FEDERAL COURT OF AUSTRALIA
ADMINISTRATIVE LAW – CUSTOMS TARIFF - judicial review of delegate’s decision refusing a determination under s 273 of the Customs Act 1901 (Cth) – whether delegate applied Government policy without regard to the merits of the particular case – whether delegate failed to take relevant considerations into account – whether, by misconstruing Government policy the delegate failed to take a relevant consideration into account – whether irrelevant considerations taken into account – whether delegate denied the applicant procedural fairness by not referring a particular proposed conclusion to the applicant before reaching that conclusion – whether the exercise of the power was unreasonable in the administrative law sense – statutes – repeal – whether rights arising under s 273 of the Customs Act (if any) and rights of review of decisions made under that section were accrued rights – whether contrary intention apparent so as to affect any accrued rights – whether the impugned decision should be set aside as at the date of its making or as at the date of the Court’s order – discretionary considerations.
Acts Interpretation Act 1901 (Cth) s 8
Administrative Decisions (Judicial Review) Act 1997 (Cth) ss 5, 16
Customs Act 1901 (Cth) ss 273, 273A
Customs Amendment Act 1996 (Cth) Schedule 1, items 42, 43
Customs Tariff Act 1987 (Cth) Schedule 4, item 45
Customs Tariff Act 1995 (Cth) Schedule 4, item 45
Customs Tariff (Miscellaneous Amendments) Act 1996 (Cth) Schedule 2, item 2
Customs Tariff Amendment Act (No 1) 1996 (Cth) Schedule 1, item 3
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 referred to
ACI Operations Pty Ltd v Chief Executive Officer of Customs (Burchett J, Federal Court
of Australia, 27 February 1998) referred to
Khan v Minister for Immigration, Local Government and Ethnic Affairs (unreported,
Federal Court of Australia, 11 December 1987) applied
Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33
FCR 87 referred to
Hindi v Minister for Immigration and Ethnic Affairs (1988) 20 FCR 1 referred to
Minister for Immigration and Ethnic Affairs v Tagle (1983) 67 FLR 164 referred to
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 applied
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 referred to
Nikac v Minister for Immigration and Ethnic Affairs (1988) 16 ALD 611 followed
Chumbairux v Minister for Immigration and Ethnic Affairs (1986) 74 ALR 480 referred to
Sacharowitz v Minister for Immigration, Local Government and Ethnic Affairs (1992) 33 FCR 480 referred to
Turner v Minister for Immigration and Ethnic Affairs (1981) 4 ALD 237 referred to
Li Shi Ping v Minister for Immigration, Local Government and Ethnic Affairs (1994) 35 ALD 225 distinguished
Curragh Queensland Mining Ltd v Wilson (1989) 17 ALD 636 referred to
Minister for Immigration v Gray (1994) 50 FCR 189referred to
McPhee v Minister for Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 77 referred to
Waterford v The Commonwealth (1987) 163 CLR 54 referred to
Century Metals and Mining NL v Yeomans (1989) 40 FCR 564 referred to
Somaghi v Minister for Immigration, Local Government and Ethnic Affairs (1991) 31 FCR 100 applied
Esber v The Commonwealth (1992) 174 CLR 430 referred to
Attorney-General (NSW) v Quin (1990) 170 CLR 1 referred to
Yao v Minister for Immigration and Ethnic Affairs (1996) 69 FCR 583 referred to
Lee v Secretary, Department of Social Security (1996) 68 FCR 491 referred to
Director of Public Works v Ho Po Sang [1961] AC 901 referred to
Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253 referred to
Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 referred to
Minister for Immigration, Local Government and Ethnic Affairs v Taveli (1990) 94 ALR 177 referred to
TJM Products Pty Ltd v The Industry Research and Development Board (Federal Court of Australia, 26 May 1998) referred to
Bond Corporation Holdings Ltd v Australian Broadcasting Tribunal (1988) 84 ALR 669 referred to
Minister for Immigration and Ethnic Affairs v Conyngham (1986) 11 FCR 526 referred to
BHP DIRECT REDUCED IRON PTY LTD v CHIEF EXECUTIVE
OFFICER, AUSTRALIAN CUSTOMS SERVICE
No WAG 108 of 1996
CARR J
PERTH
23 OCTOBER 1998
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IN THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
BHP DIRECT REDUCED IRON PTY LTD (ACN 058 025 960) Applicant
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AND: |
CHIEF EXECUTIVE OFFICER, AUSTRALIAN CUSTOMS SERVICE Respondent
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT ORDERS THAT:
1. The decision of the respondent’s delegate, as communicated in his letter dated 25 June 1996 to the applicant, be set aside with effect from 25 June 1996.
2. The applicant’s request, made on 30 April 1996, that the respondent determine that item 45 of Schedule 4 to the Customs Tariff Act applies to the Reactors, being the subject matter of the abovementioned decision, be referred to another delegate of the respondent for reconsideration according to law.
3. The respondent pay the applicant’s costs of the application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
BHP DIRECT REDUCED IRON PTY LTD (ACN 058 025 960) Applicant
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AND: |
AUSTRALIAN CUSTOMS SERVICE Respondent
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
Introduction
This is an application, under s 5 of the Administrative Decisions (Judicial Review) Act 1997 (Cth) (“the ADJR Act”), for an order of review of a decision made by a delegate of the respondent on 25 June 1996. On that date the respondent decided not to make a determination (for which the applicant had applied) under s 273(1) of the Customs Act 1901 (Cth) that item 45 of Schedule 4 to the Customs Tariff Act 1987 (Cth) apply to certain goods, being eight conical fluidised bed reducing reactors (“the Large Reactors”). As will be seen below, implicit in that decision was a decision not to make such a determination under item 45 of Schedule 4 to the Customs Tariff Act 1995 (Cth) which was an item in materially identical terms. If the respondent had made either such determination then the applicant could have imported the reactors free of customs duty.
Factual Background
At all material times the applicant was undertaking the construction of a hot briquetted iron plant at Port Hedland in Western Australia. That plant included the eight Large Reactors and eight cylindrical fluidised bed reducing reactors (“the Small Reactors”). When referring to the 16 reactors together, I shall describe them as “the Reactors”. The project timetable, in the form of a critical path chart for the construction of the plant, contemplated that the Reactors would be installed in two modules, each consisting of four Large Reactors and four Small Reactors. The project timetable further contemplated that the installation of the Reactors comprising Module 1 would take place in January 1997 and the installation of the Reactors comprising Module 2 would take place in April 1997. In July and August 1995 the applicant wrote to 26 companies in Australia and four companies overseas asking if they were interested in supplying the Reactors. The applicant had entered into a contract with an Austrian company called Voest Alpine Industrieanlagenbau (“VAI”) to design and supply the hot briquetted iron plant. VAI separately wrote to companies outside Australia also asking if they were interested in supplying the Reactors. Of the companies so approached by the applicant and VAI, five Australian companies and four overseas companies were invited to submit tenders for the Large Reactors and the Small Reactors. Seven conforming tenders were submitted in respect of the Small Reactors and four such tenders were received in respect of the Large Reactors. In relation to the Small Reactors, the applicant caused VAI to accept a tender from Australian Defence Industries Ltd (“ADI”), although its tender was for a higher price than the respective prices tendered by three South Korean companies and notwithstanding the fact that ADI’s delivery date for the final batch of Small Reactors was about three months later than the delivery date promised by the South Korean companies. In relation to the Large Reactors, tenders were received from the same three South Korean companies and an Australian company, Australian Shipbuilding Corporation Pty Ltd (“ASC”). ASC’s tender price was 26.8% higher than that of Hyundai Heavy Industries Ltd (“HHI”). HHI offered a delivery date of the end of January 1997 for the final batch of Large Reactors whereas ASC’s offered delivery date was April 1997. On 7 December 1995 the applicant caused VAI to award the contract for the supply of the Large Reactors to HHI. The project timetable contemplated that installation of the last four of the eight Large Reactors would be completed by 30 April 1997. On 30 April 1996 the applicant wrote to the respondent seeking a determination under item 45 of Schedule 4 to the Customs Tariff Act (which I shall henceforth refer to as “item 45”) in relation to the Large Reactors. On 23 May 1996 a meeting was held at the offices of the respondent in Canberra. That meeting was attended by three representatives of the applicant and three representatives of the respondent. On 25 June 1996 the respondent’s delegate, Mr Richard Janeczko, wrote to the applicant advising that he would not make the determination requested by it. As matters transpired, the first four of the Large Reactors arrived at Port Hedland on 9 January 1997 and were delivered to the applicant’s project site by 15 March 1997. The remaining four Large Reactors arrived at Port Hedland on 21 April 1997 and were delivered to the applicant’s project site by 30 April 1997. Installation of the last four of those Large Reactors in Module 2 was completed by 19 June 1997.
The Legislation
Section 21 of the Customs Tariff Act 1987 imposed Duties of Customs on goods imported into Australia. Schedule 3 to that Act set out the duty to be paid on each good imported into Australia. Section 25 provided authority for the goods specified in Schedule 4 to be imported at a rate of duty below that set out in Schedule 3. Item 45 of Schedule 4 (when read with s 25) provided entry free of duty for “Goods designed for use in the mining industry, as prescribed by by-law”. It was common ground that the Large Reactors were goods designed for use in the mining industry. So far as the limitation “as prescribed by by-law” is concerned, that requirement is effectively overridden [by s 273(3) of the Customs Act] where a determination is made under s 273 of the Customs Act. Section 273 provides as follows:
“273(1) The Comptroller may determine, by instrument in writing, that, subject to the conditions, if any, specified in the determination, an item, or a proposed item, of a Customs Tariff that is expressed to apply to goods, or to a class or kind of goods, as prescribed by by-laws shall apply, or shall be deemed to have applied, to the particular goods specified in the determination.
(2) The Comptroller may make a determination under the last preceding subsection for the purposes of an item, or a proposed item, of a Customs Tariff whether or not he has made a by-law for the purposes of that item or proposed item.
(3) Where, under this section, the Comptroller determines that an item, or a proposed item, of a Customs Tariff shall apply, or shall be deemed to have applied, to goods, that item or proposed item shall, subject to this Part and to the conditions, if any, specified in the determination, apply, or be deemed to have applied, to those goods as if those goods were specified in a by-law made for the purposes of that item or proposed item and in force on the day on which those goods are or were entered for home consumption.”
It was common ground between the parties (and an agreed fact) that the Government policy which was applicable in relation to determinations in respect of item 45 was to be found in, inter alia,
(a) Australian Customs Notice No 95/55 dated 11 September 1995;
(b) A news release issued by Senator Schacht (the then Minister for Small Business Customs and Construction – “the Minister”) dated 6 December 1995; and
(c) Australian Customs Notice No 95/74 dated 14 December 1995.
I refer below to these documents in more detail.
It was also common ground and an agreed fact that on or about 9 December 1994, the Minister wrote a letter to Mr Peter Barnett, the President of the Australian Mining Industry Council (“the Minister’s letter”). In the Minister’s letter, he referred to:
· the ongoing restructuring of the Australian economy, as part of which the government had significantly reduced tariffs with the general rate reducing gradually to 5% by 1 July 1996;
· the institution by the Government, within that framework, of procedures whereby duty free entry of certain goods would be allowed for specified industry policy reasons;
· the revision of the Tariff Concession System and the introduction of the Policy By-laws (“PBL”) System
and then stated:
“The government’s intention with the PBL System is to reduce input costs for industry, thereby encouraging investment in Australia, the establishment and development of world class resource (including downstream processing) projects and industrial projects while facilitating greater involvement in these projects by competitive Australian suppliers.”
The letter also referred to item 45 as one which might be of relevance to the Council’s members, and continued in the following terms:
“Accordingly, I have instructed my Department and the Australian Customs Service that the system should be administered in a manner that gives both sides, ie project proponents/importers and potential local suppliers, a better opportunity to comment on proposals for the concessional entry of goods, particularly when a high value of imports is involved.
Your members at times may well be project proponents and in such cases, I would encourage contact early in the design of projects with potential Australian suppliers, including through relevant supplier industry associations and the Industrial Supplies Offices, so that potential local suppliers are not “designed out” of the project. My desire is not only that the process be transparent and sound, but that competitive Australian suppliers be given genuine opportunity to bid for contracts. In this way, I am sure that local industry will develop and expand with consequential benefits for the economy and project developers.”
The Minister’s News Release of 6 December 1995 announced some refinements to the PBL System whereby certain projects could be given what was described as “Project Status”. The significance of Project Status was that the relevant importer (having secured Project Status for its project) was not required to engage in the tariff concession order process but could simply apply for concessional import. It was common ground that the applicant’s construction of the hot briquetted iron plant at Port Hedland had been accorded Project Status on 22 February 1995.
The Decision
On 30 May 1996, Mr Leslie Robinson, Acting Senior Inspector, Import Entry Applications Section, Commercial Services Division of the Australian Customs Service prepared a minute paper in relation to the applicant’s application for a determination under s 273 of the Customs Act (“Mr Robinson’s Minute”). That document, omitting some formal parts, read as follows:
“ITEM 45 – BHP HOT BRIQUETTED IRON PROJECT – PORT HEDLAND
1. Project status for the project was approved on 22 February 1995.
2. Applicant has requested Item 45 approval for eight (8) Fluidised bed reducing reactors (conical).
3. The goods are to be imported from Hyundai Heavy Industries (HHI), Korea.
4. The applicant was requested to show a suitable alternative for maximisation of local content instead of using the TCO route. The applicant actively used the ISO and manufacturing bodies to identify potential suppliers. Twenty-four local suppliers were potentially identified with a further two from the ISO (folio 33). Three local suppliers were eventually requested to tender for the reactors – ADI, ANI and ASC. The tenders were then evaluated. The process used would appear to meet the requirements for project status.
5. Their (sic) were a total of 16 reactors required (8 cylindrical and 8 conical style). The smaller cylindrical reactors are to be supplied through ADI at Bendigo even though they are approximately 6% more expensive than the overseas bidder – HHI.
6. Local tenders were called from ADI, ANI, and ASC for the larger conical reactors. It was not possible for ADI or ANI to move the reactors to the destination point because of transport logistics.
7. ASC were able to construct the goods but were not shortlisted as their bid was 26.8% higher than HHI bid and the delivery date was unacceptable.
8. ASC ex works date for supply of last four reactors is 16 April 1997 compared to HHI date of 31 January 1997. The project requires the final four units to be lifted into position over 4 weeks from 01 April 1997. It takes four weeks for the reactors to be positioned etc after arrival at Port Hedland. Folio 45 states the reactors are needed by 04 March 1997 to be ready by 01 April. However this is not entirely consistent with the critical path map at folio 1 which allows to the end of April 1997.
9. ASC revised their initial offer dated 09 November 1995. They are able to deliver the reactors by RO/RO to the site. Folio 13 shows that the last of the reactors can be ready ex works by 16 April. BHP require one month of preparation after the reactors reach the destination which would make the completion time end of May 1997.
10. The cost difference between HHI and ASC = $2,231,264 (26.8%). ASC was the more expensive of the two offers.
11. The critical path map (folio 1) shows the reactors are required to be ready between 01 April and 30 April. The applicant argues that HHI can have the reactors ready by 04 March 1997 and in place by the first week of April. The critical path map gives an end date of 30 April. Working on the information provide (sic) it would appear that ASC reactors would be up and completed by the end of May.
12. When the contract was awarded to ADI to supply the smaller reactors, they were awarded the contract even though they were 6.8% higher than HHI and their delivery date was also 5 weeks later than HHI date. I have checked the critical path map (folio 1) and I believe I have identified the smaller reactors to be line “Y232200 Reactors Module 1”. The date for these is between 03 January 1997 and 01 February 1997. The evaluation report pointed out the concern that ADI would have problems delivering by the critical time and it was decide (sic) to closely supervise the construction (folio 30). The delivery date in the evaluation for the smaller reactors was quoted as “at site March 1997” (folio 23). There would appear to be an inconsistency in that the larger reactors were to be supplied by HHI because (apart from cost) the local supplier was unable to meet the deadline. They would be completed and installed about four weeks past the end date of the critical path date. The supply of the smaller reactors would appear to have the same time delay but the contract was still awarded to ADI.
13. It would appear that the prime factor for opting for the overseas supplier of the larger conical reactors, was the cost – some 26.8% cheaper. This application does not appear to meet the policy guide-lines for the goods.
Les Robinson
A/g SI Tariff Policy
30 May, 1996”
Mr Robinson’s Minute as tendered in evidence bore an endorsement (the evidence is that it was made by Mr P L C Kittler then Director, Tariff Policy, Commercial Services Division of the Australian Customs Service) which read as follows:
“Les
There are policy issues raised in this case which shd be referred to DIST, in particular
- whether ASC was given an equal opportunity
- whether local suppliers adequately factored in the offshore contracts
- whether timeframe for supply and local supplier’s inability to meet it, are grounds for sourcing offshore
Draft memo to DIST for NMTV signature.
Q DPBL
31/5”
[I infer, from various pieces of evidence, that “DIST” is a reference to the Department of Industry Science and Technology, and that “NMTV” refers to the National Manager Tariff & Valuation.]
On 25 June 1996 the respondent’s delegate, Mr Richard Janeczko (the National Manager Tariff & Valuation), wrote to the applicant’s customs consultant conveying the respondent’s decision (being the decision challenged by this application), in the following terms:
“I refer to your application made on behalf of BHP Direct Reduced Iron Pty Ltd for an Item 45 Determination for eight (8) fluidised bed reducing reactors for use in the Port Hedland Hot Briquetted Iron Project.
As the delegate of the Chief Executive Officer, for the purposes of sub-section 273(1) of the Customs Act 1901, I must be satisfied that your application meets certain criteria, to be eligible for Item 45 consideration. Item 45 deals with goods designed for use in the mining or minerals processing industries.
Following examination of the information provided in your application, I am unable to make a Determination because the granting of concession in this instance would not be consistent with Government policy.
Evidence before me indicates that the eight larger units are to be imported because:
(i) the cost quoted by the local supplier was 26.8% higher than the successful overseas bidder; and
(ii) the delivery time quoted by the local supplier was not considered acceptable to BHP for supply of the larger reactors. It would appear that the contract for supply of the smaller reactors was given to a local manufacturer despite there being a question mark as to their ability to supply the goods by the required deadline.
This application is not considered to be consistent with the Government’s stated intention for the Policy By Law Scheme in concessions only being available if there is no local manufacturing capability.
I have therefore concluded that I am unable to determine that item 45 applies to the eight fluidising bed reducing reactors for the Port Hedland Hot Briquetted Iron Project, the subject of your application.
Yours faithfully
Richard Janeczko
National Manager
Tariff & Valuation”
I shall refer to the above letter as “the Respondent’s Letter”.
The evidence shows that Mr Robinson had prepared a draft of the Respondent’s Letter. Mr Janeczko made only two amendments to that draft. The first was immaterial to the disposition of this case. The second amendment was to insert the words “… concessions only being available if there is no local manufacturing capability” (see the second last paragraph) in lieu of Mr Robinson’s suggested wording which was:
“… ensuring investment in Australia in world class projects, whilst facilitating greater involvement in these projects by Australian suppliers. Project programs should identify and make contact with potential Australian suppliers early in the design of the project, so that local suppliers are not designed out of a project.”
I pause here to make this observation about Mr Janeczko’s deletion. The uncontradicted evidence before the Court was to the effect that:
· the design of the reactors was determined by the design of a plant to process iron fines into two million tonnes of iron briquettes each year. The design was not beyond the capability of Australian manufacturers, as evidenced by the fact that three of such companies reached the “pre-qualification” stage and submitted tenders; and
· all tenderers were given the same time in which to tender, namely five weeks.
THE GROUNDS OF REVIEW
Ground 1: Improper exercise of discretionary power in accordance with
a policy without regard to the merits of the particular case
Applicant’s Contentions
The applicant contended that it was plain from the Respondent’sLetter that he had purported to exercise the power conferred by s 273(1) of the Customs Act in accordance with Government policy, and without regard to the merits of the applicant’s case. The applicant relied in particular upon the third and fifth paragraphs of that letter, which I have set out above. Mr M J Buss QC who (with Mr R J Price) appeared for the applicant, submitted that Mr Janeczko had given no reason other than Government policy in the Respondent’s Letter.
Respondent’s Contentions
Mr P R Macliver, counsel for the respondent, submitted that the respondent’s delegate had not made his decision in accordance with policy without regard to the merits of the particular case. He referred me to that part of the Respondent’s Letter where Mr Janeczko stated that:
· he had examined the information provided in the application; and
· the evidence indicated that the eight larger units were to be imported because the cost quoted by the local supplier was 26.8% higher than the successful overseas bidder and the delivery time quoted by the local supplier was not considered acceptable to the applicant.
Mr Macliver further submitted that there was no basis upon which I could find that the delegate made his decision in accordance with a rule of policy without regard to the merits of the applicant’s case. He pointed out that the letter was brief and not a formal statement of reasons. The Court, so it was put, should not be concerned with “looseness of language” or “unhappy phrasing”, nor should it approach the construction of the letter “minutely and finely with an eye keenly attuned to the perception of error” – referring to Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272 (and the cases there cited) and ACI Operations Pty Ltd v Chief Executive Officer of Customs (Burchett J, Federal Court of Australia, 27 February 1998) at 5-6.
My Reasoning
Mr Janeczko’s affidavit evidence was that the Respondent’s Letter contained his reasons for refusing the application. I accept, of course, the beneficial construction which must be brought to bear when assessing his stated reasons. In that regard I agree, respectfully, with Burchett J in ACI Operations that expressions such as “… I am unable to make a Determination …” and “I have therefore concluded that I am unable to determine that …” should be understood as what his Honour described as:
“… a loose, almost colloquial, indication that the circumstances in which he was asked to exercise his discretion were not such as to enable him to conclude that he should exercise it in favour of the applicant.”
The approach I took was to search in the letter for any basis upon which the discretion was exercised, other than Government policy. I could find no other basis in the Respondent’s Letter. In the third paragraph, the reason which Mr Janeczko gives for not making a determination is because the granting of the concession “… would not be consistent with Government policy.” Then he considers the evidence of the applicant’s reasons for importing the Large Reactors. I acknowledge, as Mr Macliver submitted, that Mr Janeczko appears at that point to be considering the merits. But immediately after having done so, he simply (and exclusively) measures those matters against Government policy, in the following terms:
“This application is not considered to be consistent with the Government’s stated intention for the Policy By-Law Scheme in concessions only being available if there is no local manufacturing capability.”
“…what was required of the decision-maker, in respect of each of the applications, was that in considering all relevant material placed before him, he give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy [authorities cited].”
This passage was cited with approval by Hill J in Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87 at 98, and by Sheppard J in Hindi v Minister for Immigration and Ethnic Affairs (1988) 20 FCR 1 at 13. See also Minister for Immigration and Ethnic Affairs v Tagle (1983) 67 FLR 164 at 169. In a sense, Mr Janeczko can be seen to have had regard to the merits advanced by the applicant in that he referred to them, as I have said. But he mentioned these matters only to point out that they are inconsistent with Government policy. In doing so, in my opinion he exercised a discretionary power in accordance with the policy without regard (i.e. proper regard) to the merits of the particular case. The present matter stands in stark contrast to the situation in ACI Operations Pty Ltd where (at 6-7) it can be seen that the delegate went on to consider matters other than policy requirements before exercising his discretion. As Burchett J observed (at 8):
“The delegate thus made it quite clear that his decision was grounded in policy which he accepted as guiding the exercise of his discretion, and from which he saw no reason to depart in the individual case.”
In my view, the applicant has made out this ground.
Ground 2: Failing to take relevant considerations into account
Applicant’s Contentions
The applicant contended that the respondent had failed to take into account the following relevant considerations:
A. (i) the critical deadline for completion of the applicant’s hot briquetted iron project required that the Reactors be delivered by 4 March 1997;
(ii) no Australian manufacturer could meet this deadline; and
(iii) the applicant would suffer serious prejudice, namely a loss of approximately A$52.2 million in sales revenue, if this deadline was not met.
B. The cost of supply by an Australian manufacturer was 26.8% higher than that of an overseas manufacturer.
As a matter of convenience, I shall refer to the above as “the Factors”.
The applicant contended that the respondent (through Mr Robinson and Mr Janeczko) had made a mistake as to the nature of the relevant deadline in the critical path chart. As a result of that mistake, that deadline was not accepted as being a bona fide deadline so that the revenue losses of about $8.7 million for each week of delay were not given any consideration. As this mistake loomed fairly large in the case, I shall explain it at this point of my reasons.
1. At paragraph 8 of the Robinson Memorandum, Mr Robinson referred to the ASC tender for the supply of the last four Large Reactors. He correctly identified the date upon which ASC would have those reactors available ex works as being 16 April 1997. This can be seen as the last item on p.255 of the agreed bundle [“AB”].
2. In the next sentence he stated (again correctly) that the project required the final four units to be lifted into position over four weeks from 1 April 1997 (see the critical path chart item Y232250). He then stated:
“It takes four weeks for the reactors to be positioned etc after arrival at Port Hedland. Folio 45 [AB 206] states the reactors are needed by 04 March 1997 to be ready by 01 April. However this is not entirely consistent with the critical path map at folio 1 which allows to the end of April 1997.”
It is here that Mr Robinson made his first mistake. Folio 45 is part of the applicant’s letter dated 30 April 1996 to the respondent seeking the determination. A careful reading of the first paragraph on folio 45 reveals that there was to be a four week preparation period after delivery to site and that the final four Large Reactors were therefore required on site at Port Hedland by 4 March 1997. They would then be prepared on site for a four week period terminating on 1 April 1997 following which, over a four week period commencing on 1 April 1997 they would be lifted into position. It is quite clear that eight weeks were required from the time that the reactors were delivered to site to the time that they would be finally in position. ASC’s works were in South Australia. Even allowing no time for delivery (and the evidence shows that two weeks would have been required for delivery) ASC’s final four Large Reactors could not have been installed until mid-June (i.e. eight weeks from 16 April 1997). Allowing two weeks for shipment from ASC’s works to Port Hedland, the earliest that the last four Large Reactors from ASC could have been finally in position would have been, as the applicant submitted, the end of June 1997. As Mr Robinson correctly recognised in paragraph 8 of the Robinson Memorandum, HHI were offering a delivery date at Port Hedland of 31 January 1997 [AB 247]. That would have allowed four weeks of preparation on site (i.e. the whole of February) and then four weeks to lift into position i.e. the whole of March 1997, i.e. four weeks to spare.
3. In paragraph 9 of the Robinson Memorandum Mr Robinson confirmed his misunderstanding of the information contained at folio 45. In that paragraph, he impliedly acknowledged that ASC would take about two weeks to deliver ex works to site i.e. 30 April 1997. But he then only added a further one month of preparation to calculate the completion time as being the end of May 1997. The truth of the matter was (as folio 45 disclosed and as I have mentioned earlier) that there would have been four weeks preparation on site and then a further four weeks to lift the reactors into position i.e. the completion date would have been the end of June 1997.
4. In paragraph 11 of the Robinson Memorandum, Mr Robinson carried through that error. He referred to the fact that HHI could have the reactors ready by 4 March 1997 and in place by the first week of April. It is true that that would be four weeks ahead of the time provided for by the critical path chart i.e. 30 April 1997. He then repeated the statement that the ASC reactors would be up and completed by the end of May i.e. four weeks later than the deadline provided by the critical path chart.
5. Mr Robinson then turned his mind to the question whether that four weeks (as he calculated it, but which in fact was eight weeks) was as significant as BHP contended. To make that assessment he looked at the delivery time tolerance which BHP extended in respect of the Small Reactors.
6. At paragraph 12 Mr Robinson made his next mistake when he said that he believed he had identified the Small Reactors on the critical path chart as line “Y232200 Reactors Module 1”. The truth of the matter was that that line referred to the delivery of Module 1, comprising four of the Small Reactors and four of the Large Reactors. It was not the line which identified the dates by which the Small Reactors had to be delivered. By wrongly identifying line Y232200, Mr Robinson assumed that the delivery date shown in the critical path chart for all eight Small Reactors was between 3 January 1997 and 1 February 1997. It is quite clear that that was simply not the case. He then referred to a delivery date shown in VAI’s evaluation for the Small Reactors as being “at site March 1997”. That can be seen at what Mr Robinson identified as folio 23 and which is at AB 245. The problem with this part of Mr Robinson’s analysis is that the truth of the matter is that the date stipulated at AB 245 as being “beg [beginning] Mar 97 at site” was the date for the delivery of the last four of the Small Reactors which were to be combined with the last four of the Large Reactors during the eight week period commencing 4 March 1997 i.e. four weeks of preparation on site and four weeks lifting into position. Mr Robinson then concluded that there would appear to be an inconsistency, in that BHP was prepared to accept the delay of about five weeks in respect of the delivery time for the Small Reactors but would not accept a delay of four weeks in respect of the Large Reactors. All of this was based upon Mr Robinson ignoring the fact that four weeks on site preparation was required for preparing the reactors on site before commencing a four week period of lifting the reactors into position.
7. At paragraph 13 of his memorandum, Mr Robinson then rejected the delivery factor as being a genuine basis for BHP’s preference of HHI when he stated “It would appear that the prime factor for opting for the overseas supplier of the larger conical reactors was the cost – some 26.8% cheaper”. This led to final sentence: “This application does not appear to meet the policy guide-lines for the goods”, a sentence echoed in the Respondent’s Letter, which was largely drafted by Mr Robinson.
8. In my view, Mr Robinson got a critical aspect wrong. In terms of the critical path chart, the fact that ADI’s delivery date for the last of the Small Reactors was four or five weeks later than the delivery date offered by HHI was not important. Those four Small Reactors were to be combined with the last four of the Large Reactors to form Module 2. What was important in relation to the Small Reactors was that they be on site by 4 March 1997 at the same time as the last of the four Large Reactors. Mr Robinson’s misunderstanding was reflected in Mr Jeneczko’s rejection of the delivery time factor (in relation to the last four of the Large Reactors) in his letter, where he stated:
“It would appear that the contract for supply of the smaller reactors was given to a local manufacturer despite there being a question mark as to their ability to supply the goods by the required deadline.”
The applicant advanced two reasons why the respondent was obliged to consider the Factors. The first was that they were to be found in the subject matter, scope and purpose of the section: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40. The second was that the Factors were said to arise under the very Government policy which the respondent purported to apply and to which he was bound to have regard. A policy adopted by a decision-maker in order to structure a broad discretionary power was, so it was put, a relevant consideration which the decision-maker was bound to take into account. For that proposition the applicant relied upon Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 590 and Nikac v Minister for Immigration and Ethnic Affairs (1988) 16 ALD 611 at 621, 625.
In relation to the first reason, the applicant submitted that:
· the evident principal purpose of imposing tariffs upon imported goods was to protect those Australian industries which manufacture similar goods;
· the evident purpose of the tariff concession regime was to facilitate those Australian industries which required imported goods as part of their business, where no suitable substitute goods are available in Australia;
· the respondent was obliged to take into account the Factors in that those matters plainly were relevant and central to the evident object and purpose of the tariff regime and the concession regime; and
· with a “massive” $2 million (nearly four times the tariff duty applicable) difference in the purchase price between the overseas supplier (HHI) and the local supplier, and given the necessity for the reactors to be delivered by 4 March 1997 (in view of losses of revenue of about A$8.7 million for each week of delay), it was obvious that the principal purpose of imposing tariffs would not be offended, and that the purpose of the concession regime would be satisfied, if a determination under s 273(1) of the Customs Act were made.
The applicant submitted that the Factors were clearly relevant to the Government policy, particularly the aspects of the policy concerning whether there existed “competitive” local supply and whether “reasonable attempts” had been made to source the goods locally (the words in quotation marks being references to portions of the Minister’s News Release of 6 December 1995 and Australian Customs Notice No. 95/74 “ACN 95/74”). The applicant contended that it was plain from the Respondent’s Letter that he had failed to have regard to any of the Factors. It submitted that, whilst the respondent recited some of the Factors in that Letter, he merely gave lip service to them and did not consider them. He had proceeded so it was put, only in accordance with his (mistaken) interpretation of Government policy (as to which see below). The applicant contended that inflexible application of an administrative policy may provide evidence of a failure by a decision-maker to consider relevant matters, relying on Hindi, Tagle, Chumbairux v Minister for Immigration and Ethnic Affairs (1986) 74 ALR 480 at 493, 494 and Sacharowitz v Minister for Immigration, Local Government and Ethnic Affairs (1992) 33 FCR 480 at 486-487, 489. The mere assertion by a decision-maker that he has taken a relevant consideration into account would not, so it was contended, conclude the matter. The applicant relied on a passage in Turner v Minister for Immigration and Ethnic Affairs (1981) 4 ALD 237 at 241 where Toohey observed:
“It may be possible to demonstrate from a consideration of all the reasons leading to the decision or indeed from the decision itself, that a consideration has not been taken into account in any real sense.”
The applicant relied upon the following evidence of the respondent’s incorrect view of Government policy, namely (the first four references below to paragraph numbers are to paragraphs of Mr Janeczko’s affidavit sworn 27 August 1997) that:
(i) the ability of an Australian manufacturer to meet a delivery deadline would only be material to his decision if the manufacturer could not deliver the goods ‘at all” (paragraph 3);
(ii) if a local manufacturer could have met the delivery deadline had the applicant ordered the Reactors earlier, that would indicate the existence of a local manufacturer (paragraph 3);
(iii) the crucial factor was that there was a local manufacturer which could have produced and delivered the Reactors (paragraph 7);
(iv) whether the Reactors were delivered 4 or 8 weeks late was not a matter of material importance. Although delivery would be later than the applicant desired, this did not alter the material fact that there was a local manufacturer. It was not a situation where the local manufacturer could never deliver the Reactors (paragraph 7); and
(v) Government policy was that concessions were only available if there was no local manufacturing capability (the second last paragraph of the Respondent’s Letter).
The applicant submitted that the respondent’s proposition that, if a local manufacturer could have met a delivery deadline had the goods been ordered earlier, then a local manufacturer existed, was specious. The applicant contended that it would seldom be possible, under that test, for there not to be a potential local manufacturer. There was no issue raised in the present case that the applicant had “designed-out” the local manufacturers or did not give them adequate time to tender. The availability of a local manufacturer, so it was submitted, must be judged by reference to the bona fide requirements of the applicant. The applicant submitted that the respondent’s views on price and delivery were clearly contrary to the Government policy as expressed in the Minister’s News Release of 6 December 1995 and ACN 95/74. The delegate had thus effectively dismissed the significance of the Factors and thereby failed properly to take them into account.
Respondent’s Contentions
The respondent submitted that this ground of review (failing to take into account relevant considerations) could not be made out on the basis of an alleged failure to take into account individual facts or pieces of evidence. The respondent submitted that the facts alleged not to have been taken into account by the respondent, (which I have, for convenience referred to as “the Factors”) were not “factors” which the delegate was bound to take into account by implication from the subject matter, scope and purpose of s 273 of the Customs Act or other provisions of that Act and the Customs Tariff Act. The respondent contended that the only factor which the delegate was bound to (and did) take into account was whether the Large Reactors could be manufactured in Australia. In that regard the respondent relied upon what was said in Li Shi Ping v Minister for Immigration, Local Government and Ethnic Affairs (1994) 35 ALD 225 at 236 (with which the other members of a Full Court of this Court agreed).
In oral argument, Mr Macliver pointed out that “of course” the policy does not have to be followed; a decision-maker could choose not to follow a policy in appropriate circumstances. The applicant was asserting, in effect, that there was a policy to grant determinations if an applicant could show that the particular goods it sought to import were not goods that were made in Australia or capable of being made in Australia. Mr Macliver acknowledged that if an applicant were able to demonstrate that a decision had been made to refuse the determination, contrary to the policy (and no notice had been given to the applicant of an intention not to follow the policy in a particular case) that would be a breach of natural justice. But, so the respondent submitted, that would not mean that there was a failure to take into account a relevant consideration.
The respondent contended that, in any event, the Respondent’s Letter demonstrated that he did have regard to the Factors in assessing and making his decision. Mr Macliver again referred me to that part of the Respondent’s Letter where Mr Jeneczko stated that:
· he had examined the information provided by the applicant in its application;
· the eight larger units were to be imported because the cost quoted by ASC was 26.8% higher than that of HHI; and
· the delivery time quoted by ASC was not considered acceptable to the applicant.
Mr Macliver pointed out that the applicant’s application had referred to the different delivery dates offered by ASC and HHI for the final four Large Reactors, had stated that the disparity was of the utmost significance as the Large Reactors were on the project’s critical path chart and the final four Large Reactors had to be on site by 4 March 1997, and that each week by which the project completion was delayed would cost $8.7 million in lost sales. Mr Macliver submitted that it could not be established that Mr Jeneczko did not have regard to those matters in making his decision. The weight which Mr Janeczko placed on them was a matter for him. Nor could it be said, so he argued, that the respondent had failed to take the Factors into account simply because “at the end of the day” he made a decision not to make a Determination.
Further, in relation to the applicant’s claim that it contracted with HHI and not ASC due to a difference of ten weeks in the dates of delivery to site, the respondent relied upon the agreed fact that (as matters eventually transpired) the final four Large Reactors were not delivered by HHI until late April 1997. Therefore, so it was submitted, if the respondent had failed to take the matters of deadline and costs of delay into account, he was not obliged to do so “… because they were based upon a statement of intended future action (the delivery of the final four Large Reactors by HHI on or before the critical deadline of 4 March 1997), and that intended future action did not occur.”
In response to the applicant’s submission that the relevant Government policy meant that the respondent was bound to take into account the Factors (in the sense that a failure to do so would constitute a failure to take a relevant consideration into account) the respondent’s submissions were as follows. First, that the existence of a policy cannot give rise to factors which a decision-maker is bound to take into account. Secondly, that the factors which a decision-maker is bound to take into account are governed by what is either expressly or impliedly set out in the relevant legislation. In any event, the Government policy as set out in ACN 95/74 did not require the respondent to make a detailed assessment of the competing tenders of ASC and HHI for the Large Reactors in order to determine whether the former’s tender was competitive in a commercial sense with HHI’s tender. Mr Macliver said that the reference in that document to “competitive local supply” (see AB 294) had to be seen in its proper context i.e. in relation to the granting of project status. That reference to “competitive” and similar references in the Minister’s News Release of 6 December 1995, and his letter dated 9 December 1994 to the President of the Australian Mining Industry Council, were used in the sense that Australian suppliers should be given an opportunity to compete with overseas manufacturers. The policy did not require the respondent to assess whether in strictly commercial terms one tender was commercially competitive with another tender. Severe difficulties would be posed for decision-makers if they were required to make such a commercial comparison. This was said to be exemplified in the present case, where the difference in delivery times was stated as being ostensibly ten weeks. A meaningful comparison of competing tenders might well require consideration of matters such as past experience in manufacturing products of a similar nature, whether the shorter delivery time had been quoted unrealistically in an attempt to gain the contract, the quality and training of the respective workforces, and the organisational structures and management qualities of the two entities. Such a comparison in this case, so it was submitted, might have led to a conclusion that while HHI promised an earlier delivery, it would be unlikely to meet its agreed delivery date, but it was not a comparison which the respondent was obliged to carry out under the Government policy. Whether a price or delivery date difference was so great as to warrant a departure from Government policy was a matter of assessment for the decision-maker. In terms of the Government policy, Mr Macliver submitted that the expression “not normally made in Australia” should be interpreted as “not normally made or capable of being made in Australia”. Mr Macliver, in oral submissions, made a comparison of ASC’s original tender of 3 November 1995 (AB 99) and its revised tender of 8 November 1995 (AB 252). Both those tenders were for the delivery of 16 reactors. He said that it did not appear that the applicant, having selected another contractor for the eight Small Reactors had made any attempt to return to ASC and enquire whether, in those changed circumstances, it could meet a delivery deadline of 4 March 1997 for the last four Large Reactors. Mr Macliver submitted that it may not have been accurate for the applicant to have made the claim, as it did, that ASC’s delivery time for eight Large Reactors was almost eight weeks later than the date required by the project schedule. As I understand Mr Macliver submission, he took me to that matter as simply being “one more indication” that it could not be said that on the facts of the matter, the respondent was bound to grant the application and was further support for the respondent’s submission that the Government policy did not require a detailed assessment of the comparative commercial merits or competitiveness of the two applications.
Whether Mr Janeczko misunderstood the Government Policy
Mr Macliver’s response to the applicant’s submissions that the evidence (principally Mr Janeczko’s affidavit sworn 27 August 1997) showed that Mr Janeczko misunderstood the relevant Government policy was as follows. First he submitted that the use by Mr Janeczko of the words “material to his decision” in paragraph 3 of his affidavit should, in the context of the rest of that affidavit and the Respondent’s Letter, be understood in the sense of “giving great weight to” or “it being highly relevant” or “something that would result in a determination being allowed”. Paragraph 3 of Mr Janeczko’s affidavit read as follows:
“3. In paragraph 4 of his affidavit, Mr Sprunt [the applicant’s Customs Consultant] refers to a meeting on 14 February 1996 which I attended. At that meeting, the issue of policy by-laws was discussed with the Applicant’s representatives in a general manner, including the issue of delivery dates. I recall informing Mr Sprunt and Mr Milnes Ellis that the ability of an Australian manufacturer to meet a delivery deadline would be considered as material if that manufacturer could not deliver the goods at all, despite having previously manufactured such goods. I further recall saying that if a local manufacturer could have met the delivery deadline if the applicant had ordered the goods earlier, that would indicate the existence of local manufacture.”
Mr Macliver drew my attention to the fact that the evidence of both Mr Sprunt and Mr Janeczko was that the latter at the very same meeting had said
“Delivery might sometimes be a factor; price would rarely be.”
Mr Sprunt’s note on this point (in which he recorded Mr Janeczko’s explanation of Government policy), when read in full was as follows:
“If Australian industry had the capability to manufacture the specific goods, then a concession would not normally be granted. Not much weight would be given to commercial considerations. Delivery might sometimes be a factor; price would rarely be. Even the inability to transport equipment to its destination (as in the case of ADI for the larger reactors) did not appear to be a matter of much concern.”
As this is an evidentiary matter, I think it is convenient to state my finding at this stage. When one reads paragraphs 3 and 4 of Mr Janeczko’s affidavit, it is quite clear that, while he agreed with Mr Sprunt’s abovementioned note, this was subject to the qualification which was set out in paragraph 3. In other words, I find that Mr Janeczko regarded paragraph 3 as prevailing over paragraph 4. The emphasis under the words “at all” in paragraph 3 of Mr Janeczko’s affidavit appeared in that document. He returned to the same point in the last sentence of paragraph 7 of his affidavit where he said:
“This was not a situation where the local manufacturer could never deliver the subject goods.”
I find that it is more likely than not that Mr Janeczko interpreted the relevant Government policy on the basis that the test was whether the Australian manufacturer could deliver the goods at all (i.e. where it could not be said that the local manufacturer could never deliver the subject goods). I reject the submission that he used the word “material” in the sense suggested by the respondent’s counsel.
Mr Macliver defended Mr Janeczko’s interpretation of the Government policy in terms of the last sentence of paragraph 3 (set out above) on the basis that the fact of different delivery dates was another issue altogether. The mere fact that an Australian manufacturer could not meet a specified delivery date but could meet a later one “would clearly demonstrate that there was an Australian manufacturer capable of manufacturing the goods”.
In view of the conclusions which I have drawn in relation to this ground of appeal generally, I do not need to deal specifically with this contention. It does not require any factual finding. The same applies to Mr Macliver’s submissions in relation to Mr Janeczko’s statement (in paragraph 7 of his affidavit) that the crucial factor was that there was a local manufacturer which could have produced and delivered the Reactors. For similar reasons expressed immediately above, I shall not deal separately at this stage with that point.
Mr Macliver defended Mr Janeczko’s explanation of his reasoning in paragraph 7 of his affidavit that “whether the reactors were delivery (sic) four or eight weeks late was not a matter that I considered to be of material importance in the making of my decision” on the basis that this was “not something which affects the crucial material fact that there was an Australian manufacturer capable of making the goods in question and of having them delivered to the applicant’s site.”
Mr Macliver also defended the proposition that a delegate could give consideration to whether an Australian manufacturer could have been capable of meeting a deadline if the goods had been ordered earlier. But he said that that was not the case in this matter. Accordingly there is no need for me to deal with that particular point.
In my view, taking Mr Janeczko’s affidavit as a whole, it is quite clear, as I have found above, that Mr Janeczko took the view that if the Australian manufacturer could, at any time, deliver the goods then that was a sufficient basis for refusing a determination. I think that in doing so he misconstrued Government policy. I think also that he misunderstood Government policy when he concluded that price would rarely be a factor.
My (further) Reasoning on Ground 2
I reject the respondent’s submission that the existence of a policy cannot give rise to factors which a decision-maker is bound to take into account in the sense that a failure to do so will constitute a failure to take a relevant consideration into account. I think that it can readily be implied into s 273 that if the Executive arm of government formulated a policy for the making of determinations under that section, then the respondent was bound to take into account such factors as that policy indicated were material to such a decision. I do not think that it can be said that such a conclusion flows from what was decided in Drake, in particular at 590 in the report of that case. In that case, the Full Court held that the initial decision-maker was entitled to take into account Government policy. If he had done so then, on review, the existence of that policy would plainly be a relevant factor for the Administrative Appeals Tribunal to take into account. However, I respectfully agree with the conclusion reached by Wilcox J in Nikac at 625 that although a non-statutory policy is not binding upon a decision-maker, it is always a relevant consideration in the making of a decision.
The next question is whether the fact that ASC could (on the applicant’s case) only offer delivery at a date which was at least eight weeks later than the delivery date offered by the overseas supplier (and would thus delay completion of the project by that period at a cost of $8.7 million per week) and the fact that its price was 26.8% higher than that of the overseas manufacturer are “factors” which the respondent was bound to take into account or were they simply individual facts or pieces of evidence?
In my view, the Factors were the two key matters which together indicated whether there was a competitive local supplier. In that context I refer to the following passage in the Minister’s News Release of 6 December 1995 (AB 282):
“The Government reaffirmed the overriding policy principle that PBL concessions should only be granted when it was clear that there was no competitive local supplier and that there must be a clear mechanism in place to demonstrate this outcome.”
In ACN No 95/74 there appear the following relevant statements:
“All applications (including those for Item 43 or 52 where the complete machine is not being imported) must give detailed information on the applicant’s efforts to source the goods from local manufacturers. Evidence of approaches to relevant supplier industry associations and ISOs, tender documents and replies from local manufacturers will be taken into account when evaluating the application.
. . .
In accord with the Government’s policy, the delegate will take into account whether the goods to be imported are:
. . .
· not normally made in Australia. As a guide, in considering whether Australian companies make goods, consideration will be given to whether they are:
· producing now for production line items; or
· having (sic) made the specific goods within the last two years for one off items.”
The third paragraph of the Minister’s letter of 9 December 1994 read:
“The Government’s intention with the PBL System is to reduce input costs for industry, thereby encouraging investment in Australia, the establishment and development of world class resource (including downstream processing) projects and industrial projects while facilitating greater involvement in these projects by competitive Australian suppliers.”
One of the agreed facts was that the Government policy applicable to determinations under item 45 was to be found, inter alia, in ACN 95/55, the Minister’s News Release and ACN No 95/74. I acknowledge that the list did not include the Minister’s letter of 9 December 1994, but it was in evidence and, I think, confirms the relevance of local supplier competitiveness.
From the documents it can be seen that the decision-maker had to consider the interests of the importer in having low cost inputs and the interests of any Australian manufacturer wishing to supply the relevant goods. In my view, the questions of the delivery time and price offered by the Australian manufacturer were at the very core of the decision-making process and thus constituted matters which the respondent was obliged to take into account when balancing the respective interests of the importer and the Australian manufacturer and deciding whether to make a determination.
The evidence discloses, in my view, (and I so find) that the respondent’s delegate first made a mistake in calculating the delay which, on the documents before him, would have resulted from reliance on the Australian manufacturer. That mistake led him to reject the applicant’s submission on that point. In essence, the respondent, on the basis of that mistake, dismissed the applicant’s bona fides in advancing that argument. Furthermore, it is clear, as I have found above, that the respondent’s delegate thought that the test was whether the manufacturer could ever deliver the goods, not whether it could meet a delivery deadline. That led to there being no consideration of the potential loss of approximately A$52.2 million in sales revenue to the applicant. Then, in relation to the price differential between the two offers, it can be seen, in my view, that the respondent’s delegate simply decided to apply what he perceived as being the Government policy.
I reject the submission, advanced on behalf of the respondent, that as matters turned out, HHI’s failure to meet the deadline was a justification for not taking the Factors into account. In my view, the respondent’s delegate was obliged to take into account the Factors as they appeared from the material before him and as they appeared from any other information which he saw fit to obtain or rely upon. I do not consider that the validity of the decision-making process can be affected, in this matter, by what subsequently transpired, as indicated in paragraph 19 of the agreed statement of facts. Much more evidence would be required. That evidence might well include whether the applicant was protected by contractual provisions giving rise to damages for late delivery and the like.
Similarly I reject the respondent’s contention that it would have placed an undue burden on the decision-maker to have to engage in a comparison between the terms offered by the overseas supplier and the Australian manufacturer. In each case it will be a question of degree. However, matters of delivery, time and price were so essential to the policy that I think some inquiry of this type was required. It might well have been sufficient simply to obtain the views of the Australian manufacturer either in conjunction with or as an alternative to an independent expert in the field. Nevertheless, in my view some evaluation had to be made of the Factors when balancing the respective interests of those sought to be protected by the policy. In my view, the applicant has made out Ground 2 of its application for review.
Ground 3: Failure to consider whether the determination of the applicant’s application, purportedly in accordance with Government policy, was reasonable
In oral argument, Mr Buss conceded that there was nothing advanced under this ground of application which was not found within Grounds 1 and 2. Accordingly, in my opinion, it does not require separate consideration.
Ground 4: Further alleged improper exercise of power
The applicant contended that the respondent’s decision was an improper exercise of the power conferred by s 273(1) of the Customs Act in that, in the course of his decision-making, the respondent’s delegate seriously misconstrued or misunderstood the terms and purposes of the relevant Government policy, and, in consequence, failed to take a relevant consideration into account in the exercise of such power. The relevant consideration which the applicant submitted had not been taken into account was identified as being the Government policy, properly construed and understood. Government policy, as properly construed and understood, so it was put, was that a determination should not be made under s 273(1) if the relevant goods could be manufactured in Australia on terms which were competitive with those offered by an overseas manufacturer. The applicant argued that the respondent’s (erroneous) understanding of Government policy was that a determination should not be made under s 273(1) if the goods in relation to which the determination was sought could be manufactured in Australia, irrespective of:
· the terms of sale offered by the Australian manufacturer and the overseas manufacturer; and
· any prejudice which would be suffered by the importer if it was obliged to accept the terms offered by the Australian manufacturer in preference to those offered by the overseas manufacturer.
The applicant submitted that the mistaken application of a policy by a decision-maker will entitle an applicant to relief, citing Curragh Queensland Mining Ltd v Wilson (1989) 17 ALD 636 at 637, for that proposition.
Respondent’s Contentions
The respondent agreed that where a decision-maker is bound to consider the existence and contents of a policy, a serious misconstruction of its terms or misunderstanding of its purposes in the course of decision-making may constitute a failure to take into account a relevant factor. In that regard the respondent referred to Minister for Immigration v Gray (1994) 50 FCR 189at 208. Mr Macliver submitted that the respondent’s delegate did not seriously misconstrue or misunderstand the Government policy as set out in ACN No. 95/74 in relation to the policy by-law system. He referred to the introductory paragraph of that document as containing the essence of that policy. That paragraph read:
“Schedule 3 to the Customs Tariff Act 1987 (the Tariff) sets out the duty to be paid on each good imported into Australia. The principal objective of the duties imposed is to provide assistance to Australian manufacturers of goods. The organisation of the Tariff is such that some goods not made in Australia are also subject to duty. Those duties can impose costs on firms, while not providing assistance to any local manufacturers. Therefore, under certain conditions, the Government foregoes the duty on goods not made in Australia, as a means of reducing firms’ input costs.”
The notion of “competitive manufacture” in assessing whether imported goods should bear the ordinary rate of duty or should be granted the concessional rate was, so it was contended, quite contrary to the whole rationale of imposing import duties on goods manufactured overseas. The basis for imposing such duties was the protection of Australian manufacturers who would otherwise be unable to compete with overseas goods. It was highly likely that a product manufactured overseas and in respect of which a duty was imposed would cost less than the same product manufactured in Australia, as was the case here with the costs quoted by the Korean manufacturers for the Large Reactors and that therefore the Australian goods would not be competitive in a commercial sense. Mr Macliver submitted on behalf of the respondent that issues such as the comparative terms of sale offered by Australian and overseas manufacturers and their commercial competitiveness, and any prejudice which might be suffered by an importer if it accepted the terms offered by an Australian manufacturer in preference to an overseas manufacturer, were not issues that were part of or covered by the Government’s policies. He repeated his earlier submission that there would be severe difficulties imposed upon decision-makers if they were required to make a commercial comparison of the terms offered by an Australian and an overseas manufacturer for the supply of particular goods.
My Reasoning
In my view, this matter has already been raised and decided in the context of Ground 2 of the applicant’s grounds. I have already held that those provisions of the Government policy to which I referred required the respondent to take into account matters such as delivery times and price. I have also expressed my view that the respondent’s delegate misunderstood the Government’s policy on these matters. Accordingly, I do not consider that it is necessary to revisit the matter. In their submissions (both written and oral) it was apparent that the parties recognised this degree of overlap.
Ground 5: Taking an irrelevant consideration into account
The applicant contended that the respondent’s delegate, having misconstrued the information provided to him, took into account an irrelevant consideration. The misconstruction of the information provided to him has already been identified above as comprising the delegate’s wrongful assumption that the contract awarded to ADI for the supply of the Small Reactors was contrary to the requirements of its critical path chart. The irrelevant consideration was said to be the delegate’s conclusion that it was of no particular consequence to the applicant whether or not an Australian manufacturer could deliver the Large Reactors by 4 March 1997. This conclusion was said to be erroneous and, in the circumstances, unreasonable.
Respondent’s Contentions and My Reasoning
The respondent argued that it was “a very large step indeed” from the relevant reference in the Respondent’s Letter (the passage which referred to “a question mark”) to a conclusion that it was of no particular consequence to the applicant whether or not an Australian manufacturer could deliver the Large Reactors by 4 March 1997. I disagree. I do not think that any other interpretation can be placed upon what was said in the Respondent’s Letter. It was the basis for rejecting that part of the applicant’s case which was based on the delivery time.
In his written submissions as filed, the respondent said this:
“While it is conceded that the delegate was in error in his conclusion that there was a question mark concerning the ability of the local manufacturer of the small reactors to supply them by the required deadline, that incorrect finding of fact was not critical to the delegate’s decision.”
In oral argument the respondent withdrew that concession and said, in effect, that the error was in misunderstanding the critical path chart. The respondent relied upon the proposition that there was no error of law in simply making a wrong finding of fact, relying on McPhee v Minister for Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 77 and Waterford v The Commonwealth (1987) 163 CLR 54 at 77. However, as the respondent acknowledged, if it is established that the decision-maker has treated an irrelevant consideration as an element leading to the formation of his or her decision, this ground of review is made out. In my opinion, the respondent’s delegate did treat the relevant consideration (as identified above by the applicant) as an element leading to the formation of his decision. This can be seen not only from the passage in the Respondent’s Letter to which I have just referred, but also in paragraphs 12 and 13 of Mr Robinson’s Memorandum. In my view the applicant has made out this ground also.
Ground 6: Denial of natural justice
Applicant’s Contentions
The applicant contended that the respondent’s delegate denied it natural justice by drawing the conclusion (that it was of no particular consequence to the applicant whether or not an Australian manufacturer could deliver the Reactors by 4 March 1997) without giving any prior notice to the applicant and without affording it any opportunity to be heard in relation to that conclusion. The conclusion was contrary to the submission made by the applicant and the delegate’s conclusion was erroneous. Mr Buss submitted that common fairness required that the respondent squarely put to the applicant that he did not propose to accept its contention about the importance of delivery times, and seek an explanation. Had that been done, so it was submitted, there could not be any doubt that the explanation which appears in the applicant’s affidavits would have been given.
Respondent’s Contentions
In oral argument, although not in his written submissions, Mr Macliver submitted that there was no obligation on the respondent’s part to accord procedural fairness to the applicant. The decision was simply one which might affect the applicant’s commercial interests, but was not one which attracted the requirements of procedural fairness.
In any event, the respondent repeated his submission that the delegate had reached no such conclusion as alleged.
My Reasoning
I have already, in the context of considering Ground 5, found that the respondent’s delegate did reach the conclusion upon which the applicant relies for both Grounds 5 and 6.
I accept the applicant’s submission that there was a duty on the respondent’s part to observe procedural fairness in this matter. I shall state my reasons briefly. First, there were significant financial consequences to the applicant depending upon how the decision fell. The Customs Dutyattracted by the Large Reactors was about $585,000. Secondly part of ACN No. 95/74 reads:
“5. APPLICATION ASSESSMENT PROCESS
The Government seeks to ensure that the process for examining PBL applications is transparent, fair and equitable.”
In my view, that assurance gave rise to a legitimate expectation on the applicant’s part that its application would be accorded procedural fairness: Century Metals and Mining NL v Yeomans (1989) 40 FCR 564 at 588-592. To adopt the Full Court’s language (at 592) to the circumstances of the present case, I consider that procedural fairness entitled the applicant to hold the respondent to its promise of a process that was “transparent, fair and equitable”. I regard that relevantly as being a promise of procedural fairness itself. I now turn to the content of that procedural fairness in the present matter.
Before the respondent’s delegate made his decision, there had been two meetings between the parties to discuss the application of item 45. It was common ground that at neither of those meetings did the respondent raise any concerns about what he perceived as an inconsistent approach on the applicant’s part to the question of delivery times. As was recognised in Somaghi v Minister for Immigration, Local Government and Ethnic Affairs (1991) 31 FCR 100 at 119, in a particular case, fairness may require an applicant to have the opportunity to deal with matters adverse to its interests which the decision-maker proposes to take into account, even if the source of concern by the decision-maker is not information or materials provided by a third party. In my view this is such a case. I take into account how little would be required of the respondent in according such procedural fairness. It could have been as little as picking up a telephone and raising his concerns, which would have been identified by reference to item Y232200 in the critical path chart. His attention would have been directed to the correct item (item Y232250). The respondent’s misconception would then have become immediately apparent, there would have been no error and, quite possibly, no adverse conclusion.
I think that in the circumstances of this matter the applicant was denied procedural fairness in the manner claimed in Ground 6.
Ground 7: Wednesbury unreasonableness
Applicant’s Contentions
The applicant contended that, in the circumstances, the only decision reasonably open, upon proper consideration of the relevant Government policy (properly construed and understood) and the merits of the particular case, was to grant the applicant’s application and make a determination under s 273(1) of the Customs Act. The applicant submitted that the delegate misconstrued its critical path chart, misconstrued the Government policy, made conclusions adverse to it which were not logically probative and which were made without affording it any opportunity to be heard. The delegate had either ignored or unreasonably, wrongly and too narrowly interpreted, the concept of “competitive” as used in Government policy and had substituted for that policy his own idiosyncratic notion of “no local manufacturing capability”. The applicant contended that in these circumstances, the exercise of the power was so unreasonable that no reasonable person could have so exercised it.
Respondent’s Contentions
The respondent submitted that Wednesbury unreasonableness was clearly not made out on the facts and circumstances of this case. Mr Macliver relied upon the arguments which he had advanced in relation to Grounds 1 to 6. He submitted that, in particular, when regard was had to the late delivery of the final four Large Reactors by HHI, the delegate’s decision was clearly not unreasonable in the Wednesbury sense.
My Reasoning
I reject the applicant’s submissions in relation to this ground. I have found several, largely inter-related, grounds upon which the applicant is entitled to review. However, I do not consider that it has been shown that the exercise of the power was so unreasonable that no reasonable person could have so exercised it. For example, a proper assessment might well have shown that either the Government policy (properly construed) militated against making a determination in the particular factual context (as fairly found) and that there were no sufficient reasons why the policy should not apply. Alternatively, it might emerge that, on the facts, a determination was consistent with Government policy but there were good reasons why the policy should not be applied in the particular case. The present matter is not one where, under the relevant statutory scheme, an applicant can be said to have an entitlement to a determination upon satisfaction of a given set of factors. There is a residual discretion. I do not think that the decision, when looked at objectively, was so devoid of any plausible justification, that no reasonable person could have made that decision. It may well have been the case that if the delegate had given proper consideration to the delivery time differences and had investigated whether ASC had been given an opportunity to re-tender on the basis of supplying only the eight Large Reactors but in a shorter time frame, he could refuse to make a determination without being held to have acted unreasonably in the administrative law sense.
For those reasons I reject Ground 7.
RELIEF
It was common ground that if I found one or more of the grounds of review to have been made out, the appropriate order was that the decision of the respondent’s delegate made on 25 June 1996 be set aside and the matter be remitted for consideration according to law. Where the parties differed was over which law and policy was to be applied by the decision-maker. The applicant sought that the decision be set aside ‘with effect from 25 June 1996” and that its application be referred to another delegate of the respondent for reconsideration “as at 30 April 1996, alternatively as at 25 June 1996”. The significance of the differences between the parties arises out of the fact that certain legislative and policy amendments took effect in July 1996.
Legislative Changes
Section 273 of the Customs Act has not been amended. However, the Customs Tariff Act 1987 was repealed by the Customs Tariff Act 1995. The Customs Tariff Act 1995, although enacted in that year, did not commence until 1 July 1996. There is some significance in that fact. It arises out of the following. The term “Customs Tariff” (which, of course, is a key term so far as s 273 is concerned) is defined by s 4(1) of the Customs Act in the following terms:
“Customs Tariff means an Act imposing duties of customs, and includes such an Act that has not come into operation.” [Emphasis added]
As senior counsel for the applicant explained, there is an element of contemporaneous and prospective operation in s 273. By s 273(1) the respondent is given power to determine that an item or a proposed item of a Customs Tariff shall apply or shall be deemed to apply to particular goods. Where he does so, s 273(3) provides that subject to Part XVI of the Customs Act and to any conditions specified in the determination, that item or proposed item shall apply or be deemed to have applied to those goods as if they were specified in a by-law made for the purposes of that item or proposed item and in force on the day on which those goods are or were entered for home consumption. At the time when the applicant made its application for a determination in this matter (on 30 April 1996) the Customs Tariff Act 1995 had been enacted but had not yet come into operation. That was still the case when the respondent’s delegate made his decision on 25 June 1996. The delegate could have determined that an item in the Customs Tariff Act 1987 applied or he could have determined that an item in the Customs Tariff Act 1995 applied. It was for that reason that the applicant sought and obtained leave, towards the end of the hearing to amend its application. The amendment was to identify the decision challenged as being not only a refusal to make a determination under the Customs Tariff Act 1987 but also not to make one under the Customs Tariff Act 1995. Item 45 of Schedule 4 to the Customs Tariff Act 1995 was materially identical in its terms to item 45 of Schedule 4 to the Customs Tariff Act 1987. It is necessary, at this stage, to refer to two other relevant statutes. The first is the Customs Tariff (Miscellaneous Amendments) Act 1996 being No. 15 of 1996. Section 2 of the Customs Tariff (Miscellaneous Amendments) Act 1996 provides that it commences on 1 July 1996 immediately after the Customs Tariff Act 1995. Section 3 of the Customs Tariff (Miscellaneous Amendments) Act 1996 provides that each Act, specified in a schedule to it, is amended or repealed as set out in the applicable items in the schedule concerned and any other item in a schedule to the Act has effect according to its terms. Item 2 of Schedule 2 to the Customs Tariff (Miscellaneous Amendments) Act 1996 relevantly provides as follows:
“2. By-laws and determinations made or taken to have been made in relation to the 1987 Act
(1) This item applies to a by-law made under s 271 of the Customs Act or a determination made under s 273 of that Act that was in force immediately before 1 July 1996.
(2) If:
(a) a by-law or determination to which this item applies was made in relation to item … 45 …in Schedule 4 to the 1987 Act; or
(b) …
then, on and after 1 July 1996:
(c) the by-law or determination is taken to have been made in relation to the item having the same item number (whether alphanumerical or not) in Schedule 4 to the 1995 Act [defined as the Customs Tariff Act 1995]; and
(d) the by-law or determination has effect as if the reference in it to that item were a reference to the item having the same item number (whether alphanumerical or not) in Schedule 4 to the 1995 Act.
(3) Subitem (2) does not affect the operation of the by-law or determination in relation to the 1987 Act.
(4) Any other by-law or determination to which this item applies (including any by-law or determination that was taken to have been made in relation to an item in Schedule 4 to the 1987 Act) ceases to have effect on 1 July 1996.”
In summary, it can be seen that the intention of this provision was that a determination made before 1 July 1996 that (relevantly) item 45 applied, would thereafter take effect as if it were a determination under the Customs Act that item 45 of Schedule 4 to the Customs Tariff Act 1995 would apply to the goods concerned. I shall refer to that as “the deeming effect”.
I interpolate here to note that the applicant contends that this item has no application to the present matter simply because, on the facts, no determination was made by the respondent. I accept that submission so far as any direct effect is concerned. That is what the item says. However, as will be seen below, I consider that there is matter within item 2 which is picked up by reference in subitem (4) of item 42 of Schedule 1 to the Customs Amendment Act 1996, being No. 30 of 1996. This is the second of the two other relevant statutes to which I referred above. That Act was assented to on 9 July 1996 and commenced on 15 July 1996, but immediately after the Customs Tariff (Miscellaneous Amendments) Act 1996 commenced. Section 3 of the Customs Amendment Act 1996 provides that each Act, specified in a schedule to it, is amended or repealed as set out in the applicable items in the schedule concerned and that any other item in a schedule to that Act has effect according to its terms. Item 42 of Part 2 of Schedule 1 to the Customs Amendment Act 1996 relevantly provides that it applies to any determination made under s 273 of the Customs Act and in force immediately before 15 July 1996 if it is taken to be made in relation to item 45 of Schedule 4 to the Customs Tariff Act 1995 by virtue of item 2 of Schedule 2 of the Customs Tariff (Miscellaneous Amendments) Act 1996. Subitem (2) of item 42 relevantly provides that a determination to which the item applies is to be taken to have been revoked with effect from 15 July 1996. That is, the deeming effect of item 2 of Schedule 2 of the Customs Tariff (Miscellaneous Amendments) Act 1996 was fairly short-lived, 14 days to be precise. Subitem (4) of item 42 provides that if a person had before 15 July 1996 requested the respondent to make a determination under s 273 of the Customs Act to enable goods to be covered “by an item referred to in subitem (1)” and that request was still outstanding at 15 July 1996 then the request is to be treated as if it were a request made under the Customs Act as amended by the Customs Amendment Act 1996. The applicant submitted that just as item 2 of Schedule 2 to the Customs Tariff (Miscellaneous Amendments) Act 1996 did not apply to the present matter, because no determination had been made, so subitem (1) and (2) of item 42 of the Customs Amendment Act 1996 had no application to this matter. However, Mr Buss submitted that if I set aside the respondent’s decision but I found against the applicant in respect of its contention that it had (by virtue of s 8 of the Acts Interpretation Act 1901) any accrued rights in relation to a determination under s 273 when read with the since repealed Customs Tariff Act 1987, then subitem (4) of item 42 applied. To some extent there was common ground between the parties. When one takes into account the amendments made to the application, I think that Mr Macliver’s primary submission (made also in the context of whether there was a relevant “contrary intention” for the purposes of s 8 of the Acts Interpretation Act) was that if I set the challenged decision aside (as I propose to do) then subitem (4) of item 42 applies. That was because:
· the applicant had before 15 July 1996 requested the respondent to make a determination under s 273 of the Customs Act to be covered “by an item referred to in subitem (1)”;
· item 45 is “referred to” in subitem (1); and
· the applicant’s request was still outstanding “at that time”.
In those circumstances, so it was submitted on behalf of the respondent, the applicant’s request was to be treated “as if it were a request made under the Customs Act as amended by the Customs Amendment Act 1996”. Mr Macliver then referred me to item 43 of Schedule 1 of the Customs Amendment Act 1996 as, again, showing the legislative intent. Item 43 relevantly defines the term “revoked instrument” as meaning a determination that is taken to have been revoked under item 42 of that schedule. It then provides that subject to subitem (3) a revoked instrument ceases to apply in relation to goods entered for home consumption after the time when the revocation comes into effect (in this case 15 July 1996). Subitem (3) provides that despite revocation, an instrument continues to apply to goods that were imported into Australia before (in this case) 15 July 1996 and were entered for home consumption either before or within 28 days after 15 July 1996 or were in transit as at that date and are entered for home consumption on or within 28 days after the day on which they were imported into Australia.
It is necessary to refer to two more pieces of legislation. The first is the Customs Tariff Amendment Act (No 1) 1996, being Act No 32 of 1996. That Act was assented to on 9 July 1996 and, like the Customs Amendment Act 1996, came into force on 15 July 1996. When the Customs Tariff Act 1987 was repealed and replaced by the Customs Tariff Act 1995, item 45 in Schedule 4 of the 1995 Act remained initially, between 1 July 1996 and 15 July 1996, in materially the same terms as it stood immediately prior to the repeal i.e. “goods designed for use in the mining and minerals processing industries as prescribed by by-law”. However, the Customs Tariff Amendment Act (No 1) 1996 amended the Customs Tariff Act 1995 by omitting item 45 from Schedule 4 as from 15 July 1996 and substituting the following item:
“Capital equipment for use in the mining and resource processing industries, as prescribed by by-law.”
It can be seen that there was a change in the description of the goods in item 45. However, Mr Macliver conceded that “It probably doesn’t change things that much … in that the applicant’s goods would presumably fall within that description as well as coming within the description of item 45 as it was initially …” in the Customs Tariff Act 1987 and in the Customs Tariff Act 1995 for a short period.
The second piece of legislation is s 273A of the Customs Act which has remained unamended at all times material to this application and which provides:
“BY-LAWS AND DETERMINATIONS FOR PURPOSES OF REPEALED ITEMS
273A. The Chief Executive Officer may make a by-law or determination for the purposes of an item of a Customs Tariff notwithstanding that the item has been repealed before the making of the by-law or determination, but the by-law shall not apply to, and the determination shall not be made in respect of, goods entered for home consumption after the repeal of that item.”
I endeavour, at the risk of some inaccuracy, to summarise the legislative (and some other) history as follows:
1. The applicant sought a determination that concessional item 45 of Schedule 4 of the Customs Tariff Act 1987 apply.
2. That item remained in materially identical terms in Schedule 4 of the Customs Tariff Act 1995 which was enacted in 1995, came into effect and repealed the Customs Tariff Act 1987 on 1 July 1996.
3. Between the enactment of the Customs Tariff Act 1995 in 1995 and the commencement of that Act on 1 July 1996, a determination that item 45 of the Fourth Schedule of either of those Acts apply to the goods, could have been made. That was due to the prospective wording of s 273 of the Customs Act (i.e. “proposed item”).
4. Item 2 of Schedule 2 to the Customs Tariff (Miscellaneous Amendments) Act 1996 provided that a determination made before 1 July 1996 that item 45 applied to goods, would thereafter take effect as if it were a determination made to the same effect in relation to the corresponding item in Schedule 4 to the Customs Tariff Act 1995. But that was not to affect the operation of the determination in relation to the Customs Tariff Act 1987. All determinations in relation to items other than those referred to in subitem 2(a) were to cease to have effect on 1 July 1996.
5. Item 42 of Schedule 1 to the Customs Amendment Act 1996 provided that a determination of the type first referred to immediately above is to be revoked with effect from 15 July 1996. Subitem (4) of item 42 of that Schedule provided that a request for a determination which was still outstanding as at 15 July 1996 was to be treated as if it were a request made under the Customs Act as amended by the Customs Act 1996.
6. The revocation referred to above was mitigated in its application where the goods had either been imported or were in transit on 15 July 1996 and were entered for home consumption within the periods referred to slightly earlier in these reasons.
7. The Customs Tariff Amendment Act (No 1) 1996 substituted the differently worded item 45 in Schedule 4, as from 15 July 1996, for what had until that date been a materially unchanged item.
8. Throughout the whole of the relevant period s 273A of the Customs Act conferred power on the Chief Executive Officer to make a determination for the purposes of an item of a Customs Tariff, notwithstanding that the item had been repealed, but provided that the determination should not apply to and not be made in respect of goods entered for home consumption after the repeal of that item.
Applicant’s contentions on the question of relief
The applicant sought the following orders, namely that:
(a) the decision of the respondent’s delegate be set aside with effect from 25 June 1996;
(b) the applicant’s request for a determination that item 45 of Schedule 4 to the Customs Tariff Act be referred to another delegate of the respondent for reconsideration “as at 30 April 1996, alternatively as at 25 June 1996”;
(c) the delegate reconsidering such request do so having regard to these reasons and in particular
(i) shall take into account the relevant considerations referred to in Grounds 2, 3 and 4 of the application; and
(ii) not take into account the irrelevant considerations referred to in paragraph 5 of those grounds.
The applicant contended that each of the above orders was authorised by various sub-paragraphs of s 16(1) of the ADJR Act. Those sub-paragraphs were specified in the applicant’s written outline of submissions. I return to those matters below.
Accrued Rights
The applicant submitted that even though the Customs Tariff Act 1987 was repealed on 1 July 1996 with the commencement of the Customs Tariff Act 1995, and even though Government policy had changed (on 15 July 1996) since its request for a determination was made and the respondent’s decision was given, the Court should direct the respondent to reconsider the matter taking into account the factors set out in Grounds 2, 3 and 4 of its application and not taking into account the irrelevant consideration referred to in Ground 5. The applicant submitted that as at 25 June 1996 the applicant had, within the meaning of s 8 of the Acts Interpretation Act, a “right” which it had “acquired” under the Customs Tariff Act 1987 when read (as s 4 of that Act required) with the Customs Act. That right, so it was submitted, was as against the respondent to have its application for a determination under s 273 of the Customs Act considered and determined according to law. The applicant relied on Esber v The Commonwealth (1992) 174 CLR 430 at 439-441 and Lee v Secretary, Department of Social Security (1996) 139 ALR 57 at 69-73. The majority in Esber and Lee decided that in the context, respectively, of the Compensation (Commonwealth Government Employees) Act 1971 (Cth) as repealed by the Commonwealth Employees’ Rehabilitation and Compensation Act 1988 (Cth) and the Social Security Act, an applicant’s right to have a primary decision reviewed by the Administrative Appeals Tribunal was a right within the meaning of s 8 of the Acts Interpretation Act. Section 8 of the Acts Interpretation Act relevantly provides that where an Act repeals in whole or in part a former Act, then unless the contrary intention appears, the repeal shall not affect any right acquired under any Act so repealed or affect any legal proceeding or remedy in respect of any such right and any such legal proceeding or remedy may be instituted continued or enforced as if the repealing Act had not been passed.
Mr Buss submitted that when the Customs Tariff Act 1987 was repealed, the applicant’s right was in existence. In consequence of the reviewable errors, the respondent’s decision should be set aside as at 26 June 1996 and was thus outstanding. There was no contrary intention, so it was put, in the legislation which repealed the Customs Tariff Act 1987, the applicant’s right was protected by s 8 of the Acts Interpretation Act and was thus not affected by the repeal of the 1987 Act. The relief sought was, so it was submitted, not inconsistent with the public interest intended to be served by the exercise of the relevant discretionary power conferred by s 273. To the contrary the relief was consistent with good administrative practice in that it ensured that no premium attached to bureaucratic delay or error. Alternatively, if I were to find that there was a contrary intention of the kind contemplated by s 8 of the Acts Interpretation Act, Mr Buss submitted that the applicant’s case fell within subitem (4) of item 42 of Schedule 1 to the Customs Amendment Act 1996. On that basis, if the decision were to be quashed, then the applicant’s request for a determination would be treated as a request made under the Customs Act as amended by the Customs Amendment Act 1996, and be referred to a different delegate for determination in accordance with the reasons and observations of this Court.
Respondent’s contentions on the question of relief
The respondent submitted that the applicant had no accrued rights. The respondent sought to distinguish Esber on the basis that in that matter there was a right to take advantage of a statute in the sense that if certain matters were established an entitlement arose. Mr Macliver referred me to the discussion on this point in the decision of Yao v Minister for Immigration and Ethnic Affairs (1996) 69 FCR 583 at 588-590. In that case Black CJ and Sundberg J regarded the approach taken by the majority in Lee as being inconsistent with the opinion of the Privy Council in Director of Public Works v Ho Po Sang [1961] AC 901, a case which their Honours described as having been relied on by the High Court in Esber. As it turned out, their Honours did not have to decide whether the applicant in Yao had an accrued right; they assumed so, for the purposes of deciding the appeal. Mr Macliver submitted that the present matter was quite different in that there was no right on the applicant’s part to an advantage upon having satisfied certain statutory criteria. The present case, by contrast, was one of an unfettered discretion. There was only a mere hope or expectation of some benefit on the applicant’s part when it lodged an application for a determination under s 273 of the Customs Act. The respondent relied upon the dissenting reasons for judgment of Davies J in Lee.
The respondent contended that subitem (4) of item 42 of the Customs Amendment Act 1996 evinced an intention that all applications for determinations under s 273 of the Customs Act decided after 15 July 1996 be considered in relation to the amended item 45 of Schedule 4 of the Customs Tariff Act, thereby excluding the application of s 8 of the Acts Interpretation Act. The respondent contended that if one or more of the grounds of review had been made out, the appropriate order was that the decision of the respondent’s delegate made on 25 June 1996 be set aside and the matter be simply remitted for consideration according to law. The new decision-maker, so it was contended, would be entitled to take into account the Government policy in force at the time of making the fresh decision. For that latter proposition Mr Macliver relied on the decision of the High Court of Australia in Attorney-General (NSW) v Quin (1990) 170 CLR 1.
Mr Macliver also relied quite heavily on s 273A as indicating a statutory intention that the repeal of an item of a Customs Tariff is not to carry any accrued rights except in the circumstances where the goods are entered for home consumption before repeal. The evidence showed that the applicant’s goods were entered for home consumption in two shipments, the first in January 1997 and the second in April 1997. Mr Macliver submitted that every item in the relevant Schedule of the Customs Tariff Act 1987 was repealed because the whole Act itself was repealed. Section 273A preserved the power to make a determination in respect of such items, notwithstanding their repeal, but with the limitation that the determination must not be made in respect of goods entered for home consumption after the repeal of the item. Furthermore, Mr Macliver submitted that items 42(4) and 43 of Schedule 1 to the Customs Amendment Act 1996 also evinced an intention that all applications for determinations decided after 15 July 1996 were to be considered in relation to the amended item 45 of Schedule 4 to the Customs Tariff Act.
My Reasoning
First, having decided that the respondent’s decision should be set aside, I deal with the question of the date from which it should be quashed. The authorities show that, consistent with the requirements of s 16 of the ADJR Act, the date to be selected is that which will best do justice as between the parties and any other affected persons: Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253 at 257. I refer also to the discussion at 255 to 260 in that case (a unanimous decision of a Full Court of this Court). There was no suggestion that there were any other persons who might be affected by the date selection. No prejudice has been suggested by the respondent if the date selected is 25 June 1996 i.e. the date upon which the decision was made. It was also held in Wattmaster (at 256) that there was no onus on a party contending for a date earlier than that upon which a Court order was made, to show a “positive reason” why the date selected should be an earlier one. The cases confirm that s 16 confers a considerable degree of flexibility on the Court when it comes to framing orders: see Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 at 644-645; and Minister for Immigration, Local Government and Ethnic Affairs v Taveli (1990) 94 ALR 177 at 184 and 201. In view of the potential for the date sought by the applicant to be one which may assist in its quest to obtain a determination, despite the statutory amendments which started to come into effect six days after the decision was made, and in view of the absence of any prejudice to the respondent or any other person, I will order that the decision be set aside with effect from 25 June 1996.
I doubt very much whether the applicant can be said to have accrued rights within the meaning of s 8 of the Acts Interpretation Act. In view of my conclusion, for the reasons set out below, that a contrary intention appears from the network of statutory provisions, it is not necessary for me to decide the question of whether the applicant had accrued any relevant right. However, in deference to counsel’s submissions, I shall say something very briefly. I would distinguish Esber on the facts. In Esber the applicant had instituted proceedings in the Administrative Appeals Tribunal before the repeal of the Compensation (Commonwealth Government Employees) Act 1971. I have not overlooked Mr Buss’ submission that, although the applicant did not file its application in this Court before 1 July 1996, it had the right to apply for an order of review between 25 June 1996 and that date. Furthermore, I respectfully share the doubts raised by the Full Court in Yao that, where a discretion is involved (in contrast to an entitlement) a right may not be said to have been accrued, a doubt which had, the previous month, been expressed in the dissenting judgment of Davies J in Lee. I refer also to the dissenting judgment of Brennan J in Esber, in particular at 447. However, it is not necessary for me to decide the matter and I shall not do so. I now turn to the question of contrary intention.
In my view, the web of statutory provisions, which I have endeavoured to describe above, evinces a contrary intention within the meaning of s 8 of the Interpretation Act. That is, if the applicant had accrued rights of the type which it claimed in its submissions, I think that it sufficiently appears from the various pieces of legislation that those rights and any legal proceeding or remedy in respect of such rights were to be affected. Item 2 of Schedule 2 to the Customs Tariff (Miscellaneous Amendments) Act 1996 discloses a parliamentary intention that where a determination had been made under s 273 of the Customs Act and was in force immediately before 1 July 1996 in relation to item 45, then thereafter it was to be taken to have been made in relation to item 45 of Schedule 4 of the Customs Tariff Act 1995. Express provision was made in subitem (3) of that item to the effect that subitem 2 was not to affect the operation of the determination in relation to the Customs Tariff Act 1987. Any determinations in relation to items other than those specified in subitem (2)(a) were to cease to have effect on 1 July 1996. I appreciate, of course, that there was no relevant determination in this matter, but I regard this item as giving some slight indication of Parliament’s intention. More importantly, I accept the respondent’s submission that items 42 and 43 of Schedule 1 to the Customs Amendment Act 1996 evince a relevant contrary intention for the purposes of s 8 of the Acts Interpretation Act. I read item 42(4) as a clear reflection of Parliament’s intent that a request for a determination in relation to item 45 under s 273 of the Customs Act which, at 15 July 1996 was outstanding, was to be treated as if it were a request made under the Customs Act as amended by that amending Act. Subitem (2) of item 42 when read with item 43 disposes (by revocation) with limited exceptions, of determinations which were given a brief 14 day life by item 2 of Schedule 2 to the Customs Tariff (Miscellaneous Amendments) Act 1996. In addition, when one reads s 273A of the Customs Act there is also reflected a legislative policy that, where there has been the repeal of an item, a determination shall not thereafter be made in respect of goods entered for home consumption after the repeal of that item. I acknowledge the force of Mr Buss’ submission that s 273A deals with a different subject matter to that raised in the present case, but I regard s 273A as some further slight indication that Parliament, when it repealed the Customs Tariff Act 1987, had a relevant contrary intention (with some limited exceptions) within the meaning of that expression in s 8 of the Acts Interpretation Act. Section 273A was not amended at any material time but, I think, can be taken as a continuing reflection of Parliament’s intention. As I see it, a new Customs Tariff regime was introduced on 1 July 1996 and an even newer one 14 days later. The terms in which that was done (reflected in the various pieces of legislation to which I have referred) lead me to conclude that there was a relevant “contrary intention” within the meaning of s 8 of the Acts Interpretation Act.
Discretion
The applicant submitted that s 16(1)(b) and (d) of the ADJR Act authorised the Court to make an order that its request for a determination be referred to another delegate of the respondent for reconsideration “as at 30 April 1996, alternatively as at 25 June 1996”. The only detailed submission made on behalf of the applicant, in relation to this point, dealt with the justice of such reconsideration of the matter being handled by a person other than the original decision-maker, a subject to which I return below. I was not referred to any authority to the effect that s 16(1)(b) or (d) would, in the present circumstances, authorise the Court to make an order which, in my view, would clearly conflict with the specific and substantive legislative provisions which I have discussed above. I am inclined to the view that such specificity and substantiveness would override the necessarily general words of s 16 of the ADJR Act. In TJM Products Pty Ltd v The Industry Research and Development Board (Federal Court of Australia, 26 May 1998) Spender J, (at 10) expressed the view that s 16(1)(d) did not extend to permitting the Court to direct a decision-maker to regard something which has not been done as having been done. That is not quite the issue here, but in my opinion the observation is sufficiently analagous to support my opinion. If I had such a discretion, my view is that it is not necessary to do justice between the parties to direct the respondent that, when reconsidering whether there should be a determination, he should do so as if the clock had been wound back to 30 April 1996 or 25 June 1996. As I see it, the person who reconsiders the matter will be making an administrative decision in an area where the evidence shows that executive and administrative policy is far from static. I think that I would be making an unwarranted intrusion, in the circumstances of this matter, into matters of political and executive concern if I fettered the decision-maker in the manner sought. This case is, in my opinion, very different from cases such as Bond Corporation Holdings Ltd v Australian Broadcasting Tribunal (1988) 84 ALR 669 [the Full Court saw no error of principle in Gummow J’s approach – see (1989) 86 ALR 424 at 431] and Minister for Immigration and Ethnic Affairs v Conyngham (1986) 11 FCR 526. Accordingly I decline to make so much of the orders sought by the applicant and identified in paragraph 11(b) of its written submissions as would require the respondent’s delegate to reconsider the request either as at 30 April 1996 or in the alternative as at 25 June 1996.
The applicant’s position
In my view, subitem (4) of item 42 of the Customs Amendment Act 1996 has the effect (following this Court’s order to set aside the respondent’s decision as at 25 June 1996) that the applicant’s request for a determination under s 273 of the Customs Act is to be treated as still outstanding as at 15 July 1996 and is to be treated as if it were a request made under the Customs Act as amended by the Customs Amendment Act 1996. I would reach that conclusion by construing the expression “covered by an item referred to in subitem (1)” in subitem (4) as meaning that it was sufficient, in this case, for item 45 simply to be referred to (in the sense of appearing in the list) in subitem (1). I would read down the reference in subitem (1) to “this item applies” to enable that construction. Clearly subitem (1) itself does not apply directly to the present circumstances, because there was no determination. However, in my view, subitem (4) must be read as dealing with situations in which no determination at all had been made. I consider that the prospective effect of s 273 of the Customs Act when read with the definition of “Customs Tariff” in s 4(1) of that Act means that the applicant’s request of 30 April 1996 is to be taken as a request for a determination in respect of not just item 45 of Schedule 4 to the Customs Tariff Act 1987 but also to the materially identical item in Schedule 4 to the Customs Tariff Act 1995. In those circumstances, subitem (4) of item 42 of Schedule 1 to the Customs Amendment Act 1996 does its work and the request is to be treated as if it were a request made under the Customs Act as amended by the Customs Amendment Act 1996. At that date, (15 July 1996) the change to be made to item 45 of Schedule 4 to the Customs Tariff Act 1995 by item 3 of Schedule 1 to the Customs Tariff Amendment Act (No 1) 1996 was either an item or a proposed item within s 273 of the Customs Act. The result, in my opinion, is that the applicant’s request is to be treated as seeking the application of the amended item 45 which reads “Capital equipment for use in the mining and resource processing industries, as prescribed by by-law”.
Policy
Mr Buss pointed out in his oral submissions that there was a change of policy which took effect on 15 July 1996. This was contained in Australian Customs Notice No 96/32 and was in evidence. Although Mr Buss said that a question arose whether that policy or the policy which existed at the time when the respondent’s delegate originally made his decision was to be applied, I did not understand him to be seeking any particular order in that regard. Possibly the seeking of such an order could be implied from paragraph 11(b) of the applicant’s written outline of submissions. However, no such order was sought in those terms in the application and I was not addressed further on behalf of the applicant on this particular point. That was probably because, as Mr Buss explained, the applicant’s attack “… extends beyond the mere terms of whichever policy is in force but goes to the heart of the construction of s 273 …”. Mr Buss acknowledged (at p 34 of the transcript) that in the event that the provisions of item 42 subitem (4) of Schedule 1 to the Customs Amendment Act 1996 being applicable, then the applicant’s request would be considered under the policy in place on and after 15 July 1996. Even in those circumstances, so the applicant submitted, the Court should direct the respondent to reconsider the matter taking into account the factors set out in Grounds 2, 3 and 4 of the application and not taking into account the irrelevant consideration referred to in Ground 5.
As I have mentioned, the respondent submitted that upon such reconsideration the new decision-maker would be entitled to take into account the Government policy in force at the time of making the fresh decision, citing Quin. To the extent that it is necessary for me to decide the point, I do not think that Quin provides a complete answer to the question. It seems to me that the majority in Quin was very much concerned about judicial intrusion by way of administrative review into the area of the exercise of discretionary power by the Executive in the administration of justice and in the appointment of magistrates in particular. For the same reasons as express above in relation to the “dating back” of the reconsideration date, as a matter of discretion, I decline to make any direction concerning the role which any particular policy should take in the further decision-making process.
Again for similar reasons I decline to make specific directions regarding any matters which the respondent’s delegate must take into account or must not take into account. I hope that there is sufficient guidance in that regard in the above reasons. In all the circumstances, I think that it is in the interests of justice that the matter be referred to another delegate. The respondent did not seriously contend to the contrary and paragraph 39 of his written submissions seems to accept that position.
Conclusions
For the above reasons there will be orders in the following terms:
1. The decision of the respondent’s delegate, as communicated in his letter dated 25 June 1996 to the applicant, be set aside with effect from 25 June 1996.
2. The applicant’s request, made on 30 April 1996, that the respondent determine that item 45 of Schedule 4 to the Customs Tariff Act applies to the Reactors, being the subject matter of the abovementioned decision, be referred to another delegate of the respondent for reconsideration according to law.
3. The respondent pay the applicant’s costs of the application.
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I certify that this and the preceding forty-four (44) pages are a true copy of the Reasons for Judgment of Justice Carr |
Associate:
Dated: 23 October 1998
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Counsel for the Applicant: |
Mr M J Buss QC (with Mr R J Price) |
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Solicitor for the Applicant: |
Messrs Freehill Hollingdale & Page |
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Counsel for the Respondent: |
Mr P R Macliver |
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Solicitor for the Respondent: |
Australian Government Solicitor |
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Date of Hearing: |
22 September 1998 |
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Date of Judgment: |
23 October 1998 |
