Fell v Can Recycling (SA) Pty Ltd No. DCCIV-00-115

Fell v Can Recycling (SA) Pty Ltd
[2002] SADC 166
Judge Lee
Civil

This is a point of law which, by order of a Master, is to be determined in advance of a trial of the action.
The plaintiff carries on business at Bordertown as a collection depot for empty beverage containers. The defendant carries on business throughout the State of South Australia as a recycler of empty beverage containers. On 1 August 1996, the parties entered into an agreement whereby the plaintiff would receive used beverage containers, refund deposits paid on those containers, and deliver the containers to the defendant for recycling, and the defendant for its part would reimburse the refunds to the plaintiff and pay him a handling fee.
The action concerns a claim by the plaintiff to recover an alleged short-fall in, and a counterclaim by the defendant to recover an alleged overpayment of, reimbursements of deposit refunds paid to persons by the plaintiff. The period covered by the action is 29 April 1999 to 2 June 1999.
The point of law, although capable of formulation in different ways, really boils down to whether the obligation imposed by s.71 of the Environment Protection Act 1993 extends to beverage containers sold interstate. I will come to that section in a moment. Clauses 33 and 34 of the agreement provide:
“33. The collector is responsible for paying the refund amount (as prescribed in the regulations to the Act) on a refund amount bearing container to the person who brings a refund amount bearing container to the depot.
34. Statewide Recycling or the regional centre (if so appointed by Statewide Recycling ) must pay the collector on each Tuesday of every week the value of the refund amount on all refund amount bearing containers which are returned to the recycling centre, a regional centre, the beneficiation plant or other nominated location in the seven (7) days ending at midnight on Friday of the previous week.”
Clause 1 of the agreement defines “Act” to mean the Environment Protection Act and “refund amount bearing containers” to mean “containers on which a refund amount is payable under the Act”.
To relevantly paraphrase s.10 of the Environment Protection Act, the objects of the Act are to promote principles of ecologically sustainable development, and to minimise harm to the environment by programs to encourage action by industry aimed at pollution prevention, reuse and recycling of material and waste minimisation.
Division 2 of the Act, under the heading Beverage Containers, provides a scheme whereby the purchaser of a beverage pays a deposit on an approved container to the retailer, an approved collection depot refunds the deposit upon return or delivery of the empty container, and the collection depot receives from the recycler both a reimbursement of the refund and a handling fee.
Subsection (1) of s.68 provides that a retailer must not sell a beverage unless the container belongs to an approved class of containers, that is, either category A containers or category B containers, and bears an approved marking showing the refund amount for the container. Section 3 defines “sell” to include supply on a gratuitous basis for commercial promotional purposes and offer or display for sale or supply. It is agreed that the containers collected by the plaintiff and delivered to the defendant in the relevant period were category B containers. Subsection (2)(b) provides that a person must not sell a beverage in a container for consumption unless the container belongs to an approved class of containers and bears an approved refund marking. Subsection (3)(b) provides that a retailer must not sell a beverage in a category B container unless the retailer’s premises are situated within a collection area for which a collection depot has been approved.
Section 71 deals with the obligation of collection depots to accept delivery of and to pay refund amounts for empty category B containers:
“71. (1) Subject to subsection (2), the person operating or in charge of a collection depot must not refuse or fail, or permit a person acting on his or her behalf, to refuse or fail-
to accept delivery of empty category B containers of a class for which the collection depot is approved, being containers that bear the refund marking approved by the Authority for containers of that class; or
in respect of each such container, to pay to the person delivering that container the refund amount for that container.
Penalty: Division 7 fine.
Expiation Fee: Division 7 fee.
(2) A person is not required by subsection (1) to accept delivery of any container that is in an unclean condition.”
It is common ground that all category B containers manufactured in South Australia were marked with refund amounts, that some of those containers were sold outside South Australia, that consumers who purchased containers outside South Australia did not pay any deposit, and that in the relevant period there were no means or apparent means of determining from the container whether it was sold inside or outside South Australia.
By notice pursuant to s.69 of the Act published in the Government Gazette of 27 May 1999 at page 2661, conditions of approval of category B containers were varied, with effect from 28 May 1999, to require that each such container “must have been sold in the State of South Australia”. Prior to 28 May 1999, however, and during most of the relevant period, beverage containers bore, as a condition of approval, the mark “5 cent deposit in South Australia”.
The plaintiff contends that when a container marked with a refund amount was presented to him at Bordertown for a deposit refund, he was obliged by s.71 of the Act to pay a refund amount, irrespective of whether any deposit was paid by the consumer at the point of sale. Further, in most cases the plaintiff did not know, and had no means of knowing, whether containers were sold in South Australia or elsewhere. Nor, to take the example of a scavenger, would the scavenger know, or have the means of knowing, where containers collected by him were sold. In any event, the objects of the Act are best achieved by the collection and recycling of containers in South Australia, regardless of their history.
The defendant contends that the scheme of Division 2 contemplates that deposits paid by consumers at any point of sale in South Australia will be passed back through a pool to a collection depot, being the point at which refunds are made. This means that the collection in South Australia of containers sold outside South Australia has the potential, if a literal approach is taken to the construction of s.71, to jeopardise the scheme of the Act and the financial viability of the industry. Moreover, the defendant does not accept that the plaintiff made “refunds” with respect to all of the containers in question. When a load of containers arrived at Bordertown on a Victorian registered semi-trailer, the plaintiff must have known that deposits had not been paid, and so the plaintiff would not have made any “refunds” on those containers.
Section 22 of the Acts Interpretation Act 1915 provides:
“(1) Subject to subsection (2), where a provision of an Act is reasonably open to more than one construction, a construction that would promote the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) must be preferred to a construction that would not promote that purpose or object.
(2) This section does not operate to create or extend any criminal liability.”
In Mills v Meeking (1990) 169 CLR 214 at 235, Dawson J said:
“However, the literal rule of construction, whatever the qualifications with which it is expressed, must give way to a statutory injunction to prefer a construction which would promote the purpose of an Act to one which would not, especially where that purpose is set out in the Act. Section 35 of the Interpretation of Legislation Act must, I think, mean that the purposes stated in Pt 5 of the Road Safety Act are to be taken into account in construing the provisions of that Part, not only where those provisions on their face offer more than one construction, but also in determining whether more than one construction is open. The requirement that a court look to the purpose or object of the Act is thus more than an instruction to adopt the traditional mischief or purpose rule in preference to the literal rule of construction. The mischief or purpose rule required an ambiguity or inconsistency before a court could have regard to purpose: Miller v The Commonwealth (1904) 1 CLR 688 at 674; Wacal Developments Pty Ltd v Realty Developments Pty Ltd (1978) 140 CLR 503 at 513. The approach required by s.35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to rewrite it, in the light of its purposes.”
Although, in that passage, Dawson J was speaking of the Victorian equivalent of s.22 of the Acts Interpretation Act of South Australia, I do not think that, for present purposes, there is any relevant distinction between the two provisions. I refer to the observations on s.22 of Cox J in Burch v SA (1998) 71 SASR 12 at 18 and 19.
As Pearce and Geddes say in Statutory Interpretation in Australia (5^th Edition) at para [2.32], the following passage from the joint judgment of Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297 at 320 to 321 has frequently been cited and relied on:
“The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole. But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction.
The rules, as D. C. Pearce says in his Statutory Interpretation, p. 14, are no more than rules of common sense, designed to achieve this object. They are not rules of law. If the judge applies the literal rule it is because it gives emphasis to the factor which in the particular case he thinks is decisive. When he considers that the statute admits of no reasonable alternative construction it is because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the legislature.
On the other hand, when the judge labels the operation of the statute as “absurd”, “extraordinary”, “capricious”, “irrational” or “obscure” he assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.
Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.”
It seems to me that the underlying assumption of Division 2, and of s.68 in particular, is that sales of containers which carry an approved “refund marking” will be confined to South Australia. Given that no deposit is payable on containers sold outside South Australia, no question of any “refund amount” with respect to those containers should logically arise.
It is true that, if s.71 is read in isolation, the obligation to accept delivery and to pay a refund amount attaches, not to containers sold in South Australia, but to containers “that bear the refund marking approved by the Authority”. And it may be, as counsel for the plaintiff contended, that to require a collection depot to accept delivery of containers sold elsewhere is to advance one at least of the objects of the Act, namely to reduce litter. On that approach, a literal interpretation of subsection (1)(a) would be justified. But there is no approach that would justify a literal interpretation of subsection (1)(b). Parliament could not have intended to require a collection depot to refund a “refund amount” for a container on which, by reason of its sale interstate, no deposit had been paid.
Although it should be acknowledged that neither of the interpretations contended for by the parties is entirely satisfactory from the point of view of practical implementation, in the end I have reached the conclusion that, when read in the context of the Environment Protection Act as a whole, the words “containers” and “container” in s.71 must, by necessary implication, mean containers and container sold in South Australia.
It must follow that, during the relevant period, there was no responsibility upon the plaintiff under clause 33 of the agreement to pay to persons refund amounts on refund amount bearing containers sold interstate, and no responsibility upon the defendant under clause 34 to pay to the plaintiff the value of any such refund amounts.
I will hear counsel on whether a date for a trial of the action should now be fixed.

[2002] SADC 166

13 December 2002