Minister for Industry & Commerce v Western Mining Corporation Ltd

deleaate.:under Customs Act that provision

in Customs Tariff Act:

for a reduced taritf in respect of qoods the manufacture of a "suitable equivalent" for which is "not reasonably avallable" in hustralla did not apply to goods imported by respondent - appeal

against decision granting order

of review of delegate's decision

consideration

of matters properly to be taken into account by

delegate - whether goods must be comercially lnterchanqeable to be

suitable

quivalent

- relevance of lack of testina of

"equivalent" aoods - costs

NQL-~S and Phrases - "sultaole equivalent"

~ "reasonablv available"

Admlnlstratlve Decisions (Judlclal Review) Act 1977

Customs-=

1YO1 s s . 2 7 1 . 2i2, 273

Customc Tarlff Act 1966 s.33A. item

1 9 of Schedule 2

"ISTER	FOR INDUSTRY & COMMERCE	v.	WESTERN MINING CORFORhTION	__
LIMITED

No. Wh G14 of 1985

WOODWARD. TOOHEY & PINCUS JJ .

PERTH

19 JUNE 1985

IN THE FEDERAL COURT

OF AUSTRALIA

)

WESTERN AUSTRALIA

)	No. WA G14 of 1985

DISTRICT REGISTRY

GENMAL DIVISION

)

ON APPEAL from a

single judge of the

Federal Court of Australia

B E T W E E N :

MINISTER FOR INIjUSTRY

& COMMERCE

Appellant

and

WESTERN MINING CORPORATION

LIMITED

Respondent

-	MINUTE OF ORDER

-	JUDGES MAKING ORDER	:	Woodward, Toohey	li Pincus JJ
DATE OF ORDER	19 June 1985
WHERE MADE	Perth

THE COUkT ORUERS THAT:

The order made by the Honourable Mr. Justice

Davies on 21

December 1984 be varied	bp	substituting	f o r parauraph 2
thereof the following:

“2.

The decision under review is

set aside and the

matter

remitted

the

Minister

€or

Industry and Commerce

for

reconslderation in

the light of the reasons of the Full

Court”.

2 . Otherwise the appeal is dismissed.

3 .

The respondent pay one half of the

appellant’s costs of the

appeal.

Note: Settlement and entry of orders is dealt

with in Order

36 of the Federal Court

Rules

IN THE FEDERAL COURT

OF AUSTRALIA

WESTERN AUSTRALIA

)

No. HA G14 of 1985

DISTRICT REGISTRY

GENERAL DIVISION

ON AFFEAL from a sinule judqe of the

Federal Court of Australia

B E T W E E N :

MINISTER FOR

INIjUSTRY & COMMESE

Appellant

and

WESTERN MINING CORPORATIOB LIMITED

Respondent

CORAPI:	WOODWARD. TOOHEY & PINCUS JJ.
19 JUNE 1585

REASOIJS FOR JULGl-lENT

THE CGURT

This is an appeal auainst a

Judument of Davles J.

urantlna an applicatlon for an

order of review of a decision made

under the Customs Act 1901. Frovlsions

that Act. referred to

in more detail below. permitted the relevant Minister

his

deleqate to make

decisions wholly

or partly relieving imported

goods of their burden of duty,

under what has become

known as the

commercial by-law

system. Delegates

the Minister declined to

urant

the relief whlch the present respondent souuht, but his

~rHonour~held

that there was

"no material upon which a reasonable

decision-maker could have come" to the

conclusion to which the

2 .

delegates came: that was, to put it generally. that he facts were not such as to permit the qranting of the relief sought. His

Honour also detected errors of

a legal kind in the

reasoning which

led to the decision attacked.

Because

the

first

basis

of the

judgment

3ust

mentioned, it is necessary to refer to the facts in some detail.

The	prellmlnary observatlon should be made that nelther party

souaht, so

far as the record

discloses. any assessment

from an

independent source of the

factual issues raised; the whole of the

informatlon on whlrh the appellant's deleuates dCted was supplied

bv the

re.;pundr'nt, with the exception of three reports of the

lndubtrles Assistance

Commission,

each

of which

contained

observations of relevance	to	applicatlons	of the sort	being
consldered.

Under 55.271,

272 and 2 7 3 of

the Customs

Act

the

Minister

1 s empowered to make by-laws (under

5 5 . 2 7 1 ,

2 7 2 )

determinatlons

(under ss.273) havlnq

the

effect

applying

certaln items in the Customs Tarlff to particular goods

or classes

of goods.

The appllcation by the present respondent was

to obtaln

a by-law or determlnation applyina, to certain refractory bricks which it had imported, item 19 of Schedule 2 of the Customs Tar=

A_&

1966, whlch was expressed

as follows:

"15. Goods, as prescribed by by-law, being

aoods a sultable equivalent of which that is

the produce or manufacture	of Australia is
not reasonably available".

Had the application to the Minister been successful, then pursuant

to s.33A of

the Customs Tariff Act 1966

the goods would

have

become dutiable at a lesser rate than that otherwise applicable.

The factual question to which

t e material placed before

the primary Judge related was whether the qoods the subject

of he

application were

within the description in Item 19 of Schedule 2

set

out

above,

that 1s whether they were "goods a suitable

equlvalent of whlch

that 1s the

produce or manuiacture of

Australia 1 s

not reasonably available". That point was decided

adversely to the present respondent, by the Mlnlster's delegates, but his Honour held, as mentloned above, that there was no evldence to support thelr concluslon.

The imported products ds to which the questlon of the

level of

duty arose were refractory bricks supplied by Vietscher

klaunesltwerke Actien-Gesellschef t "Vletscher")

. The competina

Bustrallan products were refractory brlcks available from Harbison

ACI Fty. Ltd c"Harbison").

The present respondent had a need. in

1980. to reline a flash furnace at the Kalgoorlie Nickel

Smelter

whlch

it owns and operates.

It called

for bids from various

companies and about the time

it did

so Mr. D.R.T. Hall. a

metalluruical superintendent employed by the respondent,

wrote a

memorandum to the resident manaaer

the

smelter, dated

2 3

October 1980. commenting on the relative merits of imported and local refractory bricks. The memorandum seems to us of particular

importance, since it is

one of the few documents in the record

which miaht be reaarded as expressing an

objective rather than a

subjective view on the

crucial

factual

question.

Althouah

5 .

and not all of the Vietscher bricks	in question were to be used in
the critical areas specified.

In the context just mentioned,

it seems that "normal

duty"

is mtended

to refer to use in the converters, electric

furnace and non-critical areas of the

flash furnace.

The chief

critical areas of the flash furnace are, it	seems, the reaction
shaft and the side walls.

Other information before the delegates showed that local

refractories had

already

been

used

the

furnace

for back

lininqs. dnd it was claimed that the local product

would, at

least, be adequate	above	the	bath	line	and	in	the	roof
construction.

Other informatlon emanatinu from the present respondent

on which

the delegates mlqht properlv have relied is referred to

In an

undated summarv of discussions apparently held between

representatives of

the respondent and one of

the delegates. l'he

discussions included a statement o the effect that erosion of the

bricks was

caused, in part, by thermal shock. resulting in their

flakinq.

It was said that the respondent:

' I . . .

accepted

Harbison's

arquments

hat

refractories of partly

pre-sintered

ore

handle thermal shock better than brlcks made

whollv from

pre-sintered materials".

Most of the information supplied in the course of the discussions

recorded was in favour of the

view, whlch no doubt the respondent

honestly held, that

the

best

course

was to use, at least

6 .

principally, the imported

material.

The passage we have quoted

makes It clear, however, that the decision was not 'an

open and

shut'.one. but depended upon the weighing of conflictlng factors. The delegates also had before them assertions made by Harbison to the effect that their bricks were at least as aood as the

Vietscher bricks;

we refer, without quotina,

to telexes dated 30

January 1581 and

3 February 1981.

The position Harbison took

durlng the staoe when Its bid was beinq considered is most easlly

found. perhaps, in a telex dated

2 9 January 1581

which we would

summarise as follows. Harbison had

a new product called Nucon

60XD	whlch it sald showed lower wear rate in tests using the

respondent's flash furnace slao

than other Harbison products whlch

the respondent had used. Harbison was not prepared to offer

"performance

guarantees

on eventual

refractory

life"

but

recognised its "obligation to supply a

hiuh

quallty refractory

product".

The telex also clalmed

that "our regular urade Nucon

brlck" had compared Favourably in performance, alonaslde Imported

brands. in the respondent's No. 1 flash furnace.

is true that. at the request

of the

respondent,

Harblson later wrote to

say, In a letter dated

August 1982,

Lhat its product was not a "sultable equivalent"

to the Vietscher

bricks. That letter was wrltten

to support the claim for

a by-law

and asserted that the Harbison bricks were supplied

"with the

obiect of triallnq the product in this

practical appllcation". We

do not think the delegates were obliged to

attach great weight to

Harbison's later

stance, nor to ignore the inconsistency between

the statements which the respondent extracted from Harblson and

those which Harbison made of its own	volition during the biddinu
period.

7 .

There was also other information unfavourable

to the

Harbison product placed before the delegates, including a letter

dated 8

April 1981 from Brambles-Ruys Pty. Ltd. on behalf of the

respondent. Although Davies

J. relied on it, in our

view the

delegates might well have been

iustified in not acceptin9 the

submisslons in

that letter, some

of which did not appear to be

accurate. It asserted among other thlnas that

it had been decided

that 85% of the order would be placed inth "Veitch of Austria" Csic3 dnd "15% would also go to Harbison ACI for their new product

- Nucon XT,".

It is

not clear that that was ever the intention of

the respondent; however that map be, Mr.

D.R.T. Hall deposed, on

behalf of the respondent, that In the event Japanese bricks were used for the most arduous dutv: as to the

balance,

Vietscher

bricks were used in the main. tooether with "trlal patches"

Nucon 60Xlj

and 50.

The letter from Brambles-Rugs Pty. Ltd. was

also, it appears to us, of

doubtful reliability in so

far as it

asked that, in the examination

of the application. particular

account be

taken of

"two of thc stress factors associated with

this type of

furnace". The factors

mentloned were thermal shock

and wash erosion.

The letter implled, contrary to the

view of the

respondent referred to

above, that in

both these respects the

imported bricks were expected to perform in

a superior way;

the

view of the respondent, as well

ds that of Harbison, was that the

Harbison bricks resisted thermal shock	better than did those
offered by Vietscher.

The question is whether

on the whole of the material the

view was reasonably

open that the Harbison bricks constituted

"suitable equivalent" for some

or all

of the Vletscher bricks.

His Honour held that it was

not, principally for the reasons that

the Harbison bricks were "new and they had not been tried in any similar furnace", that they were not of the same composition as

the Vietscher bricks. that the latter

were less susceptible

thermal shock and that the performance

of the bricks was cruclal.

We are of the view, with respect,

that all of these

reasons were correctly stated by hls Honour, except that relatlng to thermal shock. Further, it has to be noted that special considerations may well have applled to the new type of Harbison brick, the Nucon 60XD. That aside, as to the other brlcks. in essence what the delegates had before them consisted merely in

assertlon and counter assertion,

unless the deleuates were obliged

to treat the claims made

Harblson in support of

Its

bid as

cancelled out

by the statements elicited from it to support the

respondent S application for a bv-ldw. Althouuh the respondent

obviouslv Preferred the Vietscher bricks. we think there

was no

reallv couent evidence before the deleuates that the Harblson

bricks (excludinq the Nucon 6OXD) were. ob?ectivelv speakina,

inferlor to the Vietschers. Harbison claimed that their brlcks

(other than the Illucon 60XD) had in

actual recent use in the

respondent's

flash

furnace

compared

favourably

with

imported

bricks and we	can	find	in	the	record no disproof of that
statement.

If the view of the primary Judge that there was

evidence

that

Harbison

bricks

constituted

suitable

equivalent is to be	upheld, that must be	so because of the
followina factors:

9 .

1. Vietscher was a better established manufacturer and

its products therefore had

a higher reputation.

2 .

It was important

obtain

bricks

from

very

reputable manufacturer. The costs

failure of

the furnace would be very sreat.

3 .

A s

to the Nucon

XD 60

bricks. althouoh they had

been subjected to some performance testing, they

had

not

actually

been

use

any

similar

furnace.

On the evidence available to them,

the delesates must.

we thlnk. have made those findinus.

The question then is whether

that necessarllg produces

the result that the Australian bricks

were not

a "suitable equivalent". That, in

turn, depends on the

meaninu of the expression.

It is

curious

that

although

the

Commonwealth

has

foreacne duty over many years on the basis that no suitable equivalent OI aoodr, imported or to be imported was available, the

critical

words do not

appear

have

received

any

judicial

explanation until Davles	J. delivered his reasons.	His Honour
remarked:

"Suitability for the applicant's purpose

required. The test is an objective one.

The

opinion of

the

applicant

the

manufacturer of the

goods cannot be decisive

but may be of relevance. To satisfy the test

of equivalence, goods need not

be identical

10.

but they must be readlly substitutable, that

is to say, they	must	be commerclally
interchangeable".

We accept, with respect, the correctness of

these views with the

exception of expression

"commercially

interchangeable".

The

relevance of that reservation

the facts of this case is that

the two types of goods being compared may have certain qualities markedlv dlfferent from one another pet each be, in all. a

suitable equlvalent

of the other. That the Austrian bricks, in

this case, were of markedly

different

compositlon

from

the

Australian

bricks

does

not

necessarlly

matter; the ultlmate

question is. takins

thelr

various

qualitles

all

all, and

conslderlns the purpose to which they were to be applled. could it

be said that the Harbison bricks would not perrorm thelr intended

function about as well as the Veitschers? We sav "about

as well"

because. havinu in mlnd the purpose of the

by-law

scheme, it is

unllkelv that precise equivalence was what the leuislature had in

mind and, indeed, that would seldom be found to exist	in practice;
questions of degree are necessarily involved.

It does not seem

to us possible, on the material.

assert that the concluslon the delegates reached was not open	to
them, applylna the test we have enunciated. One dlfficultv is

that

the documents do not

disclose

the

facts wlth

complete

clarlty. An aspect of their obscuritv 1 s that on 3 February 1561

Mr. D.H.T. Hall

recommended

the

resldent

manaaer

of the

respondent that there

be a purchase

of "refractorles of the

hiuhest quallty from Vietscher". That

was apparently in pursuance

of a "blanket recommendation" from Vietscher

"to use their hiuhest

11.

quality brick throughout the entire furnace" mentioned in the same

document. However the purchase order dated 17 March 1981 suggests

that in fact bricks of varying

qualities

were

ordered

from

Vietscher and we are not sure whether that was

in accordance with

the recommendation. We must also have reaard to the fact that the delegates recelved oral information from the respondent, a summarv

of which

is retrrred to above.

It may very well be

that, from

this or other sources of knowledse, the deleuates obtained a more accurate understanding of the facts than is available to us from a

perusal of

the documents. Harblson proposed a particular lavout

and mix of various grades of

its bricks, but

it is clpar that the

notion of suitable equivalence has

nothina to do with the

way the

order for the bricks came to be placed. What

the delegates had to

conslder

was

whether

the

Harbison

bricks,

or any of them,

constituted a sultable equivalent

of the Vietscher bricks actually

imported, or any sianificant number of them. We

do not think lt

possible to hold that lt was not open to the delegates

to arrlve

at a conclusion adverse to

the respondent on that question. It

true that the lack

of in-servlce experience of the Nucon W 6 0

brlcks was an important factcr. but. even as to that urade it was

not necessarily declslve.

We pass now

to consider the question whether the result

at which Davies J. arrived may be supported on other urounds.

His

Honour

held

that

one

the

decision

makers

was

"'unduly

influenced" by reports of the Industries Assistance Commission and "failed to uive weight" to a material aspect of the facts, namely that the Harbison bricks had not been adequately tested. As to

the former, we do not accept

that under the Administrative

12.

Decisions (Judicial Renew) Act 1977 a decision may be upset merely on the around that the decision maker save more weight to a relevant factor than the Court would have done, if it had had the function of making the decislon in the first instance; see Re

Moore;

ex parte Co-operative Bulk Handlins Ltd.

(1982) 56 ALJR

697.

As to the latter. we would make

simllar observation and

add that

the lack of practlcal testing applied to only one grade

of the Harbison bricks. We do not agree, with respect, that the

matters iust mentioned lustifled settinu the declsion aslde.

A more difficult problem, raised

by his Honour, is

xhether the decision

is vitiatea bv the contents

of a letter

written bv

Mr. C.W. Channon. one

the deleuates, dated

December 1582. dnd in particular bv the

followmu sentence:

"The fact that the local product had not been

proven In

servlce

not, in Itself,

consideratlon for by-law

admlssion".

That

was

said

derived

from

an Industrles

Assistance

Commission report, No. 268.

In determininq whether one product,

lntended to be put to practlcal use. is a suitable equivalent for

another.

dre of the

view that the fact that the alleued

equivalent has not been proved in practical use

may, and dependlnu

on the circumstances often would, be material.

If the letter

intended to convey

that

the

Industries

Assistance

Commissisn

report established a princlple contrary to that which we have iust

stated. then it was in error. More generally, any factor whatever

which may

throw light upon the suitability of a product

for its

13.

intended use may be relevant in determining an application for a

by-law.

So much is.

think. clear but it is less

certain

whether the letter

we have mentioned, and

in particular, the

sentence quoted,

intended to say that lack

of testing in service

was	necessarlly irrelevant. Further, the remark was pertinent

only to the quallties	of one grade of the Harbison bricks in
questlon.

the whole. we think the better view

is that the

letter should be read in

the way suggested by the

respondent, from

which it

follows that the decision left a relevant matter out of

account. On that basis, it must follow that the declslon cannot stand. for the point excluded from consideration cannot

be said to

be wlthout significance;

nor can It be postulated

that, but for

that error, the

decision

would

have

been

the

same.

To the

contrary:

the

evidence

showed

that

before

reference

the

Industrles Assistance Commisslon report, a decislon had been taken

to grant

a by-law

and it was the content of that report

which

seems to have caused a chanae

of mind.

We add two further comments.

Firstly, as we understood

the argument

for the respondent, it was belnq asserted that the

effect of the relevant statutory provisions was that

if there were

no Australian

croods, being "suitably equivalent" and

"reasonably

available", an applicant for a by-law must necessarily be successful, there beins no discretion to refuse an application. Althoush the matter was but briefly aruued, we should say that it

our view that

this

submission

incorrect

and

that

discretlon remains

to refuse an application for

a by-law on proper

grounds; it is unnecessary, in this

case, to determine what

matters are relevant to the exercise of that discretion.

Secondly, we understand that no problem arises, in this

case, as

to the price of the proffered Australian product. W e n

the price

ot a

suitable Australian product exceeds that

of- the

imported product.

a question wlll arise whether the former is

"reasonably available", but	wlth	that	problem	we	are	not
concerned.

In the

result, we agree that, for one

of the

reasons

qlven

by his

Honour, the decision should be set aside and the

matter remitted to the Minister for reconslderation.

However,

that reconsideration will be

on a basis significantly different

from

that

whlch would have been necessary had the Minlster

followed the decision

of the primary

Judge; in particular, of

course. we have

not

aqreed

with

hls

Honour's

view

that

conclusion adverse to the respondent on

the question whether any

of the Australlan bricks constltuted a suitable eauivalent was not

reasonablv

open.

that

sense

the

appellant

has

had

slaniticant success.

It 1s

necessary to vary the order of Davies

J . bv replacinu its second paraaraph

in the followinu way:

" 2 .

The decision under review is set aside

and

the

matter

is remitted

the

Minister for

Industry and Commerce for

reconsideration in

the

light

the

reasons of the Full Court".

15.

No other chanqe

in that order is required and in

particular the

order for costs made by his Honour should stand.

Half the costs

of the present appellant in relation

the appeal should,

think,

be paid

by the present respondent; that will adequately

reflect the extent	to which the appeal has had	a favourable
outcome.

I hereby certify that this and the

foarteeti (14) preceding pages are

true and accurate copy of the Reasons

for Judgment herein of the Court.

W-	Associate to

The Hon Mr Justice Woodward

Dated: 19 June 1985

[1985] FCA 271

19 Jun 1985