On Saturday morning, a group of kiwifruit growers announced they had reached a settlement with the Crown over damages they suffered after virulent kiwifruit vine disease PSA entered New Zealand. The bacteria arrived in 2009 in imported Chinese pollen because of a Ministry of Primary Industries biosecurity blunder at the border, and it devastated the industry.

The growers wanted $450 million, plus interest, to compensate them for the destruction of their orchards; in some cases the destruction of their livelihoods. 

But late on Friday night, with the final stage of a seven year-long court battle due to start in the Supreme Court today, they settled for $40 million.

$40 million versus $450 million.

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Kiwifruit Claim chair and affected grower John Cameron says once the group has paid legal costs and the fee for litigation funding company LPF that made the action possible, the 212 farmers will get around 5 cents in the dollar for what they lost.

“It’s a joke,” says Cameron, “But what can we do? Our hands are tied”.

“People got torched by the PSA outbreak,” he says. “They had to sell assets to cover their losses. Some had to get out of the industry completely. They are bitter, they are struggling. And they have every reason to be.”

John Cameron says growers could have ended up with nothing if they hadn’t accepted the $40 million offer. Photo supplied

But at least it was a bird in the hand. A meagre, scrawny bird perhaps, but it was just too precarious to rely on a positive outcome for the 212 growers in the Supreme Court, Cameron says. Because although the original High Court case found the Ministry for Primary Industries was liable to pay compensation, that judgement was overturned by the Court of Appeal.

The farmers could have ended up with nothing.

“Our case was meritorious and deserving but we understand litigation is extremely risky and uncertain even for cases with such strong facts such as this one. 

“While both the High Court and the Court of Appeal confirmed the Ministry for Primary Industries was responsible for the incursion, the Court of Appeal found the Government was not liable for the losses.”

Read more:
The case of the catastrophic bacteria and government’s liability 
The ‘opening the floodgates’ implications for the government if they had lost the PSA case

The settlement will be a big relief to the Government because it establishes as the precedent the Court of Appeal’s view that the Ministry of Primary Industries could be negligent but not liable, says David Friar, partner and head of law firm Bell Gully’s litigation department. 

“The Court of Appeal ruled that the government did not owe any duty of care [to the kiwifruit growers for any mistakes MPI made], and that in any event the government had an immunity from any claims. The settlement means that there is now no possibility that the Court of Appeal’s decision will be overturned by the Supreme Court.”  

Ministry for Primary Industries chief executive Ray Smith called the settlement “a sensible one on a per-head basis given the number of claimants in the class action, and their legal and litigation funder costs”.

“Sensible” for whom? Cameron says MPI’s first offer was lower and they weren’t going to budge. Sensible, take it or leave it.

In many respects this is a devastating outcome after what Cameron calls “a very long, hard, and stressful fight for the kiwifruit growers who are part of the claim”. 

The King can do no wrong

They sought to fight the old maxim that ‘the King can do no wrong’, an outdated idea of sovereign immunity which, in theory was overridden by New Zealand’s Bill of Rights.

The passing of that legislation meant, in theory, the Government could be sued, just like anyone else. But there are exemptions – designed to make sure officials can still do their job – and the Crown argued immunity in the kiwifruit case. 

They also argued they should not have to pay out to kiwifruit growers because of something called “indeterminacy”, which is about protecting a defendant from having to pay an indeterminate amount to an indeterminate number of people, for an indeterminate time.

And the Court of Appeal agreed. 

No one wants floodgates – taxpayers being forced to pay out millions of dollars every time an overworked government official makes an inadvertent mistake. 

But at the same time, no one wants it to be impossible for ordinary people who find themselves massively out of pocket through no fault of their own to have any comeback.

Leaky buildings. Christchurch earthquake repairs.

Lawyers Newsroom talked to thought the Supreme Court could have gone either way.

‘The little guys have achieved accountability’

So was it all worth it? Yes, Cameron tells Newsroom. The PSA case has let officials know there are consequences when you don’t do your job properly. The Ministry for Primary Industries was found to be negligent, even if it wasn’t found to be liable.

This is one for all primary producers, he says.

“I’m a kiwifruit grower and I also have avocados and I’m a dairy farmer. I’m happy with MPI being held responsible and I know they have made improvements to operations.”

The Ministry’s Ray Smith says the settlement “acknowledges the grievance felt by the kiwifruit sector plaintiffs” and says systems have changed since 2009. 

“Much work has been done to enhance and improve the way we manage pre-border risk, import processes at the border and incursions that inevitably occur.”

And that’s a victory, Cameron says.

“If the case had not happened [the mistakes which led to PSA being introduced into New Zealand] would have been washed under the carpet. So I’m proud of what’s been done. 

“The little guys have achieved something. They have achieved accountability.”

Nikki Mandow was Newsroom's business editor and the 2021 Voyager Media Awards Business Journalist of the Year @NikkiMandow.

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