High Court backs kiwifruit growers in $400M PSA claim against MPI
By Sophie Boot
June 29 (BusinessDesk) - The High Court has backed New Zealand kiwifruit growers' claims that the government was negligent in allowing Psa, the virus which devastated the industry, into the country.
Pseudomonas syringae pv actinidiae, better known as Psa, infected 80 percent of kiwifruit orchards nationwide and is estimated to have cost the industry up to $1 billion in lost exports. The growers' group, called Kiwifruit Claim, sought over $376 million in compensation.
The case, which took place in Wellington's High Court over 11 weeks last year, is one of New Zealand's largest ever class action suits. The group of 212 growers, led by Strathboss Kiwifruit and Seeka, claimed the Ministry of Agriculture and Forestry (MAF) - which became part of MPI when that ministry was formed in 2012 - was negligent under the Biosecurity Act.
It was the first of two stages, with the original trial for the plaintiffs to prove the Crown breached its duty of care and establish a loss, and the second stage to determine the level of costs incurred and compensation.
In court, the Crown argued that biosecurity risks occur without specific fault and therefore farmers could not claim MPI was negligent, and the government's lawyer, Jack Hodder QC, said if the group's arguments on duty of care were successful that liability could be applied across all government departments. Kiwifruit Claim denied their arguments went that far.
In the judgment released this morning, Justice Jillian Mallon said that the government owed a duty of care to the class represented by Strathboss who have suffered loss to their property from Psa, but not to Seeka as a post-harvest operator, because it suffered loss because of its business relationships with growers.
The judge said the second stage of the court case would determine which of the growers are owed a duty of care by the Crown, and growers will have to show that they had property rights in vines and crops or a close enough interest that they should be treated as having suffered a loss.
Justice Mallon said that the evidence provided by the growers showed it was more likely than not that the anthers imported by Kiwi Pollen in 2009 from China were the cause of Psa in New Zealand.
MAF breached its duty of care in three ways, the judgment says. A review on the association between pollen and pest and disease was misleading; that review was relied on by MAF even though the use for the pollen was different to that assessed in the review; and there was no formal risk analysis sign off by MAF personnel before the import was permitted.
Beyond that, the judge found that it was likely that no MAF inspector actually checked the pollen before it was allowed into the country, though that wasn't a breach of duty of care as it isn't required under the Biosecurity Act.
The judge rejected the Crown's claim that it was immune from liability because MAF personnel were exempted by the Biosecurity Act, as she found that section of the act didn't cover the actions leading up to granting the import permits for the Chinese pollen.
In a press conference this morning, Kiwifruit Claim chair John Cameron said it was a landmark decision and he hoped the government would accept it and properly compensate Kiwifruit Claim growers.
Cameron said losses from the disease were at $450 million "and growing". He said the group was "overall thrilled with the result but it's not perfect" as Seeka was excluded from claiming losses.
MPI did not respond to requests for comment, but said in a statement on its website that it is "carefully considering its findings and implications for current and future biosecurity activities."