COLLECTOR OF CUSTOMS v AGFA-GEVAERT LIMITEDJudges:
High Court of Australia
Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ
This appeal is brought against an order of the Full Court of the Federal Court of Australia setting aside a decision of the Administrative Appeals Tribunal (``the Tribunal'') that held that certain goods imported by Agfa-Gevaert Limited (``Agfa''), the respondent, were not free of import duty because they did not fall within a Commercial Tariff Concession Order (``CTCO'').
The principal question in the appeal is whether the Full Court erred in finding that it is an error of law to construe a phrase in a
ATC 5242legislative instrument by giving a trade meaning to some words in the phrase and the ordinary meaning to the rest of the words in the phrase. Questions also arise as to whether the Full Court was correct in holding that the Tribunal had erred in law in construing the meaning of two expressions in a statutory instrument.
The statutory framework
At the relevant time, s 269C of the Customs Act 1901 (Cth) (``the Customs Act'') provided for the making of CTCOs and s 25 and Item 50 of Pt III of Sched 4 to the Customs Tariff Act 1987 (Cth) (``the Tariff Act'') operated so as to provide that goods that a CTCO declared were goods to which Item 50 applied were to be free of duty. Each CTCO in issue in this matter declared the goods that it identified were goods to which Item 50 applied.
The factual background
Under CTCO 8340417, Agfa imported CR312 Reversal Paper, a positive to positive photographic paper developed by a chromogenic process. This CTCO described the relevant goods as:
``PAPER, colour, in sheets or rolls, silver dye bleach reversal process, with the image dyes incorporated in the emulsion layers, coated on a resin coated paper base, for the production of positive to positive colour prints.''
On 16 October 1987, Agfa, anticipating the cancellation of CTCO 8340417, wrote to the Comptroller-General of Customs applying for a new CTCO in the same terms as CTCO 8340417. On 28 January 1988,
On 17 December 1990, Agfa sent an application for a tariff advice to the Collector of Customs (``the Collector''), the appellant, to ascertain whether its ``Agfacolour'' Type 8 and Type 9 papers fell within the CTCOs in dispute. The Collector advised Agfa that the new CTCOs - the CTCOs in dispute - covered Type 8 and Type 9 papers. Agfa proceeded to import these papers under the provisions of these CTCOs. On 11 November 1991, the Collector wrote to Agfa advising it that he had reviewed his previous advice and had concluded that the Type 8 and Type 9 papers were not eligible for the tariff concession provided by the CTCOs in dispute and that the previous advice was accordingly ``voided''. On 9 December 1992, these CTCOs were revoked.
If the Type 8 and Type 9 photographic papers imported by Agfa fell within the terms of the CTCOs in dispute, they were goods to which Item 50 in Pt III of Sched 4 of the Tariffs Act applied and should have been passed as free of import duty pursuant to s 25. If Item 50 did not apply, the goods were liable to duty at the rate in force when they were first entered for home consumption under the applicable heading of the Tariffs Act.
The dispute between the parties turns on whether the Type 8 and Type 9 papers fall within two of the phrases in the CTCOs in dispute. Those phrases are:
- • ``silver dye bleach reversal process''; and
- • ``having the image dyes incorporated in the emulsion layers''.
For Agfa's Type 8 and Type 9 paper to come within Item 50, they must fall within each of these phrases in the CTCOs. In our opinion, the Tribunal made no error of law in holding that that paper did not come within the phrase ``silver dye bleach reversal process''. It is therefore unnecessary to determine whether the Tribunal erred in law in holding that Agfa's Type 8 and Type 9 papers did not fall within the phrase ``having the image dyes incorporated in the emulsion layers''.
The process used by Agfa in respect of Type 8 and Type 9 papers
The Type 8 and Type 9 papers receive and reproduce an image on their surface from a colour negative film. Coated on the papers are emulsion layers containing a silver halide which is reduced to silver during the process. Later in the process, the silver is oxidised by a bleach and the silver salt is dissolved and washed off the paper. On the paper are three emulsion layers each of which is sensitive to one of three colours because of the presence in each layer of a substance called a colour coupler. The coupler reacts chemically with the developer by which the silver halide was reduced. A dye of the colour complementary to the primary colour is then deposited in the layer.
The proceeding in the Tribunal
Agfa applied to the Tribunal to review the decision of the Collector to accept the payment of duty made under protest in respect of goods imported into Australia on 22 January 1992 under the CTCOs in dispute. This payment was in accordance with the rate specified in Sched 3 to the Tariffs Act. The Tribunal affirmed the Collector's decision.
The Tribunal's finding as to the meaning of ``silver dye bleach reversal process''
Jenkinson J found, and it was not disputed before him, that, in the photographic trade and among members of the wider community of persons interested in photographic film processing technology, the phrase ``silver dye bleach process'' was understood as a reference to the process by which a particular photographic paper sold under the name ``Ilfochrome'' was treated to develop a photograph on that paper. However, the phrase ``silver dye bleach reversal process'', the phrase used in the CTCOs in dispute, had no trade or technical meaning. His Honour said:
``On the whole of the evidence relating to the expression `silver dye bleach reversal process' I am inclined to think that the words `silver dye bleach' should be given the meaning which usage indicates and that the word `reversal' is to be understood as meaning that reversal of image which occurs in the process of producing a positive print on paper from a positive film. A reversal in that sense occurs in the process of producing an image on paper by the Ilfochrome process and in the process of producing an image on paper by the process called colour reversal.''
His Honour held that the process used in respect of Agfa's Type 8 and Type 9 papers did not fit the description ``silver dye bleach''. He also held that, because the term ``reversal'' in the disputed CTCOs referred to the process of producing a positive print from a positive film, it did not describe the process used in respect of Agfa's Type 8 and Type 9 papers.
The appeal to the Full Court
Agfa appealed to the Full Court (Ryan, Gummow and French JJ) pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (``the Tribunal Act'') which is limited to appeals on questions of law. Each judge, in separate reasons, upheld the appeal.
The Court identified the error of law in respect of the phrase ``silver dye bleach reversal process'' as the construction of the composite phrase as a combination of ordinary and trade meanings. The reasoning of Ryan J was typical of all three judges. His Honour 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.... [O]nce it became apparent on the evidence that the resultant composite phrase had no accepted meaning within the relevant technical or trade community, it was incumbent on the Tribunal to identify, as a matter of fact, the meaning of the composite phrase as a collection of ordinary English words.''
This finding was predicated upon a depiction of Jenkinson J's approach to the composite phrase as involving the combination of the trade meaning of ``silver dye bleach'' and the ordinary meaning of ``reversal''. Because there was no evidentiary finding by the Tribunal as to the ordinary English meaning of the phrase construed as a whole, the Court referred the matter back to the Tribunal to determine this question as an issue of fact.
The distinction between questions of fact and questions of law
In this Court, the Collector again submitted that the relevant findings of the Tribunal did not raise any questions of law that could found an appeal under s 44 of the Tribunal Act. Hence, the first issue in the appeal is whether the Full Court was correct in finding that the decision of the Tribunal was vitiated by an error of law.
The distinction between questions of fact and questions of law is a vital distinction in many fields of law. Notwithstanding attempts by
ATC 5244many distinguished judges and jurists to formulate tests for finding the line between the two questions, no satisfactory test of universal application has yet been formulated. In Hayes v FC of T,
``... Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law.''
In Collector of Customs v Pozzolanic,
Some recent Federal Court decisions have attempted to distil the numerous authorities on the problem into a number of general propositions. Thus in Pozzolanic,
``1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law.
; Jedko Game Cov Collector of Customs (NSW) (1987) 12 ALD 491 . Brutusv Cozens  AC 854
2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact.
; Life Insurance Co of Australia Ltdv Phillips (1925) 36 CLR 60at 78 ; NSW Associated Blue-Metal Quarries Ltdv FC of T (1955-1956) 11 ATD 50at 52; (1955-1956) 94 CLR 509at 512 ; Nealv Department of Transport (1980) 3 ALD 97at 107-108 Jedko(1987) 12 ALD 491.
3. The meaning of a technical legal term is a question of law.
; The Australian Gas Light Cov The Valuer-General (1940) 40 SR(NSW) 126at 137-138 . Lombardov FC of T 79 ATC 4542at 4547; (1979) 40 FLR 208at 215
4. The effect or construction of a term whose meaning or interpretation is established is a question of law.
Life Insurance Co of Australia(1925) 36 CLR 60 at 79.
5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law.''
per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Hopev The Council of the City of Bathurst 80 ATC 4386at 4389; (1980) 144 CLR 1at 7 per Sheppard and Burchett JJ. Australian National Railways Commissionv Collector of Customs (SA) (1985) 8 FCR 264at 277
In Pozzolanic, the Full Court qualified the fifth proposition. The Court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact.
Such general expositions of the law are helpful in many circumstances. But they lose a degree of their utility when, as in the present case, the phrase or term in issue is complex or the inquiry that the primary decision-maker embarked upon is not clear. Thus, the phrase ``silver dye bleach reversal process'' is not easily pigeon-holed in terms of the general rules summarised in Pozzolanic because Jenkinson J construed the phrase by reference to the trade or technical meaning of ``silver dye bleach process'' and the ordinary meaning of ``reversal''.
However, for present purposes, it is the distinction between the second and fourth of the five propositions formulated in Pozzolanic
``Very different consequences attach according as the ambiguity rests in construction or in interpretation. Lindley LJ in Chatenay v Brazilian Submarine Telegraph Company
 1 QB 79 at 85.employs the same word `construction' for both ideas, but keeps the ideas distinct. He says:- `The expression ``construction,'' as applied to a document, at all events as used by English lawyers, includes two things: first, the meaning of the words; and, secondly, their legal effect, or the effect which is to be given to them. The meaning of the words I take to be a question of fact in all cases, whether we are dealing with a poem or a legal document. The effect of the words is a question of law.' The `meaning of the words' is what I call interpretation, whether the words to be interpreted into ordinary English are foreign words or code words or trade words or mere signs or even ordinary English words which on examination of surrounding circumstances turn out to be incomplete. Their effect when translated into complete English is construction. If that distinction be borne in mind very little difficulty remains.''
With respect this distinction seems artificial, if not illusory. The meaning attributed to
ATC 5245individual words in a phrase ultimately dictates the effect or construction that one gives to the phrase when taken as a whole and the approach that one adopts in determining the meaning of the individual words of that phrase is bound up in the syntactical construction of the phrase in question. In R v Brown,
``The fallacy in the Crown's argument is, I think, one common among lawyers, namely to treat the words of an English sentence as building blocks whose meaning cannot be affected by the rest of the sentence.... This is not the way language works. The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole.''
If the notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction that is currently absent from the law.
However, it is not necessary to resolve this issue in determining whether Jenkinson J's decision as to the phrase ``silver dye bleach reversal process'' raised any appealable questions of law. This is because of one concession made in argument and one principle of law that is not disputed. The concession was made by Mr Buchanan QC, for the Collector, who conceded that the determination of whether a phrase is a composite phrase or not is ``probably... in the end'' always a question of law. The principle, which we think made the concession inevitable, is that the determination of whether an ``Act uses [an] expression... in any other sense than that which they have in ordinary speech'' is always a question of law.
With this in mind, it is apparent that Jenkinson J's finding that:
``On the whole of the evidence relating to the expression `silver dye bleach reversal process' I am inclined to think that the words `silver dye bleach' should be given the meaning which usage indicates and that the word `reversal' is to be understood as meaning that reversal of image which occurs in the process of producing a positive print on paper from a positive film''
raised a question of law. However one characterises the ``structure'' of this composite phrase in terms of the interplay of the descriptors of ordinary meaning and trade meaning - for example, either a combination of two trade meanings or a trade meaning qualified by a word to be understood in its ordinary sense - or whether these descriptors have any beneficial role to play in such an inquiry at all - is not relevant at this point. All that is required for a reviewable question of law to be raised is for a phrase to be identified as being used in a sense different from that which it has in ordinary speech. It is clear that Jenkinson J treated the phrase ``silver dye bleach reversal process'' as a composite one whose meaning depended on evidence. Whether he was correct in doing so therefore raises a question of law.
The correct construction of ``silver dye bleach reversal process''
The Collector contends that a court or tribunal makes no error of law in determining the construction of a phrase merely because it applies a trade meaning to some only of the words in that phrase. Agfa, on the other hand, contends that if the whole of the expression does not have a ``definite commercial designation different from [its] ordinary meaning''
It is convenient at this stage to note that, for the purposes of interpreting the relevant phrases, the CTCOs should be considered as a species of delegated legislation.
Because the CTCOs are governed by the rules of statutory construction, the speech of Lord Simon of Glaisdale in Maunsell v Olins
``Statutory language, like all language, is capable of an almost infinite gradation of `register' - ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the
ATC 5246man in the street, lawyers, merchants, etc). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give to it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances.''
When construing revenue statutes that utilise trade or technical terms, therefore, the law generally favours interpretation of the terms as they are understood in the trade to which the statute applies. In Herbert Adams Pty Ltd v FC of T,
``... A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned.''
The courts have also said that it may be less difficult to establish a trade meaning which extends the ordinary meaning of an expression than one which limits the ordinary meaning in a specialised way.
In their own ways, both the Collector and Agfa relied upon the distinction between trade meaning and ordinary meaning to construe the expression ``silver dye bleach reversal process''. Agfa, of course, relied on the ordinary meaning of the phrase while the Collector focused on its trade meaning. However, Agfa conceded that, without some assistance from the ``technological context'' or ``technological background'' of the issues involved, the phrase in issue was, in terms of its ordinary meaning, meaningless. While denying the validity of any recourse to the trade meaning of certain words within the composite phrase, it contended that, when account was taken of this technological background, the words had an ordinary meaning as opposed to a trade meaning. Moreover, Agfa contended that the ordinary construction of the phrase accommodated its Type 8 and Type 9 paper.
The problem with Agfa's submission is that it ostensibly denies the appropriateness or relevance of the very pool of knowledge upon which, in substance, it relies. That is to say, the reliance on technological background or context, which Agfa submits is permissible when construing the ordinary meaning of words, is inconsistent with its submission that, in construing composite phrases, it is impermissible to take account of the trade meaning of certain words in that phrase.
Agfa resisted the invitation of this Court to outline conclusively the options open to the Tribunal in construing the term as a whole if the case was remitted to it. However, it contended that the expression ``silver dye bleach reversal process'' described Agfa's paper because its paper did involve a process the stages of which could be described as ``silver'', ``dye'', ``bleach'' and finally ``reversal''.
In Exxon Corporation v Exxon Insurance Ltd,
``But `original literary work' as used in the statute is a composite expression, and for my part I do not think that the right way to apply a composite expression is, or at any rate is necessarily, to ascertain whether a particular subject matter falls within the meaning of each of the constituent parts, and then to say that the whole expression is merely the sum total of the constituent parts. In my judgment it is not necessary, in construing a statutory expression, to take leave of one's common sense.''
Significantly in our opinion, Agfa's argument required the Tribunal to deny itself any recourse to common-sense in construing the expression ``silver dye bleach reversal process''.
ATC 5247the expression. However, there seems no good reason for denying trade usage a role in determining the meaning of distinct elements of composite phrases where the phrase, taken as a whole, does not have a trade meaning. In an appropriate case, and this is one, such knowledge enables courts and tribunals to tune into the most appropriate ``register''
Agfa's contention demonstrates the danger in relying on the strict rule of statutory interpretation of composite phrases which it seeks to propound.
Trade meaning and ordinary meaning do not necessarily stand at opposite extremities of the interpretative register. Professor Glanville Williams has described the distinction between primary (ordinary) meaning and secondary (trade) meaning as the distinction between, on the one hand, the ``most obvious or central meaning'' of words, and on the other hand, ``a meaning that can be coaxed out of the words by argument''.
No doubt there are cases where a court or tribunal must interpret a composite phrase by reference to the ordinary meaning of the words taken as a whole without recourse to the trade meaning that one or more of its words may have. Much depends on the subject matter and context of the phrase. In the area of statutory interpretation and construction, courts must be wary of propounding rigid rules. Even the use of general rules carries dangers in this area because of the tendency for such rules to be given an inflexible application.
Further, contrary to Agfa's submission, using the trade meaning of individual words in a composite phrase having no special meaning as a whole does not involve a failure to construe the phrase ``as a whole''. It simply does not follow, as a matter of logic or common-sense, that the division of a composite expression into parts which are interpreted by reference to their trade meaning, ordinary meaning or a combination thereof necessarily means that a court or tribunal has failed to construe an expression by reference to its meaning as a whole.
It remains to determine whether the finding of the Tribunal was permissible as a matter of law. We think that it was. We can see no reason to disturb Jenkinson J's finding which in our view was supported by the evidence and was correct as a matter of law. For the reasons that we have given, his Honour's approach to construction, namely reading the expression ``silver dye bleach reversal process'' by reference to the trade or technical meaning of ``silver dye bleach'' and the ordinary meaning of ``reversal'', does not lead to absurdity nor a failure to construe the expression as a whole. To accept the argument of Agfa would be to deny the import of logic and common-sense in matters of statutory construction. And as Lord Devlin once said, ``no system of law can be workable if it has not got logic at the root of it''.
As Jenkinson J made no error of law in respect of the phrase ``silver dye bleach reversal process'', it is unnecessary to determine whether his Honour erred in law in holding that Agfa's papers did not fall within the phrase ``having the image dyes incorporated in the emulsion layers''. Agfa's appeal to the Full Court could only have succeeded if
ATC 5248Jenkinson J had erred in law in determining the meaning of both phrases.
The appeal should be allowed.