RELATED KNOWLEDGE
Some Australian legislation comes, ultimately, from international agreements in English and French, with both texts regarded as "equally authentic". The practical difficulty this sometimes presents, however, is that both texts can on their face appear to have different meanings.
In Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd [2020] HCA 2, the High Court held that because the English text is presumed to have the same meaning as the French, "a meaning that gives simultaneous effect to all of the terms of the English text and of the French text is to be preferred to a meaning that does not".
But that does not provide a complete answer to all questions that can arise. The Federal Court was recently asked to consider the application of the High Court's reasoning to a tariff dispute involving the classification of pipes used in fire sprinkler systems in high rise buildings. In doing so it was required to have regard to a translation of the French text of the international convention from which Schedule 3 of the Customs Tariff Act 1995 was derived (Comptroller-General of Customs v Smoothflow Australia Pty Ltd [2021] FCA 144).
Tubes, pipes, and anti-dumping measures
Smoothflow imported pipes into Australia that were designed for use in fire hydrants and fire sprinkler systems within buildings. These pipes could also be used for fire hydrants not associated with buildings if appropriate modifications were made.
The Comptroller-General classified the pipes as “tubes ... of iron or steel” under heading 7306. Smoothflow paid duty under protest and applied for a review of the decision in the Administrative Appeals Tribunal, contending that the pipes were classifiable to heading 7308. While the difference in the applicable rate of duty was relatively small, the classification was relevant to the way in which dumping duty was being levied as there are anti-dumping measures in place for goods classifiable to heading 7306.30.00.
The Tribunal agreed with Smoothflow's contentions. The Comptroller-General appealed the decision to the Federal Court, which upheld the classification, notwithstanding its finding that the Tribunal had erred . In doing so, the Court provided useful practical guidance on the way in which the translation of relevant headings in Schedule 3 of the Act ought to be undertaken in light of the High Court's decision in Pharm-A-Care where there is ambiguity between the English text enacted and its foreign equivalent.
Why French is relevant to the construction of an Australian statute
The Act is part of an international approach to tariff classification that is intended to be harmonized; the treaty from which Schedule 3 derives has been reproduced in English and French, with both texts regarded as "equally authentic". The heading in dispute (7308) was:
Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns), of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel
Constructions et parties de constructions (ponts et éléments de ponts, portes d’écluses, tours, pylônes, piliers, colonnes, charpentes, toitures, portes et fenêtres et leurs cadres, chambranles et seuils, rideaux de fermeture, balustrades, par exemple), en fonte, fer ou acier, a l’exception des constructions préfabriquées du n° 94.06; tôles, barres, profilés, tubes et similaires, en fonte, fer ou acier, préparés en vue de leur utilisation dans la construction
The Tribunal had accepted that the translation contended for by the Comptroller-General (and agreed by Smoothflow) was:
"Structures and parts of structures (bridges and bridge sections, lock gates, towers, pylons, pillars, columns, framework, roofing, doors and windows and their frames, window-sills and thresholds, shutters, balustrades, for example) in cast iron, iron or steel, except for prefabricated structures as per n° 94.06; sheet metal, bars, profiles, tubes and similar, in cast iron, iron or steel, prepared for use in the construction industry." [emphasis added]
It had then sought to apply the reasoning in Pharm-A-Care to reconcile this with the English text for the purpose of classifying the pipes by asking whether they were "prepared for use in connection with the construction of structures". It held they were.
What did the French and English actually mean?
The Court however held that this construction did not find a common meaning between the English text and the translation of the French text. Instead it was inconsistent with both because it broadened the meaning of the English and narrowed the meaning of the translation of the French.
At the outset of the hearing the Court, putting to one side the translation that had been relied on in the Tribunal, noted that it was not clear that the French text was any different from the English text in the way the parties and the Tribunal had proceeded to date. The Court also noted that the translation that had been accepted had been obtained without regard to relevant context.
How should the translation have been done?
While the translator was asked whether she agreed that the words “dans la construction” were capable of meaning “in the building industry” or “in the building sector” she was not asked if that is what the words should be understood as meaning in the relevant heading. Her notes appeared to suggest she "may not have turned her attention to the possibility that the word “la construction” was being used harmoniously throughout the heading, as might be expected".
Instead she focused on whether the words in issue were capable of bearing a particular meaning, as opposed to whether they did in fact bear that meaning in context. Notably, she was not asked to consider the English text in arriving at her translation. Justice Thawley noted this was odd for the reasons observed in Pharm-A-Care, namely that "a treaty interpreter should seek the meaning that gives effect, simultaneously, to all the terms of the treaty, as they are used in each authentic language”.
Here the meaning of the word “la construction” depended on context which included the English text, particularly given the object of the translation was to determine the meaning of the French heading from a treaty which contains equally authentic French and English versions. The translation should not therefore have been undertaken in a vacuum, particularly where the English and French versions had been drafted iteratively with the intention of having a common meaning.
"Prepared for use in structures"
Once it was settled that the English text and French text were not materially different, the task came to determine whether "prepared for use in structures" required that the pipes be load bearing, as had been contended by the Comptroller-General. Justice Thawley held that the terms of heading 7308 did not require that a tube be load-bearing.
Having regard to the Tribunal's findings of fact Justice Thawley noted that "The pipes were prepared for the purpose of being installed in buildings as part of the relevant building's fire protection system. Whether the pipes were prepared to be used as part of a fire extinguishment structure for installation in a building or prepared for use in the building itself as part of its structure, they were prepared for use in structures."
The Tribunal's errors did not mean that the Comptroller General's appeal was allowed. The error was not shown to be material to the decision of the Tribunal such that the decision in fact made by the Tribunal would have been different if the error had not occurred.
Mind your Ps and Qs
The decision provides useful practical guidance on the way in which the translation of an international convention that is "equally authentic" in different languages (here, French and English) should be arrived at where there is an apparent debate involving ambiguity between the English text enacted in Australian law and its foreign equivalent.
Importers of products into Australia should also be wary of the possible ambiguities that may exist in headings in Schedule 3 of the Act because of the reconciliation that is required to be undertaken of both the English text enacted in the Act and the equally authentic French text set out in the international convention from which Schedule 3 is derived.
Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021
Importers of similar goods should be aware that the Government has sought to reverse the practical effect of this decision by the recent passing of the Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Act 2021. This will insert an Additional Note in Schedule 3 that makes clear that heading 7308 does not include "tubes, pipes and the like prepared for the conveyance of fluids (including water, oil and gas)." The relevant part will take effect on 29 March 2021 and will apply to goods imported after that date or goods imported into Australia before that date, where the time for working out the rate of import duty on the goods had not occurred before that date.
If you have any questions about the implications of the decision or would like advice on these issues, please contact Clayton Utz.
Note: Clayton Utz acted for both Pharm-A-Care Laboratories Pty Limited in Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd and Smoothflow in Comptroller-General of Customs v Smoothflow Australia Pty Ltd.