Agfa-Gevaert Ltd v Collector of Customs & Anor [1994] FCA 664

Federal Court of Australia|1994-09-16|Before: French JJ, Gummow J, Ryan J

The application came on for hearing before Jenkinson J, sitting as a Presidential

Member of the Administrative Appeals Tribunal and on 18 May 1993 his Honour

decided that the decision under review must be affirmed. On 9 December 1992, Tariff Concession Orders 8735089 and 8735090 were revoked and new Tariff Concession Orders 9209427 and 9209428 came into effect. They were expressed as

Reasons for Decision of the Tribunal His Honour found that the Agfa-Gevaert paper of Types 8 and 9

receives and reproduces the image on its surface from a colour negative film. There is present in the emulsion layers coated on the paper a silver halide which is initially reduced to silver. Later in the process the silver is oxidised by a bleach and the silver salt is dissolved and washed off the paper. Each of three emulsion layers on the paper is sensitive to one of the three primary colours, red, green and biue. This is due to the presence in each layer of a substance called a colour coupler which reacts chemically with the developer by which the silver halide was reduced and which was itself oxidised in that reaction. The reaction between the colour coupler and the oxidiser leads to the deposition in that emulsion layer of a dye of the colour complementary to the primary colour. The film negative has the primary colours, red, green and blue, distributed across its surface in places where the incident light from the object photographed was of the complementary colours, cyan, magenta and yellow

Tespectively. In the development process light incident on a red part of the negative

is transmitted as red light and causes a cyan dye to be deposited in the corresponding portion of the red sensitive layer of the emulsion. A similar process for light transmitted through the green and blue sections of the negative leads to the deposition of magenta and yellow dyes in the corresponding parts of the green and blue sensitive emulsion layers. Where light is transmitted through a part of the negative with a complementary colour, dye will be deposited in two of the three layers. Thus light passing through a yellow portion of the negative is transmitted as yellow light which is a mix of red and green. It will therefore cause the deposition of cyan dye in the red sensitive layer and magenta dye in the underlying portion of the green sensitive layer. Magenta light yields cyan and yellow layers as magenta is a mix of red and blue. Cyan, being a mix of green and blue gives magenta and yellow layers. White light transmitted through the negative generates dye in each of the layers yielding a combined result that is black. Black portions of the negative transmit

no light so the corresponding parts of the paper remain white.

His Honour identified the two principal questions in the case as follows:

Did the Agfa-Gevaert paper embody the silver dye bleach reversal process referred to in the Tariff Concession Orders?
Did the Agfa-Gevaert paper answer the description of a paper "having

the image dyes incorporated in the emulsion layers"?

After discussing the evidence and submissions his Honour concluded that the words

"silver dye bleach" should be given the meaning indicated by their usage. The phrase

he found was widely known and used in speech and printed materials to describe the process used in ifochrome film. As his Honour described it, the development process on Ifochrome paper first involves the generation of a negative image. Exposure of the paper to light results in the reduction of silver halide to silver in the lower of two emulsion layers each of which is sensitive to a primary colour. Only the lower layer has a dye for a complementary colour incorporated. Bleaching and washing which follows exposure eliminates both silver and dye in those parts of each layer in which silver had been deposited, leaving dye in the other parts to give again a positive image. His Honour also found that the word "reversal" occurring in the Tariff Concession Order is to be understccod as meaning the reversal of image that occurs in the process of producing a positive print from a positive film. That is the kind of

internal reversal process just described in relation to [lfochrome.

His Honour was evidently prepared to accept that a Tariff Concession Order could apply to the goods of a single manufacturer. He referred to the history which led up to the formulation of the orders in issue in this case. He noted that CR312 reversal paper produced by Agfa-Gevaert had been imported under the original Tariff Concession Order 83440417. He noted also that the officers of the Australian Customs Service had difficulty, as his Honour said he himself had experienced, in grasping the technical and linguistic complexities of the subject. But even if he were entitled to use the history of dealings between Agfa-Gevaert and the Australian Customs Service as a guide to construing the Tariff Concession Orders he

was unable to derive any assistance from it because the acts of the officers of the

Australian Customs Service were not based upon a satisfactory understanding of the

On the meaning of the expression "image dyes" his Honour concluded that the words referred to the colouring matter in or of the image in the print. They would comprehend colouring matter in emulsion layers which would at the end of the development process be the chemically unchanged colouring matter of the image. They did not comprehend a substance such as the colour coupler which makes an essential contribution to the formation of the colouring matter in the image by participating in a chemical reaction but none of which substance is colouring matter in the image. On that basis the Agfa-Gevaert colour negative paper did not have "the image dyes incorporated in the emulsion layers" within the meaning of the order. His Honour therefore held that the Agfa-Gevaert paper did not fall within the Tariff

L The term "silver dye bleach reversal process" did not include the process by which Agfa-Gevaert's colour negative paper gave a positive mage from a negative film.

2 The term "image dye" did not include chemical compounds which were used to form dyes on the positive print but were not themselves colournng matter in the image.

The Contentions Agfa-Gevaert contended that the ordinary meaning of the words of the

Tariff Concession Orders did not import a limitation excluding its paper. The change in wording from concession order 8340417 to Tariff Concession Orders 8735089 and

8735090 and thereafter to Tariff Concession Orders 9209427 and 9209428 was said to

support the construction contended for. In relation to the term "silver dye bleach Teversal process" it was accepted that the Tribunal had found correctly that the words are not a term of art and that there is no process which is uniquely described by them. Expert evidence before the Tribunal permitted it to apply the ordinary Meaning of those words and that in failing to do so it gave no or no sufficient weight to the expert evidence. No generalised secondary meaning was shown by the

The words "for the production of positive to positive colour prints" which had appeared in the original Tariff Concession Order were said to have been used by Agfa-Gevaert for importing its CR312 paper which is not the same as Iifochrome paper. It had applied for Tariff Concession Orders in terms of the earlier wording to enable it to continue to mport CR312 paper with concessional duty. The Tariff Concession Orders were made after the application and the proper inference, to be drawn, it is said, is that they were intended to cover the CR312 paper. However, the decision of the Tribunal would limit the application of the Tariff Concession Orders to one proprietary product, namely Ilfochrome. It would exclude not only the paper the subject of the proceedings but also the Agfa-Gevaert CR312

paper in respect of which the application was made.

It was submitted that a Tariff Concession Order should be interpreted as a species of delegated legisiation. Extrinsic materials may be taken into account in its interpretation to confirm that the meaning of a provision is its ordinary meaning or

to determine the meaning of an ambiguous or obscure provision or where the

ordinary meaning leads to an absurd or unreasonable result. It was said to be an absurd or unreasonable result to so construe a Tariff Concession Order that it does not apply to the goods which it was commonly assumed would be covered by it. A purposive construction can be applied. The deletion of the words "for the production of positive to positive colour prints" must, it was said, have significance for the

For the Collector it was contended that the words "silver dye bleach reversal process" do not have an ascertainable meaning in ordinary speech. The evidence showed a common commercial understanding of the silver dye bleach process and of a reversal process. His Honour, it was submitted, had correctly applied those established meanings. It was not open to construe the words of the Tariff Concession Orders separately and inquire whether the goods fell within the meaning of each word. The order had to be construed as a whole. On the question of the image dyes, the submission followed his Honour's reasoning that the dye colours were not present in the emulsion layers of the Agfa-Gevaert goods. There were only colour couplers which produced colours when combined with other chemicals. The Tariff Concession Orders did not in terms apply to negative to Positive paper. It was also contended that the opinion of Customs Officers that the 1983 Tariff Concession Order applied to CR312 paper was irrelevant and could not be invoked as an extrinsic aid for the purposes of s.15SAB of the Acts Interpretation Act. The words of the Tariff Concession Orders were not ambiguous or obscure nor did they lead to absurd or unreasonable results. It was submitted that the apparent

concession by the Australian Customs Service at one time that the Tariff Concession

Orders covered negative to positive paper did not go to construction.

Submissions to similar general effect were lodged on behalf of Kodak (Australasia) Pty Ltd.

The Question of Law This application invokes the jurisdiction conferred upon the Federal Court by s.44 of the Administrative Appeals Tribunal Act 1975 (Cwth). In the exercise of that jurisdiction the court is limited, in reviewing decisions of the Tribunal, to the resolution of questions of law. A wrong finding of fact does not demonstrate an error of law - Waterford v. Commonwealth (1987) 163 CLR 54 at 77-78 The distinction between questions of law and fact is not without difficulty but may be

approached having regard to the general propositions recently outlined by the Full

Court in Collector of Customs v. Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

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. .

The ordinary meaning of a word or its non-legal technical meaning is a question of fact.

The meaning of a technical legal term is a question of law.

The effect or construction of a term whose meaning or interpretation is established is a question of law.

The question whether facts fully found fall within the provisions of a

Statutory enactment properly construed is a question of law.

The notice of appeal in this case identifies as the questions of law:

The true construction of tariff concession orders 8735089 and 8735090.

Whether (and if so how) in construing the Tanff Concession Orders account should be taken of the change in wording between the Tariff Concession Orders and the earlier Tariff Concession Orders.

Whether (and if so how) in construing the Tariff Concession Orders account should be taken of the circumstances in which they were made.

In the construction of revenue Jaws directed to particular sectors of commerce or industry, there is a tendency to employ the description and adopt the meanings in use among those who exercise the trade concerned - Herbert Adams Pty Ltd v. Federal Commissioner of Taxation (1932) 47 CLR 222 at 227 (Dixon J). The tendency, however, does not exclude the possibility that words in a revenue statute may require construction according to their ordinary meaning - V. & R. Henderson (MEG) Pty Ltd v. Collector of Customs (1974) 48 ALJR 132. In relation to such usage I repeat the principles summarised in Collector of Customs v. Bell_Basic Industries Ltd (1988) 20 FCR 146 at 157. Those principles, without the accompanying

With respect to revenue laws directed to commerce, courts are more ready to conclude that items have been described according to common commercial or trade usage rather then in their natural or ordinary sense.

Whether there is a common, commercial or trade usage in relation to a particular item is a fact to be proved by evidence.

The evidence properly admissible is as to what merchants and others did, at the date of the Act, in fact call such articles. Evidence is also admissible to ascertain what, according to mercantile understanding, are the characteristics connoted by the descriptive names referred to in the legislation.

But how the trade describes goods is not conclusive. Trade evidence may limit the meaning of an expression to the denotation which it has at

a particular time without making allowance for its capacity to extend to new exemplifications which have the charactenstics of accepted denotations.

Equally, if particular articles were at the date of the Act, unknown, or not known by that name, merchants cannot by merely appropriating a particular tariff designation and attaching that designation to an article, bring it into the country under that name unless it is in truth such an article.

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.

If the expression is not uniformly understood in a specialised sense in the trade, it cannot be assumed that Parliament has adopted or recognised that specialised meaning. In that event, the ordinary English meaning of the expression is applied, having regard to the legislative context.

If there is a common commercial or specialised meaning of the particular item established by evidence, it is necessary to determine whether the legislation has used the word in its ordinary signification or in the special sense.

It is also important to note that the language in a statute may bear a construction

which involves an extension or limitation of its ordinary or commercial meaning -

It seemed to be common ground among all the expert witnesses that the

composite phrase "silver dye bleach reversal process" is not a term commonly used in

the photographic industry to describe any known process. The words "silver dye

bleach process" describe what is also called a "dye destruction process" used in

Ilfochrome, a kind of paper formerly known as Cibachrome and manufactured by

Ilford. The "silver dye bleach process" is applied to paper in which each of three

emulsion layers on the paper contains a uniform coating of dye of a colour complementary to the colour to which the layer is sensitive. Silver halides in each emulsion layer are converted to silver grains. These cause colour dyes in the

Evidence to this general effect was given by Mr C. Rudolph, a photographic chemist employed by Agfa, Paul Thomson, Marketing Manager for Hanimex Pty Ltd and Michael Flynn, a Technical Product Manager with Polaroid Australia Pty Ltd. Greg Battye, a lecturer in Photojournalism at the University of Canberra gave similar evidence although he suggested that the silver dye bleach

process was not limited to dye destruction as used by Ilfochrome papers.

Like evidence was given by witnesses called by the respondent, including Associate Professor Gale Spring, from the Royal Melbourne Institute of Technology, Satoshi Sakomoto and Edward Ashby, a senior head teacher of photography at the Sydney Institute of Technology. There was ample evidence to support his Honour's conclusion that the phrase "silver dye bleach process", taken by itself, is widely used in

the industry to describe the dye destruction process used in Ilfochrome paper.

The words "reversal process" were given varying constructions by the industry witnesses. Rudolph said they commonly refer to the processing of materials involving a reversal of images. The term could not be used with the "silver dye

bleach" to describe the Ilfochrome process because that does not involve any reversal.

It was capable of appiication to the Agfa papers when used in the sense of "turning solid silver back into the silver halide that it was pnor to exposure and developing it so that it can be removed from the paper". The kind of reversal contemplated by this testimony appears to have been a reversal of the chemical process. Flynn said "reversal process" is a recognised trade term but could not be used in conjunction with the silver dye bleach process to describe any known product. Battye said "reversal" in trade usage refers to a positive to positive process but does not involve the dye destruction typical of Iifochrome. There is, in his opinion, no product which undergoes both dye destruction and reversal processes. He suggested that the composite term "silver dye bleach reversal process" describes "a bleach reversal of the silver dye as part of the process of development". This, he said, is common to virtually all colour processes and does not uniquely identify either dye destruction or reversal. Again, the emphasis in his testimony seems to have been on chemical rather

Professor Spring focussed on the notion of image reversal in the development of the colour print from a positive colour transparency. The evidence of Sakomoto was to like effect. Ashby again concentrated on the fate of the image, describing the reversal process as one which has a "sign maintaining" effect on the

image first developed in the paper. The Agfa paper used a sign reversing process.

His Honour took the view that the word "reversal" is to be understood as meaning that reversal of the image which occurs in the course of producing a

positive print on paper from a positive film. He rejected a suggestion that reversal

could apply to the reconversion of silver to silver halide saying that:

"The submission which Dr. Emmerson [counsel for Agfa] advanced to show that the process by which photographs are printed on the applicant's colour negative paper fell within the ordinary meaning of the words in the expression may be advanced mutatis mutandis to show the same of the other processes."

The question of law which emerges as critical to this part of the case is whether his Honour was correct in construing the complete expression "silver dye bleach reversal process" as a composite of a trade usage on the one hand and one of a number of interpretations advanced by industry witnesses on the other even though it is not itself

The choices involved in construing a term used in revenue laws directed to commerce are not limited to the single decision whether the term bears its ordinary Meaning or the meaning adopted in the relevant trade or industry. It may be that the proper construction applies some extension or limitation of the ordinary or commercial meaning - Maunsell v. Olins (supra). It may be therefore that a composite phrase is construed according to its ordinary meaning but limited or extended by reference to context which can include the commercial setting in which the words are to be applied and the purpose for which they are to be applied. The alternative of a qualified commercial meaning does not arise in this case because there is no commercial meaning attributable to the phrase as a whole. It is open, therefore, to read the term according to the ordinary meaning of the words and either

The language of the TCO as his Honour held was founded upon a

technical misunderstanding by those who drafted it. Indeed there is a risk that the trade usage meaning of the first element and the interpretation applied on the second, are incompatible. In my respectful opinion it is not open to construe the composite term by reference to the trade usage of part of it. The evidence was overwhelming that there was no such usage for the whole. It therefore falls to be construed according to the ordinary meaning of the words used. What that ordmary meaning is, is a question of fact. The question arises whether on any ordinary meaning available upon the evidence before his Honour the Agfa papers would be excluded from the scope of the TCOs. I agree with Gummow J that this is a question of fact which can only be addressed by the Tribunal in the light of all the evidence before it. It cannot be said that only one answer is possible and it is necessary on this

basis that the application be remitted to resolve that factual issue.

The second issue in the application related to the construction of the term "having the image dyes incorporated in the emulsion layers". The term was discussed by various witnesses. Rudolph said the words "image dyes" were not in general use although they did appear in promotional material produced by ford and in a training manual prepared by Agfa which related to the colour negative film process. The entire phrase, "image dyes incorporated in the emulsion layer", is not, in Rudolph's opinion, a term of art. He offered a construction based upon the ordinary meaning of the words. Battye knew of nothing in photographic literature generally which would explain the use of the term "image dyes" as specific to any one process.

He also suggested an ordinary English translation in terms of "any dyes which

contribute to the construction of a photographic image". He expressed the opinion that the dye couplers and sensitivity dyes in the Agfa paper were both within that

meaning. Thomson and Flynn also advanced "ordinary meaning" constructions.

Professor Spring said that colour couplers could not be considered as "image dyes" because they are invisible unless chemically altered during the processing stage. Sensitivity dyes used in the paper could not be described as "image dyes" because they only aid in the ability of the film to "see" in the visible spectrum. Professor Spring said that to his knowledge the understanding he has of an image dye is shared by all participants in the photographic industry with whom he is familiar. Sakomoto argued that colour couplers and sensitivity dyes could not be considered as image dyes. Colour couplers could be termed as image dyes only after reaction with oxidised colour developer forming colour dyes. Similar evidence was given by Ashby. There was no suggestion in his evidence that there was an industry usage. That suggestion was made in evidence from Melvyn Forbes, an Executive with Kodak

His Honour found that there is a usage among those concerned with the technology of colour photography referring to substances which, having been combined, enable the human eye to see colours. One example of that usage was in a textbook which spoke of image dyes "being formed" as a result of silver development. If that usage did not exist his Honour would nevertheless have concluded that it was the ordinary meaning of the words to be supplied by their context. Absent trade

usage the choice of the words "image and "dyes" was not apt to describe colour

forming agents or colour forming materials. The expression "image dyes" was construed to include colouring matter which, chemically unchanged, is at the end of the development process, the colouring matter in and of the image. It does not, however, include a substance which makes an essential contribution to the formation

of the colouring matter in the image by participating in a chemical reaction.

The ordinary meaning of the noun "dye" refers to the effect of the class of substance thus defined and not to its colour. The Shorter Oxford Dictionary

"1. 2 colouring material or matter. 2. a liquid containing colouring matter for imparting a particular hue to cloth, etc. 3. colour or hue, esp. as provided by dyeing."

In my respectful opinion, the phrase "image dyes incorporated in the emulsion layers" ought to have been construed according to its ordinary meaning. The evidence of usage was not of a technical or special kind but rather argument about the correct application of the words used in their ordinary sense. His Honour's choice of a propounded trade usage to construe the phrase was therefore wrong in Jaw. There is nothing in the context in which the words are set to suggest a limitation or extension of their ordinary meaning. And although that ordinary meaning is a question of fact,

it accommodates the colour couplers in emulsion layers in the Agfa papers.

For the preceding reasons I agree that this application should succeed,

the decision of the Tribunal should be set aside and the matter remitted to it to be

I certify that this and the preceding twenty one (21) pages are a true copy of

the Reasons for Judgment of his Honour Justice French.

Counsel for the Applicant: Dr. J.L. Emmerson QC

Solicitors for the Applicants: Abbott Tout Russell Kennedy

Counsel for the First Respondent: Dr. P. Buchanan QC and Mr J. Lenczer

Solicitors for the First Respondent: Australian Government Solicitor

Solicitors for the Second Respondent: Louis Gross & Associates

"(1) The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact not of law: Girls' Public Day School Trust v Ereaut (1931] A.c. 12 at 25, 28; Life Insurance Co of Australia Ltd v Phillips 36 CLR 60 at 78; McQuaker v Goddard [1940] 1 All ER 471. This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence: Camden v Inland Revenue Commissioners [1941] 1 KB 641; In re Ripon (Highfield) Housing Confirmation Order, 1938. White and Collings v Minister of Health (1939] 2 KB 838 t 852; although evidence is receivable as to the meaning of technical terms: Caledonian Railway v Glenboig Union Fireclay Co [1911] AC 290 at 299; Attorney- General for the Isle of Man v Moore [1938] 2 All ER 263 at 267; and the meaning of a technical legal term is a question of law: Commissioners for Special Purposes of Income Tax v Pemsel {1891} AC 531 at 580."

At a glance

Court

Decision date

Before

Source

Judgment (107 paragraphs)

Cases Cited (10)