A farmer accused of contaminating his neighbour's crops with genetically modified canola has won a landmark case in the West Australian Supreme Court.

The decision could have wide-reaching implications for the production of genetically modified crops in Australia.

Michael Baxter was being sued by his neighbour, Steve Marsh, an organic certified farmer who alleged his farm in the Great Southern region was contaminated by GM material blown onto his property from Mr Baxter's land.

Mr Marsh claimed the contamination caused him to lose his organic certification on more than half his Kojonup property for almost three years.

But Justice Kenneth Martin said Mr Baxter could not be held responsible just for growing a GM crop in a conventional way.

"The end of season winds and the blowing of swathes from Sevenoaks eastwards into Eagle Rest had not been an outcome intended by Mr Baxter," he said in his judgment summary.

"Even so, no physical injury whatsoever had been sustained at Eagle Rest in consequence.

"Mr Baxter was not to be held responsible as a broadacre farmer merely for growing a lawful GM crop and choosing to adopt a harvest methodology (swathing) which was entirely orthodox in its implementation."

Judge says neighbour's action 'without precedent'

Justice Martin said Mr Marsh's action was "without precedent."

"No basis in principle was shown to extend the law to these events," he said.

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"Furthermore, Mr Baxter had not been shown to have acted negligently, either by growing or then by swathing the lawfully grown GM crop in 2010."

Mr Baxter planted GM canola in two paddocks in 2010.

The farmers' properties are separated by a single road and Mr Marsh's lawyers said the selection of both the crop location and the method of harvest contributed to the contamination of Mr Marsh's land.

Mr Marsh's lawyers told the court that Mr Baxter's decision to harvest into swathes, rather than taking the seeds directly from the paddock using what is known as direct heading, created a foreseeable risk.

However, Mr Baxter's lawyers told the court their client was simply exercising his right to grow a crop that was judged safe and legal by the State Government.

They argued Mr Marsh's land could only be said to have sustained contamination if his own crops of wheat and oats had been genetically modified, or if the GM material had been mixed in with the end product, neither of which had happened.

Winner hails GM as neighbour considers appeal

Mr Baxter was surrounded by anti-GM protesters as he left court.

He said the decision gave other farmers in Western Australia more certainty.

"It's a proven product. There's nothing dangerous about it," he said.

"It's perfectly safe, it's legalised and I think it's a great thing of the future."

Despite his victory, Mr Baxter said the court action had taken a heavy toll.

"My marriage was destroyed over it, so hope the next-door neighbour is happy about that," he said.

Organic farmer Steve Marsh speaks after his application was thrown out by the WA Supreme Court. ( ABC News: Rebecca Trigger )

Mr Marsh was visibly emotional as he left court and expressed his disappointment in the decision.

"After three-and-a-half years of this it's been pretty challenging," he said.

"Obviously we're disappointed in the judgment given the impacts on our lives."

He said he needed time to consider the judgment before deciding whether to appeal.

"It's an issue of choice, isn't it? Simple as that," he said.

"There is a lot of implications for agriculture in this decision."

Farming group welcomes court finding

The Pastoralists and Graziers Association's John Snooke said the decision gave certainty to the mainstream agricultural industry.

"Farmers are continuing to adopt modern technologies and this allows them to do that at the pace they choose," he said.

"What it really means is the status quo remains."

But Network of Concerned Farmers' spokeswoman Julie Newman said her group would push for an appeal.

"All the economic loss is to be passed to the non-GM farmer," she said.

"That is not fair or equitable, which is what [the] law is meant to address.

"It should never have been farmer versus farmer.

"There is no winner here; the Government should have addressed this issue prior to it [GM canola] being released."

GM canola farming increased since 2010

A moratorium was placed on the commercial cultivation of GM crops in WA in 2004.

The order was enacted by the then Labor government under the Genetically Modified Crops Free Areas Act 2003.

The moratorium was lifted prior to the 2010 season and the number of farmers growing GM canola has risen since then.

There were 317 farmers cultivating GM canola in 2010 but this had jumped to 406 last year.

In 2013 almost 17 per cent of all canola sown in WA was a genetically modified variety, according to figures provided by the Department of Agriculture and Food.