Questa Pool Products Pty Ltd and Australian Pesticides and Veterinary Medicines Authority
[2004] AATA 439
•7 April 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 439
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
And
Australian Pesticides and Veterinary Medicines Authority
Respondent
DECISION
Tribunal Mr RP Handley, Deputy President Date7 April 2004
PlaceSydney
Decision For the reasons given orally at the hearing, the Tribunal conditionally stays the decisions of the Respondent dated 17 March 2004.
..............................................
RP Handley
Deputy President
CATCHWORDS
APPLICATION FOR STAY ORDER – Australian Pesticides and Veterinary Medicines Authority – pool cleaning product 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 its use poses a serious health risk – compulsory recall notice – examination of the products – examination of the risks to public safety – held decision to be stayed pending conditions on sale and advertisement – Applicants to put a warning label on their products and on their websites that products should not be used in spas until further notice and that products may not be effective as disinfectants in swimming pools and should be used in conjunction with chlorine – held stay to remain in force pending an expedited hearing of the applications.
Agricultural and Veterinary Chemicals (Administration) Act 1992
Agricultural and Veterinary Chemicals Code (Agvet Code)
REASONS FOR ORAL DECISION
7 April 2004 Mr RP Handley, Deputy President Summary
1. The Applicant, Questa Pool Products Pty Ltd (“Questa”), is the manufacturer of a pool disinfecting product known as Questa Poolfresh System. On 17 March 2004, the Respondent, the Australian Pesticides and Veterinary Medicines Authority (“APVMA”), issued a compulsory Product Recall Notice against the Applicant’s product, including that the Applicant advertise a “Produce Alert” on the basis that 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 by pools and spas. This is the decision to be reviewed by the Tribunal and is the subject of the current application for a Stay Order by the Tribunal.
Background
2. Questa is the manufacturer of a pool cleaning product consisting of an ioniser, comprised of a container encasing silver and copper electrodes, used in conjunction with oxidiser known as Poolfresh Plus supplied in 500 grams, one kilogram, five kilogram or 10 kilogram containers, known collectively as Questa Poolfresh Product. This product is used for killing bacteria and other pathogens in swimming pools and spas.
3. On 11 March 2004, the APVMA wrote to Questa informing it 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 chemicals or to supply such chemicals if the product falls within the definition of “agricultural chemical product” in s 4 of the Agricultural and Veterinary Chemicals Code (“Agvet Code”) unless the product is registered under the Agvet Code. The APVMA advised Questa that on the available scientific evidence, it was not satisfied that its product was effective in controlling harmful micro-organisms and that it may 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 may result from the product. Such recall would include the recovery of all stocks and widely advertising the recall. The APVMA invited Questa to comment on its proposed decision no later than 12 March 2004.
4. 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, 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 another company, Aquamatics Pty Ltd, 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.
5. On 17 March 2004, the APVMA advised Questa 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. Such notice required that Questa:
(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 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 that the approved letters and notices were to be sent no later than 5pm on the day following approval of these drafts.
6. 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 under s 41(2) of the Administrative Appeals Tribunal Act 1975 (“the Act”). On the day of the hearing, the Tribunal also received an application for review from Katali Pty Ltd, trading as “Aquamatics”. 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.
7. At the hearing of this Stay application, the Applicant was represented by Mark Macrossan, of Counsel, and the Respondent was represented by Kathleen Battisson, Deputy General Counsel of APVMA. The Tribunal has been provided with affidavits from Derek Glinka, the Managing Director of Questa Pool Products Pty Ltd, the Applicant in the first of these proceedings and from Manuel de Carvalho, the Managing Director of Katali Pty Ltd trading as Aquamatics, the Applicant in the second of these proceedings. Both affidavits are dated today, that is 7 April 2004.
8. The Tribunal has also been provided with an affidavit of Dr David Loschke, the Principal Scientist, Agricultural Chemicals, of the APVMA, the Respondent in these proceedings. Dr Loschke gave oral evidence about a number of matters discussed in his affidavit or raised by these Stay Applications.
Applicable Legislation
9. The Tribunal is empowered to make a Stay Order in proceedings before the Tribunal pursuant to s 41(2) of the Act. This states:
(2)The Tribunal or a presidential member may, on request being made, as prescribed, by a party to a proceedings before the Tribunal (in this section referred to as the relevant proceedings), if the Tribunal or presidential member is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relate or a part of that decision as the Tribunal or presidential member considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
10. 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 established by the Agricultural and Veterinary Chemicals Code Act 1994. Section 101 of the Agvet Codes 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
11. The evidence before the Tribunal indicates that Questa manufactures, distributes and sells a product known as the Poolfresh System. This is a major part of Questa’s business. The Poolfresh System comprises two components: (1) an ionic water purifier which produces copper and silver ions by electrolysis, and (2) a non-chlorine oxidiser called “Poolfresh Plus” which activates the electrolysis of the water purifier. Questa recognises that the ionic water purifier only achieves effective results when used in conjunction with the oxidiser. When the two products are used in conjunction, Questa claims they are more effective in destroying algae and other pathogens than for example chlorine. The market for the product is principally that of swimming pools and spas.
12. There have never been any known health problems associated with the use of these particular products. The Aquabrite System has been tested recently in a public swimming pool in Ryde over a period of three months in 2003 and found to be effective as a pool disinfectant. The water quality tests were conducted independently by NATA. Following this, the New South Wales Department of Health, by letter dated 17 September 2003, stated that the information and data about the testing satisfied the Department’s “New Disinfection Process Criteria” and, accordingly, the Department offered no objection to the use of the system in public swimming pools and spas subject to certain conditions concerning dosing, testing etc.
13. About 10 April 2003, Aquamatics received notification from the National Regulation Authority (the predecessor of APVMA) regarding the provision and supply of the Aquamatic System. As a result, there followed correspondence between the Authority and Aquamatics leading to an application by Aquamatics on 1 August 2003 for registration of that product by the Authority. Between August 2003 and March 2004, Aquamatics states that its only contact with the Authority was in connection with the processing of its application.
14. Dr David Loschke, the Principal Scientist, Agricultural Chemicals of the APVMA, gave evidence of APVMA’s growing concerns over the use of ionic water purifiers – concerns based on scientific literature, some test results and two incidents involving the use of such purifiers in spas. In one incident a person developed Folliculitis, a minor skin infection, as a result of a high level of bacterial pathogens in a spa. In the other incident, which occurred in February 2004, a person died of Legionnaire’s Disease following the use of a spa in which high levels of Legionella organisms were found. The South Australia Health Authorities are still investing this incident and no final determination has been made as to the source of the infection.
15. Dr Loschke also referred to other evidence of Legionella infection from the use of spas not adequately disinfected – although other incidents may have been due to the failure to properly disinfect rather than the efficacy of the disinfectant used.
Submissions
16. Mr Macrossan on behalf of the two Applicants made the following submissions in support of their applications for a Stay:
1.Should the Tribunal decide, as the applicant (Aquamatics) submits, that the decision of the Authority should be set aside, such a review by the Tribunal will have little or no effect should the Authority proceed with the implementing the recall notice. If fully implemented, such actions will put the Applicants out of business. If partially implemented, such actions will cause the applicant loss and damage that is likely to be irremediable and not recompensable. (Affidavit of Manuel de Carvalho sworn 7 April 2004, paragraphs 18, 25-26, 29-30).
2.The Aquabrite system (“the Product”) has been on the market for approximately twelve years. (Affidavit of Manuel de Carvalho, paragraph 8).
3.There have been no reports of adverse effects in that time. (Affidavit of Manuel de Carvalho, paragraph 8, 19 and 31).
4.The Authority has indicated on two previous occasions that the Product did not require registration. (Affidavit of Manuel de Carvalho, paragraph 8).
5.Nothing has changed to suggest the necessity for an urgent recall notice or ban. (Affidavit of Manuel de Carvalho, paragraph 8).
6.The Authority has refused to give any undertakings not to proceed with the implementation of the recall notice despite applications for review of their original decision. (Affidavit of Manuel de Carvalho, paragraphs 21 and 22).
7.Without consulting the applicant, the Authority has issued a media release on its website affecting the applicant. (Affidavit of Manuel de Carvalho, paragraph 18). There is evidence that this notice has already caused the applicant damage and will continue to do so. (Affidavit of Manuel de Carvalho, paragraphs 25, 26 and 29).
8.There is strong legal argument suggesting that the Authority has erred in its interpretation of the Agricultural and Veterinary Chemicals Code Act 1994, that the Product does not fall within the ambit of that Act and that the actions of the Authority in seeking to implement the recall notice are consequently ultra vires.
9.There is compelling evidence to suggest that the Authority has not taken into account all of the current relevant scientific evidence and that the weight of such evidence indicates that not only is the Product as good as the chlorine-based products (which the Authority supports) in maintaining disease-control, but it is, in fact, far superior. (Affidavit of Manuel de Carvalho, paragraph 31 and exhibits).
10.The applicants submit that, in the circumstances, the status quo and balance of convenience favour the granting of the stay and the other orders sought.
17. Ms Battisson for the Respondent emphasised that the APVMA’s primary concern is public health. The APVMA is not satisfied that the two products in question are effective in disinfecting pools and spas against a range of dangerous organisms, a number of which are potentially lethal. The APVMA has offered to fast-track the application for registration of the Aquabrite System to minimise potential harm to the Applicants which the Authority acknowledges will result from the decisions.
Consideration of the Law and Findings
18. The issue for the Tribunal to determine in this case is whether, pursuant to s 41(2) of the Act, it is desirable to make a Stay Order “for the purpose of securing the effectiveness of the hearing and determination of the application for review”. There are four issues which the Tribunal considers are relevant to the determination of a Stay Order: firstly, whether there will be prejudice to the Applicants if the stay is not granted; secondly, whether there will be hardship to the Respondent if the stay is granted; thirdly, the prospects of success or otherwise of the applications and fourthly, the public interest. In this case, particular regard must be had to the public interest and to the safety concerns which flow from this decision.
19. The Tribunal acknowledges that both parties have legitimate concerns. The Applicants believe that there is no evidence of any risk from use of their products which have been independently tested by NATA and approved for use by the New South Wales Department of Health. The products have been used widely for 12 years without any known adverse effects. The products did not formerly require registration. Once Aquamatics was approached by the APVMA’s predecessor, it set about making the required application and co-operated with the APVMA in pursuing this. If the decision is not stayed, Aquamatics’ business will suffer severe adverse consequences, which may put them out of business. Questa’s business will also be significantly affected by the decision to its detriment.
20. The Respondent’s paramount concern is public health. The APVMA is not satisfied of the efficacy of the products as a disinfectant and believes that there is a consequent risk to public safety. Only further investigation and testing will enable this to be determined conclusively. This will take time – meanwhile public health is potentially at risk.
21. The Tribunal encouraged the parties to negotiate interim terms in respect of the period until the investigation and testing of the products has been finalised. The APVMA insisted that only the use of chlorine in conjunction with the products would satisfy its public health concerns. The Applicants are not prepared to accept such a condition for the continued marketing and distribution of their products given that they are specifically marketed as an alternative to chlorine based systems.
22. In the Tribunal’s view, a compromise must be reached – in order, on the one hand, to protect public health and, on the other, to protect so far as possible the business of the Applicants so that they can proceed with their Applications before the Tribunal. The greatest concern appears to be with the use of the products in spas where the water temperature is higher than that in swimming pools and the danger from pathogens multiplying is consequently greater. In the Tribunal’s view, there is insufficient evidence to satisfy it of any significant risk to public health by reason of the continued use of the product in swimming pools, given the experience of 12 years use and recent NATA testing. Nevertheless, it is appropriate that pool users be warned that the APVMA is currently testing the products to establish their efficacy.
23. The Tribunal has decided to issue a conditional Stay Order with a view as far as possible to preserving the Applicants’ businesses whilst minimising any potential health risks. The Stay Order will be subject to the following conditions:
1/All Poolfresh System and Aquabrite System products manufactured, sold and distributed by the Applicants will bear a notice stating that the products should not be used in spas until further notice.
2/The notice must also state that the APVMA is currently assessing the products to establish their efficacy as disinfectants for use in both spas and swimming pools and that the APVMA currently recommends these products be used in conjunction with chlorine. However, in the notice, the Applicants may state that they have confidence in the efficacy of the products when used in swimming pools which was approved by the New South Wales Department of Health in September 2003.
3/The Applicants will include a notice to this effect prominently displayed on their websites.
24. The Tribunal therefore stays the decisions of the Respondent dated 17 March 2004, subject to the conditions set out above. The Tribunal is not satisfied that it has power to restrain the Respondent from issuing public notices or to otherwise direct the Respondent to issue public notices, but expects that any information released by it will reflect the terms of the Tribunal’s Stay Order.
25. Recognising the potential risk to public health, the Tribunal will seek to facilitate an early hearing of the substantive applications in this matter.
26. The Stay will remain in operation until the determination of the substantive applications by the two Applicants.
I certify that the 26 preceding paragraphs are a true copy of the reasons for the Oral decision herein of Mr RP Handley, Deputy President
Signed: .....................................................................................
AssociateDate of Stay Hearing 7 April 2004
Date of Oral Decision 7 April 2004Representative for the Applicant Mr M Macrossan, Counsel
Representative for the Respondent Ms K Battisson, Deputy General Counsel, APVMA
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