FEDERAL COURT OF AUSTRALIA

Coca-Cola Amatil (Aust) Pty Ltd v Northern Territory of Australia

[2013] FCA 154

THE COURT DECLARES THAT:

1.    On and from 4 January 2013 beverages in regulated containers within the meaning of the Environment Protection (Beverage Containers and Plastic Bags) Act 2011 (NT) which are produced in, or imported into, New South Wales, Queensland, South Australia, Tasmania, Victoria or Western Australia may lawfully be sold in the Northern Territory without the need to comply with ss 13 or 14 of that Act.

THE COURT ORDERS THAT:

2.    The respondent pay the applicants’ costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1    The principal purpose of the Mutual Recognition Act 1992 (Cth) (Mutual Recognition Act) is to promote the goal of freedom of movement of goods and service providers in a national market in Australia (s 3). Consistently with that purpose, that legislation creates what is described as the “mutual recognition principle”. In broad terms, the effect of that principle is that, subject to certain exceptions and exemptions, goods produced in or imported into a State or Territory that may lawfully be sold in that State or Territory may be sold in another State or Territory without having to comply with certain “further requirements” relating to sale imposed by or under a law of the second-mentioned State or Territory. Those further requirements include standards relating to the goods themselves (such as requirements relating to their production, competition, quality or performance) or the way the goods are presented (such as requirements relating to their packaging, labelling, date stamping or age). Various exceptions to the mutual recognition principle are set out in the Mutual Recognition Act, with the consequence that, despite the mutual recognition principle, there is an obligation to comply with any State or Territory law covered by any such exception.

2    The issues for determination concern the interrelationship between the Mutual Recognition Act and a container deposit scheme (the Scheme) established by the Northern Territory legislature under the Environment Protection (Beverage Containers and Plastic Bags) Act 2011 (NT) (EPBC Act). One of the practical effects of the EPBC Act is that wholesalers (such as the applicants) must use recyclable or other approved material in particular containers containing beverages. Another practical effect is that those particular beverage containers must bear an approved refund marking which conveys information about refunds for empty approved containers which are presented at an approved collection depot for recycling, reuse or other appropriate disposal. The refund amount for an approved container is currently 10 cents. Scheme participants must also implement and maintain waste management arrangements under which empty containers that have been returned to collection depots in exchange for a refund are then recycled, reused or disposed of appropriately.

3    The primary legal issue is whether the requirements imposed by Part 2 the EPBC Act on the sale of beverages in containers in the Northern Territory are in conflict with or are repugnant to Part 2 of the Mutual Recognition Act. Further issues are whether, if there is any relevant conflict or repugnancy, any provisions of the EPBC Act are invalid and what relief should be granted.

Outline of background facts

4    The factual issues are not disputed. The parties filed a statement of agreed facts (SOAF). The primary relevant facts may be summarised as follows:

(a)    the applicants manufacture and supply “beverages” within the meaning of the EPBC Act. The beverages manufactured and supplied by the applicants are contained in “containers” within the meaning of the EPBC Act;

(b)    the applicants supply beverages in containers to retailers in the Northern Territory who are “beverage retailers” within the meaning of the EPBC Act. None of the goods supplied by the applicants to beverage retailers in the Northern Territory are manufactured in the Northern Territory. Rather, those goods are either manufactured by the applicants at plants in New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia, or are imported into those States as finished products;

(c)    the goods supplied by the applicants to retailers in the Northern Territory include beverages in “regulated containers” within the meaning of the EPBC Act. In order to comply with the EPBC Act, the applicants have obtained “supply approvals” under that Act, such that the regulated containers they supply are “approved containers” and can lawfully be sold to and by beverage retailers in the Northern Territory;

(d)    in order to obtain and retain a supply approval in respect of the containers:

(i)    the container material to which the supply approval relates must be suitable for recycling, reuse or other disposal;

(ii)    the holder of the supply approval must have in place a “waste management arrangement” within the meaning of the EPBC Act in respect of the relevant containers; and

(iii)    the containers to which the supply approval relates must bear the approved refund marking. The applicants’ regulated containers bear that marking within the meaning of the EPBC Act;

(e)    as noted above, all the relevant goods supplied by the applicants in the Northern Territory are either manufactured in other jurisdictions in Australia or imported into those jurisdictions as finished products. With the exception of South Australia, the products may be sold in those jurisdictions without the applicants having to comply with requirements such as those imposed by the EPBC Act; and

(f)    in South Australia, requirements relating to the sale or supply of beverage containers are imposed by the Environment Protection Act 1993 (SA). Each of the applicants have in place the approvals and arrangements required by that legislation to permit the supply within South Australia of the beverages in containers that they supply.

Outline of the Northern Territory Container Deposit Scheme

5    One of the stated objects of the EPBC Act is to minimise environmental pollution by establishing a scheme to reduce beverage container waste and increase resource recovery, reuse and recycling (s 3(a)). The legislation seeks to maximise the prospect that certain beverage containers will be recycled rather than discarded after their contents have been consumed. To that end, the EPBC Act prohibits in the Northern Territory:

(a)    the supply of a beverage in a regulated container to a beverage retailer for sale unless the container is an approved container (s 13); and

(b)    the sale by a beverage retailer of a beverage in a regulated container unless the container is an approved container (s 14).

6    The EPBC Act also contains the following relevant definitions:

    a “beverage” is any liquid, other than a liquid prescribed by regulation, intended for human consumption by drinking (s 7);

    a “beverage retailer” is a person whose business is, or includes, selling a beverage for use or consumption of the beverage (s 8(1));

    a “container” is one that is either:

(a)    made to contain a beverage and, when filled with the beverage, is sealed for storage, transport and handling before its sale or delivery for the use or consumption of its contents; or

(b)    of a kind prescribed by regulation (s 6);

    a “regulated container” is a container to which the Scheme applies (s 4);

    an “approved container” is a regulated container:

(a)    for which a supply approval is in force; and

(b)     which bears the “approved refund marking” (s 4);

    the “approved refund marking” for a regulated container means a marking or labelling about the refund amount prescribed by regulation (s 4);

    the “refund amount” is the amount prescribed by regulation for an approved container (s 4); and

    a “supply approval” is an approval under Part 2, Division 6 of the EPBC Act (s 4).

7    A supply approval may only be granted if the Chief Executive Officer (CEO) of the Territory’s Department of Natural Resources, Environment, the Arts and Sport is satisfied that:

(a)    there is an ongoing, effective and appropriate “waste management arrangement” (WMA) in place for the containers to which the application relates (s 23(2)(a)); and

(b)    the container material (including the labelling and proposed refund marking) is suitable for recycling, reuse or other disposal considered appropriate by the CEO (s 23(2)(b)(i)); and

(c)    the way that refund marking is proposed to be applied to the containers is not likely to render the containers unsuitable for recycling, reuse or other disposal considered appropriate by the CEO (s 23(2)(b)(ii)).

8    A supply approval is subject to conditions that: (a) the holder of the approval must have in place an effective WMA for the containers to which the approval relates (s 24(1)); and (b) containers to which the approval relates must bear the approved refund marking (s 24(2)). The CEO is also empowered to impose further conditions on an approval (s 24(3)).

9    A WMA is an arrangement made by Scheme participants for:

(a)    the collection, sorting and aggregation of regulated containers when empty; and

(b)    the reuse, recycling or other appropriate disposal of the containers when empty (s 11(1)).

10    A WMA must also give effect to the “CDS principles” (s 11(2)). The CDS principles are principles developed by the Minister for ensuring effective, efficient and equitable WMAs (s 12(1)). The CDS principles must deal with such matters as:

(a)    the responsibilities of Scheme participants in managing the collection, reuse, recycling or other appropriate disposal of regulated containers in a cost-effective and efficient way;

(b)    providing access to collection depots to communities in the Northern Territory;

(c)    establishing standard and transparent processes for receiving and paying refund amounts and handling costs by Scheme participants;

(d)    providing an accountable and transparent monitoring process;

(e)    establishing ways to calculate refund amounts for containers delivered in bulk; and

(f)    resolving disputes between Scheme participants (s 12(3)).

11    Other provisions in the EPBC Act deal with other aspects of the Scheme, including such matters as who is a Scheme participant (see the definition of “CDS participant” in s 4, which includes a manufacturer, distributor or beverage retailer of regulated containers).

12    The Scheme created by the EPBC Act does not apply to all beverage containers sold in the Northern Territory. The effect of the Environment Protection (Beverage Containers and Plastic Bags) Regulations 2011 (the Regulations) is to exclude certain liquids (such as concentrated fruit juice and cordial) from being “beverages” (s 2E). Moreover, certain containers are exempt, such as glass containers used for containing wine and containers used for containing more than three litres of any beverage (s 2F(e)). As the Solicitor-General of the Northern Territory pointed out in argument, the Scheme primarily relates to certain beverages sold in containers which are generally consumed in a single use. For example, the Scheme does not apply to beer which is supplied or sold in kegs (because a keg would normally contain more than three litres of beer).

Outline of the Mutual Recognition Act

13    As noted above, the Mutual Recognition Act has the stated purpose “of promoting the goal of freedom of movement of goods and service providers in a national market in Australia” (s 3). The Mutual Recognition Act was passed by the Commonwealth Parliament as envisaged by an intergovernmental agreement made on 11 May 1992 between the Commonwealth, the States and the self-governing Territories (the Intergovernmental Agreement).

14    The Mutual Recognition Act applies to all jurisdictions which are “participating jurisdictions”, which includes the Northern Territory because the Northern Territory passed the Mutual Recognition (Northern Territory) Act 1993 (NT) which requested the Commonwealth to enact the Mutual Recognition Act (s 5(1)).

15    The Mutual Recognition Act establishes a mutual recognition principle relating to goods. The general effect of that principle is outlined in [1] above. Section 9 provides:

Entitlement to sell goods

The mutual recognition principle is that, subject to this Part, goods produced in or imported into the first State, that may lawfully be sold in that State either generally or in particular circumstances, may, because of this Act, be sold in the second State either generally or in particular circumstances (as the case may be), without the necessity for compliance with further requirements as described in section 10.

16    The Mutual Recognition Act contains the following relevant definitions in s 4 (noting in particular the definitions of “goods” and “requirements”):

(a)    “goods” means goods of any kind and includes a package containing goods and a label attached to goods;

(b)    “produce” includes to manufacture;

(c)    “requirements”, when used in relation to goods, means requirements, prohibitions, restrictions or conditions; and

(d)    “sell” relevantly includes sell by wholesale or retail.

17    Section 10 sets out the “further requirements” relating to the sale of goods that are imposed “by or under” the law of the second State and that, subject to certain exceptions, do not need to be complied with. Section 10 provides:

Requirements that do not need to be complied with

The further requirements referred to in section 9 are any one or more of the following requirements relating to sale that are imposed by or under the law of the second State:

(a)    a requirement that the goods satisfy standards of the second State relating to the goods themselves, including, for example, requirements relating to their production, composition, quality or performance;

(b)    a requirement that the goods satisfy standards of the second State relating to the way the goods are presented, including, for example, requirements relating to their packaging, labelling, date stamping or age;

(c)    a requirement that the goods be inspected, passed or similarly dealt with in or for the purposes of the second State;

(d)    a requirement that any step in the production of the goods not occur outside the second State;

(e)    any other requirement relating to sale that would prevent or restrict, or would have the effect of preventing or restricting, the sale of the goods in the second State.

As will emerge further below, the requirements set out in paragraphs (a), (b) and (e) above have particular significance in the proceedings.

18    The effect of s 11 is that certain laws otherwise caught by the combined operation of ss 9 and 10 are nevertheless excepted from the operation of the mutual recognition principle. Section 11 provides:

Requirements that do need to be complied with

(1)    The mutual recognition principle is subject to the exceptions specified in this section.

(2)    The first exception is that the principle does not affect the operation of any laws of the second State that regulate the manner of the sale of goods in the second State or the manner in which sellers conduct or are required to conduct their business in the second State (including laws set out in the examples below), so long as those laws apply equally to goods produced in or imported into the second State.

Examples: Laws relating to the following:

(a)    the contractual aspects of the sale of goods;

(b)    the registration of sellers or other persons carrying on occupations;

(c)    the requirement for business franchise licences;

(d)    the persons to whom goods may or may not be sold;

(e)    the circumstances in which goods may or may not be sold.

(3)    The second exception is that the principle does not affect the operation of any laws of the second State regarding the transportation, storage or handling of goods within the State, so long as:

(a)    those laws apply equally to goods produced in or imported into the second State; and

(b)    those laws are directed at matters affecting health and safety of persons in the second State or at preventing, minimising or regulating environmental pollution (including air, water, noise or soil pollution) in the second State.

(4)    The third exception is that the principle does not affect the operation of any laws of the second State regarding the inspection of goods within the State, so long as:

(a)    inspection or the requirement for inspection is not a prerequisite to the sale of the goods in the second State; and

(b)    those laws apply equally to goods produced in or imported into the second State; and

(c)    those laws are directed at matters affecting the health and safety of persons in the second State or at preventing, minimising or regulating environmental pollution (including air, water, noise or soil pollution) in the second State.

As will emerge further below, the Northern Territory argues that the relevant provisions of the EPBC Act are covered by the exceptions in ss 11(2) and (3) of the Mutual Recognition Act and, therefore, are not in conflict with that Act.

19    It is convenient now to say something about how the Mutual Recognition Act provides for permanent and temporary exemptions from Part 2 of that Act. The key provisions are ss 14 and 15. Pursuant to s 14(2), Part 2 does not affect the operation of laws described in Schedule 2. Schedule 2 relevantly includes the Beverage Container Act 1975 (SA) (the predecessor to Part 8 Division 2 of the Environment Protection Act 1993 (SA)). Sub-section 14(3) of the Mutual Recognition Act provides that, unless otherwise stated in Schedule 2, a law described therein includes any amendment or replacement of that law, but only to the extent that the amendment or replacement deals with the same subject-matter. Accordingly, the Environment Protection Act 1993 (SA) is permanently exempt.

20    That is to be contrasted with the EPBC Act. As matters stand at present, it is not included in Schedule 2, hence it attracts no permanent exemption. The EPBC Act was, however, the subject of a temporary exemption under s 15 of the Mutual Recognition Act, which was brought about by the making of the Mutual Recognition (Temporary Exemption for Beverage Containers) Regulations 2011 (NT). In accordance with the twelve month cap imposed by s 15(3) of the Mutual Recognition Act, that exemption expired on 3 January 2013 and cannot be extended. It has no current relevance nor any bearing on the issues of construction presented by the proceedings.

21    Thus the regime under the Mutual Recognition Act permits a participating jurisdiction to legislate within that jurisdiction so as to create a temporary exemption from Part 2 of the Mutual Recognition Act for a maximum period of 12 months. A permanent exemption can only be obtained by the Commonwealth Parliament amending Schedule 2 so as to include such a law or by following the process created by s 47 of the Mutual Recognition Act (which enables the Governor-General to make regulations amending the Schedules, but that can only occur if all the participating jurisdictions request that such regulations be made).

22    It might also be noted that the Intergovernmental Agreement provides in clause 4.3.1 that a participating jurisdiction may refer the matter of a standard applicable to any goods in the territory of another jurisdiction to the Ministerial Council for determination of whether a standard should be applicable to such goods and, if so, that standard. Any such determination requires a vote in its favour by at least two thirds of the members of the Ministerial Council (clause 4.3.2).

Conflict between Commonwealth and Territory legislation

23    It is common ground that, as a general rule, Territory laws are invalid to the extent of any conflict or repugnancy with a Commonwealth statute (see Northern Territory v GPAO (1999) 196 CLR 553 at 576, 579-580, 581-2 per Gleeson CJ and Gummow J, at 630 per Kirby J; Federal Capital Commission v Laristan Building and Investment Co Pty Ltd (1929) 42 CLR 582 at 588 per Dixon J; Webster v MacIntosh (1980) 49 FLR 317 at 319-320 per Brennan J (with whom Deane and Kelly JJ agreed); R v Kearney; Ex parte Japanangka (1984) 158 CLR 395 at 418-419 per Brennan J (with whom Deane J agreed); Attorney-General (NT) v Hand (1989) 25 FCR 345 at 366-367 per Lockhart J and at 402-403 per von Doussa J; and Rockman v Smallridge [2012] NTSC 56 at [17]-[24] per Mildren J). That is because the power conferred on the Legislative Assembly of the Northern Territory by the Northern Territory (Self-Government) Act 1976 (Cth) “to make laws for the peace, order and good government of the Territory” does not include power to make laws in conflict with Commonwealth statutes. Otherwise, the Legislative Assembly could amend or repeal Commonwealth statutes in a manner inconsistent with the underlying scheme of self-government in the Territory. As the Northern Territory accepts, because there is no power to make such a law, it is unnecessary to identify an express constitutional or statutory provision similar to s 109 of the Constitution which would give Commonwealth law primacy over Territory law. To avoid confusion, I have deliberately used the language of “conflict” or “repugnancy” to reflect the fact that the legal issues here do not arise under s 109 of the Constitution.

24    In my view, the relevant principles to apply in determining conflict or repugnancy between a Territory law and a Commonwealth law are reflected in the following passage in Mark Leeming, Resolving Conflicts of Laws, The Federation Press, 2011 at page 241:

Ultimately the question, where a (valid) Commonwealth law applies in a Territory, is whether the rights, obligations, powers, privileges and immunities created by it conflict with those created by the Territory law. That in turn means asking whether there is some not insignificant impairment, detraction or qualification from those rights, obligations, power, privileges and immunities by the Territory law. For example, there could be no effective grant of “fee simple” title to land in the Northern Territory pursuant to a Territory law so as to prevent the making of a land claim pursuant to the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). On the other hand, the immunity from disclosing certain information relating to child welfare conferred by a Territory law did not vary, impair or detract from the “paramountcy principle” that the welfare of an infant is the first and paramount consideration, prevailing over the claims of a father or mother, reflected in the Family Law Act 1975 (Cth), particularly because the ultimate question was whether to make a parenting order in relation to the child, a question to which the issue of, and production in answer to, subpoenas was anterior. (Footnotes omitted).

The key issues

25    The Northern Territory does not dispute that the Scheme imposes requirements relating to sale that prevent or restrict, or have the effect of preventing or restricting, the sale by the applicants of beverages to beverage retailers in the Northern Territory within the meaning of s 10 of the Mutual Recognition Act. It says, however, that the Scheme is not inconsistent with that Act because the Scheme falls within the exceptions created by ss 11(2) and/or 11(3) of that Act.

26    In short, the Northern Territory argues that, properly characterised, the Scheme is one which regulates the manner of sale of goods in the Northern Territory within the meaning of s 11(2) of the Mutual Recognition Act and consequently is excepted from the mutual recognition principle. Further or alternatively, it says that the Scheme is concerned with the handling of containers within the meaning of s 11(3) of the Mutual Recognition Act and is therefore similarly excepted from the mutual recognition principle.

27    In support of its construction, the Territory relies upon the following matters:

(a)    consistently with s 15AB of the Acts Interpretation Act 1901 (Cth) (AIA) as in force at the date the Mutual Recognition Act received Royal Assent (as to which, see s 4(2) of the Mutual Recognition Act which stipulates that that is the relevant version of the AIA to apply to the construction of the Mutual Recognition Act), regard should be had to the Intergovernmental Agreement, which gave rise to the Mutual Recognition Act. Particular reliance is placed upon the fact that Recital E to the Intergovernmental Agreement provides as follows:

E.    In implementing the scheme for the introduction of mutual recognition principles the Parties acknowledge that:

    (a)    the scheme only applies to interfere with regulation by the States, the Northern Territory or the Australian Capital Territory in relation to goods in so far as the regulation effectively seeks to prohibit sale of such goods (emphasis added);

    …

(b)    properly construed, the EPBC Act does not prohibit the sale of beverages in containers but, rather, imposes requirements concerning their manner of sale or their handling within the meaning of ss 11(2) and 11(3) of the Mutual Recognition Act respectively;

(c)    the concept of regulating “the manner of sale” is not properly understood by drawing a distinction between regulations which affect how goods are sold as opposed to what is sold, particularly having regard to the subject matter of the examples in s 11(d) (“the persons to whom goods may or may not be sold”) and s 11(e) (“the circumstances in which goods may or may not be sold”). Rather, the notion of “regulate the manner of the sale of goods” refers to the way in which goods are sold;

(d)    the term “handling” (which appears in the collocation of the words “transportation, storage or handling of goods” in s 11(3)), is not limited to activities involving the handling of goods before they are sold, but also involves post-sale handling activities, including the return of goods for recycling after their contents have been consumed; and

(e)    the exception in s 11(3) concerning the operation of laws regarding the handling of goods requires that there be a connection between any such law and the handling of goods, which limits the scope of that exemption.

28    The applicants contest those claims. In brief terms, they say that the exception in s 11(2) relating to laws which regulate the manner of the sale of goods and/or the manner in which sellers conduct or are required to conduct their business is concerned with laws which are directed to the transaction of selling. They contend that this construction is borne out by the examples given in s 11(2), which they say all relate to the nature of the commercial transaction, the parties to sales and/or the business of selling. They further say that the requirements imposed by the EPBC Act on the supply and sale of beverages in containers go to the form of the goods themselves and the arrangements for facilitating the recycling of empty containers and not with the manner of sale or the business of selling beverages in containers.

29    The applicants also deny the availability of the exception in s 11(3). They submit that the EPBC Act requirements concerning the supply and sale of beverages in containers in the Northern Territory are not requirements “regarding the transportation, storage or handling of goods”. The relevant “goods” are beverages in containers. They say that s 13 of the EPBC Act operates to prohibit the wholesale supply of “a beverage in a regulated container” unless the container is an approved container and that a similar prohibition is imposed by s 14 on the retail sale of such a beverage unless the container is an approved container. They then point to the fact that a “container” is a container which, when filled with a beverage is “sealed for storage, transport and handling” (s 4). They say that it is evident from these provisions that the EPBC Act does not regulate the sale of beverages as such, but rather regulates the wholesale and retail supply of goods in the form of sealed containers that are filled with beverages. They say that the EPBC Act’s requirement that there be a “supply approval” in respect of any regulated container is not a requirement concerning the “handling” of beverages in containers, nor is it a requirement regarding the “transportation or storage” of beverages in containers.

30    They argue that ss 9, 10 and 11 of the Mutual Recognition Act need to be read as a whole, giving primacy to the establishment of the mutual recognition principle in s 9 and construing the exceptions created by s 11 so as not to devour or reverse the effect and operation of ss 9 and 10.

31    The applicants contend that their position is supported by parts of the second reading speech for the Mutual Recognition Bill 1992 (Cth). In particular, reliance is placed on the following statements by the Minister for Science and Technology and Minister Assisting the Prime Minister in the House of Representatives on 3 November 1992:

The legislation is based on two simple principles. The first is that goods which can be sold lawfully in one State or Territory may be sold freely in any other State or Territory even though the goods may not comply with all the details of regulatory standards in the second State or Territory: if goods are acceptable for sale in one State or Territory, then there is no reason why they should not be sold anywhere in Australia.

It was not so long ago that it was virtually impossible to market cooking margarine nationally in one package. Western Australia required margarine to be packed in cube tubs, whereas the familiar round tub was acceptable everywhere else. Under mutual recognition, producers in Australia will have to ensure that their products comply with the laws only in the place of production. If they do so, they will then be free to distribute and sell their products throughout Australia without being subjected to further testing or assessment of their product. This ensures a national market for those products.

32    They contend that, as the specific example given by the Minister demonstrates, it was intended that State laws restricting the types of containers in which products can be sold are precisely the kinds of State or Territory laws which are intended to be overridden by the mutual recognition principle.

Consideration

33    For the following reasons, I consider, that insofar as the applicants’ circumstances are concerned, certain requirements imposed by Part 2 of the EPBC Act are repugnant to ss 9 and 10(a), (b) and (e) of the Mutual Recognition Act and, further, those requirements do not fall within the exceptions created by either ss 11(2) or (3) of that Act.

34    As noted above, the Territory does not contest that the relevant requirements imposed by the EPBC Act constitute “further requirements” within the meaning of s 10. Presumably, that is because the Northern Territory accepts that the Scheme imposes requirements relating to sale that prevent or restrict, or have the effect of preventing or restricting, the sale by the applicants of beverages to beverage retailers in the Northern Territory within the meaning of s 10 of the Mutual Recognition Act. There is no contest, therefore, that, in the circumstances presented by the applicants’ activities, unless those requirements fit within a relevant exception in s 11 of the Mutual Recognition Act, Part 2 of the EPBC Act is repugnant to Part 2 of the Mutual Recognition Act.

The exemption in s 11(2)

35    Insofar as s 11(2) is concerned, the fundamental issue here is the nature and scope of that part of the first exception which concerns laws “that regulate the manner of the sale of goods”.

36    I accept the applicants’ contention that the exceptions must be construed in a way which does not remove or swallow up the operation of ss 9 and 10 of that Act. That approach is consistent with the following passages in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] and [70] per McHugh, Gummow, Kirby and Hayne JJ:

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 .

A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals . Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court “to determine which is the leading provision and which the subordinate provision, and which must give way to the other” . Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme (footnotes omitted and emphasis added).

37    Having regard to the text and purpose of the Mutual Recognition Act, it seems to me to be plain that ss 9 and 10 are at the top of the hierarchy of the Act’s provisions. It is those provisions which establish and give content to the mutual recognition principle. Section 11 creates certain exceptions and has the effect of taking certain regulatory requirements outside the sphere of operation ss 9 and 10. In creating exceptions to the mutual recognition principle, s 11 is properly viewed as a “subordinate provision”. The exceptions it creates should not be construed in a way which denudes ss 9 and 10 of their intended operation. In my view, ss 9, 10 and 11 should be construed harmoniously so that each provision is given a meaningful operation and effect having regard, of course, to important considerations of text and purpose. In general terms, that means that ss 9 and 10 ought to be read as broadly as their text and purpose permits, while s 11 is to be read more narrowly, but also having regard to its text and purpose and with a view to maintaining the unity of the statutory scheme.

38    With those general principles in mind I make the following observations concerning the meaning and scope of ss 9, 10 and 11 of the Mutual Recognition Act. As noted above, s 9 of the Mutual Recognition Act creates the mutual recognition principle, the effect of which is to allocate a right to sell goods in any participating jurisdiction in Australia without having to comply with any of the further requirements set out in s 10 as long as the goods in question have been produced in or imported into another participating jurisdiction and may lawfully be sold in that jurisdiction. Further requirements that do not need to be complied with include standards relating to the goods themselves, including requirements relating to their composition (see s 10(a)). In my view, the requirements of the EPBC Act relating to the need to use recyclable or other approved material in relevant containers containing beverages are requirements falling within s 10(a).

39    Section 10(b) identifies another further requirement which need not be complied with, namely any requirement that goods satisfy standards relating to the way the goods are presented, including requirements relating to their packaging and labelling. In my view, the requirement of the EPBC Act relating to the need for a regulated container to bear an approved refund marking is covered by s 10(b) of the Mutual Recognition Act.

40    Finally, s 10(e) has the effect of including within the notion of “further requirements”, “any other requirement relating to sale that would prevent or restrict, or would have the effect of preventing or restricting, the sale of the goods in the second state”. In my view, the requirement imposed by the EPBC Act that relevant persons must obtain a supply approval, which is conditioned in part on the holder of the supply approval implementing and maintaining a WMA, falls within s 10(e) of the Mutual Recognition Act.

41    In my opinion, the applicants are correct in their contention that s 11(2) is concerned with laws which generally are directed to the transaction of selling. Such a construction is consistent with the principle of harmonious construction referred to above, gives effect to the intended hierarchy of the relevant provisions and is not inconsistent with the text. I do not mean to suggest, however, that the first exception only applies to laws which are directed to the transaction of selling. Generally that will be the case, but it would be imprudent to make any absolute statement having regard to the need for the provision to accommodate a wide range of circumstances and laws, most of which could not be predicted at this stage.

42    A construction which views s 11(2) as concerning laws which generally are directed to the transaction of selling is supported by the following additional considerations:

(a)    it is to be noted that s 11(2) sets out what is described as the “first exception” to the mutual recognition principle. That exception actually includes two types of laws, namely laws that regulate the manner of the sale of goods and laws that regulate the manner in which sellers conduct or are required to conduct their business. The provision then sets out various examples of such laws, which are non-exhaustive. The examples are expressed in a way which does not draw any clear distinction between laws that regulate the manner of the sale of goods and laws that regulate the manner in which sellers conduct or are required to conduct their business. This suggests that there is some relationship between the two different kinds of laws. Otherwise, one would have expected that a separate exception would have been created for each of the two categories of laws and particular examples given to illustrate each category. These matters lend some support for reading the first exception as being generally concerned with laws which are directed to the transaction of selling; and

(b)    the examples set out in s 11(2) provide further support for that construction, but in a different way. Although the significance of the examples should not be overstated (bearing in mind the limitation on their use imposed by s 15AD of the AIA and the additional fact that the text of s 11(2) itself emphasises that the examples are non-exhaustive), those examples are generally consistent with a construction of s 11(2) which views it as being directed in general to the transaction of selling. Examples (a), (b) and (c) all plainly deal with aspects of the transaction of selling. Although the examples in (d) and (e) may not be quite as clear, they also appear to be directed to aspects of the transaction of selling. The persons to whom goods may or may not be sold (such as minors) can properly be seen to be an aspect of the transaction of selling. Similarly, although I accept that example (e) (i.e. the circumstances in which goods may or may not be sold) is very broad on its face, that example can also be viewed as being generally directed to the transaction of selling. That produces an outcome which is consistent with the proper construction of the substantive text in s 11(2). Furthermore, and significantly, that approach is faithful to the limitation imposed by s 15AD(b) of the AIA, which provides that, where an example is inconsistent with the provision to which it relates, the provision prevails.

43    The Territory’s contention that the Scheme is within the first exception is also inconsistent with the unequivocal statement in the second reading speech set out in [31] above concerning the earlier requirement in Western Australia that margarine be packed in cube tubs. The plain intention underlying the Bill was that the mutual recognition principle would override any such packaging requirements. It is legitimate to refer to such extrinsic material to confirm that the meaning of the relevant aspects of ss 9, 10 and 11 is the ordinary meaning conveyed by the text and taking into account its context in the Mutual Recognition Act and the purpose or object of that legislation (see s 15AB(1) of the AIA).

44    For completeness, I should also record that I consider that Recital E of the Intergovernmental Agreement provides little if any support for the Territory’s position. As noted above, the Territory contends that the Mutual Recognition Act should be construed so as to give effect to the proposition set out in Recital E, which is to the effect that the Scheme for introducing mutual recognition principles only seeks to interfere with regulation in relation to goods insofar as the regulation “effectively seeks to prohibit sale of such goods”. In my view there are several difficulties with the Territory’s reliance upon this aspect of the Intergovernmental Agreement. The first is that it operates not only in respect of requirements which prohibit sales, but also laws which have a less draconian effect. It is notable that the term “requirements” is defined in s 4 of the Mutual Recognition Act as meaning (when used in relation to goods) “requirements, prohibitions, restrictions or conditions”. Accordingly, it is clear that the legislation is intended to operate not only by reference to laws which prohibit sales, but also laws which impose restrictions or conditions.

45    Secondly, there is in any event, no inconsistency between the terms of the Mutual Recognition Act and Recital E of the Intergovernmental Agreement when proper emphasis is placed upon the reference in Recital E to regulation which “effectively” seeks to prohibit sale of such goods. As noted above, the EPBC Act imposes various requirements in the form of restrictions or conditions which, if not complied with, result in the sale of the relevant goods (in this case, beverages in containers) being prohibited.

The exemption in s 11(3)

46    For the following reasons, I do not consider that s 11(3) provides an exception within which the relevant provisions in Part 2 of the EPBC Act fall.

47    First, and foremost, it is important to focus on what are the relevant goods which attract the mutual recognition principle in a particular case. Section 9 of the Mutual Recognition Act defines those goods as goods which are produced or imported into the first State and may lawfully be sold there. In the circumstances here, the relevant goods are beverages in containers, not empty containers. It is beverages in containers which the applicants produce or import and lawfully sell in jurisdictions other than the Northern Territory, and wish to continue to sell in the Northern Territory. They do not sell empty containers.

48    Secondly, to the extent that some aspects of the Scheme involve requirements which can be seen as regarding the “handling” of goods within the Northern Territory such as the requirement to have a supply approval (which, in turn, requires that there be an acceptable WMA in place which deals with the delivery of empty containers to an approved collection depot to obtain a refund and to facilitate their recycling etc), I do not consider that such requirements fall within the second exception. That is because, even though there is no apparent difficulty with such requirements meeting the conditions in the second exception concerning non-discrimination and being directed to preventing, minimising or regulating environmental pollution in the Northern Territory, those requirements do not constitute “handling of goods” within the meaning of s 11(3). The second exception is not available where the requirements regarding handling are directed not to the handling of goods which are the subject of sale and attract the mutual recognition principle (here, beverages in containers), but to other goods (here, empty containers).

49    It might also be noted that, in any event, most of the Schemes requirements do not relate to the “handling” of goods. The requirements of the Scheme concerning the composition of the goods (i.e. recycling material) and their labelling (i.e. an approved refund marking) have nothing to do with the handling of goods.

Relief and the validity of Part 2 of the EPBC Act

50    For the reasons given above, I consider that the applicants are entitled to a declaratory order, generally in the terms sought in the second further amended originating application.

51    The question also arises as to whether the Court should declare invalid any parts of Part 2 of the EPBC Act on the grounds of conflict or repugnancy. As the applicants point out, s 59 of the Interpretation Act 1978 (NT) has the effect that Part 2 of the EPBC Act should be read and construed so as not to exceed the legislative power of the Legislative Assembly. The question then arises as to whether Part 2 of the EPBC Act should be read down and construed as being a valid Act in its application to beverages in containers other than those encompassed by s 9 of the Mutual Recognition Act. That would involve construing Part 2 of the EPBC Act as applying only to beverages in containers produced in, or imported from outside Australia, into the Northern Territory. But as the applicants also submit, reading down legislation in that manner cannot produce a changed operation of the law in question or effect a situation which is inconsistent with legislative intent (see, for example, Gould v Brown (1998) 193 CLR 346 at 409-410 per Gaudron J). Nor should legislation be read down in that fashion if it appears that the law in question was intended to operate fully and completely according to its terms or not at all (see Gould v Brown at 461 per Gummow J).

52    In my view, construing Part 2 of the EPBC Act as applying only to beverages in containers produced in, or imported from outside Australia, into the Northern Territory would result in an Act significantly different from the EPBC Act as enacted and thus that legislation should not be read down in that way.

53    That is not to say, however, that a declaration of invalidity should ensue. As the Solicitor-General contends, Part 2 of the EPBC Act might lawfully apply to other goods produced in or imported into another participating jurisdiction and lawfully sold there, and then sold in the Northern Territory. Or it could lawfully apply to locally produced goods. The issues are complex and have the potential to affect a range of persons, such as other participants in the Scheme, who are not parties to the proceedings. As a discretionary matter, I decline to make any declaration of invalidity. Urgent consideration should be given by the relevant public bodies in the Northern Territory as to whether appropriate amendments should be made to the Scheme in the light of these reasons for judgment.

54    There is no reason why costs should not follow the event.

55    Finally, and to avoid any misunderstanding, it should be made clear that these proceedings do not turn on the merits or desirability of the Scheme created by Part 2 of the EPBC Act. The proceedings give rise to orthodox legal issues requiring the proper construction of conflicting legislation of the Commonwealth and the Northern Territory. In the event of any relevant conflict the Commonwealth law must prevail.

Associate:

Dated:    4 March 2013