Fell v Can Recycling (SA) Pty Ltd No. Scciv-03-301

FELL v CAN RECYCLING (SA) PTY LTD
[2003] SASC 358
Full Court: Doyle CJ, Prior and Vanstone JJ
DOYLE CJ:
Introduction

The plaintiff in a District Court action claimed $33,679.69 from the defendant under an agreement between them. The agreement was one under which the plaintiff would collect, and deliver to the defendant for recycling, empty beverage containers, and in return would receive a payment from the defendant. The agreement was made in the context of provisions in the Environment Protection Act 1993 (SA) (“the EPA”) for encouraging the recycling of empty beverage containers. The defendant denied liability. The dispute between the parties raises the meaning of the relevant provisions of the EPA, as well as the meaning of the terms of their agreement.
A District Court judge interpreted the provisions of the EPA in a manner favourable to the defendant. The plaintiff now appeals to this court.
Background
The objects of the EPA include protecting the environment by encouraging the reuse and recycling of materials. Division 2 of part 8 of the EPA establishes a scheme relating to beverage containers. “Beverage” is defined to include a wide range of drinks. A container is a container, that is, when filled with a beverage “sealed for the purposes of storage, transport and handling prior to its sale or delivery for the use or consumption of its contents”: s 65 of the EPA.
The scheme established by Division 2 is based on a statutory requirement that a retailer must not sell a beverage in a container unless the container is one of an approved class, and the container bears an approved “refund marking”: s 68(1) of the EPA. The “refund marking” is often in common speech called the deposit payable on the container. The other basic element of the scheme is found in provisions that require a retailer of containers or the operator of a collection depot to accept delivery of an empty container and to pay to a person delivering an empty beverage container the refund amount marked on that container: s 70 and s 71 of the EPA. Putting it simply, the scheme of the EPA is to identify an amount, the refund amount, which will be paid to a person who delivers an empty beverage container to a retailer or to a collection depot. That amount must be marked on a beverage container before it can be sold in South Australia.
The submissions before this court reflected an assumption that the refund amount would be a separate additional element of the sale price of the container at each point of sale in South Australia along the chain from the first sale of the filled beverage container to the retail sale. As will appear, that is an assumption which I am not prepared to accept as a universal proposition, nor was it established as an agreed fact.
The legislative scheme assumes that the prospect of receiving payment of the refund amount from a retailer or from the operator of a collection depot will provide a sufficient incentive for the return of empty beverage containers to those points, reducing litter and encouraging the recycling of materials. Once again, in the submissions before us there was often an assumption that the scheme would work only if the first retail purchaser of the filled beverage container had paid the refund amount to the retailer, in addition to whatever other amount the retailer charged on the sale of the container. It was suggested or assumed that the scheme could not work if a refund amount could be claimed on an empty container which was not sold by retail on terms that included the payment of that same amount as an additional payment. Once again, this is an assumption that I am not prepared to make. The assumption was not established as an agreed fact.
Mr Fell operates a collection depot which I gather is an approved collection depot under the EPA. Another feature of the legislative scheme is a requirement that a beverage cannot be sold in a category B container (and the relevant containers were category B containers) unless the retailer’s premises are within a collection area for which a collection depot has been approved. In other words, the scheme is underpinned by a legislative requirement that there be a sufficient number of collection depots for the return of empty beverage containers that are category B containers.
Mr Fell operates his collection depot under an agreement with Can Recycling (SA) Pty Ltd (“Recycling”). The agreement requires Mr Fell to collect empty beverage containers of a type nominated by Recycling. The agreement obliges him to pay the refund amount on a container to the person who brings the container to his depot. He must then, following a procedure specified in the agreement, deliver the containers to Recycling, or as directed by Recycling. Recycling agrees to pay Mr Fell, for each container delivered by him to Recycling, or as directed by it, the value of the refund amount and a handling fee.
Recycling refused to pay the value of the refund amount on certain containers delivered to it by Mr Fell. Recycling says that the containers were sold by retail outside South Australia, or that it was not shown that they were sold in South Australia; that no refund amount was required to be paid or was paid by the retail purchaser; that the person who delivered those containers was not entitled under the EPA to payment of a refund amount; that Mr Fell was not obliged under the agreement to pay a refund amount in respect of the container, and that accordingly Recycling is not obliged by the agreement to pay Mr Fell the value of the refund amounts paid by Mr Fell.
In other words, reduced to its essentials, the dispute between the parties is whether the agreement obliges Recycling to pay to Mr Fell the value of refund amounts paid by him on any container delivered to him and bearing a refund amount, or only on such containers if the container was also sold by retail in South Australia.
This is a significant issue between the parties because Mr Fell’s depot is at Bordertown, close to the border between South Australia and Victoria. I gather that a significant number of the containers delivered to Mr Fell’s depot are thought to have been sold by retail out of South Australia and brought to his depot as a conveniently close depot in South Australia.
Procedural matters
The parties agreed certain facts and secured an order that three “preliminary questions of mixed fact and law” be determined before the final hearing and determination of the proceedings.
The agreed facts were quite limited. In my view the agreed facts do not actually give rise to the central question in the case. For example, it is not an agreed fact that Mr Fell accepted delivery at his depot of empty beverage containers bearing an approved refund marking that had not been sold by retail in South Australia, that he paid to the person delivering those containers the refund amount, and that he had delivered such beverage containers to Recycling and had claimed payment under the agreement from Recycling in respect of them. The argument before us proceeded on the assumption that this had occurred, or at least on the assumption that Mr Fell was not able to prove that the containers in question had been sold by retail in South Australia. In the course of preparing these reasons, a number of other matters have occurred to me that should have been established before the court was asked to decide the issue that the parties wished the court to decide, namely, (assuming I have correctly understood the issue), whether the agreement obliges Recycling to pay to Mr Fell the value of the refund amount paid by him on refund amount bearing containers delivered to him at his depot, irrespective of the place where the retail sale of those containers took place.
With some misgivings I have decided that it is appropriate to give a decision on the appeal. Clearly enough, that is what both parties want. I assume that the parties want the court to decide that question, making the best it can of the facts. The parties will have to accept the consequences of that.
The preliminary questions that were ordered to be determined did not, on my understanding, precisely raise the question identified by me. However, I believe that the question identified by me is the question that the parties wish to have decided. Perhaps this is why the District Court judge did not answer any of the three questions ordered to be determined, but rather gave his opinion on the obligation of Recycling to pay to Mr Fell refund amounts on containers that were sold by retail outside South Australia. No complaint was made about this by the parties. However, all of this highlights the importance, if this kind of procedure is to be followed, of the parties applying their minds carefully to the facts that need to be agreed, and to the questions that need to be formulated.
There is one further procedural point that should be made. The Order drawn up by the District Court was as follows:
“Judgment for the defendant on the preliminary point in accordance with my reasons for decision on 13 December 2002.”
That judgment is irregular. It was open to the parties, in the light of the judge’s answer to agree that the appropriate result was that judgment be entered for Recycling on the claim by Mr Fell. If that is the case, the appropriate Order would have been an Order that the plaintiff’s claim be dismissed and that judgment be entered for the defendant. The reference to the judge’s reasons was inappropriate and potentially confusing, because it produces the result that the meaning of the judgment appears to depend upon a consideration of the judge’s reasons.
The EPA
The agreement between Mr Fell and Recycling assumes the existence of the EPA. For present purposes it is sufficient to summarise the legislative scheme.
Section 68(1) provides that a retailer must not sell a beverage in a container unless the Environment Protection Authority (“the Authority”) has approved a class of containers to which the container belongs. The containers in question had been approved as “category B containers”. Section 68(1) further provides that a retailer must not sell a beverage in a container unless the Authority has approved a refund marking for that class of container, and unless the container bears the approved refund marking. At the time in question the approved marking was “5 cent deposit in South Australia”.
Section 68(2) provides that a person must not supply a beverage in a container to a retailer for sale by the retailer unless the requirements of sub section (1) are satisfied.
Section 68(3) 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 for containers of that class.
A collection depot is a place to which empty containers can be returned.
As will be apparent, the scheme of the EPA is to ensure that when a category B beverage container is sold by retail it bears a refund marking, and that there will be a reasonably accessible collection depot to which the empty container can be returned.
Section 71 (1) requires the operator of a collection depot to accept delivery of empty category B containers, and in respect of each such container “to pay to the person delivering that container the refund amount for that container.” In a sense this provision completes the scheme, by ensuring that there will be a place to which an empty beverage container can be returned, and by providing an incentive for the return of that container, the incentive being the payment of the refund amount for the container.
For present purposes I assume that it is agreed between the parties that Mr Fell accepted delivery of the empty containers in question, that they bore the approved refund marking, that the containers were not sold by retail in South Australia, or that Mr Fell could not establish that they had been sold by retail in South Australia, that Mr Fell paid to the persons who delivered the containers the refund amount for the container, and that he delivered those containers to Recycling in accordance with his agreement with Recycling.
In the submissions before us it was common ground that s 68 of the EPA applied only to the sale of a container in South Australia, whether that be a sale to a retailer for sale by the retailer, or a sale of the beverage for consumption.
It was an agreed fact that containers bearing the refund marking were sold in states other than South Australia. It was also an agreed fact that the sale price of beverage containers in other states did not include “any component in the nature of a refund which is payable on the return of the container”.
The legislative scheme rests on the assumption that the payment of the refund amount by the operator of a collection depot is a sufficient incentive to ensure delivery of empty beverage containers to collection depots. The EPA says nothing about arrangements between depot operators and recyclers like Recycling, but no doubt Parliament assumed that such arrangements would exist and would in turn ensure that empty beverage containers were moved from collection depots to recyclers.
Although the EPA is to be read as applying only to the sale of beverage containers in South Australia, s 71, which imposes obligations on the operator of a collection depot, makes no reference to the place of sale of a beverage container that is delivered to a depot operator. Read literally, s 71 imposes an obligation to accept delivery of any empty container of a class for which the depot is approved, provided the container bears the appropriate “refund marking”, and further requires the depot operator to pay the person who delivers that container the refund amount for the container.
The agreement
The agreement between Mr Fell and Recycling is a detailed one. Once again, I will summarise the agreement, referring only to the aspects of the agreement essential to the case.
By clause 5 Mr Fell agrees to collect “the type of containers” nominated by Recycling at his depot. I assume that the containers in question were so nominated.
Clause 24 of the agreement deals with glass containers. It provides:
“24. The collector must, after receiving glass containers from members of the public, separate those containers into the following categories:
(a)any glass container which is refillable with a beverage and which does not need to be culleted;
(b)any glass container which is not refillable with a beverage and upon which no refund amount is payable under the Act;
(c)any glass container which is not refillable with a beverage and upon which a refund amount is payable under the Act."
Clause25 provides as follows:
“25. The collector is responsible for disposing of the glass containers referred to in paragraph 24 sub-paragraphs (a) and (b) by dealing direct with the manufacturer of the beverage or the manufacturer of the glass container.”
Clauses 26 – 29 deal with the containers referred to in clause 24 (c). Mr Fell is required to put such containers into bins and then to deliver them to Recycling following a specified procedure. Containers other than glass containers that are collected for recycling are to be sorted into categories (cans, PET bottles, PVC bottles, etc) and delivered to Recycling, or dealt with as otherwise agreed: clause 32.
Recycling’s obligation to pay Mr Fell arises under clauses 33 and 34, which provide as follows:
“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 35 of the agreement then provides for the payment of a handling fee.
The dispute
The issue between Mr Fell and Recycling is whether Recycling must pay Mr Fell, under clause 34 of the agreement, the value of the refund amount paid by him on all refund amount bearing containers delivered to his depot and dealt with him as required by the agreement, whether or not the container was sold for consumption in South Australia.
I express the issue this way because, as I understand it, Recycling denies that Mr Fell is entitled to payment under clause 34 simply because he has in fact paid the refund amount on a container delivered to him. Recycling contends that Mr Fell is not obliged to pay the refund amount unless the container was sold for consumption in South Australia, and that if Mr Fell has paid the refund amount on containers that were not sold for consumption in South Australia, that is no concern of Recycling, and does not oblige it to make a payment to Mr Fell under clause 34.
The dispute between the parties turns on the meaning of clause 34 of the agreement. The clause entitles Mr Fell to payment of “the value of the refund amount on all refund amount bearing containers which are returned to the recycling centre”. The clause assumes, without so providing, that Mr Fell will in turn have paid a refund amount to the person who delivers the container to his depot. But, as I understand the argument, Recycling contends that Mr Fell’s entitlement to payment from Recycling does not arise simply because he has paid a refund amount, but depends upon the container having been sold for consumption in South Australia.
I am prepared to accept that clause 34 is to be understood as referring only to containers in respect of which Mr Fell has paid a refund amount. Accordingly, the central issue is the meaning of “all refund amount bearing containers which are returned to the recycling centre” in clause 34.
The expression “refund amount bearing containers” is defined in clause 1 of the agreement to mean “containers on which a refund amount is payable under the Act.” That must mean, I consider, containers on which a refund amount is payable by Mr Fell. That takes one back to the meaning of s 71(1) of the EPA, because that is the source of the obligation on Mr Fell to pay a refund amount. Clause 33 of the agreement should be interpreted as imposing an obligation on Mr Fell to pay a refund amount when the Act imposes that obligation.
Thus, the issue is whether s 71(1) of the EPA requires Mr Fell to pay a refund amount to a person who delivers a category B container to him only if the container was sold for consumption in South Australia, or whether or not it was sold in South Australia.
The judge’s reasons
The judge held that s 68 of the EPA applies only to sales of beverage in a container in South Australia. I agree.
The judge then said that as s 68, requiring that a container carry an approved “refund marking”, did not apply to containers sold outside South Australia
“no question of any “refund amount” with respect to those containers should logically arise.”
With respect, that appears to me to assume the answer to one of the questions at issue. I say that because the issue is whether s 71 imposes an obligation to pay a refund amount only if the container was sold in circumstances in which s 68 required it to be marked with a refund amount.
The judge accepted that s 71, on its literal interpretation, imposed an obligation to pay a refund amount regardless of the place of sale for consumption of the beverage container: [19]. But the judge rejected that literal interpretation because, he said, at [19]:
“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.”
He so reasoned even though he accepted that the literal approach would advance one of the objects of the EPA; reducing litter.
Reasoning

The issue is whether the court should depart from the literal meaning of s 71 of the EPA.
There may be good reason to depart from the literal meaning of s 71, if the result of applying the literal meaning is to produce a result that is irrational or absurd, or that is clearly contrary to the purpose of the statutory provision: Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297. However, the court should not too readily depart from the literal meaning. The function of the court is to ascertain the meaning of Parliament and usually Parliament can be taken to mean what it says.
The purpose of the EPA appears to be two-fold. First, reducing litter by encouraging the collection of empty beverage containers. Second, encouraging the recycling of materials used to produce beverage containers.
It is reasonable to assume that the primary concern of Parliament is the reduction of litter in South Australia. That suggests that Parliament is not concerned to encourage the collection of empty containers in other states. But it is not apparent to me that Parliament has no interest in encouraging the recycling of beverage containers sold in other states, and so sold in circumstances not subject to s 68 of the Act. Such containers might have been produced in another state, or produced in South Australia. To the extend that Parliament is concerned to encourage the recycling of materials, I see no reason to assume that Parliament is concerned only with the recycling of containers sold in South Australia.
Quite apart from that, it is one thing to say, if it is the case, that Parliament’s interest is in reducing litter in South Australia, and encouraging the recycling of containers sold in South Australia. Even if that premise is accepted, it does not follow that Parliament could not have intended s 71 to be given its literal meaning. To the extent that the provisions of the EPA are concerned with the reduction of litter and encouraging the recycling of materials, giving s 71 its literal meaning does not appear to me to produce an outcome that is unreasonable or contrary to the policy espoused by Parliament.
Counsel for Recycling and counsel for the Attorney-General (who intervened to support Recycling’s interpretation of the EPA) asserted that the literal approach would make the legislative scheme unworkable. But this was a matter of assertion and was not proved. It was agreed by the parties that when beverage containers are sold outside South Australia,
“The sale price… does not include any component in the nature of a refund which is payable on the return of the container.”
But it was not actually proved, as I observed at the outset of these reasons, that when a beverage container is sold in South Australia, an amount equal to the refund amount marked on the container will be a separate additional element of the sale price at each point of sale along the chain from first sale to ultimate retail sale. Anyone who takes an interest in the purchase of beverages will know that the price at which they are sold varies from time to time, presumably reflecting competitive forces. Sometimes beverages are sold as “specials” at a price well below what seems to be the “usual price”. My view is that the court does not know enough about the market in beverages to assume that when a beverage container is sold in South Australia there is always an identified additional amount paid on the sale attributable to the refund amount marked on the beverage container.
Even if that fact was established, it seems to me a matter of proof rather than assumption that the scheme of the EPA would become unworkable if the operator of a collection depot was obliged to pay a refund amount on a container sold outside South Australia. I do not know enough about the workings of the scheme to make that assumption. I am even less inclined to assume that the scheme of the EPA would be made unworkable by giving s 71 its literal meaning, bearing in mind the lack of information about how the “refund amount” is in fact reflected in the sale price of beverage containers.
Accordingly, considerations of that kind, which were pressed strongly by counsel for Recycling, do not persuade me that the court should depart from the literal meaning of s 71.
Nor do I find persuasive the fact that the relevant amount is designated by the EPA as a “refund amount”. I agree that that expression is apt to refer to an amount of money previously paid by someone (the purchaser when the container is sold for consumption) and now repaid to someone (the person who delivers the empty container to a collection depot). But, assuming that in many or most cases of a sale for consumption in South Australia an additional amount is paid by the purchaser, equal to the “refund amount”, it is not surprising that Parliament should have chosen to use this language. It is another thing to conclude, simply because this is the language used, that s 71 should not be given its literal meaning, and should be read as applying only when the payment by the operator of a collection depot is in fact a refund of an amount previously paid. The expression “refund amount” is an appropriate expression, even if it sometimes applies to payments that are not refunds. In short, I accept that this submission favours the case for Recycling, but do not regard it as persuasive.
I agree that s 68 applies only to the sale or supply of a beverage container in South Australia. That was common ground. It is not necessary to decide whether and to what extent Parliament could regulate the sale outside South Australia of beverage containers produced or filled within South Australia. But it does not follow that s 71 applies only to beverage containers sold in circumstances regulated by s 68. It was not established as a matter of fact that the legislative scheme will operate in a sensible fashion or is workable, or is likely to achieve the statutory objects, only if the application of s 71 is limited to beverage containers which have been sold in circumstances regulated by s 68. Once again, to my mind there was an element of assumption in the submissions for the respondent that the obligation imposed by s 71 should mirror the scope of the obligation imposed by s 68. But this is something to be demonstrated, not something that can be assumed. I have already dealt with the submissions that were put in support of the conclusion, and in my view they are not persuasive.
In my opinion there is also a good reason to adhere to the literal meaning of s 71.
It must often be the case that the operator of a collection depot will have no way of knowing whether the beverage container delivered to the operator’s depot was sold in circumstances regulated by s 68. Often the person delivering the container will not have been the purchaser of the container and that person will not know the circumstances in which it was sold. The submissions for the respondent would produce the result that a person delivering an empty beverage container to a collection depot could be required to prove the circumstances of the sale of the beverage container, before being entitled to payment of the refund amount under s 71 of the EPA. That seems to be an outcome that Parliament would not have intended. I realise that in most cases this would not be a practical problem, but as the present case illustrates, a retailer of category A beverage containers or the operator of a collection depot, with premises near the border of the State, could regularly face this problem. I do not regard this as a decisive factor by any means, but my view is that there are practical reasons why Parliament might have intended that s 71 should apply to beverage containers that were not sold in South Australia.
Once again, although reference was made in submissions to truckloads of empty containers being transported from other states to South Australia, there were no agreed facts about this matter. I recognise that this practice, if it occurs, could impede the intended operation of the legislative scheme, but this is not something about which I am prepared to make assumptions.
Conclusions
I am not persuaded that s 71 should not be given its literal interpretation.
Accordingly, s 71 obliged Mr Fell to pay the refund amount marked on a category B container delivered to his collection depot, whether or not the beverage container had been sold in South Australia. Clause 33 of the agreement imposed on Mr Fell the responsibility to make a payment in those circumstances.
More importantly, clause 34 of the agreement requires Recycling to pay to Mr Fell the value of the refund amount (paid by him) on refund amount bearing containers delivered to Mr Fell’s depot, whether or not those containers were sold in South Australia.
I consider that the appeal should be allowed. I would set aside the judgment of the District Court.
As the parties have been content to have the case determined on the limited agreed facts, I consider it appropriate that judgment should be entered for Mr Fell for the amount claimed, unless there is an issue other than the application of s 71 which affects Mr Fell’s right of recovery. I would wish to hear submissions on that point.
PRIOR J: I agree with the reasons prepared by the Chief Justice. The appeal should be allowed, the parties to be heard on whether there is any issue other than the application of s 71 which affects the appellant’s right to recover the amount claimed.
VANSTONE J: I agree.

[2003] SASC 358

23 October 2003