CATCHWORDS
CUSTOMS - ADMINISTRATIVE LAW - imposition of dumping duties pursuant to legislative scheme - review of Minister's decision to approve reascertained normal values for canned ham exported to Australia from the Netherlands - whether Minister erred in law in accepting findings - whether failure by the Minister to take into account relevant considerations - whether the findings the basis of the Minister's decision lacked a reasonable basis - "arms length transaction"
Customs Act 1901
Customs Tariff (Anti-Dumping) Act 1975
Anti-Dumping Authority Act 1988
Administrative Decisions (Judicial Review) Act 1977
CASTLE BACON PTY LIMITED v THE COMPTROLLER-GENERAL OF CUSTOMS and THE MINISTER OF STATE FOR SCIENCE AND SMALL BUSINESS
G175 of 1994
LOCKHART J.
23 JUNE 1995
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA)
)
NEW SOUTH WALES DISTRICT REGISTRY) No. G175 of 1994
)
GENERAL DIVISION )
BETWEEN: CASTLE BACON PTY LIMITED
Applicant
AND: THE COMPTROLLER-GENERAL OF CUSTOMS
First Respondent
THE MINISTER OF STATE FOR SCIENCE AND SMALL BUSINESS
Second Respondent
JUDGE MAKING ORDER: LOCKHART J.
WHERE ORDER MADE: SYDNEY
DATE ORDER MADE: 23 JUNE 1995
MINUTE OF ORDER
THE COURT ORDERS THAT:
1. The application for review is dismissed.
2. The applicant is to pay the respondents' costs including reserved costs, if any.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA)
)
NEW SOUTH WALES DISTRICT REGISTRY) No. G175 of 1994
)
GENERAL DIVISION )
BETWEEN: CASTLE BACON PTY LIMITED
Applicant
AND: THE COMPTROLLER-GENERAL OF CUSTOMS
First Respondent
THE MINISTER OF STATE FOR SCIENCE AND SMALL BUSINESS
Second Respondent
23 June 1995
REASONS FOR JUDGMENT
LOCKHART J.
Castle Bacon Pty Limited, the applicant, is and has been since May 1990 the sole producer in Australia of canned ham. Prior to May 1990 there were two producers of canned ham in Australia: Plumrose (Australia) Limited and the applicant; but in that month the former ceased production and commenced importing canned ham.
The applicant carries on business from premises in Victoria. It asserts that its business suffers and will continue to suffer material injury by reason of the export to Australia of canned ham from the Kingdom of the Netherlands at dumped and subsidised prices. The Netherlands is a member of the European Community (the EC)
.
The respondent, the Minister of State for Science and Small Business, is responsible for the administration of the Customs Act 1901 (the Customs Act). The Minister is empowered by s. 269TG of the Customs Act to declare that s. 8 of the Customs Tariff (Anti-Dumping) Act 1975 (the Anti-Dumping Act) applies to goods to which s. 269TG refers, so as to bring about the imposition of dumping duties on such goods. The Anti-Dumping Act, the Customs Act and the Anti-Dumping Authority Act 1988 protect Australian industries from unfair import competition where:-
. goods are exported to Australia at prices lower than their normal value in the country of export (dumping);
. goods which have been produced or exported with the benefit of certain kinds of government assistance are exported to Australia (subsidisation).
Anti-dumping action can be
taken if it can be established that dumped imports have caused or threatened to
cause material injury to an Australian industry producing like goods. A dumping duty may then be applied to those
imports to offset the price advantage caused by the dumping. The dumping duty can apply to goods which
have already been exported to Australia and on which securities have been
imposed or on which the Australian Customs Service (the ACS) has the right to
impose securities, and to goods that may be exported to
Australia in the future. The difference
between the normal value of the goods and their export price sets the maximum
amount of dumping duty. Anti-dumping
action is aimed at removing the injury or threat of it caused by dumped
imports. The practice is to calculate a
non-injurious free-on-board price (NIFOB), which is the price at which goods
could be exported without causing injury to the local industry. The NIFOB is used to calculate the dumping
duty payable whenever it is less than the normal value.
The legislative scheme which provides for anti-dumping duties is contained in the three statutes to which I have referred and has been considered in many judgments of this Court including Tasman Timber Limited v Minister for Industry and Commerce (1983) 67 FLR 12; Marine Power Australia Pty Limited v Comptroller-General of Customs (1989) 89 ALR 561; ICI Australia Operations Pty Limited v Anti-Dumping Authority (1991) 104 ALR 474 and in cases relating to the present dispute: Irish Country Bacon (Cooked Meats) Limited v Comptroller-General of Customs (1991) 32 FCR 355 (Foster J.) and Castle Bacon Pty Limited v The Anti-Dumping Authority, 9 November 1992, unreported, Gummow J.
In March 1990 ITC Australia, on behalf of the Australian industry, lodged an application requesting anti-dumping and countervailing action against exports of canned ham from Denmark and the Republic of Ireland; and lodged a further application in April 1990 to cover exports from the Netherlands. The two inquiries were conducted concurrently and the Australian Customs Services (the ACS) made a preliminary finding in August 1990 that there were sufficient grounds for the publication of a dumping duty notice. As the material injury being caused by the effects of dumping and subsidisation could be singularly expressed as dumping, the publication of a countervailing notice was said to be unnecessary.
Since the initial customs inquiry the following action occurred. In January 1991 the Anti-Dumping Authority (the ADA) issued its Report No 30 recommending anti-dumping measures against an exporter in the Netherlands and an exporter in the Republic of Ireland. In January 1991 the ADA in its Report No 33 (in which the applicant had requested the ADA to review the ACS's finding in regard to countervailing duties) upheld the finding of the ACS but forecast the intention to conduct an extraordinary review. The ADA, whilst limited to the same material which the ACS had used in reaching its preliminary finding, was convinced on the basis of additional information that a positive finding was warranted.
In June 1991 the ADA produced its Report No 39 which recommended countervailing action against Denmark, the Netherlands and the Republic of Ireland. In July 1991 the Irish exporter commenced proceedings in this Court and the ADA undertook to reconsider its recommendation.
On 24 March 1992 the ADA published its Report No 61 which recommended revocation of the current duties and the reimposition of countervailing duty and dumping duty (affecting the same countries and exporters as previously) but with reworked formulae. In July 1992 at the request of the Irish exporter a review of countervailing measures was undertaken, resulting in new levels of countervailing duty for each of the three countries.
In November 1992 the Australian industry successfully applied to this Court for an order of review of the decision resulting from Report No 61. The decision was set aside (see the judgment of Gummow J previously mentioned). The relevant duty calculation formulae were revised and new notices were published to put them into effect.
On 22 April 1993 a request was made on behalf of the applicant for a review of NIFOBs in relation to canned ham exported from the Netherlands. The request was based on alterations to the calculation of unsuppressed selling price (USP) and change to the rate of customs duty (the percentage figures are confidential).
Before a review can be initiated, the party requesting the review must produce evidence which indicates that a factor which was taken into account when the normal value and/or NIFOBs were last ascertained, has subsequently altered. It was alleged by the applicant that the NIFOBs in place against imports from the Netherlands were out of date as there had been an upward movement in the USP since the existing NIFOBs were determined. In due course the ACS decided to initiate a review into normal values and NIFOBs and countervailing measures for the Netherlands (as well as the other two countries, Denmark and Ireland currently subject to anti-dumping measures).
The initiation of this review was announced and interested parties were invited to make submissions not later than 4 October 1993.
Submissions were received from three importers of canned ham to Australia. The ACS visited those importers as well as the local manufacturer (the applicant) and examined their accounting procedures and data relevant to their claims. The ACS also visited the Netherlands exporter (Th.S. van der Loan (vdL)) to examine its records and evaluate their claims for changes to normal values and subsidies for their company.
Current normal values for the Netherlands were determined under s. 269TAC(1) of the Act on the basis of sales between vdL and its related sales company, Meatpoint Benelux (previously known as Lupac) with adjustments for distribution costs, credit terms and product and packing specification differences. vdL supplied information to the review on current selling prices and production costs and claimed that domestic selling prices had been reduced significantly since the 1991 inquiry.
The ACS found that the sale structure for vdL had changed since its previous visit in December 1990. vdL is now a production plant for a central organization known as Meatpoint Holding. Meatpoint Holding sells to its sales group, Meatpoint Benelux previously known as Lupack, which "onsells" to the retail level.
The accounting within vdL is separated between the different groups involved in the organization. Meatpoint Benelux remits a fully absorbed cost plus approximately - gross profit (at a particular time) to the central organization, Meatpoint Holding. The price from Meatpoint Benelux to Meatpoint Holding was said to be set every couple of months with Meatpoint Holding's margin (the percentage figure is confidential) being intended to cover any variations in material "buy-in" costs. For the goods under consideration Meatpoint Benelux was shown to enjoy higher levels of profitability. The profits of each division are separately reported and are consolidated during Meatpoint Holding's annual reporting.
The evidence of sales put to the ACS differed to the evidence put to the previous normal value inquiry. Normal values for the previous inquiry were based on invoices from vdL to Lupac. No invoices were provided for recent sales between Meatpoint Holding and Meatpoint Benelux. vdL provided evidence of its production costs for domestic and exported products. It also provided details as to overheads for vdL and Meatpoint Holding. This information with the addition of a profit margin was compared with information showing costings for Meatpoint Benelux.
The ACS said to the Minister that, as before, it had taken the sales from Meatpoint Holding to Meatpoint Benelux as being at arm's length and was satisfied that they were made in the ordinary course of trade. It was stated that the profit by Meatpoint Holding had been calculated (the percentage figure is confidential) based on sales examined by the ACS which occurred in mid 1993. The ACS told the Minister it was satisfied that a factor relevant to the ascertainment of normal values for the Netherlands had altered. The ACS recommended to the Minister that he reascertain the normal values, and the countervailing measures and NIFOBs and that he sign the appropriate statutory instruments under ss. 269TAD and 269TAC(8) of the Customs Act and ss. 8(5) and 10(5) of the Anti-Dumping Act.
The Minister accepted the recommendations; and, amongst other things, on 18 December 1993 reascertained the normal values for canned leg ham and canned shoulder ham exported from the Netherlands and said that the reascertained normal value shall be the amount shown in column 2 of the table attached to his instrument of reascertainment pursuant to s. 269TAD of the Customs Act and shall apply to goods entered for home consumption on or after the date of gazettal of that notice (the amount in column 2 is confidential).
The applicant instituted this proceeding for an order of review under s. 5 of the ADJR Act and pursuant to s. 39B of the Judiciary Act 1903. Initially the applicant joined the Comptroller-General of Customs and the Minister as respondents, but later filed an amended application, pursuant to leave granted by this Court, to pursue the case only against the Minister. The applicant seeks to review the Minister's decision pursuant to s. 269TAD of the Customs Act to approve reascertained normal values for canned ham exported to Australia from the Netherlands pursuant to review finding No 93/6 of the ACS.
Section 269TAD was in force at the relevant time. It was repealed by the Customs Legislation Amendment Act, Act No 207 of 1992, s. 6; but, by virtue of s. 20 thereof (the transitional provision), s. 269TAD governs the review of normal values with which this case is concerned.
There is no challenge to the applicant's status to bring this application. Plainly it is a person aggrieved by the relevant decision within the meaning of the ADJR Act because it is the sole Australian producer of canned ham, being like goods to the goods the subject of the relevant decisions, the effect of which is said to be to cause and threaten material injury to the Australian industry from imports of canned ham from the Netherlands at dumped prices within the meaning of ss. 269TAE and 269TG of the Customs Act.
I turn to the relevant statutory provisions. The starting point is s. 269TG of the Customs Act which provides, so far as relevant, as follows:
"269TG(1) ... where the Minister is satisfied, as to any goods that have been exported to Australia, that:
(a) the amount of the export price of the goods is less than the amount of the normal value of those goods; and
(b) because of that:
(i) material injury to an Australian industry producing like goods has been or is being caused or is threatened, or the establishment of an Australian industry producing like goods has been or may be materially hindered; ...
the Minister may, by notice published in the Gazette, declare that section 8 of that Act [the Customs Tariff (Anti-Dumping) Act 1975] applies to those goods."
Section 8 of the Customs Tariff (Anti-Dumping) Act 1975 empowers the Minister to impose a dumping duty on such goods, being the difference between the export price of the goods as ascertained and the normal value of the goods as ascertained subject to a proviso which is not relevant for present purposes.
Section 269TAC of the Customs Act establishes the statutory regime for the determination of the normal value of goods. The relevant subsection is subsection (1) which provides that the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, if like goods are not so sold by the exporter, by other sellers of like goods.
To determine what is an arms length transaction one proceeds to s. 269TAA which relevantly provides (subsection (1)) that for the purposes of Part XVB (special provisions relating to anti-dumping duties):
" ... a purchase or sale of goods shall not be treated as an arms length transaction if:
(a) there is any consideration payable for or in respect of the goods other than their price; or
(b) the price is influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller; or
(c) in the opinion of the Minister the buyer, or an associate of the buyer, will, directly or indirectly, be reimbursed, be compensated or otherwise receive a benefit for, or in respect of, the whole or any part of the price."
Subsection (1) of s. 269TAA is not an exhaustive statement of what is or what is not an arms length transaction; it merely states three circumstances which are deemed or declared not to constitute arms length transactions.
I turn to s. 269TAD which, as mentioned earlier, was in force at the relevant time. Section 269TAD provided:
"Where the Minister has, for the purpose of publishing a notice under section 269TG or 269TH declaring that section to apply to goods that may be imported into Australia, being like goods to goods that have been so imported, ascertained the normal value of the imported goods, the Minister may, at any time, and from time to time, if the Minister is of the opinion that any factor relevant to the ascertainment of the normal value of goods to which that section applies has altered, re-ascertain that normal value and, where the Minister does so, the Minister is to publish that normal value as so re-ascertained in the Gazette unless, in the opinion of the Minister, the publication of that information would adversely affect the business or commercial interests of any person."
It is agreed between the parties that the relevant decision of the Minister made on 18 December 1993, re-ascertaining the normal values for canned leg ham and canned shoulder ham, was made by the Minister after reading the report of the ACS in December 1993, Review Finding No 93/6. The primary issue in the case is whether the Minister erred in law in accepting that finding of the ACS and it is to that issue that I now turn.
Counsel for the applicant argued that the Minister erred in law in accepting the findings of the ACS that domestic sales in the Netherlands from Meatpoint Holding to Meatpoint Benelux were arms length transactions, thus falling within s. 269TAC(1) of the Customs Act. Counsel submitted that the Minister's decision was unreasonable within the meaning of s. 5(1)(e) and 2(g) of the ADJR Act because there was no reasonable basis to support the finding that the sales by Meatpoint Holding to Meatpoint Benelux were at arms length. No basis is made explicit in Review Finding No 93/6 of the ACS or in the s. 13 statement of reasons furnished by the Comptroller-General of Customs. It was argued that the Review Finding 93/6 reflects speculation about Plumrose (Australia) Pty Limited (a company to which reference shall be made later) and variability and profit margins, which did not provide any justification for finding that the transactions were at arms length. It was submitted that from the absence in Review Finding 93/6 and the s. 13 statement of reasons of any explicit basis for finding that the transactions between Meatpoint Holding and Meatpoint Benelux were at arms length, it is open to the Court to infer that the Minister had no good reasons and/or that the following matters were not taken into account:-
. namely, the matters mentioned in para. (a), (b) and (c) of s. 269TAA(1) to which reference was made earlier;
. that since 1990 the profit margin of Meatpoint Holding had decreased but the profit margin of Meatpoint Benelux had increased. Meatpoint Holding's profit margin was - in 1993 or perhaps - , whereas in contrast in 1990 its profit margin was - . Meatpoint Benelux's profit on sales in 1990 was - , contrasting with its profit margin in 1993 which was approximately - (the 4 percentage figures are confidential). There was no reference to these matters in Review Finding 93/6 of the ACS, nor was there any evidence that the ACS made any enquiries as to why profit margins moved in reverse directions over the years from 1990 to 1993;
. another Netherlands company which exported canned leg ham to Australia was Homberg (a Netherlands company to which reference shall be made later). In the 1990 enquiry of the ACS it did not co-operate with the ACS nor with the Anti-Dumping Authority in its subsequent review. In the absence of any objective tests to determine whether transactions between Meatpoint Holding and Meatpoint Benelux were at arms length it is clear that in 1993 Homberg may have been able to provide data at least to test whether sales by Meatpoint Holding to Meatpoint Benelux were at arms length. The ACS however made no such enquiry of Homberg. It was submitted that failure to do so was unreasonable within the meaning of ss. 5(1)(e) and 2(g) of the ADJR Act.
Reference was made by counsel for the applicant to Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 663-4; ARM Constructions Pty Limited v Commissioner of Taxation (1986) 10 FCR 197 at 205-7; Minister of National Revenue v Minister of Agriculture [1968] AC 997 at 1032-3 and 1049.
It was submitted also that the Minister chose to rely on a departmental summary which failed to bring to his attention the material facts mentioned above and that he was bound to consider them, with the consequence that having failed to take those material facts into account his decision was not made according to law. Reliance was placed upon Minister for Aboriginal Affairs v Peko Wallsend Limited (1986) 162 CLR 24.
It was argued by counsel for the applicants that the Minister had failed to take into account relevant considerations within the meaning of ss. 5(1)(e) and 2(b) of the ADJR Act and thereby made an error of law within the meaning of s. 5(1)(f) of the ADJR Act, the relevant considerations being the matters to which reference was made earlier.
Section 269TAD empowers the Minister to reascertain the normal value of goods if he is of the opinion that any factor relevant to the initial ascertainment of the normal value of goods under s. 269TG has altered. Section 269TAD was considered by Hill J. in Powerlift (Nissan) Pty Limited v Minister of State for Small Business, Construction and Customs (1993) 40 FCR 332, in particular at 345.
The normal value of the goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter, or, if like goods are not so sold by the exporter, by other sellers of like goods: s. 269TAC. It is necessary therefore that the Minister has regard to arms length transactions by the exporter, a different concept from transactions between parties at arms length. The relevant factor in considering whether there is an arms length transaction is, of course, whether the parties are at arms length. But merely because parties are themselves not at arms length does not support the conclusion that they may not be engaged in transactions at arms length. This distinction was considered by Hill J. in an income tax case of Trustee for Estate of A W Furse No 5 Will Trust v Commissioner of Taxation (Cth) (1990) 91 ATC 4,007. Section 102AG of the Income Tax Assessment Act 1936 was considered by his Honour in that case. He said at 4015:
"What is required in determining whether parties dealt with each other in respect of a particular dealing at arm's length is an assessment whether in respect of that dealing they dealt with each other as arm's length parties would normally do, so that the outcome of their dealing is a matter of real bargaining."
Hill J. followed his reasoning in Copperart Pty Limited v Federal Commissioner of Taxation 93 ATC 4779 at 4798-9, a case concerning sales tax legislation. His Honour's judgment was overturned on appeal, but not on a point that cast doubt on his reasoning on the particular question which I am considering. I respectfully agree with his Honour's observations in Furse.
As mentioned earlier, the Minister's decision was made after reading the report of the ACS being Review Finding 93/6 of December 1993. There was also before the Minister a departmental minute of the ACS signed by Ms Marion Grant, Acting Managing of the Dumping Section and the contact officer was stated to be Mr Gordon Hill, both officers of the ACS. Further light is shown on what material was before the Minister by the statement of reasons under s. 13 of the ADJR Act, a statement furnished by the ACS, not the Minister, but nothing turns on this. The statement of reasons was signed by Mr Gordon Hill.
These matters are significant because much of the challenge made to the Minister's decision was based on inferences drawn from documents which formed part of the departmental file, the author of which was Mr Muldoon, Mr Roach or Mr Walsh: all officers of the ACS. None of these three gentlemen appears to have played any or any significant role in the preparation of the documents that were in fact before the Minister when making his decision. Review Finding 93/6 and the minute seem to me to be the critical documents before the Minister.
It is necessary to examine the material contained in report 93/6 which specifically dealt with the "arms length" nature of the transaction between Meatpoint Holding and Meatpoint Benelux. The author of the report concluded that domestic sales in the Netherlands from Meatpoint Holding to Meatpoint Benelux were arms length transactions. It is plain that this question was the subject of discussion between officers of the ACS and competing views were expressed by them which can be perceived from a minute paper from Mr Walsh of 26 November 1993 and a minute paper by Mr Muldoon of 1 December 1993. The finding of the ACS that the relevant sales were arms length transactions was based primarily on information gained by the ACS at an interview conducted at the premises of vdL in the Netherlands on 21 and 22 June 1993 by officers of the ACS. The report of those officers is dated 19 July 1993.
The report 93/6 states in para. 6.4 inter alia:
"The ACS found that the sales structure for VDL had changed since the previous visit in December 1990. VDL is now a production plant for a central organisation known as Meatpoint Holding. VDL claimed that the central organisation sells to their sales group, Meatpoint Benelux - previously known as Lupack - who on-sell to the retail level.
VDL advised that the accounting is separated between the different groups involved in the organisation and that the sales group remits a fully absorbed cost plus approximately [percentage figure is confidential] gross profit (at a point in time) to the central organisation. The price from MB to MH was said to be set every couple of months, with MH's [percentage figure is confidential] (approximately) margin being intended to cover any variations in material buy-in costs. For the goods under consideration, MB was shown to enjoy higher levels of profitability. The profits of each division are separately reported and are consolidated during MH's annual reporting.
The evidence of sales put to the ACS differed to that put to the previous normal value inquiry. Normal values for the previous inquiry were based on invoices from VDL to Lupack. No invoices were provided for recent sales between MH and MB. VDL provided evidence of their production costs for domestic and exported products. They also provided details as to overheads for VDL and MH. The information, with the addition of a profit margin, was compared with information showing costings for MB.
The ACS, as before, has taken the sales from MH to MB as being at arms length and is satisfied that they were made in the ordinary course of trade. (Profit by MH has been calculated at [percentage figure is confidential] based on sales examined by the ACS which occurred in mid 1993)."
The ACS thus found that:-
. Meatpoint Holding and Meatpoint Benelux had separate accounting and reported profits separately;
. the prices for sales from Meatpoint Holding to Meatpoint Benelux were reviewed every couple of months;
. the prices reflected a fully absorbed cost plus approximately - gross profit to Meatpoint Holding which varied from - to - (percentages are confidential) during the period of the inquiry by the ACS in 1993;
. this percentage was intended to cover variations in the "buy-in cost" of the raw material over the relevant period of time.
See also the interview report dated 19 July 1993 signed by Mr Michael Roche, the ACS representative in Brussels. The interview being between officers of the ACS including Mr Roche and officers of vdL. See also paragraphs 2 and 3 of a minute of Mr Muldoon of 1 December 1993 and the statement of reasons by the ACS at page 7.
In para. 6.4 of report 93/6 the ACS analyzed the relationship between the two companies Meatpoint Benelux and Meatpoint Holding and analyzed the particular transactions of sale which were under consideration. The paragraphs from the report which are set out earlier by me represent a convenient distillation of the essential information which was before the ACS and thereafter before the Minister and was in my opinion sufficient to enable him to make the finding which he did as to the arms length transactions, a finding that is necessary for the purposes of s. 269TAD.
The finding of the ACS and ultimately the Minister was a finding of fact made by decision makers in the course of reaching an ultimate decision and doing the best that they could on the information that was available and before them. The following passage from the judgment of Brennan J. in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR at 24 is apt to the present case:
"The Department does not have to draw the Minister's attention to every communication it receives and to every fact its officers know. Part of a Department's function is to undertake an analysis, evaluation and precis of material to which the Minister is bound to have regard or to which the Minister may wish to have regard in making decisions."
See also Enichem Anic SRL v Anti-Dumping Authority (1992) 39 FCR 458 at 469, a judgment of Hill J.; C A Ford Pty Limited v Comptroller-General of Customs (1993) 46 FCR 443 at 445-7, 449 and La Doria Diodata Ferraiolli SPA v Minister for Small Business, Construction and Customs, unreported decision of Black CJ, Lockhart and Whitlam JJ., 18 February 1994 at 24.
In my opinion it has not been established that the decision of the ACS and the Minister lacked a reasonable basis, that they failed to take relevant considerations into account or otherwise made an error of law. The ACS did the best it could on the material before it and appears to me to have considered carefully the question of whether the relevant transactions were arms length transactions.
Also, it must not be forgotten that information obtained by officers of the ACS on visits to other countries is not always easy to obtain and is not assisted by the fact that there is no power in the ACS to compel persons in other countries to give evidence or produce documents to them. This operates as a substantial constraint upon what the ACS can do in these circumstances.
Before turning to the next issue in the case I note that it was argued on behalf of the applicant that the ACS and the Minister proceeded on the incorrect footing that s. 269TAA(1) of the Customs Act states exhaustively the circumstances in which a transaction may be regarded as being not at arms length. The evidence does not support this submission, so I reject it. The material in evidence which was before both the ACS and the Minister shows that many considerations were taken into account in making the relevant findings, some of which fell within the ambit of the circumstances specified in s. 269TAA(1).
Plumrose
Counsel for the applicant submitted that another error of the ACS and the Minister was in relation to a paragraph in a report of Mr Roche dated 19 July 1993 which was before the relevant decision makers and which states as follows:
"There is no evidence to suggest that the sale from the central organisation to the sales group is other than arms length. It was stated at the interview by vdL that if Plumrose were put into the domestic market in the Netherlands, vdL would expect to sell to them at a comparable price. All sales in the domestic market are through the selling group so there were no other sales to effect a comparison to test their statement."
It was submitted on behalf of the applicant that the ACS and the Minister adopted this reasoning of Mr Roche in that (a) there is nothing in report 93/6 to suggest any other reasoning was relied upon in determining that transaction between Meatpoint Holding and Meatpoint Benelux were at arms length; and (b) in finding that those transactions were at arms length, the decision makers must have adopted the Roche/Muldoon view and reasoning rather than the Walsh view and reasoning.
It was submitted that this reasoning was flawed because the reference to selling "to them" at a comparable price must be a reference to selling to the "sales group", namely, Meatpoint Benelux. One cannot test whether a sale between two related corporations is at arms length by merely postulating what would happen if there was a change of product but no change of buyer and seller. This is especially so as Plumrose was a product made by vdL. It was also said that the price at which it was postulated that the Plumrose product would have been sold to Meatpoint Benelux was an irrelevant consideration taken into account by the decision makers. Similarly it was said that the decision as to normal values, in relying upon that matter, was so unreasonable that no reasonable person could have made such decision. It was submitted also that as to price the relevant comparison was not with the price at which Meatpoint Holding would have sold another of its products to Meatpoint Benelux but rather with the price at which Meatpoint Holding would have sold products if the selling price were not influenced by any commercial or other relationship between the buyer and the seller.
Counsel for the Minister submitted that the submission is based on a misreading of the relevant paragraph in the report 96/3. In my opinion counsel for the Minister is correct. The relevant paragraph in the report which I have extracted in the second sentence is merely a record of a statement made at the interview conducted by the officers of the ACS in the Netherlands. The third sentence demonstrates that the statement was recognized as one which could not be tested. Also there is no evidence that the statement formed any part of the reasoning process of the ACS or the Minister. Further, it is clear to me that the applicant has misconstrued the sentence because reference in the relevant paragraph to "Plumrose" is not a reference to the Plumrose type of ham but to Plumrose (Australia) Limited which is an Australian importer of canned ham. What is said in the paragraph is that if Plumrose, the Australian importer, were involved in the domestic market in the Netherlands, vdL would sell to the Australian importer at a comparable price to which sales are made to Meatpoint Benelux by Meatpoint Holding.
I reject the submission of the applicant in relation to Plumrose.
Profit trends
It was submitted by counsel for the applicant that in determining that the transactions between Meatpoint Holding and Meatpoint Benelux were at arms length, the decision maker failed (within the meaning of s. 5(1)(e) and 2(b) of the ADJR Act) to take into account a relevant consideration, namely, that since 1990 Meatpoint Holding's profit margin had decreased but the profit margin of Meatpoint Benelux had increased. Meatpoint Holding's profit margin was - in 1993 (or - on one view of the case), whereas in contrast in 1990 the profit margin was -. Meatpoint Benelux on the other hand (formerly Lupack) had a profit margin in 1990 of - , yet in 1993 of approximately - (these 5 percentage figures are confidential). It was submitted that nowhere does the ACS refer to this in any of its relevant reports and nor is there any evidence that it made any enquiry as to why profit margins moved in reverse directions. The failure to consider this issue and to make enquiries about it was said to be a failure to take into account a relevant consideration and was unreasonable. Reference was made to Prasad v Minister for Immigration (1985) 6 FCR 155 at 169-170 and C A Ford Pty Limited v Comptroller-General of Customs, 8 March 1991, Wilcox J., unreported.
Central to the submission on behalf of the applicant is the assertion that the ACS did not take the differences in profit margins on sales by Meatpoint Holding and Meatpoint Benelux between 1990 and 1993 into account. This is not correct. Those differences were taken into account by the ACS. It is sufficient to refer to the file note by Ms Dianne Bamford of the ACS dated 20 September 1993, her fax to Mr Michael Roche, the ACS representative in Brussels dated 20 September 1993 and the fax from Mr Roche to Mr John Furlow of the Dumping Component Section of the ACS dated 15 November 1993 where these differences in profit margins were considered.
Homberg
Homberg was a Netherlands company which exported canned leg ham to Australia. In the 1990 inquiry of the ACS it did not co-operate with it or with the Anti-Dumping Authority in its subsequent review. It was submitted by counsel for the applicant that in the absence of any objective tests to determine whether transactions between Meatpoint Holding and Meatpoint Benelux were at arms length it was readily apparent that in 1993 Homberg may have been able to provide data at least to test whether sales by Meatpoint Holding to Meatpoint Benelux were at arms length. The ACS, it was said, made no such enquiry of Homberg. Failure to do so was a failure to take into account a relevant consideration within the meaning of ss. 5(1)(e) and 2(b) of the ADJR Act and was an unreasonable exercise of power within the meaning of s. 5(1)(e) and 2(g) of the ADJR Act. Reference was made to Prasad and Ford. It was submitted that this is especially so given that vdL had claimed that domestic selling prices in the Netherlands had decreased significantly since the 1991 inquiry (Review Finding 93/6), so that Homberg's domestic selling prices may also have fallen and thus normal values could also have fallen, rendering Homberg more likely to be co-operative with the ACS. It was said that the obviousness of the enquiry is evidenced by the handwritten note "? other sellers apart from vdL or MH" made in the margin next to para. 5.5.1 of the report of Mr Roche, the ACS representative in Brussels of 19 July 1993, concerning the interview with representatives of vdL.
It is correct that Homberg did not co-operate with the ACS or the Anti-Dumping Authority in their respective inquiries in 1990. In my opinion there is no evidence that Homberg was willing or would have been willing to co-operate with the ACS in 1993. Also, it appears from Report 93/6 of December 1993 of the ACS that there had been no importations of canned ham from Denmark over the previous two years (para. 6.2); consequently any inquiries of Homberg in 1993 would have been for no useful purpose.
In any case the absence of inquiry by the ACS of Homberg was a matter which was not in the circumstances unreasonable. Nor could the ACS be said to have failed to take into account a relevant consideration in not making inquiries of Homberg in 1993. It is not a case where it is plain or obvious that inquiries of Homberg would have been possible and would have been of importance to the decision-maker. If there was a failure by the ACS to enquire of Homberg, it was not a failure of the kind that would result in the intervention of the Court in judicial review process: see Prasad at 169-170; Enichem Anic SRL v Anti-Dumping Authority (1992) 39 FCR 458 per Hill J. at 469 and J Wattie Canneries Limited v Hayes (1987) 74 ALR 202 at 215-7.
The application for review is dismissed with costs.
I certify that this and the preceding twenty-eight (28) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart.
Associate
Dated: 23 June 1995
Counsel for the Applicant : Mr B Walker
Mr M Speakman
Solicitors for the Applicant: C G Gillis & Co
Counsel for the Respondents : Mr S Gageler
Solicitors for the Respondents: Australian Government Solicitor
Date of Hearing : 4 April 1995
Date of Judgment : 23 June 1995
