PAP Printers & Publishers Pty Ltd v Minister of State for Business & Consumer Affairs

Re: PAP PRINTERS & PUBLISHERS PTY. LTD.
And: THE MINISTER OF STATE FOR BUSINESS & CONSUMER AFFAIRS (1982) 66 FLR 341
No. VG90 of 1981
Appeal from Administrative Appeals Tribunal - Trade and Commerce -
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers J.(1), McGregor(2) and Fitzgerald(3) JJ.

CATCHWORDS

Appeal from Administrative Appeals Tribunal - error of law - application for bounty in respect of the manufacture of books by business associate of publisher - determination by Minister under s.4(2A) of Bounty (Books) Act 1969 of manufacturing cost component - purpose of bounty to encourage manufacture of books in Australia - provisions in Act to prevent exploitation - Ministerial function in forming opinion under s.4(2A) - proper use of quotations as an aid to formation by Minister of relevant opinion - whether bounty is in nature of a rebate - calculation of bounty on manufacturer's price less the bounty.

Bounty (Books) Act 1969 ss. 3, 4(1), 4(2), 4(2A), 4(3), 6, 7, 11, 17(2).

Trade and Commerce - Book bounty - Ministerial determination of manufacturing cost component of books - Price payable by publisher to printer exceeded publisher's retail price for books - Book manufacturer a business associate of book publisher - Application for review of Minister's determination - Administrative Appeals Tribunal's affirmation of ministerial determination - Appeal to Federal Court of Australia on questions of law - Whether power to determine manufacturing cost component is limited - Ministerial functions in forming opinion under s. 4(2A) of Bounty (Books) Act 1969 - Calculation of bounty - Whether price charged by manufacturer at arm's length from publisher comparable with price charged by other manufacturer - Whether ministerial opinion was justifiable - Whether basis for quotes chosen as manufacturing costs components were valid.

Administrative Law - Application for review of ministerial determination - Administrative Appeals Tribunal's affirmation of ministerial decision - Appeal to Federal Court of Australia on questions of law - Whether Administrative Appeals Tribunal performed its statutory duty to make determination - Administrative Appeals Tribunal Act 1975 (Cth), s. 29(1), 37(1), 43(1), 44(1), 44(4), 44(5) - Acts Interpretation Act 1901 (Cth), s. 15AA - Bounty (Books) Act 1969 (Cth), ss. 3, 4(1), 4(2), 4(2A), 4(3), 6, 7, 11, 17(2), 20A(ba).

HEADNOTE

Pursuant to s. 4(2A) of the Bounty (Books) Act 1969 (the Act), on 18th February, 1980, the Minister for Business and Consumer Affairs (the Minister) had determined the manufacturing cost component which was used in calculating bounty under the Act, in respect of certain books manufactured by the applicant PAP Printers & Publishers Pty. Ltd. (the printer) for PAP Book Company Pty. Ltd. (the publisher), which was a business associate of the publisher within the meaning of the Act.

The printer made an application for a review of the Minister's decision to the Administrative Appeals Tribunal (the Tribunal) pursuant to the provisions of s. 29(1) of the Administrative Appeals Tribunal Act 1975. On 28th April, 1981, the Tribunal affirmed the Minister's determination and the printer appealed to the Federal Court of Australia from the decision of the Tribunal.

The appellant printer contended that the respondent Minister had proceeded upon an erroneous view of the law whereby the determination was less than it would otherwise have been. The ground of the appeal against the decision of the Tribunal was that the Tribunal had proceeded by reference to an erroneous view of the law of such significance that the Tribunal's decision should be set aside and the matter should be remitted to the Minister for rehearing.

Evidence showed that the prices payable by the publisher to the appellant considerably exceeded the publisher's retail prices for the books and pursuant to the provisions of s. 4(2A) of the Act, the Minister was of the opinion that there were reasonable grounds for believing that the price paid or payable by the publisher to the appellant for the production of each book was greater than the price that, if the publisher had had the book produced by a manufacturer who was not a business associate of the publisher, would, in the ordinary course of business, have been charged by that other manufacturer for the production of each book.

Held: Per Smithers and Fitzgerald JJ., McGregor J. dissenting - The appeal would be allowed. The decision of the Administrative Appeals Tribunal dated 28th April, 1981, would be set aside. The matter would be remitted to the Tribunal for rehearing. (1) Per Smithers J. - The intention of s. 4(2A) of the Act is that the price by reference to which the Minister is to determine the manufacturing cost component is the price which the "other manufacturer" would have charged for carrying out the production processes involved in the production of the book as it was produced by the actual manufacturer.

(2) Per Smithers J. - The function to be performed by the Minister, and by the Tribunal on appeal from his decision, was to form an opinion as to the price that would have been charged by a manufacturer at arm's length from the publisher for carrying out the processes actually involved in the carrying out by the actual manufacturer of the manufacture of the book in the manner and circumstances in which they were actually carried out by the actual manufacturer.

(3) Per Smithers J. - The question for the Minister was what would have been the fair and reasonable charge for the work done in the actual manufacture of the book.

(4) Per Smithers J. - The quotations were not comparable in the relevant sense because the prices quoted did not represent prices for performing the productive processes actually performed in the circumstances in which they were performed. The real question raised by s. 4(2A) of the Act was not dealt with and the appropriate opinion was not formed by the Minister.

(5) Per Smithers J. - Where a manufacturer and a publisher agree upon a price and there is in the contract an express or implied term that the bounty, if received by the manufacturer, is to be paid to the publisher, or allowed in account to him, then, for the purposes of the Act and s. 4(1) in particular, the price paid or payable to the manufacturer by the publisher for the production of the book is that agreed price less the bounty.

(6) Per Fitzgerald J. - An essential prerequisite to the making of a choice between quotes was never performed by the Tribunal. No relationship essential to an assessment of the respective quotes was ever established between each of competitive and properly comparable quotes and the applications for bounty, or amongst the quotes themselves.

(7) Per Fitzgerald J. - The court appreciated that, as the Tribunal itself recognized, the Tribunal was confronted with a situation of quite unusual complexity and difficulty, occasioned by the way in which different books and different applications for bounty had been combined and by the nature of the material presented to the Tribunal.

Per Fitzgerald J. - Quaere: Whether the Tribunal performed its statutory duty to make afresh the determinations required on the material before it and whether the Tribunal did not merely decide that it was open to the Minister to make the determination which he did on the material before him.

Drake v. Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; Collins v. Minister for Immigration and Ethnic Affairs (1981) 58 FLR 407, referred to.

Per Fitzgerald J. - Quaere: Whether s. 4(2A) contains an implicit limitation upon the power to determine "manufacturing cost component" which precludes direct reliance upon the unmodified price of some "other manufacturer" which is not comparable to the applicant for the bounty, or which answers the further question of how a choice is to be made when prices are obtained from more than one "other manufacturer". There are fundamental problems in the practical operation of s. 4(2A) of the Act arising from its drafting.

(8) Per McGregor J. - The "relevant provision" in s. 4(2A)(b) of the Act does not require the ascertainment of a price that would have been charged by another manufacturer; or that the Minister should obtain competitive or any quotes on a proper comparable basis.

(9) Per McGregor J. - It is clear that the Tribunal found that the Minister did, in fact, obtain a number of quotations and from reputable printers being ones who could perform the contract, and in the ordinary course of their business. The Minister's opinion was justifiable in the sense of the best or preferable decision and one which the Tribunal might affirm within the terms of s. 43 of the Administrative Appeals Tribunal Act 1975.

Drake v. Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; Australasian Jam Company Pty. Ltd. v. Federal Commissioner of Taxation (1953) 88 CLR 23; Avon Downs Pty. Ltd. v. Federal Commissioner of Taxation (1949) 78 CLR 353; Denver Chemical Manufacturing Company v. Commissioner of Taxation (New South Wales) (1949) 79 CLR 296; Paramatta City Council v. Pestell (1972) 128 CLR 305, referred to.

HEARING

Melbourne, 1981, September 23; December 3-4,=x8; 1982, July 30.

#DATE 30:7:1982

APPEAL.

The appellant printer appealed on a question of law to the Federal Court of Australia from a decision of the Administrative Appeals Tribunal, whereby it affirmed a determination by the Minister for Business and Consumer Affairs. The appellant had made an application to the Tribunal for review of the respondent Minister's determinations pursuant to s. 29(1) of the Administrative Appeals Tribunal Act 1975.

The facts appear in the judgment.

R. Merkel, for the appellant.

J.M. Batt Q.C. and R.A. Sundberg, for the respondent Minister.

Cur. adv. vult.

Solicitor for the appellant: T. Irlicht.

Solicitor for the respondent Minister: B.J. O'Donovan, Commonwealth Crown Solicitor.

J.D. WHITEHEAD

ORDER

The Court Orders That:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal dated 28 April 1981 be set aside.

3. The matter be remitted to the Tribunal for rehearing.

4. The respondent pay the appellant's costs of the appeal. Appeal allowed.

JUDGE1

This appeal is brought from the decision of the Administrative Appeals Tribunal by which it affirmed the determination of the Minister for Business & Consumer Affairs of the amount of the manufacturing cost component in respect of certain books manufactured by the appellant for a publisher called PAP Book Company Pty. Ltd. The appellant contends that in so determining the amount of the manufacturing cost component in relation to such books the Minister had proceeded upon an erroneous view of the law whereby the determination was less than it would otherwise have been. The ground of the appeal against the decision of the Tribunal and affirming the Minister's determination is that the Tribunal itself proceeded by reference to an erroneous view of the law of such significance that its decision should be set aside and the matter remitted for hearing.

The subject of the proceeding is an application for payment of bounty in respect of the manufacture by the appellant of certain books. Under the provisions of the Bounty (Books) Act 1969 (the Act) bounty is payable to the manufacturer of a book manufactured by him for a publisher. The bounty is calculated as a percentage of the total manufacturing cost of the book (s.6). In the circumstances of this case the total manufacturing cost of the appellant was what is called the manufacturing cost component of the book in relation to him (s.4 (1)(b)). In the case of a manufacturer who is the sole manufacturer of a book and not the publisher thereof the manufacturing cost component of the book in relation to him shall, subject to sub-sections (2), (2A) and (3) of s.4 be deemed to be the price paid or payable to him by the publisher for the production of the book.

The appellant in this case was what is termed in s.4(2A) of the Act a business associate of the publisher. As a result, s.4(2A) of the Act is applicable in relation to the application for bounty. It is in the following terms:-

'(2A) Where -

(a) a person who is the manufacturer or a manufacturer of a book is a business associate of the publisher of the book; and

(b) the Minister is of the opinion that there are reasonable grounds for believing that the price paid or payable to that person for the production of the book or for any production process or production processes carried out in relation to the book, being the price that, under sub-paragraph (1)(a)(i) or (ii), is, subject to this sub-section (2), the manufacturing cost component of the book in relation to that person, is greater than the price that, if the publisher had had the book produced or that production process or those production processes carried out by a manufacturer who was not a business associate of the publisher, would, in the ordinary course of business, have been charged by that other manufacturer for the production of the book or for that production process or those production processes,

the Minister may, by instrument in writing, determine that, for the purposes of this Act, that manufacturing cost component is such lower amount as would, in his opinion, have been the amount of that component if that price paid or payable had been equal to the price that would have been so charged by the other manufacturer if the publisher had had the book so produced or that process or those processes so carried out;'

What are said to be the relevant alleged errors of law were ultimately formulated by the appellant as follows:-

1. The Tribunal was in error in affirming the determination of the Minister dated the 18th February 1980 as the determination was not made in accordance with the provisions of Section 4(2A) of the Act in that -

(a) it was not in relation to the production of the books the subject of the said claims for bounty;

(b) it was in respect of the production of books upon and subject to quite different specifications than those applicable to the actual production of the books the subject of the claim for bounty by the appellant for PAP Book Company Pty. Ltd.;

(c) it related to the production of books by the use of a different production process to that used in the production of the books by the appellant for PAP Book Company Pty. Ltd. which were the subject of the said claims for bounty.'

2. The Administrative Appeals Tribunal was in error in concluding that upon the proper construction of Section 4(2A) of the Bounty (Books) Act 1969 the price that was to be deemed by the Section to be the manufacturing cost component pursuant to that Section was not the -

(a) highest amount that would have been charged by another comparable manufacturer using the same production process of the production of each of the books the subject of the appellant's claims for bounty provided that that amount was less than the price paid or payable to the appellant by PAP Book Company Pty. Ltd. in respect of each such book; alternatively

...

3. The Tribunal was in error in not concluding that the amount deemed to be the manufacturing cost component pursuant to Section 4(2A) was to be calculated independently of and without regard to the amount of bounty (if any) that was payable pursuant to the provisions of the Act.

In the consideration of the questions so raised the initial task is to determine what the function of the Minister is in a situation to which s.4(2A) of the Act is applicable.

The Ministerial function

The nature of the Minister's function is to be ascertained from the terms of the Act considered by reference to the purpose of the Act as disclosed thereby. That purpose is readily discernible. It is, I think of critical significance in relation to the problem before the Court. It is a single and positive purpose, namely to encourage Australian publishers, whoever and wherever they are in Australia to have books which they propose to publish, manufactured by Australian printers, whoever and wherever they are in Australia, provided that pursuant to s.11 of the Act the premises where such printers produce books have been registered by the Minister. This purpose is manifest in the bounty scheme set up by the Act. Money is to be paid to manufacturers of books so that they can charge prices which, hopefully, will enable publishers to sell books manufactured outside Australia. And it is not to be doubted that included amongst those intended to be encouraged by the provisions of the bounty are publishers and printers who are business associates of each other and do business together in the production of books.

But just as Parliament intended to encourage book printing in Australia it did not intend to permit its bounty scheme to be exploited by publishers or printers who might make excessive claims in support of applications for bounty. Parliament was alert to the circumstances in which such excessive claims might arise and provided against such eventualities in s.4(2) (2A) and (3) of the Act. One such provision relates to the situation where application is made by a manufacturer who has produced a book for a publisher for a bounty calcuated by reference to the manufacturing cost component of the book in accordance with s.6 of the Act, and it appears that the applicant is a business associate of the publisher. In that situation the provisions of s.4(2A) of the Act are applicable and it becomes the function of the Minister to consider whether there are reasonable grounds for believing that the price charged by the manufacturer to the publisher was greater than the price which, if the publisher had had the book produced by another manufacturer, would, in the ordinary course of business, have been the price charged by that other manufacturer.

The consideration of the Minister is directed to the amount of the price charged by the manufacturer for production of the book, and not to the manufacturing cost component because where the applicant for bounty is the sole manufacturer of the book, and not also the publisher then, subject to sub-section (2), (2A), and (3) of s.4, the manufacturing cost component is deemed to be the price paid or payable to him by the publisher of the book for the production thereof (see s.4(1)). And it is by reference to the manufacturing cost component that the bounty is calculated (see s.4(1)(b) and s.6)).

Section 4(2) relates to cases where in the Minister's opinion there are reasonable grounds for believing that the price charged by the manufacturer for production of a book was fixed with a view to increasing the amount of the bounty payable.

Section 4(3) relates to cases in which the publisher of the book is also the manufacturer of it and the Minister is of the opinion that there are reasonable grounds for believing that the amount stated by him to be the cost to him of producing the book is greater than the price, which, if the publisher had had the book produced by another manufacturer, would, in the ordinary course of business, have been the price charged by that other manufacturer.

Section 4(2A) relates to a case where the manufacturer and publisher are business associates. Realistically, it recognises that in a case where the publisher and the manufacturer are not at arm's length, the price charged by the manufacturer may be greater than it would have been if the parties had been at arm's length. The greater the price the greater the bounty. Of course overpricing could occur either as the result of misconduct or without misconduct. But s.4(2A) does not concern itself with that aspect of the matter. It applies equally to the just and the unjust. It operates solely by reference to the Minister's opinion as to the price appropriate to have been charged in the relevant transaction. Its object is protection of the revenue against overpricing for work done not to introduce conditions under which a registered country printer working with old and less efficient machinery and high overheads would necessarily be penalised if he happened to be the business associate of the publisher. The section says in substance, that in a case in which the Minister is of the opinion that if the publisher had had the book produced by another manufacturer not being a business asociate, the price charged by that manufacturer for the production of the book would have been lower than the price actually charged by the actual manufacturer who was a business associate, he may determine the amount of the manufacturing cost component by reference to the price that would have been charged by the other manufacturer by whom the publisher had had the book published, if the publisher had had the book produced by a manufacturer not being a business associate. It is to be noted that the other manufacturer contemplated is not any other manufacturer, but the manufacturer by whom the publisher would have had the book produced if he had chosen to employ that manufacturer rather than his business associate. The concept is of a notional transaction in which, for the actual manufacturer, a manufacturer chosen by the publisher but not being a business associate, is substituted, the transaction being in all other respects the same. When the price that would have been so charged is estalished the Minister may determine the manufacturing cost component at such lower amount as in his opinion it would have been had the price so established been the actual price.

The price that would have been so charged must be established either as a matter of fact or as a matter of Ministerial opinion. It is my opinion that the section requires the latter. According to s.4 (1) of the Act the manufacturing cost component is the price paid or payable by the publisher to the manufacturer. Thus once the price is established the manufacturing cost component is necessarily that price. The only aspect of the function of the Minister in which there is scope for the formation of an opinion is in relation to the price that would have been charged by the 'other manufacturer'. The language of sub-sections (2), (2A) and (3) of s.4 are similar in this respect. In sub-sections (2) and (3) the Minister is required to form an opinion as to a price or cost which is the price or cost of an actual transaction. In sub-section (2A) the enquiry is as to theprice that would have been charged in a notional transaction. That such a price should be ascertained as a matter of opinion i logical and renders harmonious the legislative approach in the three relevant sub-sections. Accordingly the relevant price is that which in the Minister's opinion would have been so charged by the notional manufacturer who would have been engaged to produce the book if the publisher had had the book produced by him.

It is important to note that the criteria by which the Minister is required to form his opinion, is not the price at which the publisher could have had the book produced by another manufacturer, but the price which the publisher would have been charged by the other manufacturer for the work of producing the book if the publisher had had the book produced by another manufacturer. But the nature of the opinion to be formed requires elucidation.

Nature of the Opinion to be Formed

It is essential that the Minister should address his mind correctly to what it is that he is required to have an opinion about. It is the price at which another manufacturer carrying out the production processes which were carried out by the original manufacturer, would have charged for carrying out those processes if he had been in the shoes of the actual manufacturer? Or is it the price which some other manufacturer not being a business associate would have charged to produce the book considered as an end product? If the former then the concept is that the other manufacturer being a person at arms length to the publisher would produce the book at the location and premises of the actual manufacturer with his machinery and resources and carrying his overheads, and the relevant price would be that which in the Minister's opinion the other manufacturer would charge for carrying out those production processes in those circumstances. If the latter then the relevant price would be that which in the opinion of the Minister some other manufacturer would charge for producing the book as a finished article at his own premises, using his own machinery and resources and by his methods and in the circumstances in which he carries out his book manufacturing activities.

It is clear that the price charged by a manufacturer standing in the shoes of the actual manufacturer, and so carrying out the processes involved in so producing the book, must, where the actual manufacturer is a relatively small country printer using machinery and employing methods not the most modern and probably with high overhead expenses, be greater than the price that would be charged by a metropolitan manufacturer with the latest machinery and using modern methods for producing the book considered as an end product. In the present case the information before the Minister led him to adopt a price which would have been charged by a manufacturer of this second category whereas the books in question had been produced by a manufacturer of the first category. For practical purposes it would be a rare occurrence that a manufacturer operating without the advantage of having the most modern efficient machinery would not, quite fairly and reasonably, charge a price greater than that which another manufacturer with the latest equipment and business organization would charge for the production of the book considered as an end product. If the less modern and perhaps less efficient manufacturer at arm's length to the publisher, then according to the Act, his price, although inevitably greater than that which would have been charged by his more modern competitor, is acceptable as the manufacturing cost component by reference to which the bounty is calculated. If that manufacturer be a business associate of the publisher and charged that same genuine price, it would be in accordance with the purpose of the Act that that price should be the basis for the statutory bounty payable to him. That can only be so if the price the subject of the Minister's opinion under s.4(2A), is the price that would have been charged by another manufacturer in the applicant's shoes producing the book by carrying out the same production processes as were carried out by him. If it were that the price the subject of the Minister's opinion under s.4 (2A) of the Act is the price that would have been charged by a modern manufacturer operating with the latest machinery and methods, then, no matter how genuine the charge of the actual manufacturer, albeit a business associate of the publisher, the price of the modern manufacturer must be lower than the genuine price charged by the manufacturer who was a business associate. On that basis the actual manufacturer must be penalised not because his price is an inflated price but because he was a business associate. He would have a price attributed to his transaction below that which another manufacturer would have charged, indeed would have had to charge, for producing the book according to the processes by which it in fact produced. It is most unlikely that this result is intended. It would mean that in the circumstances postulated the bounty payable to the manufacturer being a business associate of the publisher would always be calculated by reference to a figure lower than and having no real relation to the costs actually incurred in producing the book. It would operate to discourage rather than encourage persons in the relationship of business associate with a publisher from undertaking the production of books. So to penalise perfectly honest printers in relation to transactions in which they are encouraged to engage would seem quite contrary to the purposes of the Act.

The object of S.4(2A) as seen in the context of the Act, generally, is to remove from the price charged by a business associate that component of the price, if any, which exceeds what the price would have been if the transaction had been between persons at arm's length. This view is supported by reference to s.4(2). Section 4 (2) provides that where there are reasonable grounds for believing that the price paid by the publisher to the manufacturer was fixed with a view to increasing the amount of bounty payable in respect of the book, the Minister may determine the manufacturing cost component at such lower amount as would, in his opinion, have been the amount thereof if the price had not been fixed with a view to increasing the amount of bounty. The provision aims to ensure that the bounty is paid upon the true manufacturing cost. It is of some importance to note that under s.4(2) the cost would be that incurred in the production of the book at the registered premises of the actual manufacturer of the book with his overheads, by his methods, and with the use of his machinery, ancient or modern. The situation envisaged is one in which it is believed that there has been an attempt to defraud the Commonwealth by both the manufacturer and publisher. Notwithstanding such impropriety the statutory command is that, so far as the Minister is concerned, the manufacturing cost component and thus the amount on which bounty is to be paid, shall be the true actual cost to the actual manufacturer.

The inevitable conclusion to be drawn from this is that the legislature does not regard even impropriety as a reason to deprive the manufacturer of a bounty calculated upon his actual costs, such costs being determined according to the opinion of the Minister. How much less, then, is it likely that the Act intends that persons involved in transactions untainted by impropriety should be deprived of bounty calculated according to real costs. To employ a manufacturer who is a business associate is in no sense an impropriety. Impropriety is dealt with by s.17(2) of the Act which provides penalties for misleading statements and other misconduct.

Section 4(3) is also relevant. It deals with cases in which there are reasonable grounds for believing that a publisher of a book who was also the manufacturer thereof has overstated the amount of his manufacturing cost component. In such a case the Minister may determine that the manufacturing cost component is such lower amount as in his opinion, it would have been if the manufacturer had had the book produced or the relevant processes therein carried outby another manufacturer. Here again t would appear that it is the intention of the Act that notwithstanding such overstatement the bounty is payable by reference to what the amount of the manufacturing cost component would have been if accurately stated.

There is, I think, in the foregoing, strong support for the view that the intention to be found in s.4(2A) of the Act is that the price by reference to which the Minister is to determine the manufacturing cost component is the price which the 'other manufacturer' would have charged for carrying out the production processes involved in the production of the book as it was produced by the actual manufacturer.

I think, that this appears from the text of s.4(2A). It is important to note the reference in the section to 'any production process or production processes carried out in relation to the book'. The section contemplates that the part played by the business associate may not extend to all the production rocesses involved in the production of the book. It provides that with respect to the price charged by the business associate for any such production process or processes carried out by him in relation to the book the Minister may consider whether it is greater than would have been charged by another manufacturer for carrying out that production process or those processes. If, in his opinion it is, then the Minister may determine the manufacturing cost component referable to it at an amount reduced accordingly. This provision concerning separate production processes carried out, and the assessment of the prices that would have been charged by another manufacturer 'for that production process or those processes' appears to reflect the concept that it is the price in respect of the work actually done as it was done, with which the Minister is to be concerned. That concept is out of harmony with the end result approach because where a book is produced by modern methods, production processes may be different or various processes involved in production by older methods may be eliminated altogether. In this very case it appears in the evidence of Mr. Collins (Vol II p.398) that the Web Offset Machine used by Hedges & Bell 'cuts out a folding operation and certain collating operations' which were part of the sheet fed process emplyed by the appellant.

Finally, for the purpose of understanding s.4(2A) the definitions of 'production' and production processes are significant. In s.3 of the Act 'production' in relation to a book means:

' 'production', in relation to a book, means the printing and binding of the book, and includes all production processes carried out in relation to the book, and 'produce' has a corresponding meaning;'

and, 'production process' means:

' 'production process' means any process carried out in the course of the printing or binding of books and, in relation to a particular book, means such a process so carried out in relation to that book;'

It is apparent therefore that when s.4(2A) speaks of the price that another manufacturer would have charged for the production of the book it contemplates the price that would have been charged by him for performing all the production processes carried out in relation to the book. What is envisaged is the carrying out of the production of the book in all respects as it was carried out save that the element giving rise to the price investigation, namely the business association between publisher and manufacturer, is eliminated. And that, unlike the end result approach, is a just and rational approach reflecting the specific purposes of the Act in relation to a class of transaction which the Act contemplates will be entered into by honest publishers and manufacturers.

It follows that the function to be performed by the Minister and by the Tribunal on appeal from his decision was to form an opinion as to the price that would have been charged by a manufacturer at arm's length from the publisher for carrying out the processes actually involved in the carrying out by the actual manufacturer of the manufacture of the book in the manner and circumstances in which they were actually carried out by the actual manufacturer.

Formation of the Opinion - Relevant Practical Steps

The Minister cannot form his opinion in a vacuum. An opinion is defined in the Chambers Twentieth Century Dictionary as 'what seems to one to be probably true'. It is probably true, and the section no doubt proceeds on the basis, that another manufacturer in the shoes of the actual manufacturer would have made, and indeed would have been bound to make, a charge fair and reasonable in the circumstances. That would be implied in his contract with the publisher. The question for the Minister was therefore what would have been the fair and reasonable charge for the work done in the actual manufacture of the book. This may be ascertained as a matter of probability sufficient to justify the formation of an opinion by various ways. It is similar to the task commonly performed by the Courts faced with the issue as to whether charges made for work done were fair and reasonable. The immediately apparent step to be taken is to identify the work done and the circumstances in which it was done and to obtain advice from persons possibly in the department or in the trade competent to say what would be a fair and reasonable charge for that work. The appellant himself may and probably should be heard on the issue. If quotations are obtained there is great difficulty in ensuring that the quotation relate to the real enquiry. If quotations are sought from the manufacturer in relation merely, to the achievement of the finished article, the book as an end result, the amount quoted may well have only remote relevance to the fair and reasonable cost of doing the actual work in question in the actual circumstances in which it was done. In the present case 'end result' quotations were obtained from first class printers with modern machinery. As the quotations were of different amounts the task of the Minister was treated by the Tribunal as one of making a choice of one or other of the prices quoted. It was recognised that for the purpose in hand the quotations should be comparable, but it is clear that when the Tribunal spoke of 'comparable quotes' it was referring, merely, to quotations from manufacturers who had the ability and willingness to produce the book in the quality and volume required. Thus it is stated in the reasons for decision as follows:-

'In the present circumstances, in the context of s.4(2A) of the Act, what does this mean? The Minister (and the public servant advising him) should obtain competitive quotes on a proper comparable basis. Having done s he is entitled to take as his benchmark the lowest quotation obtained. To do otherwise is to deny the principle of maximum satisfaction with minimum use of resources. In considering competitive quotes for performing the sae function it is undoubtedly proper to consider factors other than price, for example, quality of performance, and ability to perform, physically and economically. The normal business course would be to take the lowest quotation consistent with a proper job being done. This may not always mean taking the lowest figure. But the normal course of a prudent publisher would be to seek quotations from reliable printers experienced in the kind of work required. For a high class book a publisher would not go to a printer whose main work was in the field of 'jobbing'. Nor would a high class printer necessarily be the best for a cheap publication. A book requiring a long production run would be a different project from one with a small run.

Taking these considerations in relation to the needs of the book company in the present case, the following may be said:-

(i) Quality is hardly significant. The publications are not quality publications by any standards. Seemingly anyone who can print and assemble could do so to the required standard.

(ii) There is no suggestion that ability to perform is in doubt with any of the quoting firms. There is no evidence that time schedules were critical, or that the financial standing or the likelihood of any of the quoting firms staying in business were in doubt.

In these circumstances the respondent had, in our opinion, a clear entitlement to adopt the price represented by the lowest quotation. We do not mean to say that when the Minister approaches the making of a Determination he must search far and wide so as to obtain a lower and lower price upon which to rely. But when he has in fact obtained a number of quotations from reputable printers who would be able to perform the supposed contract in the ordinary course of their business, then he is in our opinion entitled to take into account for the purpose of making his Determination the lowest quotation consistent with comparable standards of performance.'

In the situation in which the Minister and the Tribunal had before them different quotations for the production of books, as an end result, there was no ready means of deciding which quotation should be adopted. The principle applied was that it was permissible and indeed necessary to at by reference to the notion that, for the purposes of the exercise, the Minister and thus the Tribunal, were in a fiduciary position, that they were under a duty to protect the public purse and should therefore choose the lowest quote. I cannot think this was a sound view. The task was not one of distributing public money according to some kind of discretion. It was to form an opinion as to what price somebody, not being a business associate, would have charged for doing the work of producing a book or books. That was not a discretionary task but the formation of an opinion as to what the fact, the price, was. When the opinion as to the relevant price was formed the amount of money to be paid out was fixed by the terms of the Act and the duty was to pay out the sum so fixed. Parliament wished that sum to be paid out to achieve the purpose of having books produced in Australia. But by exercising a choice of one of the quotations, and preferably not the highest, the real task was not performed. If the quotations were to be used at all that use could only be as a guide to what would have been the fair and reasonable charge for carrying out the processes actually carried out. Merely as quotations for the finished article or end result they were an unsure and potentially misleading guide for that purpose. They might have been used in conjunction with other information if available, as data by reference to which and y making appropriate allowances for the fair and reasonable price for performing the actual processes performed by the actual manufacturer in the circumstances in he was placed might have been ascertained. But there was no such information and more importantly, the quotes were not used in that way or for that purpose. The quotations were not comparable in the relevant sense because the prices quoted did not represent prices for performing the productive processes actually performed in the circumstances in which they were performed.

Thus, the real question raised by s.4(2A) was not dealt with. The appropriate opinion was not formed. Accordingly, the substande of the first ground of appeal is established.

Ground of Appeal - numbered two above

The second ground of appeal would be relevant if the problem were really that of making a choice between quotations for the production of the book as a finished article. If that were the case it would be my view that the choice would have to be the highest quote. This would follow from the circumstances that the Minister could not know by which other manufacturer the publisher would have had the book produced and therefore could not have an opinion that the manufacturer chosen by him to produce the book would have been other than the manufacturer who would have charged the highest price. But in view of the true nature of the question arising under s.4(2A). I do not think this ground of appeal is relevant to the appeal.

Bounty as a Rebate - Ground of Appeal - numbered three above

The Tribunal took the view, and it was argued by the Respondent at the hearing, that the price upon which bounty is to be calculated is the price payable to the manufacturer by the publisher less the amount of bounty. It sees desirable to state an opinion in respect of this question.

The scheme of the Act as appearing from the combined effect of s.4(1) and s.6 is that the bounty of one third of the price payable to the manufacturer by the publisher is payable by the Commonwealth to the manufacturer. In the case of there being more than one person who contributed to the production of a book the bounty is payable to those persons (see s.7(1)(b)). In a case where the publisher of a book supplied any paper or binding materials free of charge to the manufacturer for use in the production of the book, the bounty ascertained in accordance with s.6(1) of the Act is increased by 25% of the publisher's paper costs in relation to the book. In that case the publisher who so contributed to the production of the book is entitled to the amount of such increase.

In s.6(1) the bounty is expressed to be 33 1/3% of the total manufacturing cost of the book. But in s.4(1)(a)(i) the price payable by, for instance, a publisher to a sole manufacturer of the book is deemed to be the manufacturing cost component of the book and in such a case that manufacturing cost is deemed to be the total manufacturing cost of the book (see s.4(1)(b)(i)).

The Act does not contain provisions limiting in any way the terms of the contract which may be made between manufacturer and publisher. Accordingly the manufacturer and publisher may agree upon any price and other conditions relating to the production of the book. Assuming the parties are acting bona fide those terms will be determined by the relevant state of the market. The manufacturer may charge any price to which the publisher will agree. In determining the price at which he will produce the book the manufacturer, if operating from premises registered for the carrying out of any production process pursuant to s.11 of the Act, will inevitably take into account the likelihood that he will be entitled to a bounty on his total manufacturing costs as ascertained in accordance with the Act. from a practical point of view therefore, once the general potential price level is in mind, the manufacturer may quote a price on the basis that he will keep for himself the amount of any bounty received, or he can quote a price on the basis that he will pay to the publisher the amount of the bounty when received by him.

The Court was told that current practice is to adopt this latter procedure and that it was in this case adopted by the manufacturer. But it need not be and so far as the Act is concerned there is no hint that one or the other course should be followed. The Act says the manufacturer is to receive a bounty of 33 1/3% of his total manufacturing cost and leaves it at that. It is hardly to be thought however, that the manufacturer or the manufacturer and publisher between them are to receive a higher bounty if, in any particular case, the latter course is adopted rather than the former. Yet, unless, where the latter course is adopted, the payment to the publisher by the manufacturer of the bounty received by him is regarded as a rebate for the purposes of s.3(7) of the Act, that course would produce a higher bounty than would the former. Thus, if the return aimed at by the manufacturer in respect of the production of a book be $100 and the manufacturer proposes to retain for himself the bounty when received then the price charged by him to the publisher would be $75. The bounty being one third of this price would be $25. But if he charges the full $100 to the publisher under an arrangement that the bounty will be paid to the publisher if and when received, and bounty is payable on that $100, then the bounty received is $33.33, the net return to him is $100, and the publisher's outlay is reduced to $66.67. It will be seen that in this case the bounty is not really 33 1/3% of the total manufacturing cost of the manufacturer but it is 33 1/3% of that cost plus an amount of profit. Further the additional amount of bounty goes not to the manufacturer but to the publisher. And when it goes to the publisher it does not relate to or have any connection with his contribution to production of the book because, unless he supplied paper or binding, he will have made no contribution.

It is difficult however, to think that a payment or repayment by the manufacturer to the publisher of the amount of bounty when received is not a rebate. The Shorter Oxford Dictionary gives as the meaning of 'rebate' the following: 'A reduction of a sum of money to be paid, a discount; also, a repayment.' The Random House Dictionary of the English Language gives as the meaning of the noun: '1. A return of part of the original payment for some service or merchandise; partial refund.' Of the verb the following definition is given: '2. To allow as a discount. 3. To deduct (a certain amount), as from a total. 4. To return (part of an original payment).' A repayment in respect of the price already paid, or a credit against and thus in respect of the price remaining payable under an agreement for such repayment or credit in a certain event is inevitably a rebate. The price paid or payable is the only item in respect to which, as between the parties, the repayment or credit can relate. There is no sound basis upon which the payment of the bounty can in some way, be regarded as a payment arising from circumstances outside the contract according to which the fiancial obligations between the parties were fixed. The arrangement or understanding concerning the payment by the Manufacturer to the publisher is inevitably an express or implied term of that contract. If a bounty is received repayment of part of the price or reduction of the price proceeds according to that term.

It is to be observed also that if, where the price is agreed upon on the basis that the bounty is to be repaid or credited to the publisher, the bounty is calculated on that price less the bounty, the amount of the bounty will be same as if the price payable to the manufacturer by the publisher had been fixed on the basis that the manufacturer was to retain the bounty. It was argued that to deduct the bounty from the amount on which it is to be calculated before it is known what that bounty is is an impossibility. But by the assistance of algebra it is readily achievable. Thus if the bounty is to be one third of the gross price less the bounty and 'x' is the amount of the bounty in dollars and 'y' is the gross price paid or payable by manufacturer to publisher, then, if the manufacturer is to allow the publisher the whole of the bounty -

x = y - x

--------- 3 accordingly, 3 x = y - x, 4 x = y and x = y - 4

So that if y is 100 the bounty is 25 and the net price is 75.

On payment or credit of $25 to the publisher the result is as it would have been that the publisher paid $75 and the manufacturer received $100.

Accordingly, in my opinion where a manufacturer and publisher agree upon a price and there is in the contract an express or implied term that the bounty if received by the manufacturer is to be paid to the publisher or allowed in account to him, then, for the purposes of the Act and s.4(1) in particular, the price paid or payable to the manufacturer by the publisher for the production of the book is that agreed price less the bounty.

Accordingly the third ground of appeal is not sustained.

Rehearing

The matter must be remitted to the Tribunal for rehearing. Such rehearing should proceed on the basis that the opinion to be formed by the Tribunal, and which ought to have been formed by the Minister pursuant to s.4(2A) of the Act as to the amount 'as would ... have been the amount of the manufacturing cost component' if the publisher had had the book produced or the relevant process or processes carried out by a manufacturer who was not a business associate of the publisher were the price which would have been charged in the actual transaction between the publisher and the manufacturer by another manufacturer not being a business associate of the publisher if that other manufacturer had produced the books in question in the manner and circumstances in which they were actually produced rather than an opinion as to the price which would have been charged by another manufacturer contracting to produce the books as an end result in some other manner and circumstances chosen by him. Accordingly the Court should order that the appeal be allowed and the Tribunal rehear the review of the Minister's determinations and that the Minister pay the appellant's costs of this appeal.

JUDGE2

PAP PRINTERS & PUBLISHERS PTY. LTD. (applicant printer) appeals from a decision of the Administrative Appeals Tribunal (Tribunal) given on 28 April 1981 whereby it affirmed a determination by THE MINISTER OF STATE FOR BUSINESS & CONSUMER AFFAIRS (the Minister) made by him on 18 February 1980.

The Minister had determined the manufacturing cost component under sub-s.(2A) of s.4 of Bounty (Books) Act 1969 (the Act) in respect of certain cookery and other books printed by the applicant printer and to be published by PAP Book Company Pty. Ltd. (publisher). It is convenient to set out some relevant sections of the Act.
"3. (1) In this Act, unless the contrary intention appears -

"Australian book" means a book each production process in relation to which was carried out at registered premises;

"authorized person" means a person who is, for the time being, an authorized person for the purposes of this Act by virtue of an appointment under section 12;

"book" means a publication that is in book form;

"bounty" means bounty under this Act, and includes an advance on account of bounty under section 10;

"childrens picture book" means a book intended for children in which pictures provide the principle interest, whether the pictures are complete or include pictures intended to be coloured or to have any other thing done to them, or are intended to be made or completed by the joining of dots or otherwise;

"Collector" means Collector of Customs for a State or for a Territory;

"document" includes book;

"manufacturer" means a person who carries out all or any of the production processes in relation to books and, in relation to a particular book, means -

(a) where one person carries out all the production processes in relation to the book - that person; or

(b) where two or more persons respectively carry out different production processes in relation to the book -each of those persons;

"production", in relation to a book, means the printing and binding of the book, and includes all production processes carried out in relation to the book, and "produce" has a corresponding meaning;

"production process" means any process carried out in the course of the printing or binding of books and, in relation to a particular book, means such a process so carried out in relation to that book;

"protective cover", in relation to a book, means a cover for sale with the book, being a cover that is intended to protect the book while the book is in use;

. . . .
"registered premises" means premises registered by the Minister under section 11;

"textbook" means a book intended for use solely or principally in connexion with education provided at or by a recognized educational institution or recognized institutions, but does not include a book that is, in whole or in substantial part, a collection of examination papers, or copies of examination papers, used in past examinations;

. . . .
"the publisher" in relation to a book, includes a publisher who is also the sole manufacturer or a manufacturer of the book;

"the sole manufacturer" in relation to a book, means a manufacturer of the book who carries out all the production processes in relation to the book.

. . . .

(5) For the purposes of this Act, 2 persons shall be taken to be business associates if -

(a) one has an interest, whether direct or indirect, in the business or property of the other;

(b) both have an interest, whether direct or indirect, in the same business or property; or

(c) another person has an interest, whether direct or indirect, in the business or property of each of them.

. . . .

(7) For the purposes of this Act, the price paid or payable by a person for the production of a book, for a production process or production processes in relation to a book, or for paper or binding materials, shall be taken to be the gross price that he is charged for that production, for that production process or those production processes, or for that paper or those materials, as the case may be, less the amount of any rebate or discount allowable in respect of the price, not being a rebate or discount for cash payment or prompt payment.

. . . . .

4. (1) For the purposes of this Act -

(a) the manufacturing cost component of a book, in relation to a person who is the manufacturer or a manufacturer of the book, shall, subject to sub-sections (2), (2A) and (3), be deemed to be

(i) where the person is the sole manufacturer of the book and is not the publisher of the book - the price paid or payable to him by the publisher of the book for the production of the book;

(ii) where the person is one of 2 or more manufacturers of the book and is not the publisher of the book - the price paid or payable to him by the publisher of the book for the production process or production processes carried out by him in relation to the book;

(iii) where the person is the sole manufacturer of the book and is also the publisher of the book - the cost to him of producing the book; or

(iv) where the person is one of 2 or more manufacturers of the book and is also the publisher of the book - the cost to him of carrying out any production process or production processes in relation to the book; and
other manufacturer if the publisher had had the book so produced or that process or those processes so carried out.

. . . . . .

(5) A reference in sub-section (1) to the price paid or payable to the manufacturer or a manufacturer of a book by the publisher of the book for the production of the book or for any production process or production processes carried out in relation to the book shall be read as including a reference to any part of that price that relates to the cost to the manufacturer of any paper or binding materials used by him in the production of the book or in carrying out that production process or those production processes, other than the cost to him of any such paper or binding materials purchased by him from the publisher of the book and a reference in that sub-section to the cost to the manufacturer or a manufacturer of a book, being the publisher of the book, of producing the book or of carrying out any production process or production processes in relation to the book shall be read as including a reference to the cost to him of any paper or binding materials used by him in the production of the book or in carrying out that production process or those production processes.

(6) A reference in sub-section (1) to the price paid or payable to the manufacturer or a manufacturer of a book by the publisher of the book for the production of the book or for any production process or production processes carried out in relation to the book shall be read as including a reference to any price paid by the publisher for the cost to the manufacturer of any protective cover for use with the book and for the cost to the manufacturer of any packaging of the book for the purposes of transport or sale, and a reference in that sub-section to the cost to the manufacturer or a manufacturer of the book, being the publisher of the book, of producing the book or of carrying out any production process or productior processes in relation to the book shall be read as including a reference to the cost to him of any protective cover for use with the book and to the cost to him of any packaging of the book for the purposes of transport or sale.

(b) the total manufacturing cost of a book shall be deemed to be -

(i) where a person is the sole manufacturer of the book - the amount that is the manufacturing cost component of the book in relation to that person; or

(ii) where 2 or more persons are manufacturers of the book - the sum of the amounts that are the manufacturing cost components of the book in relation to those persons.

. . . . .

(2A) Where -

(a) a person who is the manufacturer or a manufacturer of a book is a business associate of the publisher of the book; and

(b) the Minister is of the opinion that there are reasonable grounds for believing that the price paid or payable to that person for the production of the book or for any production process or production processes carried out in relation to the book, being the price that, under sub-paragraph (1) (a) (i) or (ii), is, subject to this sub-section and sub-section (2), the manufacturing cost component of the book in relation to that person, is greater than the price that, if the publisher had had the book produced or that production process or those production processes carried out by a manufacturer who was not a business associate of the publisher, would, in the ordinary course of business, have been charged by that other manufacturer for the production of the book or for that production process or those production processes,

the Minister may, by instrument in writing, determine that, for the purposes of this Act, that manufacturing cost component is such lower amount as would, in his opinion, have been the amount of that component if that price paid or payable had been equal to the price that would have been so charged by the
. . . .

5. Subject to this Act, bounty is payable in respect of Australian books produced during the period to which this Act applies, other than books produced in pursuance of an agreement which, or agreements all or any of which, was or were entered into before the commencement of that period between the publisher of the book and the manufacturer or manufacturers of the book.

6. (1) Subject to sub-section (2), the bounty in respect of a book produced after 31 December 1979 is -

(a) in the case of a book produced before 1 January 1983 - 33-1/3% of the total manufacturing cost of the book;

(b) in the case of a book produced on or after 1 January 1983 and before 1 January 1984 - 30% of the total manufacturing cost of the book; and

(c) in the case of a book produced on or after 1 January 1984 - 25% of the total manufacturing cost of the book.

(2) Where the publisher of a book produced after 31 December 1979 supplied any paper or binding materials free of charge to the manufacturer or a manufacturer of the book for use in the production of the book, bounty in respect of the book ascertained in accordance with sub-section (1) shall be increased by an amount equal to -

(a) in the case of a book produced before 1 January 1983 - 25% of the publishers paper costs in relation to the book;

(b) in the case of a book produced on or after 1 January 1983 and before 1 January 1984 - 23% of the publishers paper costs in relation to the book; and

(c) in the case of a book produced on or after 1 January 1984 - 20% of the publishers paper costs in relation to the book.

. . . . .

9. Bounty is not payable to a person in respect of a book unless he satisfies the Minister that the requirements of this Act and the regulations have been substantially complied with by him."
The jurisdiction of the Tribunal is conferred by s.20A (ba):
"20A Applications may be made to the Administrative Appeals Tribunal for review of-
. . . . . .
(ba) a determination by the Minister made for the purposes of sub-section 4 (2A).
. . . . . ."
Upon application for review, the Minister, being the person who has made a decision, is required to observe the provisions of s.37 of the Administrative Appeals Tribunal Act 1975 (A.A.T. Act) which reads -
"37.(1) A person who has made a decision that is the subject of an application for a review by the Tribunal shall within 28 days after receiving notice of the application, lodge with the Tribunal such number of copies as is prescribed of -

(a) a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision; and

. . . ."
The operation of the Tribunal is referred to in the A.A.T. Act thus -

43.(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing -

It appears that the Minister determined the manufacturing cost component in respect of each book, the subject of the application for bounty payment. His determination was expressed thus -
"I, RANSLEY VICTOR GARLAND, being of the opinion that there are reasonable grounds for believing that the price paid or payable by PAP Book Company Pty. Ltd. to PAP Printers and Publishers Pty. Ltd. for the production of each book described in Column 1 of the Schedule hereunder and produced on and after 15 June 1979 (being the price that is the manufacturing cost component of each such book in relation to PAP Printers and Publishers Pty. Ltd.) is greater than the price that, if PAP Book Company Pty. Ltd. had had the book produced by a manufacturer who was not a business associate of PAP Book Company Pty. Ltd., would, in the ordinary course of business, have been charged by that other manufacturer for the production of each such book, do hereby determine in pursuance of the power conferred upon me under sub-section 4(2A) of the Bounty (Books) Act 1969 that, for the purposes of that Act, the manufacturing cost component in respect of each such book is the amount specified in Column 11 of the Schedule hereunder, being such amount as would, in my opinion, have been the amount of that component if that price paid or payable had been equal to the price that would have been so charged by such other manufacturer if PAP Book Company Pty. Ltd. had had the book so produced by such other manufacturer, and I hereby revoke the determination previously made by me on the tenth day of January 1980 pursuant to sub-section 4(2A) of the Bounty (Books) Act 1969.

SCHEDULE

Column 1 Column 11

(Description of Books) (Manufacturing cost component

for each book)

"Selected Recipes", soft cover $0.43

(a) affirming the decision under review;

(b) varying the decision under review; or

(c) setting aside the decision under review and -

(i) making a decision in substitution for the decision so set aside; or

(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.

The introduction of this Court to the matter is provided for in the A.A.T. Act, thus -

"44.(1) A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.

(2) . . . .

(3) . . . .

(4) The Federal Court of Australia shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision.

(5) Without limiting by implication the generality of sub-section (4), the orders that may be made by the Federal Court of Australia on an appeal include an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in accordance with the directions of the Court."

"Casseroles and Entrees", soft cover $0.43

"A.B.C. Cookbook", soft cover $0.43

"Centenary Cookbook", soft cover $0.43

"Golden Jubilee Recipe Book",

soft cover $0.43

"Seafoods and Selected Recipes"

soft cover $0.43

"Golden Jubilee Cookbook", soft cover $0.43

"C.W.A. Golden Jubilee Recipe Book"

soft cover $0.43

"Christmas Cookbook", soft cover $0.43

and including all series and all editions of the above titles, and,

- if bound with a standard, $0.59

overprinted stapled hard cover,

substitute; or,

- if bound with a special $0.77

individually designed stapled

hard cover, substitute.

"Bennett Family" $5.01

"Hidden Gold" $1.07

"Loch Ard" $1.00

"Evergreen Hampden" $4.09

DATED this eighteenth day of February 1980."

His Statement of Reasons pursuant to s.37 (quoted earlier) of the A.A.T. Act included a reference to the evidence, on which he made his determination, viz. -
"1. Statutory records filed in the Corporate Affairs Commission of Victoria.

2. Statements by officers of the Applicant and the applications made by the Applicant.

3. The applications made by the Applicant.

(4. The applications made by the Applicant and oral
(5. statements by certain of its officers to officers
(6. of the Department of Business and Consumer Affairs.

7. Statutory records filed in the Corporate Affairs Commission of Victoria.

(8. Statements by officers of Pap Book Company Pty.
(9. Ltd. to officers of the Department of Business
(10. and Consumer Affairs and advertising media of
(11. Pap Book Company Pty. Ltd.
(12.
(13.

(14. Statutory records filed in the Corporate Affairs
(15 Commission of Victoria.
(16.
(17.

(18. Oral and written reports by officers of the
(19. Department of Business and Consumer Affairs and
(20. oral and written quotations obtained from the
manufacturers referred to in paragraph 19.

(24. Records of the County Courts of Victoria.
(25.
(26.
(27.

(28. Written reports by officers of the Department of Business and Consumer Affairs."
and, finally, in his Reasons for determination, the following is stated -
"9. In considering the evidence, . . . . . and notwithstanding the reports by the Departmental officers concerning the inadequacy of the Applicant's records it was considered that the Applicant's interests would best be served, consistent with the prevention of improper claims, if the determination was made.

10. A determination was therefore made, pursuant to sub-section 4(2A) of the Act that the manufacturing cost component in respect of each book set out in Column 1 of the Schedule to Attachment B is the price set out in Column 11 of the 'Schedule to that Attachment."

Having regard to the terms of the Act and the facts found by the Tribunal, it was before us conceded or stated that there was no contest as to the finding by the Tribunal that the printer applicant was a "business associate" within the meaning of s.4(2A)(a) of the publisher. It is not suggested that the Minister was not entitled to form the opinion that sub-para (b) of sub-s.(2A) of s.4 of the Act envisaged. The issue is as to the method adopted by which the Tribunal affirmed his determination (which itself is said to demonstrate error) and hence the sum which is set out in Column 11 above. This is argued to have been not such a figure and indeed less than would have been reached had there been a proper approach and adherence by the Minister and later by the Tribunal to the policy and terms express or implied of the Act.

The method said to have been adopted by the Minister in making his determination is referred to in the Reasons of the Tribunal; and dealing first with Cookery Books -
"The Determination that was made by the respondent appears to us to be beset by a number of problems. First, it does not appear to have been made in relation to a particular book or books. Yet what s.4(2A) provides is that the Minister may determine that the manufacturing cost component be such lower amount as would, in his opinion, have been the amount of that component if the price paid or payable had been equal to the price that would have been charged by the other manufacturer if the publisher had had the book so produced.

That "the" book thus referred to must mean the particular book that is the subject of the application for bounty seems to us to be fundamental. But the Determination that was made referred simply, as far as cookbooks are concerned, to books in general terms or as a class of books something like what was actually produced. The first submission in writing put in on behalf of the respondent really acknowledged this, submitting that for the purpose of the review the Tribunal itself would be required to have regard to a particular book."

The Tribunal, in its decision, came to the view that a proper approach would have been for the Minister to be guided by a consideration of the duties which were presumably thought to be analogous to a fiduciary though not disregarding the principle that legislation intended to confer a benefit should be construed liberally. It wrote -
"How should the problem posed by s.4(2A) of the Act be approached? A public servant's duties when exercising his powers closely resemble those of a fiduciary, (see "Fiduciary Obligations", Dr. P.D. Finn, Law Book Co. Ltd., 1977 p.14). This has been long recognized by the courts. See for instance The King v. Boston (1923) 33 CLR 386 at 412. In what he does he must at all times ensure that the resources devoted to the doing of it are no greater than the minimum required to achieve the desired end. He is not using his own resources, he is deciding the use of community resources. The cost of what he does is the alternative foregone by the community - what the resources might otherwise have been applied to doing. To achieve maximum efficiency in the use of community resources, he should seek to ensure that no more resources than is necessary are used to achieve a given end and that the quantum of the alternative foregone is minimised. A Minister of the Crown is in no different position. He does not use more of the community resources at his command to achieve a given end than is necessary to achieve that end.

To say this is not inconsistent with the principle that has been suggested that legislation intended to confer a benefit should be construed liberally - see Re Butterworths Pty. Limited and the Minister for Business and Consumer Affairs (1979) 2 ALD 612 applying what was said by Sheppard J. in Canwan Coals Pty. Ltd. and FC of T (1974) 1 NSWLR 728.

The principle cannot it is true be pushed too far, and for a possibly contrary view in any event see per Samuels J. in Norton Harvesters Pty. Ltd v FC of T (1974) 74 ATC 4080 at p.4083. The principle relates to the course that should be followed where a legislative provision is ambiguous and two alternative constructions are open. The present legislation has its problems, but in the present context we have no difficulty with the meaning of the presently relevant provision, which requires the ascertainment of a price that would have been charged by another manufacturer. The difficulty arises in deciding what should be done, in fact if more than one price is demonstrated to be obtainable, and one is lower than another. If more than two are obtained, the problem is no different in principle, given that two different figures are obtained.

In the present circumstances, in the context of s.4(2A) of the Act, what does this mean? The Minister (and the public servant advising him) should obtain competitive quotes on a proper comparable basis. Having done so he is entitled to take as his benchmark the lowest quotation obtained. To do otherwise is to deny the principle of maximum satisfaction with minimum use of resources. In considering competitive quotes for performing the same function it is undoubtedly proper to consider factors other than price, for example quality of performance, and ability to perform, physically and economically. The normal business course would be to take the lowest quotation consistent with a proper job being done. This may not always mean taking the lowest figure. But the normal course of a prudent publisher would be to seek quotations from reliable printers experienced in the kind of work required. For a high class book a publisher would not go to a printer whose main work was in the field of "jobbing". Nor would a high class printer necessarily be the best for a cheap publication. A book requiring a long production run would be a different project from one with a small run. Taking these considerations in relation to the needs of the book company in the present case, the following may be said -

(i) Quality is hardly significant. The publications are not quality publications by any standards. Seemingly anyone who can print and assemble could do so to the required standard.

(ii) There is no suggestion that ability to perform is in doubt with any of the quoting firms. There is no evidence that time schedules were critical, or that the financial standing or the likelihood of any of the quoting firms staying in business were in doubt.

In these circumstances the respondent had, in our opinion, a clear entitlement to adopt the price represented by the lowest quotation. We do not mean to say that when the Minister approaches the making of a Determination he must search far and wide so as to obtain a lower and lower price upon which to rely. But when he has in fact obtained a number of quotations from reputable printers who would be able to perform the supposed contract in the ordinary course of their business, then he is in our opinion entitled to take into account for the purpose of making his Determination the lowest quotation consistent with comparable standards of performance."
(Underlining is mine, and intended to emphasise matters to which later I refer.)

Its view was further stated in a later paragraph thus -
"Once the situation has arisen that printer and publisher are identified as business associates, we consider that the matter should be seen as being at large, and the intention of the legislation should be seen as being satisfied by the payment of bounty measured by the price which would have been charged by an Australian printer, a member of the Australian printing industry, who provides a cost effective service geared to the needs of the particular publisher."

Finally, the Tribunal considered that there was evidence that might lead it to the conclusion that in fact the Minister's determination had been too generous to the applicant. It added -
". . . . It may be said that strictly speaking the process of administrative review, properly understood and applied, should lead us to make a new Determination reflecting this accordingly. After much consideration we have decided against this . . . . "
And later -
". . . . But the respondent never contended that the Tribunal's decision should be such as effectively to reduce the amount of bounty that the applicant might receive . . . . "
The concluding words in its Reasons for Decision were -
"Having regard to what we have said as to the clear entitlement of the respondent to adopt the lowest comparable prices in fact obtained, and to our satisfaction with the quotations supplied by Hedges & Bell Pty. Ltd., there is no way in which we could see fit to make a new Determination having the effect of increasing any of the figures determined by the respondent as manufacturing cost component in his Determination. For the reasons previously stated, we have decided not to embark upon a process which would have the effect of determining, in some instances, lower figures than those appearing in the Determination. Taking all the difficulties mentioned into consideration, we have decided that the proper course is simply to affirm the Minister's Determination."

Counsel for the applicant printer contends that the determination of the Minister was made on an impermissible basis. His arguments are reflected in summary form in the (second amended) Grounds of Appeal.

And he submitted (paraphrasing and summarising his arguments) there were three fundamental errors made by the Tribunal i.e. that -

(i) the Act was to benefit the industry rather than the individual printers;

(ii) the duty of the officials advising the Minister was to save the Government money in respect of legislation.

(iii) (After some reference as to the evidence called before the Tribunal) that the Minister's determination, upon a proper consideration of the evidence, of quotes, and how the Minister's determination reflected them, was wrong anyway.

Counsel agreed that -

if one looks to the policy of this Act it is designed to ensure that the printer gets his proper benefit, irrespective of any conduct, because it is to benefit the printing industry . . . . to keep people in employment and keep printers in business.

Interpreting the Act was, he argued, to be carried out with due regard to the Acts Interpretation Act 1901 s.15AA and if it be the same principle, that enunciated in Cooper Brookes (Wollongong) Pty. Ltd. v. Commissioner of Taxation (Commonwealth) (1981) 55 A.L.J.R. 434. Proper principles of construction would not allow a reduction by the Minister to the lowest or even average of the acceptable market price for the production process but by no more than is necessary to accord with the highest or higher categories of those prices; that there should be read into the Act s.4(2A)(b) before "manufacturer" the word "comparable". He argued then that having got such a manufacturer's price (or range thereof) the Minister should take the highest of the quotes and not the lowest. The Minister's range of entitlement he referred to in "Grounds of Appeal" filed during the hearing.

The applicant printer, he said, sought to challenge the failure of the Tribunal to substitute a correct determination for what was contended to be the incorrect one of the Minister; that challenge was only on questions of law on the incorrectness of that decision; that it could not be said applicant printer had to show that e.g. the determination was not one reasonably open. He said -
"The question is whether as a matter of law the determination by the tribunal ought to have been - and we say determination and opinion are substitutable terms in this context - the way we contend the conclusion ought to have been."
He referred to what he described as the -
". . . .difference between what the Minister did and what was in fact happening on the printing process . . . ."
He gave examples referring to evidence of variable factors which could affect printing costs; that as a matter of law only (figures of) a comparable manufacturer could be taken into account; that the Tribunal never got to the question of comparability, but "rejected it out of hand" i.e. in saying it was the Minister's duty to choose the lowest quote. On his formulation of the Minister's duty which later became that of the Tribunal he and they were, in turn, in error in determining the bounty in failing to make a comparison of or seek assistance from a:-

3. OPERATION OF THE ACT

Leaving aside, for the moment, that the operation of the presently relevant parts of s.4(2A) are related to the formation of opinions, the elements necessary for the subsection to apply are -

(a) that the manufacturer of a book (being an applicant for bounty) is a business associate of the publisher for which it produces the book; and

(b) that the price paid or payable by the publisher to the manufacturer for the production of the book (being the basis of the manufacturer's claim for bounty) is greater than the price which would have been charged:

i. for the production of the book
ii. in the ordinary course of business
iii. by another manufacturer (i.e. a person who carries out all the production processes in relation to the book - see s.3(1) "manufacture")
iv. who was not a business associate of the publisher.

It is obvious that it is essential that it be determined at point (b) what price the other manufacturer would have charged. It is that price which, by the remainder of the section, the Minister is empowered to adopt as an applicant's manufacturing cost component for the purpose of its application for bounty.

The argument on this appeal canvassed two issues concerning the manner in which power of determining that price ought to be exercised.

(1) Evidence: What reliance ought to be placed on "quotes" obtained from other manufacturers?

There is no present call to determine whether, in determining the price which another manufacturer would charge for the production of a book, the Minister is obliged to obtain evidence, such as prices from other manufacturers. It may be that the subsection leaves him perfectly free to form the opinions and make the determination required without reference to any person; it is quite possible that his Department may possess sufficient relevent information and expertise. However, one can readily understand why the Minister, in applying s.4 (2A) of the Act, would seek a quote from another manufacturer, particularly perhaps if he anticipates that a review of his decision will be sought.

A difficulty arises where, as in the present case, the Minister or Tribunal has before it not one but several quotes. The question of which of the quotes was properly to be adopted as the basis of the determination of manufacturing cost component for the purpose of s.4(2A) engaged the attention of the Tribunal at considerable length and occupied much time on the hearing of this appeal. I consider that both the decision of the Tribunal and the appellant's arguments were founded on a false premise. The assumption to date has been, by and large, that if there are a number of quotes the Act requires one of them to be chosen and dictates which it shall be; and that it is possible to decide which quote must be adopted by an interpretation of the Act.

It is, of course, the decision of the Tribunal not that of the Minister which must be scrutinised by this Court for error of law. Accordingly, I return to the Tribunal's reasons with respect to the making of a choice between different quotes. The Tribunal said:
"24. Mr Merkel, for the applicant, submitted that there were five possible approaches which the Minister might have taken, and which the Tribunal now ought to take. The first was to adopt the lowest price that would, as indicated by the quotations received, have been charged by another manufacturer. The second was to adopt an average of the prices so obtained. The third was to adopt the price that approximated most closely to that actually charged by the printer found to have been a business associate of the publisher. The fourth was to take an average of a group of the higher quotes obtained. The fifth was that in fact adopted by the Minister. He might have added a sixth, namely the taking of an average of a group of the lower quotes obtained. We do not propose to discuss these possibilities one by one, for we have no doubt whatsoever as to the course that was open to the respondent, a course which excludes all others. We explain our view of the matter as follows."

The Tribunal rejected as inapplicable, even if correct, a principle of construction urged by the appellant, namely that legislation intended to confer a benefit should be construed liberally. It preferred as its lodestar a principle which it asserted to the effect that a Minister of the Crown, like a public servant, should seek to ensure that no more of the community resources at his disposal are used than are necessary to achieve a desired end. In the context of s.4(2A), this meant, according to the Tribunal, that the Minister had a "clear entitlement" to adopt the lowest of competitive and properly comparable quotes. Comparability was regarded as encompassing such factors as "quality of performance, and ability to perform, physically and economically", but it was held that such factors were not in question in this matter. Reference was also made to the "normal business course" which it was said "would be to take the lowest quotation consistent with a proper job being done". The Tribunal concluded its discussion of this aspect of the matter in the following terms:
"25. . . . In these circumstances the respondent had, in our opinion, a clear entitlement to adopt the price represented by the lowest quotation. We do not mean to say that when the Minister approaches the making of a Determination he must search far and wide so as to obtain a lower and lower price upon which to rely. But when he has in fact obtained a number of quotations from reputable printers who would be able to perform the supposed contract in the ordinary course of their business, then he is in our opinion entitled to take into account for the purpose of making his Determination the lowest quotation consistent with comparable standards of performance."

Although the Tribunal spoke of the Minister having an entitlement to choose the lowest quote, it is clear enough that it considered that such a choice was, in face, the appropriate course.

Mr Merkel, who appeared for the appellant, described to us inequities which he said would follow from the Tribunal's conclusion on that point. In large part, his submissions were concerned with a comparison between what sub-ss. (2) and (3) of s.4 provide on the one hand, and, on the other, the consequences to an appellant of the Tribunal's construction of s.4(2A). In order of preference, he contended that what must be chosen was the highest quote, the average of the higher quotes, or the average of all quotes; although acknowledging, I think, that the amount could not exceed the price charged by the appellant. The foundation of the appellant's argument was the proposition that it would be unfair and unjust for s.4(2A) to attach more onerous consequences to a transaction between business associates, in which no impropriety might be involved, than are attached by s.4(2) to transactions necessarily involving impropriety; it was submitted that that could not have been intended by Parliament. Under s.4(2), it was said all that the Minister can do, in effect, is reduce, for bounty purposes, the price paid or payable by the publisher to the applicant for bounty by the amount by which it has been inflated; it cannot have been intended that under s.4(2A) he can substitute the price which would have been charged by say a much larger and more efficient printer who might have produced the book more cheaply.

I shall confine myself to a few brief comments:

(i) The argument assumes, wrongly, in my opinion, that the draftsman of s.4(2A) thought at all of the differences between different printers and their respective business operations. I will say something more on that in a moment.

(ii) Carried to its conclusion, the argument goes beyond merely the basis of choice between a number of quotes; if it is correct, the Minister (or the Tribunal), who or which may have only one quote, may not be entitled to determine the hypothetical "manufacturing cost component" for the purpose of s.4(2A) at the price "quoted" by another manufacturer where there are aspects concerning which the operations of the applicant and the other manufacturer are not comparable. (I will deal later with the question of whether the Minister and the Tribunal have the duty to adopt an appropriate, or the most appropriate, quote.)

(iii) It is not possible to identify an especially clear pattern in sub-ss. (2), (2A) and (3) of s.4 and there are areas of overlap. Deliberately inflated pricing between business associates who are respectively manufacturer and publisher always could have been dealt with under sub-s. (2); sub-s. (2A) was not needed for that purpose. However, in exonerating the Minister from the need to establish a deliberate overcharging between business associates, a relationship perhaps attracting particular suspicion in the context, s.4(2A) no doubt has considerably extended the Minister's power to reduce abuses of the legislative scheme. It is pointless to speculate whether that result was deliberate or fortuitous. Section 4(2A) also supplements sub-s. (3). The latter is concerned with the position where the publisher is the manufacturer or one of the manufacturers of a book. Subsection (2A) extends the right of the Minister to interfere to the case where publisher and manufacturer, although not one and the same, are business associates.

(iv) Subsection (2A) of s.4 has a more obvious connexion with sub-s. (3) than with sub-s. (2). Both are concerned with what might be described as "in-house" transactions, resulting in applications for a higher bounty than would have been payable had the publisher had the book produced by an independent printer. Both provide that the Minister may adopt, instead of the manufacturing cost component put forward as the basis of the claim for bounty, such lower amount as would have been the manufacturing cost component had the book been produced "outside". I find nothing strange in such a legislative policy. There is no conflict of philosophy or inherent unfairness between the policy of sub-ss. (2A) and (3) of s.4 on the one hand and sub-s. (2) on the other. Shortly stated, sub-s. (2) provides that if there is a deliberate inflation of price, whether the transaction is between strangers or associates, the manufacturing cost component is to be reduced by the amount of the inflation. Subsections (2A) and (3) are simply concerned with over-priced "in-house" transactions, irrespective of motive, and provide for the excessive "in-house" manufacturing cost component to be replaced by the lesser amount for which the book could have been produced outside.

I do not propose to dwell on this aspect of the matter. I do not doubt that the Minister or the Tribunal might choose either the lowest or the highest quote if it was otherwise appropriate to do so. The relationship, in point of amount, between one quote and others may bear upon its general appropriateness for selection as the hypothetical "manufacturing cost component" under s.4(2A) in any particular case. However, I cannot see any possible basis for concluding that the position of a particular quote in a range of quotes, be it at the top or bottom of the range or somewhere in-between, affords of itself reason for either adopting the quote, or for preferring it, or for excluding it, as the case may be, as the "manufacturing cost component".

(2) To What Question Should the Minister Address Himself?

There are fundamental problems in the practical operation of s.4(2A) arising from its drafting. Nothing I have said touches upon the question of whether or not there is in sub-s. (2A) an implicit limitation upon the power to determine "manufacturing cost component" which precludes direct reliance upon the unmodified price of some "other manufacturer" which is not comparable to the applicant for bounty, or which answers the further question of how a choice is to be made when prices are obtained from more than one "other manufacturer".

In the printing industry, as in all other industries, a vast number of variables may affect different manufacturers (printers), their businesses, and their operations. It is unnecessary to seek to be exhaustive but mention might be made of size, capitalization, employees, equipment, location, production methods, efficiency and so on. Further, there is no universal formula by which a price quoted or charged is related to cost of production. Such considerations seem not to have occurred to the draftsman of s.4(2A).

The subsection, taken literally, is intended to be applied by direct reference to a specific "other manufacturer" and the price he would charge in the ordinary course of business. It does not provide, expressly at least, for a theoretical opinion related to a hypothetical manufacturer and the price he would charge in the ordinary course of business, or related to what might be considered to be the "usual price" charged in the ordinary course of business.

On the other hand, there is no express limitation in the subsection upon the "other manufacturer" to whom and to whose price regard may be had. There is, for example, no express restriction by reference to the other manufacturer's comparability, on whatever basis, to the applicant for bounty. Nor is there any express provision for the modification of a price quoted by a specific "other manufacturer" to take into account differences between it and the applicant for bounty. The literal effect of the subsection is that provided the Minister finds any other manufacturer who would, in the ordinary course of business have, produced the book more cheaply than the applicant, the Minister may adopt the price of that other manufacturer in connexion with the applicant's application for bounty.

The improbability if not impossibility of finding another manufacturer whose price could be considered truly and wholly appropriate to a particular applicant for bounty seems to have been overlooked or perhaps was not thought to be relevant.

More importantly for present purposes, there is nothing at all in the subsection which suggests a recognition that there may be more than one "other manufacturer", or that their respective prices for the production of a book in the ordinary course of business may vary, far less which expressly indicates that one or other of the different prices is properly to be chosen as the relevant manufacturing cost component. Once there is more than one "other manufacturer" involved, and there are different prices in consequence, the question is no longer merely whether a particular other manufacturer and its price may be adopted as the basis for the determination of a hypothetical "manufacturing cost component" for the purpose of s.4(2A); there is also the further question whether it is appropriate, in all the circumstances, to relate the manufacturing cost component to that particular "other manufacturer" and its price, rather than to a different "other manufacturer" and its price, or to a hypothetical manufacturer and price.

I cannot see how the requisite opinions can be formed, at least in the normal case, without establishing some relationship between the applicant for bounty and its business and operations and each of the other manufacturers and its business and operations. I do not say that that must always be done, or that what must be selected as the hypothetical "manufacturing cost component" for the purpose of s.4(2A) must always be the price of the other manufacturer who is most similar to the applicant for bounty. There may be a variety of relevant considerations, including possibly the absence of any intention on the part of the legislature to subsidise inefficiency. I intend no more than that, once the need for selection arises because there is more than one price from another manufacturer, the discretion is not at large but must be exercised on a rational basis. That means, I think, that a decision is needed as to which price is, in all the circumstances, most appropriate. The question in this context is not what the Act provides on its proper construction as to how the choice will be exercised, but what is the proper exercise of the discretion which, in the circumstances, has arisen in the performance of the statutory function.

THE TRIBUNAL'S DECISION

There is no need in this case to decide what ought be done if there are a number of quotes, each of which is neither more nor less than a statement by a particular "other manufacturer" of the price which that other manufacturer would charge, in the ordinary course of business, to produce exactly the same numbers of the exact book, the subject of the application, using exactly the same process as the applicant for bounty, and in exactly the same circumstances; in other words, if no point of differentiation existed, save in relation to the respective prices of the applicant and the other manufacturers.

It was in the context of competitive and properly comparable quotes that the Tribunal expressed its opinion that adoption of the lowest price was legitimate and preferable. I have already expressed the opinion that the lowest quote is not to be excluded merely because it is the lowest quote. Conversely, I was not persuaded by the Tribunal's reasoning that there is any basis for preference of the lowest quote if there is more than one wholly appropriate quote available, but that is not to say that its view is wrong. Any taxpayer would appreciate the commonsense of a prudent approach to the expenditure of public money in schemes which are liable to abuse by persons, such as the appellant, whom the scheme is designed to benefit. However, that question just does not arise in this case.

The reason such a question does not presently arise is that, in my opinion, an essential pre-requisite to the making of a choice between quotes was never performed by the Tribunal. No relationship essential to an assessment of the respective quotes was ever established between each of them and the applications for bounty, or amongst the quotes themselves. The Tribunal did not do so because it said that it could not do so on the evidence. It could not, in those circumstances, avoid the impediment which existed to its making an effective decision on the review which was before it, by an unjustified acceptance that each quote was relevant to the applications for bounty, and by an assertion that the quotes available were competitive and properly comparable.

That assertion was plainly contrary to the facts. This is not a matter in which any question can arise as to the extent of the power to investigate an executive opinion formed pursuant to a statute. The Tribunal's own findings contradict any suggestion that some reasonable ground might have existed for the formation of an opinion that the quotes adopted were properly made the basis of the Determinations. There is little scope under the present scheme of administrative review for a citizen to be denied justice because he is unable to point to where the executive went wrong; the reasons which are required to be given enable error, where it exists, to be identified and exposed.

Two further quotations from the Tribunal in different contexts, give an insight into what it meant by comparable quotes.

In paragraph 24, in dealing with the application to the facts of its theory that minimum public resources should be expended, it said:
"In the present circumstances, in the context of s.4(2A) of the Act, what does this mean? The Minister (and the public servant advising him) should obtain competitive quotes on a proper comparable basis. . . . In considering competitive quotes for performing the same function it is undoubtedly proper to consider factors other than price, for example quality of performance, and ability to perform, physically and economically.
. . .
Taking these considerations in relation to the needs of the book company in the present case, the following may be said:

(i) Quality is hardly significant. The publications are not quality publications by any standards. Seemingly anyone who can print and assemble could do so to the required standard.

(ii) There is no suggestion that ability to perform is in doubt with any of the quoting firms. There is no evidence that time schedules were critical, or that the financial standing or the likelihood of any of the quoting firms staying in business were in doubt."

Then, paragraph 26 contained the following:
"26. We must now refer to two other issues that were canvassed at some length at the hearing. It was submitted for the applicant that quotations for the relevant purpose should be obtained only from a printer or printers having something of the same kind of production process as the actual printer engaged by the manufacturer. In fact, of ten printers who gave evidence to the Tribunal, only one used the web offset pricess. It was argued that it was neither right nor appropriate to compare a manufacturer who uses a web offset process with one who, like the applicant, uses a sheet fed process. . . . there is no question here that the applicant and all of the printers from whom quotations were obtained were all perfectly capable of doing the work and were all printers who might on an open market have tendered or been asked to tender for the job in question. . . . Once the situation has arisen that printer and publisher are identified as business associates, we consider that the matter should be seen as being at large, and the intention of the legislation should be seen as being satisfied by the payment of bounty measured by the price which would have been charged by an Australian printer, a member of the Australian printing industry, who provides a cost effective service geared to the needs of the particular publisher."

The Tribunal resolved the difficulty presented to it by the unsatisfactory state of the evidence by treating all questions relating to the various other manufacturers and their prices etc. as irrelevant, at least once it was established that each could have produced the relevant books. Beyond that, in the opinion of the Tribunal, it was simply a matter of acting on the lowest price obtained. As I have already said, as I understand the Tribunal's reasons, its view was that the proper course was to adopt the lowest quote; the alternative view of the Tribunal's reasons, that any quote might be adopted including the lowest quote, leaves the final decision to mere arbitrary choice, with the Tribunal free to substitute its whim on review for the initial whim of the Minister.

Neither conclusion is, to my mind, acceptable. In my opinion, the Tribunal erred in law. No basis was shown to exist upon which the quotes in fact chosen might validly be selected as the manufacturing cost components for the numerous applications for bounty.

The error, in my view, went further.

The appellant is not a large printer; its premises are in Warrnambool. We were told that Hedges & Bell Pty Ltd, the other manufacturer whose prices were in all cases but one adopted, is the third largest printer in Australia. Hedges & Bell Pty Ltd do not produce books like those produced by the appellant but more expensive books of a much higher quality. It was the lone printer referred to by the Tribunal which used the web offset process of printing. That process is designed for use in large production runs. The appellant used the sheet fed process. The number of books the subject of any particular application for bounty was small.

Once the definitions in s.3(1) of the Act are imported into s.4(2A), it seems to me that it may be that the price of another manufacturer, which the Minister may substitute under the latter subsection as the "manufacturing cost component" of the applicant for bounty, is not the other manufacturer's price to produce the book by some other process but the other manufacturer's price to produce the book by the process in fact carried out by the applicant for bounty. However, that may be, differences in the nature of their operations must, I think, be relevant to deciding whether the price of a particular manufacturer is appropriately to be adopted under s.4(2A) as the manufacturing cost component in respect of an application for bounty.

There was, in any event, yet a further fundamental error.

In paragraph 22 of its reasons, the Tribunal said:
"22. The Determination that was made by the respondent appears to us to be beset by a number of problems. First, it does not appear to have been made in relation to a particular book or books. Yet what s.4(2A) provides is that the Minister may determine that the manufacturing cost component be such lower amount as would, in his opinion, have been the amount of that component if the price paid or payable had been equal to the price that would have been charged by the other manufacturer if the publisher had had the book so produced. That "the" book thus referred to must mean the particular book that is the subject of the application for bounty seems to us to be fundamental. But the Determination that was made referred simply, as far as cookbooks are concerned, to books in general terms or as a class of book something like what was actually produced. The first submission in writing put in on behalf of the respondent really acknowledged this, submitting that for the purpose of the review the Tribunal itself would be required to have regard to a particular book."

The Tribunal did not do so.

I have already set out paragraph 23 of the Tribunal's reasons in which it was pointed out that the quotes related not to the specific book productions which were the subject of applications for bounty, but to materially different production specifications which, it seems, were designed by the Department to obtain information which might be used as a basis for the necessary determinations. By the hearing before the Tribunal there were ten quotes based on the Department's specifications. I do not propose to attempt to record in more detail than previously the differences between the various applications for bounty and the quotes. There is no indication that there was, at any time, a separate determination in relation to each application for bounty in respect of each book produced by the appellant. Not only did the Tribunal not perform the task but it seems that it considered that, on the material, it could not do so.

CONCLUSIONS

The more it was attempted during argument before us to suggest that the quotes could be related to the applications for bounty the more apparent it became that the attempt to implement the statutory process under s.4(2A) of the Act has been flawed from the beginning, and that the problems were compounded on the review.

In my opinion, the Tribunal erred in law in its decision to affirm the Minister's determinations. That decision must be set aside and the matter sent back for hearing.

There is no need, in the circumstances, to consider the appellant's other point, which was, in its final formulation:
"4. Whether in determining the amount that another manufacturer would have charged for the production of the books under Section 4(2A) the charge is to be calculated -

(a) independently of and without regard to the amount of bounty (if any) that may become payable under the Act; or

(b) after deducting from the gross charge of the manufacture the amount of bounty (if any) that may become payable under the Act."

I have concluded that the matter must go back to the Tribunal for a rehearing in respect of each of the large number of applications for bounty but only with considerable reluctance and enormous sympathy for the Tribunal. I cannot see any basis for acceding to the submissions on behalf of the Minister that, if the Court thought there had been error in the Tribunal, it should nonetheless conclude that the determinations were correct and dismiss the appeal, or else remit only such issues as were affected by error.

It is not easy to see how matters could have been made much more difficult for the Tribunal than they were. It is clear that the appellant ought not have received the excessive bounty which it claimed. The Department, faced with the need to prevent that occurring, looked for a short-cut in lieu of dealing with the individual applications for bounty. The result was that, when the matters came to be reviewed, a false issue was joined by reference to the Department's method of assessment rather than the appellant's applications, and, by multiplying the quotes, the difficulties were expanded to the point where the Tribunal found itself unable to resolve the conflicts and make findings.

If the matter had stopped there I would have considerable hesitation about ordering a rehearing. I cannot see what purpose could possibly have been hoped to be served by the multiplicity of quotes directed to each application. The confusion which resulted should have been anticipated.

However, in this matter, the Tribunal's position went further than an inability to decide. It took positive decisions which I consider involved mistakes of law. Further, in fairness to the parties, they may well have been led into error by the difficulties in the critical subsection.

In all the circumstances, I would allow the appeal, order that the Tribunal rehear the review of the Minister's determinations, and order the Minister to pay the appellant's costs of this appeal.

[1982] FCA 165

30 JULY 1982