CONTROLLING AUSTRALIA'S LIVE ANIMAL EXPORT MARKET
THE LIVE ANIMAL EXPORT MARKET is a significant contributor to Australia’s export economy. It also has been the subject of controversy because of the treatment of animals. In 2011, its ongoing viability was called into question as the result of an ABC Four Corners expose of the mistreatment of live cattle exported to Indonesia. At the time, Indonesia was Australia’s largest market for cattle exports, comprising about 80% of the market, translating to around $1bn annually and supporting around 10,000 jobs. A recent Federal Court of Australia judgment in Brett Cattle Company Pty Ltd v Minister for Agriculture examines the legitimacy of the way in which the Australian government intervened to regulate the export of live cattle. Brett Cattle Company Pty Ltd (Brett Cattle) operated a large cattle station south-west of Katherine. It exported live cattle to several overseas markets including Indonesia. In 2011 the then Minister for Agriculture, Fisheries and Forestry, Joe Ludwig made orders banning live cattle export to Indonesia. Brett Cattle issued proceedings against the government arguing the orders were invalid and by reason of the orders it was unable to sell about 2776 head of cattle, amounting to a loss of almost $2.5m.
THE FOUR CORNERS PROGRAM
The events giving rise to the proceedings began in early April 2011 when Minister Ludwig and his Department became aware that animal rights activists had obtained graphic footage of serious animal mistreatment in Indonesia. In early April 2011, the Minister’s office was informed the ABC program, Four Corners, might be working on a story about the inhumane conditions of live cattle exports to Indonesia. Four Corners broadcasted an episode entitled “A Bloody Business” on 30 May 2011.
The program depicted graphic scenes of the mistreatment of cattle at Indonesian slaughterhouses. The airing of the program created a political crisis for the Minister and the Gillard government. On the same day, the Minister’s department had provided him with four alternative options for regulating live exports as a response to the anticipated Four Corner’s episode. The minute attached two sets of legal advice, one from the Australian government solicitor and another from independent solicitors. The solicitors advised on the four options proposed by the department; none of the four options at the time included exercising any power under the Export Control Act 1982 (Cth). The Export Control Act regulated the export of goods not just to Indonesia but outside of Australia generally and gave the minster powers to prohibit the export of animals absolutely or on the basis of certain conditions. The AGS advised about the power of government to make orders specifying facilities to which exports could not be made but did note that the orders could be disallowed.
MINISTER’S FIRST EXPORT CONTROL ORDER
On 2 June 2011, the Minister made his first control order, which came into force the following day. The order prohibited the export of live cattle to 12 named Indonesian facilities (which had been identified by the RSPCA and Animals Australia as showing mistreatment to livestock). The order included an exceptions clause if the Minister was satisfied the slaughter complied with the World Organisation for Animal Health (known by its abbreviation OIE) Code. It was noted in a minute from his department to the Minister, that a targeted response would minimally interfere with trade but be difficult to enforce. Conversely,an order which applied broadly would be easier to enforce. During a meeting with industry leaders, it was requested that should the Minister pursue a ban on live trade, that he allow the industry to clear its pipeline of cattle already in the supply chain, and to secondly, consider any geopolitical consequences of his decisions. By 6 June 2011, Indonesian officials apologised to the Australian public and expressed a willingness to resolve the issue in live export to Indonesia.
MINISTER’S SECOND EXPORT CONTROL ORDER
In the face of mounting public concern, on 7 June 2011 at 9.30pm, the Second Control Order Export Control (Export of Livestock to the Republic of Indonesia) Order 2011 was registered and commenced the following day. It prohibited all live animal exports to Indonesia for six months and unlike the First Control Order did not contain any exceptions. The Minister was of the view that six months was a necessary timeframe in which to put in place an acceptable regulatory supply chain system. It was hoped that the new regulations would comply with OIE recommendations. The effect of the order was to cancel (without any investigation of likely claims for compensation) shipments such as on the Flaconia which was due to load a shipment of cattle at Port Hedland and contracts that Brett Cattle and others had in the pipeline.
FEDERAL COURT FINDS SECOND CONTROL ORDER INVALID
In the representative proceedings commenced by Brett Holdings in the Federal Court, it argued the Minister had committed the tort of misfeasance in public office. This occurs when a public officer has misused their office intentionally, by either intending to cause or is recklesslyindifferent to harm or knowingly exceeds their power. It was held that the Minister was recklessly indifferent as to whether the orders were within the power of the Export Control Act and that the Minister knew, or was recklessly indifferent to, the harm that the orders would cause Brett Cattle or the class of live cattle exporters. Justice Rares held, “The Minister could not make an order that imposed a total ban on all exports on a mere whim… The Parliament did not intend that the power… could be used indiscriminately, capriciously, unreasonably or so as to cause unnecessary disruption to such lawful trade or economic loss on those engaged in it”.
The Court also held the Second Control Order was invalid. The order was found to be “suitable”, but not “necessary” or “reasonably necessary”, and not “adequate in its balance”. The Judge pointed to the existence of multiple exporters which operated through “closed loops”, or other systems which could meet the substantive requirements of the OIE recommendations as animals exported through these channels were not considered in danger of mistreatment. However, the Second Order was an absolute prohibition and did not allow for an export permit to be issued where a closed loop system operated effectively.
The Federal Court found the state of mind element was also satisfied and found that the Minister deliberately took a risk that the Order could be invalid but did not care if that was the case or not. It found that the Minister was “quintessentially reckless” when he exercised his power to make the Second Order and indifferent to the harm caused. On these bases, the Federal Court found the government was liable to pay compensation to Brett Cattle and in turn other cattle exporters in the class action. At the time of writing it is not known whether the government intends to appeal the decision.
EXPORT PROCESS AFTER THE FOUR CORNERS EXPOSE
A new mandatory export process was established not long after the broadcast, the Export Supply Chain Assurance System designed to ensure that cattle exported to Indonesia would be treated humanely. The ECAS system is based on four principles: first, animal welfare - ensuring animals at the point of importation conform with OIE recommendations, second, that the exporter has control of the supply chain arrangements including transport, third, that the exporter can trace livestock through the supply chain and fourth that the supply chain in the country of importation can be independently audited. The licensed exporter must submit their proposed ESCAS arrangements for assessment together with a notice of intention to export and a consignment risk management plan.
THE COVID-19 ENVIRONMENT
Despite COVID-19, the live animal export market is expected to comply with ECAS but exporters can contact the Department of Agriculture Water and the Environment where requirements for meeting conditions, such as audits, will be managed on a case-by-case basis. Revised guidelines for Approved Export Programs for the export of livestock are due to take effect for consignments exported after 1 November 2020. COVID-19 has seen an unprecedented public awareness of the importance of biosecurity in protecting Australian industries. It has also seen the introduction of several pieces of emergency legislation particularly in the biosecurity and quarantine areas. It is prescient that the analysis of the Minister’s powers to make such orders may have resounding consequences in the post COVID-19 environment.
Alexis Cahalan, Partner
Article featured in the July 2020 issue of the Daily Cargo News