Eve Hemp Pty Limited v Secretary to the Department of Health
[2017] FCA 1051
•1 September 2017
FEDERAL COURT OF AUSTRALIA
Eve Hemp Pty Limited v Secretary to the Department of Health [2017] FCA 1051
File number(s): NSD 1048 of 2017 Judge(s): JAGOT J Date of judgment: 1 September 2017 Catchwords: ADMINISTRATIVE LAW – judicial review – whether the delegate of the Secretary to the Department of Health took irrelevant matters into account in deciding to amend the Poisons Standard of the Therapeutic Goods Act 1989 (Cth) Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth)
Narcotic Drugs Act 1967 (Cth)
Therapeutic Goods Act 1989 (Cth) ss 3, 4, 52AA, 52A, 52B, 52CA, 52C, 52D, 52E, 52EC, 57
Therapeutic Goods Amendment (2009 Measures No 2) Act 2009 (Cth)
Therapeutic Goods Regulations 1990 (Cth) rr 42ZCZL, 42ZCZQ
Single Convention on Narcotic Drugs, 30 March 1961, New York, [1967] ATS 31, (entered into force for Australia 31 December 1967)
Cases cited: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Roche Products Pty Ltd v National Drugs and Poisons Schedule Committee [2007] FCA 1352; (2007) 163 FCR 45
Date of hearing: 28 August 2017 Registry: New South Wales Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 53 Counsel for the Applicants: JK Kirk SC and CG Winnett Solicitor for the Applicants: Mills Oakley Counsel for the Respondent: S Lloyd SC and J Edwards Solicitor for the Respondent: DLA Piper ORDERS
NSD 1048 of 2017 BETWEEN: EVE HEMP PTY LTD (ACN 617 889 148)
First Applicant
AUSTRALIAN INDUSTRIAL HEMP ALLIANCE (INC 1500123)
Second Applicant
NSW INDUSTRIAL HEMP ASSOCIATION INCORPORATED (INC 9893530) (and others named in the Schedule)
Third Applicant
AND: SECRETARY TO THE DEPARTMENT OF HEALTH
Respondent
JUDGE:
JAGOT J
DATE OF ORDER:
1 SEPTEMBER 2017
THE COURT ORDERS THAT:
1.The originating application be dismissed.
2.The applicants to pay the respondent’s costs as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
JAGOT J:
The issue in this matter is whether, in deciding to amend the Poisons Standard under Part 6-3 of the Therapeutic Goods Act 1989 (Cth) (the TGA), a delegate of the Secretary to the Department of Health had regard to irrelevant considerations so that the amendment is invalid.
I have concluded that the impugned amendment is not invalid. My reasons follow. These reasons are more abbreviated than might ordinarily be the case as the impugned amendment commences on 1 October 2017. According to the applicants the amendment will have a serious impact on their businesses and the parties have co-operated to ensure that the matter could be heard and, if possible, resolved before the day on which the amendment commences.
It is common ground that the applicants have standing and that the delegate had regard to the alleged irrelevant considerations in deciding to amend the Poisons Standard. The dispute concerns the construction of the TGA, in particular Part 6-3.
The objects of the TGA are expressed in these terms in s 4:
(1) The objects of this Act are to do the following, so far as the Constitution permits:
(a) provide for the establishment and maintenance of a national system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods that are:
(i) used in Australia, whether produced in Australia or elsewhere; or
(ii) exported from Australia;
(b) to provide a framework for the States and Territories to adopt a uniform approach to control the availability and accessibility, and ensure the safe handling, of poisons in Australia.
(1A) The reference in paragraph (1)(a) to the efficacy of therapeutic goods is a reference, if the goods are medical devices, to the performance of the devices as the manufacturer intended.
(2) This Act is therefore not intended to apply to the exclusion of a law of a State, of the Australian Capital Territory or of the Northern Territory to the extent that the law is capable of operating concurrently with this Act.
It is apparent from s 4(2) that the TGA is not intended to cover the relevant field of operation.
Part 6-3 of the TGA concerns the scheduling of substances. Section 52AA provides an overview of the Part which is in these terms:
This Part provides the basis for a uniform system in Australia of access controls for goods containing scheduled substances.
The scheduling of substances allows restrictions to be placed on their supply to the public, in the interests of public health and safety. This is aimed at minimising the risks of poisoning from, and the misuse and abuse of, scheduled substances.
Section 52A(1) defines various terms including “current Poisons standard”, “scheduling” and “substance”. Section 3(1) defines “poison” as follows:
“poison” means an ingredient, compound, material or preparation which, or the use of which, may cause death, illness or injury and includes any ingredient, compound, material or preparation referred to in a schedule to the current Poisons Standard.
Sections 52B and 52C establish the Advisory Committee on Medicines Scheduling and the Advisory Committee on Chemicals Scheduling. Section 52CA provides that these two committees may hold joint meetings, as occurred in the present case.
The functions of the committees set out in subsection (4) of ss 52B and 52C respectively are in similar terms, the Medicines Scheduling committee being concerned with substances that are therapeutic goods and the Chemicals Scheduling committee being concerned with substances whether or not they are therapeutic goods. Recognising that difference it will suffice to identify the terms of s 52B(4) which specifies the functions of the Medicines Scheduling committee which is as follows:
(4) The functions of the Committee are as follows:
(a) subject to subsection (5), to make recommendations to the Secretary in relation to the classification and scheduling of substances that are, or are included in, therapeutic goods;
(b) to make recommendations to the Secretary in relation to other changes to the current Poisons Standard (other than the schedules);
(c) to reconsider a recommendation made under paragraph (a) or (b) at the request of the Secretary;
(d) subject to subsection (5), to provide advice to the Secretary in relation to the restrictions (including restrictions as to accessibility and availability) to be imposed in respect of particular substances that are, or are included in, therapeutic goods;
(e) to provide advice to the Secretary in relation to any matter referred to it by the Secretary;
(f) any other functions that are prescribed by the regulations.
It will be noted that the functions are not expressly confined by a list of matters the committee may or must consider and that the functions are expressed in terms of recommending and advising “in relation to” the subject matter.
Section 52D concerns the Poisons Standard. It is as follows:
(1) On the commencement of this Part, the first Poisons Standard is taken to have been prepared and made available by the then National Drugs and Poisons Schedule Committee.
(2) Subject to this Act and the regulations, the Secretary may:
(a) amend the current Poisons Standard; or
(b) prepare a document (including schedules containing the names or descriptions of substances or classes of substances), in substitution for the current Poisons Standard.
(3) The Secretary may exercise a power under subsection (2) on the Secretary's own initiative or following an application under section 52EAA.
(4A) An instrument made under paragraph (2)(a) or (b) after the commencement of this subsection is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the instrument.
(4B) Despite subsection 14(2) of the Legislation Act 2003 , an instrument made under paragraph (2)(a) or (b) of this section may make provision in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force or existing from time to time.
(5) In this section:
“amend” , in relation to the current Poisons Standard, means:
(a) alter any provision (including a reference to a substance) in the current Poisons Standard; or
(b) omit any provision (including a reference to a substance) from the current Poisons Standard; or
(c) insert any provision (including a reference to a substance) in the current Poisons Standard.
The power exercised in the present case was the power to amend the Poisons Standard as provided for in s 52D(2)(a). Sections 52D(4A) and (4B) reflect the outcome in Roche Products Pty Ltd v National Drugs and Poisons Schedule Committee [2007] FCA 1352; (2007) 163 FCR 451 at [41] in which Branson J held that decisions under s 52D(2) of the TGA are of a legislative rather than administrative character, meaning that review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) is not available as only administrative decisions may be reviewed under that Act. This does not mean such decisions are beyond judicial review including on the ground that the decision, having been made by reference to irrelevant considerations, is beyond power and thus invalid. So much is apparent from Branson J’s analysis at [72] to [89] in which her Honour rejected a claim that the committee had taken into account irrelevant considerations in deciding to amend the Poisons Standard. It is important to understand that the statute was amended after the decision in Roche, s 52E in particular having been enacted in different terms from those which Branson J construed.
Section 52E, in its form at the time the present decision was made, provides that:
(1) In exercising a power under subsection 52D(2), the Secretary must take the following matters into account (where relevant):
(a) the risks and benefits of the use of a substance;
(b) the purposes for which a substance is to be used and the extent of use of a substance;
(c) the toxicity of a substance;
(d) the dosage, formulation, labelling, packaging and presentation of a substance;
(e) the potential for abuse of a substance;
(f) any other matters that the Secretary considers necessary to protect public health.
(2) In exercising a power under subsection 52D(2), the Secretary must comply with any guidelines of:
(a) the Australian Health Ministers' Advisory Council; and
(b) the subcommittee of the Council known as the National Coordinating Committee on Therapeutic Goods (or any replacement subcommittee);
notified to the Secretary for the purposes of this section.
(3) In exercising a power under subsection 52D(2), the Secretary must have regard to any recommendations or advice of the Advisory Committee on Medicines Scheduling or the Advisory Committee on Chemicals Scheduling.
(4) In exercising a power under subsection 52D(2), the Secretary may seek advice from either or both of the following:
(a) any committee that the Secretary considers appropriate (whether or not the committee is established under this Act or the regulations);
(b) any person.
(5) Subsections (2) to (4) do not limit the information the Secretary may consider in exercising a power under subsection 52D(2).
The applicants contend that in deciding to amend the Poisons Standard the delegate in this case took into account matters which were either not authorised by s 52E(1), that section being an exhaustive statement of those matters which must and may be considered or, if s 52E(1) is not a code of permissible considerations, were not within the “subject-matter, scope and purpose of the statute” (Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40). According to the applicants the subject-matter, scope and purpose of the TGA, specifically, Part 6-3 discloses that the range of permissible considerations for a decision under s 52D(2) are confined by the concept of public health.
Section 57 concerns the delegation of the Secretary’s power. Subsection (1) provides:
Subject to subsections (2), (6) and (8) to (11), the Minister or the Secretary may, by signed instrument, delegate to:
(a) an officer of the Department; or
(b) an officer of an authority of the Commonwealth that has functions in relation to therapeutic goods; or
(ba) an APS employee in an Agency (within the meaning of the Public Service Act 1999 ) that has functions in relation to therapeutic goods; or
(c) a person occupying or acting in an office, or holding an appointment, declared by the regulations to be an office or appointment the occupant or holder of which may be a delegate under this section; or
(d) a person seconded to the Department from:
(i) an authority of a State or a Territory that has functions relating to therapeutic goods, health or law enforcement; or
(ii) a national regulatory authority of a foreign country that has national responsibility relating to therapeutic goods, health or law enforcement; or
(iii) an international organisation that has a function relating to therapeutic goods, health or law enforcement;
all or any of his or her powers and functions under this Act.
The applicants, in support of their case, noted that the power under s 52D(2) may be delegated to any public servant, lending weight to the proposition that the distinction between decisions of a legislative and administrative character was of little significance. If any public servant may make the decision, then notions of deference by the Court are inapt and the provisions ought not to be construed with any such notion in mind. The respondent, in support of his case, noted that the power under s 52D(2) may be delegated to an “international organisation” so that the applicants’ case, that permissible considerations do not extend to consistency with international laws, seemed unlikely, still less that consistency with other Commonwealth laws is an impermissible consideration.
Despite their debate about the significance of the decision as one of a legislative character, the parties acknowledged that ultimately the relevant task is one of statutory construction.
The impugned decision involved an amendment to the Poisons Schedule, Schedule 9, in relation to the entries for cannabis and THC (tetrahydrocannabinols). As set out in the applicants’ submissions:
Immediately prior to the Decision, by force of a previous decision dated 31 August 2016 with an implementation date of 1 November 2016 (Initial Decision), the entries for cannabis and THC in Sch 9 contained the following relevant exceptions:
(a) Hemp Fibre Exception (cannabis and THC): processed hemp fibre containing 0.1% or less of THC and hemp fibre products manufactured from such fibre;
(b) Hemp Seed Oil Exception (cannabis and THC): hemp seed oil for purposes other than internal human use, containing 50 mg/kg or less of cannabinoids (for cannabis); or hemp seed oil containing 50 mg/kg or less of THC when labelled either “not for internal use” or “not to be taken” (for THC); and
(c) Hemp Products Exception (THC only): products for purposes other than internal human use, which contain 50 mg/kg or less of THC.
The Initial Decision introduced some ambiguities into the scheduling of cannabis and THC in Sch 9 – for example, by framing the Hemp Seed Oil Exception in the cannabis entry differently from the corresponding exception in the THC entry. Following publication of that decision, a delegate considered further possible changes to these entries, and referred them to the Advisory Committees for scheduling advice. Public submissions were sought on the proposals on 22 September 2016, and the delegate issued an interim decision on 2 February 2017 (Interim Decision).
The Decision was published on 31 May 2017. Relevantly, the delegate decided to amend the cannabis and THC entries in Sch 9 by:
(a) changing the Hemp Seed Oil Exception in each entry to impose a stricter cannabinoid content limit – namely, 50 mg/kg or less of total cannabinoids including 20 mg/kg or less of THC; and
(b) removing the Hemp Products Exception from the THC entry.
The implementation dates for the Decision are 1 October 2017 for the removal of the Hemp Products Exception, and 1 June 2018 for all other changes.
The reasons for the final decision of the delegate to amend the Poisons Standard as set out above included these statements:
The reasons given by the delegate comprised the following:
ŸThere is low risk associated with the concentration of cannabinoids permitted under the exceptions. The toxicity will be low if the THCs content is low. International jurisdictions have cut-off limits lower than 50 mg/kg; some jurisdictions have as low as 10 mg/kg.
ŸLow THC hemp seed oil has been used in cosmetic and pet food products. Limiting human use to ‘external only’ mitigates against risk of internal consumption of cannabinoids, particularly tetrahydrocannabinols and cannabidiol. Hemp seed oil contains fatty acids considered useful as skin conditioners and topical use is a low risk, particularly if the level of psychoactive cannabinoid is minimal.
…
ŸThere does not appear to be any evidence of misuse or abuse of the products that currently contain low concentrations of tetrahydrocannabinols/cannabinoids. Limiting the tetrahydrocannabinols content for exemption for scheduling reduces the risk of abuse and diversion.
ŸThe amendments to the schedule entries would provide clarity and avoid any ambiguity about the products intended to be captured. There is merit in having consistent exemptions across the cannabis and tetrahydrocannabinols entries in Schedule 9, in particular the limits for total cannabinoids and tetrahydrocannabinols.
ŸThe product exemption applying to products for purposes other than internal human use containing 50 mg/kg or less of tetrahydrocannabinols is being omitted as this is inconsistent with the operation of the Narcotic Drugs Act 1967 (the ND Act) and may be breaching Australia’s obligations under the Single Convention on Narcotic Drugs 1961 (the Single Convention). Any manufacture of drugs would be regulated under the ND Act, and would require the manufacturer to be holding a manufacture licence and a permit. In view of the recent amendments to the ND Act, the Secretary must refuse to grant a manufacture licence involving cannabis, unless satisfied on reasonable grounds that at least one of the circumstances set out in subsection 11K(2) of the ND Act is met. Thus the end use of the manufactured cannabis under the ND Act is limited for a person to be granted a manufacture licence, irrespective of the concentration of cannabis in the end product to be supplied. Similarly, the cultivation and production of cannabis or cannabis resins are regulated under the ND Act.
ŸAny person who manufactures, cultivates cannabis plants or produces cannabis or cannabis resins without a licence may be committing an offence under the Criminal Code Act. Any importation of drugs would be regulated under the Customs (Prohibited Imports) Regulations 1956.
ŸThe Single Convention does not apply to the cultivation of cannabis plants exclusively for industrial purposes (fibre and seed) or horticultural purposes. However, it applies to the cultivation of cannabis plants for the production of cannabis or cannabis resins, and requires amongst others that the manufacture of drugs be under licence, subject to exemptions, and that trade in and distribution of drugs be under licence, subject to exemptions.
The reasons continued:
Additional reasons for the final decision are the following:
ŸThe delegate noted the public submissions, however, has confirmed that the final decision as amended and reasons for the final decision are in keeping with those for the interim decision.
ŸThe submissions received have highlighted that there is currently a level of confusion regarding the difference between hemp seed oil and hemp oil. The Poisons Standard provides the following definition of hemp seed oil:
“’Hemp seed oil’ means the oil obtained by cold expression from the ripened fruits (seeds) of Cannabis sativa”.
Thus, hemp seed oil can only be made from hemp seeds, and not any other part of the Cannabis plant. Hemp seeds naturally contain only trace amounts of tetrahydrocannabinols and cannabinoids, however a very small quantity of tetrahydrocannabinols and cannabinoids are permitted to allow for any minor contamination with other parts of the Cannabis plant. Hemp oil, on the other hand, can be made from any part of the cannabis plant. As flowers and leaves are high in tetrahydrocannabinols and other cannabinoids, they are captured by the Schedule 9 entries for Tetrahydrocannabinols and Cannabis. It is for this reason that hemp seeds are exempt from the Narcotic Drugs Act 1967, and the Single Convention on Narcotic Drugs 1961, while hemp oil is capture by the Narcotic Drugs Act 1967 and the Single Convention on Narcotic Drugs 1961.
ŸA submission raised the issue of Beta Caryophyllene (BCP) being a cannabinoid from their perspective and hence affecting the scheduling of this substance. Research by the secretariat has confirmed that Beta Caryophyllene is a terpene that is a selective agonist of cannabinoid receptor type-2 (CB2) and for the purposes of this scheduling entry, the delegate does not define BCP as a cannabinoid.
ŸIt is also noted that Health Canada has a List of Ingredients that are Restricted for Use in Cosmetic Products (…) which includes the following entry:
Cannabis Sativa seed oil
8016-24-8;
89958 – 21 - 4
Hemp seed oil
10 µg/g THC (delta-9-tetrahydrocannabinol), as per the Industrial Hemp Regulations
This restricted level for THC in cosmetics is equivalent to 10 mg/kg.
…
ŸAs noted previously it is not appropriate to have any other ‘products for purposes other than internal human use’ exempt due to the issues around the ND Act and Single Convention.
The impugned considerations involved in these reasons for decision are:
a) the conformity of the Poisons Standard with other Commonwealth statutes, including the Narcotic Drugs Act 1967 (Cth) (ND Act), the Criminal Code Act 1995 (Cth) …and the Customs (Prohibited Imports) Regulations 1956 (Cth)…;
b) the conformity of the Poisons Standard with an international treaty, the Single Convention on Narcotic Drugs…; and
c) the conformity of the Poisons Standard with the laws of certain comparable foreign jurisdictions, such as Canada.
As noted, the applicants’ arguments involve two alternatives: that s 52E(1) is a code which, on its proper construction, does not permit consideration of the regulatory treatment of cannabis and THC under Commonwealth, international and foreign law; or that the regulatory treatment of cannabis and THC under Commonwealth, international and foreign law is a matter outside the range of permissible considerations under s 52D(2) of the TGA because this is outside the subject-matter, scope and purpose of Part 6-3 of the TGA which concerns public health. The respondent’s answers also involve alternatives. First, that s 52E(1) is not a code of permissible considerations and the regulatory treatment of a poison under Commonwealth, international and foreign law is within the subject-matter, scope and purpose of the TGA including Part 6-3. Second, that if s 52E(1) is a code of permissible considerations it is artificial to conceive of “public health” and the regulation of substances by law, be it international or domestic law, as distinct and separate. It is the psychoactive properties of the cannabinoids found in cannabis, one of which is THC, which engage both public health concerns and the regulation of the substances. Given this, the impugned considerations are within the scope of s 52E(1)(f) of the TGA, which refers to “any other matters that the Secretary considers necessary to protect public health”. Third, that the impugned considerations, or at least those of them concerning consistency with international regulations, were made relevant by the guidelines and recommendations as referred to in ss 52E(2) and (3).
Is s 52E(1) a code?
While I accept that there are aspects of s 52E(1) which might support the conclusion that it is an exhaustive statement of relevant considerations, I conclude to the contrary.
First, the chapeau, in terms, identifies the matters the Secretary or delegate must consider. It does not identify the matters the Secretary may consider. This is an important difference from the provision as considered in Roche in which mandatory (must) and permissible (may) considerations were both identified. Another important difference is that the opening words to s 52E(2) are now “In exercising a power under subsection 52D(2)…” whereas the opening words to s 52E(2) relevant to the decision in Roche were “In taking into account the matters referred to in subsection (1)…”. It is apparent from [73] in Roche that these two factors led Branson J to conclude that s 52E(1), in its form before amendment, was an exhaustive statement of permissible considerations. Neither factor remains in the new form of s 52E(1).
Second, as the respondent submitted, given that s 52E(1), in terms, identifies only those matters which the Secretary must consider, the applicants’ argument depends on implying a limitation which does not appear in the language of the section. The section does not say that the Secretary must have regard “only” to the enumerated matters, but this is the effect of the applicants’ submission.
Third, and contrary to the applicants’ submission, it is not immediately apparent that s 52E(1) comprehensively addresses every conceivable characteristic or property of a substance that could affect public health and safety. As the respondent submitted, while the meaning of “necessary” in s 52E(1)(f) may not be confined to “absolutely necessary” it is difficult to accept that the Secretary is prohibited from having regard to any matter that the Secretary considers merely desirable or convenient to protect public health in exercising the power under s 52D(2).
Fourth, the distinctions which the applicants seek to draw between the “matters” which are enumerated in s 52E(1) and the obligation of compliance with the guidelines in s 52E(2) and the permissible sources of information in s 52E(3) to (5), in support of the argument that those sections do not extend the scope of permissible matters beyond those in s 52E(1), strikes me as too fine and too fraught with the risk of misdirection (as the applicants allege occurred in this case) to infer that they represent a manifestation of legislative intention. As the applicants would have it the Secretary must comply with guidelines and have regard to recommendations or advice but only to the extent that such involve matters within the scope of s 52E(1) and must otherwise disregard matters in guidelines and recommendations or advice which are outside the scope of the s 52E(1) matters. Accordingly, the fact that s 52E(f) is confined in terms, and does not simply refer to “any other matter the Secretary considers relevant” does not provide unequivocal support to the applicants’ construction.
Fifth, once the distinction between “matters” and “information” is seen as lacking the clarity and precision upon which the applicants rely, the references to “a matter mentioned in section 52E of the Act” which appear in regs 42ZCZL(1)(a) and 42ZCZQ(1)(a) of the Therapeutic Goods Regulations 1990 (Cth) do not provide support to the applicants’ construction.
Sixth, the context of the enactment of the amended form of s 52E, introduced by the Therapeutic Goods Amendment (2009 Measures No 2) Act 2009 (Cth) (the 2009 amendment), is the decision in Roche in which Branson J held that s 52E(1) is a code of permissible considerations based on two characteristics of s 52E neither of which appear in the amended form of the section. It is difficult not to infer that the two sets of amendments subsequent to Roche were intended to clarify acceptance of the legislative character of a decision under s 52D(2) and to overcome the effect of the decision to the extent it was held that s 52E(1) was an exhaustive statement of relevant considerations.
Seventh, that at least the first set of amendments were intended to clarify that a decision under s 52D(2) is of a legislative character but that earlier decisions were not invalid, is plain from the terms of s 52D(4) and (4A) and the Explanatory Memorandum for the Therapeutic Goods Amendment (Poisons Standard) Bill 2008 (Cth), the latter of which refers to Roche. As to the 2009 amendments, the Explanatory Memorandum for the Therapeutics Goods Amendment (2009 Measures No 2) Bill 2009 (Cth) is consistent with the respondent’s argument. It states that s 52E(1) sets out the matters the Secretary must consider. There is a common sense difference between the matters which must be considered and those which may be considered. It states that the Poisons Standard may incorporate international standards and other instruments, as provided for in s 52D(4B), which is difficult to reconcile with international or domestic regulation being considerations which are prohibited from being taken into account either at all or at least insofar, as the applicants would have it, those regulations are not concerned with public health. It refers to s 52E(2) as operating “further to these matters”, being the matters in s 52E(1) and that s 52E(3) and (4) involve things to which the Secretary must “also” have regard. This is consistent with the construction for which the respondent advocates.
Eighth, this does not mean that the power in s 52D(2) is unconfined. In making a decision under s 52D(2) the Secretary must have regard to the matters in s 52E(1) and may have regard to matters within the subject-matter, scope and purpose of Part 6-3 of the TGA construed in context.
Ninth, no other part of s 52E(1) obviously suggests a contrary conclusion, in contrast to the position in Roche relating to the unamended form of s 52E. In particular, the words “where relevant” in the opening words to s 52E(1), to my mind, are nothing more than a direction that the Secretary need not consider one of the mandated matters if it is not relevant to the decision being made.
For these reasons I accept the respondent’s argument that s 52E(1) does not constitute an exhaustive statement of the matters to which the Secretary may have regard in exercising the power under s 52D(2).
Are the impugned considerations within s 52E(1)(f)?
It is not necessary to answer the question whether, if s 52E(1) is an exhaustive statement of the matters to which the Secretary may have regard in exercising the power under s 52D(2), the impugned considerations are within the scope of s 52E(1)(f). Despite this, I should record two things. One is that there is an inherent attractiveness to the respondent’s arguments that it is artificial to attempt to distinguish between matters relevant to public health on the one hand and regulation of substances for other than public health reasons on the other hand. As the respondent submitted, whatever the form a regulation may take in relation to substances, be it criminal sanctions, a licensing or permit scheme or something else, it is not obvious that these regulations have nothing to do with public health. As such, having regard to consistency with other regulations of a substance, be they domestic or international, is not obviously a matter separate and distinct from considerations of public health. The other is that, this said, I accept that the reasons of the delegate, as expressed, are directed at the issue of consistency with other regulations in pursuit of the object of consistency. Unless a liberal approach is taken to the scope of s 52E(1)(f) it is not immediately apparent that the impugned considerations engage that provision. However, I agree with Branson J in Roche at [74] that no narrow approach should be taken to the concept of what the Secretary may consider to be necessary to protect public health. Given that there was no challenge based on the necessity of consistency with other regulations, I would conclude that the impugned considerations are within the scope of s 52E(1(f).
Are the impugned considerations within the scope of the TGA?
I would answer this question in the affirmative. A number of indicators in the statute suggest that consistency or inconsistency with other regulations of substances, be they domestic or international regulations, are within the subject-matter, scope and purpose of Part 6-3 of the TGA.
Section 52AA recognises that Part 6-3 is part of a mosaic of regulations and that, insofar as access controls are concerned, that mosaic is intended to constitute a uniform system. To achieve this, consideration of other regulations is necessary. Contrary to the applicants’ submissions this does not suggest to me that the legislative intent was for the Secretary’s role to be strictly confined to the list of matters in s 52E(1), leaving it to the other parts of the mosaic to deal with all other potentially relevant matters. As the respondent submitted, the legislative character of the making or amendment of the Poisons Standard under s 52D(2) supports an approach to construction of the power which is less confined than the applicants would have it.
Section 52D, as the respondent submitted, not only empowers the Secretary to amend or make the Poisons Standard but also empowers the Secretary to decide when the amendment or new standard is to take effect. It is inconceivable that in exercising that power the Secretary would be prohibited from taking into account a broad range of considerations including the potential impact on existing circumstances.
The guidelines referred to in s 52E(2) and recommendations or advice referred to in s 52E(3) are not expressly confined to the matters in s 52E(1). An argument that these provisions were confined in this way was rejected in Roche. The applicants make the same argument in the present case but it remains unpersuasive, as discussed below. If the guidelines or recommendations or advice deal with a matter outside of the subject-matter, scope or purpose of Part 6-3 of the TGA then the Secretary may be misled into error. But the lack of any terms confining the guidelines or recommendations or advice also operates against any narrow view of the subject-matter, scope or purpose of Part 6-3 of the TGA.
The same conclusion is supported by the fact that the Secretary may seek advice from “any person” as set out in s 52E(4)(b), which would include legal advice about the operation of other regulations of the same substance, and that ss 52E(5), 52E(2) to (4) do not limit the information the Secretary may consider in exercising a power under s 52D(2).
Section 52EC required a review of the operation of Part 6-3 which was to report on matters not confined to s 52E(1).
The fact that the power may be delegated to an international organisation as provided for in s 57(1)(d)(iii), as the respondent submitted, makes it unlikely that the legislature intended the Secretary to disregard the international regulation of substances. If this is so, there is no good reason to conclude that consistency with domestic regulations is a prohibited consideration.
For these reasons I conclude that the impugned considerations were not prohibited from being taken into account by the delegate in deciding to amend the Poisons Standard.
Guidelines and recommendations of joint committee
As discussed, I do not accept that the guidelines in s 52E(2) or recommendations and advice of the committees in s 52E(3) are confined to the matters in s 52E(1). As in Roche I prefer the contrary view, with the result that the only limitations on the guidelines, recommendations and advice are those implied by the subject-matter, scope and purpose of Part 6-3 of the TGA. This conclusion is supported by the absence of any express words of limitation, and the unsatisfactory nature of the distinctions between “matters” and “information” which the applicants draw.
The guidelines with which the Secretary was bound to comply under s 52E(2) include consideration of various matters including factors for prohibited substances in Schedule 9 which are as follows (emphasis in the original):
1.The substance is included in either Schedule IV to the United Nations Single Convention on Narcotic Drugs, 1961 or in Schedule I to the United Nations Convention on Psychotropic Substances 1971.
2.The substance has either no currently established therapeutic value, or taking into consideration the danger to the health of individuals and of the community (both immediate and imminent) associated with the use of the substance as compared to the therapeutic advantages of the substance, the benefits are substantially outweighed by the risks.
Dangers are such to warrant limiting use to strictly controlled medical and scientific research.
3.The substance has no currently established therapeutic value and is likely to present a high risk of dependency, abuse, misuse or illicit use.
A high level of control is required through prohibition of use, possession, administration, prescription, sale or distribution to prevent abuse, misuse or diversion into illicit activities.
While I accept that paragraph 1 above involves the fact of inclusion in Schedule IV to the Single Convention on Narcotic Drugs, 1961 I also consider it artificial to suggest that this fact must be taken into account but other related matters, such as the reason for the inclusion, must be disregarded. Further, as the respondent submitted, if the applicants are correct, then the reference to “illicit use” in paragraph 3 is misconceived. Yet there is no sound reason in the text or context to accept such a confined approach to the Secretary’s power or to the content of the guidelines or the recommendations and advice from the advisory committees. The fact that the guidelines also refer to suitable evidence in support of an application for scheduling or rescheduling of a substance includes evidence and information from so-called “comparable jurisdictions” weighs against the applicants’ approach to the legislation.
Insofar as the recommendations and advice of the advisory committees are concerned, this was said:
Input was sought from an observer from the Office of Drug Control. They advised that the public submission on the scheduling proposal failed to recognise that products made from hemp oils and hemp seed oils containing more than 50 mg/kg of cannabinoids were considered to be drugs. Australia would be deemed to be in breach of the UN Single Convention on Narcotic Drugs if such products are available. Narcotics cannot be included in food or imported in foods or cosmetics as this is illegal. Under the UN Convention the definition of cannabis relates to its industrial use not as a food, and members noted that FSANZ is currently consulting about the use of hemp seed oil in food.
The committee advised the delegate to seek advice from other jurisdictions in relation to appropriate cut-off levels, and that the delegate should seek further advice from the Department of Health on the legal issues relating to the UN convention.
For the reasons already given I do not accept that this involved the misdirection of the delegate to an irrelevant consideration.
It follows that the respondent’s third alternative answer to the applicants’ claim is also persuasive.
Another matter
There is one other matter which requires comment. It is the applicants’ complaint that the delegate misunderstood the Single Convention and the Narcotic Drugs Act 1967 (Cth) and thus necessarily took into account an irrelevant consideration. This argument was articulated late in the day but, as I understand it, it is that if the Secretary is permitted to take into consideration the consistency of the Poisons Standard with other regulations then it must follow that the Secretary is required to correctly identify the operation of these regulations. In the present case, it is submitted, the delegate plainly misunderstood both the Single Convention and the Narcotic Drugs Act and thus considered irrelevant matters.
I do not accept this argument.
There may be force in the submission that the delegate’s reasons disclose a misunderstanding of the Single Convention and the Narcotic Drugs Act. As to the Single Convention, the delegate appears to have recited but perhaps not appreciated the significance of the fact that the Convention does not apply to cannabis plants exclusively for industrial purposes. It is not apparent how the product’s exemption could create any inconsistency with the Single Convention as feared by the delegate. As to the Narcotic Drugs Act, it is apparent that it has a limited field of operation concerned, as it is, with the licensing of the cultivation of cannabis plants for medicinal purposes. Given this field of operation, I do not see how there could be inconsistency with this Act.
The problem for the applicants is that it cannot be the case that the Secretary, in considering a permissible matter, is bound to be right about the content of the matter. As the respondent submitted, this would involve a challenge to the merits of the decision, not its legality. In other words, while it perhaps may not have resulted in a meritorious decision, the delegate was entitled to misunderstand the Single Convention and the Narcotic Drugs Act. Perhaps for good reason, the applicants did not suggest the decision was so unreasonable that no reasonable person exercising the power could have made it or that the decision was irrational. The challenge was limited to the taking into account of irrelevant considerations.
Conclusion
I do not accept any of the challenges to the validity of the decision. As a result, the originating application must be dismissed, with costs.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate:
Dated: 1 September 2017
SCHEDULE OF PARTIES
NSD 1048 of 2017 Applicants
Fourth Applicant:
DARING PTY LTD (ACN 104 819 767) (TRADING AS MARGARET RIVER HEMP COMPANY)
Fifth Applicant:
LARIESE PTY LTD (ACN 155 192 108)
Sixth Applicant:
THE HEMP CORPORATION PTY LTD (ACN 603 031 241)
Seventh Applicant:
DHARMIC PTY LTD (ACN 118 727 898) (TRADING AS OZHEMP)
Eighth Applicant:
JAMES VOSPER
Ninth Applicant:
CATHERINE COWAN
Tenth Applicant:
LUKE WIGHTLEY
Eleventh Applicant:
REGINA WIGHTLEY
Twelfth Applicant:
HEMP HEMP HOORAY PTY LTD (ACN 619 537 003)
Thirteenth Applicant:
TEXTILE & COMPOSITE INDUSTRIES (ACN 132 341 372)
Fourteenth Applicant:
CHARLES BELA KOVESS
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