Schneider v Hoechst Schering Agrevo Pty Limited & Anor S55/2001 [2001] HCATrans 600 (20 November 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S55 of 2001

B e t w e e n -

DAVID LOUIS SCHNEIDER

Applicant

and

HOECHST SCHERING AGREVO PTY LIMITED

First Respondent

IAMA PTY LIMITED

Second Respondent

Application for special leave to appeal

GLEESON CJ

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 20 NOVEMBER 2001, AT 9.45 AM

Copyright in the High Court of Australia

MR B.W. RAYMENT, QC: May it please, your Honours, I appear with my learned friend, MR J.E. ROWE, for the applicant. (instructed by Long Howland Houston)

MR A.J.L. BANNON, SC: I appear with my learned friend, MR G.P. McNALLY, for the respondents, if the Court please. (instructed by Hunt & Hunt)

GLEESON CJ: Yes, Mr Rayment.

MR RAYMENT: Your Honours, we identify several special leave questions in our application in this matter. It would seem, if one analyses it, that only the first arises directly in relation to the claim made under the Sale of Goods Act and section 71 of the Trade Practices Act. The second group of applicants, for whom the action was brought, were suing the retailers and there was a count for breach of the warranty of merchantable quality which would seem to raise only one distinct issue, which is whether the goods were defective or not, which in turn raises the question of causation, which we propound is the first special leave point.

GLEESON CJ: Did you not have a finding against you that there was not anything that the manufacturers did wrong?

MR RAYMENT: Yes, we did. We did, but the retailers provided a product which, if we are right about the causation questions in this case, was defective.

GLEESON CJ: Just a moment. Who are you representing Mr Bannon?

MR BANNON: Both the first respondent as the manufacturer and the second respondent who was, at least, one of the distributors.

GLEESON CJ: Thank you.

MR RAYMENT: And I really wish to make clear that, in our respectful submission, only the first issue arises as against IAMA Pty Limited, the second respondent, whereas other issues arise against the manufacturers. Your Honours, we have sought to - - -

GLEESON CJ: By that you mean the causation issue arises in relation to both respondents?

MR RAYMENT: Yes.

GLEESON CJ: But in relation to the first respondent there are also issues of breach of duty?

MR RAYMENT: Exactly, and foreseeability. Now, your Honours, we have sought to stress some findings of the primary judge which were not disturbed on appeal in paragraph 8 of our outline of argument. In short, her Honour found that in the case of the five farmers to whom we refer in the written outline there was a perfect control sample. For example, in one field a farmer was able to spray this product, Puma S, over all of the field, except around trees or canals and around the trees and canals the wheat yield was good and normal, whereas in all of the other parts of that field where Puma S had been sprayed, the yield was unsatisfactory. Similarly, in the case of other farmers, adjoining paddocks were one sprayed with Puma, one not sprayed with Puma; the paddocks sprayed with Puma yielding unsatisfactory levels, the next paddock yielding a satisfactory product.

GLEESON CJ: Well, you formulate the special leave question on page 109 at line 35.

MR RAYMENT: We do.

GLEESON CJ: That looks like a question of fact, does it not?

MR RAYMENT: We submit that this is really a question - it seems that the ground upon which we have lost this case is something that was said in this Court in March v Stramare and we would submit that if you look at the facts of the case you get a very classic circumstance in which the philosophical, scientific and commonsense tests coincide. No one could merely doubt - - -

GLEESON CJ: Justice Mathews said, did she not, that she was persuaded from the results, from the control samples as well as from other things, that she was persuaded that the use of this product was related to the harm that was observed and the control sample was just an explanation of why she was persuaded of that.

MR RAYMENT: Yes.

GLEESON CJ: But the relationship was not one that she regarded as causal. Now, the existence of a control sample does not answer that problem, does it?

MR RAYMENT: But it makes it inevitable that a person applying notions of commonsense will come to a view as to causation which, for some reason, failed to commend itself to her Honour or to the Full Court.

McHUGH J: Yes, but what about the foreseeability issue? I am always unhappy about criticising parties' arguments and the way they are constructed, but really this application leaves a lot to be desired. In your opening you say it is a case concerned with breach of implied conditions under the Trade Practices Act and the Sale of Goods Act but your argument or summary of argument seems to be directed to a negligence case. Now, issues of foreseeability come in on both tests. They come in on remoteness of damage, which is a different test in contract than it is in tort.

MR RAYMENT: Yes.

McHUGH J: Now, the summary of argument really does not make clear what the point is or what the points are, with great respect. I read the whole of this carefully and I really thought that you were talking about negligence. I mean, your second special leave question specifically refers to negligence and your first one talks about the law of manufacturers' liability. It does not mention anything about breach of contract. You refer to it in paragraph 3 in this factual background.

MR RAYMENT: These goods were sold, your Honour, as goods which would destroy weeds but should not destroy wheat.

McHUGH J: I understand that.

MR RAYMENT: And there cannot really be a question of foreseeability in those circumstances, with respect.

McHUGH J: Well, there can be on a question of remoteness of damage. Even if you were right about a causal connection, a question of remoteness of damage would arise having regard to the breach of contract and the causal connection and that itself brings in foreseeability of a different sort: what was in the contemplation of the parties.

MR RAYMENT: Yes. Your Honours, what we would submit about the matter is that, as Justice Gaudron said in Bennett, if the injury occurs within an area of foreseeable risk, as it must, we would submit, when the purpose is not to destroy the wheat but to destroy the weeds, then in the absence of evidence that the breach had no effect, the court should have concluded that it was materially causative.

GLEESON CJ: But the control sample only demonstrates that if you apply the "but for" test, you will establish causation.

MR RAYMENT: Yes.

GLEESON CJ: But if I had been injured in a motor accident on the way to work this morning, you could have said that but for the fact that I got up out of bed, I would not have been injured. So, the control sample raises the problem. It does not answer the problem.

MR RAYMENT: But in an acute way to a person using commonsense notions, we would submit, it does demonstrate that the one was the cause of the other. If you have Puma sprayed in the same field in one part and in another part not sprayed at all, damage in the first part, none in the second, all other circumstances necessarily being the same, we would submit that the person using his commonsense would conclude, necessarily conclude, that the spraying of the Puma caused the damage.

McHUGH J: Yes, speaking for myself, I think that you certainly have an arguable case on causation on any test: commonsense, but for, but that only seems to me to be the beginning of your problems because there seem to me foreseeability issues involved here, both under remoteness, under contract and in terms of breach of duty in the tort. You have concurrent findings against you.

MR RAYMENT: May I put the matter this way, your Honour. So far as the law of negligence is concerned, we would submit that what the Full Court did as to foreseeability ignored what this Court said in Wyong Shire Council v Shirt. It looked for something much more than this Court said was required in the law of negligence as to foreseeability. All you need to be able to foresee is that the kind of injury which was suffered would be suffered. Doing tests prior to the manufacture of product, in our respectful submission, merely shows that you are attending to such a risk.

McHUGH J: But you have to identify what the damage is and what is the damage that is relied on here? Insufficient crop yield?

MR RAYMENT: Yes.

McHUGH J: Well, they had done extensive testing and there was nothing to indicate that that was foreseeable.

MR RAYMENT: But, your Honour, it is foreseeable if they are testing for it.

McHUGH J: Reasonably foreseeable. No, no. It is a question of what is reasonably foreseeable. When they put their product on the market in 1996, did they reasonably foresee, or what they have reasonably foreseen that it was likely to reduce yield.

MR RAYMENT: We would submit that what really happened in this trial was that a defence succeeded, which failed in Grant v Australian Knitting Mills. In Grant v Australian Knitting Mills proof was offered on behalf of the manufacturer that their process of manufacture was foolproof and the answer to that really was, "You did cause dermatitis to the plaintiff."

McHUGH J: That was because in Grant there were sulphites in the underpants.

MR RAYMENT: Yes.

McHUGH J: That was identified.

MR RAYMENT: It was identified, but it would not make a difference, we would submit, whether the precise cause was proved or not.

McHUGH J: But we do not know what happened. We do not know what happened here.

MR RAYMENT: But we do know that Puma caused it, we would respectfully submit, in commonsense terms.

McHUGH J: Yes, but that is a different question. I have put to you earlier, speaking for myself, I think you have an arguable case on causation but it is another matter as to whether or not this damage was reasonably foreseeable.

MR RAYMENT: May it please your Honours. I wanted to complete my answer to your Honour's earlier question about that matter. So far as the contract counts were concerned and the counts under the Trade Practices Act and Sale of Goods Act, no question of damage being too remote stood in our path. The trial judge said, "Because the issue of causation is resolved as I resolve it, I don't have to consider those matters" and we would submit that - - -

McHUGH J: That cannot be right. Remoteness of damage is always a question for breach of contract.

MR RAYMENT: Yes, yes, but her Honour did not come to that question in rejecting the claim is what I put.

McHUGH J: Well, is it not covered by the question of reasonable foreseeability?

MR RAYMENT: It cannot be the case, your Honour, that if a manufacturer tries to guard against a problem of defect in his product, and fails to do so, the fact that he has tried means that the damage is not foreseeable. That is really what is put against us.

McHUGH J: But if you have done every test possible and you cannot find that it would cause a drop in yield or damage the crop, then it is not reasonably foreseeable. You do not judge it by hindsight.

MR RAYMENT: Your Honours, to put the matter accurately, at page 52 in the judgment, her Honour describes the tests as "random trials". What happened was they tested this product in a variety of soils in different parts of Australia. They did not put them in hothouses and vary the temperature. They did not put them under controlled scientific circumstances and test their performance under varying conditions which they varied. They simply planted in different parts of Australia this crop and observed it and that was relevant, but, in our respectful submission, it could hardly rise to the standard of certainty that would be required to negative foreseeability.

McHUGH J: It is not a question of certainty. It is a question of reasonableness and you have a finding of fact. It is not a special leave point in this, even if the judge was wrong. It is just a question of fact.

MR RAYMENT: We would submit, in those terms, it does not affect the contract counts at all.

McHUGH J: But it must. The judge has found that the damage was not reasonably foreseeable and that must apply, whether you frame your action in contract or tort.

MR RAYMENT: The fact, in our respectful submission, that they do these tests is enough to show the foreseeability of the claim to damage. They are doing it because they foresee that this product might destroy the wheat as well as the weeds and that is precisely what happened to these five farmers.

McHUGH J: One of the problems about this case is that it has never been approached on the basis of proper legal principle. The question is not whether or not the product caused damage. The question is whether the breach of duty caused the damage and that is how it should have been approached. If it was approached in the proper way there might have been a bit more clarity in the analysis, at least that is my view of the matter.

MR RAYMENT: Yes. Those are our submissions, if your Honours please.

GLEESON CJ: We do not need to hear you, Mr Bannon.

The Court is of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave in this matter, and the application is refused with costs.

AT 10.00 AM THE MATTER WAS CONCLUDED