Tyler v Raven

[2015] SASC 171

SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeals: Criminal)

TYLER & ANOR v RAVEN

[2015] SASC 171

Judgment of The Honourable Justice Stanley

29 October 2015

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT

STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - RULES OF CONSTRUCTION

PRIMARY INDUSTRY - AGRICULTURE - OTHER MATTERS

The appellants are husband and wife. They operate a dairy farm at Willunga Hill. They wish to supply unpasteurised milk commercially to consumers. The sale of unpasteurised milk is prohibited by the Food Act 2001 (SA) (the Act). They devised a scheme to circumvent the prohibition. The scheme is constituted by what is called the “cow share program”. The premise of the cow share program is that it is not unlawful for a person to consume unpasteurised milk from a cow owned by that person. Accordingly, the appellants designed the cow share program to permit consumers to acquire a share in a cow that produces unpasteurised milk, which is provided to them. A potential consumer wishing to obtain unpasteurised milk from the appellants is invited to purchase a share of one of the appellants’ cows. The appellants feed, care for and milk all the cows and filter, refrigerate, bottle and store the milk produced by the cows. Subject to certain conditions, each shareholder is, by reason of their shareholding, entitled to a share of the milk produced by all of the cows in the herd, fed, cared for and milked by the appellants. In particular, each shareholder is entitled each week to 1.5 litres of milk for every share they own. An important feature of the program is that the milk produced by all cows in the herd is combined in a vat immediately after the cows are milked. When the milk is bottled it is placed in a fridge. Each individual bottle of milk is designated as belonging to a particular shareholder. However, each shareholder is not permitted to take their milk unless they have paid a fortnightly boarding fee of $4. The boarding fee is expressed to be payable to cover all costs associated with the maintenance of the cow and dairy.

The appellants were convicted of two offences under the Act, namely, selling milk that did not comply with the requirement of the Food Standards Code (the Code) that the milk be pasteurised and failing to comply with the requirement imposed upon them by the Code that milk for sale not exceed maximum permissible levels of microorganisms. At trial the appellants were self-represented. On appeal, the respondent concedes that the trial of the prosecution miscarried. As a result, the appeal must be allowed, the convictions set aside and, at the very least, the matter remitted to another magistrate to be dealt with according to law. However, the appellants submit that even on the evidence before the magistrate they should not have been convicted on either count. They submit that in these circumstances the Court should allow the appeal, set aside the convictions and substitute an order dismissing the charges. Accordingly, it is necessary to address the appellants’ grounds of appeal, apart from ground 5 which has been conceded and ground 7 which is not pressed. 

Held per Stanley J (allowing the appeal):

1.  The appellants were engaged in the sale of unpasteurised milk within the meaning of the Act. I would dismiss grounds 1 and 2 of the appeal (at [73]).

2.  The offence with which the appellants were found guilty is known to law, and the fact that the transaction might also be unlawful in other ways does not change that. I would dismiss ground 3 of the appeal (at [76]).

3.  The cow share program is a sham. The appellants were selling unpasteurised milk to consumers. This does constitute the “retail sale” of the milk in the ordinary grammatical sense of that expression. I would dismiss ground 4 (at [80]).

4.  In the alternative, the appellants submit that it was necessary for the respondent to prove that the milk seized and tested was “for sale”. The magistrate could not have been satisfied beyond reasonable doubt that the milk seized on 7 August 2013 was in fact “milk for sale”. The respondent had not excluded the reasonable possibility that the milk seized had already been sold and therefore was no longer “for sale”. I would uphold ground 6. I would also allow the appeal against the finding of guilt on count 3 on this basis.  I will enter an acquittal in relation to count 3 (at [84]).

5.  It follows that the magistrate cannot have been satisfied beyond reasonable doubt that at the time the milk was “for sale” the level of microbiological organisms contained in the milk exceeded the maximum permissible levels. For these reasons I would also allow the appeal against the finding of guilt on count 3.  The appellants are also entitled to an acquittal in relation to count 3 on this basis (at [85]).

6.  Appeal allowed.  Set aside the verdicts of guilty in relation to counts 2 and 3. Enter an acquittal and a verdict of not guilty on count 3.  Remit the matter for retrial on count 2 before another magistrate. I will hear the parties as to the costs of the appeal (at [86]).

Food Act 2001 (SA) s 21(1), s 21(2), s 4(1), s 3, s 5; Food Regulations 2002 (SA) reg 9; Australia New Zealand Food Standards Code st 4.2.4, st 4.6.1, st 1.1.1, st 2.5.1; Workers' Liens Act 1893 (SA) s 4, referred to.
Shaw v The Queen (1952) 85 CLR 365; Lawrence v The Queen (1981) 38 ALR 1; R v Chin (1985) 157 CLR 671; RPS v The Queen (2000) 199 CLR 620; Plant and Food Standards, Biosecurity SA v Tyler & Tyler [2015] SAMC 36; Martin v the Department of Transport, Energy and Infrastructure (2010) 269 LSJS 403; Plaintiff M70/2011 v Minister for Immigration and Citizenship & Anor (2011) 244 CLR 144; Federal Commissioner of Taxation v Unit Trend Services Pty Ltd (2013) 250 CLR 523 ; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1; Carr v Western Australia (2007) 232 CLR 138; Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297; Beckwith v The Queen (1976) 135 CLR 569; Waugh v Kippen (1986) 160 CLR 156; Bull v Attorney-General (NSW) (1913) 17 CLR 370 ; Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635; Sandeman & Sons v Tyzack and Branfoot Steamship Company Ltd [1913] AC 680; Indian Oil Corp Ltd v Greenstone Shipping SA (Panama) (The Ypatianna) [1988] QB 345; Coleman v Harvey [1989] 1 NZLR 723; Big Top Hereford Pty Ltd v Thomas as Trustee of the Bankrupt Estate of Tyler (2006) BPR 23; Re Gillie & Ors; ex parte Cornell (1996) 150 ALR 110; Fisher, Commercial and Personal Property Law (Butterworths, 1997); Farnsworth v Federal Commissioner of Taxation (1949) 78 CLR 504; Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529; Ferguson v Federal Commissioner of Taxation (1979) 37 FLR 310; Snook v London and West Riding Investments Ltd [1967] 2 QB 786; Scott v Federal Commissioner of Taxation (No 2) (1966) 40 ALJR 265; Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 499; Esanda Ltd v Burgess [1984] 2 NSWLR 139, considered.

WORDS AND PHRASES CONSIDERED/DEFINED

"commingling"

TYLER & ANOR v RAVEN
[2015] SASC 171

Magistrates Appeal

STANLEY J:

Introduction

1. The appellants were convicted of two offences under the Food Act 2001 (SA) (the Act), namely:

   (1)selling milk that did not comply with a requirement of the Food Standards Code relating to that milk, namely that the milk be pasteurised (contrary to s 21(2) of the Act) (count 2); and

   (2) failing to comply with a requirement imposed upon them by the Food Standard Code, namely that milk for sale not exceed maximum permissible levels of microorganisms (contrary to s 21(1) of the Act) (count 3).

2. The appellants are husband and wife.   They operate a dairy farm at Willunga Hill.   They wish to supply unpasteurised milk commercially to consumers.   The sale of unpasteurised milk is prohibited by the Act.   They devised a scheme to circumvent the prohibition.   The scheme is constituted by what is called the “cow share program”.  

3. The premise of the cow share program is that it is not unlawful for a person to consume unpasteurised milk from a cow owned by that person.   There is no general prohibition on the possession or consumption of unpasteurised milk.   Accordingly, the appellants designed the cow share program to permit consumers to acquire a share in a cow that produces unpasteurised milk, which is provided to them.   A potential consumer wishing to obtain unpasteurised milk from the appellants is invited to purchase a share of one of the appellants’ cows.  Each shareholder pays the appellants $30 for a 1/100 share in a cow.   The appellants feed, care for and milk all the cows and filter, refrigerate, bottle and store the milk produced by the cows.   Subject to certain conditions, each shareholder is, by reason of their shareholding, entitled to a share of the milk produced by all of the cows in the herd fed, cared for and milked by the appellants.   In particular, each shareholder is entitled each week to 1.5 litres of milk for every share they own.  

4. An important feature of the program is that the milk produced by all cows in the herd is combined in a vat immediately after the cows are milked.   When the milk is bottled it is placed in a fridge.   Each individual bottle (containing 1.5 litres of milk) is designated as belonging to a particular shareholder.  However, each shareholder is not permitted to take their milk unless they have paid a fortnightly boarding fee of $4.   The boarding fee is expressed to be payable to cover all costs associated with the maintenance of the cow and dairy, such as feeding, health requirements, milking costs, dairy shed and milking machine maintenance, electricity, refrigeration, water supply and effluent disposal.   The fee is payable in advance.  

5. At trial the appellants were self-represented.   The first appellant effectively conducted the trial on behalf of both appellants.

6. On appeal, the respondent concedes that the trial of the prosecution miscarried.   The respondent concedes that the magistrate wrongly led the first appellant to believe that he had to call the second appellant to give evidence during the prosecution case, in order to establish the provenance of a video shown to a prosecution witness.   The concession is properly made.   This was an error of law.   It resulted in an unfair trial of each of the appellants.   The first appellant called the second appellant during the prosecution case.   She was cross-examined at large.   The procedure adopted by the magistrate resulted in the appellants electing to go into evidence and, in particular, to call the second appellant as a witness before the close of the prosecution case, in circumstances where the likelihood is that the second appellant otherwise would not have given evidence.   The evidence given by the second appellant was admissible against both appellants.   A defendant in a criminal trial is entitled to wait until he or she knows the whole of the case to be presented by the prosecution before electing to give evidence, and cannot be required to give evidence before the close of the prosecution case.[1]  As was said in R v Chin[2] by Dawson J, the principle is essentially one of fairness.   As defendants in a criminal trial, each appellant had the right to cross-examine the prosecution witnesses.   They also had a right to remain silent and, in particular, to elect not to call or give evidence.[3]  The conduct of the trial by the magistrate effectively deprived them of this right.  As a result, the appeal must be allowed, the convictions set aside and, at the very least, the matter remitted to another magistrate to be dealt with according to law.   However, the appellants submit that even on the evidence before the magistrate they should not have been convicted on either count.   They submit that in these circumstances the Court should allow the appeal, set aside the convictions and substitute an order dismissing the charges.   Accordingly, it is necessary to address the appellants’ grounds of appeal, apart from ground 5 which has been conceded and ground 7 which is not pressed. 

   [1]    Shaw v The Queen [1952] HCA 18, (1952) 85 CLR 365 at 380; Lawrence v The Queen (1981) 38 ALR 1 at 3; R v Chin [1985] HCA 35, (1985) 157 CLR 671 at 676.

   [2] [1985] HCA 35, (1985) 157 CLR 671 at 685.

   [3]    RPS v The Queen [2000] HCA 3 at [28], (2000) 199 CLR 620 at 633.

7. The appeal essentially raises four questions.   First, were the appellants engaged in the sale of unpasteurised milk within the meaning of the Act between 17 April 2013 and 1 May 2013; second, does the Food Standards Code (the Code) apply to the sale of unpasteurised milk in South Australia; third, was the tested milk for sale; and fourth, did the respondent prove that the milk sold by the appellants on 7 August 2013 contained microbiological organisms which exceeded permissible levels under the Code at the time of sale. 

   Evidence at trial

8. The prosecution called evidence from two officers of Biosecurity SA, Mr Lance Holberton and Mr Kevin Glover, and the General Manager of the Dairy Authority of South Australia, Mr John Crosby.  

9. Mr Holberton gave evidence that he was assigned to investigate alleged sales of unpasteurised milk.   As part of his investigations he viewed an internet website promoting the cow share program.   He downloaded content from the website.   It was admitted into evidence.   It was in the following terms:

   Real milk

   What is it?

   It’s milk taken from cow’s [sic] grazing on chemical free pasture, simply filtered and refrigerated.   

   How can I get it?

   Unfortunately it is illegal to sell unpasteurized milk in South Australia.   The only legal way that you can consume Real MILK is to drink milk from your own cow.   

   Shared house cow program

   We have set up this program at Moo View Dairy to enable those that don’t have the space or time to look after their own cow, the opportunity to legally consume REAL MILK. 

   We are providing a facility where people that are unable to house their own cow, or wouldn’t utilise the production of one complete cow, can as a group own their own cows and share in the production of their cows.

   Ownership of each cow is divided into 100 shares entitling each share owner to 1% of the milk that cow produces, which will average 1 and a half litres per share per week.   The amount of milk you want to collect each week will determine how many shares you need to purchase...’

10. Mr Holberton further gave evidence that he visited the dairy on 18 April 2013 and agreed to purchase a share in the cow share program.   He executed a document entitled “My Cow Cow Share Program Share Application” and paid a fee of $30.   The first appellant provided him with a document headed “Terms and Conditions”.  

11. The terms and conditions state:

    1.Each share held is a real ownership of 1% of a particular dairy cow.

    2.Each share is valid for the life of that cow (i.e.  until the cow dies).

    3.Shareholders must pay the fortnightly boarding fee in advance for each share they own before they are entitled to collect their share of their cow’s production.

    4.Each share held entitles the holder to receive each week an amount of milk equivalent to 1% of that cow’s production for that week.   The average entitlement will be 1.5 litres of milk per week per share.

    5.Moo View Dairy will endeavour to provide the average entitlement of 1.5 litres of milk per week, but if there is not enough surplus unclaimed milk to do this (eg cows producing less) each shareholder will be restricted to the share of the milk produced by their cow(s).

    6.Moo View Dairy will feed, water and care for all cows owned by the shareholder in accordance with good dairy farm management practices. 

    7. Moo View Dairy will milk all cows owned by the shareholder daily throughout their lactation until they enter their dry period (two month rest period before next calving).  Milk from all cows producing milk fit for human consumption is combined in the vat until it is bottled ready for collection by the shareholders or their representative.   

    8.Moo View Dairy will manage the dairy to maximise benefits of the collective shareholders.   Occasionally it will be necessary to sell a cow for one of a number of reasons that include:

    ·        Illness/injury eg arthritis

    ·        Infertility

    ·        Prolonged low production

    In these instances the proceeds of sale will be distributed amongst the shareholders of that cow according to their ownership.

    9.Moo View Dairy will cover all costs of routine veterinary treatment, but if there is need of urgent treatment to preserve the life or productivity of the cow, the costs of this treatment will be shared by the shareholders of that cow according to their shareholding.

    10.Moo View Dairy will cover all costs associated with breeding and calving, and accordingly retain the rights to ownership of all calves birthed by cows owned by the shareholders.

    11.Shareholders are able to sell their shares to a third party at any time.

    12.If a shareholder wants to cease participating in the program at any time, Moo View Dairy will repurchase any shares held at a depreciated rate ($5.00 depreciation at date of purchase, plus additional $5.00 on each anniversary of ownership).   There may be occasions where there will be a waiting list for repurchase.   

    13.Moo View Dairy will ensure that the milk is refrigerated to less than 4° Celsius within 3 hours and is stored at less than 4° until it is collected.  It is the shareholder’s responsibility to ensure that the milk is stored at less than 4° from the time it leaves the farm.   If the milk is stored at less than 4° it will keep fresh for at least 1 week.   

    14.After an extensive testing and eradication program in the 1970’s and 80’s all cattle in Australia are declared free of Tuberculosis and Brucellosis.   If this situation should change for either disease we will test the cows annually.

    15.A shareholder can choose to delay collecting their milk, eg if they go away on holidays, and the milk is then available at a credit for them to request at a later date (for up to 6 months).   The ability of a shareholder to receive milk in credit is dependent on there being a surplus of uncollected milk at the time requested.

    16.As managers of the care of the shareholders cows(s), Moo View Dairy’s insurance covers any damage that their cow(s) may cause to any party’s person or property whilst in our care.’

12. On 30 April 2013 Mr Holberton returned to the dairy to collect his unpasteurised milk.   He paid the first appellant an amount of $4 being for the fortnightly boarding fee.   From the refrigerator he took a bottle of milk marked in his name.  

13. Mr Glover is a senior investigator with Biosecurity SA.   He gave evidence of attending at the dairy on 14 May 2013 and again on 7 August 2013.   On the second visit he was accompanied by Mr Holberton and an officer of the Department of Health, Mr Clarke.   Mr Glover took samples from the milk stored in the refrigerator in the dairy.   Some 15 samples were taken.   Bottles were taken from the refrigerator and placed on a table in the dairy.   The bottles had names on them.   He said the milk was cold when taken from the refrigerator and the samples were divided into three separate lots, each of five bottles, which were marked ‘A’, ‘B’ and ‘C’.   One lot was retained by the appellants, a second lot was taken for analysis and the third lot was kept in reserve in the event of any dispute over the results of the analysis.   The two lots taken by Mr Glover and his colleagues were placed in plastic bags which were sealed and then placed in a refrigerator in their vehicle.   Mr Glover estimated the milk remained on the table for approximately 15-20 minutes before it was placed in the car.   He gave evidence that the temperature in the refrigerator in the vehicle was recorded as five degrees.   Lot B was submitted for analysis to the IMVS on 7 August 2013.   The samples were analysed the following day.   The Certificate of Analysis was admitted in evidence.  

1. Mr Crosby gave evidence that he visited the appellants’ dairy in May 2013.   He gave evidence that the dairy authority is the regulatory authority responsible for ensuring milk produced in South Australia is suitable for human consumption.   During his visit to the dairy he made observations of a herd of approximately 50 cows in the dairy and of the standard of the equipment.   He gave some evidence as to the process of milking cows and storing milk.   He said that when taken from a cow, milk is about 32 degrees in temperature.   It is then cooled and stored in a tank or vat to a temperature of less than five degrees.   This is required to occur within three hours of milking.   He described the process of pasteurising milk.   He gave evidence that the milk samples collected on 7 August 2013 were tested at the IMVS and the results of the microbiological test recorded the highest reading he had observed.   There was no issue at trial that the results of the testing disclosed microbiological organisms in the milk above the maximum permissible levels.  Under cross-examination he gave evidence in relation to the growth of bacteria in milk.   He said that there is a relationship between the age and temperature of milk and the development of microbiological organisms in milk.   He said that bacterial growth in milk is sensitive to temperature.   When milk is kept below seven degrees there is a lag period when the growth of bacteria is substantially inhibited.   The higher the temperature of the milk, the faster bacteria will grow.   Even where milk is kept below seven degrees, after a period of time, when the lag phase has concluded, bacteria will develop.   Once bacteria commences to grow it can do so exponentially.   The significance of pasteurisation is that it kills bacteria in milk.   The industry authority requires milk to be pasteurised within 24-48 hours of the milk being produced.[4]  That is what he described as the lag phase.   He gave evidence that so long as samples taken for testing are kept below five degrees and are tested within 48 hours, the results obtained should reflect the level of microbiological organisms which were in the milk at the time the sample was taken.   Mr Crosby gave evidence that the results recorded in Exhibit P10 were obtained within the standard parameters for testing.   They were tested within 36 hours of the sample being obtained.   In those circumstances he considered that, so long as the samples had been kept at less than six degrees during that 36-hour period, the results obtained on testing would substantially reflect the level of microbiological organisms in the milk at the time the sample was taken.  

   [4]    Transcript 121.3-121.9.

2. There were three witnesses for the defence.   They were the appellants and Rachel Tyson.

3. Ms Tyson is a shareholder in the cow share program.   She holds five shares divided amongst four cows.   Her evidence did not take the matter very far.  

4. The first appellant told the magistrate that he and the second appellant built the dairy in 2001.   In 2002 it was licensed to sell unpasteurised milk.   Subsequently the sale of unpasteurised milk for human consumption was prohibited.   When this happened the appellants discontinued dairying but some time later they decided to explore a way to sell unpasteurised milk so that it did not contravene the law.   In September 2008 they started the cow share program which continued until the dairy was visited by Biosecurity SA in 2013.   The first appellant told the magistrate that in December 2008 he received a letter from the dairy authority alleging that he was engaged in the sale of unpasteurised milk.   The first appellant replied advising that he was not selling milk and explaining how the cow share program operated.   He heard nothing further until officers of the dairy authority visited the dairy in 2013.   He gave evidence that the shareholders’ ownership in the cows was real and the shareholders employed the appellants to feed, care for and milk the cows.  He said he and his wife did not own the cows, nor did they have a relevant entitlement to the milk of the cows which would enable them to sell the milk to the shareholders.   He said the relationship between the parties to the contract is defined in the contract, as are the entitlements of the shareholders to the milk.  Any concessions made by the shareholders are a matter of contract only.  The concessions do not mean the shareholders do not own the milk from their cows.  He said that the appellants had no entitlement to the milk because they had sold the cows.  He said that the appellants could not sell what was not theirs. 

5. The second appellant gave evidence of recording a video of the visit by officers of Biosecurity SA to collect the samples in August 2013.  She told the magistrate that some of the milk seized was potentially a week or more old.  She gave evidence that she and her husband offer 100 shares in each of their cows at a cost of $30 per share.  She told the magistrate that they milked the cows everyday and the milk from all the cows is stored in a single vat.  They bottle every second day.  She said the milk belongs to the shareholders and not to the dairy. 

   Relevant legislative provisions

6. Section 3 sets out the objects of the Act:

   3—Objects of Act

   The objects of this Act include the following:

   (a)     to ensure food for sale is both safe and suitable for human consumption;

   (b)     to prevent misleading conduct in connection with the sale of food;

   (c)     to provide for the application in this jurisdiction of the Food Standards Code.

7. Section 21(2) of the Act provides:

   21—Compliance with Food Standards Code

   (2) A person must not sell any food that does not comply with any requirement of the Food Standards Code that relates to the food.

   Maximum penalty:

   (a)     If the offender is a body corporate—$250,000.

   (b)     If the offender is a natural person—$50,000.

8. Section 21(1) relevantly provides:

   21—Compliance with Food Standards Code

   (1) A person must comply with any requirement imposed on the person by a provision of the Food Standards Code … to food intended for sale or food for sale.

   Maximum penalty:

   (a) If the offender is a body corporate—$250,000.

   (b) If the offender is a natural person—$50,000.

9. Sections 21(1) and (2) are, at least for purposes of this appeal, limited in their application to “food for sale” and the act of “sell[ing]” food.

10. Section 4(1) of the Act defines “sell” as follows:

    sell includes—

    (a)barter, offer or attempt to sell; or

    (b)receive for sale; or

    (c)have in possession for sale; or

    (d)display for sale; or

    (e)cause or permit to be sold or offered for sale; or

    (f)send, forward or deliver for sale; or

    (g)dispose of by any method for valuable consideration; or

    (h)dispose of to an agent for sale on consignment; or

    (i)provide under a contract of service; or

    (j)supply food as a meal or part of a meal to an employee, in accordance with a term of an award governing the employment of the employee or a term of the employee's contract of service, for consumption by the employee at the employee's place of work; or

    (k)dispose of by way of raffle, lottery or other game of chance; or

    (l)offer as a prize or reward; or

    (m)give away for the purpose of advertisement or in furtherance of trade or business; or

    (n)supply food under a contract (whether or not the contract is made with the consumer of the food), together with accommodation, service or entertainment, in consideration of an inclusive charge for the food supplied and the accommodation, service or entertainment; or

    (o)supply food (whether or not for consideration) in the course of providing services to patients or inmates in public institutions; or

    (p)sell for the purpose of resale;

11. At trial the respondent’s case was that the conduct of the appellants fell within placita (g) and (n) of the definition of “sell”. 

12. The Act contains no definition of “sale.” In most instances the use of the word “sale” in the Act takes its colour from the definition of “sell” in section 4(1). The definition being inclusive extends the ordinary grammatical meaning of “sell.”

13. Section 5 of the Act defines food to include “any substance or thing of a kind used, or represented as being for use, for human consumption (whether it is live, raw, prepared or partially prepared)”. There is no issue that milk is “food” for the purposes of the Act.

14. Regulation 9 of the Food Regulations 2002 (SA) adopts the Australia New Zealand Food Standards Code. Standard 4.2.4 of the Code requires that milk be pasteurised. Standard 1.6.1 provides that foods listed in the Schedule to the Code must comply with the microbiological limits set in relation to that food in the Schedule. The Schedule, inter alia, prescribes permissible levels of specified microorganisms in “unpasteurised milk for retail sale.”

    The magistrate reasons

15. The magistrate found the charges proved on the following basis:[5]

    Despite a prolonged trial, there are just two matters which are in dispute.   They are: does the My Cow program constitute selling milk for the purposes of the Food Act and did the microbiological levels in the milk on 7 August 2013 exceed the permissible levels?  I remind myself in order to protect public health, Parliament drafted the Act widely to encompass every possible form of distribution of food.  The defendants’ narrow definition of what constitutes a sale is entirely inconsistent with the intention of Parliament.   According to the defendants a ‘sale’ requires the defendant to have some form of ownership or entitlement to the milk. That is not an interpretation which is consistent with section 4 of the Food Act because several of the actions referred to in the definition of sell do not rely on ownership or entitlement.   

    I reject the argument the defendants cannot sell the milk because they do not own it or the cow from which it comes. Some conditions of the Cow Share program are inconsistent with the shareholders’ purported ownership of their cow and its milk. For instance, the shareholders do not take an interest in the progeny of the cow, nor is the milk they receive sourced exclusively from their cow. At best they received a cocktail comprised of the milk from many cows which may or may not contain any milk from their own cow. In my view, the issue of whether the My Cow program represents a divestment of the defendants’ cows in favour of the shareholder is not critical, but for what it is worth, I am not satisfied the shareholders are the exclusive owners of the cows. It follows the shareholders have something less than full ownership of their cow and its milk and the defendants retain some entitlements that come with ownership. It follows they had a proprietary interest in the milk, which on their own case, means there was a sale. Ultimately, ownership of the cow and milk is not relevant because I agree with the prosecution’s submission the My Cow program amounts to a sale as defined in subsection (g) of section 4 of the Food Act that is, ‘dispose of by any method for value or consideration.’ The prosecution says the milk is disposed of because it is provided by the defendants to the shareholders for them to drink and the My Cow scheme falls within the scope of ‘any method.’ Valuable consideration, being the cost of the share and the boarding fee, passes between the defendants and there is a nexus between the value or consideration and the provision of the milk.  I agree with this submission from prosecution and the evidence supports the prosecution’s submission.

    I agree also with the prosecution’s submission the My Cow program falls within the definition in subsection (n) of the section 4 of the Food Act.   It is submitted the defendants supply food pursuant to a contract with the shareholder together with accommodation or service, that is agisting and boarding the cow, in consideration of a charge for the milk and the boarding fee.  In my opinion the defendants cannot escape these conclusions.

    I am not convinced by the defendants’ argument concerning the deterioration of the milk samples.   The evidence is when the samples were taken from the refrigerator the temperature of the samples was 5 degrees.   The evidence further shows the temperature of the sample on the journey to the IMVS laboratory was 5 degrees.   Mr Crosby’s evidence was there would be no significant increase in microbiological level if milk was maintained between 4 and 6 degrees and provided the samples were kept below 6 degrees.   If the milk was kept refrigerated within this range there would be only a marginal increase in microbiological levels in the period between removal from the dairy and the testing.   

    The evidence does not support the defendant’s submission about the deterioration of the samples.   I am satisfied the milk was taken from the refrigerator in the dairy and later placed in a refrigerator in Mr Glover’s vehicle.   The samples remained in the open air for about 20 minutes only before they were placed in the vehicle.   The temperature of the milk when taken from the dairy refrigerator was 5 degrees.   The temperature in the refrigerator in the vehicle was 5 degrees.   When delivered to IMVS the temperature was 6 degrees and the milk was kept overnight at IMVS at 5 degrees.   There is no demonstrated failure by Mr Glover and his colleagues in their handling of the samples which would explain the very high microbiological levels in the milk.   Those levels in some cases ranged from five times the permissible limit to 40 times the permissible level.   Three of the five samples contained coliforms which exceeded the permissible levels, two of the samples contained Ecoli levels which exceeded the maximum permissible levels by 20 percent and in four of the samples staphylococci levels exceeded the maximum permissible level, in one case by twice the permissible level and in another sample up to eight times the permissible level.    The only explanation for these readings is there were already very high bacteria levels in the milk when samples were taken by Biosecurity SA officers.

    Almost as an afterthought, the defendants submit Food Standards Code 1.6.1 does not apply to raw cow’s milk, because the only raw milk which may be sold in Australia is raw goat’s milk.   Food Standard 1.6.1 refers to ‘unpasteurised milk’ only.   It is not restricted to milk from a particular animal and the defendants’ submission is not relevant. 

    I have no doubt Mr and Mrs Tyler believe there are health benefits in consuming unpasteurised milk.   Their many shareholders tells me there are others in the community who share that view.   The Tylers were responding to that demand and they created a way of meeting the demand which they believed did not infringe against what they consider to be a bad law.   Their intentions may be commendable, but in my opinion the methods still amount to a sale for the purposes of the Food Act.

    [5]    Plant and Food Standards, Biosecurity SA v Tyler & Tyler [2015] SAMC 36 at [30] – [36].

    Nature of the appeal

16. The appeal is by way of rehearing.  The nature of such an appeal was considered in Martin v the Department of Transport, Energy and Infrastructure.[6] White J said:[7]

    In short, on appeals against conviction under s 42 of the Magistrates Court Act, this Court is required to conduct a real review of the evidence put before the Magistrate.  On issues which involved an assessment of the quality and reliability of a witness, this Court must make due allowance for the advantage of the Magistrate in seeing and hearing the evidence being given.  However, the fact that a Magistrate reached his or her conclusion by an acceptance of the evidence of the witnesses of one party does not prevent this Court carrying out its statutory function.  There may be cases in which incontrovertible facts or uncontested testimony or the glaring improbability of the Magistrate’s conclusion will, despite the Magistrate’s preference for the evidence of a particular witness, warrant this Court’s interference.  Further, if the question is one of inferences to be drawn from facts found or which are not in dispute, this Court can substitute its decision if it comes to a different conclusion as to the correct inference to be drawn.

    [Citation omitted].

    [6] [2010] SASC 141, (2010) 269 LSJS 403.

    [7] [2010] SASC 141 at [38], (2010) 269 LSJS 403 at 410.

    Construction of the Act

17. Central to the magistrate’s reasons was his interpretation of the Act.  The appellants submit the magistrate erred in the approach he took to construing the Act. 

18. The contemporary approach to statutory construction emphasises that legislation is to be construed in accordance with its text, context and purpose.[8]  In Project Blue Sky Inc v Australian Broadcasting Authority[9] the High Court said:[10] 

    The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole”. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that “the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed”. Thus, the process of construction must always begin by examining the context of the provision that is being construed.

    [Citations omitted].

    [8]    Plaintiff M70/2011 v Minister for Immigration and Citizenship & Anor [2011] HCA 32 per French CJ at [50], per Gummow, Hayne, Crennan and Bell JJ at [109], (2011) 244 CLR 144 per French CJ at 176 – 177, per Gummow, Hayne, Crennan and Bell JJ at 194; Federal Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 at [47], (2013) 250 CLR 523 at 539 – 540.

    [9] [1998] HCA 28, (1998) 194 CLR 355.

    [10] [1998] HCA 28 at [69], (1998) 194 CLR 355 at 381.

19. This approach was subsequently reaffirmed by the High Court in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue[11] and Australian Education Union v Department of Education and Children’s Services.[12]  In Alcan Hayne, Heydon, Crennan and Kiefel JJ said that:[13]

    [T]he task of statutory construction must begin with a consideration of the text itself.  Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text.  The language which has actually been employed in the text of legislation is the surest guide to legislative intention.  The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. 

    [Citations omitted].

    [11] [2009] HCA 41; (2009) 239 CLR 27.

    [12] [2012] HCA 3, (2012) 248 CLR 1.

    [13] [2009] HCA 41 at [47], (2009) 239 CLR 27 at 46 – 47.

20. In the AEU case the Court said:[14]

    … The process of construction begins with a consideration of the ordinary and grammatical meaning of the words of the provision having regard to their context and legislative purpose.

    …

    [14] [2012] HCA 3 at [26], (2012) 248 CLR 1 at 13.

21. However, the general rule that a court is to construe legislation in a manner that promotes its purpose or object may be of little assistance where a statutory provision strikes a balance between competing interests and the problem is one of doubt about the extent to which the legislation pursues a purpose.  In Carr v Western Australia[15] Gleeson CJ observed:[16]

    … Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem.  For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose.

    … Ultimately, it is the text, construed according to such principles of interpretation as provide rational assistance in the circumstances of the particular case, that is controlling.

    [15] [2007] HCA 47, (2007) 232 CLR 138.

    [16] [2007] HCA 47 at [5] – [6], (2007) 232 CLR 138 at 142 - 143; See also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 at [51], (2009) 239 CLR 27 at 47 – 48.

1. This is consistent with the position of the High Court in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation:[17]

   … [I]f the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature. The danger that lies in departing from the ordinary meaning of unambiguous provisions is that “it may degrade into mere judicial criticism of the propriety of the acts of the Legislature”, as Lord Moulton said in Vacher & Sons Ltd. v. London Society of Compositors; it may lead judges to put their own ideas of justice or social policy in place of the words of the statute. On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice. Since language, read in its context, very often proves to be ambiguous, this last mentioned rule is one that not infrequently falls to be applied.

   [Citation omitted].

   [17] [1981] HCA 26, (1981) 147 CLR 297 at 305.

2. The appellants submit that s 21 of the Act and the extended definition of “sell” should be construed narrowly as the provision is penal in character.  However, characterisation of the provisions as penal does not compel a narrow construction of the provision.

3. The modern approach to construing penal statutes commences with consideration of Beckwith v The Queen[18] where Gibbs J (as he then was) said:[19]

   The rule formerly accepted, that statutes creating offences are to be strictly construed, has lost much of its importance in modern times.  In determining the meaning of a penal statute, the ordinary rules of construction must be applied, but if the language of the statute remains ambiguous or doubtful, the ambiguity or doubt may be resolved in favour of the subject by refusing to extend the category of criminal offences:  see R v Adams; Craies on Statute Law, 7^th ed, 1971, pp. 529 – 534.  The rule is perhaps one of last resort. 

   [Citation omitted]. 

   [18] [1976] HCA 55, (1976) 135 CLR 569.

   [19] [1976] HCA 55 (1976) 135 CLR 569 at 576.

4. The approach in Beckwith has particular resonance to the problem posed by beneficial legislation which penalises prescribed conduct.  There is an obvious tension between the principle that penal legislation should be interpreted strictly and the principle that beneficial legislation should be interpreted liberally so as to give effect to its purpose.  This problem was addressed by the High Court in Waugh v Kippen.[20]The High Court was construing occupational health and safety legislation which penalised employers who failed to take reasonable care to protect employees from a foreseeable risk of injury.  The High Court said:[21]

   [Where] the two principles of interpretation … come into conflict … the court must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention, remembering that it is a remedial measure passed for the protection of the worker. It should not be construed so strictly as to deprive the worker of the protection which Parliament intended that he should have … In such a context the strict construction rule is indeed one of last resort…

   [20] [1986] HCA 12, (1986) 160 CLR 156.

   [21] [1986] HCA 12, (1986) 160 CLR 156 at 164 – 165.

5. The Act, like occupational health and safety legislation, is beneficial and remedial.  It is intended, inter alia, as s 3 of the Act makes plain, to ensure food for sale is both safe and suitable for human consumption. Its purpose is the protection of public health. The Act should be construed to give the fullest remedy which the fair meaning of the language of the statute will allow.[22]

   [22]   Bull v Attorney-General (NSW) [2013] HCA 60, (1913) 17 CLR 370 at 384, cited with approval in Waugh v Kippen [1986] HCA 12, (1986) 160 CLR 156 at 164.

6. Mr McDonald, counsel for the appellant, submits that the magistrate fell into error by construing the text of the Act from the premise that the Act is designed to address every possible method of distribution of food.  He submits that this proposition discloses error.  In my view, this submission must be accepted.  The Act does not apply to a gift of “food” as defined.  The operation of the Act, and in particular s 21, is confined to the protection of the public health in relation to the supply and distribution of food for commercial purposes.  It is not however, concerned with food that is grown and prepared for personal consumption.    In the AEU case[23] French CJ, Hayne, Kiefel and Bell JJ said that in construing a statute it is erroneous for the court to emphasise a judicially constructed policy at the expense of the requisite consideration of the statutory text and its relatively clear purpose.  In construing a statute it is not for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose.  The statutory purpose is to be derived from a consideration of a scheme of the Act as a whole.  However, in the case of this Act, notwithstanding the error into which the magistrate fell, this is legislation which pursues a single purpose, that purpose is, as I have said, the protection of public health.  Accordingly, the cautionary note struck by Gleeson CJ in Carr v Western Australia[24] does not apply.  Section 21 is to be construed on the basis of its text and in the context that its purpose is to prevent the commercial supply and distribution of contaminated food which might pose a risk to the health of the consumer.  Identification of the purpose of s 21, in the context of reading the Act as a whole, does not involve the commission of the error to which the court in the AEU case referred.  Rather, it involves the exercise of the principled approach the High Court affirmed in the AEU case, namely, that the construction of legislation requires a consideration of the text of the provision having regard to its context and legislative purpose.[25] 

   [23]   Australian Education Union v Department of Education and Children’s Services [2012] HCA 3 at [28], (2012) 248 CLR 1 at 14.

   [24] [2007] HCA 47 at [5] – [6], (2007) 232 CLR 138 at 142 – 143.

   [25] [2012] HCA 3 at [26], (2012) 248 CLR 1 at 13.

7. In my view the approach taken by the magistrate to the construction of the Act otherwise is correct. In construing the prohibition in s 21(2), against selling any food that does not comply with any requirement of the Code that relates to the food, the verb “sell” is to be construed in accordance with the extended definition in s 4(1). That definition is to be construed broadly, consistent with the beneficial and remedial purposes of the Act.

8. The ordinary grammatical meaning of “sell” does not constrain the intended reach of the extension of the meaning of “sell” in the definition. Each of the placita of the definition of “sell” in s 4(1) extends the meaning of the expression “sell” beyond its ordinary grammatical meaning. So much is apparent from the reference in the definition of “sell” to bartering, to disposing of by way of raffle, lottery or other game of chance, to offering as a prize or reward, or to giving away for the purpose of advertisement or in furtherance of trade or business. The ordinary, grammatical meaning cannot circumscribe the extension of the meaning found in each placitum of the definition. Each placitum of the definition is to be given the widest amplitude the text will allow consistent with the purpose of the legislation. In my view, the legislative intention is plain. It is to extend the operation of the Act to include commercial schemes for the provision or supply of food that do not fall within the ordinary grammatical meaning of “sell”.

   Did the appellants contravene s 21(2) of the Act by selling milk?

9. In my view the magistrate was correct in concluding that the appellants had sold milk in accordance with the definition of “sell” in placita (g) and (n) of the definition.  

10. Within the meaning of placitum (g), the appellants disposed of the unpasteurised milk for valuable consideration.  The consideration was the payment of the share price and the boarding fee.  The method by which they disposed of the milk was the cow share program. 

11. The “shareholders” were not permitted by the appellants to take possession of the milk unless they had paid the fee for the “share” in a cow and the “boarding” fee or fees they had incurred.  It is significant in this context that the milk the appellants disposed of may not have come from the cow in which the “shareholder” had purchased his or her “share”.  I will come back to this.

12. In addition, and in the alternative, the appellants sold milk as defined in placitum (n) because they supplied milk under a contract, together with a service, in consideration of an inclusive charge for the milk supplied and the service.

13. The “shareholders” entered into a contract with the appellants.  Pursuant to that contract they paid the appellants a “boarding fee”.  Pursuant to that contract the appellants provided the service of “agisting and milking” the cow or cows in which the “shareholder” had a “share”, bottling milk and storing it in refrigeration for collection by the “shareholder” (or delivering it to them). The terms and conditions state expressly that “shareholders” must pay the fortnightly boarding fee in advance for each share they hold before they are entitled to collect milk. 

14. I reject the appellants’ submission that there was no “consideration” for the disposal or supply of the milk as required by placitum (g) and (n).  The share payment and the payment of the boarding fee constitutes the requisite consideration.  The appellants submit that neither the payment for the share nor the boarding fee were payable in consideration of the provision of milk.  They submit the boarding fee is not a payment for milk but for a service.  They put the submission in two ways.  First, they contend that the prohibition on the provision of milk without payment of the boarding fee is indistinguishable from a worker’s lien.  Second, they contend that the entitlement of a shareholder to the milk arises from their proprietary rights as owners in common of one or more cows. 

15. I reject the submission that the requirement to pay the boarding fee in advance before the “shareholder” is entitled to any milk is indistinguishable from a worker’s lien so as to contraindicate the proposition that the payment of the boarding fee is consideration for the provision of milk. Section 4 of the Worker’s Liens Act 1893 (SA) (Worker’s Liens Act) provides:

    4—Workers’ liens

    (1) A worker doing work for an owner or occupier, or for a contractor or sub-contractor for the benefit of an owner or occupier, shall have a lien for his wages for such work on the estate or interest in land of the owner or occupier in each of the following cases:

    (a)     Where the work is done with the assent, express or implied, of the owner or occupier to the land or to any fixture thereon:

    (b)     Where the work is done in or about the manufacture of materials which are, with the assent, express or implied, of the owner or occupier, used or intended to be used in or about work done, or intended to be done, to the land or to any fixture thereon.

    (2) A worker employed upon land and doing work there for the owner or occupier thereof in connection with pastoral, agricultural, horticultural, or mining pursuits carried on upon such land shall have a lien on all goods on such land belonging to such owner or occupier, but such lien shall not avail against the title of a bona fide purchaser, mortgagee, pledgee, or incumbrancee without notice of such lien.

    (3) A lien under this section shall be limited to four weeks' wages or wages for work not occupying more than four weeks, not exceeding in either case the sum of two hundred dollars.

16. Plainly, the requirement to pay the boarding fee before milk is supplied is not a worker’s lien.  The appellants are not in the position of a worker within the meaning of the Worker’s Liens Act.  They are working on land they own and occupy not someone else’s land. 

17. I turn to the appellants’ second submission that the payment of the share price and the boarding fee is not consideration for the supply of milk because the “shareholders” had a proprietary interest in the milk and thereby an entitlement to possession. 

18. Mr McDonald, for the appellants, submits that upon purchasing one or more shares in a cow, a shareholder becomes entitled to a proportionate share in the produce not only of their cow but of all the cows in the program.  He submits that the shareholders’ entitlement to an interest in the total produce is an incident of their ownership of shares in one or more cow.  Each shareholder purchased their share on the understanding that there would be other shareholders and that all shareholders in all cows would have an entitlement to a prescribed share in the whole of the milk. 

19. I do not accept this submission.  The premise of the cow share program is that each “shareholder” is a co-owner of a cow and therefore a co-owner of its milk.  The “shareholder” is consuming its own milk.  There has been no sale.  If the “shareholder” agrees to share his milk with other “shareholders” and to consume the milk produced by cows owned by others, the “shareholder” is consuming milk that belongs to others.  Moreover, he is doing so in consideration of the payment of a fee.  There is a “sale” of milk to the “shareholder” in these circumstances. 

20. In the alternative, Mr McDonald submits that each shareholder is a tenant in common with the other shareholders in a particular cow.  Accordingly, each shareholder is a tenant in common with the other shareholders in that cow in the milk produced by the cow.  When the milk from their cow is commingled in the vat with the milk from other cows, they become tenants in common of all the milk produced by the herd which has been commingled, according to the relative ratio of their contributions to the total quantity of the milk in common bulk. 

21. Tenancy in common is a form of co-ownership of property where each co-owner holds a distinct interest in the same piece of property.  The tenants in common hold undivided shares, possessing the property in common without the right to exclusive possession of any part of it.[26]  Common possession is the only necessary feature of a tenancy in common.  Each tenant in common is entitled to possession of the whole of the commonly owned property but not to the exclusion of the other tenants in common.[27]

    [26]   Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45, (1993) 177 CLR 635 at 643.

    [27]   Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45, (1993) 177 CLR 635 at 643.

22. The appellants’ submission relies upon the proposition that where goods are commingled or confused so as to become indistinguishable, the mixture belongs to the former proprietors in common, in proportion to their respective contributions or shares.[28]  That proposition, however, is subject to two provisos.  First, because each tenant in common is entitled to possession of the whole of the commonly owned property but not to the exclusion of the other tenants in common, it is not possible for one tenant to take a share of the commonly owned property without the consent of the other co-owners.[29]  Second, where there is an underlying intention on the part of the co-owner who did not do the mixing, to divest itself of ownership of the resultant mixture by means of a dispositive transaction, whether as a sale, gift or other transfer, no proprietary interest is retained by the former proprietor.[30] 

    [28]   Sandeman & Sons v Tyzack and Branfoot Steamship Company Ltd [1913] AC 680 at 694 – 695; Indian Oil Corp Ltd v Greenstone Shipping SA (Panama) (The Ypatianna) [1988] QB 345 at 370; Coleman v Harvey [1989] 1 NZLR 723; Big Top Hereford Pty Ltd v Thomas as Trustee of the Bankrupt Estate of Tyler [2006] NSWSC 1159 at [62], (2006) 12 BPR 23.

    [29]   Re Gillie & Ors; ex parte Cornell (1996) 150 ALR 110 at 113.

    [30]   Fisher, Commercial and Personal Property Law (Butterworths, 1997) at [4.44]. 

23. In Farnsworth v Federal Commissioner of Taxation[31] a fruit grower delivered dried fruits grown by her to a packing company to be dealt with in accordance with the rules of a marketing association of which she was a member.  The fruit was graded, processed and packed by the company, and the processing involved the mixing of the grower’s fruit with that of other growers so that it became impossible to identify the fruit of any particular grower.  The fruit was sold by a selling agent.  The rules of the association provided for the distribution of the proceeds of the fruit when sold, less the expenses of marketing, among the suppliers rateably according to parity in respect of the grade, description and quantity of the fruit supplied.  Dixon J (as he then was) held that the packing house could not be treated as a mere agent of the grower.  The grower’s dried fruit had been delivered irrevocably to the packing house upon terms which entitled her to payment of a money sum and left her with no dispositive power over the fruit and no power to direct or control the disposal by the packing house of the fruit either alone or in combination with other suppliers.  He considered the property in each parcel of fruit delivered into the pool passed to the packing house.  Whatever contractual and equitable rights each grower or all growers possessed to enforce the obligations of the packing house, it was not right to treat all the dried fruit in the hands of the packing house as the property in co-ownership of all or some number of the suppliers of fruit to the pool.  It was delivered on terms which did not contemplate co-ownership at law.[32]  McTiernan J agreed with Dixon J.  Rich J took a similar approach.  He held that after the grower delivered her fruit to the packing company and it had been processed, the grower lost all control and power of disposition of the fruit and it became so inextricably mixed with the fruit of other growers as to be incapable of identification.  In those circumstances the property in the fruit passed to the packing company and became converted into a claim for an account in equity.[33]  While this was a tax case, the relevant principles are nonetheless applicable to this case.[34] 

    [31] [1949] HCA 27, (1949) 78 CLR 504.

    [32] [1949] HCA 27, (1949) 78 CLR 504 at 518.

    [33] [1949] HCA 27, (1949) 78 CLR 504 at 515.

    [34]   In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” [1976] HCA 65, (1976) 136 CLR 529 at 561 the High Court recognised the distinction in Farnsworth v FCT. 

24. The appellants’ submission that there is no consideration passing, because the shareholder is the proprietor of the milk, founders on a number of grounds. 

25. First, the commingling does not occur as an isolated or accidental event.  It is central to the appellants’ business.[35]  It occurs as part of an organised, repetitive, continuing program of activity undertaken by the appellants as the core aspect of their business.  The commingling was not undertaken by one of the “shareholders” but by the appellants.  This evidences the proprietary interest the appellants have in the milk.  The appellants, like the packing house in Farnsworth, are not mere agents of the “shareholders”, they are exercising actual control over the disposition of the milk.  As in Farnsworth, the objective intention of the parties is that the appellants continue to exercise power and control over the cows and the milk in ways that are consistent with the retention of a proprietary interest in the cows and the milk they produce.  They can sell the cow.[36]  They retain any progeny of the herd.[37]  They mix the milk.[38]  They alienate a portion of the milk to a “shareholder” even if his or her cow is not producing milk.[39] The evidence suggests that the “shareholders” could not remove a cow they “owned” from the appellants’ dairy farm. 

    [35]   Ferguson v Federal Commissioner of Taxation [1979] FCA 29, (1979) 37 FLR 310 at 314 and 325.

    [36]   Exhibit P3, Terms and Conditions clause 8. 

    [37]   Exhibit P3, Terms and Conditions clause 10. 

    [38]   Exhibit P3, Terms and Conditions clause 7. 

    [39]   Exhibit P3, Terms and Conditions clause 4. 

1. Second, the evidence does not establish that a 1/100 share in a cow equals 1.5 litres of milk per week as the relevant proportion of each “shareholders” contribution to the common bulk of milk produced by the herd.  Clause 5 of the terms and conditions provides that where there is not enough surplus unclaimed milk to permit the provision of 1.5 litres of milk per week, each “shareholder” will be restricted to the share of the milk produced by their cow.  This indicates that 1.5 litres of milk per week does not represent the proportionate share of the milk produced by the cow in which the “shareholder” has an interest.

2. Third, the “shareholder” purportedly is entitled to 1.5 litres of milk per week per share even if the “shareholder’s” cow is not producing milk at that time.  In those circumstances there can be no question of commingling of the “shareholder’s” property.  Yet, notwithstanding the “shareholder’s” cow is not producing milk at that time, the appellants alienate a portion of the milk produced by the herd to a “shareholder” on the premise that that particular bottle of milk belongs to the “shareholder”.   

3. All of this points to the appellants asserting proprietary rights to the milk. 

4. In my view, the “shareholders” have no proprietary interest in the milk that is mixed by the appellants in the vat.  If the “shareholders” had acquired a proprietary interest in the milk produced by a cow in respect of which they had “purchased” a “share”, like the grower in Farnsworth, any property the “shareholder” had in that milk passed to the appellants when mixed with the milk produced by the other cows in the herd.  The “shareholders” only acquire a proprietary interest in the milk upon payment of the boarding fee. 

5. But in any event, I consider that the appellants’ submission proceeds from a false premise.  The appellants’ defence turns on the proposition that they are not the owners of the milk because they have disposed of their proprietary interest in their cows by the cow share program.  The magistrate rejected this argument.  He found that some conditions of the cow share program were inconsistent with purported ownership of the cow and its milk by the “shareholders”.  He was not satisfied that “shareholders” were the exclusive owners of the herd of cows.  As a consequence the appellants retained a proprietary interest in the milk.  In effect, the magistrate found the cow share program to be a sham.  The appellants submit that because the contract provides for the purchase of a share in a cow the arrangement is not a sham.[40]  This requires consideration of the law concerning whether an arrangement is a sham.  A convenient starting point is Snook v London and West Riding Investments Ltd[41] where Diplock LJ said:[42]

   I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities … that for acts or documents to be a “sham”, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.

   [40] Appellants’ summary of argument at [47].

   [41] [1967] 2 QB 786.

   [42] [1967] 2 QB 786 at 802.

6. In Scott v Federal Commissioner of Taxation (No. 2)[43] Windeyer J said:[44]

   … On the other hand, if the scheme, including the deed, was intended to be a mere facade behind which activities might be carried on which were not to be really directed to the stated purposes but to other ends, then the words of the deed should be disregarded … A disguise is a real thing: it may be an elaborate and carefully prepared thing; but it is nevertheless a disguise. The difficult and debatable philosophic questions of the meaning and relationship of reality, substance and form are for the purposes of our law generally resolved by asking did the parties who entered into the ostensible transaction mean it to be in truth their transaction, or did they mean it to be, and in fact use it as, merely a disguise, a facade, a sham, a false front — all these words have been metaphorically used — concealing their real transaction …

   [43] (1966) 40 ALJR 265.

   [44] (1966) 40 ALJR 265 at 279.

7. The effect of these authorities were summarised in Sharrment Pty Ltd v Official Trustee in Bankruptcy[45] by Lockhart J, who said:[46]

   A “sham” is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.

   [45] (1988) 18 FCR 499.

   [46] (1988) 18 FCR 499 at 454.

8. This analysis is cited with approval by the High Court in Commissioner of Taxation (Cth) v Montgomery.[47]

   [47] [1999] HCA 34 at [88], (1999) 198 CLR 639 at 668.

9. The intention of the parties to an arrangement is properly the subject of investigation when considering whether the arrangement is a sham.[48]  In Sharrment Lockhart J held that it is the intention of the parties to the transaction which determines the question whether the act or document was never intended to be operative according to its tenor at all but rather was to cloak another and different transaction.

   [48]   Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 499 at 456 – 457; Esanda Ltd v Burgess [1984] 2 NSWLR 139 at 146 – 147 and 153 – 154.

10. In my view, the magistrate was justified in his view that the contractual arrangement between the parties was not effective in disposing of the appellants’ proprietary interest in the milk via the “shareholding” arrangement.  They retained a proprietary interest in the milk until it was sold to their customers i.e. the “shareholders”.  The very point of the cow share program is to conceal what is truly occurring, namely, the sale of unpasteurised milk to the public as a commercial undertaking.  The cow share program is a sham.  The arrangement entered into between the appellants and the “shareholders” purporting to involve the sale of a share of a cow does not preclude the conclusion that the cow share program is a sham.  The sham nature of the arrangement is evidenced by the fact that every cow has the same price, namely, $3,000,[49] notwithstanding that the value of a dairy cow will vary depending on characteristics of the cow, such as the amount of milk it produces.[50]  The Act prohibits the commercial supply of unpasteurised milk.  The cow share program is a transparent device to circumvent that prohibition. 

    [49]   The appellants purported to “sell” 100 shares in each cow at a price of $30 per “share”. 

    [50]   See evidence of Mr Crosby at Transcript 135 – 136. 

11. This conclusion has two consequences.  First, the payment of the share price and the boarding fee constitute the passing of valuable consideration to the appellants for the provision and supply of the milk.  Second, because the cow share program is a sham, I consider the appellants were “selling” milk both within the extended definition of “sell” in sub-paragraph (e), namely, by causing or permitting it to be offered for sale, and in the ordinary grammatical meaning of the expression. 

12. Even if this analysis is wrong, that does not matter to the ultimate result of this appeal.  Ownership of the milk is irrelevant to the question of whether the appellants were selling milk within the Act.  Pursuant to the extended definitions of “sell” in placita (g) or (n), whether or not the appellants owned the milk, or, as was put on appeal by them, whether they retained any proprietary interest in the cows, was irrelevant to their disposal or supply of the milk produced by those cows.  Whether the appellants were selling the milk depended on whether their conduct in implementing the cow share program fell within the extended definition of “sell” in placitum (g) or (n).  For the reasons explained above, it did. 

13. Accordingly, the magistrate’s conclusion that the appellants had a proprietary interest in the milk is immaterial for two reasons.  First, because ownership of the milk is irrelevant if the appellants’ conduct comes within the operation of placitum (g) or (n) of the definition of “sell”.  Second, because as the magistrate’s reasons recognise, this conclusion was not central to his ultimate finding.  The appellants are engaged in the commercial supply and disposition of unpasteurised milk. 

14. For these reasons I am satisfied the appellants were engaged in a sale of unpasteurised milk within the meaning of the Act between 17 April 2013 and 1 May 2013.  I would dismiss grounds 1 and 2 of the appeal.   However, because the appellants have succeeded on ground 5 of the appeal, the findings of guilt in relation to counts 2 and 3 must be set aside.  Nonetheless, it is necessary to consider the appellants’ submission relating to count 3 to decide whether the appellants are entitled to an acquittal on that count. 

    Does the Food Standards Code apply to the sale of unpasteurised milk in South Australia?

15. The appellants submit that minimum standards prescribed by the Code pursuant to Standard 1.6.1 do not apply to the sale of unpasteurised milk in South Australia. The contravention of s 21(1) of the Act found by the magistrate arose from his finding that the level of microorganisms found in the milk seized and tested exceeded the maximum permissible levels permitted pursuant to Standard 1.6.1. Standard 1.6.1 prescribes the maximum permissible levels of food-borne microorganisms in unpasteurised milk for retail sale. However, the appellants submit that clause 4 of Standard 2.5.1 of the Code, in combination with clause 15 of Standard 4.2.4, requires that in Australia, although not in New Zealand, milk be pasteurised unless an applicable law of a State or Territory expressly provides otherwise. South Australian law does not provide otherwise. Accordingly, the sale of unpasteurised milk is prohibited in South Australia. In those circumstances the appellants submit that, as a matter of construction, in South Australia there is no level of food-borne microorganisms permitted in unpasteurised milk offered for retail sale. The appellants submit that it follows that there could be no contravention by them of s 21(1) because the applicable standard relating to unpasteurised milk for retail sale does not exist in South Australia. The relevant requirement in Standard 1.6.1 is to be understood as applying only to unpasteurised milk that is lawfully able to be offered for retail sale. So much is apparent from the qualification found in clause 15(1) of Standard 4.2.4 which requires that milk be pasteurised unless a law otherwise expressly provides. The qualification recognises the capacity of a particular State or Territory, which has adopted the Code, to legislate to exclude the obligation to pasteurise milk.

16. I do not accept this submission.

17. Section 21(1) relevantly requires a person to comply with any requirements imposed on the person by a provision of the Code in relation to food for sale. The appellants were found guilty of contravening s 21(1) on the basis that on or about 7 August 2013 they offered milk for sale that exceeded the maximum permissible levels of food-borne microorganisms in Standard 1.6.1. The offence with which they were found guilty is known to law, and the fact that the transaction might also be unlawful in other ways does not change that. Notwithstanding that the sale of unpasteurised milk itself constitutes an offence against the Act, where the unlawful sale also contravenes s 21(1), because the milk did not comply with the microbiological limits set in relation to that food in the Schedule to the Standard, a further offence, akin to aggravation, is committed. The obligation, established by s 21(1) of the Act, that unpasteurised milk offered for retail sale cannot contain more than the maximum permissible microbiological organisms, applies notwithstanding the prohibition on the sale of unpasteurised milk. To sell unpasteurised milk constitutes one offence. To offer for retail sale unpasteurised milk containing more than the maximum permissible level of microorganisms constitutes another offence. I would dismiss ground 3 of the appeal.

    Did the respondent prove that the tested milk was for sale?

18. There are two aspects to this issue.  First, whether the conduct of the appellants can constitute the retail sale of unpasteurised milk.  Second, whether the respondent proved that the milk seized and tested was, in fact, offered for retail sale. 

19. The appellants submit that the magistrate erred in finding them guilty of contravening s 21(1), for failing to comply with a requirement of a provision of the Code, where the relevant provision related to unpasteurised milk for retail sale. They submit they were not undertaking the retail sale of the milk. The appellants submit that the Code is not delegated legislation but a free-standing code. The Code establishes standards which are to be construed uniformly in all jurisdictions in Australia and in New Zealand. Accordingly, the definition of “sell” in s 4(1) of the Act does not apply to the Code. The interpretive provisions of particular State legislation can have no bearing upon the proper construction of words and expressions used in the Code itself. On the contrary, the Code contains its own interpretive provision in Standard 1.1.1. Further, each standard contains its own interpretation provisions. However, neither the general interpretation provision in Standard 1.1.1 nor Standard 1.6.1 contains a definition of “retail sale”. Accordingly, the appellants submit those words, as used in Standard 1.6.1, must bear their ordinary grammatical meaning. They submit the cow share program does not constitute the retail sale of unpasteurised milk as that expression is ordinarily understood.

20. I do not accept this submission. 

21. The appellants were found guilty of failing to comply with the requirement imposed upon them by the Code in relation to milk for sale.  The magistrate found the milk for sale exceeded the maximum permissible levels of food-borne microorganisms in Standard 1.6.1.  The requirements in Standard 1.6.1 relating to microbiological levels in food apply, relevantly, only to “nominated foods, or classes of foods”.  The relevant item in the Schedule to Standard 1.6.1 prescribes standards in respect of “unpasteurised milk for retail sale”.  For the reasons explained above, I am satisfied that the cow share program is a sham.  The appellants were selling unpasteurised milk to consumers.  Contrary to their submission, this does constitute the “retail sale” of the milk in the ordinary grammatical sense of that expression.  For these reasons, I would dismiss ground 4. 

22. In the alternative, the appellants submit that it was necessary for the respondent to prove that the milk seized and tested was “for sale”. They submit that the prohibition in s 21(1) applies only to food at the time when it is “intended for sale” or “for sale” and not to food that has, at some time in the past, been “for sale”. The appellants submit that milk that was “for sale” necessarily ceases to be “for sale” at the time when it is sold, that is, at the time when the purchaser obtains a proprietary interest in the milk. The milk in respect of which the appellants were found guilty of contravening s 21(1) was milk which had already been bottled by the appellants. Affixed to the bottle was a label with the name of a shareholder. The appellants submit that at least from the time when the milk was bottled and labelled it was sold within the meaning of s 21(1). They submit that there was no evidence before the magistrate from which a finding could be made as to when the particular milk seized and tested had been “for sale”, assuming it ever was. Consequently, no conclusion could properly be drawn as the levels of food-borne microorganisms in that milk at the time when it had been “for sale” or whether those levels exceeded the prescribed maximum permissible levels.

23. The milk which was the subject of seizure and testing, and was the subject of the prosecution of the appellants for contravening s 21(1), was seized from the refrigerator in the appellants’ dairy.[51]  The milk seized was in bottles with names on labels affixed to them.[52]  The milk was seized by Mr Glover, Mr Clarke and Mr Holberton on 7 August 2013.  The milk was seized from the refrigerator in the dairy where the vat is situated.  This is where the milk came from when Mr Tyler supplied Mr Holberton with unpasteurised milk on 30 April 2013.[53]  On 7 August 2013 Mr Tyler told Mr Glover that the milk in the bottles belonged to the shareholders.[54]  In evidence Mrs Tyler made the same claim.[55] 

    [51]   Evidence of Mr Glover at Transcript 50.13-50.20. 

    [52]   Evidence of Mr Glover at Transcript 50 and 68.

    [53]   Evidence of Mr Holberton at Transcript 17-18.

    [54]   Evidence of Mr Glover at Transcript 54 and 73; evidence of Mr Holberton at Transcript 36. 

    [55]   T 158.

24. In my view, it was open to the magistrate to infer from these facts that the milk seized had been “for sale” within the meaning of s 21(1) at some earlier time. Contrary to the submission of the appellants, I do not accept that the milk had been sold once it was poured into a bottle and a label with a “shareholder’s” name was affixed. The milk was sold once the “shareholder” paid for it. This is the case whether the milk is “sold” in the ordinary grammatical sense, or pursuant to the extended definition of “sell” in sub-paragraphs (g) and (n) which require the provision of consideration. Sale of the milk, however, did not depend on the purchaser collecting it. There was no evidence before the magistrate as to whether, and if so when, payment for the seized milk had been made by the “shareholder”. As discussed earlier, payment for the milk was made by payment of the share fee and the boarding fee. There was evidence before the magistrate that most “shareholders” paid the boarding fee of $4 per fortnight in advance and in a lump sum representing a multiple of $4. The evidence is that in practice most “shareholders” paid directly into a bank account and they paid varying amounts in advance, sometimes up to six months.[56]

    [56]   Appeal Transcript at 9. 

25. In these circumstances the magistrate could not have been satisfied beyond reasonable doubt that the milk seized on 7 August 2013 was in fact “milk for sale”.  Milk which had been sold was no longer “for sale”.  The respondent had not excluded the reasonable possibility that the milk seized had already been sold and therefore was no longer “for sale”.  Accordingly, I would uphold ground 6.  I would also allow the appeal against the finding of guilt on count 3 on this basis.  I would enter an acquittal and a verdict of not guilty on count 3.    

    Did the respondent prove that the milk exceeded the maximum permissible levels of microorganisms contrary to s 21(1) of the Act when it was for sale?

26. Ground 8 raises a related argument.  The appellants submit that the finding of guilt on count 3 was unsafe and unsatisfactory.  They submit that the respondent has failed to exclude on the evidence the reasonable possibility that the levels of microorganisms in the milk seized and tested did not exceed the maximum permissible levels prescribed pursuant to Standard 1.6.1 at the time it was for sale.  The appellants’ submission principally is founded on the evidence of Mr Crosby.  It turns on the issue of the relationship between the age of milk and the development of microbiological organisms in milk.  The appellants submit that, given the evidence of Mr Crosby that even when milk is kept below seven degrees, bacteria will develop after a period of time, once the so-called “lag phase” has concluded, it was for the respondent to prove beyond reasonable doubt that the level of microorganisms in the milk could not have increased substantially in the period between when the milk was “for sale” and when it was tested.  I am satisfied that the evidence of Mr Crosby is that the lag phase is a period between 24 and 48 hours after milk is produced.[57]  During the “lag phase” bacteria levels in milk tend to be stable but after the lag phase has concluded, even where milk has been kept below seven degrees, bacteria will develop.  Once it does so, it can grow exponentially.  The appellants submit that, in these circumstances, the magistrate could not have been satisfied beyond reasonable doubt that at the time when the milk was “for sale” the level of microorganisms present in the milk were above the maximum permissible levels.  This is because the evidence did not establish when the milk was “for sale”.  Both the appellants gave evidence that some of the milk seized and tested could well have been up to a week old or older.[58]  Accordingly, notwithstanding the soundness of the magistrate’s reasons in relation to the chain of evidence, which I am satisfied establishes that the results of the testing undertaken by the IMVS disclosed the level of microbiological organisms in the milk at the time it was seized, that is not the relevant issue.  The relevant issue is the level of microbiological organisms in the milk at the time it was “for sale”.  For the reasons I have given in upholding ground 6, the magistrate could not have been satisfied beyond reasonable doubt on the evidence before him when the milk seized and tested was “for sale”.  It follows he cannot have been satisfied beyond reasonable doubt that at the time the milk was “for sale” the level of microbiological organisms contained in the milk exceeded the maximum permissible levels.  For these reasons I would also allow the appeal against the finding of guilt on count 3.  On this basis the appellants are also entitled to an acquittal on count 3. 

    [57]   Transcript 121.3-121.9. 

    [58]   Evidence of Mrs Tyler at Transcript 163-164; evidence of Mr Tyler at Transcript 206-207 and 221.

    Conclusion

1. I would allow the appeal and set aside the verdicts of guilty in relation to counts 2 and 3.  I would enter an acquittal and a verdict of not guilty on count 3.   I would remit the matter for retrial on count 2 before another magistrate.  I will hear the parties as to the costs of the appeal.