Pengilley, Warren --- "The Wallis Lake Oyster Litigation: Appellate Proceedings in Relation to Gallimaufry of Product Liability Claims" [2003] JCULawRw 8; (2003) 10 James Cook University Law Review 143

THE WALLIS LAKE OYSTER LITIGATION: APPELLATE PRECEDENTS IN RELATION TO A GALLIMAUFRY OF PRODUCT LIABILITY CLAIMS

WARREN PENGILLEY*

* Professor of Commercial Law, University of Newcastle, NSW and Special Counsel to, and former Partner in, Sydney Lawyers, Deacons. Dr Pengilley was formerly a Commissioner of the Australian Trade Practices Commission.

‘He was a bold man that first eat an oyster’

— Jonathon Swift, Polite Conversation Dialogue 2 (1738) (cited by Gleeson CJ in the Wallis Lake Oyster Litigation [2002] HCA 54 at para 45)

The multitude of claims brought by Grant Ryan as a class action on behalf of himself and others after he ate some contaminated oysters shows the diversity of remedies available in Australia in the area of product liability. Clearly issues of negligence, contractual liability, ‘Sale of Goods Act ’-type liability and Trade Practices Act ( TPA) liability cannot be segmented into neat separate subject matter compartments. In the Wallis Lake litigation, even the obligations of the State Government and those of local councils to enforce statutory powers, questions normally of administrative law and quite remote from product liability issues, were relevant. For the future, perhaps the most interesting aspect of the case is that four Justices of the High Court expressed obiter views as to whether the Trade Practices Act and common law negligence principles should receive an akin interpretation and invited debate as to the extent to which statutory Trade Practices Act provisions may have ‘covered the field’ and thus ‘pre- empted’ common law remedies in negligence. This case note discusses these issues and draws conclusions as to the relevant law, based on this litigation.

The litigation went ‘all the way’. It was brought in the Federal Court of Australia and was heard at trial by Justice Wilcox.[1] His Honour’s decision was subsequently appealed to the Full Federal Court by both the defendants and the plaintiff.[2] In addition, there were some five procedural judgments in the case before the trial judge and a procedural judgment subsequent to the Full Federal Court’s judgment on liability.[3] Dissatisfied litigants in the Full Federal Court appealed that Court’s decision to the High Court.[4]

The case involved a significant use of judicial ink. The judgment of Justice Wilcox at trial covers 106 pages, the Full Federal Court judgments 161, and the High Court judgments 96. Relevant issues were decided at both the Full Federal Court and High Court levels. It is thus necessary in this commentary to cover both the Federal Court judgments and those of the High Court in order to give the full picture.

I BASIC FACTS

A Litigation Brought

• Against Barclay Oysters under s 74B and s 74D of the Trade Practices Act. Section 74B permits a consumer to proceed against the manufacturer of goods which are not reasonably fit for their purpose. Section 74D permits an action by a consumer against a manufacturer of goods which are not of merchantable quality. Principles of interpretation of these sections stem from State Sale of Goods Act legislation.[5] For this reason, they are referred to in this commentary as ‘sale of goods’ warranties.

• Against Barclay Oysters under Part VA of the Trade Practices Act covering liability for defective goods.

• Against the Barclay companies in common law negligence.

• Against the State of New South Wales for negligence and nonfeasance in that the State government had certain powers to police the NSW fishing industry (including powers in relation to oyster growing) but had not exercised such powers appropriately.

• Against the Great Lakes Council for negligence and nonfeasance in the exercise of the powers it held in relation to the environmental management of Wallis Lake and its surrounds.

B Result of the Litigation

• Won in the Full Federal Court under s 74B and s 74D of the Trade Practices Act in relation to goods not being fit for their purpose and not being of merchantable quality (i.e. on the issue of sale of goods warranties). This issue was not appealed to the High Court.

• Lost in the Full Federal Court in relation to his claim under Part VA of the Trade Practices Act. This issue was not appealed to the High Court.

• Won in the Full Federal Court against the Barclay companies in relation to common law negligence (Lee J and Keifel J; Lindgren J dissenting). The Barclay companies appealed to the High Court on this issue and their appeal was allowed by a 4:3 majority.[6]

• Won in the Full Federal Court in relation to negligence and nonfeasance by the State of New South Wales (Lee J and Keifel J;

Lindgren J dissenting). The State of New South Wales appealed this point to the High Court and its appeal was unanimously allowed.

• Lost in the Full Federal Court in relation to his claim against the Great Lakes Council (Keifel J and Lindgren J; Lee J dissenting). Mr Ryan appealed this issue to the High Court. His appeal was unanimously dismissed.

C Facts in Relation to Hepatitis and Oyster Purification

Justice Wilcox at trial set out these details and below is a much- summarised statement of the facts as stated by His Honour. There was no contest in relation to these facts either in the Full Federal Court or in the High Court.

His Honour found:

• There was no antibiotic treatment for the disease known as viral hepatitis ‘A’. The severity of attacks of this disease can vary greatly from person to person.

• Oysters can be contaminated with viral hepatitis ‘A’. Because oysters are filter feeders, any viral contamination of oysters is likely to be at a level of concentration far exceeding the concentration of the virus in water.

• Viral hepatitis ‘A’ can survive in the environment for three months or longer. Cases had been recorded where the virus had remained in the environment two years after the sewerage discharge introducing the virus had ceased.

• Following a gastroenteritis attack in 1968 in the Georges River in Sydney, oysters had, by law, to be ‘depurated’ for at least 36 hours. This involves placing oysters in tanks of clean water disinfected by ultraviolet or ozone treatment. Barclay Oysters used ultraviolet depuration. This destroys all viruses and bacteria with which the oyster makes contact. However, the effectiveness of the treatment depends on:

– the level of maintenance of the depuration tanks and equipment;

– the turbidity of the waters in which the oysters were depurated; and – the capacity of the ultra violet light to come into contact with each viral or bacterial particle. Ultraviolet does not depurate any viruses or bacteria with which it does not come into contact.

There was evidence that depuration could not remove the presence of viruses completely. In particular, if waters are heavily contaminated, viral outbreaks will occur regardless of depuration.

Depuration, therefore, was not a total guarantee of absolute public health. Specialist evidence was given that depuration was the only cost-effective basis of ensuring safety of raw oysters. However, depuration had to be supported by regular testing of oyster harvest areas to monitor large areas and extended periods of sewerage pollution which are likely to pollute oysters to a degree which makes them incapable of effective purification.

• Monitoring water quality was itself subject to limitations. There was no effective method of ensuring the absence of viral hepatitis ‘A’ from water. Bacterial testing was the only way of testing water. Yet the absence of bacterial indicators in polluted waters could not predict the presence or absence of human viruses. All that could be concluded in relation, for example, to treated sewage was that while the lack of indicators in treated sewage does not indicate the absence of viruses, where there are high bacterial levels from a human effluent source one can safely assume that levels of viruses will also be high. This is because any treatment which has failed to eliminate bacteria will also have failed to eliminate viruses.

• ‘Flesh testing’ was another method for the detection of viral hepatitis ‘A’. It was known and available at the relevant time. It tested the ‘meat’ of the oyster. However, flesh testing did not discriminate between infectious and non-infectious viral particles. It was expensive, and could be performed only by trained laboratory personnel. Further, flesh testing destroyed the tested oyster and thus could be utilised only by way of sample. There were extraordinary difficulties in extrapolating results from any particular sample and thus the flesh testing was not reliable. Even if negative results were reliable, they established no more than that the particular oyster involved was not contaminated. The trial judge was satisfied that it would be unsafe for an oyster grower or regulatory authority to rely upon flesh testing alone as an indicator of the absence of viral contamination in an oyster growing area.

• There were several possible sources of faecal contamination of Lake Wallis.[7]

• A near village lacked a reticulated sewerage system and relied substantially on septic tanks. Septic effluent discharged into a river would reach Lake Wallis during the time the viruses in the effluent remained viable.

• Various caravan parks also relied on a septic system and effluent from these could find its way into Lake Wallis.

• A public toilet on the shore of the lake, and ‘pit toilets’, could contribute to lake pollution.

• Stormwater drains carried high levels of faecal coliforms to the lake, especially after heavy rain.

• There were also other possible sources, notably seepage from the Council’s sullage depots and escape of sullage into the lake during its transport from one sewerage treatment depot to another.

• The contamination occurred following a period of rain that flushed river water into the lake. This water, which would not normally flow into the lake, gave rise to the oyster contamination.

II LIABILITY OF BARCLAY OYSTERS UNDER SECTIONS 74B AND 74D OF THE TRADE PRACTICES ACT

Trade Practices Act s 74B – Non Fitness for Purpose

Section 74B of the Trade Practices Act provides for a right of action by consumers against manufacturers in respect of goods which are not fit for the purpose for which they are commonly supplied.

Section 74B requires that the consumer in order to come within it, acquire the goods for a particular purpose made known to the supplier.

Section 74B has a defence which provides that the section does not apply:

Where the circumstances show that the consumer did not rely, or that it was unreasonable for the consumer to rely, on the skill and judgment of the supplying corporation.

Barclays Oysters argued that the plaintiff did not, in fact, rely upon its skill or judgment and also that it was unreasonable for him to have done so.

1. Was There Actual Reliance?

The plaintiff testified that when he consumed the oysters, he assumed they would not cause him any illness and that, if he had thought they would do so, he would not have eaten them.

Lindgren J, writing the leading Full Federal Court judgment in this area, held that, in the circumstances, non-reliance was not proven and the plaintiff had, in fact, relied upon the seller’s skill and judgment. His Honour agreed with the trial judge on this point. At trial, the trial judge held that:

A person will not normally seek an assurance that an item grown or manufactured for human consumption is fit for that purpose; in the absence of an obvious defect or special circumstances, fitness will be assumed. The acquirer will rely on the skill and judgment of the grower or manufacturer in ensuring the article is fit for human consumption. That was the situation in this case. If [he] had been asked [Mr Ryan] would surely have said he assumed the oysters were fit for human consumption; they were purchased from a supplier associated with a reputable grower.[8]

2. Was the Actual Reliance an Unreasonable Reliance?

As there was actual reliance, a s 74B defence based on non-reliance could not succeed. A successful defence by the Barclay companies to a s 74B claim, therefore, depended upon the companies showing that the oyster consumers ‘unreasonably relied’ on the supplier’s skill and judgment.

In this regard, the test was not one of whether the grower could reasonably have discovered a defect in the oysters. The question at issue was the reasonableness of the consumer’s reliance. Neither was the question one of the reasonableness of the manufacturer’s behaviour.

In the absence of a warning, therefore, the plaintiff was entitled to rely on the skill and judgment of the grower.

3. Trade Practices Act s 74D – Non Merchantable Quality

Section 74D of the Trade Practices Act gives a right of action by consumers against a manufacturer if the goods supplied are not of merchantable quality. The test under s 74D(3) for merchantable quality is that the goods must be: as fit for the purpose or purposes for which goods of that kind are commonly bought as is reasonable to expect having regard to:

(a) any description applied to the goods by the corporation;

(b) the price received by the corporation for the goods (if relevant); and (c) all the other relevant circumstance.

Again, the question was not whether it was possible for the grower to ensure that the oysters were free of viruses but whether a purchaser would act reasonably in expecting they were. Section 74D (unlike s 74B which directs attention to the action of a particular consumer), imposes an objective standard (what is reasonable to expect) albeit that this standard must be applied in all the relevant circumstances. In the present case, these circumstances include the absence of any warning that there was a possibility of any virus in the oysters.

In interpreting s 74D, the knowledge of a reasonable hypothetical consumer is not to be matched against the technical knowledge of oyster growers. In the case of oysters, the reasonable hypothetical consumer is entitled to assume that oysters are safe.

Under both s 74B and s 74D, the plaintiff succeeded against Barclay Oysters but not against Barclay Distributors. Barclay Distributors were not the ‘manufacturers’ of the oysters. It is to be noted, however, that no action was taken against Barclay Distributors under s 71 of the Trade Practices Act as supplier of the relevant oysters. Had this been done, presumably, in view of the other findings in the case, Barclays Distributors would have been liable in respect of the supplied goods being unfit for their purpose and not being of merchantable quality.[9]

Lee J and Keifel J agreed with the reasoning of Lindgren J.

III TRADE PRACTICES ACT PART VA: LIABILITY FOR DEFECTIVE GOODS

Liability under Part VA was decided unanimously against Mr Ryan in the Full Federal Court. It was not the subject of appeal to the High Court.

Section 75AD of the Trade Practices Act provides that liability attaches to a manufacturer of goods if ‘they have a defect’. Section 75AC(1) provides that: goods have a defect if their safety is not such as persons generally are entitled to expect.

There is a defence under s 75AK(1) if the manufacturer establishes that: the state of scientific or technical knowledge at the time when (the goods) were supplied by their actual manufacturer was not such as to enable (the) defect to be discovered.

Justice Lindgren wrote the leading judgment in the Full Federal Court. His Honour noted that the ultimate test in relation to each individual oyster was flesh testing. Only in this way could there be a guarantee in respect of each oyster. But flesh testing, whilst it may well reveal the relevant defect, would destroy the goods. Flesh testing was not available as a testing by way of sample because of the inability to apply the test of one oyster more generally to a bulk of oysters. So a flesh test of an individual oyster did no more than establish the situation in relation to the oyster actually tested.

Given that flesh testing was inappropriate for the above reasons, the question was whether any other test was available ‘to enable (the) defect to be discovered’ (s 75AK(1)). If some scientific test or technical knowledge had been discovered and this did not involve the destruction of the oyster involved, His Honour was of the view that Barclay Oysters, unless they used this test, would not have been able to utilise the defence in s 75AK(1). However, there was no such test. Thus Barclay Oysters were entitled to succeed pursuant to the s 75AK(1) defence available to it.

Lindgren J did comment, though obiter, that it would be an interesting question which may have arisen as to whether the s 75AK(1) defence was to import a modifying notion of reasonableness and practicability. Questions of cost might then be relevant — for example if extrapolation from sample to bulk was valid but the sample had to be tested in a geographically distant laboratory at great cost. However, His Honour concluded that, in this case, he did not have to explore the issue.

Keifel J and Lee J agreed with the above reasoning.

IV CLAIMS BY MR RYAN AGAINST THE BARCLAY COMPANIES IN RESPECT OF COMMON LAW NEGLIGENCE

A The Trial Judge’s Decision

At trial, His Honour held in relation to testing that a prudent oyster grower need do no more than depurate and rely on E. coli flesh tests. There was nothing else which could be done by way of testing. His Honour, however, held that an oyster grower had an overall duty to take all steps reasonably open to obtain a virus-free growing environment and, if this was impossible, to refrain from selling oysters for human consumption except perhaps with a warning about the risk in eating them.

The Barclay companies, said the trial judge, could have made a sanitary survey. Governmental and local governmental involvement in this was essential yet no approach was made to either.

This breach of care by Barclay Oysters, said the trial judge, did not make all their distributors liable in negligence. However, Barclays Distributors was controlled by Barclay Oysters, the grower company. It was, therefore, fixed with an unusual degree of knowledge about the circumstances of the production of the product it distributed. Therefore, it too was liable to Mr Ryan in negligence.

B The Full Federal Court

2. Judgment on Appeal of Lee J (upholding negligence claims against Barclay Oysters) His Honour agreed with Keifel J as to the negligence of the Barclay companies.

3. Judgment on Appeal of Lindgren J in dissent (upholding the Barclay Oysters Appeal on the question of negligence) Lindgren J thought that the Barclay companies were not liable in negligence. They were unaware of the various ‘developments’ in construction around the lake that might cause lake pollution. They tested the product after rain and these tests had proven satisfactory. However, as has been noted, even satisfactory tests did not necessarily signify an absence of viruses.

So far as Mr Barclay knew, said Justice Lindgren, the lake water was safe to grow oysters. There had never been any prior outbreak of hepatitis even though there had previously been similar rainfall events. In any event, by having oysters flesh tested, Mr Barclay was taking precautions beyond those which could reasonably have been expected. His Honour noted that depuration and flesh testing cannot ever absolutely guarantee that an oyster is safe to eat. His Honour did not think that a sanitary survey could reasonably be demanded of the Barclay companies because precautions to be taken in order to assess negligence involve ‘a consideration of the magnitude of the risk and the degree of probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action.’[11]

On this test, Justice Lindgren concluded that the Barclay companies did not have to go as far as making a sanitary study unless and until they realised that there was a real problem. To require a sanitary survey to be done involved a closure of business until there was a complete assurance that a product was produced which was free of defects. This assurance was impossible to give because of the inadequate nature of the testing procedures available. These testing procedures could never give a totally scientific incontrovertible result.

4. Full Federal Court Conclusion as to the Liability of the Barclay Companies in Negligence The Barclay companies were thus held liable in negligence in the Full Federal Court (Lindgren J dissenting). No distinction was made between Barclay Oysters and Barclay Distributors as they were both under common control and each had the same duty of care.

C The High Court

1. Joint Judgment of Gummow and Hayne JJ (with which Gaudron J agreed) The leading judgment in the High Court is the joint judgment of Gummow and Hayne JJ (with which Gaudron J agreed). Their Honours relied initially on Brodie v Singleton Shire Council [13] to conclude that the Barclay companies did not have a duty to ensure the safety of oysters in all circumstances. They continued their analysis by reference to Wyong Shire Council v Shirt where it was held that:

In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant’s position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man’s response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have.[14]

Their Honours noted that neither Lee J nor Keifel J in the Full Federal Court had approached the issue by the reasoning process which Wyong Shire Council v Shirt mandated.

Their Honours thought that an evaluation of negligence necessarily involves an inquiry as to what should be done: ‘No conclusion of negligence can be arrived at until, first, the mind conceives affirmatively what should have been done’. [15] The trial judge and the majority of the Full Federal Court had not evaluated the reasonable response to the risk of the harm that existed and, in failing to do this, they had fallen into an error of law.

The risk of injury was not far-fetched or fanciful, and indeed the Barclay companies knew of the risk, although there was some dispute as to whether they had knowledge of any specific pollution problems. The reasonableness of the response had to be gauged by the fact that there had been similar rainfall in previous years. There had been a cessation of harvesting after such rain and no problems resulted. There was no reason to believe that there would be any greater contamination caused by the rainfall in question in the case. Harvesting was recommenced only when the relevant tests which could be carried out were in fact carried out.

Their Honours also noted that, in assessing the reasonableness of a response, it had to be borne in mind that there was simply no practicable test to detect the presence of hepatitis A in estuarine water. Thus it was (and still is) not possible to eliminate entirely the risk of viral contamination in oysters. Likewise, contrary to the reasoning of Keifel J in the Full Federal Court, there is no readily identifiable ‘sufficient period’ following rainfall after which there was no risk of contamination.

Neither could the Barclay companies alone have carried out an effective and comprehensive sanitary survey. They did not have the statutory power of search and entry possessed by the Great Lakes Council and the State of New South Wales. They could not compel the rectification of any defects causing faecal pollution. There was thus, in the absence of willingness by either or both the Council or the State to conduct regular and comprehensive sanitary surveys, little the Barclay companies could do to address the pollution sources that were contaminating the lake.

In the ultimate, the only action the Barclay companies could take was not to harvest oysters for an unspecified, potentially indefinite period following rainfall. Whilst a risk of contamination was ever present, this was the first case of contamination at Wallis Lake in almost a century of oyster growing. The degree of likelihood of contamination could not be said to justify the above difficult, expensive and inconvenient alleviation action which was contended for by the plaintiff.

2. Judgment of Justice McHugh

Justice McHugh, in all relevant respects, articulated akin principles to those set out in the joint judgment of Justices Gummow and Hayne.

3. Minority Judgments — The Separate Judgments of Justices Gleeson, Kirby and Callinan JJ The minority (Gleeson CJ, Kirby J and Callinan J[16] ) who would have held the Barclay companies liable in common law negligence did so, in the writer’s view, only tentatively.

Gleeson CJ did so on the basis that the Full Court conclusion did not involve any error and that the High Court should not substitute its findings for those made at trial.

Kirby J noted that no injustice or error was caused by the majority view of the Full Federal Court. [17] He noted, however, that any suggestion that the Barclay companies should have ceased oyster growing was unrealistic and that no such response was called for. Nonetheless he thought that the trial judge could conclude that the Barclay companies had been negligent in view of their total control over oyster growing. He adopted the view that harvesting should cease for a sufficient period (not apparently seeing the difficulty in defining such a period and being content simply to conclude that the period of cessation in the present case was inadequate). His Honour concluded:

Absolute certainty about safety could not be guaranteed. But it was open to the primary judge and the full Court to conclude that the two day interruption to the harvesting of oysters after the rain stopped was insufficient and that it represented a breach of duty of care that caused, or materially contributed to, the infection suffered by Mr Ryan and other consumers. [18]

Callinan J held in similar terms to Justice Kirby, concluding that the suspension of harvesting for longer than a few days may have significantly reduced the relevant risk. He thought that the trial judge’s decision should not be disturbed although commenting, ‘I might not perhaps have reached the same conclusion myself.’ [19]

V CLAIM BY MR RYAN AGAINST THE STATE OF NEW SOUTH WALES FOR NEGLIGENCE AND NONFEASANCE

A The Reasoning of the Full Federal Court Majority

B The High Court

• In determining whether a public authority has breached a common law duty by failing to act, it is essential to consider the words and policy of the relevant legislation.[20]

• Legislation may give a public authority such a wide discretion to exercise the power in question that a tribunal of fact cannot find that the failure to exercise the power constituted a breach of the duty.[21]

• Legislatures often vest discretionary powers in authorities for the purpose of protecting the community. But when powers are discretionary, the common law does not convert a discretion into a positive common law duty to act for the benefit of one or more members of the community. Unless the proper inference from a statute is that an individual has a personal right to the due observance of the conduct, and consequentially a personal right to sue for damages if he be injured by a contravention, breach of a statutory duty does not sound in damages.[22]

• Ordinarily the common law does not impose a duty of care on a person to protect another from the risk of harm unless that person has created the risk. Public authorities are in no different position. A public authority has no duty to take reasonable care to protect other persons merely because the legislature has invested it with a power whose exercise could prevent harm to those persons.[23]

• Central to the plaintiff’s case was that the State, in owing him a duty of care, exercised control over the Lake Wallis oyster industry. The mere granting of powers does not carry the grant of control over an industry. The legislation in question[24] merely enabled the State to supervise and manage fisheries in New South Wales and to issue licences in relation to the industry. It did not give the State control over the industry even though the State was legislatively required to mitigate the pollution of waters, had power to establish and supervise oyster leases and grant aquaculture permits, and was a participant in the Lake Wallis Estuary Management Committee, one of whose objects was to sustain a healthy, productive and attractive estuary. The greatest power the State possessed was a power at any time to prohibit the taking of oysters from the lake.

McHugh J put the position in relation to the obligation of public authorities in the following terms:

Where a plaintiff claims that a public authority owed him or her an affirmative duty of care in a situation that has not yet been recognised by the common law, the court must examine a number of matters to determine whether the duty existed. ….[These matters are]:

• Would a reasonable public authority reasonably foresee that its act or omission, including a failure to exercise its statutory powers, might result in injury to the plaintiff or his or her interests?

• Was the authority in a position of control and did it have the power to control the situation that brought about the harm to the injured person?

• Was the injured person or his or her interest vulnerable in the sense that the injured person could not reasonably be expected to adequately safeguard himself or herself or those interests from harm?

• Did the public authority know, or ought it to have known, of an existing risk of harm to the plaintiff or, in some cases, to a specific class of persons who included the plaintiff (rather than a risk to the general public)?

• Would the imposition of the duty of care impose liability with respect to the defendant’s exercise of ‘core policy-making’ or ‘quasi-legislative’ functions?

• Is there any supervening policy reason that denies the existence of a duty of care?

If the first four of these questions are answered in the affirmative and the fifth and sixth questions in the negative, the court will ordinarily hold that the authority owed a duty of care to the plaintiff. Conversely, if any of the first four questions are answered in the negative or either of the fifth and sixth questions answered in the affirmative, ordinarily no duty of care will arise.[25]

Gleeson CJ concluded (as did the other judgments in similar terms) that, in his opinion:

The State had no relationship with the consumers of oysters that imposed on the State an affirmative duty to protect those consumers from harm created by the growers and distributors of oysters. That is so, even though the State ought to have reasonably foreseen that, unless it acted, oyster consumers might suffer harm. Knowledge or imputed knowledge that harm may result from a failure to take affirmative action is not itself sufficient to create an affirmative duty of care.[26]

Considerable emphasis was placed in the various judgments on the fact that State authorities are political creations. The judicial arm of government should be reluctant to pass judgment on the legislative or executive arms of government for action or inaction taken for political reasons. This is because such decisions necessarily involve issues of revenue raising and expenditure and claims upon scarce resources. Said Gleeson CJ:

Courts have long recognised the inappropriateness of judicial resolution of complaints about the reasonableness of government conduct where such complaints are political in nature.[27]

Space does not permit an analysis here of the remaining judgments.

The State was thus not liable for damages at the suit of Mr Ryan for the above reasons and for akin reasons expressed in other judgments of the Court.

VI CLAIM BY MR RYAN AGAINST THE GREAT LAKES COUNCIL

A Full Federal Court Decision

There was no direct responsibility on the Council for the operation of the oyster industry or in relation to the oysters harvested from the lake. There was no sufficient proximity, therefore, between the Council and oyster consumers and thus to hold the Council liable would mean that it was accountable to an indeterminate class of persons. All of these factors considered, it was not ‘fair, just and reasonable’ to impose a duty of care on the Council. The Council’s appeal was thus allowed.

B High Court Decision

The Local Government Act 1993 (NSW) granted the Council a wide array of powers to control pollution. Nevertheless, the statutory powers of the Council gave it less “control” over the Wallis Lake oyster industry than the “control” that the State had over the industry. Indeed, the Council, unlike the State, had no specific powers or functions in respect of oysters or the oyster industry. Nor did the fact that the Council had monitored the water quality of the Lake from 1989 to 1993 constitute “control” of those waters for the purposes of this branch of the law. The monitoring was carried out in the exercise of discretionary powers. It was for the Council to decide if and when it should monitor the Lake. Its monitoring created no relationship with oyster consumers such that the failure to continue monitoring was a breach of a common law duty of care. The Council had no control over the industry in any relevant sense.[28]

VII INTERACTION OF TORT LAW AND THE TRADE PRACTICES ACT

A Gaudron J

Her Honour made an akin comparison in relation to Part VA and the ‘state of knowledge’ defence. Her Honour noted that there should not be a variation in this regard between statutory requirements and common law duties.

B Gummow and Hayne JJ

C Kirby J

His Honour noted that the question of whether common law can exist side by side with the provisions of the Trade Practices Act has been noted by the Court in earlier decisions and analogous issues have received Court attention in the United States in an antitrust context. However, because the issue of statutory ‘pre-emption’ was not expressly raised by any party as a fundamental ground of objection to Mr Ryan’s claims based on common law, it was appropriate to proceed on the basis that claims can exist concurrently. His Honour noted that a claimant could not, of course, recover twice but would be obliged to elect before enforcing judgment.

VIII LESSONS FROM THE CASE

• There is a fundamental difference between ‘sale of goods’ type obligations (warranties as to fitness for purpose and merchantable quality) and negligence claims. Fitness for purpose evaluations do not depend upon the reasonableness of the manufacturer’s behaviour but on the reasonableness of the consumer’s reliance. Merchantable quality is an objective standard and, for this reason, it is not a question of the reasonableness of the producer’s actions which has to be evaluated. The relevant issue is whether or not a product comes up to the appropriate standard. ‘Sale of goods’ type warranties are strict liability warranties and are unrelated to negligence issues. Though this point has been made in many prior cases, it is frequently misunderstood. The Full Federal Court’s unanimous holding in this regard underlines the importance of the differing liability approach in negligence cases to that in ‘sale of goods’ warranty cases.

• The ‘state of scientific knowledge’ provisions of the Trade Practices Act were a complete defence to proceedings under Part VA. This defence would not have been available if there were, in fact, technical knowledge available which the Barclay companies could have utilised. But there was not. The obiter comments of Justice Lindgren in the Full Federal Court do, however, raise an interesting question which will, no doubt, be decided on another day. Do the relevant provisions of Part VA in relation to the ‘state of knowledge defence’ import a modifying notion of reasonableness and practicability? Questions of cost might be relevant. For example, if there were a valid test available but this could be utilised at a geographically distant laboratory at great cost, is there an obligation to utilise the available test?

• At the Full Federal Court level, the seemingly contradictory conclusion was reached that the Barclay companies were exonerated under the strict liability provisions of Part VA (because there was nothing they could do to eliminate the risk as there was no scientific way of doing so) but were, nonetheless, found to be negligent at common law. This position did not ultimately survive in that the High Court reversed (but only by a majority of 4:3) the Full Federal Court on the negligence issue. The case does point to the possibility, however, that defendants may be held to be negligent at common law yet not be liable under the seemingly more stringent strict liability provisions of Part VA of the Trade Practices Act. The High Court has, in the writer’s view, sensibly brought the two principles into alignment in this particular case. This does not mean, on the present state of the law, that there is no possibility of future divergence.

The Court foresees the problem of different statutory and common law duties. The findings in the case in fact gave rise to the same obligations, meaning that a precise conclusion as to the interaction of different, but akin, liabilities was not necessary. Justices Gaudron, Hayne, Gummow and Kirby, however, expressed obiter some disquiet as the possibility of divergent interpretations of akin obligations. Justice Gaudron expressed the view quite specifically that there should be the same interpretation given to Part VA on the ‘state of scientific knowledge’ question as that given to the deciding of negligence issues at common law.

• The case is of particular importance in relation to what constitutes common law negligence. Clearly enough, there will be fine line evaluations in this area. The trial judge, two of the three judges of the Federal Court and three of the seven High Court judges thought the Barclay companies negligent at common law (making a total of six judges finding negligence as against five not so finding). The points made by the High Court majority are, however, of importance. These include the following:

– There is no duty to guarantee safety in all circumstances.

– The question is initially whether a reasonable person would have foreseen the risk.

– If there is foreseeability, the issue is then a question of the appropriate response. This calls for an evaluation of the magnitude of the risk, the probability of its occurrence and inconvenience of taking any alleviating action.

– No conclusion as to negligence can be reached unless the Court can conclude, affirmatively, what should have been done.

• The judgments discuss at length the obligations of statutory authorities. Perhaps Callinan J expresses the cardinal point in an encapsulated form when he cites Earl Cairns LC with approval as follows:

There may be something in the nature of the thing empowered to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so.[35]

Justice Callinan said that, if there is no duty to exercise the power involved, then a statutory authority cannot be held guilty of nonfeasance in not exercising that power. He doubted if it was possible to make a more accurate or better statement of the obligations of statutory authorities.

Clearly enough the question of whether the relevant statutory authority had control over the relevant industry was also a factor of significant importance to the Court in its determination as to whether or not a statutory power should be exercised.

• Observations by Justices Gaudron, Gummow and Hayne and Kirby on the interaction of common law remedies and the Trade Practices Act remedies, though clearly obiter, are of interest. Their Honours clearly envisage that Federal legislation may ‘cover the field’ so as to preclude common law remedies. Their Honours may be inviting further debate on this issue in future cases. Clearly enough, Justice Gaudron sees the statutory provisions of the Trade Practices Act and common law negligence principles requiring, on policy grounds, an akin interpretation. The Courts may in future, on policy grounds, be looking at further interpretational convergence. There seems much to be said for the application of the same standard of liability in akin cases.

• The complexity of cases such as this and the multiplicity of claims which can be pleaded at common law and under various State and Federal statutes perhaps demonstrates a real need for a consolidation of Australian law into one manufacturer’s liability statute. The case illustrates the subtle nuances of the various possible claims and, whilst this situation continues, necessarily all possible claims will continue to be pleaded. Industry certainty could well be considerably advanced by a consolidation of all liability provisions in one place.

• Finally, it must be stressed that this action was a ‘representative action’ in the Federal Court under the Federal Court of Australia Act. Basic issues of liability have been established in relation to the case brought by Mr Ryan. However, how the court administers the class will be interesting to observe. The damages of each class member will be different as each will have suffered different physical conditions. The administration of class actions is probably the real challenge which the Court faces — and in relation to which, the Court has little experience to date.

Undoubtedly the Wallis Lake Oyster litigation will be much cited in future in any study of product liability and ‘sale of goods’ warranty issues. A major development which will be watched with interest is the interaction of the Trade Practices Act and common law remedies. Four Justices of the High Court have opined, albeit obiter, that this issue is one which they would like to examine further.

[1] Ryan v Great Lakes Council [1999] FCA 177 (Wilcox J).

[2] Graham Barclay Oysters Pty Ltd v Ryan [2000] FCA 1099 (Lee, Keifel and Lindgren JJ).

[3] [2000] FCA 1220.

[4] Graham Barclay Oysters Pty Ltd v Ryan ; Ryan v Great Lakes Council; State of NSW [2000] HCA 54 (Gleeson CJ; McHugh, Gummow, Kirby; Hayne and Callinan JJ. Justices Gummow and Hayne wrote a joint judgment. Each other Justice wrote a separate judgment).

[5] For example, Sale of Goods Act (NSW) s 19(1) [fitness for purpose]; s 19(2) [merchantable quality]. The provisions of s 74B and s 74D of the Trade Practices Act (TPA) apply only in relation to goods of a kind ordinarily acquired for personal, domestic or household use or consumption. [TPA s 74A(2)] They permit recovery by a consumer by way of a direct action against a manufacturer even if the consumer had no contractual relationship with the manufacturer. The TPA also has provisions permitting action against the party with whom the consumer contracts (normally the product retailer) — see s 71(1) (merchantable quality); s 71(2) (fitness for purpose). In the litigation, only the oyster producer (Barclay Oysters) was proceeded against (under TPA s 74B and s 74D). The supplier reseller (Barclay Distributors) was not joined in the litigation under the statutory provisions of the Trade Practices Act though it was joined in the litigation in other claims.

[6] Gummow and Hayne JJ (in a joint judgment with which Gaudron J agreed) and McHugh J allowed the appeal. Gleeson CJ, Kirby J and Callinan J in separate judgments dismissed the appeal. The various judgments are discussed in greater detail hereunder.

[7] Wilcox J’s analysis ran to 23 pages.

[8] [1999] FCA 177, 364.

[9] See generally commentary at n 5, above.

[10] ‘Nugatory’ is used here in the sense of ‘futile’ or ‘inoperative’, rather than ‘trifling’. 11 Wyong Shire Council v Shirt (1979–[1980] HCA 12; 1980) 146 CLR 40, 47.

[12] See n 6, above.

[13] Brodie v Singleton Shire Council [2001] 206 CLR 627–8.

[14] Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40, 47–8.

[15] Graham Barclay Oysters Pty Ltd v Ryan; Ryan v Great Lakes Council; State of NSW [2000] HCA 54, [192] (Gummow and Hayne JJ) citing Isaacs ACJ in Melbourne Gas Co v Melbourne Corporation (1924) 35 CLR 186, 194.

[16] Graham Barclay Oysters Pty Ltd v Ryan; Ryan v Great Lakes Council; State of NSW [2000] HCA 54, [41 et seq] (Gleeson CJ), [253 et seq] (Kirby J), [328 et seq] (Callinan J).

[17] Kirby J uses the case as a forum for discussion of a methodology in relation to common law negligence principles: ibid [225–44]. It is not here possible to discuss his Honour’s views in this regard. He concludes (at [244]) that the search for a simple formula may be a ‘will-o’-the wisp’.

[18] Graham Barclay Oysters Pty Ltd v Ryan; Ryan v Great Lakes Council; State of NSW [2000] HCA 54, [260] (Kirby J).

[19] Ibid [330] (Callinan J).

[20] Ibid [78] (Gleeson CJ).

[21] Ibid.

[22] Ibid [79] (Gleeson CJ).

[23] Ibid [81] (Gleeson CJ).

[24] The legislation is set out in Gleeson CJ’s judgment, ibid [92].

[25] Ibid [84] (McHugh J).

[26] Ibid [95] (Gleeson CJ).

[27] Ibid [6] (Gleeson CJ).

[28] Ibid [96] (McHugh J).

[29] Ibid [62] (Gaudron J).

[30] Ibid [63].

[31] Ibid [64].

[32] Ibid [129] (Gummow and Hayne JJ).

[33] Ibid [62] (Kirby J).

[34] ‘Gallimaufry’ is defined in the Australian Oxford Dictionary as ‘a heterogeneous mixture; a jumble or medley. [ORIGIN: French galimafrée, of unknown origin.]’

[35] Graham Barclay Oysters Pty Ltd v Ryan; Ryan v Great Lakes Council; State of NSW [2000] HCA 54, [310] (Callinan J) citing Earl Cairns LC in Julius v Lord Bishop of Oxford (1880) 5 App. Cas. 214, 222–3.