CATCHWORODS ADMINISTRATIVE LAW - relevant matter not taken into consideration - whether decision has to be set aside - another apparent defect regarded as relevant to exercise of discretion - date of effect of order setting aside. CUSTOMS - anti-dumping duties - operation of "normal vaiue" provisions. Administrative Decisions (Judicial Review) Act 1977, ss.5(2)(b), 16(1) (a) Customs Tariff (Anti-Dumping) Act 1975, ss.5,8,20. WATTMASTER ALCO PTY. LTD. & ORS. v. THE HONOURABLE JOHN NORMAN BUTTON N.S.W. G430 OF 1985 PINCUS J. BRISBANE 24 January 1986 PRINCIPAL BGGISTER, IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) NSW G430 of 1985 GENERAL DIVISTON BETWEEN : WATTMASTER ALCO PTY. LTD. & ORS. Applicants AND: THE HONOURABLE JOHN NORMAN BUTTON Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 24 January 1986 WHERE MADE: BRISBANE THE COURT ORDERS THAT: l. 3. NOTE: The decision of the respondent, the Honourable John Norman Button, made on 15 August, 1984, to publish a declaration pursuant to s.8(2) of the Customs Tariff (Anti-Dumping) Act 1975 in respect of sweep fans for Hong Kong having metal blades of less than 1400 mm sweep, be set aside with effect from a date to be determined. The applicants be at liberty to apply within 14 days to have this matter relisted for a hearing on the issue of the date from which the order setting aside the respondent's decision has effect, and in default of the applicants so applying, the order setting aside the respondent's decision shall have effect from 24 January, 1986. The respondent pay the applicants' taxed costs of and incidental to this application to date. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) NSW G430 of 1985 GENERAL DIVISION ) BETWEEN : WATTMASTER ALCO PTY. LTD. & ORS. Applicants THE HONOURABLE JOHN NORMAN BUTTON Respondent PINCUS J. 24 January 1986 REASONS FOR JUDGMENT The applicants are importers of, among other things, ceiling fans from Hong Kong and apply to review the decision of the respondent being a declaration under s.8 of the Customs Tariff (Anti-Dumping) Act 1975 in respect of certain such fans. The application was made on 6 December 1984. On 25 July 1985 the applicants applied to the respondent under s.20 of the Act to revoke the notice by which the declaration attacked was published. That application was unsuccessful and the applicants applied to amend their original application to this court so as to include in it an attack upon the refusal or failure to revoke the notice. I granted the application to amend and let in evidence which the applicants had placed before the respondent in support of their application of 25 July 1985. Although, as just explained, the application in its amended form has two distinct aspects, namely an attack on the original declaration and an attack on the failure or refusal to revoke it, the convenient course, inmy view, is to consider first the material which was before the respondent when he made the declaration without having any regard to the information furnished in support of the application of 25 July 1985. Under s. 8 of the Customs Tariff (Anti-Dumping) Act 1975 the Minister 1s empowered, by notice published in the Gazette, to declare that the section applies to certain goods. The effect of his doing so 1s that, under sub-ss. (3) and (4), a special duty known as dumping duty 1s charged. The respondent made the declaration which 1s an issue before me under s.8(2), which reads as follows: ""(2) Where the Minister 1s 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 of 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 Australia after the date of publication of the notice or such later date as 1s specified in the notice; and (d) the amount of the export price of which is less than the amount of their normal value." Under s.8(4), the dumping duty is equal to "the amount by which the amount of the export price of the goods is less than the amount of the normal value of the goods" ~- i.e. the dumping duty is the difference between the export price andthe "normal value". It will have been observed that there are two distinct conditions which must be fulfilled in order that publication of such a declaration as s.8(2) contemplates may be justified: the export price must be less than the "normal value" and there must be material injury or material hindrance to an Australian industry. In this case, the attack was concerned with both these conditions. The declaration 1n question was in the following terms: "Customs Tariff (Anti-Dumping) Act 1985 Notice No. 1984/D 41 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 1n respect of ceiling sweep fans having metal blades of less than 1400 mm sweep from Hong Kong 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 being threatened or the establishment of an Australian industry has been or may be materially hindered, 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 (ad) the amount of the export price of which is less than the amount of their normal value. Dated this 15th day of August 1984. -sgd- (John N. Button) Minister of State for Industry and Commerce" The expression "normal value" takes its meaning from s.5. However, that provision is not merely definitive. It empowers the Minister to make determinations and give directions, the effect of which is twofold. Firstly, they may, aif valid, provide a foundation for the publication of such a notice as s.8(2) contemplates, by fixing a "normal value". Secondly, determinations or directions under s.5 may fix the amount of the dumping duty which, as has been pointed out, is the excess of "normal value" over the export price. The respondent made two determinations of "normal value", one in respect of 900 mm or 36" sweep fans, and one in respect of 1200 mm or 48" sweep fans. Both those determinations were based upon prices said to be charged by a certain Hong Kong company which may conveniently be called Benchmark. Although the applicant made many criticisms of the way in which the decision attacked was arrived at, the attack was concentrated on the respondent's determinations of "normal value" in accordance with prices said to be charged by Benchmark and that aspect of the matter will now be discussed. The applicants said that there was no proper evidence of the price said to be charged by Benchmark, and apart from that, the Benchmark price should have been adjusted for its custom of allowing buyers long credit terms. The determination of normal value for 900 mm fans commenced as follows: "I, JOHN NORMAN BUTTON, Minister of State for Industry and Commerce, being satisfied that sufficient information has not been furnished or the information is considered to be unreliable to enable the normal value of the goods to which this notice applies to be asccertained under sub-section 5(1) or sub-section 5(2) of the Customs Tariff (Anti-Dumping) Act 1975, hereby DETERMINE pursuant to sub-section 5(4) of that Act and having regard to all relevant information that the normal value in respect of ce1ling sweep fans having metal blades of 900 mm or 36" sweep from Hong Kong exported by Evergo Industrial Enterprise Ltd or Wing Tat Electrical Mfg Co., Ltd 1s to be for the purposes of that Act..." (The 1200 mm determination began in the same way except for the slze specified.) There followed details of the determination. Tt 15 not necessary to go anto them; the important point to note is that the determination purports to be under s.5(4) on the basis that not enough information was furnished, or that furnished was considered to be too unreliable to enable a determination under s.5(1) or s.5(2). The former provision reads as follows: "(1) Subject to this section, for the purposes of this Act, the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, 1f like goods are not so sold by the exporter, by other sellers of like goods." The sub-section mentions two possibilities - either that "normal value" is the price paid in home consumption sales by the exporter, or that it is the price paid in home consumption sales by other sellers. Since the Minister has made his determinations under s.5(4), that step in the process, if valid, must be based upon satisfaction that there was not enough information to enable a determination on either of those bases. It will be noted that s.5(4) refers to "the preceding sub-sections". The only relevant ones are referred to in the determination; of those, sub-s.(1) has already been set out. Sub-s.(2) need not be set out but, in brief, allows determination on the basis of cost to manufacture. The details of the method whereby the determinations of normal value were made are discussed below, but the preliminary observation should be made that it 1s rather puzzling that the respondent purported to determine under s.5(4) for, as indicated above, (and as was common ground at the hearing) he based the determinations on prices claimed to have been charged by Benchmark, as if under sub-s.(1). That point 1s mentioned further below. The investigations, which provided the information about Benchmark, are principally to be found ina document dated 31 January 1984 prepared by an Australian Customs representative in Hong Kong. The representative spoke to a company executive, Mr. Lee, about Benchmark''s export prices and Mr. Lee "appeared evasive and without actually refusing to supply the requested information, he managed to skirt the issue..." When pressed, he supplied copies of invoices to trading houses in Hong Kong for export to the U.S.A. and the Philippines. Copies of those invoices were placed before me and show the prices charged in HKSs for 36" fans and for 48" fans. The normal values determined were HK8156 for the 36" fans and HK$172 for the 48" fans (both figures rounded off). It appears that the sale prices just mentioned, which related to sales of considerable quantities of fans, were themselves considerably below "normal value". The representative was told by Benchmark personnel that a substantial part of its total production was sold domestically to Hong Kong retailers. He said "samples of invoices and statements were sighted to these outlets". No such samples were exhibited to the report, nor, it appeared, were any copies then solicited from Benchmark, an omission I find puzzling. The representative went on to say that he sawa price list and invoices to retailers "verifying list prices as shown on the price list less" a 10% discount, apparently allowed to retailers as a matter of routine. In addition to that, further discounts of 5%, 2%, and 5% and (sometimes) a rebate of 1% were allowed, each being applied by multiplication to the result of the last. The representative also produced copies of post-dated cheques exemplifying the practice of the Hong Kong retailers in paying Benchmark for the goods. Under that practice, goods supplied during the whole of the calendar year 1983 (for example) were paid for by cheques delivered in 1984 postdated to various dates, the earliest being 23 March 1984 and the latest 29 May 1984. Obviously, payment on that basis is of less value than payment after, say, 30 days and it is that circumstance which, according to the applicants, was not taken into account in using the Benchmark price. One argument on behalf of the respondent was that the matter had been allowed for in taking a further 10% off the Benchmark domestic price, in accordance with remarks made by the representative, reading as follows: "Quantity of sale I consider would have little bearing on the discounts applicable as evidence of domestic sales to electrical retail outlets and statements made by company officials indicate that the same discounts and rebates apply to all buyers, except 1n some instances for the 1% CASH rebate. In discussion with the Department of Trade marketing officers (Australian Commission), it would seem that a 10% allowance for level quantity of sale (1.e. wholesale), would be appropriate given the discount and rebates schedule that applies in the marketing chain which results in an effective 29.08% cumulative discount from retail." It is not easy to reconcile the statement made in the first sentence, that quantity of sale would have little bearing on the discounts applicable, with that in the second, that 10% "allowance for level quantity of sale (1.e. wholesale), would be appropriate". The expression "level quantity" seems to mean "level and/or quantity". Applying that extra 10% gave the representative the result of a "cumulative discount to wholesale level of 29.08% reducing to net, FOB, packed cash". The representative recommended: "Section 5(1) normal values adjusted by Section 5(5) due allowance for level/quantity as follows: 900 mm (36") - HKS156.03 1200 mm (48") - HK$171.64" Those precise figures are adopted in the respondent's determinations of normal value. The representative's reference to an adjustment under s.5(5) requires some explanation; that provision allows adjustment of prices paid for like goods - an expression taken from s.5(1) - to allow for various factors including "the terms or circumstances of the sales to which they relate". Plainly, what the representative did was to treat Benchmark as a seller of like goods within the meaning of s.5(1) and adjust the price said to be actually charged by a "10% allowance for level quantity of sale (1.¢e. wholesale)" under s.5(5). The principal argument, as indicated above, was that the expression just quoted did not include an allowance under s.5(5) for the delay in payment. The impact of that delay, if properly exemplified by the statement of account which was in evidence, would seem to be augmented by the circumstance that most (about 70%) of the sales were made by the end of June. I was invited to read the expression "10% allowance for level quantity of sale (1.e. wholesale)" as necessarily including an allowance for that delay in payment. But it is neither express nor implicit in the two paragraphs quoted from the representative's report that the hypothetical wholesale purchaser would be buying on terms different from those applicable to the retail purchasers. It is not suggested anywhere in that report that the generous payment 10. arrangement has anything to do with the level of sale. Rather 1t is said to be one "traditional for Chinese businessmen". It has to be admitted that it is not very clear what is the true rationale of the 10% allowance, particularly in view of the statement already referred to that the representative considered the quantity of sale would have little bearing on the discount applicable. However, I find it impossible to read into the expression "level quantity of sale (i.e. wholesale)" any notion that the representative intended all or part of the 10% to be an adjustment for long terms of payment. It was argued on behalf of the respondent, however, that even 1f the representative did not take the matter into account, 1t was considered ata later stage. That submission depends largely upon the terms of the relevant dumping report, No. 97. It said of the domestic sales by Benchmark that they were "considered to be the best anformation available for the assessment of a normal value". Reference was made at that point to an appendix which, so far as relevant, reproduced, in different form, the information as to prices and discounts contained in the representative's report analysed above. It described the 10% as "adjustment for level". That description is repeated in an attachment to the appendix reading: "Consider that 10% adjustment on the net selling price should be made for level based upon findings of A.C.R. Hong Kong." It will be noted that there is a difference in the phrasing; the representative spoke of "level quantity" meaning . ll. "level and/or quantity". The reason the report omits reference to quantity 1s, perhaps, that the its author noticed the apparent inconsistency to which reference 1s made above: that the 10% can hardly have anything to do with quantity in view of the information that no discount is allowed for quantity. There appears to have been particular care applied to the important question of the description of this 10% allowance. It is my view that if the author of the report had it in mind that the 10% covered credit terms, he would probably have said so. An unfortunate expression used in the same attachment under the heading "TERMS OF PAYMENT" 15 a reference to the domestic price of Benchmark as "cash, packed, delivered". The conclusion stated at the end of that section is as follows: "Adjustment for extended payment terms where there are extended terms applying is acceptable, at the rate of an additional 1% per month." The explanation of this is that the respondent's advisers considered that, where exporters offered Australian importers extended terms, an additional 1% per month should be allowed. Again, although there are other possible explanations for the reference to the Benchmark price as "cash", the reader would surely take from it that the price was one for prompt payment, an anference which would gain particular strength from the context. The only other reference to the point in the dumping report which seems of sufficient significance to require mention 1s the following: "Deductions were allowed in accordance with the provisions of sub-section 5(5) to compensate for differences between domestic sales in Hong Kong and export sales to Australia. In particular, 12. adjustments were made for the differences in level of sale between the domestic sales to retailers in Hong Kong and the sales to the Australian importers/distributors, and for credit terms and packaging. (Confidential Appendix 5)." The argument for the respondent placed reliance upon that paragraph but, in my view, if it has any tendency, 1t is against the respondent's contention. That 1s so because the reference to credit terms there is, as the appendix mentioned makes clear, confined to terms allowed to Australian importers. Mention of "adjustments ... for the differences in level of sale" can only be a reference to the 10% mentioned in the representative's report and, again, if that 10% was intended to cover allowance of credit terms, 1t is strange that there 1s no mention of that fact. It may seem odd that the point being discussed was lost sight of in what seems to have been a most painstaking examination of the subject. However, 1t would be unfair to the applicants to start from any presumption that the process was error-free. The simple fact is that there 1s nothing in any of the voluminous documents to support the argument that the 10% covered the (admittedly important) aspect of extended terms of payment to the Chinese puchasers. The 10% 1s consistently described either as an allowance for level and/or quantity or as one for level alone. I have not overlooked the contentions advanced in oral evidence to the effect that, in truth, the report was intended to make an allowance of 5% for the terms of payment. I have not found myself able to accept that. It is my opinion that the report on which the respondent acted failed to take a relevant consideration into account. It is not suggested that the respondent had any other information on the subject and it therefore seems to follow that the matter falls within s.5(2)(b) of the Administrative Decisions (Judicial Review) Act. It was contended by counsel for the respondent that, even if the view just mentioned were arrived at, the decision should be upheld in my discretion, because the 10% allowance was a reasonable one in the circumstances and arguments of some complexity were put forward in support of that. The exercise of the discretion given by s.16 of the Judicial Review Act depends on some further aspects of the case, now to be mentioned. Reference has already been made to the fact that the report of the Hong Kong representative recommended that values be determined under s.5(1) adjusted under s.5(5). The minute paper dated 10 August 1984, which accompanied the dumping report, says "normal values have been assessed in accordance with sub-ss.5(1) and 5(4) of the Customs Tariff (Anti-Dumping) Act 1975". That document has a note at the foot indicating that 1t was agreed to by the respondent on 15 August. The report itself has this to say: "In view of the circumstances outlined above, the department considered it appropriate to establish normal values under both sub-sections 5(1) and 5(4) of the Act. These normal values are based upon the domestic selling prices of the exporter mentioned in paragraph 10.3 above..." That exporter was, of course, Benchmark. The terms of the determination, part of which is quoted above, show that the respondent declared himself satisfied that "sufficient information has not been furnished or the information 14. is considered to be unreliable to enable the normal value of the goods to which this notice applies to be ascertained under sub-s.5(1) or sub-s.5(2)". Thus, three views of the appropriate treatment of the information have been put forward: the first (that of the Hong Kong representative) was that the appropriate course was to take normal value from s.5(1), treating Benchmark as a seller of like goods; the second was that mentioned 1n the report, that normal values could be determined under each of sub-ss.(1) and (4); and the third was that actually implemented, namely determination under sub-s.(4). A condition of the Minister's power to determine normal value under sub-s.(4) is that he 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". Although the determinations made mention of information being unreliable (a matter referred to in s.5(4A)), 1t seems clear that the information on which the determinations were based, namely that obtained from Benchmark, was treated as reliable. It 1s true that doubts were entertained about the reliability of some information obtained from other exporters, but there were none with respect to that which was acted on. The suggestion in the report that normal values should be established under both of sub-ss.(1) and (4) was in error; the two are mutually exclusive. It is only if there is not enough information to enable a determination under sub-s.(1) that a determination may be made under sub-s.(4). . 15. Section 5(4) is not a provision which enables normal value to be determined "at large", 1f there 1s doubt whether, for example, sub-s.(1) applies. Reference to the report shows that there was not thought to be any shortage of reliable information to enable a determination under sub-s.(1). It there were, of course, that would not, without more, warrant resort to sub-s.(4); 1t would first be necessary to consider whether there was enough information to make a determination under sub-s.(2), a matter not mentioned in the report at all. This 1s not a point related merely to the form of the determinations, but 1s one of substance. The power to make a sub-s.(4) determination, outside the prima facie rules, 1s not untrammelled. On the face of it, there seems good ground for thinking that the determinations, which were founded on prices charged to Hong Kong retailers by Benchmark, did not have as their basis such a lack of reliable information as 1s mentioned in them. Although the point just mentioned was not one taken by the applicants, it 15 a consideration against declining to give effect to the point which was taken, namely that a relevant matter was left out of account. In exercising my discretion under s.16 of the Judicial Review Act I think I should not disregard the circumstance that the whole foundation of the use of sub-s.(4) seems, at best, dubious. Another matter which influences me 1s that the circumstances called for particular care in ascertaining and applying the Benchmark domestic price. According to the 16. information contained in an annexure to the dumping report, all the export and domestic prices obtained from the enquiries of the seven major Hong Kong exporters were substantially below the determined "normal values". For example, one of the Hong Kong exporters, according to "verified information" placed before the respondent, was selling 36" fans domestically at HK$28 below "normal value", to third countries (U.S.A. and Canada) at HK$45 below "normal value" and to Australia at HK$20 below "normal value", That all the other vendors were, so far as the information available showed, selling both domestically and for export well under "normal value", assessed in accordance with a single standard, does not necessarily falsify the respondent's conclusions. It should, however, have prompted a most careful scrutiny of the Benchmark price. The evidence shows that the Hong Kong representative, 1n response to a request from Canberra, made further enquiries in early May 1984 and was told by a director of Benchmark that "invoices were not available, for under their system, when invoices are paid and signed as such, they are returned to the customer?" The punctuation mark suggests a doubt in the writer's mind, presumably based on the notion that on the information supplied in January 1584 there should still have been unpaid invoices early in May. Further, the representative was shown what purported to be sample iunvoices, during his visit in January. Apart from that unproductive enquiry, nothing further seems to have been done to ensure that, despite the gap between 1t and all the other prices referred to above, the figures derived from the Benchmark domestic price were truly representative of normal value. as 17. Problems arising from differing business practices, distance, language, and the necessity of complying with the rather inflexible provisions of the governing statute, all combined to make correct completion of the task undertaken a difficult matter. Nevertheless, the applicants were entitled to have the process of imposition of dumping duties performed free of mistakes of the kinds spoken of in s.5 of the Judicial Review Act. It 18S my Opinion that the process was vitiated by a Significant error, namely the omission to take account of the terms of payment said to be available in domestic sales by Benchmark, and in the whole of the circumstances, the decision should, for that reason, be set aside. That conclusion makes it unnecessary to deal with the other points taken by the applicants, some of which appeared to me to have substance. The only remaining question is the date from which the setting aside should be operative. Section 16(1)(a) of the Judicial Review Act empowers the court on such an application as this to make: "An order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the decision specifies." Counsel for the respondent submitted that the operative date should be the date of my judgment. I have not found any authority setting out the considerations relevant to the exercise of the apparently unfettered discretion to fix the date of operation of such an order as this. It seems clear that the discretion applies to all cases, whether or not, apart from the statute, the court's order would have been effective from the date of making the decision, i.e. whether or not the decision 18. impugned would, under the general law, have had to be treated as totally void. I am of the view that, under the terms of s.16(l1)(a), prima facie the setting aside should be operative from the date of the court's decision; a party desiring the specification of a different date must demonstrate the propriety of that course. As the point was not argued (although said by counsel to involve some $500,000), I propose to give the applicants an opportunity to have the matter re-listed fora further hearing with respect to the date of operation of the order. Unless the court 1s informed within 14 days that sucha hearing is desired, the order will take effect from today. Evidence was "placed before me that, in response to the application for revocation made in July 1985, the Australian Customs Service is in the process of making further enquiries about the justification for imposition of these dumping duties, un the light of current circumstances. It 1s hardly necessary to add that no evidence of such circumstances was placed before the court and these reasons are not intended to convey any view as to whether, at present, a new imposition of dumping duties would, or would not, be justified. It will be ordered that the decision of the respondent of 15 August 1984 to publish a declaration pursuant to s.8(2) of the Customs Tariff (Anti-Dumping) Act 1975 in respect of ceiling sweep fans having metal blades of less than 1400 mm sweep from Hong Kong be set aside. The respondent must pay the costs. * certify that this and the / 7 preceding P2~s are a true copy of the reasons for Judgment herein of His Honour Mr Justice Pincus Va. tL & £ 7? cd V8 Sof Associate