Collector of Customs v AGFA-Gevaert Limited M84/1994 [1995] HCATrans 195 (9 June 1995)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M84 of 1994

B e t w e e n -

COLLECTOR OF CUSTOMS

Applicant

and

AGFA-GEVAERT LIMITED

Respondent

Application for special leave to appeal

BRENNAN CJ

DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 9 JUNE 1995, AT 9.46 AM

Copyright in the High Court of Australia

MR P. BUCHANAN, QC: If the Court pleases, I appear with my learned friend, MR J. LENCZNER, for the applicant. (instructed by the Australian Government Solicitor)

MR J.M. EMMERSON, QC: If the Court pleases, I appear for the respondent. (instructed by Russell Kennedy)

BRENNAN CJ: Yes, Dr Buchanan.

MR BUCHANAN: Your Honours, there were two issues before the Federal Court. The manner in which the court dealt with those issues, we submit, raise matters of sufficient general importance to warrant the grant of special leave in this case and discloses error on the part of the court.

The first of the two issues was the meaning of the phrase in the tariff concession order, "silver dye bleach reversal process", in its application to paper used to produce colour photographs. The evidence before the tribunal established three matters. Firstly, that there was no general or established recognised trade or technical meaning of the phrase as a whole; secondly, that there was a recognised trade meaning of the words "silver dye bleach"; and thirdly, that there was not a settled technical or trade meaning of the words "reversal process".

BRENNAN CJ: But there was evidence that the trade differentially understood that term?

MR BUCHANAN: That is true, your Honour. Some of the witnesses said that what it meant was a process by which any positive image was reversed and became again another positive image. Others said no, it refers to the case of a negative image becoming a positive image. So that there was a dichotomy between the witnesses. The trial judge accepted, I think it is fair to say, that there was in those circumstances no settled trade usage in respect of that term.

TOOHEY J: When you put the argument that way, Mr Buchanan, and looking at the grounds of appeal, are you challenging the jurisdiction of the court to have entertained the appeal?

MR BUCHANAN: Your Honour, in respect of the first issue, our principal point is the rule of construction which effectively the court developed which disposed of that first issue. It is in respect rather of the second issue, the construction of the phrase "the image dyes" that we would say the court went beyond the jurisdiction which it had under section 44, strayed from an error of law to in fact rehearing and determining again questions of fact upon which the matter was resolved.

TOOHEY J: But in putting the matter that way, you seem to be accepting that the first question, namely whether this phrase should be construed in the manner in which the tribunal construed it, gave rise to a question of law such as to found the jurisdiction of the Full Court.

MR BUCHANAN: Yes, that is true to say, your Honour, because in doing so, what the court did was to effectively determine whether the words were to receive a trade meaning or an ordinary meaning; a variant of that, and we - - -

TOOHEY J: So it is a question of law whether it was a question of law; is that it?

MR BUCHANAN: We would say it is wrong, but that is the result that the court came to. In coming to that result, it effectively promulgated what is a new canon of construction which has far-reaching effects, particularly in the area of revenue laws and particularly in the case of customs laws and tariff concession orders made under them.

BRENNAN CJ: Could you articulate what you regard as the new canon of construction.

MR BUCHANAN: Yes, your Honour. It was this, that the tribunal having applied the trade meaning of the words "silver dye bleach" and really an ordinary meaning of the words "reversal process", the Full Court said that that disclosed an error of law because a composite phrase - and the court appears to have regarded any phrase in which there is a noun qualified by other words as a composite phrase - if it has no trade meaning as a whole, one cannot resort to a trade meaning to interpret part of it. So that the whole must be construed according to the ordinary meaning of words and it is impermissible to have regard to a trade meaning in carrying out the task of construing the phrase.

BRENNAN CJ: I must say, speaking for myself, I do not understand that they articulated that as the canon of construction. I suppose I put it to the test of: what did I understand myself when I first looked at these words? I did not have any understanding of what they meant.

MR BUCHANAN: Your Honour, we would say that your Honour's reaction is one shared by many others. Indeed, the applicant contended before the tribunal that the proper way to do it was to look at each of the words. As far as I understand it, no construction according to ordinary meaning of words has been advanced in respect of the whole.

BRENNAN CJ: No, that is why it seems to me that it is not correct to put the propounded new canon of construction in that way. The court must have had regard to at least the technical connotation of the words that were used.

MR BUCHANAN: I would accept that in this way, your Honour, I think: it would be fair to say that the court must have had regard to the evidence which it had before it as to the various ways in which images are produced from transparencies onto opaque paper. Having that evidence before it of in fact how photography in general works and the different ways in which a transparency becomes a positive image on opaque paper, the court was then, one presumes, in a position to apply the ordinary meaning of words having regard to the background of what the trade does without, we would say, allowing any tribunal, or indeed the court itself, to have resort to the meaning of words ascribed by the trade.

DAWSON J: What they really were doing was saying you cannot have regard to technical evidence for part of the expression and take "the ordinary meaning" for the other.

MR BUCHANAN: Yes, your Honour. For example, Mr Justice Ryan at line 30 on page 25 of the application book said:

It is impermissible, as a matter of law, I consider, to adopt a differential interpretation of a composite phrase by isolating part of the phrase and according to it the technical or customary meaning which that part, standing alone, can be found, on the evidence, to bear and then construing the balance of the phrase according to the ordinary English meaning of the word or words comprising it.

Mr Justice Gummow at page 43 and Mr Justice French at page 67 made like pronouncements.

DAWSON J: The truth is they had regard to technical evidence with respect to the whole of the phrase and they came to the conclusion with regard to "reversal process" there was not a technical meaning and they heard the technical evidence.

MR BUCHANAN: That is right, but further, what they did as a consequence of that was to say that you cannot have resort to the technical evidence as to the meaning of the words "silver dye bleach".

DAWSON J: Because there was no technical meaning for the words - - -

MR BUCHANAN: "Silver dye bleach reversal process".

DAWSON J: Really there was no technical meaning for the words "reversal process".

MR BUCHANAN: No.

TOOHEY J: I rather thought it was "reversal" itself that was said to be the ordinary English word, not "reversal process".

MR BUCHANAN: With respect, I think - - -

TOOHEY J: I am not sure that anything turns on it, but in other words it is the insertion of the word "reversal" into the phrase "silver dye bleach process" that gave rise to the problem.

MR BUCHANAN: Yes, I think that is right, your Honour. We would say that until this point, until this decision, the courts had offered only general guidelines which are capable of being moulded to suit the needs of particular cases where one is looking particularly at revenue laws dealing with a subject matter used in trade and commerce and the law addresses the persons who use the article. The general guidelines were principally that there is an inclination or a tendency which is appropriate in most cases where a revenue statute addresses the members of a trade and deals with an article in their trade to accord to it, if it has one, a settled and sufficiently widespread technical meaning.

But that was, as I say, only a guideline and the courts were careful to say that, notwithstanding the existence of a trade usage, if the context or the history of the legislation required it or a trade meaning produced an absurd result, then you could have resort to ordinary words. Now it seems there is a new canon or principle which has none of that flexibility and which effectively deprives a tribunal dealing with matters such as these of the ability to draw upon one source of assistance in construing technical phrases.

TOOHEY J: Is that clear from the terms of the judgment? I am not sure in my own mind what the effect of the order made by the Full Court is. In terms it remits the matter to the tribunal, but do you understand the effect of the judgment that the tribunal is then precluded from seeking any assistance of a technical sort as to the meaning of any of the expressions used in the overall phrase?

MR BUCHANAN: In the composite phrase, yes, your Honour, as we would say Mr Justice Ryan made perfectly clear and so did the other judges.

DAWSON J: It is all very silly, is it not, Dr Buchanan? The exercise is to find out the meaning of a word or words and you find out where you can. If you go to a dictionary, after all, you are really only consulting an expert in words. You are allowed to do that; you are allowed to go a trade journal presumably?

MR BUCHANAN: Yes, that is so, your Honour.

DAWSON J: It is written down and you can look at that, but is there supposed to be a difference when you listen to someone in the witness-box?

MR BUCHANAN: If I come back to your Honour the Chief Justice's remark that your Honour was not struck by the recognition, having read the words, of anything which your Honour could bring to mind, and no one would. We would say that really these words used in that phrase, according to just their ordinary meaning, are very difficult if not impossible to give a sensible operation to. Commercial tariff concession orders are not the product of parliamentary counsel. They are drawn by the applicants for the commercial tariff concession orders themselves, usually through Customs agents. They come to and are considered by administrative officers in the Customs service. They are expressed usually by persons well versed in the trade in which the article is used.

After all, the whole purpose of tariff concession orders is to protect a trade which competes; an indigenous trade in Australia. There are many thousands of these tariff concession orders - some 12,000 at the moment - and they are being added to as every day passes. They are not always drafted in a way which would please a strict grammarian and often their construction requires a fair bit of juggling in terms of syntax and we would say often require all the help that can be afforded not merely by dictionaries but also by the experience which those applying the words, that is those in - - -

DAWSON J: Why do you not call a person from the department to say what was meant?

MR BUCHANAN: We did not.

DAWSON J: That is not rhetorical. Could you?

MR BUCHANAN: I think not, your Honour.

DAWSON J: Why not?

MR BUCHANAN: The process by which the order comes into existence is one which is not the work of Customs. Customs now does not even regard itself as having the power to amend an application; it simply accepts it or rejects it. So that all that the evidence would be if you called it would be evidence of an administrative officer who says, "Well, when I accepted this application and made the order, I thought that the words meant this or that". We would have thought, with respect, that that evidence was really not admissible. The question is: what is the meaning which the words have?

DAWSON J: If you can call one witness to say what words mean, why can you not call another?

MR BUCHANAN: Because, your Honour, you can only call a witness to say what words mean when the witness is deposing to some meaning which is a special one; that is, something other than the meaning which ordinary people understand. On that subject evidence is not admissible. Accordingly, we would say that it is a statutory instrument and one could no more call the officer from Customs than one can call parliamentary counsel to give evidence as to the meaning of a statute in a public Act.

TOOHEY J: I must say at first blush the notion that an expression or phrase which is entirely technical and which is understood as having a technical meaning by those who practise in the area is in a sense brought down by the insertion of one non-technical word in the expression. That is your complaint, I suppose?

MR BUCHANAN: It is, and perhaps we would not be confronted with a problem if the person who drew it had taken the word "reversal" so that it did not precede the word "process" but came after it, so that you had a "silver dye bleach process", then qualified by something separate so that one did not have the composite phrase which so shackled the Full Federal Court.

BRENNAN CJ: It is obvious that we would not grant special leave simply to consider this particular CTCO, but I do not quite appreciate what is the fear of the applicant in relation to the effect of this judgment on future administration.

MR BUCHANAN: It is this, your Honour, and putting to one side the $4 million which will or could flow from this judgment as it stands, it is that trade descriptions are commonly found in the many thousands of commercial tariff concession orders which are in existence and are coming into existence every day. They are commonly used by persons in the trade. Persons who want to import articles or make decisions about investment and the like, either to manufacture in Australia or to import, have regard to and deal with commercial tariff concession orders. It is important that they should be understood and capable of being understood by those who were concerned in the trade. Also, we would say, in the construction of them when it comes to a judicial contest about what they mean, no tribunal and no court should be limited by such a rule which excludes, once there is no technical meaning to the whole, resort to what may often be - not always but often - a helpful tool in the construction of the phrase.

BRENNAN CJ: That seems to me to be exactly what the court did here. They may have been mistaken about whether or not there was an error in the manner of the approach of the tribunal, and that might have amounted to a question of law. But when the court set about construing the instrument itself, it seems to me that they did look at the evidence in order to understand what the words meant.

MR BUCHANAN: I am not, with respect, sure that that is necessarily right. They certainly referred to the evidence, but for the most part, if not entirely, they did so for the purpose of construing or understanding what it was that the tribunal itself had done. It was necessary to look at the evidence first of all to see that indeed there was no generally accepted trade meaning for the composite phrase as a whole, and then to see the process of reasoning of the judge himself and how it was that he had viewed the words "reversal process" and the words "silver dye bleach". After all, in the end the court did not say what the words meant.

TOOHEY J: Had they carried that exercise through, you would have expected them to have resolved the matter then and there and not sent it back?

MR BUCHANAN: Yes.

TOOHEY J: But the fact that they sent it back suggests that they - the evidence is that they did not reach a conclusion themselves.

MR BUCHANAN: No, they did not. It is hardly surprising, once they had apprised themselves of the best evidence understood in the trade of what the important words in the phrase meant.

BRENNAN CJ: Then should the matter go back and be resolved in some as yet unforeseen but curious way that highlights the problem that you are speaking about? Would that be the occasion to bring the matter forward?

MR BUCHANAN: No, your Honour. With respect, the problem and the significance which it has, the administration of the law in this area, exists now. It will not, with respect, be made any clearer, although it might be emphasised, by the struggles which the tribunal has in dealing with its restricted role. Your Honours, that basically is - - -

BRENNAN CJ: I think your time has expired, even though we have taken some part of it, Dr Buchanan.

MR BUCHANAN: If your Honour pleases. With respect to the second issue, the principal matter is the question of section 44 which we have put forward in our summary of argument.

BRENNAN CJ: Dr Emmerson.

MR EMMERSON: If the Court pleases. We say that no special leave point arises here. The approach taken by the court was impeccable. The court considered first the question: has a composite expression "silver dye bleach reversal process" a special technical meaning in the art? Having decided that it did not, then the court held that one then had to look to see what the words otherwise meant.

The court did not exclude the evidence that could be drawn about what the individual words in the composite phrase meant in the photographic industry. So that it is possible to ask the place of silver, dye, bleach and reversal all in the industry. Indeed, that was why the court sent the matter back.

DAWSON J: So what the judge at first instance can do is to allow evidence as to each word individually but he cannot hear evidence as to the collocation of words?

MR EMMERSON: As to the total collocation he has heard evidence, and the evidence is that that has no set meaning.

DAWSON J: So he cannot go back and take the first four words together and say: "Does that have a meaning?"

MR EMMERSON: That would take you to "silver dye bleach reversal".

DAWSON J: Well, the first three.

MR EMMERSON: The evidence he proceeded on was not the first three - - -

DAWSON J: He can hear evidence as to the meaning of the words "silver", "dye", "bleach" and "process" separately.

MR EMMERSON: Yes.

DAWSON J: But he cannot hear evidence as to the meaning of "silver dye bleach process".

MR EMMERSON: He could and he did, but the court said that he was wrong in then grafting onto that the word "reversal" in the fourth position.

DAWSON J: Why would he be wrong?

MR EMMERSON: He was wrong because then that took the expression - that gave you a meaningless expression and, indeed, there was evidence that the word "reversal" would not simply qualify but would contradict the words "silver dye bleach process".

TOOHEY J: But it did not give you a meaningless expression. The expression must have a meaning, however the meaning is ascertained. Is that not the point, that the - - -

MR EMMERSON: Precisely, your Honour.

TOOHEY J: Do you accept that the judgment of the Full Court precluded the tribunal from receiving expert evidence as to the meaning of the expression "silver dye bleach process"?

MR EMMERSON: What it did was, the tribunal having taken that meaning, the court held as a matter of law that the tribunal had been wrong in treating that as the governing phrase. The way the court approached it - - -

DAWSON J: No, you did not answer the question, Dr Emmerson. Was the court wrong in receiving technical evidence to construe those three words?

MR EMMERSON: The court was not wrong in receiving technical evidence.

DAWSON J: To construe or using the technical evidence - - -

MR EMMERSON: The court was not - - -

DAWSON J: Is that what was being said?

MR EMMERSON: No, it was not. What the court said was that you can take technical evidence in order to determine the trade usage meaning of words and phrases, and that is evidence about usage. It said that the court was not bound to accept the views of technical expert witnesses as to what a composite phrase meant, that is to say as to its construction, as distinct from what the usage was. So that they could say, "Yes, this is how the phrase is used in the trade", but they did not bind the tribunal by whatever arguments they happened to use.

BRENNAN CJ: What did Justice Jenkinson do wrong?

MR EMMERSON: What Mr Justice Jenkinson did wrongly was that he incorrectly concluded that in construing the expression "silver dye bleach reversal process" he should use the technical meaning of the words "silver dye bleach process".

TOOHEY J: If by that you mean the phrase "silver dye bleach process" - - -

MR EMMERSON: That is right, yes.

TOOHEY J: - - - not the technical meaning of the words that make up the phrase.

MR EMMERSON: No, your Honour. There was no objection, as we would read the judgment, to looking at the evidence about the individual words. Indeed, his Honour Justice Gummow - - -

DAWSON J: If it goes back to him, what does he have to do?

MR EMMERSON: What he has to go back to do is to decide whether these words apply to my client's papers.

BRENNAN CJ: Of course, but how does he do it?

MR EMMERSON: He does it by making findings about what these individual words mean.

DAWSON J: On what evidence the second time round?

MR EMMERSON: On the evidence of experts. He is entitled to do that. Could I draw attention to the fact that his Honour Justice Gummow, in our submission, at page 33 sets out impeccably, we would say, what has got to be done.

BRENNAN CJ: That is a series of propositions of law with which perhaps there may not be much quarrel, but in coming to the solution of the present problem it seems that there is the first step, namely that proposition (iv) raises a question of law and thus enlivens the section 44 jurisdiction.

MR EMMERSON: That is correct.

BRENNAN CJ: The second thing is that, in discovering the error of law that exists, some proposition is advanced, the nature of which I confess I still do not fully understand, which indicates that Justice Jenkinson was wrong in relying upon that evidence in relation to the meaning of "reversal" which he favoured as against that evidence which was opposed to the meaning of "reversal" that he favoured. I do not see in terms of legal principle what that error can be.

MR EMMERSON: We would say in terms of legal principle what went wrong was this. His Honour Justice Jenkinson was entitled to embark on an inquiry: did these words have a technical meaning; did the composite phrase have a technical meaning? There was no difficulty about that. That was a question of fact. But the question of whether a technical meaning should be given to the composite expression was held by the court to be a question of law. Having reached that point, the question was: had the tribunal determined that question of law correctly? In considering that, the court considered all the technical evidence and decided that he had answered that question of law incorrectly.

BRENNAN CJ: Which question of law?

MR EMMERSON: That is to say, whether the expression "silver dye bleach reversal process" should be construed on the footing that the expression "silver dye bleach" was inserted there in a technical composite sense telling you, "We are talking about the silver dye bleach process".

BRENNAN CJ: That is not the question of law thus identified on page 33.

MR EMMERSON: On page 33 we would say yes, because on page 33:

The question whether or not a word or phrase.....is to be given its ordinary meaning or some special meaning.....is a question of law.

The question of whether you could lift this expression "silver dye bleach" out of the words "silver dye bleach process", and say therefore this can be talking only about that particular process, was held to be a question of law but it was held to be a question which the tribunal had answered incorrectly. In considering the correctness or incorrectness of this, the court took into account the technical evidence then available. But once you are left with the proposition that it was wrong to give "silver dye bleach" a technical process as distinct from an ordinary meaning - and by "ordinary" I do not exclude of course a knowledge of the technology and what place "silver", "dye" and "bleach" play in that - that is what the tribunal has to do.

The court held that it did not have sufficient findings of fact in order to determine that, and so the tribunal had to determine that. But in so doing it was doing, in our respectful submission, no more than applying directly the principles which his Honour sets out on page 33. You identify by technical evidence whether there is technical evidence of a meaning of a word or a phrase. Here there was technical evidence or technical findings dealing with phrases. There was no sufficient technical findings dealing with the individual words. That is why it had to go back. But having identified those technical meanings, you then have a question: in this case do they have a technical or other meaning? That is the question which the court held that in this case had been decided incorrectly by the tribunal.

TOOHEY J: One thing is clear, I think, that the effect of the judgment is that the tribunal is precluded from hearing evidence as to the technical meaning of the expression "silver dye bleach process".

MR EMMERSON: It is now because, having heard it and having used it incorrectly, it has been corrected on that and so it now has to go back and look at the individual words. That is true, but the court is not saying "You can never hear evidence of the meaning of a technical phrase". It is saying "You did hear it, you've got it wrong, now do it correctly". But of course, the tribunal is not entitled to revisit the question that it has already been told in this case it answered incorrectly.

BRENNAN CJ: Dr Emmerson, do you draw a distinction between a technical meaning of a word or phrase in the sense of what those skilled in the art will understand those words or that word to mean, and the meaning which any member of the public may attribute to those words once that member of the public is acquainted with the skill or art?

MR EMMERSON: The former. That is to say, the expression "technical meaning" is used in the sense of a description of usage within the art. The expression "ordinary meaning" is used to take you outside special technical usage in that sense, but of course it assumes that the ordinary member of the public is informed of the relevant technical facts.

BRENNAN CJ: In this case, once it is clear that there is no technical meaning of the entire phrase, the function that is then to be performed is to determine what the phrase means with a full knowledge and appreciation of the technology to which the phrase applies.

MR EMMERSON: With respect, yes, your Honour, precisely.

BRENNAN CJ: Is that not precisely what Justice Jenkinson attempted to do?

MR EMMERSON: We would say no, it was not what he did, that he misled himself because he never really embarked on the question of where does silver fit into the technology; what goes on in this technology? He never asked the question: suppose I just treat these as words being a composite phrase which is not a term of art but which I have to understand in the light of technology. He did not deal with that.

BRENNAN CJ: He short-circuited it by saying, "Looking at the phrase, the first three and the fifth word together, I understand that in the trade, having regard to the technology of the trade, to mean Ilfochrome paper", and then looking at the other evidence of what "reversal" means, it can mean one of two things. I take it to mean one thing. Therefore, putting that together with the Ilfochrome paper, I understand it to mean so-and-so". Where is the error?

MR EMMERSON: The court simply held that he did that incorrectly in the light of the facts of this case.

BRENNAN CJ: Can you articulate, apart from what the court said, where the error lies in that approach?

MR EMMERSON: If the Court pleases, it is the error in the application of the approach to the particular facts of this case.

BRENNAN CJ: Then you are barred by section 44.

MR EMMERSON: No, indeed, we are not because the question of whether a word or phrase is used in its technical sense is a question of law.

BRENNAN CJ: Be it so.

MR EMMERSON: So the tribunal is entitled to ask itself the question: is this phrase being used as a technical composite phrase or is it not? But if it answers that incorrectly, then it has made an error of law. That is why we are not barred by section 44.

BRENNAN CJ: That is assuming that that is exactly what happened. If what happened was as I put it to you, namely that in the trade, having regard to the technology of the trade, words 1, 2, 3 and 5 are understood as meaning Ilfochrome because of the processes that Ilfochrome has, we then find this strange word "reversal" which does not make sense of the whole phrase, but it can have two meanings and I adopt one of those which is appropriate to the technology of the phrase, where is the error?

MR EMMERSON: I would challenge your Honour's recital of the facts in this respect. It was not held that those words mean Ilfochrome and nothing else. It was that that composite phrase "silver dye bleach process" was used to mean Ilfochrome. There is an important difference. It was not a holding that those words could not mean anything else, but those words in their particular combination meant Ilfochrome. That is where the tribunal went wrong.

BRENNAN CJ: There is no doubt the words 1, 2, 3 and 5 mean that.

MR EMMERSON: In combination.

BRENNAN CJ: In combination, that is right. So that we have the stranger.

MR EMMERSON: We have the stranger, and the question of law is: does the stranger alter the meaning? The tribunal held no, the stranger does not alter the meaning. The court said that was wrong, that in deciding whether the stranger did or did not alter the meaning, the tribunal went wrong. Accordingly we say that there is no general principle new or otherwise which raises a question of special leave in this case. The principles which are set out in both the longer judgments are well established, they are there for future tribunals to follow. There is no suggestion that the precise difficulty that has arisen in this case is a matter of general importance. If the Court pleases.

BRENNAN CJ: Thank you, Dr Emmerson. We need not trouble you in reply, Dr Buchanan.

There will be a grant of special leave in this matter.

AT 10.28 AM THE MATTER WAS CONCLUDED