Amcor Ltd v Kelly, F
[1990] FCA 41
•15 Feb 1990
NOT FOR D ~ S T R ~ B U P ~ O N
J . , c a *
'JUDGMENT No. ......---..
IN THE FEDERAL COURT OF AUSTRALIA)
)
VICTORIA DISTRICT REGISTRY 1 1 GENERAL DIVISION )
BETWEEN : AMCOR LIMITED (Applicant)
AND : FRANK KELLY, - THE COplPTROLLER-GENERAL OF
CUSTOMS
(First Respondent)
AND : ROBERT KELLY
(Second Respondent)
Coram: Ryan J
Date: 15 February 1990
Place: Melbourne
REASONS FOR JUDGMENT
This application for the grant of mandamus pursuant to s.39B of the Judiciary Act 1903 is the latest step in a long running controversy between the applicant and the Customs Department. It began in November 1985 when the applicant, havlng declded to lmport a paper making
(a) goods serving simllar functrons to the particular goods are not produced in
Australia; and (b) goods serving slmllar functions to the particular goods are not capable of being produced in Australia by any person in the normal course of business,
applied for a Commercial Tariff Concession Ord
s.269C(1) of the Customs Act 1901. That sectlon, i when the application was made, provided:
"Subject to this Part, where the rqlinlster,
considering an application under sectron
the maklng of an order under this
respect of partrcular goods, is satisfied that -the Minister shall make a written order, to be known as a Commercial Tarlff Concession Order, declaring that the particular goods are goods to which a prescribed item specified in the order
applies. "
The phrase "ln the normal course of business" in paragraph (b) has been a focus for the competing contentions of the applicant and the Customs authorities. Some assistance as to its meaning can be found in s.269B(7) whlch provides:
"For the purposes of this Part, a person shall be taken to be capable of producing goods in the normal course of business if, in the normal course of business, he is prepared to accept orders for the supply of such goods that have been, are being, or are to be, produced by him."
The paper-making machine in question has a wlre width of 5.6 m and is vast in srze. The supply and delivery of the machine was to cost in excess of $10m, and the effect of a Tariff Concession order, if granted, would be to reduce the duty payable on the machlne by approximately $800,000.
The application for a Concession Order was initially refused by Mr Olliffe, a delegate of the firstnamed respondent, ("the Comptroller"). He set out hls reasons brlefly in a letter dated 13 February 1986 to the appllcantrs customs agents, Brambles International Trade Consultants. The relevant parts of that letter were in these terms:
"I belleve it is correct to say that the only likely local manufacturer in thls product area, Johns Perry Engineering, of Adelaide, has not previously supplied a complete machine, and slmllarly, that all componentry for such a machine is not capable of being manufactured locally.
However, the position, as conveyed by Johns Perry to you in its letter of 28 January 1986 accompanied by Form CTC2 in the affirmative, is that Johns Perry is prepared to accept orders for paper machines.
I have made enquiry and have also been given direct statements to this effect.
Providing the terms of section 269B Part XVA of the Customs Act are met, the incorporation of overseas technology, expertise or componentry in
a locally made machlne does not disqualify its
manufacturer from assistance provided by the
Parliament.My responsibilities in terms of the tariff concession provisions Include that I be satisfied that goods servlng similar functions are not capable of being produced in Australia.
Having considered all of the information submitted, I advise that I am not satisfied that a prima facie case for concession has been established in these circumstances."
Mr Olliffe's decision was reviewed internally, at the
request of the applicant, by Mr Shakespear, another officer
of Australian Customs. He refused to overturn Mr Olliffefs
decision and outllned his reasons in a letter to Brambles International dated 21 April 1986. He said:
"Notwithstanding, the fundamental issue to be considered is whether at the time the application was lodged, goods serving similar functions were produced or were capable of being produced in Australia in the normal course of business. Might
I say at this point that the goods wlth whlch I
am concerned are paper making machines per se, whlch may incorporate components sourced overseas. The machines are not, for tariff concession purposes, being notionally divided.
I turn now to the matter of your appeal against the delegate's decision not to approve your application for a tariff concession order. That decision is made on the basis of the response by Johns Perry to your enquiry to that company, and the information and advice gained by the delegate during a vlslt to Johns Perry's premises.
In this particular case, Johns Perry clalmed that they have sufficient resources, expertise and technical knowledge (including if necessary access to the resources of Beloit Internatlonal) to place them in a position to be able to accept orders for a paper maklng machine serving simllar functions. Their preparedness to accept an order was said to have been advised to you during
discussions, and was later confirmed in wrlting
in their letter to you dated 28 January 1986. Thelr capabilities were fully tested by Mr. K. Olliffe of this office durlng our inspection of the manufacturing facilities on 20 November 1985. Mr. Olliffe has reported that in his view the claims are totally justified. Further, Johns Perry has not resiled from their earlier position."
The applicant then applied to this Court for an order of review under the Administrative Decisions (Judicial Review) Act 1977, ("the ADJR Act") in respect of the decisions of Nr Olliffe and Mr Shakespear. Amcorls main contention was that the decision-makers had failed to apply
the words "in the normal course of business". The application . the test required by s.269B(7) in interpreting the meaning of was dismissed at first instance on 10 July 1987. The applicant successfully appealed to the Full Court; see Amcor Ltd v Comptroller-General of Customs (1988) 79 ALR 221. As well as having to conslder the effect of the words "normal course of business" and s.269B(7), the Full Court was also concerned with the application of the "cross-elasticity of demand" test enshrined in s.269B(4). The application of that test is no longer in issue between the parties.
As to the proper interpretation and application of the
phrase "normal course of business", the Full Court, in a
joint ~udgment, observed at 229:
"Accordingly, in deciding whether Johns Perry was capable of producing goods in Australia in the normal course of business (S 269C(l)(b)), the decision maker had to determine whether or not, in the normal course of business, Johns Perry was prepared to accept orders for the supply of such goods that had been, were being, or were to be, produced by it. The expression 'in the normal course of business' thus appears twice in these steps, but crucially in the second, namely the preparedness to accept orders. The consequence of such preparedness would be an affirmative answer to the question whether goods serving similar functions to the particular goods were capable of being produced in Australia by Johns Perry in the normal course of business: s 269C(l)(b). The result would then be that the Commercial Tariff Concession Order would not be made. "
The Court, after accepting a submission on behalf of the Comptroller that a producer may be prepared to accept orders for the supply of goods without those goods being in stock or in production, continued, at 230, to say:
"However, the preparedness to accept orders of the necessary description must be a preparedness to accept 'in the normal course of business'. In the present case, the decision maker took the view on the materials before him that Johns Perry satisfied this description. We disagree."
After referring to a passage from the cross-examination of Mr Shakespear, the Full Court then recorded the following observations (at 230-231):
"(1) The announced preparedness of Johns Perry to accept an order does not mean that preparedness was in the normal course of its business, there being an objective element in the expression 'in the normal course of business'.
(ii) The responses indicated by Johns Perry on the CTC form (dated 24 January 1986) have to be read (as the words on the form 'see attached letter' indicate) wlth the lengthy letter of 28 January 1986.
(iii) Paragraph (2) of that letter reaffirms that Johns Perry would accept an order only 'in conjunction with our technology partner, Beloit International'.
(iv) Later, on 20 February 1986, Mr Howlett of Johns Perry had told Mr Olliffe that after a visit by officers of Amcor and Brambles, Johns Perry 'maintains its stand that we are prepared to accept orders for complete machines. I hope that we have clarified their understanding of our position - we would be the prlme contractor in any order accepted for complete machines'.
(V) The reallty of Johns Perry's positlon
1s probably best summed up in the later statement (on 2 April 1986) by Mr Jennings of Johns Perry to Mr Olliffe that 'we are genuinely wantlng to get into this sort of market'.
(vi) Whilst Johns Perry may have manufactured or refurbished a range of equipment, particularly components used in PaPe r manufacture, for it to undertake an order such as that in question here, even in conjunction with one or other of the Beloit companies and even by subcontractlng certain components to Beloit, would be an undertaking that might fairly be described a S special, exceptional or extraordinary.
(vii) Indeed, it was doubtful whether Johns
Perry had designed and manufactured any paper-maklng machine, whatever the slze; nor was
under its arrangements with Belolt. ~t clear that it had ever exercised its rights In those circumstances, we belleve it would not be accurate to say, within the meaning of S 269B(7) that Johns Perry was, in the normal course of business, prepared to accept orders for the supply of the goods in question."
The Full Court thus concluded that the decision-makers had fallen into error in interpreting s.269C(l)(b), and that the applicant was entltled to an order for review under the
ADJR Act. Accordingly, the application for a Tarlff Concession Order was referred to the Comptroller for further consideration.
The respondents then applied to the High Court for special leave to appeal. Special leave was refused on 12 August 1988 when the High Court observed that "we do not think that the decision of the Full Court is attended with sufficient doubt to warrant the grant of special leave".
The Comptroller thus remained under a duty to reconsider and determine according to law the application for a Concession Order. That reconsideratlon has not so far resulted in any determination but the applicant has returned to this Court seeking an order that the respondents carry out their duty according to law. This latest application for an order of mandamus stems from an apprehenslon that the Customs authorities do not intend to determine the application for a Concession Order according to law, particularly the interpretation of ss.269B and 269C expounded
created by a series of communicatlons between Amcor and its in the judgment of the Full Court. That apprehenslon has been solicitors on the one hand, and the Department of Customs on
the other.That series of communications commenced on 13 October 1988 when the applicant's solicitors wrote to the Comptroller requesting the grant of a Concession Order in light of the events leading up to the refusal of special leave by the Hlgh
Court. A copy of thls letter was sent to Mr Robert Kelly, the second respondent, on the basis that he was the Comptroller's delegate for the purpose of reviewing the applicant's application.
A meetlng took place in Canberra on 15 March 1989 and was attended by Mr Bowd and Mr Howard representing the applicant, and Mr Wilson, M Kelly and Mr Daniels
representing the Comptroller. It was thls meetlng which is clalmed to have first given the applicant cause for concern that the respondent may not have regarded ltself bound by the decision of the Full Court. Mr Bowd summarised his understanding of the respondent's position in a letter to Mr Kelly dated 22 March 1989 in these terms:
"Alan Wilson had at the opening of the meeting stated that the ACS, on legal advice was not of the opinion that the Full Court's ruling was binding and that the ruling may or may not weigh heavily on your decision."
On 1 May 1989, the applicant's solicitor, Mr OIDonahoo
received a telephone call from Mr Kelly. In an affidavit
sworn 26 June 1989, Mr OIDonahoo has deposed that:
"Mr Kelly told me that Customs did not agree wlth the decision of the Full Court on what is meant by 'normal course of business' and that they had made this point clear to the High Court. He said that Customs had obtained legal advice that they need not follow what the Full Court had ruled and that if it were not for that advice, because of what the Full Court had said, they would simply have to grant the Concession Order."
Following that telephone conversation, Mr OPDonahoo wrote to Mr Kelly on 2 May 1989, lndlcatlng thus his
understanding of the respondent's petition:
"Whllst you refused to be drawn on what you, as the Comptroller-General's delegate, understand the concept or test of normal course of business to mean, it seems to us that you are proceeding to determine our cllent's application by applying this test in a manner contrary to that required by the Full Federal Court. Moreover, if our understanding is correct, the approach which you are adoptlng 1s not expressed to be predicated upon the judgment of a court of similar or higher standing to that of the Full Federal Court but rather upon untested legal advice which we assume merely disagrees with the unanimous view of the Full Federal Court."
Mr OrDonahoo also requested a copy of the legal advlce on which the respondent clalmed to be relylng.
On 3 May 1989, Mr OrDonahoo spoke to Mr Mulgrew, the Director of Courts at the Australian Customs Service. Mr Mulgrew confirmed that the respondent disagreed wlth the Full Court's interpretatlon of "normal course of business" and referred to a legal opinion which the Customs Service had recelved from Mr Uren Q.C. and Mr Tracey. He said he was not prepared to furnish a copy of that opinion to Mr O'Donahoo. In his affidavit, Mr O'Donahoo deposed that Mr Mulgrew:
"said he understood our dilemma but that they had legal advlce. The dllemma he referred to was our inability to learn what test was to be applled by Customs and thus, what information was relevant to satisfy Customs in that regard. He said that the matter would probably end up in Court again. He said that when a decision was made concerning Amcor's appllcatlon we had a right of review, and he understood that what they were dolng may well end up in Court."
By letter dated 26 Nay 1989, Mr Mulgrew advised Mr
OfDonahoo that:
"I should firstly like to state that the Comptroller-General's delegate will apply the test of normal course of business in accordance with the requirements of Part XVA of the Customs Act, the decisions of the Full Federal Court In the Amcor case and the legal opinion available to
him. "
In a further letter to Mr OtDonahoo of 14 June 1989, Mr
Kelly noted:
"The decision that will be made by myself wlll be made in accordance with the requirements of Part XVA of the Customs Act."
Despite further requests for a copy of the legal opinion, it was not provided before the hearing of this application commenced. After it had been provlded to the applicant in the course of the hearing, a copy of the oplnlon of Mr Uren Q.C. and ar Tracey was exhibited to a further affidavit of Mr OIDonahoo sworn 19 December 1989. Perusal of that exhibit reveals that the prlmary question on which Counsel's opinion was sought was:
"Is s.269B(7) of the Customs Act 1901 a code, or can the decision-maker conslder other matters in deciding whether he or she is satisfied under s.269C(l)(b) that goods serving similar functions are not capable of being produced in Australia?"
On that question, Counsel expressed the vlew that:
"On its face, sub-section (7) does not purport to be an exhaustive prescription o f the circumstances in which a person shall be taken to be capable of producing goods in the normal course of business. Had the draftsman intended to achleve this result one would have expected to flnd the words 'if, and only ifr In the sub-section."
After acknowledging that the Full Court had analysed
the legislation "rather differently", Counsel went on to
conclude that :
" ~ t follows, in our oplnlon, that sub-section (7) does not lay down an exclusive code and that this view is not-inconsistent with the approach taken by Davies J. in the Davies Cralg case." [(l9861
68 A.L.R. 1051
On the basis of that conclusion, Counsel were able to
conclude that:
"We think, then, that the reference by the Full Court to the connection between s.269B(7) and s.269C(l)(b) is not blnding (although it may well be considered of persuasive authority) and that the Comptroller or his delegate may proceed to make a decision based on the view which we conslder correct. Indeed, if he does not do so, the matter will never be able to be tested because there will be no appeal on the issue."
Other materlal sent to Mr Bowd of Amcor by Mr Wilson
included a document entitled "Tariff Concession System". Page
4 of that document Included a section on the "normal course
of business" requirement of s.269B(7). It stated:
"In a situation where a local manufacturer opposing the concessional entry of goods in an application is not producing the goods at the tlme of enquiry but claims to be capable of producing such goods in the normal course of business it will be necessary for the manufacturer to demonstrate capability to produce in the normal course of business to the satisfaction of the delegate. To thls end the local manufacturer may need to provide:
- evidence of financial and technical
capability;
- evldence of having undertaken projects of a
slmilar nature;
- evidence of having undertaken unlque or
ad-hoc projects;
- evidence that the company responds to available tenders for projects of a slmilar scope, whether those responses are successful or not."
In these proceedings the applicant seeks an order of
mandamus either requiring the respondent to grant the
Commercial Tariff Concession order to the applicant forthwith
or that the respondent determine the application according to law, and, in particular, in accordance with the decision of the Full Court. In support of the clalm for relief in the earlier, peremptory form, Dr Buchanan Q.C., who appeared wlth Mr Judd for the applicant, contended that thls was one of those rare cases in whlch the facts and the law combined to impose on the respondents a slngle inescapable duty to grant a Tariff Concession order. He assimilated the present case to
The Queen v ~nderson; ex parte Ipec-Alr Pty Ltd (1965) 113
CLR 177 and relied in particular on this passage from the judgment of Kltto J at 187:
"The evidence, and particularly the Dlrector- General's own statements, make it clear that his refusal of the charter licence had nothlng whatever to do with any question of safety, and that in truth the prosecutor has established to the satisfaction of the Director-General that it is capable of complying wlth any and all provisions relatlng to the safety of the proposed operations. I read the Director-General's letter refusing the charter llcence as acknowledging, even if unintentlonally, that it was in spite of, and not because of, the concluding words of reg. 199(2) that the charter licence was being refused. I think the truth of the matter should be faced : the refusal of the licence was based upon nothing whatever but a policy against allowlng anyone to participate in the relevant form of inter-State trade other than those already engaged in it. However wise and well- grounded in reason that policy may be, if the Regulations on their true construction authorize a refusal so based I should find great difficulty in avoiding the conclusion that reg. 197, in so far as it requires a charter licence for charter operations in inter-State air navigation, is invalid as being in conflict with s.92 of the Constitution. In my opinion, however, such a refusal is contrary to the direct command of reg. 199(2).
I regard this as a clear case for a writ of mandamus; and since on the view I take of the facts the Director-General is now under an absolute duty to issue a charter llcence, a duty which is unqualified by any discretionary judgment still remaining to be exercised, I am of oplnion that the tenor of the writ should be to command that that duty be performed."
In support of that contention, Dr Buchanan pointed to the alleged concession by Mr Kelly to Mr OpDonahoo that "Customs had obtalned legal advice that they need not follow what the Full Court had ruled and that if it were not for that advice, because of what the Full Court had said, they would simply have to grant the Concession Order". Although Mr Kelly subsequently denied, in a telephone conversation with Mr O'Donahoo, having made a concession in precisely those terms, I am prepared to assume, in the light of the evidence
before the Court, that Mr Kelly made some statement to the
general effect of that attributed to him. However, I do not consider that, in making it, Mr Kelly should be treated as having made a relevant finding of fact in his capacity as a delegate of the C6mptroller. Nor should he be taken to have precluded any appropriate factual investigation which may asslst in determining whether goods serving similar functions to the paper maklng machine are capable of being produced in Australia by any person in the normal course of business.
I have been reminded by Mr Tracey who appeared for the respondents that the Full Court in its ludgment of 15 Aprll 1988 indicated, at 232, several lines of inquiry whlch might be pursued in making that determination. The Full Court itself referred Amcor's application to the Comptroller for further consideration, and I find myself unable to draw the inference that, since then, all relevant facts have been revealed in such a way as to compel satisfaction that goods serving similar functions to Amcor's machine are not capable of being produced in Australia by any person in the normal course of business.
However, the expression of reservations by the Customs authorltles about the correctness of the Full Court's interpretation of s.269C(l) and s.269B(7) which was persisted in after the High Court refused special leave to appeal, created, I find, a reasonable apprehension in the mind of Amcor and its advisers that the Full Court's Interpretation might not be applied when the Comptroller or hls delegate should come to consider further whether he is satisfled of
the matters speclfled in s.269C(l)(b). That apprehension was reinforced by the persistent refusal of Customs from 3 May until 15 December 1989 to release to the applicant even part of the legal opinion whlch was regarded as provldlng guidance for the making of the determination contemplated by s.269C(l)(b).
Accordingly, it is appropriate to order the respondents to determine the appllcantrs application for a Commercial Tarlff Concession Order according to law, and, in particular, in accordance with the interpretation of s.269C(1) and s.2698(7) of the Customs Act 1901 as in force on 13 November 1985, as enunciated by the Full Court of this Court in Amcor Ltd. v Comptroller-General of Customs (1988) 79 A.L.R. 221. I shall hear Counsel on the question of the costs of the present application to the Court.
I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment of His Honour Mr Justice Ryan.
Date: / g . 2 70
Solicitors for Applicant: Arthur Roblnson & Hedderwicks Counsel for Applicant: Dr P Buchanan, QC
Mr J G Judd
Solicitors for Respondent: Australian Government Solicitor
Counsel for Applicant: Mr R.R.S. Tracey Date of Hearlng: 15, 19 December 1989
31 January 1990Date of Judgment: 15 February 1990
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) NO VG 204 of 1989 ) GENERAL DIVISION )
BETWEEN: AMCOR LIMITED
(Applicant)
(First Respondent)
AND : ROBERT KELLY (Second Respondent)
Judge Making 0rder:Ryan J
Date of Order: 1 March 1990 where Made: Melbourne
MINUTES OF ORDER
The Court Orders:
1. That the respondents determine the applicant's application for a Commercial Tariff Concession Order according to law, and, in particular, in accordance
with the interpretation of s.269C(1) and s.269B(7) of the Customs Act 1901 as in force on 13 November 1985, as enunciated by the Full Court of this Court in Amcor
Ltd v Comptroller-General of Customs (1988) 79 ALR 221.2. That the respondent pay two-thirds of the applicant's costs to be taxed, including any reserved costs.
NOTE: Settlement and entry of orders is dealt with in 0.36 of
the Federal Court Rules.
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