CATCHWORDS Administrative Decisions (Judicial Review) Act 1977 - application for by-law exempting goods from customs duty - allegation of denial of natural justice and improper exercise of power. ADMINISTRATIVE DECISIONS (JUDICIAL REVIEW) ACT 1977 CUSTOMS TARIFF 1966 Item 19 to the 2nd Schedule, Part 1. N.S.W. G. 35 of 1981 TOOHEYS LIMITED v. MINISTER OF STATE FOR INDUSTRY AND COMMERCE St. John, J. Sydney Monday 26 September 1983 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G. 35 of 1981 BETWEEN: TOOHEYS LIMITED Applicant AND: MINISTER OF STATE FOR INDUSTRY AND COMMERCE Respondent ORDERS JUDGE MAKING ORDERS: ST. JOHN, J. DATE OF ORDERS: MONDAY 26 SEPTEMBER 1983 WHERE MADE: AT SYDNEY THE COURT ORDERS THAT: 1. The application 1s dismissed. 2. The applicant 1s to pay the respondent's costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G. 35 of 1981 BETWEEN: TOOHEYS LIMITED Applicant AND: MINISTER OF STATE FOR INDUSTRY AND COMMERCE Respondent REASONS FOR JUDGMENT ST. JOHN, J. MONDAY 26 SEPTEMBER 1983 AT SYDNEY The applicant seeks review pursuant to the Administrative Decisions (Judicial Review) Act 1977 ("the Act") of a decision by the Minister's delegate that a certain palletizer imported by the applicant should not be made the subject of a by-law exempting it from duty payable if no suitable equivalent palletizer was reasonably available in accordance with Item 19 to the 2nd Schedule, Part 1, of the Customs Tariff 1966. The application has previously been subject to a motion to strike out the proceedings on the basis that such decision was not an administrative decision within the meaning of the Act. That motion did not succeed before Ellicott, J., whose decision 1s reported; Tooheys Limited v. Minister for Business and Consumer Affairs (1981) 36 A.L.R. 64. An unsuccessful appeal against that decision is also reported; Minister for Industry and Commerce v. Tooheys Limited (1982) 42 A.L.R. 260. The relevant legislation 1s reproduced in those reports and it is therefore unnecessary for me to quote it in any detail, except Item 19, which is as follows:- "Goods, aS prescribed by by-law, being goods a suitable equivalent of which that 1s the produce or manufacture of Australia is not reasonably available" The evidence before me was a statement made by the respondent pursuant to S.13 of the Act, consisting of some ninety-one pages, some affidavits filed on behalf of the applicant and the Departmental file consisting of one hundred and twenty-five folios and containing handwritten minutes, letters and copy letters. «20/3 nt The grounds of the application were:- "1. That a breach of the Rules of Natural Justice occurred in connection with the making of the decision. 2. That the making of the decision was an improper exercise of the power conferred by the Customs Act, 1901 as amended and the Customs Tariff, 1966 as amended in pursuance of which 1t was purported to be made." and the particulars of the grounds were:- "(a) 'The Respondent took irrelevant considerations into account in the exercise of the power. (b) The power was a discretionary power exercised in bad faith. (c) The power was a discretionary power exercised in accordance with a rule or policy without regard to the merits of the particular case. (d) The exercise by the Respondent of the power was so unreasonable that no reasonable person could have so exercised 1t. (e) The said power was exercised ina way that constituted an abuse of the sald power." The history revealed by those documents was that, by application dated 26th September, 1978, Molcolm Pty. Limited ("Molcolm") made an application for a by~law pursuant to Item 19 on behalf of Tooheys Limited in respect to one only Alvey Series 310 palletizer with a paliletizging capacity of seventy 2/4 be cases and up to one hundred cases per minute. That application stated that the goods had not been entered for home consumption and the expected date for importation was October, 1978. "Palletizer" is a word apparently of such recent origin that dictionaries do not include 1t. It means a machine which handles packaged goods and stacks them on pallets. The Chief Inspector, By-law Services, requested the applicant to provide evidence to support its claim that suitably equivalent goods were not reasonably available from certain Australian manufacturers, included among which were W. & D. Engineering Pty. Limited and A. P. M. Packaging Equipment. In response to enquiries made by Departmental officers, A. P. M. Packaging Equipment referred to a particular palletizer which was able to achieve one hundred cartons per minute. That system had not yet been installed, but the company had no doubts as to the concept "being satisfactory and reliable". Molcolm, by letter, asserted that the machine being offered by A. P. M. Packaging Equipment was only a concept, not a design. After further correspondence and discussions, on 12th September, 1979, an officer directed that a ministerial determination be granted in the applicant's ++ -/5 favour, and this was issued in respect of the Alvey palletizer described, and entered for home consumption in the period lst August 1978 to 3lst December, 1978. It was later revealed that the palletizer ordered by the applicant on 9th December, 1977, had actually been entered for home consumption by a customs agent other than Molcolm on 26th June, 1978 and duty had been paid. Molcolm then sought re-issue or amendment of the determination for the reason that the date of the determination did not correspond with the date upon which the goods had been entered for home consumption. By letter dated 20th March, 1980, an Assistant Secretary, By-law Branch, Mr. Luckman, invited Molcolm to explain the discrepancy between the actual date upon which the goods had been entered for home consumption, namely 26th June, 1978, and the unformation on the application as to entry, namely list August, 1978 to 31st December, 1978. Molcolm offered an explanation which, in essence, was to the effect that there was some confusion between it and its principals, the applicant, and, on the 13th May, 1980, Mr. Luckman wrote to Molcolm a letter which is relied upon by the applicant to assert that animus against the respondent is exhibited therein. That letter 1s in the following terms, omitting formal parts:- -.-/6 —~——-- os " I acknowledge your letters of 18 and 28 April relating to your application for by-law for an Alvey 310 palletizer imported by Alvey (A'sia) Pty Ltd on behalf of Tooheys Limited. The copy orders now produced indicate that your original by-law application dated 26 September 1978 falsely quoted dates of order and intended importation. Your application quoted order date as being 27 August 1978 with 1mportation October 1978. Documents now produced show ordering as dating from 28 November 1977 with reference to quotations earlier again. This situation gives rise to considerable concern. A great deal of effort by many people has been expended to ascertain the local availability of suitably equivalent equipment during late 1978. It would now seem that that effort has been largely wasted as a result of the misleading dates quoted in your application. I find it very hard to understand how your company, with its experience in Customs matters, could not have been aware of the true state of ordering and importation. Certainly Wathen Curnow & Cocks (Sydney) Pty Ltd, on whose instructions you appear to be acting, would have been aware of the true position and there seems no logical reason for false and misleading dates to be quoted to you or by you. Tf you wish to proceed with the by-law case,, I will require a completely new submission. This should begin with the steps taken by Toohey when considering alternative palletizer strategies prior to ordering in late 1977. A copy of engineering studies performed by that company would be a useful start. Any submission should also indicate whether local manufacturers were contacted or asked to quote for the Toohey requirement. Written evidence from the principal manufacturers will be necessary to establish what their position would have been in mid 1977, were they asked to quote and/or supply. -.-/7 " Very recently a further local manufacturer of palletizer equipment has written to this office and expressed concern at any by-law action being taken in respect of palletizers. This 1s ALLEN YGNIS (AUSTRALIA) PTY LTD, who claim to have manufactured automatic pallet loaders for the past ten years. Their comments on their ability to meet Tooheys requirements if approached during 1977 would be necessary if any reconsideration is to be given to this case." Molcolm responded with a letter dated 19th May, 1980, giving some details of transactions which leq to the mix-up in dates, and made further representations in favour of the grant of an Item 19 by-law. Further correspondence and meetings took place, and Mr. Sadleir, a Departmental officer, was asked to, and did, report on the question of the availability of a suitable equivalent machine. His conclusion was that he was prepared to approve Molcoim's application and stated "I am: not completely satisfied that the local manufacturers could have offered a suitably equivalent palletizer even if Tooheys" (the applicant) "had approached them before making the decision to purchase overseas". On 4th February, 1981, Mr. Luckman wrote the following minute in the file:- ~— +. -/8 u DMB/L wy This file examples the difficulty 1n deciding s.e.r.a." (suitably equivalent reasonably available) "question some years after the action. In passing file to BLOM(S)" (By-law Officer (Machinery)) "for review I expressed the view that the time factor necessitated that any benefit of the doubt must go the way of local manufacturers. I have read the most recent folios. I have some doubts about whether the two lm's" (local Manufacturers) "could have offered a satisfactory product - but doubts are not enough when considering 1977/8 action. The facts are that neither APM of Allen Ygnis were given the opportunity to modify their existing machines for the requirements. Ygnis' first paragraph (f113) suggests he would have submitted a proposal. I do not believe that we are in a position to pass Judgment now on the question of whether that proposal (4 years ago) would have represented s.e." (sultably equivalent) "goods. In my view the doubt must lead us to refuse bylaw. The applicant has not really explained why his original application was in error in relation to the date of order and entry. Orally, he has told me that he was 'let down' by his principals. All that means is that the information he presented to us originally was hearsay and 'good enough'. I do not regard that as at all satisfactory - we have the right to expect that applicants for bylaw will present facts, not guesses. ADD The above decision involves both S.E." (suitably equivalent) "and R.A." (reasonably available) "criteria. In our evidence to the R.A. Inquiry" (apparently a departmental inquiry) "we discussed what R.A. meant in the case of new or enhanced products. The key in the practical 1unterpretation of R.A. is the identification of the manner in which the goods in question are ordered and bought. It 1s my understanding that Palletisers oe e/f9 AN "are designed specifically for the purchaser - the basic unit being constant but every application requiring some modification. In this situation L.M.'s need to be able to offer a basic unit and stand prepared to modify - these claims need to be backed up with having done business that way. 4/2" On 18th March, 1981, Mr. Luckman wrote to Molicoim in the following terms, omitting formal parts:- "I refer to your application of 26 September, 1978 and numerous correspondence since, requesting, on behalf of Tooheys Ltd., the by-law admission of an Alvey Automatic Palletizer imported in June, 1978. Your submission of the 28th November, 1980, has been given careful consideration and in response I would offer the following comments: As 1tem 19 forms an integral part of the structure of the Tariff its administration must be compatible with the Government's general philosophy of industry assistance. It would be inappropriate for me to permit by-law admission under item 19 which had the effect of removing the tariff assistance accorded by Parliament to a particular industry, or manufacturer. It 1s only in situations where 1t 1s quite clear that there is no local production competing with the imported goods that by~law admission can be granted. In this case, at the time when your client decided to purchase the imported machine, neither APM or Allen Ygnis was given the opportunity to quote for the requirement. I accept that such a quotation would have involved development and/ or modification but I do not feel that the Situation is sufficiently clear for me to decide that By-law entry was appropriate in 1977/78. Finally, your response to my letter of 20 March, 1980 1s not entirely satisfactory. I would expect any future applications from you to pay -+-/10 "particular attention to essential facts such as date of order and the sequence of events that preceded and surrounded the decision to order overseas." This letter is also relied upon by the applicant to submit that 1t manifests bias or animus in the delegate, Mr. Luckman. It 1s apparent from the file that, pursuant to that policy that the Department keep what is termed a "manufacturers' index" where the products made in Australia by local manufacturers are listed under their various classifications and on receipt of an application for exemption of duty pursuant to Item 19, local manufacturers are asked of their capacity to produce a suitable equivalent which 1s reasonably available. Publication of the application 1s apparently made in a gazette which 1s presumably made available to, or is accessible to, local manufacturers. It has not been argued before me that the govern- mental policy expressed in the third paragraph of that letter is irrelevant or incorrect. Counsel for the applicant relies upon the history I have outlined above and, in particular, the opinion expressed by Mr. Sadleir after his investigation of the matter and ---/11 Mr. Luckman's apparent reversal or failure to adopt that opinion. Mr. Luckman was senior to Mr. Sadleir and the minute reproduced above indicates that he was considering not only the application by the applicant, but expressing views on policy considerations when such applications are considered. In addition to the above outline, I shall refer to other relevant facts when I come to consider the applicant's contentions. Before considering those contentions, I make the preliminary observation that the task of detecting bias or animus from the written word above, 1s much more difficult than when seeing and hearing witnesses give evidence. I now consider the matters relied upon by the applicant: Letter from Mr. Luckman to Molcolm dated 13th May, 1980 At most the applicant can rely on an expression of suspicion of the applicant's bona fides when the wrong date for entry has been given. Holding such a suspicion and expressing 1t by saying the falsity of the information "1s very hard to understand" does not, 22/12 in my view, go very far towards establishing bias. The purchase price of the machine was approximately sixty thousand dollars ($60,000) and the duty sought to be re-imbursed to the applicant was approximately twenty thousand dollars ($20,000). That acquisition of the palletizer was essential to the applicant was emphasized in correspondence by the applicant. The application gave local manufacturers little time to consider their capability of matching the specifi- cations of the Alvey machine. Letter from Mr. Luckman to Molcolm dated 2nd June, 1980 On 16th June, 1980, a director of Molcolm conferred with Mr. Luckman and the latter minuted that conference. The contents of the third paragraph of this letter were not noted. In the director's affidavit, no mention 1s made of the allegations in this paragraph, nor are they referred to in any other affidavit or document to which my attention has been drawn. I do not feel compelled to accept the submission that this letter exhibits bias or animus against the applicant. If the matters referred to in the paragraph referred to were taken into account when the final decision was made, there is no evidence of that fact. --+-/13 Mr. Luckman's minute dated 4th February, 1981 Counsel for the applicant relied heavily upon the contents of this minute. Firstly, he suggests that the words "I have read the most recent folios" can be relied upon to assert an incomplete knowledge of the facts. It is apparent from the file that Mr. Luckman wrote letters, copies of which are folios 106 and 108 and initialled letters received, folios 113 and 118. His initials appear constantly throughout the file. The fifth paragraph is relied upon as indicating bias in conjunction with the letters already dealt with. Mr. Luckman does not specifically state that this factor influenced his decision, but, assuming 1t did, that influence has not been demonstrated to be such that 1t overbore all proper considerations. The addition to the minute appears to be a state- ment of policy for the guidance of subordinate officers. Letter from Mr. Luckman to Molcolm dated 18th March, 1981 Applicant's counsel submitted that the words "quite clear" manifest the application of an unduly high standard ... .2-/14 of proof. In assessing the impact of words used in administrative decision making, care should be exercised not to place too much emphasis on precision of language. In their context, I do not see those words as more than indicating lack of satisfaction. Reverting to comment of a general nature, the file reveals that information expected by the Depart- ment to be supplied at an early stage of the decision to purchase overseas was not supplied until well after the relevant time. The Departmental officers were, as Mr. Luckman points out, put in a position where they had to assess whether local manufacturers, given adequate notice, could have met the applicant's needs as described in the item. The decision to purchase overseas was taken in late 1977. The manufacturing time for the Alvey machine was eighteen to twenty weeks. Mr. Luckman had, therefore, to deal with a, partially at least, hypothetical situation, I have not reproduced voluminous references to specifications of the palletizer and the capacity of local manufacturers to meet them. I restrict myself to saying that there was some evidence that, given adequate warning of the applicant's requirements as a possible -.-/15 order, local manufacturers may well have undertaken the task. The respondent's case is that adequate opportunity was not given and, in that circumstance, the application failed. It is not in dispute that the power to exempt the applicant from the relevant duty is discretionary; Finance Facilities Pty. Ltd. v. The Commissioner of Taxation (1970-71) 127 C.L.R. 106. There was no submission that government policy was misinterpreted. I do not find misuse of power or bias. The application is dismissed. The applicant is ordered to pay the respondent's costs. I certify thet this and the Fouarass (iy) preceding pages are a true copy of the Reasons for Judgment herein of his Honour kr. Justice $T. Serna Associate Dated: 26.@.83 Por,