Questa Pool Products Pty Ltd and Anor and Australian Pesticides and Veterinary Medicines Authority
[2004] AATA 687
•30 June 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 687
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/326
GENERAL ADMINISTRATIVE DIVISION ) Re Questa Pool Products Pty Ltd Applicant
And
Australian Pesticides and Veterinary Medicines Authority
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/429
GENERAL ADMINISTRATIVE DIVISION )
Re Katali Pty Ltd
Applicant
AndAustralian Pesticides and Veterinary Medicines Authority
Respondent
DECISION
Tribunal Mr RP Handley, Deputy President
Professor G Johnston, MemberDate30 June 2004
PlaceSydney
Decision The Tribunal determines that the silver and copper electrodes and the oxidisers which are components of the Questa Poolfresh System and the Aquabrite System are “agricultural chemical products” as defined in s 4(2) of the Agricultural and Veterinary Chemicals Code but not the systems themselves. Pursuant to s 43(1) of the Administrative Appeals Tribunal Act 1975, the Notices issued by the Respondent to the Applicants pursuant to s 101 of the Code should therefore be varied to reflect this.
.............................................
RP Handley
Deputy President
CATCHWORDS
Australian Pesticides and Veterinary Medicines Authority – compulsory recall notice – pool cleaning products containing silver and copper electrodes and oxidiser – decision that these products are not, on current scientific evidence, effective for the control of micro-organisms in pools and spas and their use poses a serious health risk –– examination of the products – examination of the risks to public safety – examination of the testing carried out on the products – whether product is an agricultural chemical – held silver and copper electrodes and the oxidiser which are components of the Applicants’ Questa Poolfresh System and Aquabrite System are “agricultural chemical products” but not the systems themselves – held that the notices issued by the Respondent should be varied to reflect that the components do fall within the definition but not the systems.
Agricultural and Veterinary Chemicals (Administration) Act 1992
Agricultural and Veterinary Chemicals Code (Agvet Code)
REASONS FOR DECISION
30 June 2004 Mr RP Handley, Deputy President
Professor G Johnston, MemberSummary
1. The First Applicant, Questa Pool Products Pty Ltd (“Questa”), is the manufacturer of a pool disinfecting product known as the Questa Poolfresh System. The Second Applicant, Katali Pty Ltd trading as “Aquamatics” (“Aquamatics”), is the manufacturer of an almost identical product called the Aquabrite System. Both products employ an ionic water purifier and an oxidiser.
2. On 17 March 2004, the Respondent, the Australian Pesticides and Veterinary Medicines Authority (“APVMA”), issued a compulsory Product Recall Notice against the Applicants’ products, including a requirement that the Applicants advertise a “Product Alert” because the APVMA was not satisfied, on current scientific evidence, that silver and copper ion based pool products were effective in the control of disease-causing micro-organisms that readily grow or are transmitted in the water in pools and spas. This is the decision to be reviewed by the Tribunal. However, these reasons concern the determination of a preliminary issue: whether the First and Second Applicants’ products fall within the definition of “agricultural veterinary product” contained in s 4 of the Agricultural and Veterinary Chemicals Code (the "Agvet Code”).
Background
3. Questa is the principal manufacturer and distributor of a pool cleaning product known as the Questa Poolfresh System, comprising two components: an “ionic water purifier”, comprising silver and copper electrodes with an electronic power unit, which is used in conjunction with a proprietary blend of peroxygen oxidiser known as the Poolfresh Plus. This is a major part of Questa’s business. This product is used for killing bacteria and other pathogens in swimming pools and spas. Aquamatics manufactures, distributes and sells an almost identical product called the Aquabrite System employing an ionic water purifier and an oxidiser known as Aquabrite. This is its sole business. The Aquabrite System has been on the market since 1992 and is sold both in Australia and internationally. The Poolfresh System was developed in 1995 in conjunction with Aquamatics.
4. On 11 March 2004, the APVMA wrote to Questa and Aquamatics informing them that products which release and disperse metal ions into water in swimming pools and spas for the purpose of controlling micro-organisms including bacteria, fall within the definition of an agricultural chemical product; it is an offence to invite people to buy such a product, and to supply such a product, if the product falls within the definition of “agricultural chemical product” in s 4 of the Agvet Code unless the product is registered under the Agvet Code.
5. The APVMA also advised Questa and Aquamatics that on the available scientific evidence, it was not satisfied that their products were effective in controlling harmful micro-organisms which might be harmful to human beings. Given the serious health concerns, the APVMA proposed requiring prompt recall action under s 101 of the Agvet Code aimed at preventing or reducing harmful effects that might result from the product. Such recall would include the recovery of all stocks and widely advertising the recall. The APVMA invited Questa and Aquamatics to comment on its proposed decision no later than 12 March 2004 (File N2004/326 T15; File N2004/429 T38).
6. By letter dated 12 March 2004, Questa responded to the APVMA stating that the company had been selling the product on a world-wide basis for 10 years without any correspondence being received from APVMA concerning the product. Questa stated that if the product was required to be registered then the company would comply, but without the commercial disadvantage of a product recall. It stated that it only sold the Poolfresh System ioniser in conjunction with a proprietary non-chlorine oxidiser called Poolfresh Plus. This oxidiser was developed by Aquamatics in conjunction with Questa. Moreover, prior to the release of the pool cleaning system, it had undergone testing by an independent National Association of Testing Authorities (“NATA”) laboratory and was found to be efficient in killing bacteria. Questa concluded that if the system was used as directed in the owner’s manual it was safe and possibly safer than chlorine, and should be excluded from any general ioniser product recall notice (File N2004/326 T16).
7. By facsimile dated 16 March 2004, Aquamatics responded to the APVMA stating that the company had applied for registration of its product in December 2003 and that the only outstanding issue was the payment of the registration fee of $6,600. Aquamatics stated that it was aware of the limitations of its product and that was why the product was only sold as an integrated system comprising an ioniser and an oxidising agent. Moreover, the product had undergone months of stringent testing at a commercial pool in Sydney, with the tests being accredited by the New South Wales Department of Health. Aquamatics concluded that it “has been extremely cautious in all aspects of delivery of its products to ensure it works and does not pose any health risk” (File N2004/429 T p317).
8. On 17 March 2004, the APVMA advised Questa and Aquamatics that it had considered its submissions and decided to issue a compulsory recall notice for the product under s 101 of the Agvet Code effective from that date (File N2004/326 T17 p93; File N2004/429 T45 p330). Such notice required that Questa and Aquamatics:
(a) immediately cease promotion of the Product;
(b)immediately cease supply to Distributors and take possession of all surrendered stocks of the Product;
(c) recover all stocks of the Product in the possession of Distributors;
(d)in relation to Distributors, the Sponsor is to provide a letter advising them to immediately cease supply, advise actions that they need to take in relation to the stocks of Product in their possession and any stocks of Product surrendered by End Users, and take possession of all stocks or surrendered Product;
(e) in relation to End Users, the Sponsor is to publicly advertise a Product Alert.
(f) in relation to surrendered stocks of the Product:
(i)store the product in a manner that is compliant with the requirements of agencies responsible for occupational health and safety; or
(ii)if disposal is elected, do so in a manner that is compliant with the requirements of agencies responsible for environmental protection;
(g)complete the actions listed herein by the dates specified and undertake any other actions that the Sponsor thinks necessary to give effect to the recall; and
(h) comply with all Reasonable Directions given by the APVMA.
The compulsory recall notice required Questa and Aquamatics to prepare and submit a draft letter of notice of recall and product alert advertisement to the APVMA by 5pm on 18 March 2004 and stated that the approved letters and notices were to be sent no later than 5pm on the day following approval of the drafts.
9. On 17 March 2004, Questa lodged an application for a review of this decision by the Tribunal. On 18 March 2004, Questa lodged an application for a Stay Order pending the hearing of Questa’s application for a review of the delegate’s decision. On the day of the Stay hearing, 7 April 2004, the Tribunal also received an application for review from Aquamatics together with an application for a Stay Order and a request that the matters be dealt with together. The Tribunal, exercising its powers under s 41(2) of the Administrative Appeals Tribunal Act 1975, granted the Stay Order in respect of both decisions.
10. At the hearings, the Applicants were represented by Mr M Macrossan, of Counsel, and the Respondent was represented by Dr JG Renwick, of Counsel. The evidence before the Tribunal comprised the documents produced and evidence tendered by the parties at the hearing. Oral evidence was given by Robert Chedzoy for the Applicant and by Dr David Loschke for the Respondent. The Tribunal was asked, in the first instance, to decide whether the Applicants’ products fell within the definition of “agricultural veterinary product” in s 4 of the Agvet Code. An affirmative determination would then require the Tribunal to determine the substantive issue under review following a hearing on a later date.
Applicable Legislation
11. The principal legislation is the Agricultural and Veterinary Chemicals (Administration) Act 1992, which established the APVMA as the national registration authority for agricultural and veterinary chemicals. The Agvet Codes were included as a Schedule in the Agricultural and Veterinary Chemicals Code Act 1994.
12. Section 3 of the Agvet Code includes the following definitions:
pest means:
(a) in relation to an animal, plant or thing—any animal, plant or other biological entity that injuriously affects the physical condition, worth or utility of the first-mentioned animal or plant or of that thing; or
(b) in relation to a place—an animal, plant or other biological entity that injuriously affects the use or enjoyment of that place.
plant means any vegetation or fungus and includes a seed or cutting of a plant, or any other part or product of a plant.
substance includes:
(a) any gas, liquid, mixture or compound of gases, or mixture or compound of liquids; and
(b) an organism or part of an organism, including a genetically manipulated organism or part of a genetically manipulated organism; and
(c) material that is produced from an organism; and
(d) matter whose production involves the use of an organism;
but does not include an excluded organism or part of an excluded organism, or material that is produced from, or matter whose production involves the use of, an excluded organism.
supply includes do, or cause or permit the doing of, any of the following:
(a) sell;
(b) expose for sale;
(c) send or deliver for sale or on sale;
(d) dispose of under a hire purchase agreement;
(e) exchange;
(f) give;
(g)offer to do an act that would be a supply (including an act referred to in any of the above paragraphs);
thing, except where used as an object of the verb “to do”, includes:
(a) an animal; and
(b) information; and
(c) a document; and
(d) a substance.
13. The definition of “agricultural chemical product” appears in s 4 of the Agvet Code:
4 Definition of agricultural chemical product
(1) This section defines what is meant by an agricultural chemical product for the purposes of this Code.
(2) Subject to subsections (3) and (4), an agricultural chemical product is a substance or mixture of substances that is represented, imported, manufactured, supplied or used as a means of directly or indirectly:
(a) destroying, stupefying, repelling, inhibiting the feeding of, or preventing infestation by or attacks of, any pest in relation to a plant, a place or a thing; or
(b) destroying a plant; or
(c) modifying the physiology of a plant or pest so as to alter its natural development, productivity, quality or reproductive capacity; or
(d) modifying an effect of another agricultural chemical product; or
(e) attracting a pest for the purpose of destroying it.
(3) An agricultural chemical product includes a substance or mixture of substances declared by the regulations to be an agricultural chemical product.
(4) An agricultural chemical product does not include:
(a) a veterinary chemical product; or
(b) a substance or mixture of substances declared by the regulations not to be an agricultural chemical product.
14. Section 78 of the Agvet Code states:
78 Supply of chemical products that are not registered products, registered listed products or reserved products
(1) A person must not supply, or cause or permit to be supplied, a chemical product that is not a registered chemical product, a registered listed chemical product or a reserved chemical product unless:
(a) the supply is authorised by a permit; or
(b) the product is exempted by the NRA from the operation of this section; or
(c) all the following subparagraphs apply:
(i) at a time or times before the supply takes place, the product had been registered, granted listed registration, or reserved, under this Code or had been registered under a corresponding previous law;
(ii) the period beginning on the day when the product ceased, or last ceased, to be so registered, granted listed registration, or reserved, and ending on the day when the supply takes place is not longer than a period that the NRA has determined in relation to the product for the purposes of this subparagraph;
(iii) the supply is a supply of part of a stock of the product that was in the person's possession or custody immediately before the product ceased, or last ceased, to be so registered, granted listed registration, or reserved;
(iv) a recall notice has not been given in respect of the product;
(v) the person is not the person who imported the product into, or manufactured the product in, Australia;
(vi) if the registration or listed registration of the product was subject to conditions—the supply is in accordance with those conditions.
15. Section 101 of the Agvet Code states:
101 Recall of products that are not registered and do not have listed registration or whose registration or listed registration is being reconsidered
(1) If:
(a) a chemical product (other than a reserved chemical product) is not registered, and has not been granted listed registration, under the Agvet Code of this jurisdiction;
or
(b) the NRA is reconsidering:(i) the registration of a chemical product under Division 4 of Part 2 of that Code; or
(ii) the listed registration of a chemical product under Division 6 of Part 2A of that Code;the NRA may give written notice to any person (the notified person) who has, or has had, possession or custody of stocks of the product, or of a particular batch of the product, in this jurisdiction, requiring the notified person to do any one or more of the things mentioned in subsection (2).
(2) The things that the notified person may be required to do under subsection (1) are as follows:
(a) not to supply, or to stop supplying, the product, or that batch, in this jurisdiction either immediately or within a stated period;
(b) to take any action stated in the notice that the notified person is reasonably capable of taking to recover stocks of the product or of that batch from any other person in this jurisdiction:
(i) to whom the product or that batch has been supplied by the notified person;
or
(ii) who has possession or custody of any such stocks directly or indirectly because of a supply by the notified person;
(c) if the product is not registered and has not been granted listed registration—to destroy, as stated in the notice, stocks of the product or of that batch in the possession or custody of, or recovered by, the notified person in this jurisdiction or to deal with them as stated in the notice;
(d) to report to the NRA within a stated period on the action taken by the notified person under the notice.
(3) Section 168 provides for additional matters to be included in a notice under subsection (1).
Evidence
Robert Chedzoy
16. Mr Chedzoy provided an affidavit dated 21 May 2004 (A2). He is the Technical Services Manager of Aquamatics. He described the operation of the Questa Poolfresh and Aquabrite systems. The sacrificial copper and silver electrodes (metal alloys) are connected to an electronic control unit. The control unit supplies an extra low voltage current to the electrodes which, in water, causes electrolysis, releasing copper and silver cations (atoms which have lost, respectively, two and one electrons) into the water. This “ionic water purifier” is used in conjunction with an oxidiser (either Aquabrite or Poolfresh Plus) which, Mr Chedzoy claimed, has the effect of enhancing the ionic purification process by activating the ions in the water. This activation, he claimed, results from the copper and silver cations loosing further electrons (one in the case of the copper cation and two in the case of the silver cation). The activated ions then destroy algae and bacteria in the swimming pool or spa water.
17. In cross-examination, Mr Chedzoy acknowledged that his account of the effect of the oxidiser on the cations released through electrolysis is essentially an assertion. He said there is some evidence to support his account in an article published in 1970 of which he no longer has a copy. He agreed that the two independent components – the ionic water purifier and the oxidiser, each individually have a disinfectant effect, but said that the effect is enhanced one or two hundredfold when the two components are used together.
18. Mr Chedzoy said the development of the systems occurred as a result of four years of research and laboratory testing. However, he has been unable to find any published data regarding the mechanisms involved in a search of scientific literature. He deduced from the presence of copper and silver ions and the persulphate mixture during testing that there was a “co-dependent reaction between the ions and the persulphate blend” (A2, paragraph 14). Mr Chedzoy said he had also tested the ionic water purifier in conjunction with chlorine and the effect was much milder than that with the persulphate oxidiser.
Dr David Loschke
19. Dr Loschke is the Principal Scientist, Agricultural Chemicals, of the APVMA. He provided a further affidavit dated 11 June 2004 (R7). He said Mr Chedzoy’s assertion of the co-dependent relationship between the ionic water purifier and the oxidiser is implausible and highly speculative. Dr Loschke said there is no evidence of interaction between the copper and silver ions and the oxidiser. The effect produced could equally be an additive effect from the use of two separate disinfectants at the same time, or a synergistic effect from the slightly different operation of the two disinfectants.
20. Dr Loschke said chlorine may have a different effect from the persulphate oxidiser but this is still speculative.
Discussion
21. The preliminary issue for the Tribunal to determine is whether the Applicants’ products fall within the definition of “agricultural chemical product”, thereby empowering the Respondent to issue the recall notices against Questa and Aquamatics pursuant to s 101 of the Agvet Code. The Respondent contends that the electrode and oxidiser components of the two systems identified in the recall notices are each agricultural chemical products within the meaning in s 4(2) of the Agvet Code because they are both “substances” which individually have a disinfecting effect. The Respondent accepts that the ionic water purifier container and electronic control unit are not agricultural chemical products and acknowledges that “the products arguably could have been better defined in parts of the recall notices” (Respondent’s Statement of Facts and Contention, paragraph 5).
22. The Applicants contend that the mixture of substances, namely the silver/copper alloy in the electrodes is not represented as achieving the results listed in s 4(2) paragraphs (a) to (e) of the Code. The alloy needs to be combined with electricity, to undergo a transformation into ions and, further, needs to be combined with the oxidiser and “activated” before the relevant effect is achieved. Thus, the substance represented as achieving the relevant result is not the silver/copper alloy in their electrode form, but the activated silver and copper ions.
23. Therefore, the Applicants submit that if the silver and copper alloy electrodes do not constitute agricultural chemical products within the meaning of s 4, it must follow that the oxidiser component also does not do so. Moreover, the oxidiser does not modify the effect of the silver and copper alloy in the electrodes: it modifies the effect of the copper and silver ions in the water. The intention of the Agvet Code is to control the end product and not its individual components.
24. The definition of “agricultural chemical products” in s 4(2) of the Code requires that the product be a “substance or mixture of substances”. The word “substance” is defined in s 3 of the Code, set out above. There is no dispute that the silver and copper alloys of which the electrodes are made are substances as defined. Moreover, although the Applicants do not appear to have specifically conceded that the persulphate oxidiser is a substance, the Applicants have not contended otherwise and appear to accept this. In any event, in the Tribunal’s view, it is clear that the oxidiser is a substance or mixture of substances.
25. However, the Tribunal has concluded that the Questa Poolfresh and Aquabrite Systems, considered as systems, do not constitute substances or mixtures of substances. The systems include containers for the electrodes, and a power unit to control the passage of electricity into the electrodes. While not specifically conceded by the Respondent, this seems to be the gist of the Respondent’s focus on contending that the two principal components of the systems – the electrodes and the oxidiser, are individually agricultural chemical products.
26. Turning then to whether, individually, the electrodes and oxidiser are agricultural chemical products, the Tribunal must consider whether they are “represented imported, manufactured, supplied or used as a means of directly or indirectly” achieving the ends set out in any of paragraphs (a) to (e) of s 4(2). With regard to the electrodes, there is undisputed evidence that the electrodes indirectly achieve paragraph (a) by destroying pests in the swimming pools or spas in which the products are used as a result of electricity being passed through the electrodes, resulting in the release of ions into the water.
27. With regard to the oxidiser, which is a mixture of persulfates, this has a similar direct effect destroying pests in the water. It may also work indirectly if the disinfecting effect is magnified when the electrodes and oxidiser are used together. Moreover, if the oxidiser enhances the effect of the electrodes, it could be said to be a direct modification of the effect of the electrodes and so come within paragraph (d).
28. Thus, in the Tribunal’s opinion, both the electrodes and the oxidiser are agricultural chemical products as defined in s 4(2). The Tribunal notes that this conclusion is in accordance with what appears to be the purpose or object of the legislation, that is regulating the use of products intended to be used in controlling pests or products being used as pesticides.
29. The Respondent concedes that the “products” identified in the s 101 compulsory recall notices “could have been better defined in parts of the recall notices” (Respondent’s Statement of Facts and Contentions, paragraph 5(b)). However, the Respondent contended that the Tribunal, being seized of jurisdiction to review the issue of the recall notices, should reach the correct or preferable decision as to the contents of the notices, including, if necessary, varying the items the subject of the notices so as to separately identify the agricultural chemical products.
30. In the Tribunal’s view, this is the appropriate course. Pursuant to s 43(1)(b) of the Administrative Appeals Tribunal Act 1975, the compulsory recall notices issued to the Applicants under s 101 of the Agvet Code and dated 17 March 2004 should therefore be varied so that the component silver and copper electrodes and the oxidisers are identified as being the agricultural chemical products and not the Questa Poolfresh System or the Aquabrite System.
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of
Mr RP Handley, Deputy President
Professor G Johnston, MemberSigned: .....................................................................................
AssociateDate/s of Hearing 10 May 2004 and 18 June 2004
Date of Decision 30 June 2004
Counsel for the Applicant Mr M Macrossan
Solicitor for the Applicant Makinson & d'Apice
Counsel for the Respondent Dr J Renwick
Solicitor for the Respondent APVMA, Office of the Deputy General Counsel
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