In Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2024] HCA 25 (7 August 2024), the High Court dismissed an appeal from the Court of Appeal of the Supreme Court of Queensland with costs.
Advanta Seeds Pty Ltd (Advanta) is a seed producer. Mallonland Pty Ltd (Mallonland) is a farming company growing sorghum crops. The issue before the Court was whether Advanta owed Mallonland a duty of care to take reasonable care in production to avoid risk of economic loss to Mallonland.
Mallonland purchased bags of sorghum seeds from an Advanta authorised distributor to sow in the 2010/2011 planting season. There was a hidden defect. The bags of sorghum contained another very similar looking seed mixed in with the sorghum. This seed was called shattercane, a genetically related seed, so-called because the seedhead shatters and distributes the seeds.
Mallonland was required to undertake costly action to remove the contamination.
There were minimum standards of purity on the bags of sorghum, including a warning to purchasers. Relevantly, the warning contained a statement to the purchaser: “. . . If the product in this bag does not comply with its description . . . liability . . . will be limited . . . to cost of replacement” and “the producer will not be liable . . . for any injury, loss or damage” (at [9]).
Advanta had acknowledged that it was common for other seeds to be mixed into the bags and that economic losses were reasonably foreseeable.
Both the Trial Judge and the Court of Appeal of the Supreme Court of Queensland found that Advanta did not owe a duty of care to Mallonland.
The High Court applied Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529, and the principle: “As a general rule, damages are not recoverable in negligence for pure economic loss, that is, for loss that is not consequential upon injury to person or property . . .” (at [30]).
The High Court noted that the salient features approach had been criticised since the decision in Sullivan and Moody (2001) 207 CLR 562, but neither Mallonland nor Advanta argued that it did not apply and the High Court applied the salient features approach (at [36]).
Mallonland argued a number of salient features as to why a duty of care existed, including “. . . the producer’s knowledge of the risks of economic loss to which the growers were exposed if reasonable care was not taken in seed production . . .” (at [42]). The Court held that none of the salient features gave rise to a duty of care.
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