A local dispute in Western Australia (WA) is stoking the flames of the global debate surrounding the use of GM technology in farming. Starting out in early 2014 as a clash between two neighbouring farmers, Marsh v Baxter [2014] WASC 187 has quickly gained international attention from those who see it as a ‘test case’ for the use of GM crops worldwide.

At trial Justice Kenneth Martin rejected the claim by organic farmers Steve and Susan Marsh that Michael Baxter was liable to them for co
mmon law negligence and private nuisance. The Marshes brought the case after some of Baxter’s GM canola seeds blew onto the Marshes’ land, resulting in the decertification of the majority of their property. The decision has polarised the agribusiness community: while some applaud it as a victory for the burgeoning GM industry, others see it as a threat to the future of organic farming.

This year, the attention of farmers and interest groups worldwide has turned once again to the WA Supreme Court, as they wait for its Court of Appeal to put the issues introduced at trial to rest. Whichever way the Court decides, all players in the agribusiness community should apprise themselves of the legal and commercial consequences of the judgment.


Background: decertification

The Marshes obtained organic certification for their property ‘Eagle Rest’ from the National Association of Sustainable Agriculture (Australia) Ltd (NASAA) in 2006. In 2010 their neighbour, Mr Baxter, began producing GM canola after the WA government authorised its use. Initially, Mr Baxter utilised a harvesting method called ‘direct heading’. In November 2010 he decided to harvest his canola using a two-phase technique called ‘swathing’. Although widely employed, swathing makes crops vulnerable to being swept away by wind. Shortly after Mr Baxter left his crops out to dry, strong winds carried approximately 245 canola swathes from Mr Baxter’s land onto Eagle Rest. As a consequence, 70 percent of the Marshes’ land was decertified by NASAA.

The Trial: The Marshes fail to establish private nuisance and negligence

Justice Martin rejected the Marshes’ claim for $80,000 in damages and a permanent injunction that would restrain Mr Baxter from further use of GM canola near the their land. Central to this finding was the fact that there had been no physical damage caused to the Marshes’ land by the transfer of the GM crop. To the contrary, the evidence of both parties was that GM canola swathes are harmless to animals, land and people. The only case in which GM crops will pose a risk of contamination is where they cross-fertilise with a compatible species, such as another canola crop. Because the Marshes had no such crops on their land, there was no risk of this occurring.

Private nuisance

Dealing first with the private nuisance claim, Justice Martin held that the Marshes failed to establish that there had been any unreasonable interference by Mr Baxter in their use and enjoyment of Eagle Rest. The deciding factors of this holding were that:

  • Mr Baxter had relied on expert advice and employed orthodox methods in his harvesting process
  • he had not intended the financial loss incurred on the Marshes
  • there had been no physical injury sustained on Eagle Rest; and that
  • Mr Baxter could not be held responsible in law for NASAA’s decision to decertify the Marshes’ land.

Negligence

To succeed in negligence the Marshes needed to establish that Mr Baxter breached the duty of care he owed to them and that as a result of that breach, they suffered damage. Justice Martin rejected the Marshes’ claim on the basis that the harm they had asserted was exclusively financial. He stressed that courts have traditionally limited the availability of actions for pure economic loss. In the absence of any physical damage proved by the Marshes, Justice Martin reasoned that to allow them to succeed in negligence in the circumstances would be without precedent. Furthermore, he held that the Marshes had failed to establish that Mr Baxter had acted negligently in either growing or swathing his lawfully produced GM crop.

Community reaction and the Marshes’ appeal

The conflicting reactions to the decision reflect the complex web of commercial, ideological and political interests that shape the GM debate.

Proponents of GM see the trial decision as an endorsement of GM farming generally and an opportunity to lobby the WA government to repeal the Genetically Modified Crops Free Areas Act 2003 (WA), which banned GM crops in WA. Current GM farms in WA are operating under a legislative exemption introduced in 2010. GM supporters fear the exemption may be removed by a future government, effectively ending WA’s GM industry overnight.

The decision also shone a light on Australia’s internationally unique ‘zero-tolerance’ policy toward traces of GM material in certified organic produce. Some elements of the agribusiness community see the high Australian standard as the cause of the Marshes’ problem and would like to see the threshold raised. However in December 2014 the Organic Industry Standards and Certification Council rejected the WA government’s submission to increase the allowable threshold of GM traces in organic produce to match the European Union’s threshold of 0.9 percent. Proponents of the zero-tolerance policy argue that it is fundamental for protecting organic produce from contamination.

An alternative solution is to prevent GM farmers who are in close proximity to organic producers from using harvesting methods that pose a risk to their neighbours’ operation. The Marshes are no longer seeking to prevent Mr Baxter from harvesting GM crops. Pivoting from the trial strategy that focused on the dangers of GM farming, the Marshes’ legal representative Malcolm McCusker has decided to make the appeal about harvesting techniques. As was done at trial, Mr McCusker conceded that there was no physical threat posed by the transfer of GM seeds. However he argued that Mr Baxter breached his duty of care by swathing his GM canola crops so close to the Marshes’ farm. Key to this approach is the assertion that there was a risk that Eagle Rock’s sheep would eat the GM canola and that, as a consequence, the Marshes would be banned from selling them as organic meat. Thus the Marshes hope to succeed by convincing the Court that because there was a risk Mr Baxter’s GM canola could be eaten by the Marshes’ lamb, he had a duty to use other viable harvesting methods, such as direct heading.

Conclusion: towards co-existence?

Outside the appeal hearing in March a crowd of anti-GM protesters held up placards protesting the subordination of organic farming to corporate interests. GM farmers continue to retort that the fault lies with ideological organic certification bodies that refuse to lower their standards. A new argument gaining traction is that, were the Court to accept Mr McCusker’s argument, the decision may pave the way for reform that facilitates the co-existence of GM and organic farming. This begs the question: could such a development mend the rift in the agribusiness community such that neighbouring farmers like Mr Baxter and the Marshes can operate peacefully alongside one another?

Authors
: Max Dalton & Greg Wrobel

Contact details

Brisbane

Ron Eames, Partner
T: +61 7 3135 0629
E: ron.eames@holdingredlich.com

Sydney

Geoff Farnsworth, Partner
T: +61 2 8083 0416
E:  geoff.farnsworth@holdingredlich.com

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