Galati v Potato Marketing Corporation of Western Australia
[2006] FCA 895
•12 JULY 2006
FEDERAL COURT OF AUSTRALIA
Galati v Potato Marketing Corporation of Western Australia
[2006] FCA 895
PRACTICE AND PROCEDURE – strike out – no reasonable cause of action – whether it was arguable that sections of Marketing of Potatoes Act 1946 (WA) were invalid on grounds of inconsistency with s 46 of Trade Practices Act 1974 (Cth).
Marketing of Potatoes Act 1946 (WA), ss 17(A)(a)-(e), 19(k)-(o), 22-32 and 40-42
Marketing of Potatoes Regulations 1987 (WA), Regs 29-38 and 58-62
Trade Practices Act 1974 (Cth), ss 46, 46(b), (c)
The Constitution s 109Bradley v The Commonwealth (1973) 128 CLR 557
Julius v Lord Bishop of Oxford 5 App Cases 214ANTONINO GALATI and GALATI NOMINEES PTY LTD (ACN 009 320 503) v POTATO MARKETING CORPORATION OF WESTERN AUSTRALIA
WAD 46 OF 2006SIOPIS J
12 JULY 2006
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 46 OF 2006
BETWEEN:
ANTONINO GALATI
First ApplicantGALATI NOMINEES PTY LTD (ACN 009 320 503)
Second ApplicantAND:
POTATO MARKETING CORPORATION OF WESTERN AUSTRALIA
RespondentJUDGE:
SIOPIS J
DATE OF ORDER:
12 JULY 2006
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1The respondent’s notice of motion dated 3 April 2006 is dismissed.
2The applicants have leave to amend the statement of claim in terms of the minute of further amended statement of claim dated 29 June 2006, save for the replacement of the words ‘to the extent that they are inconsistent with s 46 of the TPA’ in paragraph A of the prayer for relief, with the words ‘because they are inconsistent with s 46 of the TPA’ and the addition of those words to par 15 of the statement of claim.
3The applicants are to pay any of the respondent’s costs thrown away by the amendment of the statement of claim.
4The revised minute of further amended statement of claim dated 12 July 2006 stand as the further amended statement of claim and service is dispensed with.
5The respondent is to pay the applicants’ cost of, and incidental to, the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 46 OF 2006
BETWEEN:
ANTONINO GALATI
First ApplicantGALATI NOMINEES PTY LTD (ACN 009 320 503)
Second ApplicantAND:
POTATO MARKETING CORPORATION OF WESTERN AUSTRALIA
Respondent
JUDGE:
SIOPIS J
DATE:
12 JULY 2006
PLACE:
PERTH
REASONS FOR JUDGMENT
The first applicant is a commercial producer of potatoes in Western Australia. The second applicant is a company which carries on business as a potato merchant in Western Australia.
The respondent is a statutory corporation established under the Marketing of Potatoes Act 1946 (WA) (‘the MOP Act’). The preamble of the MOP Act states that it is an Act, among other things, ‘… to make provision for the marketing, sale and disposal of ware potatoes and to control their production …’ in Western Australia. The MOP Act defines ‘ware potatoes’ essentially as unprocessed potatoes grown in Western Australia for sale for human consumption. I shall refer henceforth to ‘ware potatoes’ as ‘potatoes’. The Act also provides for the establishment of the respondent and defines its functions and powers. Sections 22(1) of the MOP Act makes it an offence for a commercial grower of potatoes to sell or deliver potatoes to any person other than the respondent. Section 22 (2) makes it an offence for any person other than the respondent or its agent to purchase or take delivery of potatoes from a potato grower. The Act also provides for the appointment by the respondent of inspectors with extensive powers of entry, search and seizure.
On 21 February 2006 the applicants commenced this application. In the statement of claim the applicants allege that the second applicant wishes to compete with the respondent in the market in Western Australia for the purchase of potatoes by wholesalers from commercial potato growers and that the first applicant wishes to compete with the respondent in the market for the supply of potatoes to potato merchants. The applicants go on to allege that the respondent has threatened to prosecute the applicants for breach of s 22 of the MOP Act in response to the first applicant making ad hoc wholesale sales of potatoes to persons other than the respondent, including sales to the second applicant.
By their application, the applicants seek a declaration that ss 17(A)(a)-(e), 19(k)-(o), 22-32 and 40-42 of the MOP Act and Regulations 29-38 and 58-62 of the Marketing of Potatoes Regulations 1987 (WA) are invalid on the grounds that those provisions are inconsistent with s 46 of the Trade Practices Act 1974 (Cth) (‘the TP Act’). The applicants rely upon s 109 of the Constitution.
On 23 March 2006 the respondent filed a notice of motion supported by affidavits seeking an interlocutory injunction to restrain the applicants until judgment or further order from purchasing or taking delivery of potatoes otherwise than in accordance with the MOP Act, and from obstructing any inspectors from entering onto land on which potatoes were produced and from carrying out their duties under the MOP Act.
On 5 May 2006 the applicants gave undertakings to the Court substantially in the terms sought in the notice of motion claiming the interlocutory injunction, and on that day the notice of motion was dismissed.
By a notice of motion dated 3 April 2006 the respondent seeks to strike out pars 5‑15 of the amended statement of claim and the attendant claim for relief, on the grounds that the statement of claim disclosed no reasonable cause of action. The facts and matters pleaded in support of the applicants’ claim for the declaration of invalidity based on s 109 of the Constitution are pleaded in pars 5‑15 of the statement of claim.
The respondent’s main contention is that the impugned claim is untenable because it is clear beyond argument that there is no relevant inconsistency between the nominated sections of the MOP Act and the Regulations and s 46 of the TP Act. The respondent also complained about the way that the applicants had pleaded the ‘market’, and the way in which the relief claimed was formulated.
At the commencement of the hearing, the applicants produced a minute of further amended statement of claim. The minute proposed an amendment to the claim for the declaration of invalidity by adding the words ‘to the extent that they are inconsistent with s 46 of the TPA’ so that the declaration would read:
‘A declaration that ss.17(A)(a)-(e), 19(k)-(o), 22-32 and 40-42 of the MOP Act and Regulations 29-38 and 58-62 of the MOP Regulations are invalid to the extent that they are inconsistent with s 46 of the TPA.’
The minute added a further claim for relief, namely, a declaration that the respondent has engaged in conduct in contravention of s 46 of the TP Act. The respondent objected to the proposed amendment to include that claim on the grounds that the material facts relied upon by the applicants in support of that claim were not sufficiently identified.
The Attorney-General of Western Australia has intervened in the proceeding. At the hearing counsel for the Attorney-General of Western Australia supported the respondent’s motion to strike out the applicants’ claim for a declaration of invalidity.
Inconsistency with s 46 of the Trade Practices Act
The applicants’ claim for a declaration of invalidity is based on an allegation that there was a direct inconsistency between the nominated provisions of the MOP Act and Regulations and s 46(b) and s 46(c) of the TP Act. In support of that claim the applicants have pleaded in pars 8A, 9, 13A and 14 of the statement of claim that the MOP Act required the respondent to engage in conduct which was forbidden by s 46(b) and s 46(c) of the TP Act.
Senior counsel for the respondent submitted that the pleading in pars 8A, 9, 13A and 14 of the statement of claim, and the applicants’ case, which depended on that pleading, was untenable because it was clear that the MOP Act did not ‘require’ the respondent to engage in the proscribed conduct under s 46 of the TP Act because the MOP Act did not ‘require’ the respondent to do anything. All that the MOP Act did, said senior counsel, was to define the functions of the respondent and vest in the respondent certain powers and discretions. Further, senior counsel argued, it could not be inferred that if the respondent acted within its powers and discretions that the respondent was acting for the purposes proscribed by s 46 of the TP Act.
The respondent submitted further that the applicants were precluded from giving effect to their expressed desire to buy and sell potatoes to persons other than the respondent, by the operation of s 22(1) and s 22(2) of the MOP Act and not by reason of any duty imposed on the respondent by the MOP Act. It was those subsections which created the criminal offences and it was, therefore, the operation of the MOP Act, in that sense, which precluded the applicants from buying and selling potatoes in the manner in which they desired. Senior counsel submitted that whereas the respondent had the power to prosecute in respect of any breaches of s 22(1) and s 22(2), the MOP Act did not impose a ‘duty’ on the respondent to prosecute any person that contravened those sections of that Act. The respondent was, therefore, not required to do under the MOP Act, what was forbidden under s 46 of the TP Act.
It followed, submitted senior counsel for the respondent, that the applicants’ case was bound to fail.
Senior counsel for the applicants submitted that whether a statute imposed a duty on the repository of a statutory power to exercise that power is a matter of construction of the statute as a whole. He said that it was at least arguable that the intention and effect of the MOP Act was to create a statutory monopoly in favour of the respondent in relation to the commercial purchase and sale of potatoes in Western Australia. He submitted that on the proper construction of the MOP Act, it was also at least arguable that the MOP Act imposed a duty on the respondent to exercise the powers and discretions in order to give effect to its statutory purpose. Therefore, said senior counsel it was at least arguable that the MOP Act required the respondent to act in a manner which was directly contrary to the provisions of s 46 (b) and (c) of the TP Act.
In my view, the submissions of senior counsel for the applicants are to be accepted.
In the case of Julius v Lord Bishop of Oxford 5 App Cases 214 the House of Lords recognised that there would be circumstances where there would be a duty upon the repository of statutory powers to exercise those powers. At issue in that case was whether the words “it shall be lawful” in the context of the statute under consideration, were enabling words, or words which imposed a duty on the bishop in question to take action under the statute. At 235 Lord Selborne said of those words:
‘The question whether a Judge, or a public officer, to whom a power is given by such words, is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects, of the enactment conferring the power.’
In the case of Bradley v The Commonwealth (1973) 128 CLR 557, the High Court considered the question of whether the Post and Telegraph Act 1901-1971 (Cth) imposed a duty upon the Postmaster‑General to provide postal and telegraphic services to the complainant. The Commonwealth argued that there was no such duty on the Postmaster-General because the statutory provisions were ‘permissive rather than obligatory, and directory rather than mandatory.’
At 565 Barwick CJ and Gibbs J observed:
‘… the decision of this case depends entirely upon the proper construction of the Act and regulations. It should, however, be said that there is nothing in Bennett and Fisher Ltd. v Electricity Trust (S.A.) (1962) 106 CLR 492 that is inconsistent with the established rule that in the construction of a statute regard may be had to its subject matter and object, and if the object of the statute is to confer a monopoly upon some public authority the decision in that case does not deny that due regard may be had to that fact.’
Barwick CJ and Gibbs J also observed at 566 that, in construing the Act, it was legitimate to take into account the object of the Act and the importance to the community of postal and telephone services. The High Court embarked upon a detailed consideration of the provisions of the Act and found that the Act did impose a duty on the Postmaster-General to provide postal services to the complainant in that case.
In my view, it is plainly arguable that the object of the MOP Act is to confer a monopoly on the respondent. On the authority of Bradley this can be taken into account by the court in construing whether there is a duty upon the respondent to exercise its statutory powers. In addition, it is arguable, that by providing for an extensive investigatory and punitive regime in the MOP Act, the legislature intended to impose upon the respondent an obligation to use its powers to achieve the statutory purpose. Further, because it is open to the trial court to find that the statutory purpose was to confer a monopoly upon the respondent, it is also open to the trial court to find that in exercising its powers under the Act the respondent is required to do so to give effect to the statutory purpose. It follows, that in my view, it is arguable that on the proper construction of the MOP Act there is a duty upon the respondent to exercise its statutory powers and discretions to give effect to the statutory purpose of conferring monopoly powers upon the respondent in relation to the purchase and sale of commercial potatoes in Western Australia. Accordingly, it cannot be said that the applicants’ case for a declaration of invalidity is so patently untenable that it should be struck out on the grounds of no reasonable cause of action.
Counsel for the Attorney-General of Western Australia intervening, submitted that the applicants’ claim was untenable because the justiciable controversy before the Court was confined to the question of whether s 22(1) and s 22(2) of the MOP Act validly prohibits the applicants from engaging in the proscribed conduct; which, he said, was a different question to whether the rest of the MOP Act requires the respondent to engage in conduct proscribed by s 46 of the TP Act. Counsel submitted that there could never be any inconsistency between s 22 of the State Act and s 46 of the TP Act because s 22 does not impose any duty upon the respondent whereas s 46 of the TP Act is directed at proscribing conduct.
In my view, it is at least arguable that s 22 of the MOP Act is to be construed as a statutory provision to facilitate the carrying out by the respondent of its alleged duty to implement a monopoly, and that, therefore, s 22 of the Act is inextricably linked to the rest of the impugned provisions of the MOP Act. It is, therefore, also arguable that s 22 cannot be viewed in isolation from the other impugned provisions of the MOP Act, and that the validity or otherwise of s 22 has to be considered in the context of the extent of any duty imposed upon the respondent under the Act, and the validity or otherwise of the other impugned sections of the MOP Act. I do not, accordingly, accept the argument of counsel for the Attorney-General of Western Australia.
The pleading of ‘market’
The applicants have pleaded in par 5 of the statement of claim that there is a market for purchase of potatoes by wholesalers from commercial potato growers in Western Australia.
The respondent complained that the pleading was embarrassing because a market requires both buyers and sellers, and the applicants had referred to only one side of the relevant transaction, namely the purchasers. The pleading has not referred to the sale by growers. Both purchasers and sellers should be mentioned. A similar complaint was made about the way the applicants had pleaded the market for the supply of potatoes in par 10 of the statement of claim.
The respondent also complained it was not possible to plead, as the applicants had, that the respondent participated in the market as a purchaser of potatoes, because under the MOP Act the respondent acquired the potatoes from growers and did not purchase them.
In my view, the pleading of the markets in pars 5 and 10 is sufficient for the purposes of this case and for the determination of the issues which are raised in this case. The pleading makes it clear that the markets on which the applicants rely are the markets for the purchase of commercial potatoes and for the supply of commercial potatoes in Western Australia. If further detail is necessary to assist the respondent to understand the case against it this could be dealt with by a request for particulars.
Further, in my view, the question of whether the means whereby the respondent acquires potatoes under the MOP Act is to be characterised as ‘purchasing’ potatoes as opposed to some other form of acquisition is a mixed question of fact and law. It is, therefore, a matter for trial. I do not accordingly, accept the respondent’s objection.
Definition of the extent of invalidity claimed
Counsel for the Attorney-General of Western Australia also objected to the inclusion of the words ‘to the extent that they are inconsistent with s 46 of the TP Act’ in par A of the minute of further amended statement of claim. These words, said counsel, rendered the claim for relief vague and embarrassing. He also said that a declaration could not be made in those terms.
Senior counsel for the applicants accepted this criticism. Senior counsel for the applicants submitted that by identifying specific provisions of the MOP Act and Regulations in par A in the prayer for relief, the applicants had sufficiently identified those provisions in the MOP Act and Regulations which they claimed were invalid by the operation of s 109 of the Constitution. Therefore, said senior counsel, the impugned words should be deleted from the proposed minute of further amended statement of claim. In my view, this is the correct approach. By identifying the specific provisions of the MOP Act and the Regulations that the applicants allege are invalid, the applicants have identified those provisions which they say represent the extent of the inconsistency under s 109 of the Constitution between the MOP Act and the s 46 of the TP Act. This is sufficient to identify the case that the respondent must meet.
Failure to identify material facts in support of the claim that the respondent contravened s 46 of TP Act
Counsel for the respondent objected to leave being given to amend the statement of claim by the addition of the claim in par B of the prayer for relief that the respondent had contravened s 46 of the TPA.
Senior counsel for the respondent submitted that the applicant had not sufficiently identified the conduct which the applicants relied upon as comprising the conduct which contravened s 46 of the TP Act.
The proposed declaration is in the following terms:
‘Further or alternatively, a declaration that the respondent’s conduct pleaded in paragraphs 7, 8 and 8A and paragraphs 12, 13 and 13A contravenes s 46 of the TPA.’
In my view, however, by referring to specific paragraphs in the statement of claim the applicants have sufficiently identified the conduct which is relied upon for the declaration sought. I would, accordingly, give the applicants leave to amend the statement of claim in accordance with the minute of further amended statement of claim dated 29 June 2006, subject to the deletion of the words ‘to the extent that they are inconsistent with s 46 of the TPA’ in claim A of the minute.
The respondent’s notice of motion dated 3 April 2006 is dismissed with costs.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate:
Dated: 12 July 2006
Counsel for the Applicants: Mr M McCusker QC with Ms L Back Solicitor for the Applicants: Solomon Brothers Counsel for the Respondent: Mr A R Beech SC with Mr C McLeod Solicitor for the Respondent: Deacons Counsel for the Intervenor: Mr R M Mitchell Solicitor for the Intervenor: State Solicitor for Western Australia Date of Hearing: 29 June 2006 Date of Judgment: 12 July 2006
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