Kiwifruit growers win negligence claim

A High Court judge has ruled the government was negligent in its handling of the PSA disease, which devasted the kiwifruit industry in 2010. 

In a 500-page decision made public today, Justice Jillian Mallon said growers who banded together for the court claim under the name Strathboss Kiwifruit should be compensated.

The growers had alleged that the then Ministry for Agriculture and Forestry (MAF) was negligent, causing $885 million worth of losses to kiwifruit growers around the country who had to pull out vines infected by the disease.

“In all the circumstances it is just, fair and reasonable that MAF has a duty of care to those within the class represented by Strathboss who have suffered loss to their property. The wrong to them should be remedied,” her decision says.

 “I have found that MAF owed a duty of care to Strathboss to take reasonable skill and care in its actions or omissions prior to the New Zealand Psa incursion to avoid physical damage to property. It also owed a duty to take care to avoid loss consequential on that damage to property,” the decision says.

Justice Mallon also said there was no Crown immunity due to the provisions of the Biosecurity Act.

What the growers will actually get paid out is yet to be determined and the Crown could still appeal. A spokesperson for the claim said it was worth about $500m. He added that while all 212 could seek damages due to the decision, any other growers who didn't join would have to take their own legal action. 

While after a 12-week trial the judge found the government was responsible to kiwifruit growers, she said its duty of care did not extend to NZX-listed packhouse Seeka, which also took part in the court case.

She said Seeka’s economic loss was relational and it might be more appropriate that Seeka, rather than the government and ultimately the New Zealand public, bears losses arising from adverse events in kiwifruit production. Seeka will still get some compensation as a grower but not for its packhouse operations. 

Kiwifruit claim chairman John Cameron says it has been a long and hard battle and he hopes the decision draws a line in the sand for growers.

“The kiwifruit industry alone is worth around $1.67 billion a year to the New Zealand economy, and MPI is the only agency in the country with the mandate to manage biosecurity risks.

“MPI knew for many years that PSA was a significant risk to the kiwifruit industry, and if it had done its job properly and followed its own regulations and protocols under the Biosecurity Act, the PSA incursion would not have happened.”

MPI said in a statement once it has completed considering the judgment a decision will be made by the solicitor-general on whether to appeal. 

"We are now carefully considering its findings and implications for current and future biosecurity activities...We have confidence in our current biosecurity system and in the continued robustness of it going forward," the statement says. 

The numbers
The costs of the case to the Crown ahead of the trial had come in at about $3m, with a further million dollars expected to be spent at trial. 

Growers were asked to put in between $500-1500 depending on the size of their orchards, while packhouses made one-off contributions of $10,000. The litigation was further bankrolled by litigation funder LPF Group. The litigation funder will take home between 10-25% of the successful judgment.

LPF’s modelling shows that, for example, on an award of damages of $800m, LPF would contribute $4m, and receive $129.6m, should it be paid within two years.

Despite the devastating effects of PSA, the industry is broadly seen to have recovered from the disease, with the sector recording its largest-ever crop in 2016/17, a rise of $694 million.

In her decision Justice Mallon noted the industry is divided over the claim.

“Zespri does not support the claim. Zespri considered the industry was well into recovery from Psa and the focus should be on that and the industry would be better for working with the government and not against it. A number of growers have the same view.”

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