Century Metals & Mining Nl & the Union of Christmas Island Workers v Yeomans, R.J., the Liquidator of the Phosphate Mining Corporation of Christmas Island & the Minister for Arts & Territories

Re: CENTURY METALS AND MINING NL AND THE UNION OF CHRISTMAS ISLAND
WORKERS
And: ROBERT J. YEOMANS, THE LIQUIDATOR OF THE PHOSPHATE MINING
CORPORATION OF CHRISTMAS ISLAND AND THE MINISTER FOR ARTS AND
TERRITORIES
Nos. WAG 122 and 188 of 1988
FED No. 79
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Administrative Law - Minister of Crown - statutory liquidator - Christmas Island Territory - decision re proposals for re-opening of phosphate mining industry - liquidator appointed to recommend successful proposals to Minister - statutory function of liquidator under Winding Up Ordinance - statutory function of Minister under Administration Ordinance 1968 - natural justice - opportunity to be heard - to supplement submission - to controvert criticism - legitimate expectation - whether as to benefit or fair treatment - latter inherent in former - bias or predisposition - - departmental bias - improper purpose - relevant considerations - whether decision-maker bound to take into account - criteria - discretion involving national policy - social and economic impact of decision - irrelevant considerations.

Administrative Decisions (Judicial Review) Act (1977)

Services Corporation Ordinance 1984

Christmas Island Assembly Ordinance 1985

The Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987 ss.14 and 15

Administration Ordinance 1968

Lands Ordinance 1987

Christmas Island Act 1958

de Smith's Judicial Review of Administrative Action 4th Edition Wade - Administrative Law 6th Edition

Century Metals and Mining NL v Yeomans (unrep. 12/12/88, French J.)

Re Clunies-Ross; Ex parte Totterdell (1988) 82 ALR 475

Ridge v Baldwin (1963) 1 QB 539

Furnell v Whangarei High Schools Board (1973) AC 660

Salemi v Mackellar (No. 2) (1977) 137 CLR 396

R v Mackellar; Ex parte Ratu (1977) 137 CLR 461

Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487

Swan Hill Corporation v Bradbury (1937) 56 CLR 746

Shrimpton v The Commonwealth (1945) 69 CLR 613

Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492

Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1

FAI Insurances Ltd v Winneke (1982) 151 CLR 342

Franklin v Minister of Town and Country Planning (1948) AC 87

Schmidt v Secretary of State for Home Affairs (1969) 2 Ch 149

Testro Bros. Pty Ltd v Tait (1963) 109 CLR 353

McInnes v Onslow-Fane (1978) 1 WLR 1520

Russell v Duke of Norfolk (1949) 1 All ER 109

University of Ceylon v Fernando (1960) 1 WLR 223

Mobil Oil Australia Pty Ltd v The Commissioner of Taxation (1963) 113 CLR 475

R v The Commonwealth Conciliation and Arbitration Commission; Ex parte The Angliss Group (1969) 127 CLR 546

National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296

Cinnamond v British Airports Authority (1980) 1 WLR 582

Kioa v West (1985) 159 CLR 550

CREEDNZ Inc. v The Governor-General (1981) 1 NZLR 172

Minister for Immigration and Ethnic Affairs v Pochi (1980) 44 FLR 41

Federal Trade Commission v Cement Institute 333 US 683 (1947)

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24

Sean Investments Pty Ltd v MacKellar (1982) 42 ALR 676

Tabag v Minister for Immigration and Ethnic Affairs (1982) 45 ALR 705

Barbaro v Minister for Immigration and Ethnic Affairs (1932) 46 ALR 123

Kaufusi v Minister for Immigration and Ethnic Affairs 70 ALR 476

ARM Constructions Pty Ltd v Deputy Commissioner of Taxation (1986) 65 ALR 343

Conyngham v Minister for Immigration and Ethnic Affairs (1986) 68 ALR 423

Ashby v Minister for Immigration (1981) 1 NZLR 222

HEARING

PERTH

#DATE 16:3:1989

Counsel for the Applicants: Mr R.J. Ellicott QC and Mr R. Le Miere

Solicitors for the Applicants: Malleson Stephen Jaques

Counsel for the First Responsent: Mr D. Williamson QC and Mr D. Clyne

Solicitors for the First Respondent: Sly & Weigall

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

Solicitors for the Second Respondent: Australian Government Solicitor

ORDER

The applications are dismissed.

The applicants are to pay the Respondents' costs of the applications.

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

JUDGE1

The future of phosphate mining on Australia's Christmas Island Territory has been a matter of some controversy for several years. That controversy was intensified when, in November 1987, the Federal Government announced that mining on the Island would cease and that the statutory corporation known as the Phosphate Mining Corporation of Christmas Island ("PMCI") would be wound up. The question whether the industry should be continued in any and if so what private hands, and on what terms, has, since then, occupied the anxious consideration of senior public servants, parliamentarians, Ministers of the Crown, union leaders, entrepreneurs and, not least, the ordinary working people of the Island. That consideration has not been without debate and conflict in which political, industrial, emotional and personality factors have all played a part. More recently, the question has occupied 12 hearing days in this Court as a consortium comprising Century Metals and Mining NL and the Union of Christmas Island Workers ("UCIW"), has sought judicial review of decisions by the liquidator of the PMCI and the Minister for Territories which favour a proposal by Elders Resources Ltd to acquire the assets of the corporation, reclaim stockpiled phosphate and mine that remaining in existing cleared areas.

The Court decided on 12 December 1988, after two days of preliminary argument, that the impugned decisions and conduct are for the most part, amenable to review under the Administrative Decisions (Judicial Review) Act (1977). It must now determine whether any of those decisions or that conduct should be reviewed. The relevant factual background is set out below.
Physical, Demographic and Historical Features
The sometimes heated conflicts over the future of the phosphate deposits are put into a calming perspective against the time scale and nature of the processes which brought them into existence. Christmas Island, which is located in the Indian Ocean, 2,400 kilometres north west of Perth and 360 kilometres south west of Java, occupies 135 to 140 square kilometres and is described in geological terms as an isolated sea mount with a volcanic core and a discontinuous limestone cap resulting from atoll formation associated with the emergence of the volcano above sea level. The calcium phosphate which is at the heart of this litigation is the product of bird droppings deposited on the Island over many centuries. The droppings, or "avian guano" as they are sometimes known, are said to have been leached by rainwater into the limestone bedrock over hundreds of years, which process has led to the formation of calcium phosphate.
The population of the Island has fluctuated, decreasing in recent years from 2,800 in 1979 to 1,229, according to a survey commissioned by the Department of Arts, Sport, the Environment, Tourism and Territories ("DASETT") and carried out in the week 22 to 27 November 1988. Nearly 67% of this population is of Chinese ancestry and some 11.3% of Malay origin. As at November 1988 just over 50% of the population had lived on Christmas Island for less than 5 years and 72% for less than 10. There were in November 398 households on the Island, 104 of which were constituted by single persons while 178 were comprised of a couple and dependent children aged less than 15 years.
The Island was settled in 1888, annexed by Great Britain in 1889, and first mined in 1891. The constitutional history which led ultimately to it becoming a territory of Australia in 1958 and the statutory arrangements regulating the extraction and disposal of its phosphate are set out in the judgment on the objections as to competency given on 12 December 1988 and it is unnecessary to repeat them here. However, for the sake of coherence and in the light of more detailed evidence adduced at the substantive hearing, some facts relating to events following the appointment of the liquidator may be retraced.
As was pointed out in the earlier judgment, phosphate mining on the Island was carried on from 1948 until July 1982 by the British Phosphate Commissioners as managing agents for the Christmas Island Phosphate Commission ("CIPC"), a body set up and continued by the Australian and New Zealand Governments under their 1948 and 1958 agreements. Following the report in 1980 of the Sweetland Commission of Inquiry into the Viability of the Christmas Island Phosphate Industry (Parliamentary Paper No. 36/1980), the involvement of the British Phosphate Commissioners as managing agent of the Christmas Island Phosphate Commission was terminated. Their role was taken over in July 1982 by the Phosphate Mining Company of Christmas Island Limited, incorporated in the Australian Capital Territory and wholly owned by the Commonwealth.
In November 1982 Australia and New Zealand agreed to terminate their 1958 agreement and to wind up the CIPC. By the Services Corporation Ordinance 1984, the Christmas Island Services Corporation ("CISC") was formed. Its functions, set out in s.4 of the Ordinance, were to make provision for and in relation to a variety of local government and like services and facilities. The Minister was empowered by s.8 to give directions to the Corporation with respect to the performance of any of its functions or the exercise of any of its powers. In the following year, the Christmas Island Assembly was established under the Christmas Island Assembly Ordinance 1985. The principal function of the Assembly, an elected body of 9 persons, was to run the CISC. And for that purpose the Services Corporation Ordinance was amended to empower the Assembly to give directions to the Corporation. The first Assembly was elected in October 1985. Its Chairman, at all material times, was the General Secretary of the UCIW, Mr Gordon Bennett.
At the same time the Federal Government adopted a policy of "normalisation" to bring conditions on Christmas Island into line with those on the mainland in relation to social security, taxation and local government matters. In 1985 a Federal Government Working Party on the future of the Island recommended diversification of its economy and charging for municipal services on a cost recovery basis.
On 16 August 1986 the PMCI retrenched some 150 employees under a compulsory redundancy scheme by which they were paid 4 months wages in lieu of notice. Some 100 remained on the Island unemployed. At about the same time the UCIW imposed bans, for environmental reasons, on the mining of the western shore terrace. Following these events PMCI adopted a revised corporate strategy and concluded a written agreement with the UCIW and the Commonwealth. That agreement provided that in the event of any breach of guarantees of industrial stability contained in it, the Minister might direct the PMCI to cease mining and take steps to wind it up. It required that the PMCI not exceed the workforce level under which it was then operating (some 280 employees) and that it should achieve annual sales of not less than 560,000 tonnes using revised work practices. On these conditions the Commonwealth undertook to fund the $4.2m operating loss projected for the triennium 1987/89 by the corporate strategy. The agreement made provision for a consultative process between the parties, preference in employment for UCIW members, occupational health and safety dispute procedures and industrial dispute resolution procedures generally. It also made provision for voluntary redundancy of PMCI officers and employees.
In spite of the agreement there was more disputation. Further, the Christmas Island Assembly failed, in the eyes of the Federal Government, to introduce the measures necessary to enable the CISC to balance its budget.
The Decision to Wind Up PMCI and Close the Mine
In October 1987 the Federal Cabinet decided that the PMCI should be wound up, a liquidator appointed, and that mining on the Island should cease. It was also resolved to dissolve the Christmas Island Assembly and to charge for housing and municipal services on a user pays basis. The then Minister for Territories moved, under s.18(4) of the Assembly Ordinance, to appoint the Administrator of the Territory, Mr D. Taylor, to act as the Assembly. In a letter dated 3 November 1987, Mr A.S. Blunn, portfolio secretary of DASETT, formally advised the Administrator of his appointment and set out measures to balance the budget of CISC "in a manner that provides a sustainable financial base for the community and makes appropriate provision for CISC managed assets". The Administrator acted upon that advice and moved swiftly to announce the retrenchment of excess CISC staff, the development of a public housing rental system modelled on that applicable in the Australian Capital Territory and increases in electricity, water, sewerage and sanitation charges.
On 11 November 1987 the Minister announced the appointment of Mr R. Yeomans, a partner in the firm of chartered accountants, Duesbury's, as liquidator to take over the PMCI "with a view to ending mining". According to the Minister the decision was taken in light of the inability of the PMCI to work within the corporate strategy that the government had approved for the 1987/89 triennium. "A major factor", he said, "has been that the Union of Christmas Island Workers has not been prepared to work with management within the terms of the Industrial Agreement". Whether that was so need not be determined here, but it was the case that in May 1987 the Union had placed industrial bans arising out of the use of off Island labour to carry out repairs to a conveyor belt. In July 1987 a dispute had occurred in relation to barge repairs and the loading of certain plant and equipment. On each occasion the matter had ended up before the Christmas Island Arbitrator.
The Minister's release addressed not only the industrial relations question, but also other factors affecting the viability of the mining operation, namely the shortage of fresh water and the difficulty of obtaining ore of the requisite quality. The Government was, according to the release, intent on ensuring a future for the Island more in keeping with its unique environment and tourist potential. $2.5 m was said to have been allocated for special resettlement and skills upgrading programs.
The ministerial announcement was expanded upon in a more detailed statement published by the Administrator. This highlighted the looming unemployment problem with a prediction that after the closure of the mine, there would be some 600 persons out of work. The problem would not be significantly affected by the proposed establishment of a casino, as direct employment opportunities would be primarily available to young people and would include a high proportion of women. Residents were therefore advised "that for the sake of their families and themselves they should take advantage of the generous resettlement schemes that the Government is prepared to offer them". Post mining "normalisation" of government services was also referred to including the increased charges and reduced services already announced and foreshadowing the necessity to "review the level of Commonwealth Government services in areas like education and health having regard to sustainable population levels".
The implementation of the resettlement programe was reflected in an agreement reached between DASETT and the UCIW before the Christmas Island Arbitrator in December 1987. By its terms, payment of resettlement benefits was to be the responsibility of the Department and was to be made only in cases of genuine resettlement. Ex-employees of the PMCI who wished to leave the Island had to be packed up and ready to move by 31 March 1988 or as soon as practicable thereafter, having regard to shipping. Others had to be off the Island by the end of March if they were to qualify for the benefits.
The Battle for Christmas Island
Early Moves by the Union and Elders Resources Ltd
In spite of the clear statements of intention by the Government to terminate phosphate mining on the Island altogether, there were interested parties who were not prepared to treat that intention 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. One of the interested parties was the UCIW which, in November 1987, engaged the accountants Arthur Andersen & Co., to conduct a study into the feasibility of continuing mining through a joint venture arrangement involving the Union and some other private party. To assist in that study, the Union also engaged McKay and Schnellmann Pty Ltd, Geologists, who reviewed geological aspects and Minproc Engineers Pty Ltd for advice on the overall viability of the mining and processing operation. Arthur Andersen issued a preliminary report on 24 December 1987 and a final report appending those from the geological and engineering consultants on 29 January 1988.
In the meantime, on 13 November 1987, Mr C. de Guingand, the General Manager, Developments Marketing Division of Elders Resources Trading Pty Ltd, wrote to Mr Stephen Arnaudon, the Assistant Secretary of the Indian Ocean Territories Branch of DASETT. In his letter de Guingand proposed that with an off Island workforce of less than 100 used on a fly-in fly-out basis, Elders Resources could sell existing stock piles of B grade ore to customers in Indonesia, Japan and Malaysia. The letter also foreshadowed the development of a caustic leach technology to upgrade C grade ore of which there was said to be some 6 million tonnes in the stock piles. Such an operation, it was claimed, should be able to yield for the government royalties amounting to $2 m per annum.
Arnaudon and Yeomans - Attitudes to Bennett and the Union
Arnaudon had had responsibilities covering Christmas Island since October 1986. From that time up until the end of 1987 he had frequent dealings with the UCIW and its general secretary, Bennett. There were numerous industrial relations problems over that period and he 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. He learnt in November of the UCIW interest in joining a consortium to reopen the mine. In a submission to the Minister dated 17 November he advised that the Union was sounding out private entrepreneurs "about the privatisation of the phosphate mine". He understood, he said, that Bennett was travelling to Canberra to talk to the Minister, Mr Blunn, Mr Warren Snowdon MHR, and Senator Bob Collins, both Labor parliamentarians representing the Northern Territory. He pointed out that while a marginally viable operation might be possible, it could not be achieved "at the wage and condition structure that the UCIW envisage or with the attitudes that the UCIW would eventually develop with any new management team". The government had made a firm decision to end mining and "should not waver from that decision for the marginal gain that might eventuate through privatising the mine". In a more detailed briefing attached to the minute, he argued that a privatised operation would not be commercially viable, there being virtually no mineable resources of A grade ore left and the B and C grade ores being incapable of profitable mining because of market price and cost structure. Bennett, he said, "over the years, has 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 he warned that:

"Running the mine by a Union co-operative is tantamount to giving virtually total control of Christmas Island to Mr Bennett. This would be intolerable with a largely Chinese community some 360 km from Java. The non adherence to accepted Australian mainland principles would be an embarrassment internationally for Australia. For example, the UCIW would direct its marketing effort towards Asia and embarrass Australia through failure of ANPWS to grant forest clearing plans, failure of government to provide funding for housing upgrading, etc - ie the government was forcing the Union Co-operative to go broke and fail to meet its contract commitments to Asian nations. Again on past performance the UCIW would use the strategic sensitivities to gain concessions from the Government."

Arnaudon's concerns were communicated to and discussed with the PMCI liquidator, Yeomans, on many occasions. And Yeomans too formed an unfavourable view of Bennett and the 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 Island, he met with Arnaudon and John Rankin, also of DASETT. His notes of the meeting include references to the possibility that Bennett was travelling to Canberra, the need to "firmly resist efforts to privatise" and to brief the ministers, Brown and Richardson, who then shared responsibility for the territory.
On 19 November, Arnaudon wrote to Elders Resources what he described in evidence, as a "non-committal reply" to their initial letter (883). The government's intention, he pointed out, might not necessarily preclude a stockpile removal operation of the type suggested. A copy of the letter was sent to Yeomans. On the same day Snowdon and Collins put out a joint press release in which they announced that the federal government was prepared to look at proposals from parties asking to buy out the government's interest in PMCI:

"If there is a company or individual who believes that they can operate the mine on a viable commercial basis, while maintaining appropriate levels of employment, then the Government is happy to consider them".

They also announced that the government would be setting up a working party to report to the Minister on the future needs and development plans for the Christmas and Cocos Islands. The announcement followed a meeting between the Minister and the Prime Minister at which the Prime Minister had indicated that private mining proposals would be considered.

On 23 November, Yeomans again met with Arnaudon and Rankin and two other DASETT officers, Jenny Emmerton and Vivan Mawhinny. Discussion ensued about the Arthur Andersen study and Yeomans' notes indicate that PMCI staff were not inclined to co-operate due to pressure of work and disenchantment with the UCIW, which they saw as having cost them their jobs. He said, however, that he had directed them to co-operate and, in his view, co-operation had been extended. A list of necessary constraints in any continued mining operation was also set out in his notes. These included a requirement to maintain the previous employment level of about 300. Both Yeomans and Arnaudon agreed in cross-examination that compliance with such a requirement was not consistent with a viable mining operation (696, 884).
On 27 November Yeomans had a meeting with de Guingand and Perkins of Elders Resources at which time there was some discussion of privatisation proposals under preparation by Bennett. The Elders' proposal, as Yeomans noted, was still confined to the removal of existing stockpiles.
Heading off Privatisation
Arnaudon became increasingly concerned about the moves to introduce private mining. In a minute to the Minister dated December 1987, he recommended that:

"The immediate steps are to stop the mine privatisation push, take a tough stance on no-payment of charges and on genuine re-settlement, be prepared to tough out any pickets on electricity contractors and move to extend the National Park. Action will be needed progressively over the next two to 4 weeks."

And in a minute to the Deputy Secretary of DASETT on 2 December, he predicted that the Arthur Andersen study was likely to be inconclusive and would be used by Bennett to publicise an argument that the Government had been misled by PMCI and by the External Territories Section of DASETT:

"He is likely to try to reactivate backbench committee...and to directly approach various companies to develop private proposals. This has potential to get out of hand. Minister has draft press release (attached) which would dampen this issue."

The minute referred to the dangers in the Island becoming Asian-oriented through a private mine supplying Asia together with an Asian-oriented casino and an Asian community dominated by UCIW. A memorandum to cabinet would point out these matters and "suggest resettlement, and a smaller more mainland oriented community with environmental protection and tourism as its mainstays".

In the meantime, Warren Snowdon was keeping up pressure on the Minister to ensure that decisions about the future of the Island, the proposed expansion of the National Park and the imposition of any royalty regime on a mine operator should be made in consultation with the relevant members and committees of the Labor Caucus. He secured the passage of a resolution at the 1988 annual conference of the Australian Labor Party in the Northern Territory supportive of the endeavours of the UCIW and the residents of Christmas Island to reopen the phosphate mine. The Commonwealth was urged, as a matter of priority, to take all reasonable steps to facilitate its recommissioning. Arnaudon regarded Snowdon as having been "conned by Bennett", according to a note made by Yeomans at a meeting with him and other DASETT officers on 10 December 1987. Nevertheless the possibility that the Government would permit private mining on the Island was by then sufficiently real that Yeomans noted that the liquidation should proceed, but that no decision should be taken at that time about demolition.
By early January, the Arthur Andersen Preliminary Report had been delivered and Arnaudon, without having read it, made comments on what he understood to be its key points in a minute dated 5 January 1988. The minute was critical of those points. It also expressed his belief that Bennett was going to Perth on 12 or 19 January for discussion with the Western Australian Trades and Labour Council and to try to put a consortium together to run the mine. He surmised that Bennett would approach Elders, Wesfarmers and Century Mining with a promise of a no-strike agreement and a $1m contribution by his workforce as shareholders in the venture. He recommended that there should be no dealings with the UCIW on the Arthur Andersen Report, but only with prospective developers and on the basis of the conditions that the Commonwealth would wish to apply. There should be a strict time limit on negotiation. In the context of the PMCI liquidation, he viewed the end of February 1988 as a realistic deadline. He went on to say "(t)here should be no variation to the conditions recently promulgated on resettlement i.e. there should be no extension from 31 March 1988 eligibility deadline on the basis that a private mine may be possible. If the mine were to open at a later date the developer will be responsible for the recruitment of his employees and previous experience in the mine may or may not be a consideration".
The comparatively neutral tones of the latter part of that minute were belied by correspondence emanating from Arnaudon on the 19 and 22 January 1988 to Bennett and to the Chairman of Century Metals and Mining respectively. The letter to Bennett was by way of a highly critical comment on an article which had appeared in the UCIW newsletter "Union News" on 7 January 1988. Although a copy of that publication is not before the Court, it evidently canvassed the concept of a joint venture or consortium involving the union and a private party, financed in part by the contributions of union members. In his letter Arnaudon accused Bennett of raising false expectations about jobs in an endeavour to hold his personal power base together, without any thought for the future of the individuals and families concerned. The issue of privatisation was, according to Anaudon, one for the government and any genuine prospective private developer:

"Yet another report on the mine from yet another consultant is of little consequence. The Government would want to discuss the issues that are of concern with any genuine developer who comes forward with concrete proposals. I believe we 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 Chairman of Century Metals, Arnaudon in effect warned that company of the difficulties of dealing with the UCIW and its history of non-adherence to the industrial agreement that it had made with the PMCI as part of the previous corporate strategy. The correspondence reflected hostility to the UCIW and to Bennett and it is perhaps not surprising that in due course he was reprimanded by the Portfolio Secretary, Mr Blunn, for having sent it. He frankly conceded in cross-examination that at this time his feelings about the Union were so strong that he might have been less objective on some issues than would be expected of someone in his position.

On 12 January 1988, Elders Resources sent him a letter confirming its interest in establishing a commercial stockpile reclamation project on the Island and outlining a proposal in that regard.
Preliminary Reactions to Arthur Andersen Report
On 1 February a copy of the Arthur Andersen Report was sent to the incoming Minister for the Arts and Territories, Mr Punch, by the UCIW and on 3 February he published a press release indicating that he had asked the department to provide him with detailed advice on the Report in the context of the possibility of any mining company expressing interest in operating an economically viable phosphate mine on Christmas Island. The release said that a preliminary examination of the Report suggested there were a number of problems with several of its basic assumptions, but there would be a quick response to it and that the Minister had no intention of altering the 31 March deadline for the Government's resettlement package.
The preliminary examination referred to in the minute had been prepared by Arnaudon. It began with the observation that "The Report opens with several disclaimers which go beyond those normally found in consultant's reports and probably reflect the concern by a reputable firm as to how the UCIW might use or misuse the information". It was generally critical of the report and as to Bennett's continuing involvement said:

"Mr Bennett has created a hate mentality between European managers and Chinese workers and major customers know this. He would accept new managers out of necessity but the truce would not last."

Discussion of Elders' Proposal

On 4 February 1988, Yeomans, Arnaudon and the Christmas Island Administrator, Mr D. Taylor, met with representatives of Elders Resources to discuss the Elders' proposal. At that stage it was still limited to stockpile reclamation. Mr Perkins of Elders Resources, stated that the project would not involve mining or forest clearing, but the reclamation of approximately 300,000 tonnes of stockpiled material per year for a 10 year period directed almost exclusively to the Asian market. Arnaudon in a minute of the meeting which he prepared, noted that it was obvious that Elders were nervous about a private development if the UCIW had industrial coverage or if Mr Bennett were still a force on the Island in any guise. After discussion of various elements of the proposal, the meeting concluded on the basis that Elders would obtain from the liquidator a list of equipment and infrastructure to be sold and demolished respectively. This would allow them to prepare information for a tender and for their own feasibility study. On 8 February 1988, Elders wrote to the Minister referring to the meeting of 4 February and noting that it was not one of the private organisations referred to by the UCIW as interested in re-opening the mine. Nevertheless the company kept its options open for it went on to say:

"Although we have the people, skills and resources to carry out such a project, it is our understanding that a continuation of large scale mining is not seen as compatible with your Department's future land use strategies, including conservation."

It indicated that it would be writing to Yeomans outlining the equipment and Island infrastructure which it believed would be essential for its proposal and in respect of which it intended to make a firm purchase offer.

On 8 February Arnaudon forwarded to the Minister a written brief on the discussion with Elders Resources. Two key considerations were mentioned. The first was Elders proposal to tender for the mining equipment and infrastructure. The second related to employment. Elders, he said, made it quite clear that the viability of the operation would be very suspect if the UCIW were involved. If Elders did decide to proceed and purchase the equipment and infrastructure with a view to a proposal 2 or 3 months later, the principal objectives of the Government for the future of the Island would have been met. Yeomans could not recall seeing this minute, but would not deny that he had. He agreed that at the time Arnaudon was "more than likely" at pains, in conversation with him, to draw a distinction between mining and the stockpile reclamation project.
Political Support for Arthur Andersen Report
Another letter from Snowdon dated 10 February called upon the Government to immediately develop "a coherent strategy for the future development of the Island" and asked that sufficient time be allowed to enable any potential new operator of the mine to come forward. And on the following day the Minister was sent a letter by the Trades and Labor Council of Western Australia, which had considered the Arthur Andersen Report, and passed a resolution in the following terms:

"Council notes the decision taken by the Federal Government to close the Phosphate Mining Corporation on Christmas Island. Council understands that the Union of Christmas Island Workers has commissioned a detailed study of the future viability of the mining operation and that the study has shown mining can be profitably undertaken for the next five to six years. Accordingly Council calls on the Federal Government to allow their mining operation to continue under appropriate arrangements."

Critiques of Arthur Andersen Report

Yeomans made some notes on the Arthur Andersen Report on 11 February. They were critical of it in relation to a number of matters including ore reserves, royalties and projected ore production. As to the latter the notation read "incomprehensible given past peformance of union". Proposals in the Report for the adoption of new work practices involving a 10 hour shift, a half hour lunch and 6 day week and mobility of tasks were similarly characterised. There would, in Yeomans' view, be difficulty in attracting experienced managers having regard to the union's past performance. He also queried customer confidence given the unreliability of the UCIW. Against the words "Ore grade" appeared the comment "difficulties in maintaining standards - problems anticipated". He observed that the Government was not likely to allow mining in environmentally sensitive areas and that there was a world surplus of phosphate stock. As to the market for phosphate it was, he thought, still available, subject to customer reluctance to deal with any new company having regard to the past performance of the union. Other comments related to water supply, shipping, town community costs, industrial marketing strategy and equipment. 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.
Political support for the reopening of the mine continued and on 11 February, the Minister sent a letter to a West Australian senator, Senator McKiernan, in which he said that the UCIW had pursued "industrial tactics that are virtually unheard of in this period of Government/Union Accord on the mainland". The Andersen Report, he said, "provides nothing to allay the fear of potential investors that the Union would have changed its attitude". On the same day he published a media release in which he rejected the findings by Arthur Andersen & Co. and said that the report had been put to "detailed study" by the Government. Its findings identified a number of problems any one of which in his opinion, would raise doubts about the viability of phosphate mining. However, according to the release, he stressed that it was a matter on which the market would make a commercial judgment. The problems pointed up by the Andersen report included:

1. The assumption that many employees would have to work 10 to 10 1/2 hours per day and a six day week.

2. No allowance for purchase or lease of capital equipment.

3. No allowance for mineral royalties.

4. No allowance for the upgrading of the water supply which the Andersen Report admitted was essential.

5. No guarantee of purchase by major markets because of concern over reliability of supply.

6. The assumption of continuing government subsidies of public utilities on the Island.

Notwithstanding this the Minister went on to say in his release:

"(T)he 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 Government was not prepared to vary the 31 March 1988 eligibility deadline for re-settlement benefits and the liquidator would be instructed to continue winding up the corporation. The conditions for further mining on the Island reiterated by the Minister were as follows:

". The Commonwealth would not provide subsidies for housing, rents, electricity, water etc previously provided to the Government mine; . The Commonwealth would negotiate the level of royalties for removal of its phosphate resource and use of its social infrastructure on the Island;

. The developer would be expected to buy the mine infrastructure and undertake to demolish all fixed plant at the end of the project; and . Existing obligations to use Australian-crewed ships for the Australian market, to operate the port and ship handling facilities (or contract such services from the Government) and to meet treaty obligations with New Zealand would have to be adhered to."

The release concluded with the following three paragraphs:

""Most importantly, the Government would not allow any further rainforest clearing as this was not consistent with the Government's long term strategy for the Island.", said Mr Punch. The future of Christmas Island lay in its unique fauna and flora as a tourism based economy rather than in phophate (sic) mining. Any further rain forest clearing would be shortsighted. The Government had been notified by a major Australian company that it was investigating the feasibility of a stockpile removal project which would 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."

Mr Frank Gardiner, who had been Commercial Manager of PMCI prior to the appointment of the liquidator, and who was employed by him from 1 January 1988 to August 1988 to assist in the winding up, prepared his own observations on the Arthur Andersen Report which he sent to Yeomans on 12 February 1989. He was critical of it saying that it was lacking in concise relevant information supporting the projections and was too long on unnecessary backup in detail. The authors, he said, had "failed to understand the potential problems associated with a future phosphate mining operation on Christmas Island". They were limited in their approach by the requirement of the UCIW that its continuing presence be incorporated in the new organisation. In his covering note to Yeomans, Gardiner said that with the mining of phosphate becoming progressively more difficult there was a doubt that the mine would sustain the requisite production rate. A copy of his comments were sent to Mr Chris Cole of DASETT.
Critical comments on the report were also received from two other ex-PMCI officers, Messrs. Ronaldson and Inglis. Ronaldson's comments which were dated 16 February, concluded that the report had not come to grips with the intricate factors which significantly impacted on the viability of any mining operation on the Island. Inglis's report, dated 17 February 1989, agreed with Gardiner's criticisms. The report, he said, failed to address the sheer magnitude of the task of resuming the operation, particularly bearing in mind that a management team with such responsibility would probably be relatively unfamiliar with the overall concept. He made a number of detailed criticisms and concluded with the comment that the possible stockpile removal mentioned in the Minister's media release was a proposition totally different from one involving the resumption of mining and certainly merited investigation. Yeomans accepted in cross-examination (740) the supposition that when he read that comment he understood it to be a reference to the Elders' stockpile proposal. Gardiner sent a note to Yeomans about the same time indicating that a copy of Ronaldson's comments had been sent by facsimile to Mr C. Cole of DASETT. He suggested that Ronaldson be paid a fee of $250 for his work and a tick in the margin of the note suggests that this was approved. He also advised that he understood a proposal would be going forward from Century and observed that "the comments from D. Ronaldson would surely scare any potential investors and create doubts as to the validity of the AA Report". Yeomans agreed with that observation.
Century's First Proposal
On 19 February, both Century Metals and Mr John Booth put proposals to the Minister for the continuation of mining on the Island. Under the Century proposal, which was expressed to be "in brief form", a consortium would be established of "three listed mining companies, together with a cooperative representing the residents of Christmas Island". The capital brought into the venture would total $5,540,000 comprising $540,000 for Century Metals, $1 m for Croesus Mining NL, $500,000 for Orion Resources NL and $3,500,000 from UCIW members. A further $1,500,000 was to be raised from borrowings. The vehicle through which the consortium would operate was to be a company called Christmas Island Resources NL. Fifty one per cent of the shareholding would be controlled by the three participating companies and the balance of 49% by the Islanders. Their additional financial contribution would be reflected in debentures rather than shares, it being "fundamental to the participation of Century and its partners that they hold a position of control".
The consortium's objective was said to be the re-opening of the mine and its operation for an estimated period of 6 years although research would be undertaken into the development of additional products. The consortium intended to provide direct employment for almost 190 local residents. There was a budget (not set out in the proposal) to enable the consortium to meet the cost of relevant infrastructure. This would include rates or a levy to fund essential services currently provided by CISC, such as roads, water supply, sewerage, electricity, garbage disposal and parks and gardens. Generally on the question of infrastructure there were a number of areas which would need further discussion and refinement with Government. As to environmental considerations and additional clearing, the consortium proposed that, with the exception of an area of 0.2 square kilometres already approved for mining, the whole of the balance required for the operation was comprised in land already cleared by PMCI.
On the question of markets, the Century consortium contended that an adequate market existed for immediate production of 600,000 tonnes in the first year and 750,000 tonnes thereafter. Prospective purchasers included CSPB-Farmers Limited at 150,000 to 200,000 tonnes, New Zealand manufacturers at 200,000 tonnes and ICI Malaysia at 250,000 tonnes of B grade.
An agreement for the adoption of a new award had been reached with UCIW as outlined in the Andersen Report. The submission went on:

"We are of course cognizant of the appalling level of past industrial disputation. However, we take the view that special circumstances, often beyond the control of either party, created situations which could only lead to difficulties. Our agreement with the UCIW addresses the question of industrial matters from a different perspective, and we are satisfied that industrial problems will be kept to a minimum."

Benefits to the Commonwealth were asserted comprising:

1. Foreign exchange earnings of $240 million.

2. Corporate tax $15 million.

3. Income Tax and Fringe Benefit Taxes $4 million in first year of operation.

4. Multiplier effect on shipping and mainland support services.

5. Saving to Commonwealth in relocation costs and community welfare and unemployment expenses.

6. Savings in public expenditure on Christmas Island as success of mining operation assists with essential infrastructure costs necessary for alternative industries.

The submission also referred to the social problems that would continue in the absence of employment relevant to the skills of Island residents. It concluded:

"Detailed discussions will be necessary to refine the terms of our proposal and officers of this Company are available to meet for meaningful discussions as soon as required."

On 22 February Arnaudon sent a minute to the Minister the stated purpose of which was to brief him on the Century proposal. It was by way of unalloyed criticism and in short made the following points:

1. At first reading the venture appeared to be undercapitalised.

2. The corporate structure reflected Century's mistrust of UCIW.

3. It was doubtful whether the Christmas Island residents understood their financial exposure and Century's lack of mining experience.

4. The report was deficient in detail on environmental protection and industrial relations matters.

5. The figures did not bear out the projected markets for phosphate.

6. There was no comment on or allowance for mineral royalties.

7. Absent rain forest clearing available ore reserves would limit production to 2 1/2 years instead of the projected six.

On the following day, 23 February, Arnaudon prepared another minute for the Minister headed "Christmas Island Privatisation: Next Steps". It noted that proposals had been received from Elders, Century, Connex Australia NL (the Booth Consortium) and White Industries. Yoemans and Arnaudon had met with Booth that day. The following sequence of action was suggested:

1. Further discussions with each proponent.

2. Reports from each proponent on how it would meet government requirements and the financial matters including the purchase price of infra structure and royalties or purchase price of reserves and stock piles.

3. Agreement from Commonwealth to move to final negotiations.

4. Assessment by Government on whether benefits from proposed lease would outweigh costs.

5. If one or more of the proponents were to survive the above process, a private treaty arrangement for the lease of the land and resources and purchase of the infra structure (with a reserve price determined by the Government on advice from the liquidator).

And the next day Warren Snowdon fired a further shot in the paper war with a five page letter to the Minister expressing concerns and suggestions for change in the way the Government was handling the affairs of the Island. In relation to the assessment of proposals for private mining operations he said that:

"...in making any assessment of the various proposals that may be forthcoming, ensure that they are appraised by a body independent of the Department of Territories; and ensure that any negotiations that may arise are undertaken on an appropriate commercial basis: while ensuring that negotiations are on a commercial basis, in any final decision, take account of the social impact of any proposal and to the wishes of the island community."

A meeting was arranged between members of the Department, the liquidator and representatives of the Century consortium for 26 February. On that same day Snowdon again wrote to the Minister expressing concern that the Department might be prejudiced against the Century proposal in part because of the involvement in it of Island residents who were members of the UCIW. He reiterated his view "that any analaysis of the feasibility of proposals for future mining operations on Christmas Island should be undertaken independently, and not by the Department of Territories..."
The Meeting of 26 February 1988
The meeting relating to the Century proposal was held at 3 pm on 26 February in Mr Blunn's conference room and he chaired it. Also present were Messrs. Arnaudon and Yeomans and Ms.Harlowe and Mr Kerrisk, of the Minister's office. Representing the consortium were Mr Alan Guy, the managing director of Century, Mr Douglas Dunnett, mangaging director of Orion Resources NL, Mr Ron Manners of Croesus Mining NL and Mr David Argyle of Argyle Partners Pty Ltd, an accountant who had been engaged by Century to consider financial and production projections for the project. There were various accounts given in evidence of the progress of the meeting. Its purpose as described by Blunn in his evidence, was to provide the Century consortium with information and to discuss issues relating to their proposal (389). He also indicated, at the meeting, that there would be an assessment of proposals independent of the Department. According to Arnaudon, this came as a surprise to him and although the Minister had not been consulted, he did agree to the suggestion shortly afterwards. His intention to have an independent assessment of proposals was announced by a press release of 16 March 1988.
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 (766). 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.
Yeomans did not recall when he had first seen a copy of the Century proposal, but said he might have received one on the day of the meeting. Nevertheless he raised a series of questions about the proposal including the following (673):

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.

Other issues raised related to budget and cash flows, the New Zealand Treaty, port and harbour costs and the availability of water for the mining operation.

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" (769). 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.
On 2 March Arnaudon reported to the Minister that meetings had taken place with Elders, Conex and the Century group. they were "long meetings" he said, "and no party could accuse the government of not giving adequate consideration to their proposals".
The Second Century Proposal
Century in the meantime began preparing a more detailed proposal. As explained by Argyle, the essence of it involved processing stock piled B grade ore for the first 6 to 9 months of operation, allowing time to generate cash flow, negotiate markets, contracts and prices, and prepare equipment for A grade ore recovery. Argyle expected that when negotiations commenced with the Department they would receive PMCI costing information enabling them to confirm the profitability of A and B grade operations. The revised proposal was to form a basis for negotiation. Neither Argyle nor the consortium were then prepared, he said, to insert a royalty or infrastructure purchase price in the proposal because:

1. Although he allowed a 15% contingency in his financial calculations, certain information including product cost was unconfirmed.

2. The "concept of acquisition" was said to be built into the proposal by virtue of foreign exchange revenue and savings achievable with it as well as tax benefits and social security savings flowing to the Commonwealth.

3. Acquisition price for assets would dependent on their quality and utility.

The revised proposal was submitted to the Minister on 18 March 1988. In the covering letter from Mr Guy it was said that:

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

Guy further expressed a wish to finalise details of the proposal as soon as practicable in order to meet the 31 March deadline on the acceptance of the resettlement package for Island residents and others.

The consortium was, as before, save for the withdrawal of Croesus Mining NL. Proposed subscription comprised $540,000 from Century, $500,000 from Orion Resources and $3,500,000 from the Christmas Island workers and residents. The operation would have an estimated life of 15 years and provide direct employment for 190 persons during the full production period.
A reduced sized operation would be phased in as ore reserves were further depleted. The consortium claimed to have budgeted to meet "the obligations of the mining operation in respect to all relevant infrastructure costs which would be expected in any normal mainland town/mine relationship". A stringent environmental management policy was promised in relation to areas owned by the consortium, and an undertaking given to negotiate with government to assist in the rehabilitation of previously mined areas. In relation to markets the consortium expressed confidence that on the basis of its contacts in Australia, New Zealand and Malaysia, sales targets could be achieved subject to quality and world pricing. 350,000 tonne production was budgeted for the first year, 750,000 for the next three and 350,000 for the remaining 11 years of the mine. As to industrial relations, an agreement had been reached with UCIW for the adoption of an established mining industry award. Benefits to the Commonwealth were outlined and in addition to those already mentioned "fixed plant demolition costs $2 million" was included, as well as "multiplier effect on Island and mainland economies". Under the heading "Social Benefits", there was a fairly broad statement in the following terms:

"A clear benefit of the proposal is the intent by Christmas Islanders to remain on the Island. Additionally the restoration of previously mine

(sic) areas can be undertaken."

Proposed heads of agreement were attached and included the following terms:

1. Transfer of existing mining and processing operations of PMCI to the consortium at no cost to it. Assets transferred would include fixed and moveable plant and equipment, existing ore stockpiles and mining and water rights held by PMCI. They would extend to all of PMCI's shares in Phosphate Technology Pty Ltd and the railway and other transport infrastructure necessary to the operations. As consideration for transfer of these assets it was said that the consortium would assume responsibility for necessary demolition at the termination of the project and for relocation expenses for employees.

2. The Commonwealth was to upgrade the existing power station and the consortium to operate it on behalf of CSIC or a local authority and to enter into an agreement as to the tariffs to be charged to the consortium for its use.

3. Existing port and harbour facilities to be transferred to the consortium which would maintain and operate the harbour during the term of the project.

4. The consortium to operate and maintain the supply of water on behalf of the town council and to be fully reimbursed for all water supply costs incurred by (prospective) authorities.

5. The Commonwealth to ensure that the town council would provide only essential community services.

6. Existing housing owned by the Commonwealth to be auctioned to local residents.

7. Consortium to be responsible for demolition at termination of project and to provide a security amounting to $2 million over 6 years.

On the matter of royalties, the heads of agreement provided:

"The consortium will enter into an agreement with the Commonwealth on royalties based upon the operation's ability to support such payments."

On the same day Argyle wrote to Yeomans seeking information on the ownership and any proposed changes in the ownershp of Phosphate Technology Pty Ltd. On 7 April, Guy wrote to Blunn complaining that although there had been an oral response to their queries, a written response had been refused. On 11 April, the written reply was supplied by Yeomans.

Independent Assessment Proposal Pursued

On 25 March, Arnaudon put a further submission to the Minister in which he said that Century's proposal, unlike those of Elders and the Booth consortium, did not meet the Government's criteria in relation to rain forest clearing. He went on to suggest that an independent assessment be undertaken on the three proposals so far tendered and any others received before a definite cutoff date. On 22 April, Bennett learned from the Island Administrator of the possibility that time might be allowed for further proposals for the reopening of the mine. He wrote a letter to the Minister registering "the strongest possible protest" against this development.
In March or April Arnaudon met with Yeomans and representatives of the Department of Administrative Services and the Attorney General's Department. A proposed procedure said to be acceptable to the Departments concerned, was set out in a minute to the Minister on 28 April. The proposals outlined included inviting the liquidator to assess existing submissions and to call publicly for any further proposals to reopen the mine.
On 2 May 1988, Century wrote to the Minister expressing concern at the delay in the Federal Government's decision on its proposal. On 3 May, Arnaudon met with Griff Thomas and John McKenzie from Elders Resources. Yeomans was present as an observer. There was, as recorded in his notes of the meeting, some discussion of "defensible public action - probity of". This was, he thought, a reference to discussion of the need to go through some kind of tender procedure that would be beyond reproach. There was also reference to Yeomans undertaking the assessment of proposals. By that time this course had not been firmly decided, but was a strong suggestion awaiting the provision of advice from the Attorney-General's Department (777). The alternative of having the Department of Administrative Services do the assessment was not preferred, evidently because of timing problems.
On the following day, 4 May, Mr A.P. Butler, the General Manager of the Department of Administrative Services, wrote to Arnaudon saying, inter alia:

"I understand that the process that the liquidator would follow in disposing of the assets of PMCI would be determined by him in accordance with his powers under the Ordinance. His professional responsibilities would presumably entail getting maximum market exposure to produce the best return for assets sold. This would be consistent with the basic thrust of Commonwealth disposal policy. If for any reason it is decided that the Commonwealth itself must handle the disposal of the Corporation's assets the normal disposal method would be a tendering process. An option would be to engage the liquidator as an adviser in such a process and to use his skills in the evaluation process."

An indicative timetable was annexed demonstrating a two stage tender process which included the following steps:

" ACTION TIME TAKEN .

.

.

(i) Open Tenders and record details, send to evaluator 3 days

(j) Evaluation process up to 2 months

(k) Post-tender negotiations probably 3 weeks

(l) Legislative changes ?

(m) Award contract to successful firm - . . ."

It was in the context of that indicative timetable that submissions were made for the applicants in this case that the normal Commonwealth disposals policy contemplated post-tender negotiations with short listed firms before deciding upon which firm would receive the relevant contract. Some further thoughts on tendering were submitted to Yeomans on 5 May by Griff Thomas from Elders Resources. This included a draft tender specification. A copy of the letter and specification was sent to Arnaudon. Yeomans said he put the draft on the file and accepted in cross-examination that it was possible that use was made of the document in the preparation of an information package later circulated to interested parties. On 6 May, Century Metals again wrote to the Minister expressing "grave concern" at the absence of any communication from him or his department on the question of phosphate mining on Christmas Island, summarised previous unanswered correspondence and called upon him to make an immediate decision. The advice which was awaited from the Attorney-General's Department was received on 12 May. Relevantly for present purposes it advised:

"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, as advised by Mr Coe in a telephone discussion on 10 May 1988, there is no obstacle to the proposals for private mining received by the Commonwealth being referred to the Liquidator for assessment in 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. Were the Liquidator nevertheless to undertake such an assessment, and purported to do so in his capacity as Liquidator, it would be open to a creditor, or a person aggrieved by such action of the Liquidator, to appeal to the Supreme Court of the Territory in respect of that action, and to seek an order from the Court that the liquidator should not conduct the assessment see s.59 of the Ordinance. Naturally the Ordinance could be amended to enable the Liquidator to conduct such an assessment if required."

On the same day the Minister published a media release advising that assessment of proposals to reopen the Christmas Island mine were to be undertaken by the Official Liquidator of PMCI. In doing so, it was said, the Minister was 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 release went on:

"The Minister has written to the Official Liquidator, Mr Yeomans, asking him to carry out an assessment of potential mining operations having regards to the Government's guidelines of 11 February as well as pertinent industrial relations matters."

The release continued and concluded in the following terms:

"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."

On 13 May 1988, the Minister moved under s.15(1) of the Winding Up Ordinance by way of a letter to the Liquidator expressing his views in relation to the winding up. The relevant parts of the letter are as follows:

"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 telephoned all parties on or about 5 April 1988 asking them to make final submissions to me by the end of April 1988. My Department has also had various meetings between 3 February and 3 May 1988 with the three parties who have submitted proposals and I understand that you have been present at some of these meetings. At these meetings my Departmental officers reiterated the Government's conditions for further mining as outlined in my media release at Attachment B. I believe you should give appropriate consideration to the media release."

The letter referred to publicity given to the release and went on:

"Despite the above publicity it is possible that some parties with a potential interest in the project have not had the matter drawn to their attention."

Copies of correspondence between DASETT, the Department of Administrative Service and the Attorney-Generals Department were annexed, including the latter's advice tendered on 12 May. The Minister summarised the advice as follows:

". 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."

Mr Yoemans said in his evidence that he read the Minister's letter and its attachments carefully and decided to take into account the views there expressed. He was also referred to the indicative timetable for a two stage tender process which had been annexed to the DAS letter to Arnaudon and was in turn annexed to the Minister's letter to him. He replied to the Minister's letter on 18 May, agreeing that he had the power to dispose of the assets of the PMCI to a private purchaser wishing to conduct a mining operation, if in his professional opinion, that were the most appropriate course of action under the Winding Up Ordinance. He agreed therefore to undertake an assessment of private mining proposals. This, he said, would be done "in an impartial and thorough manner bearing in mind the interest of the Corporation and my responsibilities for its winding up". He noted and said he would have regard to the Government's conditions set out in the media release of 11 February 1988 and also noted the policy of the Western Australian Trades and Labour Council on employment of Christmas Islanders.
The Liquidator's Assessment
Yeomans requested Messrs. Inglis and Gardiner to give him their views on the proposals. Inglis sent him a 9 page memorandum on 19 May. He was of the view that the Elders Resources submission indicated "the most in-depth study and the best general understanding of some of the problems involved." The Century submission he regarded in parts as "more an exposition of idealogical (sic) and sociological doctrine than a serious mining proposal". He saw the paper as almost totally lacking in detail regarding the proposed methods of mining, processing, shipping and marketing:

"So generalised is the Century Metals proposal (as I have it) that it is virtually impossible to attempt any realistic evaluation."

All the proposals, in his view, were deficient in dealing with fossil production difficulties. As to industrial relations, he accepted that it would be reasonable to expect that if Century were the successful tenderer, industrial disputation would be minimal. He offered detailed comments on marketing and freighting and concluded that of the three proposals he found that from Elders the most persuasive. However, he accepted that potential industrial relations problems were likely to be maximised in the case of the Elders' proposal as that had minimal involvement of Island residents. The risk of failure in resuming mining was high and in the event of failure, the Government would inevitably become embroiled in the financial and social fallout. Little or no thought, he said, appeared to have been given to ocean freighting. It was unclear what assumptions had been made as to selling prices, cost of production, allowances for inflation, and the effects of possible future changes in the world price for phosphate. The Century Metals mine life and tonnage projections appeared to substantially exceed known available phosphate reserves in stockpiles and cleared land. Phosphate was in global oversupply and was likely to remain so in the foreseeable future.

Gardiner also expressed the view that the Elders' proposal was superior to the other two. The Century proposal he saw as still based on the Arthur Andersen Report, which had been commissioned to produce a plan suiting the aims of the UCIW before the Government had published the conditions under which any future mining operation would be expected to operate. The proposal therefore did not conform with the Government's conditions for further mining and in particular, sought to clear further areas of rain forest and made no provision for the purchase of existing mine infrastructure. There was no financial information to support claims made in the proposal and detailed projected profit and loss accounts and cash flow forecasts were not incorporated. He regarded the estimated 15 year life as quite unbelievable if note were to be taken of ore reserve figures previously supplied by the PMCI management. The concept of employing 190 staff drawn from the ranks of those remaining on Christmas Island was not achievable. Over 200 of PMCI's 300 employees had resettled elsewhere and in the case of supervisory personnel, only 6 of the 46 remained on Christmas Island. Further, the proposal was not in accord with the Government's policy of normalisation as the consortium sought to operate the power station, be responsible for the supply of water and have port facilities transferred to it. Further, the proposal was said to place scant regard to the interests of the Commonwealth in the area of housing, which it stated would be auctioned to local residents. He made the point, however, that there was no market for housing on Christmas Island.

In relation to decisions under s 3(3) I think that no test of impartiality or apparent absence of pre-determination has to be satisfied. Any other approach would make the legislation practically unworkable. The only relevant question can be whether at the time of advising the making of the Order in Council the Ministers genuinely addressed themselves to the statutory criteria and were of the opinion that the criteria were satisfied. If they did hold that opinion at that time, the fact that all or some of them may have formed and declared the same opinion previously does not make the Order invalid."

And at 194 per Richardson J.:

"The application of the rules against bias must be tempered with realism. It would be unrealistic to expect Ministers to have completely open minds as to the criteria set out in s 3(3) of the National Development Act or as to the desirability in the public interest of a proposed work. An assumption that the Governor-General in Council may be predisposed to apply the provisions of the National Development Act to a project is not enough. It is not expected that Ministers will approach their consideration of the application under s 3(3) with perfect detachment. Before the decision can be set aside on the grounds of disqualifying bias it must be established on the balance of probabilities that in fact the minds of those concerned were not open to persuasion and so, if they did address themselves to the particular criteria under the section, they simply went through the motions."

- see also McMullin J. at 214.

The preceding references apply primarily to ministerial decision making and are directly relevant to the applicants' attack on the decisions taken by the Minister in this case. They are also, however, helpful indications of the limits of the requirement of "impartiality" in analogous classes of decision making.
Deane J. has observed that the judgments of the Courts of the United States on procedural due process can be of assistance in determining the rights of a party at the hands of a statutory tribunal bound to act in accordance with the rules of natural justice. The "basic fairness" underlying procedural due process lies likewise "at the heart of the common law concept of natural justice or acting judicially" - Minister for Immigration and Ethnic Affairs v Pochi (1980) 44 FLR 41 at 65. In this connection one case is illustrative of an approach cognisant of the realities of administrative decision making. In Federal Trade Commission v Cement Institute 333 US 683 (1947), the United States Supreme Court considered the validity of an order by the Federal Trade Commission requiring manufacturers of cement to cease and desist from employing a multiple basing points system for pricing cement. The fact that the Commission had entered views prior to making the order, and that those views were based on ex parte investigations, that the pricing system was in restraint of trade, did not mean that their minds were irrevocably closed on the question:

"If the Commission's opinions expressed in congressionally required reports would bar its members from acting in unfair trade proceedings, it would appear that opinions expressed in the first basing point unfair trade proceeding would similarly disqualify them from ever passing on another ...Thus experience acquired from their work as Commissioners would be a handicap instead of an advantage. Such was not the intendment of Congress. (at p 702)

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 was suggested in argument that the liquidator was obliged to follow in substance, principles of Commonwealth disposal policy as set out in the letter from the Department of Administrative Services which he was required by the Minister to take into account. The letter from the Department of Administrative Services of 4 May, however, merely noted that his professional responsibilities would entail getting maximum market exposure to produce the best return for assets sold. This, it was observed, would be consistent with the basic thrust of Commonwealth disposal policy. Reference to the tendering process was made on the hypothesis that the Commonwealth itself handled the disposal of the corporation's assets. The indicative timetable annexed to the letter demonstrated a two stage tender process which included provision for post-tender negotiations before the contract was awarded to the successful firm. The inclusion of the letter as an attachment to the Minister's letter of 13 May did not constitute any direction to take into account or follow Commonwealth disposal policy and the letter itself did not suggest that that was a requirement to be observed by the liquidator.
The complaint was also made under the head of natural justice that the liquidator did not and could not act in an impartial or independent manner because he was bound to consider matters in accordance with the Winding Up Ordinance which involved the application of criteria materially different to those which the Minister was required or able to take into account. Accepting that the ultimate objective of the liquidator in making a decision under s.14 would be to obtain the best price for the corporation's assets, the imposition of that constraint on his decision making process does not vitiate it. In fact, if that be implicitly a requirement of the section, his decisions might be open to attack if he did not take it into account. Whatever bearing this issue might have on the decisions taken by the Minister, it has none on those made by the liquidator.
Broadly speaking therefore the allegation that the liquidator has breached the rules of natural justice in relation to the making of the various decisions set out in the amended application is not made out. And while I have not expressly dealt with each and every one of the particulars in support of that ground, I do not regard those not expressly mentioned as having any merit.
Liquidator's Decisions - Other Grounds
The remaining grounds in relation to the liquidator in my opinion cannot succeed. It is said that his decisions were not authorised by the Winding Up Ordinance, because the Winding Up Ordinance would not empower him to make any decisions having a social and economic impact on the Christmas Island community or which would affect the welfare and interests of its members. There is nothing in the Winding Up Ordinance which supports such a construction.
Next, in ground (c), it was said that the decisions involved error of law and, as particularised, that the social and economic impact of each of the proposals on the Christmas Island community was a consideration essential in assessing and deciding which proposal to recommend. The liquidator, it was said, did not have power to have regard to such considerations or to attach any weight to them unless the Minister, acting under sub-s.15(1) of the Winding Up Ordinance, were to express the view that he should take into account such considerations or give weight to them. The liquidator erred in law in not appreciating the relevance of the Minister's failure to request him to take such considerations into account or give weight to them. He was also alleged to have erred in law in purporting to take those considerations into account. It was said that he had regard to the commercial viability of the proposals and thereto erred because he had no power to do so in the manner or to the extent that he did. He should have assessed each proposal with a view to ascertaining the best price for the assets, but did not do so. The manner of his assessment, it was contended, was beyond his power as liquidator even after taking into account the Minister's views. He is said to have purported to take into account the social and economic impact of the proposals in a perfunctory manner which he could not do properly without causing the exercise of his discretion to miscarry.
These particulars, convoluted as they are, do not, in my opinion, disclose any error of law. It is true that in paras. 7 and 8 of the "General Comments" section of his report, the liquidator acknowledged that the mining of phosphate on Christmas Island involved broad social, industrial and political issues, which the government would need to consider. In assessing the proposals he had had regard "primarily to the issue of maximising the return to the liquidator". But he had also had regard to the broader issues. His comments involved a recognition of the primary responsibility of government in weighing social, industrial and political considerations. Exercising as he was, a function under s.14 of the Winding Up Ordinance, he gave primacy to the return on the assets. Having regard to that primacy, it was not inappropriate for him to also have regard in a broad way to other issues. He was after all involved in winding up a public corporation in the discharge of a public statutory function. He was not obliged to take into account the social and economic impact of the proposals, but if he did give some, even if little weight, to those questions no error of law is thereby disclosed.
Ground (d) alleged improper exercise of power. This occurred firstly, it was claimed, because of failure to take into account relevant considerations. This limb repeated the complaint about the social and economic impact of the proposals and also in another guise the natural justice issues which have already been addressed. In this regard it was said the liquidator failed to take into account facts and circumstances relevant to the applicant's proposal which he could have ascertained had they been given a proper opportunity to be heard or had their legitimate and reasonable expectations been recognised by him. I am satisfied that on the evidence he had regard to the contents of the applicant's proposal and was under no obligation to pursue them with a view to "filling the gaps". Inconsistently with the preceding ground, complaint was also made that he failed to take into account:

"The social, economic and other benefits which would flow to the community on Christmas Island as a result of the acceptance of the Applicants' proposal..."

For reasons I have already outlined, I am satisfied that his treatment of that question was in accordance with the proper discharge of his statutory function under the Winding Up Ordinance.

It was further contended that he misunderstood and misinterpreted important features of the applicant's proposal which he regarded as critical in preferring other proposals. As I have already indicated the provisions of the Administrative Decisions (Judicial Review) Act do not permit the Court to engage in reviewing the decision complained of on the merits. In my opinion the only clear evidence of misinterpretation relates to the applicant's undertaking to meet the cost of demolition. I am not satisfied in this case that that is a basis on which the Court should intervene by way of judicial review, particularly having regard to the extent to which that factor is obviously overshadowed by the absence of any offer for the acquisition of PMCI assets and the absence of any offer or formula for negotiation of royalty payments.
The final limb of the allegation of failure to take into account relevant considerations related to predisposition and complained that the liquidator did not take his own predisposition into account in making his decision to assess the proposals. In my opinion, the mere fact that he had formed views on relevant matters prior to undertaking the task of assessment did not disqualify him from that task and was not required to be weighed by him as a factor against acceptance of that duty.
It was also said that the liquidator exercised his power improperly, in that it was done at the direction or behest of the Minister and officers of DASETT and at the direction of Inglis, Gardiner and Ronaldson. While his ultimate decisions may have reflected views held in common with the persons mentioned, there is no evidence to suggest that he arrived at those decisions on their direction.
The reasonableness of the decisions was impugned under this general head of improper exercise of the power. In particular the applicants alleged that the failure to attach any or any sufficient weight to the social and economic impact of the proposals on the Christmas Island community resulted in an exercise of his power that was so unreasonable that no reasonable person could have made it. I have already dealt with the question of the social and economic impact of the proposals so far as they related to the liquidator's decisions and, in my opinion, the fact that he did not for his own purposes attach great weight to those considerations does not vitiate his decision. They were, as he said, matters which the government would need to consider. No other basis is disclosed in the particulars for saying that the decision was so unreasonable as not to constitute a proper exercise of the power.
Fourthly, it was claimed, that the exercise of the power was improper as based on incorrect assumptions of fact. Suffice it to say that none of the particulars set out under this ground support the view that there was an improper exercise of the power. Rather they invite the Court to an exploration of the merits of the decision and that is an invitation that the Court will not accept. The liquidator was also alleged to have exercised his decision making power in bad faith to achieve ulterior purposes, namely, to reduce the influence of the UCIW and its executive on Christmas Island and to effect the depopulation of the Island. Accepting once more that the liquidator had formed views about the UCIW and its secretary, I am not satisfied that the evidence discloses that in his assessment process he had in mind any of the alleged ulterior purposes.
Minister's Decisions - Rules of Natural Justice
The Minister's decision to request the liquidator to assess and make recommendations in relation to proposals to recommence mining on Christmas Island was separately attacked on various grounds, the first of which was that a breach of the rules of natural justice occurred. Some five matters were raised in the particulars of this ground. The first was the failure of the Minister to give the applicants an opportunity to make submissions in relation to his request to the liquidator. There is, in my opinion, no substance in that complaint. While the rules of natural justice may apply to the Minister's substantive decision making powers under the Administration Ordinance 1968, there is no basis for their insertion into the interlocutory step of selecting a mode of assessment in aid of the ultimate exercise of those powers. And if the device by which that selection be effected was the expression of views under s.15(1) of the Winding Up Ordinance that did not in these circumstances attract a duty to first hear from the applicants.
The second and third particulars under this ground relate to the failure to recognise the applicant's legitimate and reasonable expectations that the Minister would, if requesting some other person to assess their proposal, ensure that that person would afford them an opportunity to answer criticisms of or objections to it, fill the gaps in it, and negotiate in relation to it. For reasons I have already expressed there was no such obligation on the liquidator. A fortiori the rules of fairness did not require the Minister to ensure that he took those steps.
The fourth matter of complaint under the head of natural justice in relation to the selection decision was that the Minister was predisposed by Arnaudon against Bennett and the President and the Vice President of the UCIW when Arnaudon prepared the advice to him to request the liquidator to assess the proposals and make the relevant recommendations. Accepting that Arnaudon had strong adverse views in relation to Bennett and had made unwise remarks concerning the other two officers, I am not satisfied that his predisposition involved the Minister in the breach of any rule of fairness in chosing the liquidator to carry out the task designated.
Fifthly, it was said, that the liquidator was not a detached third party and did not and could not act in an impartial independent manner. The reasons for this alleged disability were the same in substance as those set out in the grounds for review of the liquidator's decision, And this ground must fail for the same reasons as did the like attack against the liquidator's decisions.
In relation to the remaining ministerial decisions in respect of which review was sought, natural justice was invoked on substantially similar grounds. Accepting that the rules of natural justice applied to the Minister's decisions, the minimum requirements of fairness had been satisfied in the assessment process undertaken by the liquidator.
Ministerial Decisions - Other Grounds
All the Minister's decisions are attacked on the basis of improper exercise of power and in particular, failure to take into account relevant considerations. First and foremost among these were the social and economic impacts of each proposal on the Christmas Island community. The law, as it relates to relevant considerations in the exercise of statutory discretions, has been authoritatively set out in the judgment of Mason J. in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39. In summary the principles enunciated by his Honour (with which Gibbs C.J. and Dawson J. agreed) were:

1. The ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision.

2. What factors a decision-maker is bound to consider in making the decision are determined by construction of the statute conferring the discretion. If the relevant factors are not expressly stated they must be determined by implication from the subject-matter, scope and purpose of the statute.

3. Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned discretion and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision.

4. The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator.

5. In the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to matters which are required to be taken into account in exercising the statutory power.

6. The principles stated above apply to an administrative decision made by a Minister of the Crown. However in conformity with the principle expressed in (2) above, namely that relevant considerations may be gleaned from the subject matter, scope and purpose of the Act, where the decision is made by a Minister of the Crown, due allowance may have to be made for the taking into account of broader policy considerations which may be relevant to the exercise of a ministerial discretion.

There was considerable debate about the criteria by which a judgment might be made whether a factor relevant to the exercise of a statutory discretion is one that the decision-maker is bound to take into account. It is generally an easier matter to identify factors irrelevant to the power and not to be taken into account, than those which are in the language of counsel for the Minister, "imperatively relevant" - Sean Investments Pty Ltd v MacKellar (1982) 42 ALR 676, 681 (Bowen CJ and Fox J.).

In deportation cases it would seem that a complete disregard of the personal circumstances of the deportee and his or her family and the impact of an order on them, would be disregard of a factor that the decision-maker is bound to consider - Tabag v Minister for Immigration and Ethnic Affairs (1982) 45 ALR 705, 708 (Woodward J.), 732 (Jenkinson J.), although the latter would not so readily review misattribution of weight as the former; Barbaro v Minister for Immigration and Ethnic Affairs (1932) 46 ALR 123, 126 (Smithers J.); Kaufusi v Minister for Immigration and Ethnic Affairs 70 ALR 476, 482 (Smithers J.). Other isolated examples may be cited of cases where relevant factors that the decision-maker is bound to take into account have been identified even though not expressly referred to in the statute creating the power - ARM Constructions Pty Ltd v Deputy Commissioner of Taxation (1986) 65 ALR 343, 351-352 (Burchett J.) - capacity to pay and merits of objection relevant to discretion to extend time under the Income Tax Assessment Act; Conyngham v Minister for Immigration and Ethnic Affairs (1986) 68 ALR 423, 432 (Wilcox J.) - prior reputation and quality of performance of singing group seeking temporary entry to Australia - decision varied on other grounds by the Full Court 68 ALR 441.
No selection principle emerges from these cases to enable identification, from a range of relevant factors, of those which must be taken into account. In Ashby v Minister for Immigration (1981) 1 NZLR 222 at 233-234, Somers J. in the Court of Appeal referred to "matters so obviously or manifestly necessary to be taken into account that a minister acting reasonably would be bound to take them into account". This, with respect, suggests no criterion beyond the obvious or manifest importance of the factor in question. In the end it is, I think, a question on which the Court must make a practical judgment. But such judgment is less likely to be made where the decision involves questions of high national or governmental policy in the exercise of a broad discretion:

"The willingness of the Courts to interfere with the exercise of discretionary decisions must be affected by the nature and subject matter of the decision in question and by consideration of the constitutional role of the body entrusted by statute with the exercise of the power. Thus the larger the policy content and the more the decision-making is within the customary sphere of elected representatives the less well-equipped the courts are to weigh the considerations involved and the less inclined they must be to intervene." - CREEDNZ Inc. v Governor-General (supra) at 197-198 (Richardson J.)

"Social and economic" is a term of wide import whose limits are not capable of precise definition. Its very width raises the question whether in any useful sense it describes a factor or class of factors that can be identified by the court on a review application. Ordinances are made pursuant to the Christmas Island Act 1958 for the "peace, order and good government of the Territory" (s.9). That does not mean that a court is empowered to review the exercise of a discretion created by any such ordinance for failure to take into account "peace, order and good government". It may be that there are specific social or economic factors which, once identified, could be characterised as relevant and required to be taken into consideration, but I doubt that the class term "social and economic" describes any basis upon which the court can or should intervene.

In any event the evidence indicates that the Minister formed the view that the social and economic problems of the Territory were to be addressed outside the framework of the decision as to the re-opening of the phosphate mine. This appears from his letter to Bennett of 29 August 1988 when he said that he believed it to be "preferable that a commercially viable mine, regardless of its employment level, be established and for the Government to address the social issues". And in that letter he set out various steps that the government was taking to address the problems of electricity costs, housing stock and future employment prospects. In my opinion, he was entitled to take this approach. The decision, if there was one, to exclude from consideration the social and economic impact of the contending proposals, was a policy decision he was entitled to take and reflected a legitimate choice to address those issues in other ways. In my opinion, this ground, so far as it bears upon the selection of the liquidator to assess proposals and the decisions of the Minister in relation to that assessment, must fail. The same observation applies to particular factors under this general head including maximisation of employment and self-sufficiency, maintenance of the conditions and culture of the Chinese and Malay communities and economic benefits including foreign exchange earnings, personal and fringe benefits taxes, company taxes, social security savings and relocation and re-settlement costs. The difficulties flowing from the continued residence of unemployed persons on the Island and the employment problems of Island residents re-settled in Australia, did not have to be addressed within the framework of the decision on the re-opening of the mine.
Other factors said not to have been taken into account by reason of incorrect assumptions or because of lack of thoroughness went to the merits of the decision and as I have already indicated the Court will not intervene in that regard. And the natural justice points which re-emerged under the heading of "Relevant Factors", do not in that guise, disclose any further reason for interfering with the decisions taken.
Irrelevant considerations are said to have been taken into account, namely, a policy of depopulating Christmas Island and Arnaudon's predisposition against Bennett and the President and Vice President of the UCIW. I am not satisfied that the evidence supports the view that the Minister's decisions were made pursuant to a policy of depopulating the Island. Indeed, his statement to Bennett in the letter of 29 August, suggests support for the development of alternative sources of employment for Islanders. There is no substance in the predisposition point as an element of irrelevant considerations.
As already indicated I am not prepared to review the purported incorrect assumptions of fact said to have been relied upon in the Minister's and liquidator's decisions.
The allegations of bad faith which rely upon the alleged policy of depopulation and the predisposition against the UCIW executive, are also not made out. If the Minister had an adverse view of the UCIW executive and the reliability of that union by reference to its previous conduct, he is not therefore disqualified from basing his decision wholly or partly on that view. It is not an indication of bad faith if he did so.
As to the allegation that the decisions were contrary to law, there is no evidence that by asking the liquidator to undertake the assessment of proposals, the Minister abdicated his decision-making power. There is no merit in this ground.
So far as the Minister's decisions were characterised as conduct engaged in for the purpose of making decisions, the grounds were substantially the same and fail for the same reasons.
CONCLUSION
For the reasons outlined above the applications will be dismissed. It is important to make the point, however, that this result does not reflect any view of the Court on the correctness of the assessment or the decisions made in relation to the re-opening of the phosphate mine. Nor does it constitute an endorsement of the way in which successive Ministers and their advisers have gone about the exercise of their decision-making powers.
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 Humphry Appleby.
In spite of that criticism, I am satisfied that at the end of the day no legal grounds have been disclosed upon which the decisions challenged can be reviewed by the Court and the applications will be dismissed.

[1989] FCA 79

16 MARCH 1989