Lessons From The Lake

Transcription

1 Lessons From The Lake Ken Fowlie Associate Slater & Gordon, Solicitors 8 October 1999 Background In January and early February 1997, NSW Health began detecting higher than usual notifications for viral Hepatitis A in New South Wales. Viral Hepatitis A is an acute condition transmitted via the faecal-oral route. The virus only multiplies in humans. The source of infection must ultimately be human sewage or excrement. In the face of rising notifications, NSW Health undertook investigations. Those diagnosed with Hepatitis A were asked to complete questionnaires concerning their behaviour, including whether they had consumed foods such as shellfish. A pattern began to emerge. Oysters cultivated in Wallis Lake were suspected as the source of the outbreak. On 14 February 1997 the Department of Health issued a warning that Wallis Lake oysters were suspected in an epidemic of viral Hepatitis A. The Oyster farmers voluntarily recalled their products from sale. Viral testing of oysters was undertaken at Wallis Lake. The tests detected traces of the Hepatitis A virus in oysters cultivated from there. Tests of sediments and water revealed other viruses known to be associated with recent human sewage. Those results, and other associated investigations, satisfied the authorities that the epidemic was associated with human faecal pollution at Wallis Lake. The Class Action Grant Ryan was one of those who had the misfortune to consume oysters cultivated in Wallis Lake. He started to feel unwell on 31 January 1997, the day that his young son was born. By 3 February 1997, his doctor had diagnosed him as suffering with viral Hepatitis A. As a result of his illness, Grant was bedridden. He could not work as a plumber and he could not help his wife look after their newborn son or their other 5 children. Grant approached Slater & Gordon. After reviewing Grantis circumstances and the circumstances of hundreds of other sufferers who contacted the firm, Slater & Gordon decided to commence Federal Court representative proceedings for compensation on behalf of the victims. Grant Ryan agreed to act as the representative applicant. The statement of claim and application was lodged with the Federal Court in Sydney on 13 March At the time that the proceedings were commenced 14 parties were named as respondents to the action, including the Great Lakes Shire Council (the municipality in which Wallis Lake is located) and Graham Barclay Oysters Pty Limited (the largest oyster farmer in the region). The other parties included smaller oyster farmers and oyster distributors and wholesalers. In October 1997 the proceedings were 1/5

2 amended so that the State of New South Wales became a respondent along with further oyster distributors and wholesalers. During the 18 months between commencement and trial, the respondents tried countless legal strategies in an attempt to frustrate the claim and bring it to an early unsuccessful end. Attempts were made to dismiss the proceedings outright, demands for financial surety from the applicants were sought and access to important documents was refused by the State. After more than 10 separate direction hearings, one trip to the Full Court of the Federal Court and numerous motions, the case was fixed for trial by Justice Murray Wilcox commencing on 14 September Justice Wilcox decided that the first trial would only consider whether the Great Lakes Shire Council, Graham Barclay Oysters and the State of New South Wales were liable for what had occurred to Mr Ryan. His Honour also determined that he would decide what amount of compensation, if any, Grant Ryan was entitled to receive in connection with his illness. The trial ran for three weeks, concluding on 2 October The case opened at the Forster Local Court House at 10 am on Monday 14 September After hearing the opening submissions by Mr Terrence Tobin QC, for Mr Ryan, His Honour adjourned for a tour of the area. By boat, foot and car, Justice Wilcox and the parties spent the afternoon touring Wallis Lake and its surrounding townships of Forster, Tuncurry and Nabiac. Over the remaining 14 days, the Court was occupied with evidence from experts in water modelling, water quality, oyster cultivation and viral hepatitis A. On 5 March 1999 Justice Wilcox delivered judgement. In a comprehensive rebuff to the industry and the regulators of it, he held that each of the producer, local council and state Government had been negligent. The 400-paragraph judgment is a detailed critique of food safety in Wallis Lake and contains valuable lessons for other primary producers and industry regulators. The judgement was appealed by each party. The Appeal has been heard and a judgement from the Full Court of the Federal Court of Australia is expected to soon follow. The Lessons from the Lake The Wallis Lake experience provides lessons for both regulators and seafood producers. The Court hearing became a comprehensive inquiry into quality assurance issues in the mariculture industry in New South Wales. The Judgement of the Court goes into great detail considering those issues and their implications for stakeholders. The Lessons for Producers For producers and suppliers of seafood, the lesson from the Wallis Lake experience is that it is essential to do what is right and reasonable rather than rely on government or do only what government mandates. His Honour's conclusions concerning the activities of the oyster producer encapsulate the clear message for seafood producers arising from the case: 2/5

3 it is enough to say that it is not sufficient for the Barclay companies (or any other producer) to shrug off their knowledge of the possible pollution of the Lake by saying that this was someone else s responsibility [paragraph 353]. Once armed with knowledge of potential risks to health from oyster consumption which the producer had in the case, (and which one would assume most primary producers would have in relation to their product), the producer then had to take all reasonably available steps to prevent that risk coming home to consumers. It was not enough to simply take those steps which government regulation required. At another place His Honour said, Barclay's oysters were not obliged to ensure the absence of viruses, but it was obliged to take the steps reasonably open to it 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 other important reminder for producers of seafood from the Wallis Lake case is the power of the consumer protection provisions contained in the Trade Practices Act 1974 (The Act). Division 2(A) of Part 5 of the Act deals with actions against manufacturers and importers of goods. Section 74(B) deals with unsuitable goods, Section 74(C) with goods that do not correspond with their description and Section 74(D) with goods of unmerchantable quality. Section 75(A)(D) deals with liability in manufacturers and importers for defective goods causing injury. The Court held that 'manufactured' within the meaning of the Act included the activities of a corporation which grows, harvests, cleans, depurates or packs oysters for distribution. The Court also dismissed any suggestion that growers should be afforded some leeway because people purchase oysters knowing or suspecting that it is impossible to ensure that they are free from viral or other contamination. On the contrary, the Court found that most consumers assume that there are procedures and tests that enable a grower to ensure that the product produced is fit to eat. Moreover Justice Wilcox indicated that it would come as a surprise to most members of the public to learn this is not necessarily so. While the Court accepted that it is impossible to ensure that a particular oyster is free from viral contamination, it is possible to minimise that risk. In the end the Court decided that because the oysters were not sold with a warning, producers were not entitled to any protection or leeway that might otherwise be available under the Act (because of difficulty in preventing contamination and uncertainty in detection techniques). Therefore, the full force of the Act came to the aid of affected consumers. His Honour's Judgement about the Trade Practices Act only serves to reinforce the central lesson arising from the case for producers. Producers must do everything reasonably in their power to avoid a risk of food contamination becoming a case of food poisoning. Apart from warnings and suspensions of harvest as measures of last resort, the Court also talked about other steps which a producer could take, including pressuring government agencies for action and taking things into their own hands (i.e. conducting their own pollution surveillance). 3/5

4 The Lessons for Regulators The inquiry conducted by the Judge into the circumstances at Wallis Lake demonstrated that both the local council and the State Government, through its various agencies, had assumed a management responsibility for Wallis Lake and for the oyster industry within it. The regulatory agencies of the State were armed with sufficient knowledge and power to minimise the risk of the Lake becoming contaminated with human effluent which in turn they knew posed a risk to the oysters cultivated in the Lake and ultimately threatened the health of consumers who ate those oysters. The Trial Judge found that the local Council and the State failed to exercise the management powers which they had assumed in such a way as to minimise the risk of Hepatitis A infection by oyster consumers. The State Government in its submissions argued to the Trial Judge that all it had done was set up a regime by which the industry could be self-regulating. It was further argued that the Court should not look behind that regime with a view to criticising it as being either inadequate or implemented in an untimely fashion. The decision to regulate the industry in this way was argued by the State to be a policy decision for the State which Courts should not second-guess. This model of regulation is all too common nowadays. Many governments in many industries adopt a similar, delegated partnership with industry approach with a government body overseeing, a so-called self-regulatory industry. This of itself is not undesirable. But does it absolve the Government of responsibility? The Court took the view that the State Government had done more than simply set up a mechanism at arms length. The State Government had created an environment in which it performed a critical management role. The Trial Judge described it thus, In the present case, the State did more than lay down rules and leave the industry to manage itself. Through various agencies, the State actively involved itself in the management of the Wallis Lake Oyster Industry. This is understandable. The State had a direct financial interest in the industry, as a lessor of oyster leases, as well as indirect financial interests and (presumably) social and political concerns. The determination by the Fisheries Department of the areas to be leased to oyster growers, and the supervision of their use, were activities within the operational area; as were the depuration activities of the Health Department and indecisions by the minister as to the closure or non closure of the fisheries. The EPO was involved in inspections and directions in relation to the premises in the Wallis Lake catchment area. Decisions by the EPO regarding the necessity to inspect premises for the purpose of determining whether they were sources of water pollution were decisions in the operational area. In sum total, through various agencies the New South Wales Government exercised substantial managerial control over the Wallis Lake Oyster Industry. It exercised that control by day to day operational decisions'. [334] The Trial Judge went on to conclude, despite the attempts by the State to characterise the arrangement differently, that the State was 'the ultimate manager of the fishery [340]. 4/5

5 Having determined that the State played an operational, day to day management role in the fishery it was incumbent on the State to discharge that responsibility reasonably. In the end His Honour decided that State had a body of knowledge concerning the real risk of contamination of the Lake by human effluent. As a minimum the State should have ensured that the reasonable step of a comprehensive and competent sanitary survey was undertaken to safeguard public health. Absent which, it was then up to the state to take the seemingly unpalatable action of closing the fishery. The State of New South Wales, and the local council, did neither and the Court held them each responsible for that failure. The risk of litigation is real The incident at Wallis Lake was not the first occasion where consumption of oysters has been associated with widespread bouts of gastrointestinal illness. Successive outbreaks in the Georges' River of Sydney lead ultimately (in connection with other disease issues) to the devastation and ultimate destruction of that fishery. One of the interesting differences between the Wallis Lake episode and earlier episodes is the different attitude of consumers concerning their rights to quality food. In this case perhaps, the change of attitude of consumers can be in part attributed to the seriousness of the illness which was contracted. Hepatitis A, whilst an acute illness is nevertheless significantly debilitating and in some persons can lead to chronic sequelae. However, the other factor, which is at least as important and certainly worth bearing in mind, is the change of attitude amongst consumers concerning food quality. The days when consumers tolerated or accepted occasional bouts of food poisoning (if they ever existed) are long past. Consumers expect to receive food which is fit to eat and do not expect or accept that food which when delivered for consumption is liable to be contaminated. The onus rests with industry to embrace food quality measures. By doing so, industry will build and maintain consumer confidence and ultimately avoid the risk of civil litigation. 5/5