79 Mr Hutley's first submission is that the Court must look only at the "operative part" of the ABA, namely, clauses 1 to 28; it cannot look at the title page and, in particular, it cannot have regard to the words "For all Barley with the exception of Barley meeting NSW Malting Barley Standards" , or to the words at the foot of each page "Authorised Buyers Agreement - Feed Barley" . The Court cannot look at these words, Mr Hutley says, because RB has agreed to accept as the terms and conditions of its appointment as an authorised buyer only those terms and conditions in clauses 1 to 28, and the Board has appointed RB as an authorised buyer only upon the terms and conditions contained in those clauses. Clauses 1 to 28, he says, contain no express prohibition or limitation as to the grade, class or description of the barley which may be purchased by RB as an authorised buyer.
80 I am unable to accept this submission. It adopts a formal, literalistic approach to the construction of contracts rather than a purposive approach. The formal, literalistic approach has no place in the modern law of contract. Portia's literalistic submission as to the true construction of Shylock's bond with Antonio may have found favour with the Duke's Court in Venice, but it would have fallen on deaf ears in the High Court of Australia: see Wilson v Anderson (2002) 190 ALR 313, at para.9.
81 As is manifest, the ABA is unskilfully drawn: the inconsistency in referring to "barley" with an upper and a lower case initial is but one of many instances of clumsiness. The document contains no definition of "barley" in the operative part, as one might have expected in a well-drawn document but, on the other hand, the title page is very evidently intended to convey to an applicant for authorised buyer status under s.40 of the Act just what particular authority to buy is to be conferred if the applicant completes the document and the Board approves the application in terms. In my opinion, it is clear from the document, looked at as a whole, that it is intended for use only where the applicant is seeking authorised buyer status in respect of barley which does not meet the Malting Barley Standards, i.e. feed barley. Consequently, the agreement which comes into existence upon the Board's acceptance of that application must be understood as applying only to feed barley.
82 Next, Mr Hutley submits that clause 2 of the ABA is inconsistent with the incorporation in the contract of the title page as containing a definition of "barley" as feed barley. Why, he asks, does clause 2 expressly prohibit the sale of barley to maltsters if, on the proper construction of the ABA, malting barley cannot be acquired under the agreement in the first place? Clause 2 supports the construction, says Mr Hutley, that the ABA authorises the purchase of all varieties of barley, including malting barley, and is concerned only to prohibit any malting barley acquired from being on-sold to maltsters.
83 I am unable to accept this submission for two reasons. First, clause 2 may be superfluous in light of the exclusion of malting barley from the authority to buy conferred by the ABA, but that is not a strong indication that the plain words of the title page must be disregarded. Superfluity would not be surprising in a document so ill drawn. The evidence suggests that what has happened is that a prior version of the ABA, which authorised the purchase of all types of barley but contained the restriction in Clause 2, has been modified to exclude authority to purchase malting barley by the simple but clumsy expedient of inserting an overall definition on the title page but with no careful consideration as to the amendments which might be necessary to make the document otherwise consistent.
84 The second reason is, as submitted by Grainco, that clause 2 may not be superfluous at all. The Grainco Malting Barley Standards are not necessarily the malting barley standards applicable elsewhere in Australia. It may be in the interests of Grainco and the Board to prevent or control the sale of barley which, although not meeting NSW Malting Barley Standards, is nevertheless acceptable to maltsters outside New South Wales. In short, if the ABA on its proper construction prohibits the acquisition of barley meeting the Malting Barley Standards, I am unable, as the evidence stands, to conclude that there is no circumstance in which clause 2 can have any work to do.
85 Thirdly, Mr Hutley submits that the ABA must be construed as effecting a purpose which the Board can lawfully carry out. Section 40(2) of the Act, he says, empowers the Board to authorise the purchase only of a "commodity", such as "barley" and not "parts" or "types" of a commodity, such as "feed barley". Because the Board could not lawfully authorise the purchase of feed barley alone, he submits, the ABA should be construed by ignoring the words on the title page and in the footers, so that the reference to "barley" throughout the operative part of the agreement must be construed as meaning all types of barley.
86 I am unable to accept this submission. In my view, the Act empowers the Board to authorise a buyer to purchase certain grades, classes or descriptions of a commodity, such as "malting barley" or "feed barley", as well as barley of every grade, class or description. The functions conferred on the Board with respect to the marketing of grains are expressed in the widest possible terms by s.32 and s.33 and by the definition of "marketing" in s.3(1). Further, by s.36 the Board is empowered to "establish grades, classes or descriptions of a commodity and … to fix the price at which a grade, class or description of a commodity may be sold by wholesale" .
87 In the light of these very broad functions and powers it can be seen that it may well be desirable for the Board to authorise buyers to purchase certain grades, classes or descriptions of a commodity on certain terms and to authorise the purchase of other grades, classes or descriptions of a commodity on other terms, thereby establishing or monitoring control over and stabilising the fixing of prices at which these grades, classes or descriptions of the commodity may be sold by wholesale.
88 Further, s.40(2) authorises a buyer to purchase any of the commodity which a producer is entitled to sell. A producer is entitled to sell a commodity under s.46(1)(b) to merchants, such as authorised buyers, "in such cases and on such terms and conditions as [the Board] thinks fit" . The Board, in my opinion, therefore has a wide power to impose terms and conditions on producers, including terms as to what grades, classes or descriptions of a commodity they are entitled to sell to authorised buyers.
89 Correspondingly, under s.40(2) the Board must be empowered to impose conditions upon the appointment of a person as an authorised buyer so as to make clear that the authority to purchase is expressly limited to particular grades, classes or descriptions of a commodity which the Board has authorised producers to sell pursuant to terms imposed on those producers under s.46(1). That power is implicitly recognised by the words in s.40(2) "subject to and in accordance with the order appointing the person" . Those words would be pointless if it were beyond power for the Board to impose any conditions at all on an appointment under subsection (1).
90 When this analysis of the text of the ABA is seen in the light of the surrounding circumstances to which I have referred in paragraphs 69 to 75, the conclusion that the ABA does not authorise the purchase of malting barley is, in my opinion, irresistible.
The background and genesis of the JVA