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Kiwifruit growers settle class action with the Crown

Home Insights Kiwifruit growers settle class action with the Crown

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Contributed by: Chris Curran, Polly Pope, Kirsten Massey, Aidan Lomas and Anna McLean

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Published on: February 18, 2021

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Questions remain as to the scope of Crown liability for negligence in the absence of a Supreme Court decision.

The Crown has settled with approximately 200 kiwifruit growers who sought compensation for damage caused to kiwifruit vines by the bacteria known as Psa3. This marks the end of a class action which spanned seven years, with the growers receiving $40 million from the Crown.  
 
The proceedings raised questions about Crown liability in negligence with the growers claiming a novel duty of care existed whereby the Crown would be legally responsible, in effect, for not protecting them from the Psa3 outbreak. More broadly, the litigation continues the development and evolution of class actions in New Zealand.

The claim

In 2009, following the grant of a permit by the Ministry of Agriculture and Forestry (now the Ministry of Primary Industries), a shipment of kiwifruit pollen was imported into New Zealand. That shipment contained the Psa3 bacteria which subsequently spread throughout kiwifruit orchards in the Bay of Plenty and Northland regions. Participants in the kiwifruit industry suffered significant financial loss and emotional distress as a result. 
 
Strathboss Kiwifruit Ltd was a grower representing approximately 200 kiwifruit growers. It commenced proceedings in 2014 (along with Seeka Ltd, a post-harvest operator) claiming $450 million in damages. The crucial question was whether the Crown was liable to kiwifruit growers and post-harvest operators in negligence for granting and renewing the import permit, or for not inspecting the kiwifruit pollen when it arrived in New Zealand – in other words, whether the Crown could owe a duty of care to the kiwifruit growers (and post-harvest operators) for any operational mistakes MPI may have made.

Decisions of the courts

In 2017 in the High Court, Mallon J found that it was "fair, just and reasonable" that the Ministry owed a duty of care to the class of kiwifruit growers who suffered loss to their property and subsequent financial loss. The High Court held that personnel from MPI had breached their duty of care and that the wrong should be remedied. The Court found that personnel from MPI did not owe a duty of care in relation to Seeka and other post-harvest operators.
 
The Court of Appeal subsequently overturned the High Court decision in April 2020. It held that the Crown has a statutory immunity preventing it from being liable for the relevant negligent acts or omissions. But the Court noted that it would have found no duty of care was owed to kiwifruit growers in any event – policy factors (particularly the risk of indeterminate liability) meant it would not be fair, just or reasonable to impose a duty of care. If a duty had been owed, the Court would have held that duty was breached. 
 
Strathboss appealed to the Supreme Court. However, prior to the hearing, the growers announced they had agreed to a settlement with Crown.

What's the position now?

This case will not be the last word on novel duties of care (whether alleged against the Crown or otherwise) and will certainly not be the last word on class actions. 
 
While the settlement means that the Court of Appeal's judgment that there should not be a duty of care stands, the Supreme Court granted leave to appeal, which suggests the question is one of general or public importance. Accordingly, the issue appears ripe for future litigation.
 
For the growers, the $40 million settlement brings a final, and successful, result (even though their initial claim was for significantly more). 
 
The recent global trend for increased class action litigation is unlikely to change. Recognising that trend, the Law Commission is currently conducting a review of the law relating to class actions and litigation funding in New Zealand. It published an issues paper in December 2020, outlining its preliminary view (among other matters, that a statutory class action regime is desirable) and seeking public feedback on issues relating to the scope and design of any class action regime. Submissions close on 11 March 2021.
 

Please get in touch with one of our experts if you have any questions on this or would like to consider a submission to the Law Commission.  

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