Cultivaust Pty Ltd v Grain Pool Pty Ltd

[2006] HCATrans 333

[2006] HCATrans 333

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A58 of 2005

B e t w e e n -

CULTIVAUST PTY LIMITED

Applicant

and

GRAIN POOL PTY LIMITED

First Respondent

STATE OF WESTERN AUSTRALIA

Second Respondent

ATTORNEY-GENERAL FOR THE STATE OF SOUTH AUSTRALIA

Third Respondent

STATE OF TASMANIA

Fourth Respondent

Application for special leave to appeal

HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 16 JUNE 2006, AT 1.05 PM

Copyright in the High Court of Australia

__________________

MS M.A. PERRY, QC:   If it pleases the Court, I appear with my learned junior, MR R.M. FOREMAN, for the applicant.  (instructed by Corsers)

MR K.J. MARTIN, QC:   May it please your Honours, with my learned friend, MR J.A. THOMSON, I appear for the first respondent.  (instructed by Mallesons Stephen Jaques)

MR R.M. MITCHELL:   If it please the Court, I appear for the second respondent.   (instructed by Crown Solicitor’s Office Western Australia)

HAYNE J:   The third and fourth respondents have filed submitting appearances, I think.  Is that not right?

MS PERRY:   Yes, your Honour, that is correct.

HAYNE J:   Yes, Dr Perry.

MS PERRY:   Your Honour, I seem to have a red light before I have even started, which is probably not a good sign.  The special leave question concerns the assumption by the Full Court that there is but one principle which applies where it is said that international obligations contained in a convention should be taken into account in statutory construction.  That principle is the well‑established but rebuttable presumption that Parliament intends to enact laws which are consistent with the 900 or so treaties to which Australia is a party.  That, of course, is a principle with which your Honours would be well acquainted and has been articulated in cases such as Teoh and more recently in Coleman v Power.

In making that assumption we say that the Full Court failed to draw a critical distinction and matters between cases to which that general presumption applies on the one hand and a case such as the present where Parliament’s purpose, we say, was precisely to conform to the international convention.  In a situation of that kind the appropriate principle, we would say, is that enunciated in section 15AA of the Acts Interpretation Act.

HAYNE J:   That proposition contains a premise which lies at the heart of the dispute between the parties, does it not, about construction, about the degree of conformity between the Act and the international obligation, particularly given the intrusion of the food exception?

MS PERRY:   It does and, your Honour, I would say first, just on one matter, it is not an exemption in terms of food in the way in which it has been construed by the Full Court.  It is an exemption that would apply in relation to the use of propaganda material which is the protected intellectual property for any non‑propagating purpose, whether it be fuel or construction material or food or whatever.  The second point, we would say, is that although section 18, which is the critical provision, has no direct analogue in the Convention itself, nonetheless, Article 17 of that Convention specifically envisages the possibility that public interest exemptions may be made on certain conditions.  That is that the rights holder is given some form of remuneration for the derogation from plant breeders’ rights.

Read naturally, we say as well, it is clear that section 18 was not intended to substantially derogate from the rights created in section 11.  That is, given its natural meaning – and I am referring there in particular to the use of the word “enables” by the Full Court which your Honours will recall from the judgement of the Full Court – they rejected that natural and ordinary meaning.  We also say in answer to that that there is a clear indication, both within the body of the Act and within the secondary materials, the explanatory memorandum and the second reading speech, that the purpose was precisely to conform to the Convention and also that it was not intended to go beyond what was permitted by the Convention, and there were very good reasons for that.

The Convention itself sets up a regime for reciprocal rights in member States so that Australians who hold plant breeders’ rights, for example, in Australia can receive like benefits, like protection within the jurisdictions of the 59 other parties to the Convention and, conversely, those parties can be assured, because Australia is a party to that Convention, that Australia will extend like protection to those grantees.  There is on the other hand ‑ ‑ ‑

HAYNE J:   Can I take you off your course a moment just to understand a quite basic element?  What particular form of the section 11 rights or what particular forms of the section 11 rights were said to have been infringed?

MS PERRY:   Your Honour, we say that those rights which were infringed were stocking of Franklin barley, the offering for sale of Franklin barley, the sale of Franklin barley and its export.  Each of those constituted infringements under section 11 but, by reason, we would say, of the extended rights created by section 14 of the Act.  Those rights apply in circumstances where, such as the present case, grain has been produced by a farmer who is legitimately relying on section 17 to then propagate from farm‑saved seed.  So the point at the end of the day there is that section 17 derogates from plant breeders’ rights because it precludes the grantee or the rights holder from exercising rights in relation to reproduction.

HAYNE J:   But the construction of the word “enables” in 18(1)(b) for which you contend seems at first blush to be a construction that could be engaged only by a very limited class of cases of section 11 once.  That is only very particular circumstances.

MS PERRY:   Yes, your Honour, we do say that.  That is our first construction, that in fact the word “enables” should be given its ordinary meaning.  It does not have a great deal of work.  It has some, not a great deal.

HAYNE J:   But that then means that the expression “any act” referred to in 11 that “enables” really is given a very narrow and confined operation, is that right?

MS PERRY:   Your Honour, that leaves us then, I think, with precisely the dilemma which we say gives rise to the special leave question and that is, do we or do we not read this section so as to conform with Australia’s obligations under the Convention?  Now, the way that the Full Court resolved that issue was to look at the history of section 18.  In effect, it used the history of that provision in order to rebut the presumption which it saw as being the relevant principle that the Act should be interpreted in accordance with the Convention.  So therein lies, we say, the error.  Rather, what the Full Court should have done was to say, looking at the Act, looking at its text, looking at its structure, one can then discern purpose, one can place this provision within its context and we ought to be giving a construction, if in fact one is available, which promotes that purpose.

Had they applied that approach, then we say they would have reached a very different view.  Either they would have read “enables” according to its natural meaning or, alternatively, it would have said that section 18 does not apply where one is dealing with the very specific regime of extended rights created by sections 14 and 15.  In other words, there was a contrary intention which displaced the general exemption in section 18 when one fell within those specific provisions of sections 14 and 15.  The Full Court also proceeded on the basis that it was an indisputable historical fact that section 18 was inserted as an additional exemption not contemplated by the Convention.

Now, one of the subsidiary points which has arisen really as a result of that statement by the Full Court is the question of the extent to which one can rely on extrinsic materials and on relating to later amendments to the Act and to those amendments themselves.  Far from being an indisputable historical fact, in fact the Parliament took issue directly with that proposition.  It disputed it and it said, “No, this is not what we intended.  We will amend the Act in order to avoid misinterpretation and in order to clarify the operation of the Act”.  So there is that subsidiary issue which arises as well, we say, directly as a result of the approach adopted by the Full Court.

The question of this general principle of statutory interpretation where one is dealing with international obligations is not one which is at all confined to this case.  Your Honours would be well familiar with cases such as the Migration Act where a law is intended partially to implement Australia’s international obligations.  There are other cases, we say, which are more akin to this where Parliament intends to enact a law which really does implement in a very fulsome sense Australia’s international obligations such as the Hazardous Waste (Regulation of Exports and Imports) Act and the Nuclear Non‑Proliferation (Safeguards) Act 1987 and the Antarctic Treaty (Environment Protection) Act 1980, so one can see readily that these questions do not arise simply in this case.

But there is a further point which we say emphasises the public importance of that and that is that issue of statutory construction.  It is always the case that where a court reaches a construction which means that Australia has failed to comply with its international obligations there is always the possibility of serious implications from that.  That possibility, that the seriousness of those consequences, in effect, was recognised again by the Parliament when in 2002 it acted to amend the Act and did so in order to ensure compliance.  That was, as your Honours may have seen from the secondary materials, directly as a result of the arguments put in this case.  Parliament acted even before the trial judge had ruled on those issues in order to ensure that in the future an argument of this kind could not succeed and did so expressly on the basis that it was a misinterpretation or a misrepresentation of what the Act was intended to achieve.

The final point I would make with respect to the issue of public importance is that the issues are by no means confined simply to section 18 but also other issues of other provisions which remain in an unamended form within the Act will arise for construction.  I have in mind, for example, section 14 of the Act which deals with the question of the circumstances in which these extended rights created by the provision are engaged.  Your Honours may recall that the trial judge adopted a particular construction of section 14 which the Full Court expressed doubts about.  It said it was unnecessary for it to determine that issue because of the view it took of section 18, but nonetheless it cast doubt on that construction.  That issue would be one which would be of an ongoing nature which would have an ongoing relevance and importance in the future.

I will also make the point that in this particular case there was the intention by Parliament to enact a law conforming to the Convention.  We see further support from the fact that it was necessary for the Parliament to enact such a law in order to even become a party to the Convention itself.  That was required by Articles 34 and 36 which required Australia to have conforming laws in place before it was entitled to ratify the Convention. 

We have identified the parts of the judgment of the Full Court where we have alleged that the court fell into error in the application book at pages 169 to 170.  The effect of those errors, we say, is that the Full Court construed section 18 without regard to the purpose of the law, assumed, as I have said, that the general presumption that Parliament intends to comply with its treaties obligations with the relevant principle, and then held that that was effectively rebutted on the basis of its historical considerations. 

The reasoning of the Full Court in that regard also has an element of circulatory because it interpreted the provision without having regard to the purpose of giving effect to Australia’s international obligations and then, having engaged in the exercise in that manner, said that, “Well, there is a disconformity”, in effect, that is unfortunate, “but that is a result of the interpretation we have adopted”.  That in itself, we say, again shows the error.

We explored the implications of the Full Court’s construction in our written submissions in the application book at page 174.  The end result though, as we showed by that, was that the exception in section 18 came to overwhelm the intention to create valuable statutory rights and to create such rights specifically in relation to grain, which is one of the most important foodstuffs and obviously one of the kinds of plant varieties that the Parliament was particularly concerned to encourage innovation in that area. 

The result the Full Court achieved though was, first, that the exception protected purely commercial interests of, for example, middle men who simply sold or on‑sold grain for non‑propagating purposes for profit.  Their role could be utterly remote from using the material as a food or for some other non‑propagating purpose or rendering it into a state where it could be used for such a purpose.  As a result, it could not be said on that construction that it even protected any public interest. 

Secondly, the end result of the Full Court’s construction was that we were not simply dealing with a substantial derogation from the plant breeders’ rights in relation to grains, but effectively a denial of those rights in the area of grains produced from farm‑saved seed, which is, of course, the traditional farming method.  Rights would normally attach under section 11 to particular material and when new material was produced, new rights to exercise the exclusive rights in section 11 would attach, but no rights would attach to grain produced from farm‑saved seed unless the farmer were effectively to sell the grain over the fence to another farmer for propagating services. 

The extent of derogation that that involved in practical terms was aptly illustrated by uncontested evidence in this case that one tonne of Franklin barley would produce 40 to 50 tonnes of harvest.  So the end result was to leave the rights holder with no real reward for innovation in this absolutely critical food area.  This was recognised by the Full Court when it accepted that section 18 constituted, as interpreted by it, a very substantial derogation from plant breeders’ rights.  On the other hand, as I have said, it was our contention that section 18 could be accommodated comfortably within the Convention if it were construed as we contended on either view. 

I should just before completing what it was that I wish to say that on the issue of costs which we have also sought to raise against Western Australia it is not obviously a point which ordinarily one would seek to raise in this Court.  That an unusual step was taken in this case to raise that point because it was felt that there really was a serious injustice occasioned which was not addressed on the appeal.  It was a discrete point, so that if special leave were granted, it is one that we say could appropriately be dealt with.  It would not be one that would take long to argue and special leave was not sought specifically on that point.

The essential point was that costs were awarded against the applicant in Tasmania in circumstances where their separate claim for declaratory relief in order to clarify their rights was essentially rendered moot by legislative changes effected after judgment was reserved at first instance.  It was then said that the Full Court compounded the errors of the trial judge on the appeal to the extent that the Full Court then appeared erroneously to have considered that there was some inconsistency between the position taken by the applicants at first instance and on the appeal, whereas, in effect, what had happened on the appeal was that the amendments having occurred between judgment being reserved at first instance and then judgment being given at first instance, it was felt on the appeal that there was no point then in pressing the claim for separate declaratory relief.  In other words, it would no longer be possible to say to the Court that the applicant needed clarification of the extent of the applicant’s rights in Western Australia in the face of the Grain Marketing Act and its prohibitions on the applicant engaging in conduct which prima facie breached provisions of the Grain Marketing Act and would have resulted in

the commission of criminal offences.  So it was in light of the fact that it was felt there really was a serious injustice done that it was sought to attach that, in effect, also to the application for special leave.

HAYNE J:   Yes, thank you, Dr Perry.  We need not trouble you, Mr Martin and Mr Mitchell.

The principal question which the applicant seeks to agitate in this Court concerns the proper construction of a provision of a federal law which has since been repealed.  The principles to be applied in construing the provision are not in doubt.  The construction adopted by the Full Court of the Federal Court of Australia was reasonably open. 

In our opinion there are insufficient prospects of an appeal to this Court succeeding to warrant a grant of special leave to appeal.  Special leave accordingly is refused.  It must be refused with costs.

MS PERRY:   Your Honours, may I just raise one issue in relation to my learned friends.  I understand that a request was made by them to appear by video link and a concern was raised by me with the Registrar about the potential liability for costs in the event that special leave was refused if, in fact, the respondents were required to attend.  I simply raise that as a concern on the issue of costs because no video link was able to be arranged.

HAYNE J:   Yes.

MS PERRY:   So it would seem unfair in those circumstances for the applicant to have to pay the costs of the respondents in attending today in person as opposed to attending by video link.

HAYNE J:   Well, video link is a facility that can, on occasions, be provided but not invariably.  Any question of costs, at least for myself, would seem to be a matter to be taken up at taxation.  Is there any order you seek from us, Dr Perry?

MS PERRY:   Your Honour, I do not think we can press it any further before the Court.  Thank you.

HAYNE J:   Yes.  The order of the Court is special leave is refused and refused with costs.

The Court will adjourn to reconstitute.

AT 1.29 PM THE MATTER WAS CONCLUDED