Cultivaust Pty Limited v Grain Pool Pty Limited

ALLEGED INFRINGEMENT OF PBR BY THE GRAIN POOL 13 By s 6 of the Grain Marketing Act 1975 (WA) ('the Grain Marketing Act'), the Grain Pool of WA ('the Grain Pool') was established as a body corporate. Under s 18A of the Grain Marketing Act, the objects of the Grain Pool were to maximise the net returns to persons ('producers') who deliver grain to a grain pool, by securing, developing and maintaining markets for grain and grain products and by minimising costs as far as practicable. Under s 18B, the functions of the Grain Pool were to control the marketing of prescribed grain that was to be exported or sold for export from the Commonwealth and to promote and market, in markets within and outside the Commonwealth, grain delivered to the Grain Pool by producers. Under s 20, barley was a prescribed grain. 14 By s 22 of the Grain Marketing Act, the Grain Pool was to be the sole marketing authority of prescribed grain that was to be exported, or sold for export, from the Commonwealth. Under s 22(2), no person, other than the Grain Pool or a person authorised by the Grain Pool, was to export a prescribed grain or sell a prescribed grain for export from the Commonwealth. Under s 22(2)(a), no person was permitted to purchase, take delivery of or receive from any person, other than the Grain Pool, a prescribed grain that was to be exported or sold for export from the Commonwealth. 15 Section 24 of the Grain Marketing Act provided that the Grain Pool was, on such terms and conditions as it thought fit, to establish and maintain a pool or separate pools for the marketing of a particular prescribed grain produced in a season. Under s 25, the Grain Pool was to receive, for the prescribed grain pool, any prescribed grain that was produced in the season to which the prescribed grain pool related. Under s 29, where the Grain Pool received grain for a pool, the grain was vested in the Grain Pool, freed and discharged from all trusts and encumbrances and, under s 31(1), the Grain Pool was authorised to sell grain so vested in it to such persons, at such prices, and on such terms, as the board of directors of the Grain Pool thought fit. 16 The Grain Marketing Act was repealed by the Grain Marketing Act 2002 (WA). By the operation of s 46 of, and item 4 of Schedule 1 to that Act, the liabilities of the Grain Pool immediately before the commencement of that Act became liabilities of the first respondent, Grain Pool Pty Limited. More particularly, item 4(2) of Schedule 1 to that Act provided that any proceeding or remedy that, immediately before that commencement, might have been brought, continued or available against the Grain Pool may, on or after that day, be brought or continued and was available against Grain Pool Pty Limited. 17 On 19 January 1990, the fourth respondent, the State of Tasmania ('Tasmania'), in the guise of its Department of Primary Industry ('the Tasmanian Department'), was granted plant variety rights under the Plant Variety Rights Act 1987 (Cth) ('the Plant Variety Act') in relation to the 'Franklin' variety of the Vulgare species of the Hordeum genus. Hordeum Vulgare is commonly known as barley. Those rights were to expire on 6 April 2009. The Plant Variety Act was repealed by s 78 of the Plant Breeder's Act but, by s 82 of the Plant Breeder's Act, the PBR granted to Tasmania under the Plant Variety Act continue to have effect as if those rights had been granted under the Plant Breeder's Act. By an agreement made on 31 January 1992 between Tasmania and the appellant, Cultivaust Pty Limited ('Cultivaust'), Tasmania granted to Cultivaust the exclusive right to sell and produce Franklin barley throughout the world and to grant to others rights to sell and produce Franklin barley. 18 In March 1991, the crop improvement branch of the Western Australian Department of Agriculture notified the Tasmanian Department that it wished to proceed with commercial evaluation of Franklin barley for malting in Western Australia. It was agreed that two tonnes of Franklin barley seed would be supplied for such evaluation at the standard price. The Tasmanian Department stipulated that the two tonnes of Franklin barley were to be supplied on the understanding that all grain produced in Western Australia would be used for malting and none would be retained for further seed multiplication. The Western Australian Department of Agriculture agreed to abide by those terms. However, despite that arrangement, one of the producers who participated in growing trials in the 1991/1992 season retained about 10 tonnes of the 50 to 55 tonnes of Franklin barley grain harvested. The balance, as with the other Franklin barley grown in the trials, was delivered to the Grain Pool pursuant to the Grain Marketing Act. 19 In the first half of 1992, Kirin Australia Pty Ltd ('Kirin') approached the Tasmanian Department for supplies of Franklin barley for malting in Western Australia. During 1992 and in the next succeeding few years, Kirin acquired quantities of Franklin barley direct from Tasmania, totalling in excess of 16,000 tonnes over three or so years. 20 During 1992, the Grain Pool decided that it would become involved in a large scale trial of Franklin barley. Quantities of Franklin barley were supplied for the 1992 crop, largely through dealings between Cultivaust and Joe White Maltings Limited ('Joe White'). It was agreed that Joe White would procure about 200 tonnes of Franklin barley for growing trials in 1992 and the Grain Pool would be responsible for the allocation and distribution of that Franklin barley. There were also direct dealings between Cultivaust and the Grain Pool for the supply of Franklin barley for the 1992 crop. 21 Thus, from May 1992, Franklin barley was grown and harvested by producers in Western Australia and was then delivered to the Grain Pool pursuant to the provisions of the Grain Marketing Act. Over the seasons 1991/1992 to 1999/2000, the Grain Pool received and handled some 326,000 tonnes of Franklin barley, of which about 131,000 tonnes were sold to maltsters for malting for beer or whiskey. Those sales were either to Western Australian based maltsters or for export to maltsters in China, Chile, Japan and South Africa. The balance of the Franklin barley, about 195,000 tonnes of lesser quality, was sold for animal feed. The Grain Pool did not stock, offer for sale, export or sell any of the Franklin barley for the purpose of its being used to propagate further Franklin barley. 22 Neither Tasmania, nor Cultivaust on behalf of Tasmania, authorised the Grain Pool to deal with the Franklin barley grown in Western Australia in the manner described above.

THE PROCEEDING 23 On 5 May 1998, Cultivaust and Tasmania commenced a proceeding in the High Court against the State of Western Australia ('the First High Court Proceeding'), seeking declarations that certain provisions of the Grain Marketing Act were invalid because of alleged inconsistency with the Plant Breeder's Act. In August 1998, the Grain Pool commenced another proceeding in the High Court ('the Second High Court Proceeding'), challenging the constitutional validity of the Plant Variety Act and the Plant Breeder's Act. Argument in the Second High Court Proceeding took place on 5 and 6 October 1999, when judgment was reserved by the High Court. Pending a decision in the Second High Court Proceeding, the First High Court Proceeding appears to have lain dormant. However, on 24 December 1999, Cultivaust and Tasmania commenced a proceeding in the Federal Court against the Grain Pool, claiming relief in respect of alleged infringement, by the Grain Pool, of Tasmania's PBR under the Plant Breeder's Act ('the Federal Court Proceeding'). 24 On 23 March 2000 judgment was delivered in the Second High Court Proceeding. The Grain Pool was unsuccessful in its contention that the Plant Variety Act and the Plant Breeder's Act were invalid - see Grain Pool v The Commonwealth (2000) 202 CLR 479. Following that decision, Tasmania and Cultivaust applied to the High Court for joinder of the Grain Pool as a defendant in the First High Court Proceeding and for leave to amend their statement of claim in the High Court. However, on 26 April 2001, Western Australia applied to the High Court for remitter of the First High Court Proceeding to the Federal Court and, on 23 May 2001, the High Court remitted the First High Court Proceeding to the Federal Court. 25 On 29 June 2001, von Doussa J ordered that the First High Court Proceeding be heard and determined with the proceeding commenced in the Federal Court on 24 December 1999. The effect of the orders made by von Doussa J was that the Federal Court Proceeding and the First High Court Proceeding were consolidated and Western Australia became the second respondent in the consolidated proceeding. 26 On 21 May 2004, a judge of the Court ordered that the consolidated proceeding be dismissed. On 3 December 2004, the primary judge made orders as to the costs of the proceeding, including an order that Cultivaust and Tasmania pay to Western Australia its costs of the consolidated proceeding, including the costs of the First High Court Proceeding. Cultivaust now appeals from the orders made by the primary judge in the consolidated proceeding. Tasmania and the Attorney-General for the State of South Australia, who intervened, have indicated that they are willing to submit to any order that the Full Court may make, save as to costs. 27 In its defence in the consolidated proceeding, the Grain Pool relied upon the operation of the Grain Marketing Act as an answer to complaints of infringement of Tasmania's PBR. In that context, Tasmania and Cultivaust raised the question of the validity of the Grain Marketing Act, in so far as it was inconsistent with the Plant Breeder's Act. However, since the primary judge found that there was no infringement of Tasmania's PBR, it was unnecessary for his Honour to determine the question of whether there was inconsistency between the Grain Marketing Act and the Plant Breeder's Act such as would lead to partial invalidity of the former. Western Australia was a party to the consolidated proceeding in order to defend the validity of the Grain Marketing Act. 28 In the consolidated proceeding, Cultivaust and Tasmania also made allegations against the Grain Pool of breach of contract, estoppel, breach of fiduciary duty and unlawful interference with rights. The primary judge dismissed those claims and there is no ground of appeal in relation to those claims. 29 The appeal was concerned solely with the questions of whether, by offering for sale, selling, or exporting Franklin barley, or stocking Franklin barley for those purposes, the Grain Pool infringed Tasmania's PBR and whether the primary judge erred in the exercise of his discretion in ordering Cultivaust and Tasmania to pay Western Australia's costs of the consolidated proceeding. As to the first question, the appeal turns on the meaning and effect of s 18 of the Plant Breeder's Act in the circumstances outlined above.

BACKGROUND TO SECTION 18 30 Although Australia did not subscribe to the 1991 International Convention for the Protection of New Varieties of Plants until 1999, it enacted the Plant Breeder's Act in light of that Convention. A copy of the English text is set out in the schedule to the Plant Breeder's Act. By Article 30 of the Convention, each Contracting Party agreed to adopt all measures necessary for the implementation of the Convention. In particular, each Contracting Party was required to provide for appropriate legal remedies for the effective enforcement of PBR and it was understood that, on depositing its instrument of ratification, acceptance, approval or accession of, or to, the Convention, each Contracting Party was to be in a position, under its laws, to give effect to the provisions of the Convention. 31 Chapter V of the Convention deals with 'THE RIGHTS OF THE BREEDER' and contains Articles 14 to 19 inclusive, the substance of which is enacted in the provisions of Part 2 in the Plant Breeder's Act. Part 2 of the Plant Breeder's Act, which is headed 'Plant Breeder's Right', consists of ss 11 to 23 inclusive. Each of ss 11 to 23, apart from s 18, can be seen to be based on one or other of Articles 14 to 19 of the Convention. Curiously, s 18 has no counterpart in the Convention, but appears to have been enacted for a reason other than to give effect to the terms of the Convention. Interestingly, although irrelevantly for present purposes, s 18 was repealed by the Plant Breeder's Right Amendment Act 2002 (Cth). 32 Section 18 had a precursor in s 38 of the Plant Variety Act. Thus, s 38(1) relevantly provided as follows: 'Notwithstanding that plant variety rights subsist in respect of a plant variety, any person may: (a) … (b) sell plants of that variety for use as food or for another use that does not involve the growing of the plants or the production of plants of that variety; (c) sell reproductive material of plants of that variety for use as food or for another use that does not involve the production of plants of that variety; [Emphasis added] …' 33 The source of the exception constituted by s 38 is by no means clear. It may be that s 38 was introduced to pacify rural and other interests who would be concerned at the possibility that the grantee of PBR would be in a position to impose end point royalties in relation to food or food ingredients. 34 The explanatory memorandum circulated in connection with the Bill for the Plant Variety Act contained an outline that relevantly said: 'The Plant Variety Rights Bill is based on the following principles: … · Nothing in this Bill will prevent the retention of seed of protected varieties for sowing of crops or sale for human and animal consumption. Protected varieties will also be freely available for research purposes and to plant breeders for use in breeding programmes (sic).' The body of the explanatory memorandum said as follows, in relation to clause 38, which became s 38 of the Plant Variety Act: 'Specifies purposes for which registered varieties may be grown or sold without infringing the rights. The Bill does not preclude the retention of plants or reproductive material for own use. Protected varieties may also be used for research or breeding purposes but not in the commercial production of hybrid varieties. The aim of this clause is to make clear that the legislation is not intending to restrict traditional farming or home garden practices whereby seed or other reproductive material is retained for production of a subsequent crop.' That comment is headed 'Plant variety rights not to restrict sales for food, fibre, fuel, etc.', although there is no mention of food, fibre or fuel in the body of s 38. 35 In his speech on the second reading of the Bill for the Plant Variety Act, the relevant Minister said: 'Rights granted under the legislation will not extend to sale of plants with land, of reproductive material of plants as food, fibre or fuel. This will mean, for example, that a right granted over a variety of wheat will not extend to the use of that variety for bread making. Provision is made for compulsory licensing of plant varieties by the secretary to the department administering the scheme should the reasonable requirements of the public with respect to the plant variety not be satisfied by the grantee.' The latter comment by the Minister is a reference to the provision that became s 39 of the Plant Variety Act, which was the precursor of s 19 of the Plant Breeder's Act. 36 Under s 19(1) of the Plant Breeder's Act, the grantee of PBR in a plant variety must take all reasonable steps to ensure reasonable public access to that plant variety. Reasonable public access is taken to be satisfied if propagating material of reasonable quality is available to the public at reasonable prices, or as gifts to the public, in sufficient quantities to meet demand. Under s 19(3), the Secretary of the relevant Department is authorised to license a person whom the Secretary considers appropriate to sell propagating material of plants of a plant variety covered by PBR or to produce propagating material of plants of that variety for sale during such period as the Secretary considers appropriate and on such terms and conditions, including the provision of reasonable remuneration to the grantee of the PBR, as the Secretary considers would be granted by the grantee in the normal course of business. 37 Between August and September 1990, a study was undertaken by Dr Noel Byrne of Queen Mary and Westfield College, University of London, pursuant to arrangements made with the Commonwealth Ministers for Primary Industries and Energy and Industry, Technology and Commerce. The study concerned the legal protection for plants in Australia under patent and plant variety rights legislation. In his report of 7 November 1990, Dr Byrne referred to s 38 of the Plant Variety Act as 'the farmer's exemption' and recommended that the farmer's exemption in s 38(1) should be reviewed in the near future. Dr Byrne characterised the farmer's exemption as relating to 'farm saved seed'. That, of course, is not a specific subject of s 38 of the Plant Variety Act, which does not refer in terms to farm saved seed or other language similar to that found in s 17 of the Plant Breeder's Act. The epithet 'the farmers exemption', however, may provide a hint as to the political source of the exemption contained in s 38, as re-enacted in s 18 of the Plant Breeder's Act. 38 The explanatory memorandum circulated with the Bill for the Plant Breeder's Act contained an outline of the Bill. The outline relevantly stated: 'The Bill provides for, subject to certain defined exemptions and extensions, the grant of an exclusive right to the following acts of exploitation of the propagating material of new varieties… [the paragraphs of s 11 then follow]. The outline makes no mention of the food exemption. However, the commentary in the body of the explanatory memorandum says that clause 18 '[p]rovides that the breeder's rights are not infringed when propagating material is used as a food, food ingredient or fuel or for any other purpose not leading to or involving the production or reproduction of propagating material.' 39 In his speech on the second reading of the Bill for the Plant Breeder's Act, the relevant Minister made no reference to the food exemption, although he referred to an exhaustive inquiry in 1986 by the Senate Standing Committee on Natural Resources in relation to plant breeder's rights and observed that the Senate Standing Committee on Rural and Regional Affairs was of the view that the Bill was not a major departure from the Plant Variety Act. The aim of rewriting and renaming the legislation was said to be principally to conform to the 1991 revision of the Convention. APPLICATION OF S 18 IN THE CIRCUMSTANCES OF THE PRESENT CASE. 40 Section 18 is predicated on there being an act referred to in s 11 in relation to propagating material of a plant variety in respect of which PBR subsists. Its effect is that, if that act satisfies the description in s 18(1)(a) and s 18(1)(b) then, notwithstanding that the act is one the exclusive right to do which is comprised in the PBR, the act will not infringe the PBR. Section 53 of the Plant Breeder's Act provides that, subject to ss 16, 17, 18, 19 and 23, PBR in a plant variety is, relevantly, infringed by a person doing, without authorisation from the grantee of the right, an act referred to in a paragraph of s 11 in respect of the variety. 41 The acts complained of by Tasmania and Cultivaust are acts referred to in s 11 that were done in relation to the propagating material of plants of the Franklin barley variety. Section 18(1)(a) is therefore satisfied. The critical provision is s 18(1)(b). That is to say, the question is whether any of the acts complained of, each of which is referred to in s 11, constitutes an act 'that enables the use of [Franklin barley] as a food, food ingredient or fuel', or, alternatively, whether any such act is an act 'that enables the use of [Franklin barley]… for any… purpose that does not involve the production or reproduction of the [Franklin barley]'. 42 The first argument raised by Cultivaust is whether the Grain Pool, by offering Franklin barley for sale, selling Franklin barley, exporting Franklin barley or stocking Franklin barley for one of those three purposes, enabled the use of that Franklin barley as a food or food ingredient: that is to say, whether the word 'enables' in s 18(1)(b) has any significance. The word 'enables' did not appear in s 38 of the Plant Variety Act and that suggests that no particular significance should be attached to it. 43 The word 'enable' may be taken to mean 'make possible' or 'give the means for' (see Shorter Oxford and Macquarie Dictionaries). Certainly, after the Grain Pool sold or exported Franklin barley, that Franklin barley was used as a food or food ingredient. However, the mere offering of Franklin barley for sale or the stocking of Franklin barley for any of the three purposes, did not, of itself, make possible, or give the means for, the use of that Franklin barley as a food or food ingredient. In one sense, while the sale or export of the Franklin barley by the Grain Pool enabled the buyer to use the Franklin Barley as a food or food ingredient, the Franklin barley could equally well have been used by the Grain Pool as a food or food ingredient. That is to say, the relevant acts of the Grain Pool did not in any sense make the Franklin barley better able to be used as a food or food ingredient. It is not a case of post hoc ergo propter hoc. 44 If the Grain Pool undertook the conditioning of Franklin barley, within the meaning of that term as defined in s 3(1), one could readily conclude that that act of conditioning might enable the use of that Franklin barley as a food or food ingredient. That is to say, the act would involve, cleaning, coating, sorting, packaging or grading of the Franklin barley, or other similar treatment, for the purpose of preparing the Franklin barley for propagation or sale. However, it is only conditioning for propagation that constitutes an act referred to in s 11. As indicated above, conditioning for sale is not an act referred to in s 11. 45 Having regard to the fact that s 18 was not intended to change the substance of s 38 of the Plant Variety Act, the better view is that 'enables' is to be given no particular significance. It does not mean that there must be some causal link between the act and the Franklin barley becoming capable of use as a food or food ingredient. Rather, it means simply that an act referred to in s 11, which is done in relation to Franklin barley, such as sale or export, is followed by the use of the Franklin barley as a food or food ingredient. Understood in that way, s 18(1)(b) was satisfied in relation to the Franklin barley sold, offered for sale, exported or stocked for those purposes, by the Grain Pool. 46 Another argument advanced on behalf of Cultivaust and Tasmania involves the interplay between s 14 and s 18. Cultivaust says that s 18 does not apply to harvested material in relation to which s 11 operates pursuant to s 14(1) as if it were propagating material. Rather, Cultivaust says, harvested material in s 14, and products from harvested material in s 15, are treated as separate and different from propagating material and it is only the latter that is the subject of s 18. 47 Sections 14 and 15 have a deeming effect. That is to say, s 11 operates in relation to harvested material as though it were propagating material, even though the harvested material is not in fact propagating material. However, the deeming effect operates only if the three prerequisites are satisfied. Even so, the deeming effect is qualified by the operation of s 14(2), which depends upon the operation of s 17(1). 48 Section 17 operates to provide an excuse to a farmer in circumstances where, but for the operation of s 17, an act of the farmer referred to in paragraph (a) or (b) of s 11 would be an infringement of PBR. Thus, relevantly for present purposes, where a farmer in Western Australia, who had legitimately obtained Franklin barley from Cultivaust, harvested the crop from the planting of that Franklin barley, the farmer could condition the crop for the farmer's use for reproductive purposes and could reproduce further Franklin barley. The harvested material, in so far as it was required by the farmer for the farmer's own use for reproductive purposes, would not be subject to the deeming operation of s 14(1). That is the effect of s 14(2). 49 Cultivaust contends that the policy evinced by ss 17 and 14 is to provide an exception for farmers, in the using of propagating material or seed retained from a crop, for the purpose of replanting and reproducing. Cultivaust contends that s 18 operates only in relation to that propagating material or seed. Cultivaust says that Franklin barley produced from second generation crops in Western Australia, grown from farm seed saved under s 17 of the Plant Breeder's Act, is 'harvested material' within s 14. It says that the general exemption from infringement in s 18 does not apply to harvested material referred to in s 14. Cultivaust points to the fact that s 18 is limited to acts done in relation to the propagating material of plants of that variety. Because the harvested Franklin barley is treated as harvested material, it is not to be regarded, for the purposes of s 18, as propagating material. 50 Harvested material is assumed, by s 14, not to be propagating material otherwise the deeming effect of s 14 would be unnecessary. That is to say, harvested material is not limited to the reproductive part of a plant. Once Franklin barley is harvested, it is to be treated no longer as propagating material, but as harvested material. Notwithstanding that, having regard to the nature of grains, the harvested material is in fact propagating material, the policy evinced by s 14 is to treat harvested material as being something different from propagating material. Once the harvested Franklin barley is treated as harvested material, assumed by definition not to be propagating material, it is to be treated, for all purposes, including s 18, as not being propagating material. 51 Cultivaust contends that such a construction is consistent with the purpose of enabling the grantee of PBR to exercise that right by imposing an end point royalty. That object would be undermined, so Cultivaust says, by the alternative construction. The alternative construction is that harvested material is to be treated as propagating material for the purposes of s 18. Cultivaust says that, if farmers continue to sell propagating material for purposes other than production and reproduction, the grantee of the PBR would be precluded from obtaining any commercial benefit from the PBR. 52 Cultivaust also points to the provisions of s 18(1)(b)(ii), which would excuse any act that enabled the use of Franklin barley for any purpose that did not involve the production or reproduction of the propagating material. It says that that criterion is premised upon the assumption that the production or reproduction of the propagating material has occurred with the authorisation of the grantee of the PBR. Sections 14 and 15, on the other hand, operate only where propagation has occurred without the authorisation of the grantee, in reliance upon the farm saved seed exception is s 17. 53 Cultivaust's argument ignores the extent of the operation of the Plant Breeder's Act. For whatever reason, the Parliament clearly intended that s 18 would have an effect in relation to food or food ingredients. In relation to a plant variety such as Franklin barley, where the harvested material is also propagating material, s 18 constitutes a very significant derogation from PBR. However, there are other plant varieties that are of different character. Examples would be grapes, apricots and the like, where the harvested material is something other than the propagating material. Section 18 would not have such a significant operation in relation to plant varieties of that character. It is only where the propagating material itself is used as food or food ingredient that the exception under s 18 operates. 54 Finally, Cultivaust points out that Article 15 of the Convention, on which s 17 is based, would be more faithfully implemented by limiting the operation of s 18 in the way contended for. Article 15(2), which is expressed by the Convention as an optional exception, provides that contracting parties may, within reasonable limits, restrict a plant breeder's right in relation to any variety in order to permit farmers to use, for propagating purposes on their own holdings, the product of the harvest that they have obtained by planting the protected variety on their own holdings. However, that contention ignores the indisputable historical fact that s 18 was inserted by the Parliament as an additional exception that was not contemplated by the Convention. 55 It follows that s 18 had the effect that the acts of the Grain Pool about which Cultivaust complains did not infringe Tasmania's PBR in Franklin Barley. In view of that conclusion concerning the operation of s 18, it is not necessary to express any opinion on the operation of s 23(1). While that provision might have been of significance in relation to a claim against a producer of Franklin barley, it would have no application to the Grain Pool, in circumstances where the acts referred to in s 11 engaged in by the Grain Pool did not involve 'further production or reproduction' of Franklin barley. The primary judge dealt with s 23 in a manner in that appears to be unexceptionable. 56 In dealing with s 14 of the Plant Breeder's Act the primary judge considered the meaning of s 14(1)(b), which is in the same terms as s 15(1)(b). The primary judge, in dealing with whether Tasmania had a 'reasonable opportunity to exercise the grantee's right in relation to Franklin barley produced or reproduced without its authorisation', the primary judge characterised Tasmania's 'rights'[sic]as 'exclusive, but negative' and said that the exercise of 'those rights' [sic] involved, if necessary, action under s 54 of the Plant Breeder's Act. However, s 54 simply provides that that an action for an infringement of PBR in a plant variety may be begun in the Federal Court. 57 His Honour's characterisation may involve a confusion of the concept of exercising the right that constitutes PBR with the concept of enforcing rights that arise under the Plant Breeder's Act by reason of infringement of the right, conferred by the Plant Breeder's Act, that constitutes PBR. That is to say, if s 14(1) be relevant, the primary judge may have misconstrued s 14(1)(b) in failing to distinguish between the grantee's right under s 11 and the secondary rights that arise by reason of infringement of that right, as provided for in s 53(1). In the light of the conclusion reached above, it is unnecessary to resolve that question but it should not be thought that his Honour's view of ss 15(1)(b) and 16(1)(b) would necessarily be endorsed if the question arises in the future.

COSTS 58 The primary judge characterised the First High Court Proceeding as being 'anticipatory' of success by Cultivaust and Tasmania in establishing infringement, by the Grain Pool, of Tasmania's PBR in relation to Franklin barley and of the Grain Pool's seeking to rely upon its powers and functions under the Grain Marketing Act as an answer to such infringement. While his Honour erroneously referred to the First High Court Proceeding as having been instituted in 2001, that error appears immaterial. 59 At the hearing before the primary judge, Western Australia appeared by counsel, instructed by the Crown Solicitor of Western Australia and made submissions on the Constitutional questions raised by Cultivaust and Tasmania. Western Australia argued that there was no inconsistency between the Grain Marketing Act and the Plant Breeder's Act. That involved including submissions as to the proper construction of the relevant provisions of the Plant Breeder's Act. Western Australia did not adduce any evidence or participate in cross-examination of any of the witnesses, except to the extent that it was necessary to establish the function of the Grain Pool. Western Australia made no submissions as to the factual findings that the primary judge should make or about any of the causes of action prosecuted by Tasmania and Cultivaust against the Grain Pool. 60 The primary judge considered that no significant additional costs were incurred as a consequence of the consolidation of the two proceedings. However, his Honour considered that, by reason of the consolidation, Western Australia was required to be involved in the consolidated proceeding to the extent indicated above. 61 Because the primary judge concluded that was that there was no infringement of PBR by the Grain Pool, it was not necessary for his Honour to address the Constitutional questions. Thus, Western Australia was successful in resisting the relief claimed against it, albeit because it was unnecessary for his Honour to consider questions going to the validity of the Grain Marketing Act. His Honour considered that Western Australia did not adopt a role that went beyond attending to its proper interests and there was no suggestion that the conduct of Western Australia unduly prolonged the course of the hearing. His Honour considered that there was no reason to depart from the usual rule that costs follow the event and, accordingly, ordered Tasmania and Cultivaust to pay Western Australia's costs of the consolidated proceeding as indicated above. 62 The question is whether, in those circumstances, the exercise of judicial discretion by the primary judge miscarried. Given the issues raised in the consolidated proceeding, there is no basis for saying that the primary judge erred in ordering that costs follow the event. 63 It was central to Cultivaust's case on the appeal that his Honour ought to have, but did not decide, the Constitutional questions and that that was a separate and free standing claim and not, as his Honour said, a consequential one. However, in its written submissions in reply to the Full Court, Cultivaust eschewed any contention that it would be necessary for the Full Court to determine the question whether there was inconsistency between the Plant Breeder's Act and the Grain Marketing Act in order to determine the appeal. Indeed, an amended notice of appeal was filed expressly excising any such claim. Western Australia adopted the same position and submitted that the Full Court should not resolve the constitutional question. The parties to the appeal accepted that, only if the appeal on the substantive issues were upheld and infringement of Tasmania's PBR were established, would it then be necessary to consider the Constitutional questions. 64 The question of Western Australia's costs of the appeal was the subject of further submissions after the conclusion of oral argument on the appeal. Western Australia asked for its costs of the appeal, in the event that the appeal be dismissed as against Western Australia. Cultivaust, however, contended that Western Australia should not be entitled to any order for costs incurred: · by reason of its legal representatives travelling to Adelaide in order to attend in person on the hearing of the appeal; · in attending on the two full days of hearing, as opposed to the time during which the ground of the notice of appeal relating to costs was argued; · in connection with the preparation of written and oral submissions on the Constitutional questions. 65 The hearing of the appeals was fixed to commence on Monday, 15 August 2005 at 10.15 am Adelaide time. Cultivaust says that it made it clear, in its grounds of appeal, that it did not seek declaratory relief on the Constitutional questions independently of its claim for damages for infringement of PBR, although it reserved its rights to raise the Constitutional questions in response to matters that might arise on the appeal. In a letter of 8 February 2005 from Cultivaust's solicitors to the solicitors for Western Australia, the following was said: 'These grounds are included only to ensure that the question of whether [the Grain Marketing Act] is inconsistent with [the Plant Breeder's Rights Act] ('the s 109 Issue') is raised to the extent necessary to determine [Cultivaust's] claim for damages for infringement of plant breeder's rights. Accordingly, [Cultivaust] does not seek to have [the grounds relating to the Constitutional issue] determined by the Full Court separately from the claim for damages. Equally, and for the same reason, the declaratory relief referred to in [that part of the notice of appeal dealing with orders sought] is sought only in the event, and to the extent, that the Court should find it necessary to determine the s 109 issue in order to determine the claim for damages.' 66 In its written submissions to the Full Court of 5 August 2005, Cultivaust said: '[G]iven the repeal of [the Grain Marketing Act] and amendments to [the Plant Breeder's Act] after judgment below was reserved, no complaint is made in this appeal of the failure by the trial judge to award declaratory relief on the constitutional issue, except to the extent (if any) that it should prove necessary to determine that question in order to determine the claim for damages in any event. … In this regard, it is noted that the trial judge did not determine the quantum of any damages for infringement in the event that, contrary to his findings, the [Grain Pool] did not infringe PBR. If [the Grain Pool] should maintain its claim that Cultivaust and Tasmania failed to mitigate their losses by obtaining a permit under the [Grain Marketing Act], Cultivaust reserves its right to maintain its contention that the [Grain Marketing Act] was invalid to that extent…' 67 In its written submissions to the Full Court of 9 August 2005, Western Australia dealt in some detail with the Constitutional questions. Grain Pool Pty Limited adopted Western Australia's submissions on those questions. In its submissions to the Full Court in reply, filed on Friday, 12 August 2005, Cultivaust relevantly said: '[Cultivaust] does not contend that it is necessary for this Court to determine the question whether there is an inconsistency between the [Plant Breeder's Act] and [the Grain Marketing Act] in order to determine this appeal, as is apparent from the terms of the notice of appeal. This is also the position adopted by [the Grain Pool and Western Australia]. Indeed, Western Australia and [the Grain Pool] submit that the Court should not resolve the constitutional questions in these circumstances. Accordingly, it is unnecessary for [Cultivaust] to address Western Australia's submissions… that there is no inconsistency or, alternatively, that a limited inconsistency only exists.' 68 On that day, Cultivaust's solicitors sent a facsimile to the solicitors for Western Australia saying: 'It is clear that the parties agree that there is no live constitutional issue between the parties raised on the appeal. We note your earlier advice as to your intention to attend on the appeal in Adelaide, however, we confirm our view that we would be prepared for the appeal on the costs issues with [Western Australia] to be determined on the papers. Alternatively you may wish to reconsider the possibility of a video link or telephone link for the costs issues.' Western Australia's solicitors responded by facsimile, dispatched late in the evening of 12 August 2005, saying: '…we do not consider that it would be appropriate for us not to attend the hearing… If you do intend to formally abandon the grounds of appeal raising the constitutional issue we may be prepared to reconsider our position…' 69 If the only question in issue between Cultivaust and Western Australia on the hearing of the appeal was the question of Western Australia's costs of the trial before the primary judge, it would be difficult to justify expenditure for the Solicitor General for Western Australia to travel to Adelaide to argue that question. However, the issue now raised is whether the Constitutional questions remained live for the purposes of the appeal, despite the exchanges referred to above. 70 The question of the relief to which Cultivaust would have been entitled, if it succeeded on the appeal in relation to infringement of PBR, is not a question that would have been dealt with by the Full Court. That question would have been remitted to the primary judge for determination. The Constitutional questions would arise only if, on an enquiry as to damages or the taking of an account of profits, Grain Pool Pty Limited maintained the position that Cultivaust failed to mitigate its loss by obtaining a permit under the Grain Marketing Act. Thus, the Constitutional questions would not have arisen on the appeal. In those circumstances, it is difficult to see why Western Australia needed to be represented on the hearing of the appeal by its Solicitor General. 71 On the other hand, Western Australia was entitled to be present throughout the hearing of the appeal, as a party to the proceeding. Essentially for the reasons indicated above in dealing with the costs of the trial, Western Australia is entitled to its costs of the appeal, although the assessment of costs would be a matter for the relevant taxing officer. However, there appears to be no basis for the costs of senior counsel travelling from Perth to Adelaide to be allowed in those costs. Ultimately, however, that is a matter for the judgment of the taxing officer, if it becomes relevant. However, Western Australia's costs should not include any costs of the submissions on the Constitutional questions. 72 A further issue was raised on the hearing of the appeal concerning the costs of the appeal books. The appeal books consist of nine volumes, four of which contained exhibits to witness statements. Three of the remaining books consist of witness statements and oral evidence. Only several pages of those seven volumes were referred to in the course of the hearing. It is clear that there was a very significant quantity of material included in the appeal books that was quite unnecessary for the resolution of the issues raised on appeal. Cultivaust contends that it should not be required to bear the bulk of the costs of the appeal books as much of this content was included at Grain Pool Pty Limited's insistence and against its wishes. 73 The Court has been referred in supplementary submission to exchanges of correspondence between the solicitors for the parties over a period of almost six months in connection with the preparation of the appeal books. It is unnecessary to go into those exchanges in detail. Suffice it to say for present purposes they reveal instances of lack of cooperation or explanation where these reasonably could have been expected, of failure to make timely and reasonable inquiry which may have limited the needless inclusion of materials in the appeal books, and of some posturing. 74 Grain Pool Pty Limited acknowledges that the evidentiary material in all but two of the appeal books was included eventually at its request. Nonetheless, it ascribes the need for that material: (a) to Cultivaust's failure to explain adequately why it wished to include an extract of an expert's report in the appeal book (which led in the event to the inclusion of the evidence and reports of two experts which made up almost two volumes of the appeal books); and (b) to Cultivaust's failure to particularise properly two of its grounds of appeal (which resulted in the inclusion of the evidence of six witnesses). 75 It is clear from the correspondence that the parties had acquiesced in the inclusion of the reports of their respective experts by late March 2005, Cultivaust apparently accepting then that it could not put in only part of its expert's report though it indicated it could not see the relevance of Grain Pool Pty Limited's expert's report. For its part, Grain Pool Pty Limited later objected to the inclusion of the report of Cultivaust's expert on the ground that it was irrelevant to the appeal. It was only in June that Cultivaust appears to have hardened in its attitude to the need for the inclusion of either report other than a few pages of the report of its own expert. At this stage (i.e. by letter of 10 June 2005) it foreshadowed that it could raise the issue of costs of the appeal book at the appeal. The appeal books had apparently been prepared by this time. 76 The needless inclusion of material in appeal books is a matter of growing concern in this Court. The present appeal demonstrates starkly how little of what has been included was necessary for the orderly disposition of the matters actually in issue. Neither Cultivaust nor Grain Pool Pty Limited is free from fault in permitting this state of affairs to occur. Cultivaust, as the unsuccessful party, should pay Grain Pool Pty Limited's costs. Nonetheless it is appropriate that the costs of the appeal books should be borne equally by Cultivaust and Grain Pool Pty Limited.

CONCLUSION 77 The appeal should be dismissed. Cultivaust should pay the costs of the appeal of Grain Pool Pty Ltd, except to the extent of any costs incurred in relation to seven volumes of the appeal books. Grain Pool Pty Limited should pay one half of Cultivaust's costs of the preparation of those volumes. Cultivaust should pay Western Australia's costs of the appeal, on the basis of junior counsel in relation to the question of the exercise by the primary judge's discretion as to costs. There should be no order as to the costs of the Constitutional questions. There should be no order as to the costs of the Attorney-General for South Australia or of Tasmania. I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn, Emmett & Bennett.

Associate: Dated: 28 October 2005 Counsel for the Appellant: Dr M Perry and Mr T Cox

Solicitors for the Appellant: Corsers Solicitors

Counsel for the First Respondent: Mr KJ Martin QC and Mr JA Thomson

Solicitors for the First Respondent: Mallesons Stephen Jaques

Counsel for the Second Respondent: Mr RJ Meadows QC and Ms KH Glancy

Solicitors for the Second Respondent: Crown Solicitor for the State of Western Australia

Date of Hearing: 15 and 16 August 2005

Date of Judgment: 28 October 2005