Century Metals and Mining NL v Yeomans

Re: CENTURY METALS AND MINING NL
And: ROBERT J YEOMANS, THE LIQUIDATOR OF THE PHOSPHATE MINING
CORPORATION OF CHRISTMAS ISLAND and THE MINISTER FOR ARTS AND
TERRITORIES
No. WA G25 of 1989
FED No. 383
Administrative Law
100 ALR 383
(1989) 40 FCR 564

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Fisher(1), Wilcox(1) and Spender(1) JJ.

CATCHWORDS

Administrative Law - Winding up of Commonwealth mining operation - Selection of private operator to take over Commonwealth assets and to commence mining - Promise by Minister of independent, impartial and thorough inquiry - Liquidator of Commonwealth company appointed to enquire - Whether liquidation inquiry constituted an independent, impartial and thorough inquiry - Natural justice - Proper exercise of Court's discretion as to setting aside decisions.

Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987 ss.10, 14, 15, 58, 59.

Lands Ordinance 1987 (Christmas Island) s.5.

Administrative Decisions (Judicial Review) Act 1977, s.5, 16.

HEARING

SYDNEY

#DATE 25:7:1989

Counsel for the Appellant: Mr R J Ellicott QC with

Mr R L Le Miere

Solicitors for the Appellant: Mallesons Stephen Jaques

Counsel for the First
Respondent: Mr D G Williamson QC with

Mr A L Cavanough

Solicitors for the First
Respondent: Sly & Weigall

Counsel for the Second
Respondent: Mr D Williams QC with Mr P. Macliver

Solicitors for the Second
Respondent: Australian Government Solicitor

ORDER

The appeal be allowed.

The orders made by French J on 23 March 1989 be set aside and in lieu thereof it be ordered that:

(a) the decision of the first respondent to make the recommendations contained in his report to the second respondent dated 23 May 1988 be set aside;

(b) the decision of the second respondent of 1 July 1988 to commence negotiations with Elders Resources Limited about recommencing mining on Christmas Island be set aside;

(c) the matter of mining on Christmas Island be remitted to the second respondent for further consideration; and

(d) the respondents pay to the applicants their costs of the proceeding.

The respondents pay to the appellant its costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal against a decision of a Judge of the Court (French J) dismissing an application for review, made under the Administrative Decisions (Judicial Review) Act 1977, of various decisions made by Robert J Yeomans, the first respondent, and the Minister for Arts and Territories, the second respondent. Mr Yeomans is the liquidator of an entity known as Phosphate Mining Corporation of Christmas Island ("PMCI").

The applicants, at first instance, were Century Metals and Mining NL ("Century") and The Union of Christmas Island Workers ("UCIW"). Both applicants appealed against the dismissal of their application but, a day or two before the commencement of the hearing of the appeal, UCIW discontinued its appeal. The appeal by Century was maintained and fully argued.
The proceedings at first instance
The hearing at first instance was arranged as a matter of urgency. The respondents objected to the competency of the proceedings. French J heard argument upon that question as a preliminary matter. On 12 December 1988 he dismissed the objections to competency. The correctness of that decision has not been challenged before us.
French J commenced to hear the matter, upon the merits, on 23 January 1989. The hearing occupied 12 days, concluding on 15 February 1989. On 16 March 1989 his Honour delivered a lengthy and comprehensive judgment, setting out the whole of the salient facts and dealing with the numerous issues of law argued before him; many of which have not been pursued before us. As will appear, we are of the opinion that Century is entitled to succeed in respect of one aspect of its case, so that the decision of the learned trial Judge must be reversed. Nonetheless, it is appropriate that we acknowledge the considerable assistance which we have obtained from the full and clear findings made by his Honour. Although Century challenges his Honour's final conclusions in connection with several aspects of the case, no attack has been made upon the primary findings of fact.
The mining proposals
In his reasons for judgment of 12 December 1988 French J referred to the history of Christmas Island, both in terms of its settlement and development and its constitutional links with Australia. The story is an interesting one, but it is not necessary to recapitulate it here. We propose to confine our summary of facts to those directly relevant to the arguments which we have to consider. For that purpose it is enough to say, in respect of earlier years, that the principal economic activity upon the Island traditionally has been the mining of phosphate; the mining being undertaken since July 1982 by PMCI, a company incorporated in the Australian Capital Territory and wholly owned by the Commonwealth of Australia.
On 28 October 1987 the Federal Cabinet decided that mining on the Island should cease, that PMCI should be wound up and, for that purpose, that a liquidator should be appointed. On 5 November 1987 a special ordinance was made: the Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987. The Ordinance required the Minister to "appoint a liquidator for the purpose of winding up the affairs and distributing the property of the Corporation". The liquidator was required to be a person registered as a liquidator under s.20 of the Companies Act 1981. Part III of the Ordinance dealt with the winding up of the Corporation. It contained s.10, providing a Commonwealth guarantee to creditors:

"10. Where but for this section the property of the Corporation would be insufficient to pay all the creditors of the Corporation in full on the winding up in accordance with the other provisions of this Ordinance, the Minister shall direct payment out of moneys appropriated by the Parliament for the purpose of an amount that is, or of 2 or more amounts the aggregate of which is, sufficient to ensure that those creditors are paid in full."

Section 11 provided for the winding up to commence on the day on which the Ordinance commenced. (This was the date of gazettal, 11 November 1987.) As from that date PMCI was to cease to carry on its business except so far as, in the opinion of the liquidator, this was required for the beneficial winding up of that business (s.12). Section 14(1) set out the powers of the liquidator. These powers included the power to "sell or otherwise dispose of, in any manner, all or any part of the property of the Corporation" (para.(d)) and to "do all such other things as are necessary for winding up the affairs of the Corporation and distributing its property" (para.(m)). Section 15 dealt with the relationship between the liquidator and the Minister. That section provided:

"15. (1) The Minister may, in writing, express to the Liquidator the views of the Minister in respect of any aspect of the winding up and the Liquidator shall consider those views.

(2) The Liquidator may seek the views of the Minister in respect of any aspect of the winding up.

(3) Subject to the other provisions of this Ordinance, the Liquidator may act in accordance with the views of the Minister."

Sections 58 and 59 concerned the control of the liquidator. They provided as follows:

"58. (1) If:

(a) it appears to the Court or to the Minister that the Liquidator has not faithfully performed or is not faithfully performing his or her duties or has not observed or is not observing--

(i) a requirement of the Court; or

(ii) a requirement of this Ordinance or of the regulations; or

(b) a complaint is made to the Court or to the Minister by any person with respect to the conduct of the Liquidator in connection with the performance of his or her duties;

the Court or the Minister, as the case may be, may inquire into the matter and, where the Court or the Minister so inquires, the Court may take such action as it thinks fit.

(2) The Minister may report to the Court any matter that in his or her opinion is a misfeasance, neglect or omission on the part of the Liquidator and the Court may order the Liquidator to make good any loss that the estate of the Corporation has sustained thereby and may make such other order or orders as it thinks fit.

(3) The Court may at any time require the Liquidator to answer any inquiry in relation to the winding up and may examine him or her or any other person on oath or affirmation concerning the winding up and may direct an investigation to be made of the books of the Liquidator.

59. A person aggrieved by any act, omission or decision of the Liquidator may appeal to the Court in respect of the act, omission or decision and the Court may confirm, reverse or modify the act or decision, or remedy the omission, as the case may be, and make such orders and give such directions as it thinks fit."

On 11 November 1987 the first respondent, a chartered accountant, was appointed as liquidator of PMCI. In announcing his appointment the Minister referred to the intention of the Government to ensure a future for the Island more in keeping with its unique environment and tourist potential. $2.5 million was said to have been allocated for special resettlement and skills upgrading programs. Details of the resettlement program, under which assistance was to be available to ex-employees of PMCI who left the Island by 31 March 1988, were specified in an agreement reached between UCIW and the Department of Arts, Sport, the Environment, Tourism and Territories ("DASETT") in December 1987.
Notwithstanding the resettlement program, as French J noted, some parties were not prepared to treat the Government's decision as immutable. "The interaction of their competing interests with departmental views and those of the liquidator of PMCI underlies a tangled tale of commercial, bureaucratic, political and industrial manoeuvring that stretched over many months". That interaction gave rise to the present litigation.
One of those parties was UCIW which, in November 1987, engaged Arthur Andersen & Co, accountants, to assess the feasibility of continuing mining through a joint venture arrangement involving UCIW and a non-government entrepreneur. Geological and engineering consultants were engaged to assist the assessment. Arthur Andersen issued a preliminary report on 24 December 1987 and a final report, appending the reports of the geological and engineering consultants, on 29 January 1988. The assumption behind the investigation was that the Commonwealth might be prepared to lease the mine site to the proposed consortium. This was a course open to the Commonwealth under s.5 of the Lands Ordinance 1987 (Christmas Island) which read:

"5. The Administrator may, in writing, in the name of the Commonwealth, grant--

(a) a lease of, or licence to occupy, premises; or

(b) easements, or other rights, powers or privileges (other than leases or licences to occupy), over or in connection with premises."

Another interested party was Elders Resources Limited ("Elders"). On 13 November 1987 Mr C de Guingand of Elders wrote to Mr Stephen Arnaudon, the Assistant Secretary of the Indian Ocean Territories Branch of DASETT, suggesting that, with an off Island workforce of less than 100 people used on a "fly-in fly-out" basis, Elders could exploit existing stockpiles of phosphate, selling to markets in Asia.
Mr Arnaudon had had responsibilities covering Christmas Island since October 1986. He had had frequent dealings with UCIW and its general secretary, Gordon Bennett. As the trial judge found:

"There were numerous industrial relations problems over that period and he" (Mr Arnaudon) "found his involvement time consuming, difficult and unproductive. By the end of 1987 he regarded the Union leadership, and more particularly Bennett, as untrustworthy and concerned less with the welfare of the members than in maintaining its own power base on the Island."

Mr Arnaudon learned of the interest of UCIW in entering a joint venture with a mining company. In a submission to the Minister of 17 November 1987 he expressed strong reservations about this possibility. His submission included criticism of Mr Bennett who, he said, over the years had "run a campaign of extracting concessions from managers (and Ministers) then becoming vindictive towards the same people when they gave no further concessions, because they realize they've been taken advantage of". In the last paragraph of the submission Mr Arnaudon said that: "Running the mine by a Union co-operative is tantamount to giving virtually total control of Christmas Island to Mr Bennett". He went on to argue the problems which this course would cause. The trial Judge found that Mr Arnaudon's concerns were communicated to, and discussed with, Mr Yeomans on many occasions and that Mr Yeomans also formed an unfavourable view of Mr Bennett and UCIW "to the effect that they were untrustworthy and unreliable in the performance of agreements". On 18 November, shortly after his first visit to the Christmas Island, Mr Yeomans met with Mr Arnaudon and Mr John Rankin, also of DASETT. His notes of the meeting include a reference to the need to "firmly resist efforts to privatise" the mining operation.
Notwithstanding Mr Arnaudon's view about privatisation, he did not immediately reject the Elders proposal. On 19 November he replied to Mr de Guingand's letter in a manner which he, fairly, described in evidence as "non-committal", but which indicated that the government's intentions for the future of the Island "might not necessarily preclude a stockpile removal operation of the type you suggest". Copies of Mr de Guingand's letter and the reply were sent to Mr Yeomans.
Also on 19 November 1987 Mr Warren Snowdon MP and Senator Bob Collins, within whose constituencies Christmas Island lay, put out a media release in which they stated that the Government was prepared to consider proposals from parties wishing to buy out the Commonwealth's interest in PMCI.
During the next few days Mr Yeomans had two relevant meetings: on 23 November with Messrs Arnaudon and Rankin and two other DASETT officers, when the Arthur Andersen study was discussed, and on 27 November with Mr de Guingand and another officer of Elders.
It is not necessary to detail the events of December 1987. It is enough to say that, in a minute to the Minister, Mr Arnaudon again expressed concern about what he called "the mine privatisation push" and that Mr Snowdon was actively engaged in supporting the proposal of UCIW. Mr Arnaudon's view about that activity was conveyed to Mr Yeomans, who noted that Mr Arnaudon regarded Mr Snowdon as having been "conned by Bennett". PMCI ceased operations on 31 December 1987, upon which date all staff were retrenched.
In a minute dated 5 January 1988 Mr Arnaudon commented unfavourably upon the Arthur Andersen preliminary report. He recommended that there should be no dealings with UCIW on the report, but only with prospective developers and on the basis of the conditions that the Commonwealth wished to apply. There should be a strict time limit on negotiation. He suggested the end of February 1988.
Mr Arnaudon's opposition to the UCIW proposal was evidenced in two letters, dated 19 and 22 January 1988, sent by him respectively to Mr Bennett and to a director of Century. In his letter to Mr Bennett, Mr Arnaudon expressed the belief that the Department "would be duty bound to inform any interested party of the history of management/union relations in the mine. This would be important to any 'risk assessment' that a developer would make as any projection of profits can quickly degenerate into losses through industrial action. It seems incongruous to me, for example, that you now say that the necessary doubling in productivity can be achieved, when previous endeavours to increase productivity by much smaller margins fell so far short of expectations". In his letter to the Century director, Mr Arnaudon warned of the difficulties of dealing with UCIW and of its history of non-adherence to the industrial agreement that it had made with PMCI.
On 12 January 1988 Elders confirmed its interest in establishing a commercial stockpile reclamation project on the Island and outlining a proposal to that end. Mr Yeomans, Mr Arnaudon and the Administrator of Christmas Island, Mr D Taylor, met with representatives of Elders on 4 February 1988 to discuss that company's plan. The proposal was described as being confined to stockpile removal, not new mining. Elders assumed 300,000 tonnes of material per annum, to be removed over a 10 year period. There was discussion about the purchase of equipment and infrastructure, the Elders representatives foreshadowing a tender by that company for the equipment combined with an offer to demolish the infrastructure upon completion of their mining operations. Reference was also made to employment. In a minute to the Minister reporting upon the meeting, Mr Arnaudon said that the Elders representatives "made it quite clear that the viability of their operation is very suspect if the UCIW is involved".
There was considerable comment on the final Arthur Andersen report, following its release at the end of January. In a minute prepared for the Minister, Mr Arnaudon was critical of it. His position received support from comments made shortly afterwards by three ex-employees of PMCI, Messrs Frank Gardiner, David Inglis and David Ronaldson, all of whom made reports either to DASETT or to Mr Yeomans.
Mr Yeomans made some notes about the report. In relation to the matter of projected ore production he commented: "incomprehensible given past performance of union". As French J remarked: "The general tenor of the note was negative. He agreed in cross-examination that the note reflected on the past conduct of Bennett and the Union and that it was then his view that that conduct was likely to continue".
The Arthur Andersen report did receive support in some quarters, notably from the Trades and Labor Council of Western Australia and from some politicians. Nonetheless, the Minister was unimpressed. On 11 February 1988 he issued a media release stating that he had "rejected" the findings of the report. The release identified a number of problems, any one of which would, in the Minister's opinion, "raise doubts about the viability of phosphate mining". However, the Minister stated that "it was a matter for the market to make a commercial judgment" and that "the Government would examine any genuine proposals for mining that were forthcoming, but any such proposals which relied on purchasing or leasing the equipment on the Island must necessarily be made in the very near future because the liquidator's work was well advanced".
The release went on to reiterate the Government's conditions for any further mining on the Island. These conditions included that "the Commonwealth would negotiate the level of royalties for removal of its phosphate resource and use of its social infrastructure on the Island", that the developer purchase the mine infrastructure and undertake to demolish all fixed plant at the end of the project and that there be no further rain forest clearing. The release concluded:

"The Government had been notified by a major Australian company that it was investigating the feasibility of a stockpile removal project which could provide employment for between 20-40 employees over a number of years. This would appear to be consistent with the Government's objectives for the Island."

On 19 February two separate proposals were put to the Minister: from a consortium led by Century and from a consortium represented by Mr John Booth. The members of the proposed Century consortium were Century itself, two other mining companies, Croesus Mining NL and Orion Resources NL, and UCIW. The three mining companies were to make capital contributions totalling $2,040,000 and UCIW $3,500,000. A further $1,500,000 was to be borrowed from an institution. The proposal envisaged the clearing of 20 hectares of rain forest; otherwise the areas to be mined were confined to lands already cleared. Information was set out on a number of topics, including markets, industrial relations and benefits to the Commonwealth. No reference was made to royalties. The life of the mining operation was estimated as being six years, although it was said that research would be undertaken into the possibility of extending this period. The proposal suggested that some 190 local people would be employed.
In a minute to the Minister dated 22 February 1988, Mr Arnaudon commented upon the submission. The minute was severely critical of the proposal, in numerous respects.
Mr Arnaudon and Mr Yeomans met with Mr Booth to discuss his proposal on 23 February 1988. On the following day, Mr Snowdon wrote a letter to the Minister in which he expressed concerns about the Government's handling of the affairs of the Island. Amongst other suggestions, he called for an appraisal of the various mining proposals "by a body independent of the Department of Territories".
On 26 February 1988 a meeting was held in the office of Mr A S Blunn, the Secretary of DASETT. Messrs Arnaudon and Yeomans were present, along with two persons from the Minister's office. The Century consortium was represented by Mr Alan Guy, the managing director of Century, Mr Douglas Dunnett of Orien, Mr Ron Manners of Croesus and Mr D A Argyle, an accountant. The purpose of the meeting, as described by Mr Blunn in his evidence, was to provide the consortium with information and to discuss issues relating to their proposal. Mr Blunn indicated to the meeting that there would be an assessment of proposals independent of the Department.
During the meeting reference was made to the position of UCIW. In view of its importance to the submissions made to us, we set out the findings of French J in regard to that matter:

"At the commencement of proceedings Arnaudon raised the issue of the UCIW participation and Bennett's involvement with the consortium. He said that the consortium would have difficulty if PMCI's experience with the Union were repeated. Yeomans' attitude at that time was, also, that if the Union were involved in the consortium, it would run into trouble. While he denied Dunnett's suggestion that he said the consortium was 'running with the wrong group', I am satisfied that he made some such remark evidencing his scepticism of the probability of the consortium succeeding while the Union was involved. Blunn specifically recalled him asking how the consortium proposed to deal with Bennett and the Union, given the past industrial relations problems. Guy protested that they were there to discuss the Century proposal and not personalities. Blunn agreed that the question of dealings with Bennett was a matter for the company. He did not wish to talk about personalities either and defined the purpose of the meeting as the discussion of issues related to the proposal and to provide the Century representatives with such information as they required. In spite of his direction in that regard, Arnaudon again raised matters relating to industrial disputes on the Island, but Blunn ruled them to be irrelevant."

The trial Judge also found that Mr Yeomans raised a series of questions regarding the proposal and that they included the following:

"1. Whether Century might have over estimated the ore reserves.

2. Whether it might have overstated annual production having regard to the PMCI experience.

3. Whether it might have difficulties with customers.

4. Whether it might have difficulties with shipping costs.

5. Whether it could achieve expected production levels with 189 PMCI employees where PMCI have been unable to do so with 300."

After mentioning some other aspects of the proposal which were discussed, French J returned to the matter of Mr Yeoman's attitude to the Century proposal. He said:

"In his affidavit evidence, Yeomans said that he did not criticise the Century proposal, nor Century's involvement with UCIW. I am satisfied that he did and that his comments at the meeting were generally adverse based on views that he had already formed about the Arthur Andersen Report. The suggestion that he was not critical of the UCIW involvement is belied by a fable that he told over drinks with Guy, Dunnett, Argyle, Manners and Arnaudon, after the meeting. A frog and a scorpion were both on a riverbank. The scorpion asked the frog to ferry him across the river to the other side. The frog replied, 'Don't be silly you will sting me half way across and I will die'. The scorpion reassured the frog that it would not do that because it would drown. The frog agreed to ferry the scorpion but half way across the river the scorpion stung him. As they were both sinking beneath the water for the third time, the frog asked the scorpion why it had stung him. The scorpion replied 'I couldn't resist'. Guy had already heard the story from Arnaudon over the telephone. The frog represented Century and the scorpion UCIW. It was dismissed by Yeomans as 'a humorous joke in a social occasion' and 'conveying no message'. In my opinion, however, the joke did convey a serious message and reflected Yeomans' scepticism about the prospects of the Century consortium succeeding. Yeomans left the gathering and Arnaudon invited Guy, Manners, Argyle and Dunnett to join him for more drinks at the Royal Canberra Golf Club. There he repeated the frog and scorpion story. Guy asked him about social issues on the Island. He said that the police were concerned about drug trafficking and gambling and that there was a rumoured involvement of Chinese mafia or triads. He told them, according to his evidence, that he did not know who was engaging in these activities, but it could even have been some of the 'senior union people', such as Mr Lai Ah Hong and Mr Chang Heng, the Vice President and President of UCIW respectively. Dunnett and Guy's recollection was that he went further and alleged that these two persons were suspected of participation in criminal activities. Whichever is the correct version, the observations reflect continuing hostility to the Union and, I have little doubt, an intention to cause Century and the other companies in each consortium to reconsider their involvement with it. The business part of the meeting ended with a request from Blunn that the consortium submit a more detailed proposal within the following three weeks. Yeomans was asked to make available information on PMCI operations to all proponents."

Following that meeting Century prepared a more detailed proposal. It was submitted on 18 March 1988; but on behalf only of Century, Orion and UCIW, Croesus having dropped out of the consortium. The revised proposal envisaged the processing of stockpiled B grade ore for the first six to nine months of operation, allowing time to generate cash flow, to negotiate markets, contracts and prices and to prepare the equipment needed for the recovery of A grade ore. Projected employment continued to be 190 persons, although this was predicted to vary considerably during the proposed 15 years of operations. Various items were listed under the heading "Benefits to the Commonwealth". They included "Royalty Payments", no amount or method of computation being stated. The document concluded with the following two paragraphs:

"We expect this document will result in the commencement of immediate negotiations with the Commonwealth on specific acquisition terms and conditions.

The Consortium members wish to meet with you and your officers as soon as practical to finalise details of the proposal due to the March 31st deadline placed on the workers by your department."

An addendum to the proposal document set out proposed terms of an agreement to be made between the consortium and the Commonwealth. It included the following item:

"The Consortium will enter into an agreement with the Commonwealth on royalties based upon the Operations ability to support such payments."

Under the heading "Demolition", the following statement was made:

"The Consortium will be responsible for the demolition of the Operations at the termination of the Project."

After a reference to reafforestation of mined land the document proceeded:

"To ensure the performance by the Consortium of its demolition obligations, the Consortium is to provide suitable security to the Commonwealth which shall increase over the life of the project as listed below."

There followed a table, setting out in respect of each of years 1 to 6 the amount of a security to be provided. According to that table the amount of the security at the end of the sixth year would be $2 million.

Both Mr Booth and Elders also revised their proposals during March. The Booth revision was dated 18 March, that of Elders 11 March. The revised Elders' proposal departed conceptually from its predecessors in that it envisaged not merely the removal of stockpiles but also the mining of ore on previously cleared areas. The "fly-in fly-out" employment basis was retained, total estimated employment being 50 to 65 persons.
On 25 March 1988 Mr Arnaudon submitted a minute to the Minister dealing with all three proposals. In a brief note upon the Century proposal Mr Arnaudon commented: "They do not meet your criteria in that they propose rain forest clearing". In fact this was a matter not dealt with, one way or the other, in the revised proposal; but Mr Arnaudon's comment may have had in mind that the consortium had not retracted its initial proposal to clear a further 20 hectares of rain forest. Under the heading "Next Steps", Mr Arnaudon said:

"I believe you need to settle a process and a timetable so that all prospective developers are working to the same information. We need to be as diligent in this matter as we are on Government contracts or tenders. A desirable course of action therefore is for an independent assessment to be undertaken of the three proposals and any others received before a definite cut-off date. This approach has been suggested by one proponent and some politicians.

There are substantial gaps in each of the three proposals that will require further information from the Department and from the proponents. We could endeavour firstly to rectify these gaps or alternatively hand the reports over to a consultant in their current form and allow him to do this work. I favour the latter option as it puts the Government at an arm's length in the evaluation process."

During the remainder of March 1988 and the whole of April there was considerable pressure upon the Minister and the Department as to the course which ought to be taken. It is not necessary to refer to the whole of the evidence but mention should be made of a note of a telephone conversation between Mr Guy and a departmental officer on about 5 April 1988 during which Mr Guy argued that, as part of the assessment process, the Department must recognize the need to negotiate about unanswered questions in his consortium's proposal. Mr Guy agreed with the suggestion of an independent evaluation of the proposals.
On 28 April 1988 Mr Arnaudon submitted a further minute to the Minister in which he suggested a procedure to be adopted, involving the giving of advice to the liquidator under s.15 of the Winding Up Ordinance that the Government would consider the sale of the mining infrastructure to a private concern and an assessment by the liquidator of both existing and any further mining proposals.
On 2 May 1988 Century wrote to the Minister expressing concern at the delay in a decision on the consortium's proposal. On 3 May Mr Arnaudon and Mr Yeomans met with representatives of Elders. Mr Yeomans' notes refer to discussion of "defensible public action -- probity of". In evidence Mr Yeomans said that there was discussion of the need to go through some sort of tender procedure that would be beyond reproach. There was also reference to Mr Yeoman's undertaking the task of assessment.
Upon the following day the Department of Administrative Services provided advice to Mr Arnaudon as to an appropriate timetable for a tendering process. On 6 May Mr Guy wrote a further letter to the Minister expressing "grave concern" at the absence of any communication from either the Minister or the Department and seeking a meeting with the Minister. He followed this letter with a further letter of 10 May in which he complained of a statement to the media by a Ministerial spokeswoman, to the effect that the Department had offered to hold talks with the Century consortium. Mr Guy claimed that the only discussion which had been held with his group was the meeting of 26 February, arranged at his request.
On 12 May 1988 DASETT received advice from the Attorney-General's Department. The advice dealt with several matters, one of which was the role of the liquidator in assessing proposals for private mining. In relation to this matter the Department gave the following "short answer":

"The Liquidator of the Corporation is concerned only with the winding up of the Corporation. He is not concerned with other matters such as the commercial viability of mining proposals, or the future of the Territory except in so far as those matters may impact upon the winding up of the Corporation."

Included amongst the Department's reasons for its advice was the following paragraph:

"18. The principal duties of the Liquidator are, by analogy with those of company liquidators, to take possession of and protect the assets of the Corporation, to have disputed cases adjudicated upon, to realise the assets and to apply the proceeds in due course of administration amongst the creditors and the Commonwealth. The Liquidator should not, therefore, be concerned with such matters as the economic or social development of the Territory, nor with the commercial viability of proposals for mining in the Territory, except in so far as such matters may affect the capacity of a potential purchaser to pay the Liquidator under proposed arrangements for the sale of the Corporation's assets, or otherwise affect the winding up of the Corporation. Accordingly, ... there is no obstacle to the proposals for private mining received by the Commonwealth being referred to the Liquidator for assessment in the terms of the Ordinance: that is, in order that the Liquidator may determine which proposal would provide the highest return on the Corporation's assets. However, unless there are circumstances of which I am not aware, that relate the long term commercial viability of the mining proposals to the winding up, the Liquidator is not able to undertake a broad ranging assessment of the proposals on behalf of the Commonwealth with a view to establishing whether they are so viable. ... Naturally, the Ordinance could be amended to enable the Liquidator to conduct such an assessment if required."

Evaluation of the proposals

Despite this advice, and without taking any steps to amend the Ordinance, the Minister decided to give to the liquidator the task of evaluating the various mining proposals. Upon the following day the Minister wrote a letter to the liquidator which contained the following passages:

"Under Section 15(1) of the Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987 I may, in writing, express to you my views in respect to any aspect of the winding up and you shall consider those views. Under Section 15(3) subject to the other provisions of the Ordinance, you may act in accordance with my views. Accordingly, I now wish to express to you my views in regard to some aspects of the liquidation.

Under section 14(d) you have the power to sell or otherwise dispose of, in any manner, all or any part of the property of the Corporation. I would like you to consider the possibility of such a sale being to a party or parties who have the intention of recommencing phosphate extraction from Christmas Island on a commercial basis.

I have received seven expressions of interest from parties interested in operating the phosphate works on Christmas Island. The names and addresses of these parties are at Attachment A.

On 11 February 1988 I issued a media release (copy at Attachment B) which said that the Government would examine any genuine proposals for mining that are forthcoming, but any such proposal which relied on purchasing or leasing the equipment on the Island must necessarily be made in the very near future because your work as Liquidator is well advanced. Subsequently three proposals for mining were submitted to me, between 11 and 18 March 1988, followed in one case by a supplementary submission. Copies of relevant material are at Attachment C.

...

My Department initiated discussions with the Department of Administrative Services (Purchasing and Sales Group) and the Attorney-General's Department on 31 March 1988, with a view to agreeing a process for possible sale that would be consistent with the basic thrust of Commonwealth disposal policy.

Copies of correspondence between the various Departments is at Attachment D. In brief, those Department's advice is that: . The Liquidator has the power to dispose of the assets of the Corporation to a private purchaser willing to conduct a mining operation.

. As the Liquidator's professional responsibility would presumably entail getting maximum market exposure to produce the best return for assets sold, disposal by the Liquidator would be consistent with the basic thrust of Commonwealth disposal policy. . While there is legislation in place - including the PMCI (Winding Up) Ordinance 1987 and the Christmas Island Lands Ordinance 1987 - other Ordinances may be required to effect the transfer of assets and regulate future mining. I believe you should be fully cognizant of the above advice and any subsequent advice from the Department of Administrative Services and the Attorney-General's Department if you decide to make any assessment of proposals to purchase the mining assets of the Corporation (in Liquidation).

I would also like to draw to your attention the policy of the Western Australian Trades and Labour Council that preference in employment shall be given to residents of Christmas Island where they can demonstrate they have the appropriate skills. Deterioration of plant in the tropical maritime climate of the Island is no doubt increasing the cost of recommissioning the mine. I am therefore concerned that any evaluation process be done expeditiously but equally, in an impartial and thorough manner."

Upon the same day the Minister issued a media release which read as follows:

"Assessment of proposals to reopen the Christmas Island Mine are to be undertaken by the Official Liquidator of the Phosphate Mining Corporation of Christmas Island. This follows a decision by the Minister for the Arts and Territories, Mr Gary Punch. In doing so the Minister is giving effect to his early commitment made in response to calls from several mining proponents that any assessment of future mining operations be undertaken by an independent third party. The Minister has written to the Official Liquidator, Mr Yeomans asking him to carry out an assessment of potential mining operations having regards (sic) to the Government's guidelines of 11 February as well as pertinent industrial relations matters. The Official Liquidator has the power under the Phosphate Mining Corporation of Christmas Island (Winding-Up) Ordinance to dispose of the assets of the Corporation to a private purchaser wishing to recommence mining operations.

Mr Punch said that he was now awaiting advice from the Liquidator on his assessment of the proposals for mining on Christmas Island and has asked the Liquidator to deal with the matter as expeditiously as possible. 'The disposal of valuable government property is something that no government should deal with lightly,' Mr Punch said. 'Following the receipt of formal submissions in late March I directed my Department to immediately commence discussions with other relevant Departments about the most appropriate assessment process consistent with Commonwealth disposal policy.' As a consequence of a cyclonic storm and resultant extensive damage to the island, as well as to ensure all those expressing interest had proper and sufficient opportunity to develop their final proposals, the 30th April was confirmed as the deadline for submissions.

'Assertions there have been long delays in the assessment process are baseless and mischevious (sic). My Department has been in consultation with potential miners throughout the process.'

Mr Punch said the Liquidator would immediately begin assessing those formal proposals received. In doing so he could seek expert mining advice on issues. The Government is conscious of possible deterioration of plant in the tropical maritime climate. 'I am therefore concerned that any evaluation process be done expeditiously but equally in an impartial and thorough manner. I hope that the Liquidator will find that there is a viable proposal and that mining can recommence,' Mr Punch said."

There is no evidence that the Minister's letter to Mr Yeomans came to the notice of Century. But its purport became known to Mr Guy, who telephoned Mr Yeomans. Mr Guy asked Mr Yeomans why he thought that he was independent, in view of the comments he had made in February. Mr Yeomans responded by saying that everybody makes similar comments about Mr Bennett. During this conversation Mr Yeomans said that he would be drawing up a check list for all of the people who had made propositions and that amongst the items on that check list would be the question of royalty. No check list was ever sent to Century.
Mr Yeomans' response to Mr Guy's question regarding independence was not accepted by Mr Guy. On 13 May he wrote a letter of protest to the Minister in which he said:

"Firstly, the appointment of the liquidator, Mr Robert Yeomans as the independent assessor is not in our opinion equitable given the following reasons:

- Mr Yeomans is an accountant and not qualified to assess the social and industrial relations aspects of each proposal.

- Mr Yeomans has stated in conversations with members of our consortium a personal disapproval of Mr Gordon Bennett and the U.C.I.W. His impartiality in this matter must therefore be called into question."

Mr Guy went on to ask that "the criteria to be used to assess the proposals be forwarded to the consortium", to set out the time required for the steps necessary to recommence operations and to request that he be "notified immediately if you consider that a decision will not be made on the future of the Christmas Island phosphate mine within 14 days".

Three days later Mr Guy wrote again, referring to information that "advertisements are to be placed Australia wide for further proposals to reopen the Christmas Island Mine with a further deadline of 31st May 1988". Mr Guy claimed that this further delay would disadvantage his consortium and that it constituted a "deviation from your press release on Friday the 13th May".
The Minister did not respond to Mr Guy's letters of 10, 13 and 16 May until 21 June 1988. In that letter, amongst other things, he said:

"Turning to matters you raised in your letter of 13 May, the Government must ensure that all proposals are considered fairly and impartially in a manner that is consistent with the basic thrust of Commonwealth disposal policy.

I wrote to Mr Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island, asking that he make an assessment of proposals to purchase the mining assets of the Corporation from parties who intend to recommence phosphate extraction on the Island. While I cannot direct the Liquidator, I have requested that among other things he take into consideration:

. the Western Australian Trades and Labour Council's policy to give preference in employment to Island residents who possess the necessary skills and qualifications;

. the Government's conditions for future mining on the Island; . the possibility that, despite the publicity to date, some parties with a potential interest in future mining on the Island may not have had the matter drawn to their attention; and . Commonwealth disposal policy. Let me state quite clearly that while the Government supports continued exploitation of the phosphate reserves on the Island it cannot force the Liquidator to make a quick decision. I have noted your assertions as to deadlines that need to be met with regard to the recommencement of mining and the maintenance of plant and equipment. I am fully aware of the need for a decision to be reached quickly on future mining proposals, given the factors you have outlined. I have asked the Liquidator to conduct his evaluation expeditiously, but equally, in an impartial and thorough manner."

Mr Yeomans responded on 18 May 1988 to the Minister's letter of 13 May. He said:

"I agree with you that I have the power to dispose of the assets to a private purchaser wishing to conduct a mining operation if in my professional opinion this is the most appropriate course of action in terms of my responsibilities under the Winding Up Ordinance. I will therefore undertake an assessment of private mining proposals. This will be done in an impartial and thorough manner bearing in mind the interest of the Corporation and my responsibilities for its winding up. I note and will have regard to the Government's conditions that you set out in your media release of 11 February 1988. I also note the policy of the Western Australian Trades and Labour Council in regard to preference in employment to Christmas Island residents."

It appears that, promptly after the letter of 13 May, Mr Yeomans requested Messrs Gardiner and Inglis to express views on the three proposals. Both of them did so, indicating that, of the three proposals, they favoured that of Elders. However, neither gentleman was enthusiastic about any of the proposals. Mr Gardiner thought that "the Elders proposal has an outside chance of succeeding" and that the Booth and Century proposals, both of which involved the use of local labour, "are so far off the mark that they should be discarded at an early date". Mr Inglis thought even the Elders' proposal "unduly optimistic in a number of respects". He expressed concern at the possibility that the Government "largely for political and social reasons "may" allow one of the proposals to proceed when the potential difficulties technically, commercially, practically and socially are so great that the risk of failure is high".
Predictably, given their comments on the Arthur Andersen report, both consultants were particularly critical of the Century proposal. Mr Inglis noted that Century now accepted that no further rain forest clearing would be permitted but asked: "how can the long mine life be sustained without further clearing?". He also noted omissions of detail in the submission "regarding the proposed methods of mining, processing, shipping and marketing". Mr Gardiner also noted deficiencies in the information supplied by Century, upon financial matters, as to the existence of the ore reserves necessary to sustain the proposed operation and as to the availability of the required personnel.
Mr Yeomans placed advertisements in some national newspapers published on 19 May, inviting proposals by 31 May. He prepared an "information package" for prospective proponents. On 25 May, Mr Yeomans wrote to Century enclosing a copy of the information package. This was done in response to a request by Mr Guy in a fax message in which Mr Guy said: "We wish to ensure that nothing has been overlooked in our proposal which you are at present reviewing". In his reply Mr Yeomans said that it would not be necessary for Century to submit a fresh proposal and that he had already commenced examination of the information provided by it. The information package contained the statement: "The successful developer will be expected to pay royalties for the removal of the Government's phosphate resource".
On 24 and 30 May respectively, Mr Guy wrote two further letters to the Minister. In the first letter he confirmed his consortium's acceptance of the Government's decision that no further rain forest clearing would be allowed. In the second letter he gave details of its projected employment levels. This letter concluded: "If you have any further queries on any aspect of our proposal, I will be happy to discuss them with you". A copy of this letter was faxed to Mr Yeomans on 1 June 1988.
Mr Yeomans did seek some additional information from Mr Guy, relating to the company's financial position. This information was promptly furnished. No information was sought regarding the other matters raised by Mr Gardiner and Mr Inglis. However, on 17 June 1988, Mr Guy wrote to Mr Yeomans stating that he had been informed by Mr Bennett that Mr Arnaudon had raised doubts on the consortium's interpretation of phosphate ore reserves remaining on Christmas Island as at 31 December 1987 and as to the labour requirements necessary to mine those reserves. Information on those matters was set out.
On 20 June 1988 Mr Argyle telephoned Mr Yeomans and asked him whether he required anything additional from the consortium. Mr Yeomans replied that nothing extra was required.
The decisions
Mr Yeomans presented his report to the Minister on 23 June 1988. In that report he summarised the steps which he had taken in connection with the liquidation and the consideration by him of the mining proposals. In summarising the Minister's media release of 11 February 1988 Mr Yeomans mentioned the reference to the Commonwealth negotiating the level of royalties. In making general comments upon the proposals, Mr Yeomans noted the estimated infrastructure demolition costs of $4 million. He referred to the damage caused to the infrastructure and to the port facilities by a cyclonic storm on 26 March 1988, the fact that phosphate "is in global over-supply and is likely to remain so in the foreseeable future" and that the mining of phosphate on Christmas Island "involves, in addition to commercial considerations, broader social, industrial and political issues which the Government will need to consider. These issues are referred to in the Minister's media release of 11 February 1988". Mr Yeomans commented:

"In assessing the proposals I have had regard primarily to the issue of maximising the return to the liquidator but I have also had regard to the broader issues."

Mr Yeomans then turned to consider each of the three proposals. In the course of summarising the Century proposal he said:

"No consideration is proposed to be paid to the liquidator for the acquisition of the existing mining infrastructure. The consortium agrees to be responsible for the demolition of the operations at the termination of the project but only to a limit of $2 million."

In the section of his report headed "Appraisal of Proposals" Mr Yeomans said this:

"Century Metals and Mining NL

1. The proposal makes no provision for the purchase of the existing mine infrastructure. The liquidator will accordingly receive no return under this proposal.

2. Royalties would only be paid based on the Operation's ability to support such payments. There is therefore a possibility that no such royalties would be paid.

3. Responsibility for demolition is limited to $2 million. Demolition costs are currently estimated at $4 million.

4. The consortium proposes to operate the power station, take responsibility for the supply of water and also take over the port facilities. This would not appear to accord with Government policy.

5. The concept of employing up to 189 staff may not be achievable without a re-migration program being implemented. Over 200 of PMCI's 300 employees at 31 December 1987 have resettled off the Island and in the case of supervising personnel less than 10 of the original 46 are understood to remain on the Island.

6. It is not clear that the consortium has the financial resources to develop a successful mine bearing in mind the need to withstand possible adverse economical influences in the early years of the mine's life. In addition, the proposal lacks detail regarding the proposed methods of mining, processing, shipping and marketing.

7. Century's offer includes a requirement that it acquires all of PMCI's shares in Phosphate Technology Pty Ltd. This is not possible within the terms of the articles of association of that company without the approval of the majority shareholder, Mr G Thomas. Mr Thomas has made an offer to acquire the PMCI shares.

8. The consortium would be responsible for reafforestation in accordance with Australian National Parks and Wildlife Service guidelines but only over areas the consortium mines. All the consortium offers in relation to the balance of the restoration requirement is that it will negotiate with Government to assist in the restoration of those areas.

9. Century is the least likely to experience industrial disharmony as the UCIW is a part of its consortium. Elders Resources Limited

1. The proposal makes provision for the purchase of the existing mine infrastructure for $4,500,000. There is, however, a net-off proposal in relation to demolition costs.

2. Royalties would be paid at the rate of $1.70 per tonne of product shipped. Rehabilitation would be funded to the value of $1.00 per product tonne.

3. The proposal from Elders sets out the company's plan in relation to its proposed operations on Christmas Island and addresses in detail the specifics on the issues of environmental protection, royalty payments, staffing plans, purchase of PMCI's assets and demolition arrangements.

4. Elders has the financial and operational resources to develop a successful mine. It has moved to ensure that it will have personnel with specific relevant experience in the marketing, operational and technical fields and in the development of caustic leach technology.

5. Elders propose (sic) to employ 50-65 people. The fly-in-fly-out arrangements proposed by Elders are becoming the 'norm' for developing new mines in remote locations. The revenue for the transportation of workers would assist the Government in maintaining a cost effective regular air service to Christmas Island and to the Cocos Islands. Elders has experience in the problems and benefits associated with fly-in-fly-out arrangements and in addition its proposal seeks to maximise employees' working hours whilst they are on Christmas Island.

6. The proposal seeks to bring industrial relations on Christmas Island in line with mainland practices. Production is inextricably tied up with industrial relations which, to say the least, has an unhappy history on Christmas Island. The UCIW is a party to the Century proposal. Union members could not necessarily be expected to willingly assist in the implementation of the Elders' proposal and in the light of history could be expected to take action to oppose it.

7. Elders proposes a payment by the Government of $4 million to assume current demolition obligations. This results in a net payment of $500,000 after taking over PMCI's assets and assuming responsibility for those obligations.

8. Elders accepts that it will be required to pay for power, water, house rents and the use of port facilities on a 'user pays' basis.

9. Elders through its Marketing Division has offices in Australia and overseas actively involved in trading fertilisers and other minerals and is well placed to provide the necessary shipping and support facilities. J G Booth

1. The proposal makes provision for the purchase of the existing mine infrastructure for $500,000.

2. Royalties are proposed to be paid at 5% of FOB price estimated at $11.7 million over the life of the operation. The FOB prices quoted appear conservative and attainable on today's market.

3. The proposal assumes the liability for the demolition of the mine infrastructure at the end of the operation. The proposal also assumes the responsibility to rehabilitate all mined areas.

4. The consortium accepts that it will be required to pay for power, water, house rents and the use of port facilities on a 'user pays' basis.

5. The consortium proposes to employ up to 76 persons of which up to 70 will be Islanders.

6. Members of the consortium are experienced in mining operations and, viewed collectively, the members of the consortium are companies of substance. The proposal limits the capital available to the consortium to $4 million.

7. As the Island residents are proposed to be a member of the consortium less industrial disharmony is likely to be experienced than with the Elders proposal."

Mr Yeomans then set out his conclusions and recommendations, as follow:

"Of the three proposals I find Elders the most acceptable for the following reasons:

1. The net payment to the liquidator of $500,000 for the PMCI assets after assuming responsibility for demolition work is more advantageous than the Century proposal and also more than the nett amount I would expect to receive from a liquidation sale taking into account the costs of disposal, demolition and removal. The Booth proposal also involves a payment of $500,000.

2. Payment by Elders of royalties at $1.70 per tonne shipped exceeds the offer contained in the Century proposal and compares favourably with the Booth proposal which however does offer slightly higher royalty payments.

3. The Elders proposal is superior to both the Century and Booth proposals in the following additional respects: . Financial resources . Production and technical expertise . Mainland support bases . Research and development . Quality of submission

4. Elders is a major Australian public resource company. Its proposal does not have the disadvantage of being a consortium proposal. I have accordingly concluded that Elders has the depth of experience and financial resources necessary to establish a commercially viable mining operation on Christmas Island in accordance with the conditions set by the Government. If the maximisation of employment of Island residents was regarded as an important objective then the Century proposal is superior to the Elders and Booth proposals. In my opinion however efficient mining operations at the level proposed would not justify the employment of the level of personnel proposed by Century. I have not had an expert assessment made of the likely costs of rehabilitation. I have concluded that this is unnecessary as the Government will independently set the rehabilitation standard to be met. I advise that:

1. If the Government is prepared to allow the recommencement of mining operations on Christmas Island I would wish to enter into negotiations with Elders Resources Limited with a view to disposing of the assets of PMCI to that company generally in accordance with the Elders' proposal.

2. Negotiations with Elders, or indeed any of the other parties, are unable to be conducted without the Government authorising the concurrent negotiation of arrangements for the recommencement of mining operations on Christmas Island. I accordingly recommend that:

1. The Minister give approval in principle to negotiations with Elders of arrangements, based on the Elders' proposal, for the recommencement of mining operations on Christmas Island.

2. I be authorised by the Minister to negotiate a total agreement in conjunction with the Department of the Arts and Territories for submission to the Minister.

3. Urgent attention be given to the drafting of necessary legislation, leases and licences to allow any such proposal to proceed without undue delay. I propose that Elders be given strict time limits within which to negotiate a final proposal for approval by the Minister. If for any reason negotiations cannot be satisfactorily concluded with Elders I recommend that negotiations be instituted with Booth."

Mr Yeomans' recommendation was accepted by the Minister. In a media release issued on 1 July 1988 he announced that "negotiations will begin with Elders Resources Limited about recommencing mining on Christmas Island". In making the announcement the Minister stated that Mr Yeomans' "independent assessment" had recommended Elders. A copy of this media release was sent to Century by Mr Yeomans on 5 July 1988.
Mr Guy protested. On 8 July 1988 he wrote a letter to the Minister complaining that Mr Yeomans had failed to consider fully and properly all of the relevant social, industrial and economic factors. He again questioned Mr Yeomans' impartiality, stating that, some weeks ago, he had arranged the sale of phosphate to Elders for delivery to Malaysia without calling for tenders and while charged with evaluating proposals to reopen the mine. The evidence does not disclose a reply to this letter.
On 18 August 1988 the Minister wrote to Mr Yeomans a letter in which he referred to his letter of 13 May and Mr Yeomans' assessment of proposals and recommendation. He went on:

"In accordance with your recommendations I request that:

(1) in conjunction with my Department, you commence in principle negotiations with Elders Resources Limited on arrangements, based on the Elders' proposal, for the recommencement of mining operations on Christmas Island.

(2) you negotiate, in conjunction with my Department, a comprehensive agreement covering the assets, of both the Commonwealth and the Phosphate Mining Corporation of Christmas Island, which will be required for future mining;

(3) you provide me with a draft Heads of Agreement, developed in conjunction with my Department, for approval prior to making any commitment on future arrangements with Elders Resources Limited;

(4) subject to my approval of the Heads of Agreement you negotiate final arrangements with Elders Resources Limited, in conjunction with my Department; and

(5) you provide the final arrangements for my approval prior to contract or leasing arrangements being entered into. I must reaffirm that any negotiations must include both the environmental and employment conditions which I have stipulated and which are outlined in my letter to you of 13 May 1988 and the attached press release. You should endeavour to meet the 22 August 1988 completion date for the signing of leases and contracts as provided in your draft timetable."

Heads of agreement were prepared, in conjunction with Elders. They are lengthy and need not be set out in these reasons. It is enough to say that they envisage the grant of a lease by the Commonwealth to Elders for an initial term of 20 years of a mining area, not yet defined, at a royalty rate of $2.70 per tonne subject to possible upward adjustment after nine years. (The figure of $2.70 is apparently the sum of the $1.70 royalty payment and $1.00 per tonne rehabilitation payment offered by Elders in its proposal.) Elders were to purchase from PMCI and the Commonwealth the mining infrastructure, plant, machinery and associated assets for $5 million, of which $1 million was to be paid in two instalments over the first 12 months and the remaining $4 million was to be set-off against the cost of demolition by Elders of all improvements on the mining tenement at the expiration of the lease. Elders was to rehabilitate all areas mined by it at its own cost and other mined areas at the cost of the Commonwealth.
The appellant's case
At first instance the applicants challenged a number of the decisions made by the liquidator and the Minister. The relevant decisions of the liquidator were identified as: the decision to recommend the Elders' proposal to the Minister, the decision to enter into negotiations with Elders regarding the sale or disposal of assets, the decision to negotiate with Elders regarding the recommencement of mining and the decision to enter into an agreement with Elders with respect to the sale or disposal of assets. The invalid Ministerial decisions were said to be: the decision to request the liquidator to assess, and to make recommendations regarding, the proposals for future mining, the decision to accept the liquidator's recommendation of Elders, the decision to request Mr Yeomans to enter negotiations with Elders regarding the recommencement of mining and the sale of assets, the decision to negotiate with Elders, the decision to grant to Elders the right to mine and the decision to enter into an agreement with Elders with respect to the right to mine.
At the preliminary hearing, dealing with competency, French J held that each of these decisions was reviewable under the Administrative Decisions (Judicial Review) Act as being a "decision under an enactment". As indicated, that holding is not challenged.
The purpose of the case, as summarised above, was, of course, to obtain an order setting aside one or more of the decisions, all of which were favourable to Elders. Although no contractual right has yet arisen, Elders plainly had an interest in the maintenance of those decisions; yet it was not joined as a respondent to the proceedings. This caused us some concern, which we expressed during the argument. It appeared, however, that Elders was fully aware of the hearings at first instance, a representative having been in court throughout the hearings. Yet no application was made for joinder. We can only conclude that Elders accepted that its interests would not be further advanced by its participation in the proceeding as a party. Such an acceptance would be understandable, given the fact that both respondents at all times actively resisted the applicants' challenges; separate senior and junior counsel being briefed by each of the respondents for that purpose.
The present appellant maintained before us its attack upon all the decisions itemized above, but the main focus of counsel's submission was upon the decision of the liquidator to recommend Elders and the decision of the Minister to accept that recommendation. These decisions were, of course, the critical decisions of each of the two respondents; the remaining decisions being consequential upon them. The two decisions were attacked upon a number of bases, all of which fall within one or both of the grounds set out in the Administrative Decisions (Judicial Review) Act: breach of the rules of natural justice (s.5(1)(a) of the Act) and improper exercise of the power (s.5(1)(e)). In addition the decision of the liquidator was said to be bad in law because, in making that decision, he took into account considerations extraneous to his statutory responsibilities, namely the most suitable mining proposal. The appellant contended that the Minister failed to take into account certain relevant considerations, namely the social and economic consequences of the proposals.
In the view we take the appellant is entitled to succeed in relation to the first of the two grounds common to the decisions of both respondents, that is natural justice. Accordingly, it will be unnecessary for us to deal with the remaining grounds of attack.
The nature of Mr Yeomans' task
Before embarking upon a discussion of the submission put to us in respect of natural justice it is desirable to deal with two preliminary matters: the nature of the exercise upon which Mr Yeomans was engaged and justiciability.
Mr Yeomans already had power, under s.14(d) of the Winding Up ordinance, to sell the PMCI assets. He needed no further authority to enable him to take that step. The Minister was entitled, under s.15 of that ordinance, to express such views as he wished as to the manner in which Mr Yeomans should carry out his duties as liquidator, including in relation to the sale of the PMCI assets. Mr Yeomans was not bound to accept the Minister's views, but he was free to act in accordance with those views, provided, of course, that such action did not involve a breach of the ordinance or other law.
However, notwithstanding the opening paragraph of the Minister's letter of 13 May, it is clear that the Minister did more than merely express views under s.15 of the ordinance. True, he did express a view; namely that he would like Mr Yeomans "to consider the possibility" of a sale of the PMCI assets "to a party or parties who have the intention of recommencing phosphate extraction from Christmas Island on a commercial basis". But he went on, in effect, to charge Mr Yeomans with the task of choosing who that party would be. He sent to him the seven expressions of initial interest and the three current proposals. Although in his letter he spoke of an "assessment of proposals to purchase the mining assets of the Corporation", he was in effect asking Mr Yeomans to assess the proposals to mine. This was made clear in the first sentence of his contemporaneous media release, which read:

"Assessment of proposals to reopen the Christmas Island Mine are to be undertaken by the Official Liquidator of the Phosphate Mining Corporation of Christmas Island."

As the media release also made plain, Mr Yeomans had been appointed to conduct the previously promised "independent" assessment of the proposals.

In taking the course which he did, the Minister created a situation which was fraught with difficulties. No criteria were specified. Upon what basis was Mr Yeomans to choose between the proposals? Plainly, he was expected to do more than to assess which proposal offered to him as liquidator the most favourable sale of assets; he was to consider the most advantageous mining proposal. Presumably this consideration was intended to take into account all relevant financial aspects; including royalty income, contribution to rehabilitation expenses, tax considerations, contribution to export earnings and the like. But was he intended to do more: for example, by assessing the social, political and environmental effects of the various proposals? As an accountant, without the secondment to him of appropriate staff, Mr Yeomans was not well equipped to conduct this broader investigation, and he obviously did not think that this is what he was expected to do. But one of the main arguments put by Century in favour of its proposal was its capacity to maximise local employment and therefore to prevent the breakdown of the Island community. If the object of the exercise was to conduct a thorough, independent inquiry into the merits of the various proposals, how could this factor be ignored?
A further problem was the fact that the person appointed to conduct the assessment was the liquidator.
Leaving aside the problem caused by Mr Yeomans' earlier involvement with the three proposals -- a matter to which we will come -- his duty as liquidator had the potential to conflict with his duty as the Minister's assessor. As liquidator, Mr Yeomans was concerned with a narrow band of issues; in summary, how to wind up the business and dispose of the assets of PMCI to the best financial advantage of the Commonwealth. As liquidator he was in no way concerned with the question whether the company to whom he sold the assets, ordinarily the highest bidder, was likely to make a success of its mining venture, except insofar as this might affect the capacity of the company to make payment to him. He was not concerned with the desirability, from any point of view, of that company's proposal; either absolutely or relatively to any other proposal. But, as an assessor of the proposals, he was concerned with such matters. There was a real prospect that, as assessor, he would find himself required to recommend an applicant who would offer him, as liquidator, less than the best financial return.
The above problems seem to have been ignored, despite the advice from the Attorney-General's Department. In deciding to appoint Mr Yeomans to conduct the promised independent, impartial and thorough assessment, without clear guidelines as to the scope of his inquiry, the Minister placed Mr Yeomans in a most difficult position; a position which has led directly to many of the defects in the assessment process.
Justiciability
Counsel for the first respondent submitted that the decisions made by their client were not justiciable. This submission was based upon two propositions. Firstly, it was said that the powers conferred upon the liquidator were of great width, reference being made to paras.(d) and (m) of s.14(1) of the Winding Up Ordinance, set out above. Secondly, counsel pointed out that the liquidator was asked to make recommendations for, and the Minister was required to make, a decision in the public interest of a political nature.

The view just stated accords with that adopted by French J, save for the fact that he spoke of a more limited expectation: "a legitimate expectation that they" (the Century consortium) "would be given a fair opportunity to present their case". But his Honour went on to hold that the consortium was not denied that opportunity:

"What is a fair opportunity and fair treatment in the sense required by the rules of natural justice will vary according to the circumstances. In this case Century had, in February 1988, submitted one proposal and after a meeting with officers of DASETT and the liquidator, had been invited to resubmit in further detail. All of this happened of course, before the liquidator was asked to act as assessor by the Minister. It is nevertheless relevant to the determination of what constituted fair treatment by the liquidator once he assumed that role. In my opinion, whatever the content of his obligation to observe natural justice, it did not require him to afford to the applicants an opportunity to rectify omissions or deficiencies which should have been addressed in their proposal. In particular, fairness did not require him to invite the applicants to submit some formula upon which royalties could be negotiated or to negotiate such royalties. The absence of any offer of payment for the acquisition of the PMCI assets spoke for itself and on the face of the submission was explained by reference to the undertaking of responsibility for demolition at the termination of the project and for relocation expenses of employees. There was, in my opinion, no obligation in fairness on the liquidator to explore alternatives or to invite a cash offer. As to the matter of the financial resources available to the applicants, it was incumbent on them to make the position clear in their proposal. There was substance in the complaint that the liquidator had misread the submission so far as it related to meeting demolition costs. It was, in my opinion, reasonably clear that the Century group did intend to bear these costs in their entirety and that the figure of $2 million was no more than the amount of a security for performance of that obligation to be provided over the life of the project. But the misinterpretation of the submission in that respect, does not constitute a breach of natural justice. Nor, in my opinion, does the failure to consult with Century about it. Fair treatment does not import a protection against factual error or miscalculation in the decision making process. That is not to say that the liquidator should not, as a matter of prudence, have had further discussions with Century and the other proponents. However, the minimum requirements of fair treatment according to law were met so far as they related to the opportunity on the part of Century to put its case."

This approach was expressly supported by counsel for the respondents. But, with respect to his Honour, it seems to us that it undervalues the Minister's promise. We agree that an obligation to accord a hearing does not usually carry with it an obligation to direct the attention of an affected person to omissions in his or her case: see Sullivan v Department of Transport (1978) 20 ALR 323 at p 343, Singh v Minister for Immigration and Ethnic Affairs (1985) 9 ALN 13. However, in the present case the Minister did not merely promise an opportunity for the various proponents to put their cases. He promised an independent, impartial and thorough assessment; that is, that the various proposals would be thoroughly evaluated by a person who was independent of DASETT and who was impartial. The Century consortium had a legitimate expectation that this promise would be honoured. Whether it was honoured is not to be answered merely by considering whether Mr Yeomans read what was put before him. The undertaking was to accord a "thorough" assessment of the proposals. The material supplied by Century contained obvious omissions. Mr Inglis and Mr Gardiner pointed some of them out. But, despite the frequent contact between Mr Yeomans and the representatives of Century and the express offers of Mr Guy and Mr Argyle to provide any further information which might be required, Mr Yeomans made no attempt to have the omissions repaired.
There were ambiguities about two financial aspects of the proposal: demolition and royalties. In connection with demolition, we share the view of French J that the proposal of Century ought to be read as accepting full responsibility for demolition costs without any expenditure ceiling. Mr Yeomans read the proposal in a different way, as being subject to a $2 million limit. This is a possible interpretation of the consortium's document but it is at best equivocal. Particularly having regard to the amount of money involved, the position ought to have been checked.
As regards royalties, the revised Century consortium proposal accepted an obligation to enter into an agreement with the Commonwealth "on royalties based upon the Operations ability to support such payments"; whatever that might have meant. Perhaps the words meant that the level of royalties would be negotiated after Century had been selected and before any agreement was made. Mr Guy gave evidence that he thought that this is what would happen. Upon another interpretation, the Century proposal meant that the royalties should be fixed after mining commenced and in the light of the financial results achieved. Mr Yeomans was entitled to regard either of these propositions as unacceptable; the royalty offer was likely to be maximised by being required to be made before Century had been awarded the right to mine. But, even if this was Mr Yeomans' position, he was not justified, when undertaking a "thorough" assessment of the proposals, in failing to ascertain what was Century's best offer on royalties. It was clear that the consortium was prepared to enter into an agreement concerning royalties. And from a financial point of view, the level of royalty payments was easily the most important aspect of the whole assessment. The income from royalties was likely far to exceed the small nett receipt upon the sale of the plant and equipment. And, if the words used by Century had been intended to convey the first of the two interpretations set out above, they would not have indicated that Century was adopting an intransigent position. In his media release of 11 February 1988 the Minister had said that the "Commonwealth would negotiate the level of royalties", presumably with the successful applicant for the right to mine.
The problem of royalties does not stop there. The report compiled by Mr Yeomans for the Minister stated as a conclusion:

"2. Payment by Elders of royalties at $1.70 per tonne shipped exceeds the offer contained in the Century proposal and compares favourably with the Booth proposal which however does offer slightly higher royalty payments."

The form of this paragraph is curious. It was one of four stated reasons for preferring the Elders proposal, the Elders royalty being said to "compare favourably" with an offer which is in fact higher. How much higher Mr Yeomans did not say. A reader of the report could reach no conclusion upon that matter because the royalty offers of Elders and Booth were made upon different bases: in the case of Elders a rate per tonne and in the case of Booth a percentage of FOB price. The report did not contain the information necessary to enable like to be compared with like or the respective gross totals to be ascertained.
A similar criticism may be made about the discussion in the report of the rehabilitation of previously mined areas. Elders offered $1 per tonne towards the cost of this work. Booth's proposal "assumes the responsibility to rehabilitate all mined areas". If this was intended to be read literally, that is to apply also to areas mined by PMCI, the offer was better than the Elders offer. It might have been expected that, in a "thorough" assessment, Mr Yeomans would have pointed out this Booth advantage and quantified its extent. He failed to point out the advantage, and he was in no position to quantify it. He made no investigation of rehabilitation costs. If, on the other hand, the Booth offer was intended to relate only to areas mined by Booth, the advantage was to the Elders proposal. From the report it was impossible to tell what was the position.
Other valid criticisms of the thoroughness of the report were made in argument. Although the nett capital payment -- that is plant purchase price less demolition cost -- offered by both Elders and Booth was $0.5 million, the offer was structured in different ways. There were obviously taxation implications in the way in which the offers were structured; a matter of legitimate interest to the Minister. Yet, despite his accounting qualifications, Mr Yeomans offered no analysis of the taxation implications.
The question whether Mr Yeomans ought to have dealt with the social and environmental consequences of the various proposals is more open to debate. As we have suggested, he was scarcely equipped to do so; yet his brief to assess the proposals was unqualified and these were clearly matters relevant to the merit of the proposals. Perhaps the submission on behalf of the appellant that these matters ought to have been considered goes less to the manner in which Mr Yeomans carried out his task than to the failure of the Minister either clearly to commit this aspect of the matter or clearly to make other arrangements in relation to it.
By way of a footnote upon the matter of thoroughness we should refer to a submission put on behalf of the second respondent. That submission was that, if Mr Yeomans formed the view that one proposal was clearly superior to its rivals, he was not bound to consider every aspect of the proposals. If, for example, factor A was of overwhelming importance and one proposal was clearly superior in respect of factor A, Mr Yeomans might properly say so and spare himself the task of comparing the proposals in respect of factors B, C and D. For that reason, it was said, it did not matter that Mr Yeomans did not ascertain the royalty rate which Century would be prepared to pay. We accept the logic of counsel's submission, but we do not think that it has much relevance to the report which Mr Yeomans submitted to the Minister. That report did not identify a factor of overwhelming importance, so that other matters paled into insignificance. On the contrary, it summarised the features of all of the proposals before coming to conclusions based upon the balance of the respective advantages and disadvantages. All relevant factors were thrown into the balance, or were allegedly thrown into the balance, in order to find the most satisfactory proposal. In a case where the assessment is carried out in this way, thoroughness demands that the factors be properly ascertained and stated.
The matters of independence and impartiality overlap. The assessment was "independent" in the sense that it was made outside of DASETT. But, as French J found, in a larger sense, Mr Yeomans was not independent. In a comment at the conclusion of his reasoning his Honour said this of DASETT and the Minister:

"Indeed, their approach is not above criticism. The description of the liquidator as 'independent' was misleading in so far as it was intended to suggest that he was bringing to bear a point of view uninfluenced by departmental attitudes towards the issue of phosphate mining on the Island. It was a political device of bureaucratic origin designed to mollify critics of the government's approach to the privatisation of mining on the Island. It shows the decision-making process challenged in this case, to have been essentially political and one which could have been undertaken by the relevant Minister himself and for which he could long ago have taken political responsibility. Given what the relevant departmental officers must already have known of Yeomans' views, the characterisation of his assessment as 'independent' was a tactic redolent of the approach of the not so fictitious Sir Humphrey Appleby."

We interpret this comment as a finding that, what his Honour elsewhere called, the "political purpose" of designating Mr Yeomans as "independent" was a device to confer respectability upon an outcome pre-ordained by the Minister's advisers. They had the Minister select as a source of "independent" advice a person who had been closely associated with the negotiations for, and the consideration of, the three proposals and whose views were already known to them. It is true that it would have been possible for Mr Yeomans to depart from those views in making his recommendations to the Minister; but his Honour's finding necessarily involves the conclusion that the Minister's advisers thought that this was an unlikely event.
Notwithstanding these findings French J rejected the complaint of partiality:

"Under the general rubric of natural justice, the applicants also complained that they were entitled to and did not receive impartial treatment in the evaluation of the Century proposal. In particular, they said, that the evaluation was based upon the opinions and conclusions provided by Inglis and Gardiner. The draft specifications provided by Thomas of Elders Resources were also said to have played an illegitimate part in the evaluation. So too was predisposition against Bennett and the UCIW.

So far as the factual underpinning for these allegations is concerned, I am satisfied on the evidence that the liquidator took into account the opinions provided by Inglis and Gardiner and at least in part adopted them for the purpose of his evaluation. In my view he was entitled to do that and it does not indicate any unfairness in treatment. It may be the case that their views were coloured by their experiences as officers of PMCI, particularly relating to dealings with the UCIW. And as to the liquidator himself, I have no doubt that by the time he accepted the Minister's invitation to assess proposals, he had formed strong views about Bennett and the Union which were adverse to them. He was aware and sceptical of the Century proposal, at least to the extent that it relied upon co-operation with the UCIW and derived from the Arthur Andersen Report. These conclusions do not however determine whether there was a breach of the rules of natural justice. The question of bias and predisposition in administrative decision-making of the character here under review, is not to be approached with that nicety appropriate to the decisions of courts and tribunals. This is particularly so where the decision-maker has a continuing involvement, and a particular policy or orientation based upon prior knowledge of matters relevant to the decision. This is well illustrated in the case of ministerial decision making by the observation of Professor Wade at p 489 of the 6th edition of his text:

'It is self-evident that ministerial or departmental policy cannot be regarded as disqualifying bias. One of the commonest administrative mechanisms is to give a minister power to make or confirm an order after hearing objections to it. The procedure for the hearing of objection is subject to the rules of natural justice in so far as they require a fair hearing and fair procedure generally. But the minister's decision cannot be impugned on the ground that he has advocated the scheme or that he is known to support it as a matter of policy.'

...

The fact that the liquidator in this case had formed views of the reliability of the UCIW and its secretary and of the prospects of the Century proposal, does not, in my opinion, vitiate his decisions. They are impugned as decisions under s.14 of the Winding Up Ordinance. Involved, as he was, in the process of disposing of the assets of the corporation, he was entitled to take into account those views he had already formed on the basis of information received from departmental sources and former officers of the PMCI. They were views which bore upon the acceptability of the Century consortium proposal to government and therefore upon the question whether he should dispose of the assets to that consortium. The political designation of him as 'independent' had nothing to do with his function as liquidator. It was designed for a political purpose. It did not attract to the discharge of his functions under the Winding Up Ordinance any greater obligation than those imposed by that statute."

It seems to us that, in the situation which here occurred, it does not matter whether one describes Mr Yeomans as lacking independence or as lacking impartiality. Putting the position at its lowest, a fair-minded person who was aware of the facts might, in such circumstances, entertain a reasonable apprehension that Mr Yeomans might not bring an impartial and unprejudiced mind to the task which was committed to him. This is the test of bias applicable to judicial proceedings: see Livesey v New South Wales Bar Association (1983) 151 CLR 188. We agree with French J that it is a test which will not usually be appropriate in connection with administrative decisions. Ministers and other administrators frequently have a continuing relationship with a particular issue or particular person during the course of which they necessarily form views; in practice it would generally be impossible for them to bring an open mind to a new decision pertaining to that issue or person. But respectfully disagreeing with French J, we think that, in this unusual case, the test applicable to judges is relevant. As is illustrated by the decision in Regina v Kent Police Authority; Ex parte Godden (1971) 2 QB 662, there are cases in which it is appropriate to apply the judicial test to administrative decisions. In the present case the decisions to be made by the liquidator and the Minister were each administrative decisions; but they were decisions affecting substantial commercial interests in respect of which the Minister had repeatedly promised an "impartial" assessment. To adopt the approach of his Honour, overlooking the fact that Mr Yeomans "had formed views of the reliability of the UCIW and its secretary and of the prospects of the Century proposal", would be to strip the Minister's promise of its content. If a Minister, though not legally bound to do so, chooses to announce that a particular decision will be preceded by an "impartial" assessment, members of the public are entitled to expect that the person who will make that assessment will bring to that task a mind which is both uncommitted in fact and which appears to be uncommitted. The reason was spelled out in a passage from the judgment of Lord Denning MR in Metropolitan Properties Co (FGC) Ltd v Lannon (1969) 1 QB 577 which was quoted by Barwick CJ, Gibbs, Stephen and Mason JJ in The Queen v Watson; Ex parte Armstrong (1976) 136 CLR 248 at p 259:

"... in considering whether there was a real likelihood of bias, the court does not look at the mind of the justice himself or at the mind of the chairman of the tribunal, or whoever it may be, who sits in a judicial capacity. It does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The court looks at the impression which would be given to other people. Even it he was as impartial as could be, nevertheless if right-minded persons would think that, in the circumstances, there was a real likelihood of bias on his part, then he should not sit. And if he does sit, his decision cannot stand. ... Nevertheless there must appear to be a real likelihood of bias. Surmise or conjecture is not enough ... There must be circumstances from which a reasonable man would think it likely or probable that the justice, or chairman, as the case may be, would, or did, favour one side unfairly at the expense of the other. The court will not inquire whether he did, in fact, favour one side unfairly. Suffice it that reasonable people might think he did. The reason is plain enough. Justice must be rooted in confidence: and confidence is destroyed when right-minded people go away thinking: 'The judge was biased.'"

The application of this standard in the present case leads inexorably to the conclusion that Mr Yeomans should have been regarded, and should have regarded himself, as being disqualified to conduct the assessment. Whatever his actual state of mind on 13 May 1988, an impression of bias must inevitably have arisen. Mr Yeomans had expressed antipathetic views about UCIW and Mr Bennett within days of his appointment as liquidator. He had considered the Arthur Andersen report, upon which even the revised Century proposal was substantially based, in early February. He had formed an adverse view of the proposal for a resumption in mining, particularly because of his opinion of UCIW but also because of other matters. The trial Judge found that, at the meeting of 26 February, Mr Yeomans criticised the Century proposal and Century's involvement with UCIW. At that meeting his attitude was that, if UCIW was involved in the consortium, it would run into trouble. That attitude was strikingly illustrated by his action in telling the fable of the frog and the scorpion, an act which the trial Judge found conveyed a "serious message" reflecting Mr Yeomans' scepticism about the likely success of the Century consortium. There was nothing in his subsequent conduct, up to 13 May, which would cause any observer to believe that this scepticism had abated. According to his Honour's findings, the Minister's advisers did not think it had. Neither did Mr Guy, who promptly wrote a letter protesting the selection of Mr Yeomans for the task.
Nothing that we have written is intended to suggest that the various criticisms which were made of the Century proposals, of the Arthur Andersen report, of UCIW or of Mr Bennett were unjustified in point of fact. The validity of those criticisms was not a matter for the trial Judge; it is not a matter before us. It is a matter about which we have no view. We simply make the point that, however justified the opinions which Mr Yeomans had formed by 13 May, the fact that he held those opinions meant that it was impossible properly to regard him as an impartial assessor.
The Minister promised an assessment which would be independent, impartial and thorough. The assessment made by Mr Yeomans was none of these. The procedural fairness ground is made out. The decision of Mr Yeomans to recommend that the Elders proposal be accepted must be set aside. The Minister's decision to commence negotiations with Elders was based upon that recommendation. It has been made without the promised independent, impartial and thorough assessment. Consequently, that decision also must be set aside.
Discretion
Counsel for both respondents submitted that, if the Court were of the opinion that any one of the impugned desicions was bad in law, the Court should refuse relief on discretionary grounds. There is no doubt that a discretion exists. Section 16(1) of the Administrative Decisions (Judicial Review) Act provides:

"16. (1) On an application for an order of review in respect of a decision, the Court may, in its discretion, make all or any of the following orders:--

(a) 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 Court specifies;

(b) an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit;

(c) an order declaring the rights of the parties in respect of any matter to which the decision relates;

(d) an order directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the Court considers necessary to do justice between the parties."

The basis of the submission on discretion is futility. During the hearing of the appeal we admitted into evidence copies of letters written by Mr Bennett to Century, to the Minister, to Elders and to the solicitors previously acting for UCIW in connection with the appeal. In the letter to Elders Mr Bennett stated that negotiations "are continuing" between UCIW in respect both of an industrial agreement and a joint venture agreement. The other letters refer to an intention by UCIW to enter into an agreement with Elders.
Counsel for each of the respondents argued that, in the light of these letters, it would be futile to set aside the recommendation and decision in favour of Elders. The Century consortium had disintegrated, they said. If the recommendation and decision were set aside and the proposals were remitted for further consideration, Century would not benefit; its proposal depended upon the involvement of UCIW, so that the withdrawal of UCIW destroyed the proposal. Accordingly, no good purpose would be served by forcing a reconsideration of the matter.
We do not accept this submission. The letters make clear that UCIW is prepared to deal with Elders, both industrially and in a joint venture. However, it is equally clear that this is a response to the present situation in which UCIW finds itself; Elders is the selected miner. UCIW is unwilling to accept any further delay. Apparently no agreement has yet been made. If Elders ceased to be the selected miner, so far as we are aware, there would be no barrier to UCIW reverting to its original position as a partner of Century. We have no reason to assume that Century would be unable to achieve the support of UCIW for a renewed joint proposal. The problem raised by counsel is one that flows from the invalid recommendation and decision. The problem may be reversible. We would compound the injustice already done to Century if we denied the company, on discretionary grounds, the opportunity to seek that reversal.
The recommendation and decision must be set aside and the matter remitted to the Minister for further consideration. We do not remit the matter to Mr Yeomans. For the reasons we have indicated, we are of the opinion that it is impossible for Mr Yeomans to undertake the independent, impartial assessment promised by the Minister. If there is to be further consideration of proposals for mining on Christmas Island, that task will need to be given to someone else; desirably a person who has had no previous association with the matter.
One other aspect of the present situation should be mentioned. More than twelve months has elapsed since the Minister decided to select Elders. The effect of the orders to be made in this appeal will be to recommit that decision for further consideration. But that reconsideration should be made upon the basis of up-to-date information: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd, especially the reference by Mason J at p 45 to "the general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made".
We are not aware of the extent of any changes in relevant circumstances in the period which has elapsed since the decision was made. There may be changes other than in the allegiance of UCIW. Several of the documents admitted into evidence, including some departmental memoranda, contain reference to the likely speedy deterioration of the mining equipment. We do not know to what extent this has occurred. It appears that many people have left the Island. This may affect the viability of one or more of the proposals. Work has apparently been under way in connection with environmental protection.
There are probably other matters, not alluded to in the evidence. It is for the Minister to determine the scope of the matters which he will take into account in deciding what course now to pursue. Our point is that, in considering those matters which he considers to be relevant, he should do so upon the basis of the material available to him at this time. He should not restrict himself to the material which existed in June 1988. It may be that, having considered the up-to-date position, the Minister will decide against a recommencement of mining on the Island by any party; in which case there would be no necessity for any further assessment process. Alternatively, the Minister might decide in favour of mining, at least in principle, and commission a suitable person to carry out the promised independent, impartial and thorough assessment of proposals. If that course is followed, adequate time must be allowed to enable interested parties to revise their proposals in the light of any changed circumstances.
The appeal should be allowed. The orders made by French J should be set aside. In lieu thereof it should be ordered that the decision made by the first respondent to make the recommendations contained in his report to the second respondent dated 23 May 1988 and the decision of the Minister on 1 July 1988 to commence negotiations with Elders about recommencing mining on Christmas Island each be set aside and the matter of mining on Christmas Island be remitted to the Minister for further consideration. The respondents must pay the costs of the appeal and of the proceedings at first instance.

[1989] FCA 383

25 JULY 1989