CATCHWORDS Administrative Law - Judicial Review - Declaration by Minister that s.8 of the Customs Tariff (Anti-Dumping) Act, 1975 applies in respect of toughened glass patio door panels exported from Spain - Declaration that amount of export price of such goods less than amount of normal value of goods - material injury to an Australian industry threatened or caused - Determination of "normal value" of goods in Spain by using U.S.A. normal values under s.5(4) - "normal value" not ascertained under ss.5(1), 5(2) or 5(3) - Whether evidence to justify decision under review - Decision that normal value could not have been fixed pursuant to s.5(1) since sales in U.S.A. not in "ordinary course of trade" since sold at loss - Whether s.5(1) applicable in circumstances - Meaning of "ordinary course of trade" for purposes of s.5(1) - Whether sales at loss are not in "ordinary course of trade" - Not appropriate to use U.S.A. normal values for purpose of constructing normal value for exports from Spain ~ Materially irrelevant considerations - Failure to consider materially relevant considerations. Administrative Decisions (Judicial Review) Act, 1977 ss.5(1)(h), 5(2) (a), 5(2) (b), 5(2) (g) Customs Tariff (Anti-Dumping) Act, 1975 ss.5{1), 5(2)(c), 5(2)(d), 5(4), 8 McDOWELL & PARTNERS PTY. LIMITED, TRIAD INTERNATIONAL PTY. . LIMITED v. THE HONOURABLE JOHN NORMAN BUTTON, PILAINGTON ACI LIMITED No. G198 of 1983 Beaumont, J. 2 December, 1983. Sydney. uv IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G 198 of 1983. BETWEEN: McDOWELL & PARTNERS PTY. LIMITED TRIAD INTERNATIONAL PTY. LIMITED Applicants D: THE HONOURABLE JOHN NORMAN BUTTON PILKINGTON ACI LIMITED Respondents ORDERS Judge making orders: Beaumont, J. Date orders made: 2 December, 1983. Where made: sydney. THE COURT ORDERS THAT: 1. The decision of the first respondent dated 20 April, 1983 being Notice No. 1983/D18 and being a declaration of application of s.8 of the Customs Tariff (Anti-Dumping) Act, 1975 be set aside. 2. The first respondent pay the costs of the first applicant but that otherwise there be no order as to costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G 198 of 1983. BETWEEN: McDOWELL & PARTNERS PTY. LIMITED TRIAD INTERNATIONAL PTY. LIMITED Applicants AND: THE HONOURABLE JOHN NORMAN BUTTON PILKINGTON ACI LIMITED Respondents CORAM: Beaumont, J. DATED: 2 December, 1983. REASONS FOR JUDGMENT This 1s an application for judicial review pursuant to the Administrative Decisions (Judicial Review) Act, 1977 ("the Judicial Review Act"). The applicants seek a review of the decision of the first respondent dated 20 April, 1983 being the declaration by the first respondent, as Minister for Industry and Commerce, of the application of s.8 of the Customs Tariff (Anti-Dumping) Act, 1975 ("the Act") in respect of toughened glass patio door panels ("the goods") exported from Spain. The applicants are importers of the goods from Spain. The declaration under challenge was in these terms: "Customs Tariff (Anti-Dumping) Act 1975 Notice No. 1983/D18 DECLARATION OF APPLICATION OF SECTION 8 I, JOHN NORMAN BUTTON, Minister of State for Industry and Commerce pursuant to sub-section 8(2) of the Customs Tariff (Anti-Dumping) Act 1975, am satisfied in respect of toughened glass patio door panels exported from Spain that: (a) the amount of the export price of goods of that kind that have already been exported to Australia is less than the amount of the normal value of those goods, and the amount of the export price of goods of that kind that may be exported to Austral1la in the future may be less than the normal value of the goods; and (b) by reason thereof, material injury to an Australian industry has been or is being caused or is being threatened and therefore hereby DECLARE that section 8 of that Act applies to goods of that kind - (c) that are exported to Australia after the date of publication of this notice; and (da) the amount of the export price of which is less than the amount of their normal value. Dated this Twentieth day of April 1983. (Sgd.) John N. Button JOHN N. BUTTON Minister of State for Industry and Commerce" By sub-s.8(2) of the Act, it is provided: "Where the Minister is satisfied, as to goods of any kind, that - (a) the amount of the export price of goods of that kind that have already been exported to Australia is less than the amount of the normal value of those goods, and the amount of the export price of goods of that kind that may be exported to Australia in the future may be less than the normal value of the goods; and (b) by 'reason thereof, material injury to an Australian industry has been or is being caused or is threatened, or the establishment ef an Australian industry has been or may be materially hindered, the Minister may, by notice published in the Gazette (whether or not he has made, or proposes to make, a declaration under sub-section (1) in respect of goods of that kind that have been exported to Australia), declare that this section applies to goods of that kind - (c) that are exported to Austrailia after the date of publication of the notice or such later date as is specified in the notice; and (d) the amount of the export price of which 1s less than the amount of their normal value." b& On the same day, 20 April, 1983, the Minister had made a determination of normal value of the goods under sub-s.5(4) of the Act: having recited that sufficient information had not been furnished or that the information was considered to be unreliable to enable the normal value of the goods to be ascertained under sub-ss.5(1), 5(2) or 5(3), the Minister determined, pursuant to sub-s.5(4), having regard to all relevant information, a normal value of US$7.625 per square metre cash, packed, FOB. The argument in the proceedings centred on a consideration of the: process of reasoning which led the Minister to determine "the normal value" of the goods for the purposes of s.5 and, in turn, s.8 of the Act. So far as material, s.5 provides: "(1) Subject to this section, for the purposes of this Act, the normal value of any goods exported to Australia 1s the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, if like goods are not so sold by the exporter, by other sellers of like goods. (2) Subject to this section, where the Minister is satisfied that - (a) by reason of the absence of sales that would be relevant for the purpose of determining a price under sub-section (1); or 5. (b) by reason that the Situation in the relevant market is such that sales in that market that would otherwise be relevant for the purpose of determining a price under sub-section (1) are not suitable for use in determining such a price, the normal value of goods exported to Australia cannot be ascertained under sub-section (1), the normal value of the goods for the purposes of this Act is - (c) except where paragraph (d) applies, the sum of - (i) such amount as the Minister determines to be the cost of production or manufacture of the goods in the country of export; and (ii) on the assumption that the goods, instead of being exported, had been sold for home consumption in the ordinary course of trade in the country of export - (A) such amounts as the Minister determines would be the delivery charges and other costs necessarily incurred in that sale; and (B) an amount calculated in accordance with such rate as the Minister determines would be the rate of profit on that sale; or (3) 6. {d) where the Minister so directs, the highest price paid for like goods sold in the ordinary course of trade in the country of export for export to a third country. Subject to sub-sections (4) and (5), where the Minister is satisfied that it 1s inappropriate to ascertain the normal value of goods in accordance with the preceding sub-sections by reason that the Government of the country of export - (a) has a monopoly, or substantial monopoly of the trade of the country; or (b) * determines or substantially influences the domestic price of goods in that country, the normal value of the goods for the purposes of this Act shall be a value ascertained in accordance with whichever of the following paragraphs the Minister determines having regard to what 2S appropriate and reasonable in the circumstances of the case: (c) a value equal to the price of like goods produced or manufactured in a country determined by the Minister and sold for home consumption in the ordinary course of trade in that country, being sales that are arms length transactions; (ad) a value equal to the price of Like goods produced or manufactured in a country determined by the Minister and sold for export from that country to another country in the ordinary course of trade, being sales that are arms length transactions; (4) 7. (e) a value equal to the sum of the following amounts ascertained in respect of like goods produced or manufactured in a country determined by the Minister and sold for home consumption in the ordinary course of trade in that country: (1) such amount as_ the Minister determines to be the cost of production or manufacture of the like goods in that country; (ii} such amounts as the Minister determines are the delivery ' charges and other costs necessarily incurred in selling the like goods; (ii1) an amount calculated in accordance with such rate as the Minister determines is to be regarded as the rate of profit on the sale of the like goods; (£) a value equal to the price payable for like goods produced or manufactured in Australia and sold for home consumption in the ordinary course of trade in Australia, being sales that are arms length transactions. Where the Minister is satisfied that sufficient information has not been furnished or 1s not available to enable the normal value of goods to be ascertained under the preceding sub-sections, the normal value of those goods shall be such amount as is 8. determined by the Minister having regard to all relevant information. (4A) For the purposes of sub-section (4), the Minister may disregard any information that he considers to be unreliable." Before turning to the specific submissions made on behalf of the parties, some reference should be made to the history of the matter. By letter dated 22 May, 1981, the second respondent forwarded to the Department of Industry and Commerce (as it now is) a "dumping submission" in respect of patio door glasses which were said to be then being imported unto Australia at prices which were forcing the second respondent to operate its toughening plant at an uneconomic level. The second respondent 1s the _ sole Australian manufacturer of toughened glass panels. It is a joint venture company; its members, Pilkington Bros. (U.K.) Limited and Australian Consolidated Industries Limited, have equal shareholdings. The products referred to in the dumping submission were toughened glass panels with a thickness between 4 mm and 5 mm, in a variety of dimensions, for use in general domestic and other glazing, predominantly in patio doors. A number of countries, including Spain, Romania, Poland and the U.S.A., were said to be involved. A deal of informational material was contained in the submission. On 16 June, 1981, discussion of the dumping complaint by the second respondent took place at a meeting of its representatives and officers of the Department. By letter dated 14 July, 1981, Cosgrave Holt Pty. Limited, consultants retained by the second respondent, forwarded to the Department further information in support of its client's complaint. This was supplemented by further material forwarded by the consultants to the Department under cover of a letter dated 5 August, 1981. No action was taken by the Minister in response to these submissions. The second respondent renewed its efforts in 1982. In March of that year, 1ts consultants delivered to the Department a further "anti-dumping" submission dealing with the calculation of "normal value" in the case of Spanish imports of the goods. This was amplified by a further submission enclosed with a letter from the consultants dated 15 April, 1982. By letter dated 4 June, 1982, the second respondent furnished the Department with particulars of trade said to have been lost by reason of Spanish imports of the goods. 10. By Australian Customs Notice No. 82/109 dated 16 June, 1982, the Comptroller-General, purportedly acting in accordance with Australia's obligations under article 6(f) of the GATT Anti-Dumping Code, (see below), advised interested parties that enquiries had been formally initiaated under the provisions of the Act to determine whether the export prices of the goods exported from the U.S.A., Spain and Romania were less than the normal values for that product in the domestic market of those countries. The notice stated that evidence had been submitted which indicated that sales of the goods had been made to Australia at prices which were up to fifty five per cent below normal values. In July 1982, Mr. B.F. Wilkinson, an officer of the Department, visited the premises of the Spanish exporters accused of "dumping", Vidrierias de Llodio S.A. ("Vilsa"), and obtained information about the goods which he recorded in a written report dated 27 July, 1982. Subsequently another officer, Mr. R.G. Farrell, visited Vilsa and obtained further details about its costs of production of the goods and profitability and reported accordingly on 18 August, 1982. Mr. Farrell concluded that no dumping of 5 mm toughened glass panels had occurred. 11. In August 1982, Mr. R.L. Fraser, an Australian customs representative attached to the Australian Consulate-General at New York, interviewed executives of PPG Industries Inc. ("PPG") in Pittsburgh. In his report dated 30 August, 1982, Mr. Fraser said that PPG was a diversified multi-national corporation engaged in the manufacture and sale of (inter alia) glass products. It exported to Australia toughened flat glass of panels 5 mm thick under the trade mark "Herculite K". The product was manufactured by the float glass method of production, a patented process licensed by Pilkington Bros. (U.K.) Limited. PPG claimed that, because of its method of production, Herculite K was superlor in quality to the toughened glass produced in Spain and Romania by the traditional vertical furnace process. In Mr. Fraser's opinion, on the assumption that it was proper to reconstruct a normal value for the product of US$7.60 per square metre cash, packed FOB port of shipment, then shipments of Herculite K clear glass had been dumped into Australia although the dumping margins were relatively small. The process of reconstruction made under para.5(2)(c) leading to a determination, for the U.S.A., of a normal value of US$7.60 per square metre cash, packed FOB port of shipment is a contentious matter to which reference will be made later. 12. On 18 November, 1982, the Department convened a meeting of interested parties in Canberra, purporting to act in accordance with article 6 of the Anti-Dumping Code (Part I of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade ("GATT")). The purpose of the meeting was to provide an opportunity for the parties to meet and present their views. The issues of "normal value" and "material inquiry" of the kand contemplated by sub-s.8(2) were discussed. The first applicant and the second respondent were represented. In December 1982,:Mr. B.J. Salmon, an Investigation Officer (Customs), attached to the Australian High Commission, London interviewed executives of another Spanish exporter of patio door. glass, Cristaleria Espanola ("Cristaleria") in Madrid. Cristaleria claimed to be the only manufacturer of float glass in Spain, manufacturing under licence from Pilkington Bros. (U.K.) Limited. The information obtained by Mr. Salmon was recorded in his report dated 22 December, 1982. Shortly thereafter, Mr. Salmon interviewed representatives of another such exporter, Delclaux Y Cia S.A. ("Delclaux"), a company related to vilsa, 1n Bilbao. He recorded the information obtained in this interview in a report on Delclaux dated 29 December, 1982. Mr. Salmon concluded that insufficient verifiable data had been presented by Delclaux and Vilsa to enable firm recommendations as to amounts of normal values on toughened glass panels ex Spain; but that: 13. ++. the information contained in this report may be of assistance when combined with information which may be available to Central Office through other sources, in establishing Normal Values under Section 5(4)." On 28 January, 1983, Brambles-Ruys Pty. Limited, consultants retained by the first applicant, wrote to the Department: "During the interested parties meetings, 1t was indicated by members of the Dumping Branch that the early data obtained from the Spanish manufacturers was insufficient and that further visits will be made to Spain to clarify certain aspects. We also suggested at the hearings that inquiries should confirm that toughened sheet glass patio door panels were not sold on the Spanish market. Wwe would appreciate your advice regarding the outcome of your inquiries an Spain, whether or not the earlier difficuities have been resolved, and if problems still exist, what additional information can we provide to assist your inquiries." By its reply dated 8 February, 1983, the Department informed the consultants that the details of the enquiry were in the process of preparation for the Minister's consideration. On 17 February, 1983, the Spanish Government Commercial Office in Sydney wrote to the Minister: 14. "I am informed that officers of your Department, based in London, have visited Spain to investigate allegations of dumping, made by Pilkington ACI, in respect of the abovementioned product, which is manufactured and exported to Australia by Vidrierias de Llodio, S.A. (VILSA) of Bilbao. As there is no domestic market in Spain for this product, which is used exclusively in residential applications, in accordance with Australian Standard AS2208, I am concerned that the information obtained to date in my country may not have been sufficiently adequate for your Department's purposes. Should this be the case I wish to place myself at your disposal to provide any additional data or comment that may be helpful to you in this matter. I am further concerned that your Department may contemplate the construction of a Spanish domestic price based on information you have of domestic prices in some other exporting country. If in this context you were, for example, to consider domestic prices prevailing in the U.S.A. then we would doubt if this would be at all appropriate, as VILSA regularly exports to the American market. The complainant, Pilkington ACI, have asserted that their product and that from Spain are interchangeable. But other industry sources and end users overseas and indeed in Australia, Maintain that float glass, as produced by the Pilkington group and most other major international manufacturers and sheet glass (produced by VILSA), are not of comparable quality and are not interchangeable. Furthermore, in markets such as the U.S.A., the product under reference, is only produced in float glass quality. a 15. Taking into account all the facts as I understand them, it would seem to me that VILSA are not exporting to Australia at a price below a reasonably constructed domestic value for Spain, and it further seems extremely unlikely that their exports to Australia, have or are likely to cause material injury to the Australian glass monopoly." On 28 February, 1983 a meeting in Canberra between officers of the Department and representatives of the second respondent discussed the question whether evidence was available to establish that the costs of production of float glass approximated those of sheet glass. Further information in this connection, but of a general nature only, was provided by the second respondent by a letter written by its consultants dated 25 March, 1983: the best evidence which the second respondent could adduce for this purpose consisted of published articles written many years ago at a level of generality which afforded no guide at ail as to the relative cost of production of float and drawn glass looked at from the point of view of a producer in the U.S.A. and a producer in Spain respectively. Indeed, the article most relied on by the second respondent discussed, in the main, the position in the U.S.A. in 1978 in terms which bore no relation to the costs of production, expenses of sale and the like and profit in the case of a Spanish exporter in 1983. However, the writer (Mr. William M. Bethke) did mention foreign producers when speaking of "the low variable costs involved in the production of flat glass and the resulting economies associated with operating at full capacity". Mr. a D. Reith, Assistant Secretary, 16. In a minute for the Minister dated 15 April, dumping report recommending (anter alia) that 1983, Dumping Branch, forwarded a declaration of the application of s.8 of the Act be made in respect of the goods exported from Spain and said: "BACKGROUND: Formal enquiries were notified in June 1982 into a complaint by a= local manufacturer, Pilkington ACI Limited, of the dumping of toughened glass patio door panels from the U.S.A., Spain and Romania. The complaint against the U.S.A. was terminated on 4 January 1983 on the grounds that the export prices were, in the main, not below normal values and in the instances where the export prices were below normal values they were only marginally so and no injury was occuring (sic). Enquiries have been made with suppliers in Spain. Information obtained there was not sufficiently reliable to enable normal values to be assessed either on the basis of market price or cost of production. As a consequence, and bearing in mind considerations of equity, USA normal values have been used, since the USA are generally agreed to be the most efficient producers and could be expected to have normal values lower than Spain. In respect of Romania, being a Centrally Planned Economy country, no overseas enguiries were made. Normal values were established based also on those of the U.S.A. A meeting of interested parties was held on 18 November, 1982 and a transcript of the proceedings can be made available. Submissions made by the various parties to the meeting are attached. 17. CONCLUSION: Dumped imports from Spain and Romania, but not USA, have caused material injury to Pilkington ACI Limited through a loss of profits due to price suppression, and loss of market share they would otherwise have enjoyed. Further injury 1s threatened." Finally, on 20 April, 1983, the Minister decided to make the declaration of the application of s.8 in the present case. In so doing, the Minister must be taken to have accepted first, a conclusion in the dumping report that dumping margins up to 21.9% for Spain and 27.6% for Romania had been found and secondly, a recommendation in that report that he determine normal values for the goods in Spain in terms of sub-s.5(4) of the Act and in Romania in terms of para.5(3)(e). Although there is no direct evidence on the point, the circumstances of the case warrant the inference that the Minister adopted the reasoning in the report (cf. Sean Investments Pty. Limited v. MacKellar (1981) 38 A.L.R. 363 at p.370). It would appear that the source of the reference to a dumping margin for Spain of 21.9% was a departmental minute prepared by Mr. A.R. Hall dated 8 February, 1983. In that minute, Mr. Hall expressed the opinion that normal value in the case of the Spanish exports could be ascertained by reference to the assessment made (by Mr. Fraser) under para.5(2)(c) for the U.S.A.; that the 18. information obtained from this source was reliable; and that the U.S.A. was also the source of lowest priced "non-dumped" or "non-injurlous" imports. Mr. Hall's calculations of normal value and export price from Spain were expressed by him thus: "Based on USA normal Value (ff 89-90 c82/7513) dumping margins are as follows: NV (U.S. normal value): SUS 7.625 per sq- metre, cash, packed FOB. EP (export price from Spain): SUS 5.956 per sq. metre, cash, packed, FOB. (Entry G22210119) Difference 1.669 Apparent dumping margin = 1.669 nt tS ie wo do However, Mr. Hall's views were not shared in other quarters. In an annotation dated 24 October, 1982 to a departmental minute, Mr. R. Morgan had observed, in response to a query as to a comparison of costs as between the U.S.A. and Spain, that the "U.S.A. cost to make and sell figures are 40 per cent higher than Spain. U.S.A. is claimed to be most efficient producer." A similar view had been taken earlier in a departmental minute prepared by Mr. R.A. Shakespear dated 9 June, 1982 when he observed that the "float (process) is more expensive than (the) drawn". 19. The reasoning which supported the conclusions arrived at and recommendation made by the Department is crucial and was expressed in the dumping report as follows: "10.6 UNITED STATES OF AMERICA 10.6.1 Overseas investigations identified that sales in the United States of America were not in the ordinary course of trade because they were sold at a loss and therefore an assessment under sub-section 5(1) of the Act was inappropriate. Normal values were established under paragraph 5(2)(c) of the Act using the actual costs of production plus assessed amounts' for selling and administration expenses and profit baséd on the results for the financial year of 1981. 10.7 SPAIN 10.7.1 The exporter claimed that there were no sales of the goods exported to Australia on the Spanish domestic market and therefore paragraph 5(2)(c) of the Act was appropriate. The exporter provided costs said to be incurred in the making and selling of these goods. 10.7.2 Due to inconsistencies in the evidence made available to the Department further enquiries were conducted in Spain which indicated that toughened glass panels for patio door applications were in fact sold in the Spanish domestic market. It appeared, however, that the toughened glass panels sold domestically were made from float glass while those exported to Australia were made from drawn glass. 10.7.3 FLOAT AND DRAWN GLASS - Like Goods 10.7.3.1. The Department was thus required to ascertain whether the goods sold domestically were 'like' goods to those sold for export and whether, and 20. if so, how their costs and prices could be compared. In its consideration of this question the Department took note of the arguments advanced by the various representatives at the meeting of parties. Further evidence was sought by the Department in order to consider the relative costs of production of drawn and float glass. There was some difficulty in obtaining relevant up to date information from sources independent to the parties but' the Department was finally satisfied that sufficient information had been made available to make a satisfactory comparison. 10.7.3.2. The Department concluded given that the two types of panels were made of the same material, albeit by a different process, were similarly priced and were used in the same application, that the product sold- domestically had characteristics closely resembling those of the product exported and thus was a 'like' product. 10.7.4 The Department then attempted to assess normal values for this product in terms of Sub-section 5(1) of the Act. Due to the nature of the information, the manner in which it was supplied, the failure of the companies involved to allow verification of certain points and inconsistencies which were apparent but for which satisfactory explanations were not given, the Department will recommend to the Minister that he disregards the information obtained in Spain as being unreliable in terms of the sub-section 5(4A) of the Act. 10.7.5 The Department considers that an assessment of normal value should be made under sub-section 5(4) and that the normal value assessed for the United States of America may appropriately be used for this purpose. In making this assessment the Department 1s aware that the panels from Spain are of a lower quality than those from the United States of America and would be expected to attract a normal value less than that established for that country. However, USA 1s regarded as the most efficient producer and selection of its normal values would not disadvantage Spain." 21. The applicants challenge the decision of the Minister on a number of the grounds contained in s.5 of the Judicial Review Act. They say, amongst other things, that, accepting as they do that hardened float glass patio door panels and hardened sheet glass patio door panels are "like goods" for present purposes, there was no evidence or other material to justify the making of the decision under review (see the Judicial Review Act, para. 5(1)(h)); that the making of the decision was an improper exercise of the power granted by s.8 of the Act: not only did the Minister take irrelevant considerations into account but he also failed to take relevant considerations into account; alternatively, his exercise of power was so unreasonable that no reasonable person could have so exercised the power (see the Judicial Review Act, paras. 5(2)(a), (b) and (g)). The applicants attack the process of reasoning in the dumping report which was adopted by the Minister in a number of ways. They submit that it was not appropriate that the normal value be determined pursuant to sub-s.5(4) because the Minister could not be satisfied pursuant to sub-s.5(2) that the normal value could not be ascertained under sub-s.5(1); further, the Minister could not be satisfied that sufficient information had not been furnished or was not available to enable the normal value of goods to be ascertained under the preceding sub-sections referred to in sub-s.5(4): an particular, sub-s.5(1), 5(2)(c) and 22. 5(2)(d). The applicants contend that the Minister should have ascertained the normal value under sub-s.5(1); but that, having failed to do so, he should have ascertained the normal value under para.5(2)(c); and that, having failed to act under (1) or (2)({c), he should have directed, pursuant to para.5(2)(d), that the normal value be the highest price paid for goods sold in the ordinary course of trade in the country of export for export to a third country. In purporting to make a determination under sub-s.5(4), the Minister failed, the applicants say, to have regard to relevant' information as required by that provision: they, refer, by way of example to the selling price of like goods on the domestic market in Spain; the cost of making and selling identical or like goods in Spain; and the export prices on sales to a third country. It is contended that the Minister was not entitled to adopt as the normal value of the goods the normal value as assessed in the case of the U.S.A.: the applicants point, in particular, to the different costs of production of float glass and drawn glass; in any event, it was wrong to assess or recommend a normal value for the gocds on the basis of cost of production in the U.S.A.; further, they say, the Minister erred in law in deciding that sales in the U.S.A. were not made in the ordinary course of trade, simply because the goods were sold at a loss; it was also wrong to decide that the selection of the U.S.A. normal values assessed under para.5(2)(c) would not disadvantage Spainish exporters. 23. Although, understandably, much of the evidence and argument in the case was devoted to the preliminary investigations carried out by officers of the Department, the substance of the reasoning to be attributed to the Minister in the decision-making process 1s contained in the dumping report. The starting point of the reasoning process was a consideration of the position in the U.S.A. In this connection, the report stated (para.10.6.1) that sales in that country "were not in the ordinary course of trade because they were sold at a loss" and thus sub-s.5(1) could not be applied. This conclusion was apparently derived from the views expressed .by Mr. Fraser in August 1982. Mr. Fraser then gave detailed consideration to the domestic pricing of PPG. He said that PPG was experiencing difficulties due to the current recession. He referred to trends in the construction and housing industries both of which were in severely depressed states at the time. He went on to say: "20. The result of the current market situation 1s that PPG's prices are also depressed to the extent that the price list at Attachment C has not been varied since it was issued in November 1980. Furthermore, it 1s fair to say that the price list bears little relationship to prices actually being fetched at the moment by PPG in its sales of Herculite K. 24. 21. In fact, there is no strict rationale for the prices currently being asked by the company. Domestic sales invoices at Attachment D to various fabricators indicate base invoice prices for both clear and tinted glass that vary over a wide range. For example, clear glass is priced as low as 54 per sq ft and as high as 74¢ per sq ft. Similarly for tinted product, prices have ranged from as low as 81.2¢ per sq ft up to $US1.22 per sq ft." Mr. Fraser also reported that PPG freely admitted that current domestic sales of Herculite K overall, i.e. both clear and tinted, were at a loss, although there was evidence indicating that the tinted Herculite K glass was ' ' profitable. He then concluded: "29. Having regard to the fact that there are distinct pricing differences for clear and tinted products, I believe it is necessary to establish a normal value for each of these products. However, as has been shown in this report, sales of Herculite K clear in the US are currently at a loss and therefore it will not be possible to recommend a TNV in terms of Section 5 (1) for this particular product. 30. Under the circumstances, Attachment F has been prepared for the purpose of calculating a Section 5 (2) (C) normal value." 25. Mr. Fraser then explained the basis upon which, in his view, a constructed normal value should be arrived at pursuant to para.5(2)(c) by reference to amounts attributed to costs of production, overheads, interest and freight. Whilst recognising that there was room for argument on the point as a matter of principle and detail, Mr. Fraser ultimately expressed the opinion that shipments of Herculite K clear glass had a normal value of US70.64¢ per square foot (US$7.60 per sq. m.), cash, packed FOB port of shipment and had been dumped into Australia although the dumping margins were relatively small; but that shipments of Herculite K tinted glass had a normal value of US96.7¢ per square foot (US$S10.41 per sq.m.), and had not been dumped into Australia. The applicants challenge the approach taken by Mr. Fraser and by the Minister in this regard. They submit that a value should have been fixed pursuant to sub-s.5(1) in the case of the U.S.A. since the domestic sales made by PPG were "in the ordinary course of trade" within the meaning of that provision. 26. Although the meaning of phrases such as "the ordinary course of business" and "the ordinary course of trade" has been considered in a wide range of statutory contexts, for example, in bankruptcy legislation dealing with preferences (see Taylor v. White (1964) 110 C.L.R. 129; Downs Distributing Co. Pty. Limited v. Associated Blue Star Stores Pty. Limited (In Liquidation) (1948) 76 C.L.R. 463 at p.476) and in income tax legislation (see Pastoral and Development Pty. Limited v. Federal Commissioner of Taxation (1971) 124 CIL.R. 453''at pp.462-3), such authorities are of no real assistance in a customs context. There are a number ef decisions of the American courts which have considered and applied the concept of "the ordinary course of trade" in provisions similar to s.5 (see United States v. Lockwood 287 F.Supp. 283 (1968); Pacific Customs Brokerage Co. 325 F.Supp. 902 (1971) Sturm, Customs Law and Administration (1980) at pp.263-70), but, again, this is of limited assistance only because the American statute contains a specific definition of the concept not found in our legislation (see Bryan, Taxing Unfair International Practices, (1980) at pp.100-1). 27. In Saracen Shoe Co., Ltd. v. Minister of Customs (1932) N.Z.L.R. 765, the Court of Appeal of the Supreme Court of New Zealand made some pertinent observations on the meaning of "the ordinary course of business" in a provision similar to sub-s.5(1), s.114(1) of the Customs Act, 1913 (N.Z.). The plaintiff company was the importer and wholesaler in New Zealand of "Ball Brand" footwear, the product of the Mishawaka Company, of the U.S.A., where the manufacturers sold 90 per cent. of its output direct to retailers subject to quantity discounts up to 10 per cent., and the balance to Dunham Bros., which concern received a discount of 14 per cent. and had the sole wholesale rights in a territory in which it undertook not to deal in competitive lines. Myers, C.J., delivering the judgment of the Court said (at p.775:) "It is no doubt true that the sales to Dunham Bros. Co. are made in the ordinary course of the Mishawaka Company's business, in the sense that every sale which that company makes is a sale in the ordinary course of its business, just in the same way, as we apprehend, that any transaction whatsoever, however unusual, which may be entered into by a company and which the company is authorized by the objects clause in its memorandum of association to enter into 1s in the ordinary course of its business. But we do not think that that is what is meant by the term 'an the ordinary course of business' as used in s.114. We think that the word there is used in the sense of 'usual' or 28. 'ordinary,' as opposed to ''special,' 'exceptional,' or 'extraordinary.' This distinction is referred to--though the case is not one involving the law relating to Customs duties-~in In re Old Bushmills Distillery Co. Under s.114 it is not merely sales in the course of business that are the test, but sales in the ordinary course of business. If the view that we take is correct, as we think it is, the ordinary course of the Mishawaka Company's business was to sell its goods to retail dealers. The sales to Dunham Bros. Co., which form the one excepted case, constitute, we think, exceptional or special sales, out of the ordinary course of business, as meant by s.114." There does not appear to be any authority on the question whether sales at a loss are not "in the ordinary course of trade" for present purposes. In his opinion in NTN Toyo Bearing Co. Ltd. v. E.C. Council (1979) 2 C.M.L.R. 257, Mr. Jeane-Pierre Warner, A.G., referred (at p.313) toa submission put on behalf of the Commission that the meaning of the phrase "in the ordinary course of trade" in Article VI of the GATT and in the Anti-Dumping Code had been for many years the subject of discussion between the major parties to the GATT: particularly discussed had been the question whether persistent selling at a loss could be considered to be "an the ordinary course of trade"; a consensus had been reached to the effect that 1t could not, because otherwise a country "would be able to export its recession": and it seemed that, on 7 November 1978, an 29. informal agreement to that effect was made at Geneva between Australia, Canada, the EEC, and the USA. But whatever the international significance of any such "agreement" may be, 1t cannot assist in the construction of s.5 of the Act (cf. Trade Agreements Act of 1979 (U.S.) s.773(b)). Warner, A.G. then advised (at p.314): "In my opinion, at the end of the day, the question is whether the Commission was empowered, un the circumstances of these cases, to hold that, within the meaning of those terms in Article 3(2) of Regulation 459/68 (echoing those of Article 2(d} of the Anti-Dumping Code), there were 'no sales of the like product in the ordinary course of trade in the domestic market of the exporting country' or that there was 'a particular market situation' in which 'such sales' did not 'permit a proper comparison'. For, if the Commission was empowered to hold that either of those sets of circumstances existed, it was empowered by Article 3(2) to depart from actual prices in the domestic market of the exporting country and to construct domestic prices pursuant to Article 3(2). Whilst I do not disregard, in approaching that question, the Commission's warning that, if the Court were to give too narrow an interpretation to those provisions, it would weaken the Community's position vis-a-vis other parties to the GATT and might Cast doubt on the lawfulness of the basic price system operated by the Community in the steel sector (which corresponds to the American 'trigger price' system), I think that the true answer to the question is to be found in the terms themselves of Article 3(2). The generality of the expressions there used and the very nature of the 30. subject-matter are such that 1t can, in my opinion, only be interpreted as conferring a very wide discretion on the Commission, a discretion with the exercise of which this Court cannot interfere except upon proof of manifest error or of misuse of power on the part of the Commission or, of course, upon proof that, despite the width of the discretion, the Commission clearly exceeded its bounds. Nor am I persuaded that there is anything to preclude the Commission from holding, in a given case, that persistent selling at a loss is not in the ordinary course of trade." It is difficult to generalise in this area. It is possible to imagine a case of persistent selling at a loss which could be characterised as extraordinary or special for that reason alone: the circumstances may well justify a conclusion that the transactions under scrutiny were entered into for an ulterior object and therefore stand outside the ordinary course of trade. On the other hand, in cases of economic recession, a producer may prefer to lose money on all markets rather than to close down its production capacity. Thus, export prices lower than the cost of production in the exporting country were, under the 1968 EEC Antidumping Regulation, not considered as dumped prices as long as there was no price discrimination, 1.e. all prices imposed by the exporting country were similarly below production cost unless there was a "particular market Situation", which was not further defined (see Pierre Didier EEC Antidumping Rules and Practices" Common Market Law Review, Vol.17 (1980) at p.352). It follows, in my view, 4s 31. that sales at a loss, without more, are not necessarily outside the ordinary course of trade, but if such sales are persisted in, they may indicate the existence of an ulterior object sought to be achieved which 1s sufficient to take the transactions outside the ordinary course. In any event, I am not persuaded that Mr. Fraser fell into error on this score. When his report is read as a whole, an impression is conveyed that, notwithstanding the impact of the economic recession, PPG was unable to explain to his satisfaction its pricing policies in respect of clear glass at least. Although not explicitly stated, I think that it is possible to infer from the report a conclusion that the sales at a loss were thought to be persisted in for some collateral reason which Mr. Fraser believed to exist but which, given the complexity of the problem, he was unable to articulate with any precision. In my opinion, it was open to Mr. Fraser (and, in turn, the Minister) to form the view that the pricing policies of PPG failed to provide a satisfactory basis for establishing a normal value for the U.S.A. based on domestic sale prices. It follows, in my view, that no review of this part of the decision on any of the statutory grounds is warranted (see Feltex Reidrubber Limited v. Minister for Industry and Commerce (1983) 46 A.L.R. 171 at p.186). w 32. However, even if it be assumed that no basis has been established for review of the decisions first, to put aside domestic sales in the U.S.A. for the purpose of ascertaining a normal value for exports from that country pursuant to sub-s.5(1) and secondiy, to construct, for U.S.A. purposes, a normal value under para.5(2)(c) using the U.S.A. aunformation (being the actual costs of production of PPG plus assessed amounts for selling and administration expenses and profit based on the financial year of 1981), it by no means follows that it was appropriate or even reasonably open to the Department to use such information for the purpose of constructing a normal value for exports from Spain. For one thing, although it is common ground that, for the purposes of the Act, float and drawn glass are to be deemed to be "like goods", the dumping report itself states that the Spanish panels are of a lower quality than those from the U.S.A. and "would be expected to attract a normal value less than that established for (the U.S.A.)" (para.10.7.5). For another, the statistical evidence in the report (para.5.2) indicates that between 1979 and 1982, the U.S.A. average price for toughened glass varied from US$7.076 to US$8.044 to US$8.29 to US$6.55 per square metre whereas the Spanish average price in that period rose from US$3.57 to USS4.74 to US$5.71 to USS6.61. Further, as Mr. Fraser's report makes clear, there was only scant material 33. avallable of the costs and profit of PPG to enable an attempt to be made to reconstruct a normal value for the U.S.A. from the notional amounts employed for this purpose. Finally, although as the report points out (para.10.7.5), the U.S.A. may be the "most efficient" producer, neither logic nor experience indicates that a notional reconstruction of the costs of production, profit and the like of a producer in the U.S.A. has any natural, let alone necessary, relatzronship with a similar reconstruction in the case of a producer in Spain. It is possible that a situation could have arisen in the present case where the only reliable information available for the purpose of ascertaining a normal value for the Spanish exports was the material gathered from PPG. But that material, although honestly proferred, was not regarded as reliable for U.S.A. purposes, let alone for Spanish purposes. In any event, there was material in point made available by the Spanish producers. It may be accepted that, as in the case of PPG, there were good reasons for not adopting that information at face value. But it by no means follows that the material made available should be rejected outright in favour of the adoption, holus-bolus, of a reconstructed "normal" value of goods produced by a different enterprise in another economy on = another continent. 34. It 1s true that many of the enquiries made by the Department of the Spanish producers were not satisfactorily dealt with and may not have been "verified" in any auditing sense. Nonetheless, the offers made by Brambles-Ruys Pty. Limited and the Spanish Government Commercial Office in their letters dated 28 January and 17 February, 1983, respectively (supra), were not taken up. But, in any event, the Spanish material already held by the Department must, on any view of the matter, have provided a safer guide, after making all due allowances or adjustments required to be made to that material, to the costs of production and other expenses, let alone' profit, for that country, than a notional calculation carried out in the case of PPG where the only primary material available was information as to profits, not costs of production; and where that information was itself not only not verified but also rejected by Mr. Fraser as unreliable for the purpose of determining a normal value for the U.S.A. It can be accepted that sub-s.5(4) may well be available in a case such as the present but, even assuming its application here, the Department is still confined, by the terms of the sub-section itself, to information which is "relevant". In my view, the information gathered in the U.S.A. as to the profitability of the operations of PPG was not relevant to a determination of the costs of production and other expenses of a producer carrying on a different & 35. type of operation in Spain. Nor does sub-s.5(4A) entitle the Department to take into account irrelevant material in determining normality on an appropriate and reasonable basis. Nor did sub-s.5(4A) justify the Department in rejecting all the Spanish information outright: it may well have required adjustment, even significant modification, in order to achieve a normal value but it was nonetheless relevant and should have been taken into account, even if on a limited basis only. In saying this, I appreciate the limits of judicial review in a case such as the present. The review is not one as to the merits of the decision but rather whether there Has been a constructive failure to make a decision having regard to all relevant considerations. In the circumstances, I am of the opinion that the Department addressed itself to materially irrelevant considerations (the U.S.A. material) and failed to consider materially relevant considerations (the Spanish material) (see Tasman Timber Limited v. Minister for Industry and Commerce (1983) 46 A.L.R. 149 at p.168). I am satisfied that the applicants have established their case for review under the Judicial Review Act in respect of the decision under challenge on the grounds mentioned in para.5(1)(e) (including paras.5(2)(a) and (b)) (cf. Semet-Solvay Co. Ltd. v. Deputy Minister of National Revenue and Kaiser Steel Corp. (1958) 20 D.L.R. (2d) 663 at pp.678-9). In the result, it 1s unnecessary to express any view on the other matters argued on behalf of the applicants. _ a 36. Further, it is unnecessary to express any view on the question whether the information already provided or otherwise available from Spanish sources as to the cost cf production and other expenses is sufficient to enable a view to be properly formed as to the normal value of the goods exported from Spain. In other words, whilst I propose to set aside the declaration made in this case by reason of the matters taken into account, it does not necessarily follow that it was not open to the Minister to determine the same normal value by taking into account information provided by Spanish sources as to profitability and costs and expenses incurred in that country. I propose to make the following orders: (1) That the decision of the first respondent dated 20 April, 1983 being notice No. 1983/Dl18 and being a declaration of application of s.8 of the Customs Tariff (Anti-Dumping Act, 1975 be set aside; (2) That the first respondent pay the costs of the first applicant but that otherwise there be no order as to costs. | certify that this and the 35 précéding Pages are a true copy of the reasons jor judgment herein of The Honourable Mr Justice Beaumont D fa rT uu Saumont. . bay Baise QD Decemtr+/ 9493