Russell Crayfish Supply P/L v Commonwealth of Australia

[1994] FCA 763

RUSSELL CRAYFISH SUPPLY PTY LIMITED v. COMMONWEALTH OF AUSTRALIA
No. VG113 of 1994
FED No 763/94
Number of pages - 7
Primary Industry

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
SWEENEY, JENKINSON AND RYAN JJ

CATCHWORDS

Primary Industry - Fish - Fish processing marketing and sale - Processing - Export control under Export Control Act 1982 - Considerations relevant to exercise of discretionary power to revoke registration of an establishment in respect of export operations.

Export Control Act 1982

HEARING

MELBOURNE, 9 and 10 June 1994
#DATE 19:10:1994

Counsel for the Applicant: Mr. R.C. Gillard QC and Mr. G.J.

Moloney instructed by Kenna Croxfor and Co.

Counsel for the Respondent: Mr. R.R.S. Tracey QC and Mr. R. Howe

instructed by Australian Government Solicitor

ORDER

THE COURT ORDERS THAT:
1. The appeal be dismissed.

2. The respondent's costs of the appeal (including costs

reserved) be paid by the applicant.

(Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules)

JUDGE1

SWEENEY, JENKINSON AND RYAN JJ Appeal from a decision of the Administrative Appeals Tribunal. The Tribunal confirmed the decision of a delegate of the Secretary to the Department of Primary Industry and Energy that the registration, under Part 5 of the Prescribed Goods (General) Orders, of two establishments used by the applicant for the preparation of goods prescribed for the purposes of the Export Control Act 1982 be revoked.

1. The regulatory system established by and pursuant to that Act has been described by Gummow J in Minister of State for Resources v. Dover Fisheries Pty. Ltd. (1993) 43 FCR 565 at 569-572. As in that case, the goods concerned were abalone, which were at relevant times within the meaning of the word "fish" in the Export Control (Fish) Orders (until 1988 called the Fish Orders) and in the Prescribed Goods (General) Orders (respectively "the Fish Orders" and "the General Orders"). The establishments registration of which was revoked were premises used as a factory in Dove Street Richmond and premises used for storage of fish in Stephenson Street Richmond. Order 43 of the General Orders includes the following provisions:
   

"43. Where there are reasonable grounds to believe that -

(a) a registered establishment has, or export operations being carried on in a registered establishment have ceased to comply with orders that apply to the establishment or operations;

(b) alterations or additions have been made to a registered establishment, or to equipment in the establishment, otherwise than in accordance with orders that apply to the establishment or equipment;

(d) any operations being carried on in a registered establishment are being carried on in a manner that may affect the hygienic preparation of prescribed goods;

(f) the occupier of a registered establishment has failed to comply with -

(i) a provision of the Act;

(ii) a condition to which the registration is subject; the Secretary may, by instrument in writing, revoke the registration of the establishment in respect of one or more of the export operations for which the establishment is registered."

In this case revocation by the Secretary was in respect of each of the export operations for which the establishment was registered, and in exercise of the power conferred by order 43. The Tribunal affirmed the Secretary's decisions.

1. One of the matters alleged by the respondent on the hearing of the Administrative Appeals Tribunal's review was that the thermal processing of abalone in the Dove Street premises between 1987 and 1991 had not been such as would ensure that the goods were commercially sterile. Between April 1985 and October 1990 clause 11 of the Fish Orders required that a registered establishment used for the preparation of abalone should be operated in accordance with Schedule 2 to those Orders. During that period clause 1 of that Schedule provided:
   

"1.1 The procedures by which low-acid fish and fish products are packed in hermetically sealed rigid, flexible or semi-rigid containers shall comply with the requirements of this Part and the NH and MRC Code of Practice for Thermal Processing of Low-acid Canned Foods.

1.2 Fish packaged in hermetically sealed containers shall be so processed by heat as to result in a product that is safe and will not spoil under normally expected temperatures of non-refrigerated storage and transportation. 1.3 The Fo value for all combinations of product, can shape and can size shall be determined by a qualified cannery person and the Secretary shall be advised of the Fo value. 1.4 Processing shall be supervised in the cannery by technically competent personnel.

1.5 Products with an equilibrium pH above 4.5 shall receive a processing treatment sufficient to destroy all spores of Clostridium botulinum unless growth of surviving spores will be permanently prevented by product characteristics other than pH.

1.6 Appropriate sampling and inspection schemes shall be used by the canner to ensure that containers and closures comply with specifications."

In October 1990 amendments made in that month had the effect that for the remainder of the period under consideration clause 1 of Schedule 2 provided:

"1.1 The procedures by which low-acid fish and fish products are packed in hermetically sealed rigid, flexible or semi-rigid containers shall comply with the requirements of this Part and the NH and MRC Code of Practice for Thermal Processing of Low-acid Canned Foods.

1.2 Fish packaged in hermetically sealed containers shall be so processed by heat as to result in a product that is commercially sterile and will not spoil under normally expected temperatures of non-refrigerated storage and transportation.

1.3 A scheduled process, including the Fo value for all combinations of product, can shape and can size shall be determined by a qualified cannery person and the Secretary shall be advised of the Fo value.

1.4 Processing shall be supervised in the cannery by technically competent personnel.

1.5 Products with an equilibrium pH above 4.5 shall receive a processing treatment sufficient to destroy all spores of Clostridium botulinum unless growth of surviving spores will be permanently prevented by product characteristics other than pH.

1.6 Appropriate sampling and inspection schemes shall be used by the canner to ensure that containers and closures comply with specifications.

1.7 Thermal processing shall be performed in accordance with the relevant scheduled process."

Fish for export must be prepared in a registered establishment and in compliance with the conditions and restrictions specified in the Fish Orders. The expression "Fo value" signifies the time, expressed in minutes, during which a temperature of 121.1 degrees celsius must be maintained at the centre of the largest piece of abalone meat in the hermetically sealed container in order to ensure that the meat is commercially sterile. The term "commercially sterile" is defined, in and for the purpose of the NH and MRC Code of Practice ("the Code") to which reference is made in clause 1.1 of the Fish Orders, thus:

"The term used to describe foods that are free of micro-organisms which are capable of growing under the conditions the product is likely to encounter during storage and distribution."

The particular micro-organism to which reference is made in clause 1.5 of the Fish Orders, Clostridium botulinum, is lethally toxic to humans and is commonly present in abalone. The Fo value required by the Secretary was 2.5, a period regarded by experts as necessary to ensure the destruction of all spores of the organism. In 1984 the Secretary had been asked to approve particular procedures as the "scheduled process" for the applicant's thermal processing of abalone. Approval was granted. The Code defines "scheduled process" as "the thermal process required to achieve at least commercial sterility in a given product in a given container". The Fo value stated in the approved scheduled process was 2.5. In 1987 the applicant departed from the scheduled process and until the end of 1991 followed a process yielding an Fo value substantially lower than 2.5. No advice was given to the Secretary that a scheduled process having a different Fo value from that indicated in 1984 was being followed. The applicant's export operations were therefore not being carried on in and after 1987 in compliance with clause 1.3 or, from October 1990, with clause 1.7 of Schedule 2 to the Fish Orders, the first of which requires, in our opinion, that the Secretary be advised of the Fo value as and when it is deliberately changed, and the second of which requires that, until a deliberate change of Fo value has been notified, the "relevant scheduled process", that is to say the scheduled process of which the Fo value has been advised, be followed.

1. The Tribunal stated one of its conclusions on this aspect of the review in these terms:
   

"78. The Tribunal is satisfied from the evidence that, over many years, the applicant operated an unapproved thermal process and failed to comply with the Code such that a product was exported that was not or may not have been commercially sterile in breach of clause 1.7 of Schedule 2 of the Fish Orders."

Elsewhere in the reasons for its decision the Tribunal stated the process adopted in 1987 to be lacking the Secretary's approval and referred to the process of which approval was sought and granted in 1984 as an approved scheduled process. It was submitted on behalf of the applicant that those passages showed the Tribunal to have been under the mistaken impression that the Fish Orders included a requirement that each scheduled process from time to time determined by a qualified cannery person have the approval of the Secretary. There is no such a requirement in either the earlier or the later Fish Orders.

1. We do not consider, on a reading of the whole of the Tribunal's reasons, that the Tribunal did have any such a mistaken understanding of the requirements of the Fish Orders. It was in a practical sense that I consider the Tribunal had regard to the need of approval by the Secretary. The Secretary is invested by the General Orders with several powers by which his dissatisfaction with an Fo value of which he is advised in compliance with clause 1.3 of Schedule 2 to the Fish Orders can be given expression. For example, he may refuse renewal of the registration of premises if the equipment is not being operated in an efficient and hygienic manner: order 27(c)(i). And order 43(d) authorises him to revoke the registration of an establishment where there are reasonable grounds to believe that "any operations being carried on in a registered establishment are being carried on in a manner that may affect the hygienic preparation of prescribed goods". If the Secretary thought that an Fo value of which he had been advised might not achieve destruction of all spores of Clostridium botulinum and the occupier of the registered establishment could not persuade him that the Fo value was sufficient, those powers could be exercised. In a practical sense, therefore, a scheduled process in respect of which an Fo value is advised must either have such an Fo value as assures the Secretary of the suitability of the process or by other means gain his approval. It was in our opinion with those considerations in mind that the Tribunal referred to approval of a scheduled process, and not under the influence of any misconstruction of the legislation.

2. It was submitted that the Tribunal had erred in finding (a) that the higher the Fo value the greater the loss of abalone meat weight during the scheduled process and (b) that the lower Fo value was adopted in 1987 in order to diminish weight loss. But neither finding was made by the Tribunal. The topics were mentioned in the Tribunal's review of the evidence, but without the expression of a conclusion.

3. One of the breaches of the Fish Orders found by the Tribunal to have been committed was the movement of abalone between the applicant's premises at Dove Street and Stephenson Street without the making of a transfer certificate. Order 37 and clause 2 of Schedule 8 to the Fish Orders required the making of such a certificate in respect of the movement, of fish intended for export, from one registered establishment to another. It was submitted for the applicant that on its proper construction Schedule 8 did not impose that requirement unless the establishments were under the authority of different authorised officers. We can find no warrant in the legislation for such a construction. It was submitted that the suggested construction was indicated by clause 4 of Schedule 8. That clause reads:
   

"4. The transfer of fish from one registered establishment to another shall be subjected to the following procedures:

(a) the owner of the fish shall notify the authorized officer supervising the originating establishment that the fish is to be moved;

(b) where a consignment is transferred from a registered vessel to registered premises in a State or Territory, the original of the transfer certificate shall be sent by the owner/agent of the fish to the Senior Fish Export Inspector in that State or Territory;

(c) where the consignment is being taken from a State or Territory to another State or Territory, the original of the transfer certificate shall be sent by the owner/agent to the Senior Fish Exports Inspector responsible for the Region to which the fish are to be moved;

(d) a copy of the transfer certificate shall -

(i) be carried by the driver of the vehicle transporting the fish; and

(ii) be delivered to the authorized officer having inspection responsibility at the registered establishment receiving the fish;

(e) all inspections of loading/unloading procedures shall be documented by an authorized officer when fully or partially supervised; and

(f) the vehicle in which the fish is transferred shall be operated in accordance with clause 27 of Schedule 2."

The Fish Orders and the General Orders constitute a very detailed and complex legislative scheme designed to ensure, inter alia, that prescribed goods for export are dealt with in registered establishments and in transit in accordance with all the requirements of those Orders. Upon a consideration of all those requirements there is in our opinion no warrant for implying a relaxation of the requirements concerning transfer certificates in a case where the same person is the "authorized officer supervising the originating establishment" and "the authorized officer having inspection responsibility at the registered establishment receiving the fish".

1. In considering whether the discretionary power conferred by order 43 of the General Orders to revoke the registration of the applicant's registered establishments ought to be exercised the Tribunal observed in its reasons for decision:
   

"100. Mr Tracey submitted for the respondent that in exercising its discretion the Tribunal must be mindful of the statutory context. This statutory context rests highly on trust, relying on the responsible officers of companies that operate registered establishments to carry out their business in compliance with the Act and its Orders.

101. The respondent relies upon this system of trust and partial self-regulation to ensure that Australia's export industries maintain high standards and that consequently the nation's export markets are protected in the national interest. The costs to the Commonwealth of a system of strict and close surveillance of exporters by the Commonwealth would be extremely costly both to export industries and the community generally. Businesses engaged in export have the benefit of minimum surveillance and in return must assume the responsibility of complying with the Act and Orders for the benefit of all export businesses.

102. As the regulatory regime is based largely on trust, the Tribunal must be satisfied that where that trust has been breached, there will be no risk of further breaches. The Tribunal is not so satisfied. The Tribunal found Mr Rudzki to be an evasive and unreliable witness and given that he is the sole active managing director of Russell Crayfish, the Tribunal could not conclude that he would or could operate in an environment of minimum surveillance."

1. It was submitted that the observations in paragraph 102 of the Tribunal's reasons show that the Tribunal took into account in the exercise of its discretion an irrelevant consideration. Order 43(g) of the General Orders authorises revocation of registration if a person who manages the operations carried on at an establishment occupied by a body corporate "ceases to be deemed to be a fit and proper person in accordance with order 47." Order 47 authorises the Secretary to determine whether a person shall continue to be deemed "a fit and proper person for the purposes of these Orders". It was submitted that the statements in paragraph 102 amounted to a determination that Mr. Rudzki was not such a person. It was a further ground of appeal, added by leave during the hearing of the appeal, that the applicant had been denied procedural fairness by the Tribunal in that, having in contemplation that it might make such a determination, the Tribunal failed to give the applicant notice of what it contemplated.

2. Nowhere in the Tribunal's reasons for decision is there reference to order 43(g) or to order 47 or to the words "fit and proper person" or to any of the circumstances specified in order 47 as those to which the Secretary is required to have regard in making his determination. No director of the applicant except Mr. Rudzki gave evidence before the Tribunal and he gave evidence that when the breaches of the Orders were brought to his attention by Departmental officers he had instituted steps to ensure that breaches did not occur again. It was those circumstances which provided the occasion for the making of the findings stated in paragraph 102. The findings were in our opinion relevant to the exercise of the discretion committed to the Tribunal and there is nothing in that paragraph or elsewhere in the reasons to suggest that the Tribunal misdirected itself into a consideration of the subject with which order 43(g) and order 47 deal. The credibility of Mr. Rudzki had been challenged by counsel for the respondent during the hearing before the Tribunal. His evidence on issues of fact relevant to the breaches of the Orders was in contradiction of other evidence. He had volunteered his evidence as to the elimination of the risk of future breaches. No requirement existed, in those circumstances, that the applicant be warned by the Tribunal that Mr. Rudzki's evidence might not be accepted.

3. It was submitted that the object of the legislation (Act, Regulations and Orders) is to assure the physical quality and safety of prescribed goods which are exported so as to maintain the trading reputation of Australian exports. That being so, the exercise of the power conferred by order 43 was to be guided, it was submitted, by reference to the magnitude of the tendency that any of the proved breaches had to frustrate that object, and also by reference to the likelihood that any breach having that tendency would be repeated by the applicant. The submission was illustrated by reference to, inter alia, the failure to notify a change of the Fo value. None of the applicant's abalone processed at the lower Fo value had in fact been shown to be unfit for human consumption. Therefore that breach should not weigh heavily in the scales in favour of revocation, it was said.

1. If the premises be accepted, yet the suggested illustration prompts the reflection that a breach may tend to frustrate the legislative object in more ways than by causing particular exported prescribed goods to be of inferior physical quality or unsafe. Disregard of one requirement of the legislation, if repeated over a substantial period without any unpleasant consequence for him who disregards that requirement, tends to encourage him, and others in the trade who are aware of the circumstances, to disregard other requirements, particularly, as the Tribunal observed, in the case of a "regulatory system .... based largely on trust". In this case the Tribunal found that the applicant had committed a number of breaches of several requirements of the Orders over a substantial period. The submission for the applicant that the Tribunal had exercised its discretionary power without due regard to what the applicant proposed as the legislative object of the regulatory scheme cannot in our opinion be accepted.

2. It was submitted that the Tribunal had failed to apply the standard of proof appropriate to the determination of facts fraught with the grave consequences which revocation entails. In support - one is tempted to say under cover - of that submission detailed submissions were advanced concerning the evidence, and the appropriate inferences from evidence, on a number of factual issues determined by the Tribunal adversely to the applicant. The appeal to this court is limited to questions of law. It is sufficient to say that it has nowhere appeared to us that the Tribunal failed to apply the appropriate standard of proof, or that any of the Tribunal's findings was unsupported by evidence, or that any inference drawn by the Tribunal was not one which could reasonably be drawn.

3. It was submitted that the Tribunal's decision to confirm the Secretary's decision to revoke the registration of the applicant's establishments was so unreasonable that no reasonable person could have reached it. Many considerations were advanced in support of the submission. But those considerations do not lead us to think the Tribunal's decision at all unreasonable. The public interest in deterring disregard of the requirements of the law regulating the export of prescribed goods may in our opinion reasonably be thought to outweigh in the exercise of the discretionary power all the considerations advanced on behalf of the applicant.

4. The appeal will be dismissed with costs.