or the likely identity of the ultimate purchasers. Furthermore, it is unlikely that even Dovuro would have had in mind such a condition. From first to last, Mr Tapp's position has been that Dovuro's only obligation was to ensure the canola seed was acceptable to the regulatory authorities. It is improbable that, in signing the agreement with Cropmark, he intended his company, or the farmers who purchased the seed, would be the arbiters of the question whether any weed seeds were of "undesirable species". 138 Further, the interpretation now suggested on behalf of Dovuro would render unnecessary the reference to Brassica and Rumex; it is common ground that, on any view, they are undesirable weeds in a canola crop. I appreciate counsel's point about more abundant caution. Nonetheless, these references do support the view that the term "undesirable species" was intended to have a relatively confined meaning. 139 I see no reason to doubt Mr Grigor's evidence that, in drafting the contract, he had in mind the New Zealand handbook. There is no evidence that he explained this to Mr Tapp or Mr Kudnig. That being so, I think they would have been entitled to regard the term "undesirable species" as embracing any species that could not lawfully be imported into Australia; although it can be argued that point is already covered by the words "to comply with Australia import regulations". It is not necessary to reach a view about that matter. It is enough to hold, as I do, that the parties did not intend the term "undesirable species" to have the wide meaning now contended by Dovuro. I think it was intended to cover only the seeds listed in the handbook, with the possible addition of species unable to be imported into Australia. This ground of cross claim fails. (iii) Implied term: reliance on seller's skill or judgment 140 Section 16(a) of the Sale of Goods Act 1908 (NZ) provides: "(a) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose." 141 There is no doubt the canola seed sold by Cropmark to Dovuro constituted "goods … of a description which it is in the course of the seller's business to supply". It may also be accepted that Dovuro made known to Cropmark the particular purpose for which the goods were required; that is, for resale as cropseed to farmers. But it seems to me impossible to hold that Dovuro relied on Cropmark's skill or judgment, at least in relation to the matter of weed contamination. First, the parties negotiated terms concerning this very matter. Second, Mr Kudnig went to New Zealand for the express purpose of inspecting the growing canola crop. A major objective of the inspection was to ascertain the position regarding weeds. Mr Kudnig also made inquiries about weeds in the locality. All this was known to Mr Grigor, who accompanied Mr Kudnig on the inspections. Third, Dovuro required Cropmark to send to it certificates of analysis disclosing the identity of any weeds within the canola seed. 142 In their written submissions, council for Dovuro addressed the issue of reliance by referring to a promotional brochure published by Cropmark and passages in the oral evidence of Mr Stirling and Mr Grigor in which they agreed that Cropmark was an experienced grain exporter. Both witnesses acknowledged that Dovuro relied "to some extent" on Cropmark's expertise, but neither witness was prepared to concede Cropmark undertook responsibility for seed quality beyond what was stated in the contract. I do not think this evidence overcomes the considerations to which I have made reference. (iv) Implied term: purchase of goods by description 143 Section 16(b) of the New Zealand Sale of Goods Act provides: "(b) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed." 144 The seed was goods bought by description and Cropmark was "a seller who deals in goods of that description" (canola seed). Mr Donohoe did not argue the proviso applies to this case, so as to negate the implication of an implied term that the canola should be of merchantable quality; presumably on the basis that the proviso applies only to cases of an examination before contract: see Taylor v Combined Buyers Ltd [1924] NZLR 627 at 635. However, Mr Donohoe contends the seed was of merchantable quality "because it was used successfully in Western Australia and other States". 145 As is revealed by perusal of Professor Sutton's work The Law of Sale of Goods in Australia and New Zealand, the concept of merchantable quality has proved troublesome to the courts: see second edition 1974, chapter X. An early definition of the term was offered by Salmon J in Taylor at 645: "I think that goods sold by description are merchantable in the legal sense when they are of such quality as to be saleable under that description to a buyer who has full and accurate knowledge of that quality, and who is buying for the ordinary and normal purposes for which goods are bought under that description in the market." 146 In Australian Knitting Mills Limited v Grant (1933) 50 CLR 387 at 418, Dixon J said: "The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms." 147 The Judicial Committee of the Privy Council upheld an appeal against the High Court's decision in that case: see Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49. Speaking for the Committee, Lord Wright observed at 60-61: "…whatever else merchantable may mean it does mean that the article sold, if only meant for one particular use in ordinary course, is fit for that use; merchantable does not mean that the thing is saleable in the market simply because it looks all right; it is not merchantable in that event if it has defects unfitting it for its only proper use but not apparent on ordinary examination: that is clear from the proviso, which shows that the implied condition only applies to defects not reasonably discoverable to the buyer on such examination as he made or could make." 148 In George Wills and Company Limited v Davids Proprietary Limited (1957) 98 CLR 77, the High Court of Australia (Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ) considered the Privy Council judgment in Grant, and a slightly earlier House of Lords decision, Cammell Laird & Company Limited v The Manganese Bronze and Brass Company Limited [1934] AC 402. At 88 their Honours observed: "Before goods can be characterised as unmerchantable it must be shown that, as goods of that description or character, they are defective though no doubt, in many cases, proof of their unfitness for some particular and obvious purpose may well establish that the goods are defective." [Original emphasis] 149 In Henry Kendall & Sons v William Lillico & Sons Ltd [1969]2 AC 31 (generally called Hardwick Game Farm), Lord Reid stated what he took to be the meaning of "not of merchantable quality" in the United Kingdom equivalent of s16(b): "that the goods in the form in which they were tendered were of no use for any purpose for which goods which complied with the description under which these goods were sold would normally be used, and hence were not saleable under that description." Lord Reid explained this was intended to be an objective test; "no use for any purpose" means "would not have been used by a reasonable man for any purpose". 150 It seems to me that, on the application of any of these tests, Dovuro must fail in its claim that the subject canola seed lacked merchantable quality. To apply the test of Salmon J, the evidence shows the canola seed was saleable to a buyer (Dovuro) who had full and accurate knowledge of its quality (ascertainable from the certificates of analysis) and was buying for the ordinary and normal purpose for which canola cropseed is bought. Similarly, Dovuro's actual purchase, with knowledge of the seed content, satisfies the test propounded by Dixon J in Grant. Applying the Privy Council approach, the seed was fit for use as seed, although subject to limitations about the places where it ought to be sown. The same response attaches to applications of the test in Wills and Lord Reid's reformulation in Hardwick Game Farm. The point, of course, is that the defect in the subject canola seed was not an inherent defect, such as an inability to germinate; it was a defect that caused the canola seed to be unsuitable for sowing in particular localities, but it remained fit for sowing in other places and marketable for that purpose. 151 This ground of cross claim also fails. (v) Trade Practices Act 152 The claim of Dovuro under s52 of the Trade Practices Act depends upon the reference to "undesirable species" in the contract. However, it must fail for the reasons expressed in paras 130-139 above. (vi) Contribution 153 Finally, Dovuro makes a claim for contribution from Cropmark pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or its Western Australian counterpart. This claim is said to be made alternatively to the earlier claims. However, that position is untenable. Liability relevantly arises only in the circumstances described by s5(1)(c) of the New South Wales Act: "Where damage is suffered by any person as a result of a tort (whether a crime or not) – … (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought." It will be noted that the person against whom contribution is obtainable must be another tort-feasor; that is, a person liable in tort to the person who has suffered damage. It is not necessary to determine what is meant, in this context, by the word "tort"; unless there is a basis upon which it may be said that Cropmark is liable to the applicants, the paragraph is inapplicable. In the view I take, Cropmark is not so liable. Orders (i) The case against Dovuro 154 I do not propose, at this stage, to make any orders in relation to the contest between the applicants and Dovuro. I will merely stand the matter over to a directions hearing at 9.30am on Thursday, 3 February 2000. 155 If Dovuro wishes to contest my finding on liability, it would be appropriate for it to do so before assessment of the damages claims. If asked, I would be minded to give leave to appeal subject to conditions requiring Dovuro to act expeditiously and ensure the appeal would be ready for hearing in the Full Court sittings commencing on 8 May 2000. This would require prompt action in relation to preparation of the appeal book. If there is to be an appeal, it will, of course, also be necessary for me to make a formal order; perhaps a declaration. 156 If there is to be no appeal, it is desirable that the parties consult as to the most efficient method of assessing the damages claims. I suggest the compilation of a Scott Schedule in respect of each claimant, or group of claimants, setting out the amount claimed and the manner of its computation. It may be desirable for any differences between the parties to be the subject of mediation hearings, possibly before a Registrar or Deputy Registrar sitting in Perth. (ii) The case against Cropmark 157 The effect of my findings is that the claims against Cropmark must be dismissed; that is to say, both the principal proceeding, insofar as it relates to Cropmark, and Dovuro's cross claim against Cropmark. I will so order. As Cropmark is under no liability, its cross claim against Dovuro ought also be dismissed. 158 Cropmark is entitled to recover its party-party costs of the action. When a claim by an applicant against a respondent is dismissed, the usual course is to order the applicant to pay the respondent's costs. However, Cropmark was brought into this litigation by Dovuro. It was only after Dovuro sued Cropmark on its cross claim that the applicants amended their claim to add Cropmark as a second respondent. It is unlikely this step added significantly to the costs that Cropmark would anyway have incurred, in its role as cross respondent. Under these circumstances, it seems to me fair to order that Dovuro pay the general costs of Cropmark, but excluding any costs incurred by Cropmark only by reason of the fact that Cropmark was made a second respondent to the applicants' claim. The applicants must pay those costs. The costs which the applicants must pay will include the costs incurred by Cropmark in making its claim against Dovuro, a step that was only taken because of the applicants' claim against it. I certify that the preceding one hundred and fifty-eight (158) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate: Dated: 23 December 1999 Counsel for the Applicant: J E Rowe Solicitor for the Applicant: Peter Long & Co Counsel for the First Respondent: S Walmsley SC and M Macrossan Solicitor for the First Respondent: Griffith Hack Counsel for the Second Respondent: P M Donohoe Solicitor for the Second Respondent: Phillips Fox Date of Hearing: 19-23 July 1999 and 2 and 4 August 1999