The Crown has been cleared of a potential $500 million bill over the arrival of the vine killing disease PSA into New Zealand.
The Court of Appeal has concluded it had statutory immunity from any liability.
The disease PSA arrived in New Zealand in 2010 and brought losses to the kiwifruit industry of an estimated $900m.
That led a segment of growers, the 212-strong Kiwifruit Claim Group, to sue the Ministry for Primary Industries, alleging slack practices by one of its forerunners allowed the disease to come into New Zealand in a consignment of pollen from China.
They won their case at the High Court.
But the Crown challenged this at the Court of Appeal, saying it was unreasonable to punish officials for not stopping any and every incursion.
The Court of Appeal has now agreed with that view, saying the Crown's statutory immunity precluded liability for alleged negligent acts or omissions.
It found the Crown cannot be held liable by tort by reason of the Crown Proceedings Act 1950.
In addition, Section 163 of the Biosecurity Act 1993 gave immunity to inspectors and other state agents during operations at both pre-border and border stages.
This meant no cause of action could be taken against the agents who conducted the operations, nor against the Crown vicariously.
In further analysis, the court ruled that if the Crown agents involved in importing pollen from China had owed a duty of care, their actions would have fallen short of the required standards of effective risk assessment.
However, liability for this was excluded by statute.
In addition, policy factors, including the risk of indeterminate liability to the Crown, meant it would not be fair or reasonable to impose a duty of care.
Court costs were awarded against the growers.
The value of the sum sought by the kiwifruit growers against the Crown has never been finalised.
Figures amounting to about half the total losses, $400m and $450m, were quoted early in the proceedings, but were never settled.
One unusual issue emerged in this case.
The growers said the Crown was protected by a $100m insurance policy for biosecurity liabilities.
But the government refused to confirm this, saying its insurance arrangements were confidential.
In a response to today's decision, the kiwifruit growers said they felt aggrieved by the verdict, and have vowed to take the case to the Supreme Court.
"The Court of Appeal held that (the Crown) was negligent ... but does not owe a duty of care to ordinary New Zealanders," said the chairman of the kiwifruit claimants, John Cameron.
"That means they can't be held liable for their actions simply because they are the government," he said.
"The decision of the Court of Appeal effectively means the government can't be held liable for any wrongdoing," Cameron said this was completely unfair.