The Australian government will have to pay substantial damages to a Northern Territory cattle company after the federal court ruled that the blanket suspension of live cattle export in 2011 was invalid, “capricious and unreasonable”, and amounted to “misfeasance in public office”.
The then agriculture minister, senator Joe Ludwig, signed a six-month suspension of the live cattle trade to Indonesia on 7 June 2011, in response to an ABC Four Corners report that showed shocking footage of Australian cattle being slaughtered inhumanely in Indonesian abattoirs.
The footage sparked a public outcry and Ludwig told cattle industry members in a meeting several days later that they had lost their social licence to operate.
The agriculture department estimated it would take six months to establish a regulatory framework for a closed loop system, to ensure that cattle exported from Australia were processed only in approved facilities in Indonesia that met minimum international animal welfare standards.
In 2014, the NT-based Brett Cattle Co led a class action against Ludwig and the department claiming it had lost the opportunity to sell about 2,776 head of cattle during the ban, and suffered losses totalling about $2.5m.
To date 30 parties have joined the class action, calling for up to $600m in compensation. The commonwealth has agreed to meet any costs or damages for which the minister is found liable.
The case has been before the federal court for six years, and awaiting judgment for 18 months.
In a judgment handed down on Tuesday, federal court justice Steven Rares said the order Ludwig made on 7 June 2011 was invalid because it failed to include any exemptions for exporters who had already established a closed loop system.
“Such a total prohibition was capricious and unreasonable and made the ban order invalid,” he said.
Rares said Ludwig knew when he made the ban order that Australia had exported more than 500,000 live cattle to Indonesia the year before, worth about $400m, and had been told by the live export industry that there were supply chains in Indonesia that had a closed loop system with animal welfare standards compliant with the international code, or that could be readily adjusted to have one.
Rares said Ludwig made no attempt to explore negotiating a solution with the Indonesian government before making the ban order, and did not talk to his Indonesian counterpart until after the order was made.
Ludwig had no legal advice that he could lawfully make the order in such form, but had sought legal advice about the government’s potential exposure to compensation claims if he made a temporary ban.
“Yet, with that knowledge the minister plunged ahead regardless,” Rares said. “He made the ban order shutting his eyes to the risk that it might be invalid and to the damage that it was calculated to cause persons in the position of Brett Cattle.”
Rares said Ludwig was “recklessly indifferent” to his powers under the Export Control Act 1982 to make a ban order in “absolutely prohibitory terms without providing any power of exception” and also the financial impact of such an order.
“Accordingly, the minister committed misfeasance in public office when he made the ban order on 7 June 2011,” he said.
Rares said that instead of a ban order, the minister should have made another control order, similar to that made on 2 June 2011, which allowed him to make exceptions for exporters working in closed loop systems if he was satisfied animal welfare standards had been met.
The ban was repealed on 7 July 2011, after the introduction on 27 June of the Export Supply Chain Assurance System, which is intended to ensure animals exported live from Australia are slaughtered only in approved facilities.
Had Ludwig introduced another control order instead of a ban, Rares said, Elders and Santori – two of the largest cattle exporters in Australia – would have been able to obtain approvals to keep exporting, and “significantly more” cattle would have been exported.
Damages will be decided following a hearing later this month.
Tracey Hayes, the former chief executive of the Northern Territory Cattlemen’s Association, said the ruling should make “government and decision-makers more accountable and highlights the dangers of knee-jerk reactions and political stunts”.
“The truth is the shutdown wasn’t required,” she told reporters in Canberra after the judgement was handed down. “Had calm heads prevailed and established government decision-making processes been followed, both the livelihoods of our farmers and many, many others in the supply chain and the welfare of our animals could have been protected.”
Hayes also said the win, which was substantially funded through the Australian Farmers Fighting Fund, highlighted “the great strength agriculture and regional Australia has when it unites for a common cause”.
