JUDGMENT NO. 2 nese coe — reeermmaeee CATCHNORDS ADMINISTPATIVE LAW - appeal from Administrative Appeals Tribunal - claim by meat exporter for export incentive grant from Export Development Grants Board - whether vells included in statutory definition of "offal" - meaning of "offal" and "carcase" in Export Expansion Grants Regulations. Administrative Appeals Tribunal Act 13975 s.44(1) Export Expansion Grants Act 1978 ss.3(1), 4(1), 22 LUITICK AUSTRALIA FIY., LTD. v EXPORT DEVELOPMENT GRANTS BOARD Wo. VG 304 of 1984 Woodward, Northrop and Jenkinson JJ. 29 April 1985 Melbourne - IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 304 of 1984 we GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY MR RF SMART OC, DEPUTY PRESIDENT, SIR ERNEST COATES AND MR EL Jd COHN, MEMBERS BETWEEN : LUTTICK AUSTPALTA PTY. LTD. Applicant Vv EXPORT DEVELOPMENT GRANTS BOARD Respondent MINUTES OF ORDER COURT : Woodward, Northrop and Jenkinson Jd. DATE : 29 April 1985 PLACE : Melbourne THE COURT ORDEPS THAT: The appeal be dismissed with costs. (Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.) IN THE FEDERAL COURT OF AUSTRALIA No. VG 304 of 1984 VICTORIA DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY MR R F SMART OC, DEPUTY PRESTDENT, STR ERNEST COATES AND MR L J COHN, MEMBERS BETWEEN : LUITICK AUSTRALIA FIY. LTD. Applicant Vv EXPORT DEVELOPMENT GRANTS BOARD Respondent COURT: Woodward, Northrop and Jenkinson JJ. DATE: 29 April 1985 PLACE: Melbourne REASONS FOR JUDGMENT The circumstances giving rise to this appeal can be briefly stated. The applicant 1s a meat exporter. Amongst its range of export products is the abomasum, or the fourth stomach of a young calf, known in the industry as the vell. The applicant is one of Australia's largest exporters of vells, exporting approximately 300,000 to 400,000 units per year. These vells were originally exported by the applicant in a dried form, but are now sent overseas in chilled or frozen form, where they are processed. tJ From the vell is extracted an enzyme called rennet, which i uw chiefly used as a coagulator of milk and ain particular in the manufacture of chees=. The legislation relevant to this las to be found ou on Ppe in the Export Expansion Grants Act 1978 ("the Act") and the Export Expansion Grants Regulations ("the Regulations") made pursuant tc s.22 of that Act. Under the Act an exporter 1¢ entitled to submit a claim to the Export Development Grants Board {"the Board") for an export incentive grant. Subject to certain restrictions which are not relevant for present frurposes, a claimant 1s not entitled ko a adrant unless ait exports items which are ""eliqikle geocds" within the meaning of s.4 of the Act. "Eligitle goede" dses nat includ¢ goods which are excluded by virtue of Fegulatzions under sub-2,22(2) of the Act. The Regulations 1n owveration at the relevant time, y Pegulation 4A and Schedule 3, declared that "excluded goods" were to include hides, meat, meat and bone meal, meat meal, cffal and tallow. Under Rec.7Z, unless the contrary intentian appears in the Regulations, the word offal "means any part of a cattle carcase or sfheer carcase cther than the flesh of the carcase, Leing a@ part that ais fresh, chilled or frozen but does not include hides." The applicant submitted a claim to the Board for a grant of €13 525 for its export of vells during the financial year mn 1980/81. This claim was rejected by the Poard on the ground that: "The fresh chilled or frozen vells exported Ey the applicant were excluded goods from 1 July 1979, being cffal in terms of s.22(2) of the Act in conjunction with Statutory Rules 1979 No. 105." The applicant sought a review of this decision sursuant to the AdminislLrative Appeals Tribunal Act 1975 ("the AAT Act"), On 26 October 1984 the Administrative Appeals Tribunal ('"the Tribunal") affirmed the decision of the Board. The applicant appeals to this Court, from that decision of the Tribunal, on & question of law, namely whether the vells are "offal" under the Regulations. The applicant concedes that 1f the vells are heli to he offal, its application cannot succeed, Tt argues however, that the meaning cf "offal" 1s dewendent upon the interpretation cf the word "carcase" in the definition. ""Carcase" 1s not Gefined in the Act por in the Fequlations. The apslicant submits that ""carcase", should ke given the meaning ascribed to 1t in the meat industry and meat export Let ade: that is a "dressed carcase" or the kody of & slaughtered beast after the removal of the ride, skin, entrails, digestive tract, stomach (including the vell), heart, liver and lungs. This was described in evidence before the Trifunal as "the basic actual skeletal structure with the relevant meat primals in 1ts entirety" and was accepted by the Tribunal as the "established" trade meaning of the word "carcase". It is to some extent supported by the dictionary definition of "carcase" found in the Macquarie Dictionary and quoted in the Tribunal's reasons for decision: "The body of a slaughtered animal after remova of the offal, et cetera." The applicant's primary contention is therefore that the definition of "offal" in Reg.? should he read as "any part of 4 CdressedJ carcase ... other than the flesh of the (Cdressed] carcase, being a part that is fresh, chilled or froren Fur does not include hides". As the dressed carcase does not include the vell, vells are not covered by the Schedule of excluded gocds, and therefore the applicant 1s entitled to an export incentive erant The Tribunal rejected this submission after careful consideration. It held that "carcase", where used ain the definition of "offal", means the dead body of the beast with the head, hide and internal organs (including the vell) intact. It is this meaning that we will refer to as the "wider" meaning, as distinct from the "trade" meaning which the applicant urges us toa accept Before this Court, the applicant has made a number of submissions supporting the adoption cf the trade meaning. Firet, it says that the primary purpose of the legislation. as suggested i) by the heading of the Act, 1s to provide incentives and encouragement for the expansion cf exports. For this reason, the legislation confers a financial benefit on those exporters who qualify for a grant. The applicant argues that this has two results when the ordinary pronciples of etatutery antergretstion are applied. First, to refuse a claimant the benefit of a grant the Board must show that the exported goods are not eligible goods within the meaning of the Act; this was argued in essence by the applicant as a "burden of proof" question. In addition, if there is doubt as to the interpretation of the legislation, any ambiguity should be construed in favour of the claimant for a grant. In this context the applicant sought to equate the Act with bounty legislation and referred the Court toa threes eras Diy Ss dealing with that subject: Re Butterworths Fry. Ltd. and Minister for Business and Cansumer Affairs (1979) 2 ALD 612; Fe Integrated Marketing and Export Development Grants Board (19°80) 2 ALD 878 and Re Computer Manufacture and Design Pty. Ltd. and Compiroller- General of Customs (1983) 5 ALD 218. Secondly, the applicant relies on the form cf wording employed by the draughtsman in specifying excluded goods in Schedule 3 of the Regulations. The Schedule specificaliy lists six meat industry products that are ta he exctuded ganis: namely hides, meat, meat and bone meal, meat meal, offal and tallow. It does not seek to make a blanket exclusion of meat industry products, whether processed or unprocessed. The applicant says this approach was taken intentionally. It was clearly intended that same products would not he covered by those six items listed or (all of which are defined in the Regulations). It 1s argued tha if the trade meaning of carcase is adopted, vells and presumably other internal organs such as kidneys, livers and brains would not be excluded goods and would therefore attract export incentive grant entitlements. If the legislature had intended ts "cover the field" a wider "exclusive" form of draucghting could have been utilised. However, when pressed, senior counsel for the applicant had trouble in putting before us a simple exclusive definition which could have been used by the draughtsman, bearing in mind the apparent intention of the legislature to benefit meat-qoods that have generally been processed or refined, for example by curing or smoking, in Australia before expert. se SL ee re Next, the applicant argues that, as the Schedule of excluded gocds is, to a significant extent, addressed to a specific industry, and as the words "offal"" and "carcase" carry specialized meanings within that industry, the Board or Court is entitled to, and should, rely on that technical or trade meaning, verified by suitable expert evidence, if the technical usage conflicts with the ordinary meaning of a word. Finally, the applicant says that were "carcase" to carry its wider meaning, the definition of offal would include a number of items that are not considered to be offal, either ordinarily or within the trade, such as glands, wool, hair, fat, bone, blood and L chemical secretions. The legislature could not have intended ta give the word "offal" such a wide meaning. The applicant admits that by adopting the trade meaning of carcase, certain meat products which would ordinarily be considered offal, such as the liver and kidneys, will not fall within the definition in the Regulations. However, it says that still leads to a more sensible construction than the alternative put by the respondent. The applicant also concedes that by using the trade meaning there are relatively few items left within the definition of cffal that would be excluded from an entitlement toa grant. It could oanly point to two specific products, namely bone and fat, but it contends this is sufficient to allow this court to infer that the draughtsman had in mind the meaning which it argues we should adopt. We are unable to accept the interpretation pressed on us by the applicant, for a number of reasons. The first 1s that if "carcase" 18 to bear its trade meaning, there is nothing of consequence to which the definition of offal in the Regulations can apply. Senior counsel for the applicant himself found some difficulty in directing us to those products that would still remain. Initially he submitted that bone, fat, lymphatic glands and the cutaneous trunci, being the membrane which encloses the flesh after the hide or skin is removed, would all be included as offal. However, on consideration, he was only prepared to rely upon the fat and bone. Yet even those have a very limited application if the fat which would ordinarily be considered either as part of the flesh or as tallow is eliminated, or if the carcase is classified as ""bone-out" carcase (the dressed carcase with most bone excluded). If the applicant is correct in its submission, we can see no point in including offal as an item of excluded goods in the Schedule. There was no evidence before the Tribunal that anyone did in fact export those items which, on the applicant's interpretation, would remain as offal. A second and equally persuasive point is that if the trade meaning of carcase is adopted, those items that are both ordinarily and in the meat industry regarded as offal, such as livers, kidneys and brains, would not fall within the definition in the Regulations. This, 1n our opinion, would render the definition of "offal" so artificial and contrary to common sense that the legislature could not have intended it to bear that meaning. The fact that attributing to "carcase" its wider meaning will mean that certain items, such as hooves, that would not ordinarily be considered offal will, 1f exported, be included in the definition in the Regulation, does not concern us greatly. It is often necessary in legislation to extend, by definition, the ordinary meaning of a word or phrase. We are supported in our conclusion by our understanding of the apparent policy of the legislature to exclude from "eligible goods" almost all meat industry products, other than goods processed to a certain level within Australia. Although we accept that, by listing excluded goods as it has in the Schedule, the legislature may not have covered the field, it has covered the great majority of unprocessed meat products that are likely to be exported. In reaching our conclusion we have not accepted the argument put by the applicant that, as the Regulations appear to deal with a specific industry, the word "carcase" should be seen as a technical word and should carry its trade meaning. In the absence of specific legislative intent to the contrary, the words of common speech used in the Regulations should bear their ordinary meaning; see the High Court decisions in Markell v Wollaston (1907) 4 CLR 141 and Herbert Adams Pty. Ltd. v Federal Commissironer of Taxation (1932) 47 CLR 222. The latter case concerned the interpretation of a Schedule to the Sales Tax Assessment Act (No. 1) 1930, which exempted "The following goods manufactured in Australia: ... Pastry but not including cakes or biscuits" from sales duty. The applicant unsuccessfully argued that the "sponge" it produced was "pastry" but not a "cake", and sought to rely on the specialized trade meanings of those two words. In the words of Dixon J (as he then was) at p.227, the Court accepted that "AR revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned" and agreed that insofar as the word "pastry" was concerned, "the Legislature has expressed itself in a manner Which amounts to a recognition, 1f not an adoption, of the trade meaning". However, it reached this conclusion hecause "it is only upon proof of the general meaning frrevailing in the trade that an explanation appears of the use of the strange expression 'pastry ... not including cakes or biscuits'" (p.228). It is not necessary in the present case to resort to the trade meaning of "carcase" to give a sensible meaning to the definition of "offal". Indeed to do so, as we have shown, creates a strange and most unlikely result. In the event, inthe Herbert Adams case, the Court rejected the argument that "cake" should bear its trade meaning: "To establish that the Schedule of exemptions has adopted this limited or restricted meaning is no easy undertaking. In the first place, there is nothing in the form of expression "pastry not including cakes or biscuits" to suggest an unusual signification of "cake" as there is in the case of "pastry". In the next place, 1t is always less difficult to show that a word has a wider meaning than it is to establish a specialized use. For an extension of meaning involves no abandonment of the use in respect of things to which it would in any case apply; but a uniformly restricted application among any class of persons is necessary in order to establish that it has among them a narrower meaning and that meaning only." (Dixon J at pp.228-9). - 10 - A further persuasive matter is that the definition of offal in the Regulations specifically excludes hides. If carcase were to carry its trade meaning there would be no reason for this specific exclusion, as the hide of the beast is remcved during dressing. It is only if "carcase" carries its wider meaning that there is a purpose for the insertion of that exclusion. We do nat attribute its inclusion in the definition to an "over-abundance of caution" on the part of the draughtsman, as the applicant asked us ta do. For the above reasons we are unable to accept the applicant's submission that "carcase" should carry its trade meaning. However, the applicant argues that such a finding will not necessarily defeat its claim. It relies on a supplementary, but independent, argument that it says stands apart from the argument in relation to the meaning of the word carcase. Even if carcase in the definition is not to carry its trade meaning, but as we have found, means the body of the beast after slaughter, the applicant argues that we are somehow able to look beyond the definition of "offal" to decide its meaning. The expert evidence presented to the Tribunal indicated that as the internal organs are removed from the body of the beast, they are sorted into four tubs; for edible goods, pet-food, condemned goods and pharmaceutical goods. Healthy vells fall within the last category. The Tribunal accepted that in the trade this category of goods, and therefore vells, are not considered "offal" but by-products. The word "offal" only strictly applies in the trade - li- to the first category of goods: edible goods such as livers or kidneys. As we understand it, the applicant contends that if the Court decides that the trade meaning of carcase cannot be applied because to do so would exclude from the definition of "offal" parts of the animal which are always called offal, then the Court would be referring to and relying on its independent understanding of the word "offal" and, in effect, "looking outside the statute". It is therefore entitled similarly to look outside the statute and hold that offal bears its trade meaning, notwithstanding the express definition in the Regulation. We cannot agree. In our opinion it is not possible to 1gnore the statutory definition, which "unless the contrary intention appears" (which it does not) 1s dependent on the meaning of the word "carcase". Finally, we turn to the applicant's submission that, if there is some doubt about whether a particular item falls within excluded goods or not, and bearing in mind what it refers to as the beneficial operation of the legislation, that doubt should ke resolved in favour of a claimant. Tt ais therefore for the respondent to prove that an item is clearly within the definition of excluded goods, and this it has not done. So the argument runs. In the event, we find it unnecessary to consider this point directly, as we do not have a sufficient doubt about the meaning of the word "carcase", which lies at the heart of the applicant's case. However, in passing, we should say that we do not accept that the applicant here can rely upon any analogy to be drawn with Bounty legislation, because the list of exclusions so clearly -12- comprehends the main unprocessed products of the meat industry that it cannot be said that there is any intention shown to advantage the producers of such goods. We accept the respondent's submission that it is for the claimant to satisfy the Board that it 1s entitled toa grant, and therefore that the goods it is exporting are not "excluded goods" by virtue of Regulations made under sub-s.22(2). For all these reasons we find that it was clearly open to the Tribunal, on the facts before it, to reach the conclusions that it did. The applicant has failed to establish pursuant to sub-s.44(1) of the AAT Act that an error of law has occurred entitling this Court to interfere with the Tribunal's decision. It follows that the appeal will be dismissed with costs. I hereby certify that this and the eleven (11) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Court Associate to The Hon Mr Justice Woodward Dated: 29 April 1985