Curragh Queensland Mining Ltd v Daniel, K., Comptroller-General of Customs

[1991] FCA 310

Re: CURRAGH QUEENSLAND MINING LIMITED
And: K. DANIEL, COMPTROLLER-GENERAL OF CUSTOMS and JOHN NORMAN BUTTON,
MINISTER FOR INDUSTRY, TECHNOLOGY AND COMMERCE
No. Q G22 of 1990
FED No. 310
Administrative Law - Customs

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Administrative Law - judicial review - tendering of new evidence - whether there was evidence before the decision maker to support the decision - whether decision maker should have sought additional information - exercise of discretion to refuse determination.

Customs - importation of gearcases - s.273 Customs Act 1901 and Item 19, Part 1, Schedule 4 Customs Tariff Act 1982 - whether goods "reasonably available" - whether Australian manufacturer may have been able to supply goods within a "reasonable time frame".

Administrative Decisions (Judicial Review) Act 1977 ss.5(1)(e) and (h), and 5(2)(b) and (g)

Customs Act 1901 s.273

Customs Tariff Act 1982, Schedule 4, Part 1, Item 19

Detsongjarus v Minister for Immigration, Local Government and Ethnic Affairs (unreported) Pincus J., 19 September 1990

Luu v Renevier (1989) 91 ALR 39

Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155 Warren v Coombes (1979) 142 CLR 531

HEARING

MELBOURNE

#DATE 11:6:1991

Counsel for the Applicant: Mr P. McMurdo

Solicitors for the Applicant: Morris Fletcher and Cross

Counsel for the Defendant: Mr P. Duteney QC

Solicitors for the Defendant: Australian Government Solicitor

JUDGE1

The applicant Curragh Queensland Mining Limited ("Curragh") is the operator of a large coal mine at Blackwater in Queensland. As part of the capital plant for working the mine it acquired from a company called Dresser Industries Inc. ("Dresser") in the United States two "Marion" brand draglines. A dragline is a large mobile excavator.

1. Curragh had to pay duty on the draglines, but in relation to the gearcases of the machines it sought a determination under s.273 of the Customs Act 1901 that the gearcases were, in terms of Item 19 of Part 1 of Schedule 4 to the Customs Tariff Act (1982):
   

"Goods, as prescribed by by-law, being goods a suitable equivalent of which that is the produce or manufacture of Australia is not reasonably available."

1. The effect of such a determination would be that duty would be payable at two per cent instead of 25 per cent.

2. An Australian company Vickers Ruwolt Pty Ltd ("Vickers") did manufacture what are now conceded to be suitable equivalents of the gearcases.

3. By a decision on 23 January 1990 the first respondent ("the decision-maker") who is a delegate of the Comptroller-General of Customs, refused to make the determination sought. That decision is challenged under the Administrative Decisions (Judicial Review) Act 1977.

4. Curragh entered into an agreement with the Queensland Electricity Generating Board ("the Board") to deliver coal from the mine at Blackwater. The coal supply agreement was dated 30 January 1981. Under clause 4.1 of that agreement the first delivery of coal was to be made on 1 October 1983 but, subject to the giving of twelve months' notice by either side, that date could be extended to 1 January 1984. The contract between Curragh and Dresser for the supply of the draglines was also entered into on 30 January 1981. Since coal deliveries were due by 1 October 1983, operations at the mine had of necessity to commence at an earlier date. That earlier date is referred to as the "dig date". Although it was obviously important for the purposes of Curragh's own planning, it was not a contractually stipulated date as between Curragh and the Board. As will be seen, the expression "dig date" has sometimes been used when what is really meant is the supply commencement date.

5. There was in existence a licence agreement between Dresser and Vickers, the effect of which was that Vickers would not manufacture components for Marion draglines without the request or express approval of Dresser.

6. Curragh imported the draglines and commenced operations at the Blackwater mine.

7. On 25 February 1983 the applicant applied for a determination under s.273. There was a very substantial delay, the reasons for which were not canvassed before me and as to which neither side sought to attach any legal significance. On 15 July 1988 another delegate of the Comptroller-General refused to make the determination sought. That decision was attacked in proceeding Q G338 of 1988 and on 7 April 1989 Pincus J. upheld the challenge on grounds which are not relevant for present purposes. His Honour directed that the decision to refuse a determination be set aside and that there be a further consideration of the application.

8. In the course of the hearing before Pincus J. evidence was given by Mr Ian Ross Bannerman who was the corporate solicitor for the group of which Curragh is a member. He was cross-examined and a question and answer from that cross-examination formed an important of the basis of the decision under challenge in the present proceedings. In order to understand the context of that question and answer it will be necessary to set out most of the cross-examination:
   

"Q. Now, the contract which Curragh had for coal in respect of this particular venture is dated 30 January 1981; is that right? A. Sorry, what was that again?

Q. That is the contract with the Queensland Electricity Generating Board?

A. I believe that is right.

Q. That is what these draglines were required for use in respect of that contract; is that the position?

A. Well, yes, but it is a little bit more complicated than that. The contract was one which gave an assurance that the project would have a market for the coal. Q. Right?

A. But it was not the sole market. There was an intention to produce a coal mine which would sell coal to the Queensland Electricity Generating Board as well as for export. (A copy of the contract was produced.)

Q. Would you turn to clause 4.1 of that contract, please; that provides for a commencement date of that contract of 1 October

1983. Do you see that?

A. Yes, I do.

Q. Can you tell me whether that commencement date was agreed on the basis of the estimated - or taking into account the estimated delivery dates of the draglines by Dresser as set out in their letter of offer of 11 December 1980?

A. I believe that it was, yes.

Q. So is the position that in the way in which negotiations proceed, you first find out when you can get your draglines, and base your dig dates under the contract on the availability of those draglines?

(Counsel for the applicant objected on the grounds of relevance.) Counsel for the respondent:

It is relevant, your Honour, for the exercise of discretion by Mr Wilson. The evidence before Mr Wilson, as appears from his affidavit, was that these gearcases could have been manufactured by Vickers in Australia, for this particular model - 8200 walking draglines. Mr Wilson's evidence will be that Curragh makes, in fact, a commercial decision as to whether they get Vickers to make them or gets Dresser to make them. Their contract appears to be based upon the availability of them so that when one comes to consider whether they are reasonably available, you cannot look at your contract - the submissions will be: you cannot look at your contract and say they have got to have a dig date by 1 October 1983, therefore, they are not reasonably available unless they will be there and in place before 1 October 1983: because that is not the process. The process is: you find out your availability first and your dig date then corresponds with your availability rather than vice versa. That is really the relevance of this question. (His Honour allowed the question.)

Q. I think, as I recollect it, we are simply asking you to confirm whether you ascertain the availability of the equipment and then negotiate your commencement date of your coal supply contract to correspond with that availability of equipment?

A. Yes, I believe that is the order in which the events occur.

1. Following the decision of Pincus J. on 7 April 1989 Curragh's solicitors on 9 May 1989 wrote a letter to the Customs Service making further detailed submissions in support of the application. There had already been written submissions made and in particular a letter of 29 July 1987. Curragh's solicitors concluded their letter of 9 May 1989 in these terms:
   

"If you require any further information or wish to discuss the matter further please do not hesitate to telephone the writer."

1. Apart from some letters requesting an early decision, there was no communication between Curragh's solicitors and Customs Service until 23 January 1990 when by letter of that date the decision now under challenge was made.

2. The letter extends over some six and a half pages. Much of it is now not in contention. I shall not reproduce all of it in this judgment.

3. After discussing certain matters relevant to the issue, the decision-maker came to the conclusion that Vickers were able to provide a "suitable equivalent" of the gearcases. As I have noted, this part of the decision is not now challenged. He then turned to consider whether Vickers' gearcases were "reasonably available". The letter states:
   

"The first issue to be determined is whether Vickers could have supplied the goods within a reasonable time frame. It has been said on several occasions that the goods had to be supplied to meet the contracted dig date. This, however, is contradicted by the statement by Mr Ian Bannerman, the Corporate Solicitor for Arco Coal Australia Inc, at the hearing before the Federal Court. In response to questioning Mr Bannerman responded to the question: Question

"I think, as I recollect it, we are simply asking you to confirm whether you ascertain the availability of the equipment and then negotiate your commencement date of your coal supply contract to correspond with that availability of equipment." Answer

"Yes, I believe that is the order in which the events occur". Although Mr McDonald (formerly of Vickers) has stated that production planning began with the dig date and everything worked back from that, Mr Bannerman's statement, which was not challenged in Court, indicates that Curragh was not locked into a specified dig date. It thus was open to have had a later delivery date which may have enabled the inclusion of Australian made gearcases. I note also that it was said at a meeting on 10 November 1983 that the Curragh machines were 5 1/2 weeks late.

The question of Vickers' capacity to produce the relevant goods has featured strongly in your application. It has been pointed out that the offer to supply for the Riverside project (a BHP mine) was made on 2 December 1980. The offer date for the Curragh project was 11 December 1980. The dates for the letters of intent and their confirmation, however, are in a different order with the Curragh project being in front of the Riverside one. I note that the offer made in relation to the Curragh contact only remained valid if the offer was confirmed by a specified date and if Curragh in fact got the contact to supply coal. I therefore come to the conclusion that Curragh was not locked into obtaining its draglines until after it knew that it had obtained its coal supply contract. At that stage the Riverside contract had not progressed to the stage where the order had been confirmed.

Evidence has been presented by former employees of Vickers about the pre-production planning for, amongst others, the Riverside project. Reference has been made to computer scheduling and visits to the United States on this project. No comment at all in the relevant statements has been made about what, if any, such work was undertaken within the Vickers organization in relation to gearcases for Curragh (or for the R.W. Miller contract). Vickers had shown interest in this contract, but as discussed in more detail below, Dresser have stated that they had decided to offer gearcases from overseas for the Curragh project. There is also contained in the Discovery papers in a document marked 202, a comment that Dresser wished to maximise the use of their own facilities for the Curragh project. I would have liked to have been able to examine the Vickers production planning records but Mr McDonald has stated that to his knowledge they no longer exist.

It is clear that Vickers did tender for the R.W. Miller contract. It would seem reasonable to assume that to be able to tender there would have had to have been work done in relation to production planning. Yet Mr McDonald does not refer to either the Miller or the Curragh projects in his statement.

Taking all these factors into account, I am not satisfied that if Vickers had been able to participate in the Curragh contract, an aspect which will be discussed below, that it would not have been able to supply the relevant goods in a reasonable time frame. It has been shown that the time from the actual placement of the order to the actual delivery of the goods was approximately 2 1/2 years. By the evidence of Mr Bannerman it has been shown that the dig date is not a finite date but depends on the supply of the necessary equipment.

It is not contended that Vickers would have been able to supply to meet the designated dig date but rather that in a time frame which covers several years that Vickers may have been able to supply within a reasonable time frame. In terms of supply within a reasonable time frame I am not satisfied that Vickers' desired production of the gearcases was "not reasonably available"."

1. The decision-maker then deals with the question of Dresser's contractual control over the manufacture of gearcases by Vickers and notes evidence that Vickers were desirous of supplying the gearcases but that Dresser "desired to maximise the use of its own manufacturing capabilities and so decided to produce the gearcases in the United States of America". The letter continues:
   "In the event, there is a clear statement that Vickers was not
   requested to make the gearboxes. There is also no evidence that
   Vickers were authorised to use the relevant drawings and
   specifications. There is thus the situation where Vickers were not
   permitted to manufacture the goods for Curragh. The submission from
   your Solicitors is that because such is the case it follows that the
   goods cannot be said to be reasonably available and thus the desired
   determination must be granted.
   In the light of the fact that Vickers were not permitted to
   manufacture the gearcases because of the restrictions in their
   Manufacturing Agreement I conclude that they could not be regarded as
   being able to satisfy the "reasonably available" criterion. I would,
   therefore, prima facie grant the determination that you have sought.
   However, despite being satisfied that suitably equivalent goods the
   produce or manufacture of Australian are not reasonably available it
   does not follow that a determination must be granted.
   The power vested in the Comptroller-General in relation to section
   273 of the Customs Act provides him with a discretion as to whether a
   determination will be granted. The purpose of the Customs Tariff
   Acts is to provide assistance to Australian industry. The rate of
   duty applicable to the goods in question would have been established
   following a public enquiry by the Industries Assistance Commission
   and the passage of the necessary legislation through Parliament.
   That tariff assistance was only intended to be reduced when
   Australian made goods which are suitably equivalent are not
   reasonably available. I am not satisfied that if approval or
   authorisation had been given to Vickers, that they could not have
   produced suitably equivalent goods that would have met the criterion
   of being reasonably available.
   It would be unusual if the availability of concessional admission
   could depend solely on a decision taken outside Australia to withhold
   permission to make goods which could otherwise be made in Australia.
   This is particularly so when it appears that the decision of the
   American manufacturer was influenced by factors relating to the
   maximization of the utilization of its own facilities.
   I have therefore decided that it is not appropriate to grant an
   application for a concession when the reason that the concession
   would be granted is that Australian made goods are not reasonably
   available only because of the overseas manufacturer withholding
   permission to make the goods. Accordingly I have decided not to
   grant the determination that you have sought."
   Curragh's Challenge

2. Curragh argues that the decision of 23 January 1990 should be reviewed under the ADJR Act because:
   (a) There was no evidence to support the finding that it was open to
   

Curragh "to have had a later delivery date which may have enabled the inclusion of Australian made gearcases". This finding was critical to the decision, but there was no evidence to support such a finding. S.5(1)(h) of the ADJR Act was relied on.

(b) Alternatively, there was other material on the availability of a

later coal delivery date which the decision-maker should have sought from Curragh. S.5(1)(e) together with s.5(2)(g) and s.5(1)(h) applied.

(c) The discretion to refuse the determination, despite the finding of

no reasonable availability, was improperly exercised. There was a wrongful failure to consider relevant matters: s.5(1)(e) and s.5(2((6).

1. It will be seen that Curragh complains that, although it succeeded on the "reasonable availability" issue, it did so for the wrong reason, and, what is more, a reason which directly lead to a wrongful exercise of the decision-maker's discretion.
   Reasonable Availability

2. A critical step in the decision-maker's reasoning was his finding that "Vickers may have been able to supply within a reasonable time frame" and that in terms of supply within a reasonable time frame he was not satisfied that Vickers desired production of the gearcases was "not reasonably available".

3. The decision-maker, correctly in my view, approached the matter on the footing that it was up to Curragh to show that Vickers gearcases were not reasonably available. His reference to "a reasonable time frame" is in my opinion consistent with the purposes of the statute. The goods in question here, heavy specialised mining equipment, are not things which one would expect to be driven off a showroom floor.

4. As I understand Curragh's argument, it accepts that the Vickers gearcases did not have to be capable of immediate delivery in order to be "reasonably available" and that, in theory, one way in which some delay in delivery could be accommodated was by Curragh arranging with the Board a later coal delivery date. Also, Curragh does not raise any issue that delay by Vickers would in fact have been too long to suit any realistically available re-arranged coal delivery date. Rather, Curragh says there was no evidence to justify a finding that there could have been any negotiation of a contract with a later delivery date (or any extension of a contractually stipulated date) at all.

5. In substance, the decision-maker found that there was at least a possibility that Curragh could have arranged its contract with the Board so that deliveries would commence at a time sufficiently late to allow the use of gearcases from Vickers. In my opinion that finding was open to the decision-maker on the facts available to him as at the date of the decision. In particular, the admissions by Mr Bannerman in cross-examination before Pincus J. amount to evidence which at the very least stood in the way of a finding in Curragh's favour that a later coal delivery date was not available.

1. I must bear in mind that I am concerned here with the question whether there was any evidence to justify his decision. It is a function quite different from that of an appellate court deciding what are the correct inferences to be drawn from primary facts: cf. Warren v Coombes (1979) 142 CLR 531. Seen in their context, the question and answer cited in the decision were not dealing with Curragh's general negotiating practice but with the particular contract with the Board. In my view, they are capable of supporting the conclusion that Curragh could have arranged a later coal delivery date with the Board.
   New Evidence

2. At the hearing before me Curragh tendered, over opposition by counsel for the respondents, evidence designed to show that in the commercial setting in which Curragh operated at the time of the negotiation of the coal supply agreement, they in fact had no flexibility in negotiating with the Board the delivery date for the coal. That evidence showed that, amongst other things, Curragh stipulated an earlier delivery date than that fixed by the Board's specifications and that this element was regarded by the Board as an important factor in awarding the contract to Curragh. The Board had its own commitments to supply electricity which made early delivery of coal of critical importance.

3. This evidence was relied on by Curragh in two ways. First, because Curragh relied on s.5(1)(h) of the Act and contended that there was no evidence or other material which justified the decision, the new evidence was said to bear on the limitation on that ground contained in s.5(3)(b) since it tended to show that the decision-maker based the decision on the existence of a particular fact and that fact did not exist. Secondly, this was said to be, adopting the language of Wilcox J. in Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155 at p 170, approved by the Full Court in Luu v Renevier (1989) 91 ALR 39 at p 49,
   

".....a case where it is obvious that material is readily available which is centrally relevant to the decision to be made (with the result that) to proceed to a decision without making any attempt to obtain that information may properly be described as an exercise of the decision-making power in a manner so unreasonable that no reasonable person would have so exercised it."

1. In my opinion the first argument fails for the reasons I have mentioned.

2. There was evidence before the decision-maker, whether incomplete or not, which did rationally support the decision he made. This is particularly so bearing in mind the onus which rested upon Curragh.

3. As to the second argument, I adopt with respect what was said by Pincus J. in Detsongjarus v Minister for Immigration, Local Government and Ethnic Affairs (unreported) 19 September 1990 at p 11:
   

"Firstly, the decision-maker is not obliged to make the applicant's case. Secondly, the decision-maker ordinarily may decide the application on the basis of such information and material as the applicant puts forward. Thirdly, the decision- maker may sometimes be obliged to make further enquiries where a proposed ground of objection is information obtained from a source other than the applicant, which information has not been dealt with by the applicant. Next, further information may have to be sought where the decision-maker knows there is available other factual material likely to be of critical importance in relation to central issue for determination. These last two points are, however, merely examples of the general proposition."

1. In the present case, the new evidence was material either within the knowledge of Curragh or, insofar as it came from officers of the Board, readily obtainable by Curragh, well before the making of the decision. After the hearing before Pincus J., Curragh had the opportunity of making further submissions, and did in fact do so in the letter of 9 May 1990, but without raising the new evidence. Curragh was a company engaged in a major mining operation. It was seeking a substantial statutory concession. For that purpose it had engaged solicitors and counsel and had successfully attacked one decision under the ADJR Act. It must have appeared to the decision-maker as well equipped to look after its own interests.

2. The issue of the possible availability of Vickers gearcases being affected by the negotiation of a later coal delivery date was clearly raised in the course of the hearing before Pincus J., not only in the answers that Curragh's own witness gave in cross-examination, but by the fact that the issue was raised in cross-examination by counsel for the Customs Service. In the circumstances, there was no obligation on the decision-maker to raise the issue further with Curragh or seek information from them.
   The Discretionary Factor

3. Curragh accepted, correctly in my view, that a discretion remained open to the decision-maker to refuse a determination notwithstanding that the statutory criteria had been met, provided of course that the discretion was exercised for a proper purpose.

4. In my opinion, the decision-maker did not stray outside the purpose and function of the Customs Act when he exercised his discretion in the way he did. In the circumstances of this case, declining to grant the determination would operate as an incentive for a company in the position of Dresser to permit Vickers to manufacture the relevant goods in Australia. Since presumably that manufacture would result in some financial benefit to Dresser, the latter would have to weigh against that benefit the consequence of importing the goods into Australia at full rates.
   Conclusion

5. The question before me is not whether I agree with the decision or whether sitting as an appellate court I would overturn it, but rather whether it was lawfully made. In my opinion the attack on the decision fails and the application should be dismissed with costs.