yUDGMENT No. 679/ S.2Z. CATCHWORDS ADMINISTRATIVE LAW - Customs - 1988 Global Tender Quota Scheme ~ scheme for calling for and dealing with tenders for right to enter goods for home consumption at concessional rate of duty - Registrar extended time for lodgment of securities under Scheme - no express power to extend under Scheme - whether departure from Scheme will invalidate decision - whether Scheme is a guide only or has the status of law - failure to take a relevant consideration into account - misinterpretation of non-statutory rules - improper purpose - breach of natural justice - legitimate expectation - procedural fairness Customs Act 1901 (Cth) ss.42, 266, 267, 268, 273 Customs Securities (Penalties) Act 1981 (Cth) s.4 Customs Undertakings (Penalties) Act 1981 (Cth) s.4 Administrative Decisions (Judicial Review) Act 1977 (Cth) GERAH IMPORTS PTY LIMITED v. MINISTER FOR INDUSTRY, TECHNOLOGY AND COMMERCE & ORS G562 of 1987 Davies J 11 December 1987 Sydney IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION CORAM: DATE: PLACE: Davies J. 11 December 1987 Sydney BETWEEN: No. G562 of 1987 GERAH IMPORTS PTY LIMITED AND: AND AND AND AND AND: Applicant MINISTER FOR INDUSTRY, TECHNOLOGY AND COMMERCE & ORS First Respondent J.M. CHESWORTH Second Respondent BENTOOMA PTY LIMITED Third Respondent KEEWAR PTY LIMITED Fourth Respondent TEXTILE INDUSTRIES AUSTRALIA PTY LIMITED Fifth Respondent KATIES FASHIONS (AUST) PTY LIMITED Sixth Respondent WEAVERS MENSWEAR PTY LIMITED Seventh Respondent CHERRY LANE PTY LIMITED AND: Eighth Respondent LOWES-MANHATTAN PTY LIMITED Ninth Respondent MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the costs of the respondents. NOTE: Settlement and entry of orders 1s dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION CORAM: DATE: PLACE: Davies J. 11 December 1987 Sydney BETWEEN: AND: ) ) ) No. G562 of 1987 ) ) GERAH IMPORTS PTY LIMITED Applicant MINISTER FOR INDUSTRY, AND: AND: AND: TECHNOLOGY AND COMMERCE & ORS First Respondent J.M. CHESWORTH Second Respondent BENTOOMA PTY LIMITED Third Respondent KEEWAR PTY LIMITED Fourth Respondent TEXTILE INDUSTRIES AUSTRALIA AND: AND: AND: AND; PTY LIMITED Fifth Respondent KATIES FASHIONS (AUST) PTY LIMITED Sixth Respondent WEAVERS MENSWEAR PTY LIMITED Seventh Respondent CHERRY LANE PTY LIMITED Eighth Respondent LOWES-MANHATTAN PTY LIMITED Ninth Respondent 2. REASONS FOR JUDGMENT This is an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) for an order of review with respect to a decision of the Registrar of Quota Tender extending time for the lodgment of securities under the 1988 Global Tender Quota Scheme. Section 273 of the Customs Act 1901 (Cth)("the Act") empowers the Controller of Customs to determine that certain goods may be imported at a concessional rate of duty. Sub-section 273(1) provides:- "273.(1) The Comptroller may determine, by instrument in writing, that, subject to the conditions, if any, specified in the determination, an item, or a proposed item, of a Customs Tariff that 1s expressed to apply to goods, or to a class or kind of goods, as prescribed by by-law shall apply, or shall be deemed to have applied, to the particular goods specified in the determination." Part XV of the Act empowers the Minister to formulate a scheme for the exercise of the s.273 discretion with respect to goods imported pursuant to a quota. Section 266 in Part XV provides:- "266.(1) The Minister may, by instrument in writing, formulate a scheme for calling, and dealing with, tenders for the right to enter for home consumption during a period, or each of a number of periods, a determined quantity of particular goods, or particular goods of a determined value, at concessional rates of duty. (2) A call for tenders that relates to determined quantities of particular goods shall include a statement that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the particular goods the subject of the 3. call, the value of the goods is to be calculated by reference to a value set out in the statement as the value of an appropriate unit of the goods. (3) In determining the value of an appropriate unit of particular goods to be set out in a statement referred to in sub-section (2), the Minister shall have regard to the average value of the corresponding unit in relation to goods of the same kind that were imported into Australia and entered for home consumption during the financial year that ended on the 30 June immediately preceding the date on which the call for tenders is made. (4) A call for tenders shall include a statement that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the particular goods the subject of the call, the prescribed percentage of the value of the goods is to be the percentage set out in the statement." Section 267 provides that any tender for a quota will be accompanied by an undertaking and provides:- "267.(1) Where, in accordance with a call for tenders made under a scheme, a person furnishes a tender for the right to enter for home consumption during a period, or each of a number of periods, a quantity to be determined in accordance with that tender of particular goods, or particular goods of a value to be determined in accordance with that tender, at rates of duty to be determined in accordance with that tender, that tender shall not be considered unless 1t 1S accompanied by an undertaking in writing by that person, in terms satisfactory to the Comptroller, that, 1f that tender 1s accepted and - (a) the Customs Tariff Act 1982 is so altered or proposed to be so altered that rates of duty determined in accordance with that tender are set out in items, or proposed items, of a Customs Tariff that are expressed to apply to goods as prescribed by by-law; and (b) the Comptroller makes a determination under section 273 by virtue of which those items or proposed items apply to the quantity determined in accordance with that tender of those goods, or the quantity of those goods having the value determined in accordance with that tender, to be entered for home consumption by that person during that period, or each of those periods, as the case may be, 4. the person will, during that period, or each of those periods, as the case may be, enter for home consumption under any of those items, or proposed items, or under any appropriate item or proposed item, of a Customs Tariff that is not expressed to apply to goods as prescribed by by-law, that quantity of those goods, or the quantity of those goods having that value. (2) An undertaking referred to 1n sub-section (1) that relates to a determined quantity of goods shall include a statement acknowledging that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the goods to which the undertaking relates, the value of those goods is to be calculated by reference to the value per unit of those goods as set out in the statement, being the value per unit set out in the statement included by the Minister, in accordance with sub-section (2) of section 266, in the relevant call for tenders. (3) An undertaking referred to in sub-section (1) shall include a statement acknowledging that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the goods to which the undertaking relates, the prescribed percentage of the value of the goods is to be the percentage set out in the statement, being the percentage set out in the statement included by the Minister, in accordance with sub-section 266(4), in the relevant call for tenders. (4) In this section, a reference to the relevant call for tenders in relation to an undertaking, shall be read as a reference to the call for tenders in accordance with which the tender to which the undertaking relates was furnished." Sections 266 and 267 were introduced into the Act in substantially their present form by Act No. 45 of 1981 which came into force on 14 May 1981. On the same day, the Customs Securities (Penalties) Act 1981, No. 46 of 1981 and the Customs Undertakings (Penalties) Act 1981, No. 47 of 1981 also came into force. These two Acts were designed to give force to a tender scheme promulgated by the Minister under s.266 of the Act, for they provided for the payment of penalties by a tenderer who failed to comply with an undertaking given under the Act or to lodge a security required under a tender scheme. The Customs Undertakings (Penalties) Act 1981 ("the Undertakings Act") defines "Customs undertaking" as an undertaking given under sub-ss.267(1) or 268(2) of the Act and defines "prescribed percentage" as "the prescribed percentage set out in the Customs undertaking that relates to the goods." Section 4 of the Undertakings Act provides:- "4.(1) Subject to sub-section (2), where a person breaches a Customs undertaking given by him, there 1s payable by that person to the Commonwealth, by way of penalty, an amount equal to the prescribed percentage of the value of the goods to which the undertaking relates. (2) Where a person who has given a Customs undertaking has, in partial compliance with the undertaking, entered for home consumption under an item, or proposed item, of a Customs Tariff to which the undertaking relates during the year specified in the undertaking goods imported by him, the penalty otherwise applicable under sub-section (1) shall be reduced by an amount that bears to the amount of that penalty the same proportion as - (a) where a particular quantity of goods was required to be so entered to comply fully with the undertaking - the quantity of goods so entered bears to that particular quantity; or (b) where a quantity of goods of a particular value was required to be so entered to comply fully with the undertaking - the value of the goods so entered bears to that particular value." The Customs Securities (Penalties) Act 1981 ("the Securities Act") likewise provides in s.4:- "4, Where - 6. (a) a tender furnished by a person in accordance with a call for tenders made under a scheme under Part XV of the Customs Act 1901 has been accepted; and (b) the person refuses, or fails, when required by a Collector under section 42 of that Act to do so, to give a security for payment of any penalty in connection with the relevant Customs undertaking that the person may become liable to pay to the Commonwealth under the Customs Undertakings (Penalties) Act 1981, there is payable by that person to the Commonwealth, by way of penalty, an amount equal to the prescribed percentage of the value of the goods to which that undertaking relates." As can be seen from those Acts, the Undertakings Act provides a penalty for a failure to import goods in accordance with an undertaking given under s.267 of the Act. The Securities Act provides a penalty for the failure to provide a security for the payment of that penalty. The 1988 Global Tender Quota Scheme was promulgated by the Minister under s.266 of the Act. The Scheme provided for tenders with respect to a premium rate of customs duty on certain goods in respect of the importation of which a quota limit 18 imposed. Each of the tenderers was required to nominate the quantity of goods in a classification which the tenderer was prepared to import and a premium rate at which the tenderer would be prepared to import those goods. The quota was to be allocated first to the tenderer who tendered the highest premium rate, then to the tenderer who tendered the next highest premium rate and so on until the quota was filled. The rate of duty to be applied to all goods imported within the quota was the rate tendered by the last tenderer to 7. enter the quota, that is to say the lowest premium rate tendered by any tenderer who obtained a quota. Quota limits were to be imposed with respect to specified classifications of goods and tenders were to be called for the importation of goods within those classifications. The following are some of the general provisions of the Scheme. Bl cl c3 cS There shall be a Registrar of Quota Tender who shall be appointed by the Comptroller and who shall administer this Scheme. The Registrar shall call for tenders for the right to enter for home consumption particular goods at concessional rates of duty by sending by prepaid post to the address shown on the quota register a tender form to each person whose name appears on the quota register in respect of the category of particular goods. A call for tenders that relates to determined quantities of particular goods shall include a statement that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the particular goods the subject of the call, the value of the goods is to be calculated by reference to a value set out in the statement as the value of an appropriate unit of the goods. A call for tenders shall include a statement that, for the purposes of the application of the Customs Undertakings (Penalties) Act 1981 and the Customs Securities (Penalties) Act 1981 in relation to the particular goods the subject of the call, the prescribed percentage of the value of the goods 1s to he the percentage set out in the statement. c6 C7 D1 D7 D8 E3 8. A call for tenders shall include a statement that the closing date and time for the receipt of tenders shall be the date and time set out in the statement and that any tenders received after that time on that date shall be disregarded. (1) A call for tenders in respect of a category of particular goods shall specify the quota pool in respect of that category of particular goods. (2) The Minister may declare in respect of a category of particular goods that a particular quantity of the goods, or a quantity of the goods to a particular value, is the quota pool. (1) A tender that is furnished in accordance with a call for tenders made under this Scheme shall be in accordance with Form 2 in respect of tenders for the right to enter for home consumption a determined quantity of particular goods or Form 3 in respect of tenders for the right to enter for home consumption particular goods of a determined value of the Schedule hereto and shall be delivered to the Registrar not later than the time on the date set out in the call for tenders pursuant to Clause C6. A tender that is furnished by a person under this Scheme shall be accompanied by an undertaking in writing by that person as required by Section 267 of the Customs Act 1901. In this Part a reference to the relevant call for tenders, in relation to an undertaking, shall be read as a reference to the call for tenders in accordance with which the tender to which the undertaking relates was furnished. (1) Commencing at the highest premium rate which is specified in respect of particular goods and proceeding then to lower rates sequentially until the effective premium rate 1s established pursuant to Clause E4 or Clause E6, the totals of the quantity or value of the particular goods specified in the tenders which specify any of those rates shall be aggregated. (2) Where a person has furnished two or more tenders in respect of the particular goods, the aggregation of totals shall include, of the quantities or values of the particular goods 9. specified in the tenders furnished by that person, only the quantity or value of the particular goods which is specified in that one of that person's tenders which specifies the rate which is the lowest of the several rates specified that are not lower than the effective premium rate. E4 Subject to Clause £6, the effective premium rate in respect of a category of particular goods shall be the highest rate at which the aggregation of totals of quantities or values of the particular goods referred to in Clause E3 1s equal to or greater than the quantity or value which is the quota pool. E13 (1) Subject to Sub-Clauses (2) and (3), each person who has furnished a tender in respect of a category of particular goods that has been accepted shall give to a Collector, within 21 days after the dispatch to that person by the Registrar of a written advice referred to in Clause £10, security under Sub-Section 42(1A) of the Customs Act 1901 for payment of any penalty in connection with the relevant Customs undertaking that the person may become liable to pay to the Commonwealth under the Customs Undertakings (Penalties) Act 1981. El14(1) Where: (a) a tender furnished by a person in respect of a category of particular goods has been accepted; (b) a Collector has required a security in relation to the tender pursuant to Clause E13; (c) the person has refused or has failed to give the security in relation to the tender; and (d) Sub-Clause (2) of this Clause does not apply; all tenders furnished in respect of the particular goods shall be reconsidered as if: (e) no tender in respect of the particular goods had been considered previously; and (£) the person referred to in Paragraph (a) hereof had not furnished any tender in respect of that category of particular goods. 10. Gl Where a person has given a security pursuant to Sub-Clause E13(1) or Clause F2 and the relevant Customs undertaking given in pursuance of Clauses D7 or F2 has not been breached, such security shall be discharged in full. G2 Where a person has given a security pursuant to Sub-Clause E13(1) or Clause F2 and Sub-Section 4(1) of the Customs Undertakings (Penalties) Act 1981 applies, the security in full will be applied by way of a penalty and will not be discharged. G3 Where a person has given a security pursuant to Sub-Clause E13(1) or Clause F2 and Sub-Section 4(2) of the Customs Undertakings (Penalties) Act 1981 applies, the security will be discharged to the extent remaining after portion thereof has been applied by way of a penalty. Under the Scheme, tenders were called for specified categories of goods in, inter alia, the textile, clothing and footwear industries. The applicant tendered for eight categories and, in each case, tendered a premium value in excess of the premium value tendered by the last importer to enter the quota. The applicant, therefore, became entitled to an allocation of quota in each category and, subject to the making of a determination under s.273, to import goods to the extent of that allocation at the effective premium rate of duty, that is to say at the concessional rate. On 7 August 1987, the Registrar wrote to each of the tenderers a letter in the following form:- "Evaluation of tenders for 1988 tender quota has now been completed. The statement on page 2 of this advice details the categories in which you have submitted a tender and whether you were successful or unsuccessful. You were successful if your tender contained a bid at or above the successful premium rate for the stated category. ll. If you have been successful you are now required to lodge with the Collector of Customs in your State the amount of security specified in this advice within twenty one (21) days - ie by Monday 31 August 1987. Where this amount is less than $250, in any category, security is not normally required. However, written acceptance of the entitlement must be made to the Registrar of Quota Tender, c/- the Australian Customs Service, Canberra within the twenty one day period - ie prior to 31 August. These details may be subject to change should a re-evaluation of tenders for one or more categories be necessary. Advice of such changes will be forwarded to you. The statement accompanying that letter commenced with the warning:- "WARNING: SECURITIES MUST BE LODGED BY 31 AUGUST. Failure to lodge securities as required may mean withdrawal of your quota entitlement, proceedings to recover due penalties and exclusion from future quota tender schemes." The statement set out a table showing the highest premium rate bid by the importer, the quantity of goods sought at that premium rate, the successful or effective premium rate and the importer's entitlement. The table also specified the securities required. This letter did not entirely comply with Clause E13 for, though the letter specified that securities were to be lodged within 21 days, the letter also specified the date Monday, 31 August 1987. The letters were in fact posted shortly after 4 p.m. on Friday, 7 August 1987. Accordingly, the date nominated gave a period of 24 days for the delivery of the securities. 12. Subsequently, many of the tenderers found difficulty in lodging their securities by that date. Sixty six importers including the applicant lodged on 31 August 1987. On 31 August 1987, the Registrar gave an extension of seven days for the delivery of the outstanding securities. The extension was communicated in these terms:- "Registrar has extended time to lodge security to 7 September 1987." All the successful tenderers provided their securities within that time. Sixty seven tenderers lodged during the extension period. Under the Scheme the Registrar had no express power to extend the time for the delivery of securities. The applicant contends that it was wrong for the Registrar to give the extension, that the Registrar should have complied with the provisions of Clause E14 and that the Registrar should have reconsidered the tenders when it was ascertained by 31 August 1987 that not all tenderers had lodged their securities by that time. Having regard to the views I have formed with respect to the matter generally, it is unnecessary for me to consider separately the effect of the nomination of the date 31 August 1987 and of the lodgment by the applicant of its securities on that date, that 1s to say, after the expiration of 24 days from the dispatch of the letter of 7 August 1987. 13. To understand the rival contentions one further section of the Act must be referred to. Section 42 of the Act provides, inter alia:- "42.(1) The Customs shall have the right to require and take securities for compliance with this Act, for compliance with conditions or requirements to which the importation or exportation of goods 1s subject and generally for the protection of the revenue of the Customs, and pending the giving of the required security in relation to any goods subject to the control of the Customs may refuse to deliver the goods or to give any security under section 39 to deal with the goods. (1A) The right of the Customs under sub-section (1) to require and take a security includes the right to require and take securities for payment of any penalty that a person may become liable to pay to the Commonwealth under the Customs Undertakings (Penalties ) Act 1981. (3) The rights of the Customs under this section may be exercised by a Collector on behalf of the Customs." It was contended by Mrs P. Flemming 0.C., senior counsel for the Minister and for the Registrar, and also by the counsel for the several importers who were joined as respondents in these proceedings that Clause E14 of the Scheme did not apply to the present circumstances as a Collector had given notice under s.42 requesting the lodgment of securities. It was submitted that Clause E14 did not apply unless the provisions of Clause E£14(1)(b) were satisfied, namely that a Collector had required a security. It was submitted that the Registrar, although in fact a Collector of Customs, did not, by his letter of 7 August 1987, give notice in his capacity as Collector requiring a security. 14. In my opinion, however, the notice given by the Registrar, who was in fact a Collector, by that letter of 7 August 1987, was a sufficient compliance with s.42 of the Act which provides that the Australian Customs Service shall have the right to require and to take securities and which goes on to provide in sub-s.(3) that the rights of Customs may be exercised by a Collector on behalf of Customs. The Registrar was the relevant Collector for, by Clause Bl of the Scheme, he had the administration of the Scheme. Moreover, Clause E14 used the words, "a Collector has required a security in relation to the tender pursuant to Clause E13". By referring back to Clause E13, Clause E14 related the requirement to give a security to the dispatch by the Registrar of the written advice referred to in Clause E10. That written advice informed the importer, inter alia, of the determined value of the particular goods in respect of which the tender was lodged and of the amount of the security required. The notice therefore satisfied the requirement in Clause F14(1)(b). I therefore accept the submissions put by Dr G. Flick, counsel for the applicant, with respect to the interpretation of the Scheme. Clause E14 of the Scheme was mandatory in terms and the preconditions for 1ts exercise were satisfied. However, I do not accept Dr Flick's principal submission that the applicant is entitled to an order of the Court ensuring that the tenders be reconsidered in accordance with Clause E14, that is to say I do not accept his submission 15. with respect to the effect of Clause E14. A most difficult question in administrative law 1s in what circumstances a departure from rules or principles by reference to which decisions are taken but which are not statutory, that is to say are not set out in legislation, may invalidate a decision. There is an interesting examination of the matter in "Circular Arguments: The Status and Legitimacy of Administrative Rules" by Baldwin and Houghton, 1986 Public Law 239, and much of what was said in "Discretionary Powers" by D.J. Galligan, Clarendon Press,Oxford, bears upon it. See also the editorial comment upon J.A. Pye (Oxford) Estates Limited v. West Oxfordshire District Council and the Secretary of State for the Environment [1982] J.P.L. 557 at 559, In Australia, in Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 A.L.D. 634, Brennan J.'s outstanding analysis of political and executive power and of the need for consistency in decision making emphasised the binding nature of rules laid down by a Minister of the Crown. Nevertheless, decisions of this Court and of the Administrative Appeals Tribunal, both before and after Re Drake (No. 2), have shown a reluctance to regard non-statutory rules as binding. Perhaps that 1s because, firstly, 1n Australia as elsewhere, non-statutory rules have often not been prepared with the care which the parliamentary counsel give to legislation and, secondly an end sought to be achieved by non-statutory rules has been to permit flexibility should the rules be found not to be appropriate to the facts which have occurred. 16. In the present case, Dr Flick rightly laid emphasis upon the fact that the Scheme was formulated under s.266 of the Act, that it was expressed in precise and formal terms, that the words "may" and "shall" were used by way of contrast to each other, that the Scheme was a public Scheme that affected both public and private interests in a significant manner, that 1t was intended the Scheme would be relied upon by potential importers and that the rights and obligations of importers would be affected by its implementation. Nevertheless, in my opinion, the Scheme should be looked upon as a statement of guidelines, not as a prescription of legal entitlements. The Scheme was formulated by the Minister pursuant to s.266 of the Act to assist the exercise by the Comptroller of his discretion under s.273 of the Act. As such, 1t was a statement of policy, albeit a precise one. The Scheme did not have legislative character. It was not delegated legislation. It was not a regulation or a by-law. A somewhat analagous situation was considered in Minister for Industry and Commerce and Another v. East West Trading Co Pty Ltd (1986) 64 A.L.R. 466, in which a like view was taken. At pp.471-2, Morling and Beaumont JJ. described the facts in these terms:- "On 15 August 1980 the Minister for Business and Commerce and the Minister for Industry and Commerce announced a seven year programme of tariff quota for the textile, clothing and footwear industries intended to commence from 1 January 1982. The programme was structured to allow 85 per cent of the quota bearing the lower tariff rate to be distributed 17. to importers on the basis of their history of importing. Consequently, the levels of imports were determined for the period 1 July 1973 to 30 June 1980 and the figures obtained became the base performance levels or 'previous import performance'. The base performance levels were determined in a number of quota categories which corresponded to different types of goods imported. It was intended that the base performance levels were to be increased annually for the seven years of the programme. The remaining 15 per cent of the quota was to be distributed by tender. The details of the scheme were outlined and publicized in a series of Bureau of Customs notices." At p.470, Fox J. said:- "Tt does not seem to me that because of the lack of more specific legislation, one should try to elevate the scheme to the status of law. Private rights of action may conceivably arise out of its operation, but that is a different matter. The quota scheme may be controlled and limited in some respects, having in mind the sections of the Act under which 1t operates, but it is not, in reality or in effect, a statute, and 1ts various provisions are not to be construed as if they were of legislative effect. The Scheme is concerned with matters of policy, and in this area, the Minister has a wide discretion." At pp. 479-80, Morling and Beaumont JJ. said:- "We would add that even if it were possible to interpret the appellants' pronouncements as constituting a representation or indication that quota would be allocated to particular importers in certain circumstances, it does not follow that the inguiry was to be limited to the question whether the importer beneficially owned the goods. In other words, 1f, contrary to our view, the material issued by the appellants did contain an undertaking that allocation would be made to certain importers, we would not construe the statements made by the appellants as confining themselves to the strictly legal question of beneficial ownership. No doubt this was one matter which the respondent had to establish in order to qualify as a 'genuine importer', but the communications, read as a whole, show that the appellants intended to take into account, in deciding to allocate quota, not only the question of title to the goods, but all the circumstances of the case. In other words we would read the statements made as intended to do no more than afford practical illustrations of situations 18. where ''genuine' importing would not be assumed rather than an attempt to state exhaustively the legal criteria by which an importer qualifies for, or is disqualified from, an entitlement to quota allocation." Subsequently, in Minister for Immigration and Ethnic Affairs v. Conyngham and Others (1986) 68 A.L.R. 441 at 452-3, Sheppard J. referred to "the danger of looking at policies or guidelines as a source of the rights of a person who claims to have been aggrieved by administrative action". His Honour cited the remarks of Fox J. which are set out above and went on to say:- "Similarly, there is no ground for elevating the guidelines here to the status of law. That is why I think that his Honour fell into error in making a declaration that the application for sponsorship was within the policy guidelines issued by the respondent for the grant of temporary entry permits. Wide though the provisions of sl6 of the Act are, they do not in my opinion authorise the making of a declaration unless what is being declared is a right in the true sense of the word. The guidelines themselves conferred no rights. They operated only to indicate to those administering the Act and to those who might be concerned to apply for the temporary entry of entertainers the manner in which the application for a temporary entry permit would usually be dealt with." More recently, in W.H. Broadbridge and Anor. v. Stammers (No. 152 of 1987, delivered 4 November 1987), Bowen C.J., Beaumont and Gummow JJ. also considered a situation analogous to the present in that a manual had set down policies to be followed by delegates in the exercise of their decision-making powers. Their Honours said:- "The manual requires decisions upon many discretionary matters and matters of judgment. It 1s not cast with the precision of a statute. Clearly this is an area in which guidelines may be useful and necessary. Much has to be left to the person selected as the delegate to give effect to them. It is an 19. administrative area where one would expect that the delegate would have to direct his mind to the matters laid down in the policy but where he would not be bound, in the strict legal sense, by every word in the policy manual. Rather one would expect he would be open to correction or discipline by the Commission should he depart in material respects from it (cf. Minister for Industry and Commerce v. East West Trading Co. Pty. Ltd. (1986) 64 A.L.R. 466 at pp.470, 479-480; Minister for Immigration and Ethnic Affairs v. Conyngham (1986) 68 A.L.R. 441 at pp.452, 453; Gunaleela v. The Minister for Immigration and Ethnic Affairs (Full Court, 21 August 1987, unreported, at pp.35-37); Simon Lee, Circular Arguments, (1985) 101 L.Q.R. 311; Robert Baldwin and John Houghton, 'Circular Arguments: The Status and Legitimacy of Administrative Rules' (1986) Public Law 239). In other words, to our minds, failure to observe strict compliance with the manual would be a matter not so much of absence of power in the delegate as a failure by the delegate to carry out his duties under the delegation in the manner required by the Commission. It appears to us that, in stating that the exercise of his delegated powers is 'subject to' the matters stated in the delegation, the Commission is indicating those matters to which he must have regard and with which, 1n general, he must comply. We do not think that the Commission is laying down a set of pre-conditions which, if not strictly observed, will result 1n an absence of power in the delegate. Put differently, the paragraphs following the words 'subject to', deal with matters of an essentially administrative character; as such, they should be seen as directory rather than mandatory." These cases all took the approach to non-statutory rules adopted by Bowen C.J., Smithers and Deane JJ. in Drake v. Minister for Immigration and Ethnic Affairs (1979) 24 A.L.R. 577. Brennan J.'s analysis in Re Drake (No. 2}, cited above, of the role of policies in administrative decision making clarified the function played by policies in administration but did not achieve a reversal of the Court's view that, 1n general, such rules are of a non-binding character. Likewise, in the United Kingdom, in R. v. Secretary 20. of State for Home Affairs; Ex parte Hosenball, [1977] 1 W.L.R. 766, the Court of Appeal considered the nature of the Immigration Rules promulgated by the Secretary of State under sub-s.3(2) of the Immigration Act 1971 (U.K.) and laid before Parliament and rejected the view that they formed a binding code. At pp.780-1, Denning M.R. said:- "Under section 3(2) of the Immigration Act 1971 the Secretary of State has power to make rules as to the practice to be followed in the administration of the Act. Those rules were said by Roskill L.J. to be delegated legislation. He said it in Reg. v. Chief Immigration Officer, Heathrow Airport, Ex parte Salamat Bibi [1976] 1 W.L.R. 979, 985. But that, I think, goes too far. They are not rules of law. They are rules of practice laid down for the guidance of immigration officers and tribunals who are entrusted with the administration of the Act. They can be, and often are, prayed in aid by applicants before the courts in immigration cases. To some extent the courts must have regard to them because there are provisions in the Act itself, particularly in section 19, which show that in appeals to an adjudicator, if the immigration rules have not been complied with, then the appeal is to be allowed. In addition, the courts always have regard to those rules, not only in matters where there is a right of appeal; but also in cases under prerogative writs where there is a question whether the officers have acted fairly. But they are not rules in the nature of delegated legislation so as to amount to strict rules of law." There 1s therefore substantial authority against Dr Flick's proposition. Moreover, I must point to a matter which was not relied upon by any counsel at the hearing. Indeed, Mrs P. Flemming QC and Mrs P. Sharp, counsel for the respondents, as well as Dr Flick, expressly submitted to the contrary of what I am about to say. Clause E14 provided that, 1f a security was not given in accordance with the requirement specified in E13, then the tenders should be reconsidered leaving out of 21. account the tender in which respect the security was not given. If this clause were given a mandatory operation, it would, in my opinion, be inconsistent with the operation and purpose of the Undertakings Act and of the Securities Act. The Undertakings Act provides that if an undertaking has been accepted and is not fulfilled the importer shall be liable for the penalty prescribed by the Act. The Securities Act similarly provides that 1f a security for the payment of that penalty 1s required and is not provided in accordance with the requirement then the importer shall be liable to the penalty imposed by that Act. In brief, both Acts specify the penalty imposed for non-compliance. It is inconsistent with these Acts that Clause E14 should provide that in the event of non-compliance there should be a reconsideration of the tenders and the defaulting tenderer should suffer the disadvantage of not having his tender taken into account. Mrs Flemming Q.C. and Mrs Sharp submitted in writing:- "6. Should the tenderer refuse or fail, when required by a Collector, to give a form of security for that amount then by operation of s.4 of the Customs Securities (Penalties) Act 1981 the tenderer would be indebted by way of penalty to the Commonwealth for the amount. Such a penalty is by virtue of s.269A of the Customs Act a debt due to the Commonwealth and may be recovered in a court of competent jurisdiction. In addition, the tenderer 1s excluded from the Scheme by virtue of clause E14 thereof." There may well be a place in a scheme such as the subject Scheme for a discretionary power to reconsider tenders in the event, for example, that a significant number of tenderers 22. could not provide securities within a reasonable time and that the operation of the scheme would be likely to be prejudiced 1n a substantial manner. But I need not consider that aspect further. The question 1s whether Clause El4 is valid when read 1n a mandatory sense so as to require a reconsideration of tenders whenever there has been default in the lodgment of security, however insignificant that default may be in the operation of the Scheme as a whole. In my opinion, Clause E14 would not be valid if so read for Parliament has specified what is to happen in the event of a default. It 1s not for the Scheme to add to, to detract from or to interfere with the operation of the penalty that Parliament has provided. Likewise, Clause E14, if read in a mandatory sense, would be inconsistent with the Act and with the Securities Act in that 1t would remove the discretion vested by s.42 in the Australian Customs Service so far as securities under the Scheme were concerned. When legislation empowers an authority to impose a requirement, such as a requirement to provide security, the legislation impliedly, if there be no indication to the contrary, grants power to waive or vary the requirement so imposed. As Lockhart J. said in Re Sterling; Ex parte Esanda Ltd (1980) 30 A.L.R. 77 at p.83, "... a power conferred by Parliament carries with it the power necessary for 1ts performance or execution." Section 42 confers such a discretion, that is to say, a discretion to impose a requirement as to securities and a discretion to waive or varv that requirement. 23. When the Securities Act provides for a penalty in the event of failure to comply with a requirement to lodge a security, it does so having regard to the discretion reposed by s.42. It does not intend payment of a penalty in circumstances where there is a mere technical breach of a requirement which ought to be remedied by an extension of time. For this reason also Clause E14 would not be valid if given mandatory effect. I accept that the Scheme by its terms conferred no power upon the Registrar to extend the time for the giving of securities and his functions under the Scheme were not stated in a manner which would incorporate that function. Clause £14 used the word "shall" and throughout the clauses of the Scheme the words "shall" and "may" contrast with each other, the one conferring a discretion and the other imposing an obligation. Moreover, the time limit for the giving of securities was not imposed just for the benefit of the Commonwealth and, therefore, by analogy with principles of contract, a matter which may be waived by the Australian Customs Service on behalf of the Commonwealth. Accordingly, the Scheme itself did not confer any express or implied power upon the Registrar to extend the time for giving the security. However, the fact that the Scheme itself conferred no power upon the Registrar to extend time 1s not determinative. The Scheme and whatever 1s done in its implementation have no effect unless and until the Comptroller exercises his power under s.273 of the Act to make a determination with respect to 24. goods identified in the determination. It is the terms of that determination which identify the goods which may be imported at the concessional rate of duty. If the Comptroller is satisfied with an extension of time which the Registrar has granted, he may make a determination which 1s effective accordingly. If he is not satisfied with an extension of time that was given, he need not do so. Thus, the authority for the extension of time is found 1n ss.42 and 273 of the Act, both of which confer discretionary powers, notwithstanding the fact that the Scheme itself did not do so. Even if non-statutory rules do not, of themselves, have binding effect, the failure of a decision maker to have regard to them or his failure to interpret them correctly may amount to an error of law justifying an order of judicial review. In J.A. Pye (Oxford) Estates Ltd. v. West Oxfordshire District Council and the Secretary of State for the Environment, cited above, at p.579, Widdicombe Q.C., a Deputy Judge, said:- "the Secretary of State must take his decision in the light of the relevant considerations in existence at the time of the decision, and if a relevant new circular came into existence before the decision it was a material factor of which account must be taken +s. the circular was a material factor, 1t was left out of account and the decision therefore had to be quashed". In R- v.- Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 C.L.R. 177, Windeyer J. expressed the point even more forcefully. At p.206, his Honour said:- "The Director-General is the officer whose written permission must be produced to the Customs. But in 25. my opinion that does not mean that he is to grant or refuse permission according to some view of his own, giving weight or no weight as he chooses to the policy of the Crown." As to misinterpretation of rules, Denning M.R. said in R. v. Chief Immigration Officer,Gatwick Airport, Ex parte Kharrazi (1980) 1 W.L.R. 1396 at 1403:- eee 1f the immigration officer interprets the rules wrongly - and on that account asks himself the wrong question - and thus gives the wrong answer to those dependent on it ~— he does something which he is not empowered to do. He acts ultra vires." See also R. v. Criminal Injuries Compensation Board; Ex parte Lain [1967] 2 Q.B. 864. However, the evidence does not show that the Registrar failed to have regard to a material fact, namely the terms of Clause E14. In the absence of evidence to the contrary, I assume that he was aware of the terms of the Scheme including the terms of Clause E14. There is no evidence that he failed to consider it. Nor 1s there any evidence that the Registrar misinterpreted his authority. He was a Collector of Customs and he had the administration of the Scheme. He was correct in holding that he had authority, pursuant to s.42 of the Act to extend the time for the giving of securities. Insofar as Clause E14 purported to take away this authority, 1t was invalid. Nor has it been shown that the Registrar acted in bad faith or for an improper purpose. Bad faith was not alleged so we may put that on one side. The applicant alleged that 26. the Registrar acted in a way which benefitted the tenderers who would otherwise have lodged their securities late and failed to apply Clause E14 when to do so would have advantaged importers, including the applicant, who had lodged their securities within time. Certainly, the Registrar did not act even-handedly in the sense of giving mandatory effect to the provisions of Clause 14. However, the Registrar did not, I think, act with any improper purpose. By extending the time for a further seven days to enable securities to be organised, the Registrar gave effect to the substantial object and purpose of the Quota Scheme, namely to enable those importers who had tendered the highest rates of premium duty to obtain a quota. Had the Registrar decided not to extend time, he would have excluded from the Quota Scheme a significant number of importers who had tendered high rates of premium duty and whose only failure was to arrange securities by the due date. The extension of time of seven days ensured that the allocation of quota and the effective premium rate could be finalised at the end of that time, whereas if the Registrar had reconsidered all the tenders by omitting the defaulting tenderers, further significant delay in the finalisation of the allocation and of the effective premium rate would have resulted. His action also achieved the highest premium rate which importers were prepared to pay, one of the objects of the Scheme. It may further be noted that it has not been alleged by the Minister, whose Scheme it is and who is a party to these proceedings, that the course taken by the Registrar was improper. 27. These facts lead me to conclude that the Registrar did not act with any improper purpose in mind. Rather he took a sensible course and, by a seven days extension of time, gave effect to the purpose and object of the Scheme and enabled all the highest tenderers to achieve an appropriate quota. Lastly, I am not satisfied that there was any breach of the rules of natural justice in that, prior to giving the seven days extension of time, the Registrar did not give the successful tenderers who had lodged their securities by 31 August 1987 an opportunity to put a view and to oppose, if desired, the extension of time which he contemplated. Circumstances may arise where a decision-maker who has decided to change an existing policy or not to apply it in the particular case is bound by a duty of fairness to permit persons who may be aggrieved by the decision to put a point of view. Thus, in R. v. Liverpool Corporation; Ex parte Liverpool Taxi Fleet Operators' Association [1972] 2 0.B. 299, Lord Denning M.R., Roskill L.J. and Sir Gordon Willmer held that a municipal council had acted wrongly when it increased the number of taxi cab licences available in its district and did so without prior consultation with an Association which represented taxi fleet operators. One of the facts taken into account by the Court was that the Council, through its Town Clerk, had undertaken that the number of licences would not be increased without consultation with interested parties. At p.308, Lord Denning said of the Council "They may be said to be exercising an administrative function. But even so, in our modern approach, they must act fairly: and the Court will see 28. that they do so." Dr Flick relied upon this principle and upon the terms of Clauses E13 and E14. Dr Flick also relied upon the Registrar's letter of 7 August 1987 which included the warning that "Securities must be lodged by 31 August". However, the effect of that warning and of like statements in explanatory material which had been distributed was that "Failure to lodge securities as required may mean withdrawal of your quota entitlement, proceedings to recover due penalties and exclusion from future quota tender schemes." (the underlining is mine.) As a whole, the letter of 7 August 1987 and the other explanatory material which had been distributed did not convey the information that an extension of time could not or would not be granted. This part of the applicant's case accordingly rests on the terms of Clause £14 which were mandatory. Dr Flick submitted that there was a reasonable expectation on the part of the applicant that all importers in a like situation would be consulted before a decision was made not to act under Clause E14. I need not discuss the many authorities on legitimate expectation. They have been recently reviewed by the High Court of Australia in Kioa and Ors v. Minister for Immigration and Ethnic Affairs (1985) 62 A.L.R. 321 and the principles to be applied with respect to procedural fairness were there enunciated. In the present case, 1t does not appear to me that the Registrar acted unfairly in a procedural sense towards any party. The applicant and all other successful tenderers in 29. the applicant's position had put in tenders at or above the successful premium rate. In my opinion, they did not have a reasonable or legitimate expectation that the time for lodgment of securities would not be extended in an appropriate case, or that the premium rate would be reduced in accordance with Clause E14 or that other successful tenderers who had bid at or above the successful premium rate would be excluded from the Scheme. I have discussed all the above issues as if they were separate, one from another. In reality, it is impossible to divorce them in that way. The issue as to fair dealing is very much tied up with the nature of the Scheme and with the operation of the Scheme in the legislative framework. The crux of my view in this case is that the legislative provisions, that is to say the provisions of ss.42 and 273 of the Act and the provisions of the Undertakings Act and of the Securities Act, were paramount. In the context, the Scheme must be looked upon as establishing guidelines for the establishment of quotas and premium rates enabling the exercise of the s.273 discretion. Clause £14 was an ill-considered clause which, if given mandatory effect, would be inconsistent with the legislative structure in which the Scheme operated. In my opinion, in extending for seven days the time for the lodgment of securities, the Registrar acted lawfully to all parties and in a way most calculated to achieve the implementation of that which the Scheme had in mind, namely 30. that only the highest tenderers would secure a quota and the lowest premium rate tendered by those successful tenderers would be the effective premium rate applicable to all importations under the quota. It appears to me that what was done accorded with good administrative practice and was sound in law. I accept that, in a Scheme such as this, which affects an industry, clear rules and fair dealing with all parties within those rules is important. Members of an industry will quickly lose confidence in a scheme if terms of the Scheme, clearly stated, are not complied with. However, although I understand the applicant's concern that the Scheme be strictly complied with, I have concluded, for the reasons I have set out above, that the act of the Registrar in extending the time for the delivery of securities was a step which achieved sound and good administration of the Scheme and was authorised by ss.42 and 273 of the Act. It is unnecessary for me to deal with any of the discretionary 1ssues which were put forward by counsel for the respondents as reasons why an order of review should not, in the Court's discretion, be made in the present case. The application will be dismissed with costs. 31. I certify that this and the 30 preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Davies. Associate: J. Gender Date: 11 December 1987 Counsel for the applicant: Solicitors for the applicant: Counsel for the first and second respondent: Solicitors for the first and second respondent: Counsel for the third and fourth respondents: Solicitors for the third and fourth respondents: Counsel for the fifth and sixth respondents: Solicitors for the fifth and sixth respondents: Counsel for the seventh and eighth respondents: Solicitors for the seventh and eighth respondents: Counsel for the ninth respondent: Solicitor for the ninth respondent: Date of hearing: Dr G. Flick Makinson & d'Apice Mrs P. Flemming Q.C. with Mrs P. Sharp Australian Government Solicitor Mr C.A. Sweeney Q.C. with Mr M. Walton Phillips Fox Mr D. Yates Simons & Baffsky Mr J.S. Hilton Dunhill Morgan Ms G. Noe J.S. Mueller & Co. 24 November 1987