CuDeco Limited and Chief Executive Officer of Customs
[2013] AATA 873
•6 December 2013
[2013] AATA 873
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/4586
Re
CuDeco Limited
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Senior Member Bernard J McCabe
Date 6 December 2013 Place Brisbane The Tribunal decides:
(a)the application for further orders pursuant to s 35(s) of the AAT Act is adjourned; and
(b)the parties shall confer and draft agreed orders under s 35(2) of the AAT Act in relation to the documents in question along the lines of those made by McPherson J in ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339; or
(c)if the parties cannot reach an agreement within 7 days of the date of these reasons, each party shall file their own draft orders within 14 days of the date of these reasons.
........................................................................
Senior Member Bernard J McCabe
CATCHWORDS
PRACTICE AND PROCEDURE – Confidentiality order – Confidential evidence – Applicant excluded from accessing certain evidence – Prejudice to parties – Public interest – Application adjourned pending receipt of draft orders
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 35, 37, 39
Customs Act 1901 (Cth) ss 269B, 269C, 269D, 269P
Customs Administration Act 1985 (Cth) s 16
CASES
ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339
ReBag & Jute Co (Tamworth) Pty Ltd and Collector of Customs (1993) 18 AAR 477
Sullivan v Department of Transport (1978) 1 ALD 383
REASONS FOR DECISION
Senior Member Bernard J McCabe
6 December 2013
CuDeco Limited is the applicant in these proceedings. It asked the Chief Executive Officer of Customs to make a Tariff Concession Order (“TCO”) under s 269P of the Customs Act 1901 (Cth) (“the Customs Act”) in respect of a ball mill that CuDeco wished to import. (The precise description of the goods is set out in the reviewable decision at p 11 of the documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”)). Ball mills are used to grind mineral ores.
A dispute has arisen in relation to the s 37 documents. The respondent says several documents on the file were provided in confidence by a third party. The respondent wants an order under s 35(2) of the AAT Act in relation to those documents. An interim order was made in relation to the documents on 31 October 2013. That order was made to preserve the status quo. The applicant has now requested access to suppressed documents. The respondent says the order under s 35 should remain in place.
BACKGROUND TO THE PROCEEDINGS
A TCO reduces the rate of duty that applies to the import of certain goods. The tariff that would otherwise be applicable serves to protect local producers of those goods. Consistent with that objective, a local producer may object to the grant of an order. That is what occurred in this case: Hofmann Engineering Pty Ltd, the objector, lodged detailed submissions objecting to a TCO on the basis it produced goods that were substitutable for the goods to be imported by CuDeco. Hofmann also claimed it was willing to accept an order for the supply of such goods. It provided detailed evidence about its production processes and costings in support of its objection. That information was not provided to the applicant, and Hofmann apparently does not want the applicant to see any of the material.
A standard TCO can be made if - after making the appropriate inquiries - the CEO of Customs is satisfied the application meets the core criteria: s 269P(1) of the Customs Act. The core criteria are identified in s 269C, namely that “no substitutable goods were produced in Australia in the ordinary course of business” at the time of the application. Section 269B addresses the question of whether goods are substitutable, and s 269D deals with when goods are produced in Australia. This last provision deals in particular with the issue of local content. Section 269D(1) provides goods are taken to be produced in Australia if:
(a) the goods are wholly or partly manufactured in Australia; and
(b) not less than ¼ of the factory or works costs of the goods is represented by the sum of:
(i) the value of Australian labour; and
(ii) the value of Australian materials; and
(iii) the factory overhead expenses incurred in Australia in respect of the goods.
The respondent declined to make the TCO after accepting submissions from the objector. The applicant wants the Tribunal to revisit that question. But to do that, it argues, it must have access to the confidential documents.
THE CONFIDENTIAL DOCUMENTS
The documents that are the subject of this application were succinctly identified by the respondent as follows:
(a) Page 80 (T14) contains the names and contact details of two other companies which the objector claims make goods in Australia which are substitutable for the goods for which the TCO is sought;
(b) Pages 83-84 (14) [sic] contains a percentage breakup of Australian labour, Australian materials and Australian factory overhead expenses and the imported content of a “Feed Chute”, Ring Gear (Girth Gear) and Pinion manufactured by Hofmann;
(c) Pages 58-90 (T14) contain three internal commercial documents provided by Hofmann. The three internal commercial documents are headed “Job Progress Summary” and contain the following redacted information:
(1) Customer Name;
(2) Labour Hours to produce the individual machines;
(3) Machine hours to produce the individual machines;
(4) Labour costs to produce the individual machines;
(5) Machine costs Material costs to produce the individual machines;
(6) Unit cost;
(7) Item Unit Price;
(8) Individual Order Price;
(9) Selling Price$;
(10) Planned Cost$
(11) Planned Margin%;
(12) Final Cost$
(13) Cost to the date of the report$
(14) Final Margin%
(15) Cost of Goods Sold$
The respondent says the confidential evidence clearly establishes the products manufactured by Hofmann exceed the 25% local content requirement in s 269D(1).
If that is accepted – and the respondent invited the Tribunal to satisfy itself of that simple fact by examining the documents – there is no need to release the confidential information to the applicant.
The CEO of Customs says it is in any event desirable to leave the current orders in place in respect of the confidential material precisely because the information was provided to Customs in confidence. The CEO is worried it will be more difficult for Customs to do its job if potential objectors are concerned their sensitive commercial information will be released to competitors or more widely. The respondent pointed out s 16 of the Customs Administration Act 1985 (Cth) makes it an offence to release confidential information. While s 16 clearly contemplates the release of information in the performance of a duty or as required by law, the respondent says the existence of the provision suggests the Tribunal should be slow to order that information be released.
The respondent also points out exemptions in the Freedom of Information legislation would probably be available in relation to the documents. The respondent said it would be odd if the applicant were able to access information through the Tribunal’s processes that it could not access through an FOI request.
This applicant disagrees with all of this. It says Hofmann:
· does not produce substitutable goods, merely parts of the goods CuDeco otherwise wishes to import;
· does not meet the local content requirements in s 269D(1) (specifically because the locally produced components should not be viewed in isolation but as part of a complete mill – which the applicant says the objector does not produce); and
· has not accepted orders from other customers for a complete mill.
In the circumstances, the applicant says the material which the respondent wishes to suppress is necessary and relevant given there is a dispute over whether the objector is producing goods that are substitutable, and over the extent to which the goods (being an entire mill, as opposed to components) are produced in Australia.
ORDERS UNDER SECTION 35 OF THE AAT ACT
Orders suppressing evidence under s 35(2) are exceptional. The Tribunal’s proceedings are usually conducted in public, and the evidence in proceedings will ordinarily be available to anyone who wants to see it. Proceedings that are unnecessarily shielded from scrutiny tend to undermine public confidence in the integrity of decision-making processes. Orders that prevent an applicant from accessing evidence should be approached with special care in light of the Tribunal’s commitment to open justice and its obligation to provide procedural fairness. The obligation to provide procedural fairness lies at the heart of the Tribunal’s duty to act judicially (see Sullivan v Department of Transport (1978) 1 ALD 383 at 402 per Deane J), and is recognised in
s 39(1) of the AAT Act which provides:
Subject to sections 35, 36 and 36B, the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents.
In the course of deciding whether it is desirable to make a secrecy order under s 35(2), the Tribunal must engage in a balancing process: see Re Bag & Jute Co (Tamworth) Pty Ltd and Collector of Customs (1993) 18 AAR 477 at 482 per DP McMahon. The Tribunal must weigh up the reasons given for making a confidentiality order against the interests of others that will be affected if an order is made. Those others include the applicant, who might be denied procedural fairness, and the public, which has an interest in transparency.
I am mindful that lifting the order would impact on the objector, whose confidential information might be released. I also acknowledge the respondent will be placed in a more awkward position if local businesses are reluctant to share information in the course of the objection process. That is one reason why there are laws prohibiting unauthorised disclosure, and why the freedom of information law creates exemptions that might be available in response to an FOI application. But those concerns are just part of the picture. Section 16 of the Customs Administration Act 1985 (Cth) contemplates the possibility that information might be released in the course of proceedings like these, and the freedom of information legislation merely defines the scope of a particular right of access under that Act – it does not operate as a limit on the Tribunal’s powers under the AAT Act.
I am satisfied the potential impact on the applicant outweighs the respondent’s concerns on this occasion. The outcome of the applicant’s case appears to turn on the information contained in the relevant documents. If the applicant were prevented from having any access to the documents under review, the review process would be hampered, if not completely frustrated.
I am also concerned the public interest in transparency and accountability weighs against the respondent’s application. Tariffs confer real advantages on local businesses at the expense of overseas competitors and local consumers. While the parliament has progressively dismantled most of these trade barriers over the last 40 years, it has nonetheless seen fit to preserve some of the protections for a limited number of industries. Decisions in relation to these laws are likely to be contentious because of the costs they impose, and the danger of rent-seeking behaviour from local businesses. There is a strong public interest in ensuring the decisions are made carefully and for a proper purpose. Transparency is especially important in cases like this.
In all the circumstances, I am not persuaded it is desirable to suppress the documents in question. They should be available for use in the proceedings. Even so, I do not propose to immediately revoke the order I made on 31 October 2013.
The respondent raised the possibility of permitting the applicant’s lawyers to access the documents for use in connection with these proceedings on the basis of an undertaking that they would not share the details with their client. I think an order along these lines is desirable. Such an order would certainly address the concerns of the respondent.
It would also ensure the applicant was not unduly hampered in the pursuit of its application. The public would not be aware of the detail of the documents, but it would at least draw comfort from the knowledge the material was being made available in a way that ensured the respondent was accountable for its decision.
Mr Williams, counsel for the applicant, pointed out such an order would be problematic in this case because his instructing solicitor was an officer of the applicant. While I was initially sympathetic to that predicament, upon reflection I think the applicant may just have to accept the cost of instructing outside solicitors (or, at a minimum, establishing the existence of appropriate “Chinese Walls” within its existing solicitor’s firm that serve to quarantine relevant information from disclosure to any member of that firm facing a conflict of interest) who can access the documents on its behalf so these proceedings may continue.
The application for further orders pursuant to s 35(s) of the AAT Act is adjourned.
The parties shall confer and draft agreed orders under s 35(2) of the AAT Act in relation to the documents in question along the lines of those made by McPherson J in ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339. If the parties cannot reach an agreement within 7 days of the date of these reasons, each party shall file their own draft orders within
14 days of the date of these reasons.
I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe ........................................................................
Associate
Dated 6 December 2013
Date of hearing 27 November 2013 Counsel for the Applicant Mr Michael Williams Solicitor for the Respondent Mr James Millea
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