Alphaone Pty Limited v Commissioner of ACT Revenue [1993] ACTSC 5; (1993) 30 ALD 378 (Extract) (1993) 112 FLR 273 (28 January 1993)

SUPREME COURT OF THE ACT

ALPHAONE PTY LIMITED v. COMMISSIONER FOR ACT REVENUE
No. SC 710 of 1992
Number of pages - 32
Administrative Law
[1993] ACTSC 5; (1993) 30 ALD 378 (extract)
[1993] ACTSC 124; (1993) 112 FLR 273

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Higgins J.(1)

CATCHWORDS

Administrative Law - Breach of natural justice - Refusal to grant a licence - Alleged breach of Business Franchise ("X" Videos) Act - No opportunity given to answer the allegation.

Administrative Law - Improper exercise of power - Adoption of an inflexible policy.

Business Franchise ("X" Videos) Act (ACT) 1990, ss.5, 6, 9, 10, 25, 27

Administrative Decisions (Judicial Review) Act 1989 (ACT), ss.13, 17(1)

Taxation (Administration) Act 1987 (ACT), s.18, 50

Business Franchise (Tobacco and Petroleum Products) Act 1984 (ACT)

Liquor Act 1975 (ACT)

Publications Control Act (ACT) 1989

R v Wilson; ex p Donaldson (1977) 19 ALR 235

Sunraysia Broadcasters Pty Ltd v Australian Broadcasting Tribunal (1987) 76 ALR 201

Dixon v Commonwealth (1981) 61 ALR 173

Minister for Immigration, Local Government and Ethnic Affairs v Taveli (1990) 94 ALR 177

Somaghi v Minister for Immigration, Local Government and Ethnic Affairs [1991] FCA 389; (1991) 102 ALR 339

Perder Investments v Lightowler [1990] FCA 239; (1990) 101 ALR 151

Lamb v Moss [1983] FCA 254; (1983) 76 FLR 296

Bond Corp Holdings Ltd v Australian Broadcasting Tribunal (1988) 84 ALR 669

Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 88 ALR 517

FAI Insurances v Winneke [1982] HCA 26; (1982) 41 ALR 1; 151 CLR 342

Borkovic v Minister for Immigration and Ethnic Affairs (1981) 39 ALR 186

Minister for Immigration and Ethnic Affairs v Conyngham (1986) 11 FCR 528; 68 ALR 441

HEARING

CANBERRA, 19 November 1992
28:1:1993

Counsel for the Applicant: Mr G. D. Wendler

Instructing solicitors: Messrs Maliganis Edwards Johnson

Counsel for the Respondent: Mr P. Walker

Instructing solicitors: ACT Government Solicitor

ORDER

THE COURT ORDERS THAT:
1. The decision of the Commissioner for ACT Revenue to refuse a

licence to the applicant be set aside ab initio.

DECISION

HIGGINS J. On 30 July 1992, the applicant applied for a retail "X" video merchant's licence. The applicant proposed, it seems, to trade under the name "Fantasy Lane Triple X". The application was for a licence for "August 1992".

2. The application form was accompanied by a cheque in the sum of $4,470.00. A receipt was issued for that sum which described the payment as "being X-Rated Video Licence Fee".

3. On 1 August 1992, according to the applicant's evidence, it commenced retailing "X" rated videos at the premises set out in the application.

4. Protracted correspondence then took place between the applicant's agent and solicitors and the respondent and his officers.

5. On 3 August 1992 Mr Williams, Assistant Director, ACT Revenue Office, wrote to the applicant on behalf of the respondent. He noted that the applicant, although taking over an existing business, was not an existing licensee. He asserted that the making of an application and payment of the fee for a licence did not amount to the grant of a licence. He directed attention to s.25 of the Business Franchise ("X" Videos) Act 1990 (ACT) (the ""X" Video Act") which imposed penalties for unauthorised trading. His letter concluded with a statement that there would be a delay in processing the application. It was necessary, he said, for the respondent to determine whether the applicant was "a fit and proper" person in accordance with s.5(2) of the "X" Video Act. To be satisfied as to that, he said, a character check would be required on "every influential person connected with" the applicant, including all directors of the applicant and of any "associated" company. He required the applicant to supply the addresses of such persons for the previous five years. He asked for police checks from any place where any such person had resided for a total of 12 months or more.

6. The applicant's agent responded with a lengthy letter dated 4 August 1992. It referred to a current High Court challenge to the validity of the "X" Video Act. It asserted that the balance of convenience would require the continuation of trading rather than the contrary. It referred to an alleged previous practice whereby X-video licences were granted forthwith, although subject to conditions which might be attached and subsequently removed when further information was supplied. A decision as to whether the applicant was "fit and proper", it was asserted, could and should have been made on the basis of the information provided on the face of the application form. The request for checks on "every influential person" was rejected.

7. That letter could be taken, and, no doubt, was intended to be taken, as a request to the respondent to issue the licence sought (albeit that the applicant noted that it sought the licence "under protest") as from 1 August 1992.

8. Alternatively, it requested the respondent to take no action concerning the apparently unlicensed trading until the validity of the licensing legislation itself had been determined.

9. Neither of these alternatives found favour with the respondent. On 5 August 1992, Mr Williams wrote again to the applicant's agent. He put a number of arguments. Firstly, he said, the respondent required further evidence to satisfy him that the applicant was a "fit and proper person". Secondly, pending any successful challenge, trading in "X" videos without a licence was regarded by the respondent as unlawful. The request for the previously requested details of all "influential persons" was, however, withdrawn. A new request was made for,

"evidence that the natural persons behind (the applicant) (and
all its office bearers and those of holding companies) have not
been convicted of any offences which would affect the
(respondent's) decision to issue a licence".

10. On 14 August 1992, Mr Williams wrote a further letter to the applicant's agent. He made certain further requests. The information so requested was said to be to "assist in supporting the proposition that Alphaone is a fit and proper person for an x-rated video licence". Thirteen numbered questions were then asked, followed by further requests which were unnumbered.

11. I set out the text of that request:- "1. Please confirm that Peter Chan and David William Watt are

the directors of Alphaone Pty Limited and that David William
Watt is its secretary;
2. Please confirm that David William Watt and Lana Watt are
the directors of Hallmark Book Wholesalers Pty Limited and
that Lana Watt is its secretary;
3. Please confirm that Gerald Arthur Hercus and Peter Chan
are the directors of Fortbacon Pty Limited and that Peter
Chan is its secretary;
4. Please confirm that there are only two shares in Hallmark
Book Wholesalers Pty Limited and Fortbacon Pty Limited.
5. Please confirm that there are only two shares in Hallmark
Book Wholesalers Pty Limited and that those shares are owned
by David William Watt and Lana Watt;
6. Who are the shareholders of Fortbacon Pty Limited? If
other companies hold shares, you will also need to provide
details of the companies involved;
7. Are any of the natural persons who are office bearers
within the group or those directly or indirectly holding a
share or shares in Alphaone Pty Limited undischarged
bankrupts;
8. From whom does Alphaone intend to purchase its stock of
videos;
9. Does Alphaone intend to copy videos from master tapes, and
if so, who is the source of the tapes;
10. Directly or indirectly, are there any amounts due under
an ACT Tax Law by any person in the group of companies,
including any of the natural persons who are office bearers
within the group or those directly or indirectly holding a
share or shares in Alphaone Pty Limited? (ACT "Tax Law" is
defined in the Taxation (Administration) Act 1987 and
includes Acts which administer rates and land tax, payroll
tax, liquor tax, tobacco and petroleum franchise fees, stamp
duties, x-rated video franchise fees and others.) If so
please provide details;
11. Has any person in the group of companies, including the
natural persons who are office bearers within the group or
those directly or indirectly holding a share or shares in
Alphaone Pty Limited, been charged with any offence(s)
(civil or criminal). If so, is the person(s) currently
awaiting legal proceedings in relation to that offence(s);
12. Is any person in the group of companies, including the
natural persons who are office bearers within the group or
those directly or indirectly holding a share or shares in
Alphaone Pty Limited, currently under police investigation
for any reason? If so please provide details; and
13. Is Alphaone aware of any reason why the Commissioner
should not grant it an x-rated video licence?
In addition to the above information I also request that you
forward details of Alphaone's assets and liabilities and those of
its holding companies. This information will assist in
determining the group's solvency and ability to market videos
successfully. Copies of the group's last financial statements
are also requested.
Finally, in the attachment to the application signed by Mr Chan,
he indicated that Alphaone intended to purchase videos from
Fortbacon Pty Limited at a wholesale price of $4.00 per video.
How was this figure arrived at, and more importantly, what is, or
would be, the price of similar videos to persons and
organisations that are not related to Fortbacon Pty Limited."

12. In reply, on 17 August 1992, the applicant's agent pointed out that Fortbacon and Hallmark were not "holding companies of Alphaone". Although a subsidiary of Fortbacon and Hallmark, the applicant was, it was asserted, "an entirely separate trading entity".

13. The numbered questions were, nevertheless, answered. Some answers expressed an objection to providing the information sought. I set out those answers which did so.

"8. You ask from whom does Alphaone intend to purchase its stock
of videos. The question is entirely irrelevant, inappropriate
and improper. Alphaone, as a trading operation will from time to
time purchase its stock from wherever it considers that it can
obtain the relevant quality, nature and quantity at the
appropriate price.
9. You ask if Alphaone intends to copy videos from master
tapes, and if so, who is the source of the master tapes. I have
extreme difficulty in comprehending how such information could be
of any interest to ACT Revenue. Alphaone has aplied (sic) for a
retail licence and not a wholesale licence. Alphaone understands
the difference. Alphaone does not intend to manufacture or
duplicate videos. Should Alphaone invest in copyright, who it
purchases those rights from is of no interest to anyone except
perhaps its commercial competitors.
11. and 12. You ask if any officer or shareholder concerned
directly or indirectly with Alphaone has been charged with a
criminal or civil offence or is under police investigation of any
sort. Such a question is viewed as being entirely improper and
irrelevant. It is our view that you as a decisionmaker are not
entitled to take into consideration such matters."

14. The additional requests also met with a rebuff.

15. It was asserted, strongly, that the applicant met all relevant tests to be regarded as "fit and proper". Accordingly, it was contended "the Commissioner therefore must have granted it (the applicant ) a licence according to section 5(2) ("X" Video Act)".

16. It was demanded that the licence so granted "formally issue".

17. Mr Williams, for the respondent, on 20 August 1992, wrote advising that he regarded the answers to questions 5, 6, 7, 8, 11 and 12 as "unsatisfactory". I set out the answers to 5, 6 and 7.

"5. The number of shares in Hallmark does not appear relevant
but I am instructed that they are all held by David and Lana Watt
collectively.
6. The shareholding of Fortbacon equally does not appear to be
relevant but I advise that all shares in Fortbacon are held by
Hercus or Anthony Mories Davidson.
7. It has already been declared and certified but is again
confirmed that no office bearer or shareholder of Alphaone is an
undischarged bankrupt nor are any of the companies under
consideration in liquidation."

18. I have to say that I cannot understand why answers 5, 6 and 7 should have been regarded as "unsatisfactory". Nor can I understand why, if they were "unsatisfactory", the answer to 9 was not so regarded as well. However, Mr Williams did indicate, clearly enough, that the respondent would not issue the licence requested.

19. Mr Williams then appeared further to narrow the respondent's demands for additional information. He said,

"One of my concerns involves the holders of Alphaone's shares.
If the shares were held by natural persons, my enquiries would
not go beyond those natural persons. However if I was to do
likewise with share holders who are not natural persons, I am
sure you can appreciate that it would be very easy for natural
persons who are not fit and proper to effectively gain a licence
and hence the benefits that would flow from it. Clearly, this
outcome is not the intention of the legislature."

20. There was no reiteration of the previously expressed need to enquire as to the identity of the applicant's proposed suppliers. It seems to have been abandoned. Nor was there any reiteration of the need to enquire as to the "criminal or civil record" of all natural persons "who are office bearers within the group or those directly or indirectly holding a share or shares in Alphaone Pty Limited". That request seems also to have been abandoned.

21. However, copies of various documents, not previously requested, were demanded. Mr Williams advised that if no satisfactory response was given to that demand,

"... I will inform the Commissioner that there is insufficient
evidence to support the application."

22. Solicitors were then drawn into the fray on behalf of the applicant. Messrs Maliganis Edwards and Johnson ("MEJ") took over the further conduct of the paper war on behalf of the applicant. On 2 September 1992, MEJ wrote to the respondent making the following points:-

. The applicant contended that a licence had, effectively,
been issued.
. All information lawfully required had been given.
. The respondent had no discretion to refuse a licence
absolutely, unless satisfied that the applicant was not a
fit and proper person.
. Whether or not the applicant had the "ability to market
videos successfully" was an irrelevant consideration.

23. MEJ demanded the immediate issue of a licence, even if on conditions. They noted that a licence could lawfully be revoked if the applicant was found, in due course, not to be a fit and proper person or to have made a false or misleading statement in support of its application.

24. On the same day, the respondent replied. This time personally. He indicated that he would make his decision on the basis of the "available information", having regard to "your client's submissions (if any) in regard to the refusal to supply information".

25. He ended his missive with the following words,

"I also advise that I am aware that your client is selling
X-videos in the ACT without a licence contrary to advice given by
Mr Williams that such sales are in breach of the Business
Franchise "X"-Videos Act 1990."

26. On 3 September 1992, MEJ responded. One interesting observation they made was the following:-

"Our client denies that it is trading illegally. Your office
knew from day one that our client was trading. It took our
client's money and issued a licence number on that date. It is
not now open to you to use the fact that our client is trading
against our client in any manner."

27. Of course, if the applicant was, in fact and in law, trading illegally, it is difficult to see how the estoppel apparently suggested above could be founded.

28. MEJ reasserted the proposition that "effectively" a licence had, in law, issued. They declined to provide further information and asserted that the onus was on the respondent to find that the applicant was not a fit and proper person. They also sought "renewal" of the licence and offered to "pay all relevant fees immediately".

29. On 11 September 1992, MEJ wrote again to the respondent expressly correcting some apparently erroneous answers to questions 3 and 4 in Part B of the application form. Up to that point it seems that the respondent had either not noticed the errors or was aware, at all relevant times, of those errors. The respondent merely noted those corrections by a letter dated 15 September 1992. He did not at any time suggest that the error was at all relevant. Given that the error arose because of the misleading format of the application form, it would not have been proper for the respondent to do otherwise. It follows that the errors in question should be disregarded.

30. On 17 September 1992, the respondent notified the applicant of his decision, in the following terms,

"Under normal circumstances I would wait until an applicant had
provided all requested documentary evidence in support of its
application before reaching a licensing decision. In your case
however, regardless of your refusal to provide all the
information requested by Mr Williams, I have substantial evidence
that your shops have been retailing x-rated videos without a
licence in breach of section 25 of the Act. I have therefore
concluded there is no additional evidence which you could now
provide which would satisfy me that it is a fit and proper person
for a licence.
Consequently your application is refused."

31. By letter dated 28 September 1992, MEJ formally requested a statement of reasons pursuant to s.13 of the Administrative Decisions (Judicial Review) Act 1989 (ACT) ("ADJR Act).

32. The respondent, on 29 September 1992, assessed outstanding fees for trading without a licence, purportedly calculated pursuant to s.27 of the "X" Video Act, at $4,470.00. A notice under s.18 of the Taxation (Administration) Act 1987 (ACT) (the "Tax Act") was also given requiring certain documents to be produced to the respondent. That notice was not received, it seems, until 6 October 1992.

33. MEJ responded on 7 October 1992. Their letter discussed proposed legal action. Thereafter, the respondent engaged the legal services of the ACT Government Solicitor.

34. It appears, from affidavits relied on by the respondent in these proceedings, that, on Friday 14 August 1992, members of the respondent's office purchased three videos, allegedly X-rated. One was purchased from each of the three trading locations mentioned in the applicant's licence application form.

35. A conversation on 14 August 1992 between Mr Williams and an agent of the applicant was deposed to. It was suggested that this conversation was to be taken as an acknowledgement by the applicant that it had no licence. I accept it as an acknowledgement that no document evidencing a licence had been received by the applicant. It is somewhat ambitious on the part of the respondent to suggest that it constituted any modification of the applicant's contentions that,

. The legislation requiring a licence was invalid; and
. The application and fee tendered were not capable of
refusal, so that, in substance, there was a licence in
existence.

36. Mr Williams also deposed that, as at 8 October 1992, the respondent had received no application for a licence or renewal of licence for September or October 1992 from the applicant. It is clear that, at all times, the applicant was willing to renew its licence (if it was deemed to have one) and pay all relevant fees for all relevant periods. It was the respondent's refusal to issue a licence which prevented the applicant from applying for renewal of it. I would construe Mr Williams' statement in his affidavit, therefore, to be an assertion that the applicant had, in his opinion, made no valid attempt to renew its licence because it had, in his opinion, no licence to renew.

37. On 23 October 1992, the respondent delivered his "Statement of Reasons Pursuant to Section 13 of the (ADJR Act)".

38. In those reasons, the respondent noted that the applicant had stated, in its application form, that it intended to commence selling "X-videos" on 1 August 1992.

39. The respondent then recited that his office had twice informed the applicant that, in the opinion of the respondent, the applicant was unlicensed and would commit an offence if it traded in X-videos. Nevertheless, on 14 August 1992, subsequent to those warnings, purchases (allegedly of X-videos) were made by the respondent's officers at each of the applicant's premises.

40. The respondent had, it seems, also acquired a copy of a "sale of business agreement" between Skyborough Pty Ltd, Fortbacon and the applicant. That agreement was not produced in evidence. However, the respondent stated that he drew from it the inference that the applicant had taken over a pre-existing X-rated video business at the premises named in the application. I cannot determine whether such an inference is warranted, but as it was not challenged, I assume it was a reasonable conclusion to draw.

41. The reasons for refusal of the application were expressed as follows:-

"When this application was lodged, Mr Williams sought certain
information concerning the Applicant. In the ordinary course of
processing an application I would consider such of that
information as I regarded relevant to section 5 of the Act.
In this case the conclusion I had reached that the Applicant was
trading without a licence would, by itself, probably result in a
licence being refused in most cases. However in this instance,
the Applicant knew that it was necessary to hold an "x" rated
video licence to sell "x" rated videos in the Australian Capital
Territory as evidenced by its submission of an application form.
Within one clear business day, the Applicant had been informed in
Mr Williams' letter of 3 August 1992 that it was not licensed and
that it should not trade. A further letter of 5 August 1992
substantially repeated this information to the Applicant.
Despite this, the Applicant sold "x" rated videos without a
licence according to the information I had received from Messrs
Marina and Halley. I therefore concluded that a breach of the
Act had been committed quite blatantly and that this reflected
extremely adversely upon the Applicant's fitness and propriety to
hold a licence.
It was for this reason alone that I refused to grant to the
Applicant a retail "x" rated video licence as I indicated to it
in my letter of 17 September 1992. A copy of this letter is
attached and it forms part of this statement."

42. It is this decision of which the applicant now requests a review by this Court.

The legislation
43. The "X" Video Act is in similar form to the Business Franchise (Tobacco and Petroleum Products) Act 1984 (ACT) (the "Tobacco and Petroleum Products Act"). It is to be read with the Tax Act. It is clear enough that the "X" Video Act is primarily revenue raising legislation, but it also seeks to achieve other appropriate regulatory purposes.

44. The Liquor Act 1975 (ACT) embraces a similar admixture of purposes. So also does the Tobacco and Petroleum Products Act. In each case, for example, there are restrictions on the access by young persons to the products referred to.

45. In each case, it is obviously considered to be in the public interest that only "fit and proper" persons are to be accepted as licensees. That requirement is relevant to each of the purposes of each of the Acts referred to.

46. There was no suggestion, in this case, that there was any formal defect in the application made by the applicant. The respondent's contention is that he was entitled to refuse the application by reason of s.5(2) of the "X" Video Act.

47. That sub-section reads,

"On application in accordance with sub-section (1), the
Commissioner shall grant a licence of the type applied for,
subject to such conditions as he or she thinks fit, if the
Commissioner is satisfied on reasonable grounds in the
circumstances that the applicant is a fit and proper person to
hold a licence of that type."

48. The "circumstances" referred to are defined, in sub-section 5(3), paragraphs (a) to (e) inclusive, to include a number of matters. None of those "circumstances" applied to the applicant as at the date of its application.

49. It is noteworthy that one of the matters made relevant by sub-section 5(3) is,

"(d) whether the applicant has contravened a provision of
this Act (that is, the "X" Video Act), the Tax Act or the
Publications Control Act 1989."

50. The reference to the applicant for that purpose (and for the purposes of sub-s.5(3)(c) and (e)) includes "... a reference to each director, secretary and officer of the body".

51. By s.6, a licence, if granted, remains in force until the expiration of the last day of the month in which it was granted. A licence may be renewed in accordance with s.9 of the Act. I note, in passing, that the Act does not specify or indicate any date upon which a renewed licence will expire.

52. Section 10 of the Act permits cancellation of a licence if the respondent becomes satisfied, on reasonable grounds, that,

"(a) the licence was granted in error or in consequence of a
false statement made, or misleading information furnished,
by the applicant for the licence;
(b) the licensee has contravened a condition to which the
licence is subject;
(c) the licensee has contravened a provision of this Act,
the Tax Act or the Publications Control Act 1989;
(d) the licensee has been convicted of an offence -
(i) against this Act, the Tax Act or the Publications
Control Act 1989; or
(ii) punishable on conviction by a fine of not less
than $10,000.00 or by imprisonment for a period of not
less than 1 year;
(e) if the licensee is a natural person - he or she is an
undischarged bankrupt;
(f) if the licensee is a body corporate - it is being wound
up; or
(g) the licensee is not a fit and proper person to hold a
licence of that type."

53. Where a licensee is a body corporate, a reference to it in (c), (d) or (g) includes a reference to any director, secretary or officer of it (s.10(2)). Cancellation is not permissible unless the licensee has been given a fair opportunity to be heard, including notice of the "facts and circumstances relied upon" as being a ground for cancellation.

54. The fact that express provision is made for a fair hearing if the cancellation of a licence is proposed does not indicate that the same requirement is excluded in relation to the procedure for the grant of such a licence, (see, for example, R v Wilson; ex p Donaldson (1977) 19 ALR 235). It makes no difference that a "licence" is involved. In Sunraysia Broadcasters Pty Ltd v Australian Broadcasting Tribunal (1987) 76 ALR 201 the principles of natural justice were held applicable to the question whether a supplementary FM radio licence should be granted, notwithstanding the discretionary elements involved in the decision to grant or refuse such a licence.

55. It was submitted that the respondent has failed to comply with the rules of natural justice and that the making of the decision to refuse to grant a licence was an improper exercise of power.

Natural Justice (s.5(1)(a) ADJR Act)
56. It is a breach of the rules of natural justice for a decision maker to consider material adverse to the subject of the proposed decision without giving to that subject a fair opportunity to be heard.

57. In Dixon v Commonwealth (1981) 61 ALR 173 a decision was taken to dismiss the appellant from the Commonwealth Public Service. In doing so, the Public Service Board considered other allegations against the appellant of which he had not been notified. The members of the Board averred that they had disregarded those matters. Nevertheless, their decision was held to have been vitiated by the undisclosed receipt of that material and the recommendation based on it from the employing Department. Even if those matters had no direct effect, it was not possible to deny that they could have had an indirect effect on their decision.

58. A similar conclusion was reached in Minister for Immigration, Local Government and Ethnic Affairs v Taveli (1990) 94 ALR 177. There the decision maker asserted that matters adverse to the respondent, not drawn to the latter's attention, were given "no or little weight". That disclaimer was held to be insufficient. The decision was set aside.

59. Somaghi v Minister for Immigration, Local Government and Ethnic Affairs [1991] FCA 389; (1991) 102 ALR 339 provides another relevant example. The appellant, an illegal entrant to Australia, had applied for refugee status. He had, after the initial refusal of his application, sent a letter to the Iranian Embassy highly critical of the Government of Iran. The application was renewed, citing the likely adverse consequences to the appellant of the receipt of that letter by the Iranian authorities in support of the appellant's claim. The decision maker took the view that the sending of the letter was not done in good faith. He took the view that nothing the applicant might say could alter that decision.

60. The decision was set aside. The court took the view that there had been a departure from the proper standards of procedural fairness to which the appellant was entitled. The conclusion that the sending of the letter was not done in good faith was not so obvious or inevitable as to render it unnecessary that an opportunity be given to the appellant to endeavour to persuade the decision maker otherwise. If the decision maker had proposed to find lack of bona fides he should have given the appellant the opportunity to address that issue.

61. In this case, the respondent told the applicant that he had evidence of the unlicensed sale by the applicant of X-videos. That evidence, if accepted, could have exposed the applicant to certain criminal and administrative penalties (see, for example, s.27, "X" Video Act). The evidence was not revealed to the applicant. There could have been many possible matters put concerning that evidence, even if only in mitigation. The classification of the goods as "X-rated" was not established otherwise than by assertion. In any event, it was clear that the applicant claimed to have a bona fide belief that it was licensed and that, in any event, the requirement for licensing was, itself, invalid and unlawful.

62. At no stage was it indicated, before the respondent made his decision, that the applicant might be refused a licence because it had, in the respondent's opinion, breached the "X" Video Act.

63. Indeed, by itself, breach of the "X" Video Act does not require the refusal of an X-video licence. The only ground presently relevant is that the applicant had not demonstrated that it was a "fit and proper person" to purvey X-videos. The fact that it had breached the "X" Video Act, would not lead inevitably to such a conclusion, notwithstanding that it would be a matter relevant to the making of such a decision.

64. Indeed, unless the applicant had been untruthful in its assertion as to its reasons for apparently defying the "X" Video Act, the breaches in question would not require such a conclusion. Indeed, in the circumstances, it would not, if the only adverse matter, support such a conclusion.

65. In the event, no opportunity to put such a submission was given.

66. It follows that the decision of the respondent to refuse the application was in breach of the rules of natural justice.

Improper exercise of Power (s.5(1)(e), ADJR Act
67. What the respondent did in refusing the application was to adopt a general rule that the sale of X-videos without a licence, after warning by his officers that such an act was not, in his opinion, permissible, rendered the seller not a fit and proper person to be licensed to retail X-videos.

68. The respondent knew of the applicant's assertions as to the legal correctness of such conduct. He did not, nor could he without a fair hearing, reject those assertions as untruthful. The respondent seems to have assumed that they were genuinely held but irrelevant. They were not.

69. What the respondent did amounted to the adoption of an inflexible policy. That is not permissible (see, for example, Perder Investments v Lightowler [1990] FCA 239; (1990) 101 ALR 151).

70. That is a further ground for setting aside the respondent's decision. No doubt the conduct of the respondent could also be considered to have been "unreasonable" (see s.5(2)(g)) or made in consequence of an error of law (see s.5(1)(f)).

Should a licence be granted?
71. There is a discretion, notwithstanding that grounds for review have been made out, to refuse relief (see Lamb v Moss [1983] FCA 254; (1983) 76 FLR 296). In an appropriate case, an order compelling a decision of a particular kind may be made (see, for example, Bond Corp Holdings Ltd v Australian Broadcasting Tribunal (1988) 84 ALR 669).

72. Declaratory orders may be made (see, for example, Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 88 ALR 517). The Court's power also includes the power to grant the licence sought, whether as from the date of judgment or from the date upon which it ought to have been granted (see, for example, Minister for Immigration, Local Government and Ethnic Affairs v Taveli (supra)).

73. It would be appropriate to exercise the latter power only if it appears that the respondent was in error in refusing to accept that the applicant had demonstrated that it was entitled to a licence as and from the date of receipt of its application, or as and from some later date.

74. There was nothing in the information supplied by the applicant to cause any doubt reasonably to arise as to its fitness to operate an X-video business in accordance with the Publications Control Act (ACT) 1989, or to pay, honestly and promptly, all relevant licence fees under the "X" Video Act, or to provide information and returns as required by the Tax Act.

75. The respondent's delegate, however, purported to require additional evidence to assess whether the applicant was a "fit and proper person".

76. At the outset, I accept that it was incumbent on the applicant to satisfy the respondent that it was a "fit and proper person".

77. Nevertheless, it was not reasonable to require "a police character check" on "every influential person connected with Alphaone Pty Ltd". Certainly, s.5(4) suggests that directors, secretaries and officers of the applicant were persons whose character might well be relevant. I also accept that the character of persons, being natural persons, who could, alone or in combination with others, control the conduct of the relevant business, would be relevant.

78. In the present case, there is, however, no suggestion that any director, secretary or officer of the applicant failed any relevant test of fitness or propriety. Nothing disclosed by the application form gave rise to any doubt about the fitness or character of any of those persons. The only other persons who could be regarded as relevant were those natural persons being persons who controlled those shareholders which were bodies corporate.

79. The two shareholders were Hallmark and Fortbacon. An attachment to the application identified the directors of those companies.

80. It is not suggested that the respondent knew anything adverse to any of the natural persons so referred to.

81. The application form did ask whether any of the directors, secretaries or officers had any relevant history. There was a question about "Related Companies". That was in the following terms:-

"... detail all associated or related companies, partnerships or
businesses, giving details and extent of relationship (e.g.
common directors, employees or shareholders). Please attach a
schedule for this purpose".

82. The applicant attached a schedule providing those details.

83. It was not suggested that the information so provided raised any doubts about the apparent suitability of the applicant to conduct the business of retailing X-videos. Indeed, the respondent's position, as represented by that of his delegate, was only that yet more information was required.

84. The application form enquired for indicia of unsatisfactory character. It enquired about any revenue or criminal contraventions committed by those persons who were shareholders, employees or directors of the applicant. There was no similar enquiry as to the shareholders, employees and directors of related companies.

85. It is of considerable importance that any information considered relevant to the grant of a licence be sought on or by the application form. A false or misleading statement made in support of such an application will render the maker liable to penalties (see s.50 Tax Act). The "X" Video Act also empowers the respondent to cancel a licence if it appears that it was granted in consequence of such a statement (see s.10).

86. It would, in my opinion, be unfair to an applicant to demand more and more information, particularly by instalments, when all information that was reasonably required could have been requested initially.

87. In this case, I consider that it was unfair for the respondent to create, and to continue to create, new and differing demands for information, additional to those which were required by the application form, even if such further information was relevant and could have been validly requested initially.

88. That statement is not to be taken as suggesting the respondent would have been precluded from requiring incomplete or unclear answers to be properly clarified by the provision of supplementary information. Nor would it preclude the respondent from drawing to the applicant's attention, for comment and further information, material adverse to the applicant obtained from other sources. Indeed, such a process would be required by the rules of natural justice.

89. The applicant submitted that the material sought by and provided on the application form was all that was needed for a decision to be made to grant its application.

90. The applicant contended that the licence should be deemed to have been granted as from the date the application was received and the fee tendered. Of course, that submission assumes that, on that date, there existed no reasonable ground upon which the respondent could have refused the application.

91. I accept that submission. In my opinion, there were no reasonable grounds justifying the respondent in refusing the application.

92. It does not follow from that, however, that the licence must be deemed to have been granted forthwith. The respondent had, necessarily, to take some time to arrive at a view that a favourable conclusion as to the applicant's fitness should be formed. I accept that, as soon as the respondent came to, or should have come to, that view, a duty arose to issue the licence sought. At that time, if, instead of granting the licence in question, the respondent decided to refuse it, that decision could and should, reasonably, be set aside and a contrary decision substituted.

93. The respondent contends, if it is decided to set aside his decision, that the question of the grant or refusal of a licence should be remitted back to him for decision. In any event, he submits, if a licence had been granted, pursuant to the application dated 30 July as from 1 August 1992, as requested, it would have expired on 31 August 1992. He submits that it would, therefore, be futile now to grant the licence originally applied for. Mr Walker, for the respondent, referred to FAI Insurances v Winneke [1982] HCA 26; (1982) 41 ALR 1; 151 CLR 342 in support of that contention.

94. In the FAI case, the appellant had been refused renewal of approval to carry on business as a worker's compensation insurer. The previous approval had been for a period of 12 months. Renewal of it had been refused by the Governor-in-Council without providing a fair opportunity to the appellant to rebut the case alleged against it. It was held that the decision not to renew the approval was void. The question then was whether the Court was empowered to declare the approval to have been renewed.

95. Aickin J thought not.

(386) "The conclusion that the Minister wrongly denied "natural
justice" to the appellant and that the Minister's decision to
recommend to the Governor-in-Council that renewal be not granted
should therefore be regarded as void cannot produce the result
that the appellant should be regarded as having been granted an
approval for some unspecified period as from 2 June 1981 (the
expiry date was 1 June 1981). That is a result that no order of
the Supreme Court could achieve, any more than such an order
could extend the period of the expired approval. This is a
result which flows from the statute and not from the Minister's
failure to provide an opportunity for the appellant to answer
"the case against" it."

96. His Honour thus accepted that the Supreme Court could have made a declaration of invalidity. His Honour saw no difficulty in, effectively, requiring the Minister to consider an original application from the appellant for approval on its merits even if that would not have been otherwise required, and "notwithstanding the fact that it cannot have any direct operation in respect of past events" (see p 387).

97. Brennan J came to a similar conclusion. Mason J agreed with Aicken J. No member of the Court suggested that, simply because the status quo could not be restored, no remedy should be given.

98. In the instant case, the issue is whether the application for a licence should have been granted. Unlike the FAI case, the grant of a licence in this case is mandatory once the applicant's qualifications for it are established. If the licence had been granted when it was applied for, it would now have expired. That is a similar circumstance to that which applied in the FAI case. An application for renewal of it would have had to comply with s.9 of the "X" Video Act.

99. Unlike the application for renewal of approval considered in the FAI case, however, s.9(3) enables the respondent to renew a licence notwithstanding that the application does not comply with s.9(2) which prescribes the form and content of such application. In FAI an application had to conform to certain statutory requirements. By its agent's letter of 17 August 1992, the applicant asserted that, assuming its contention that a licence had issued was correct, it wished that licence to be renewed. That proposition was confirmed by the applicant's solicitors' letter of 3 September 1992. Had there been a licence, the applicant would have been entitled to its renewal by virtue of s.9. The respondent was also, pursuant to s.9, empowered to grant a renewal whether the applicant had applied formally for it or not.

100. The real question, it seems to me, relevant to the scope of relief which should be granted pursuant to s.17(1) ADJR Act, is whether a residual discretion remains with the respondent, on the facts as he ought to have accepted them to be, to refuse the licence application as at the date of the application (see, for example, Borkovic v Minister for Immigration and Ethnic Affairs (1981) 39 ALR 186, Minister for Immigration and Ethnic Affairs v Conyngham (1986) 11 FCR 528; 68 ALR 441).

101. A serious question as to whether the applicant was a fit and proper person could have arisen from the applicant's erroneous answers in Part B of the application form. However, that question did not arise for reasons I have already noted.

102. On the basis of the material requested by and submitted to the respondent, no grounds arose, nor were they suggested to have arisen, upon which the applicant could, reasonably, found a belief that the applicant was not a fit and proper person to retain X-videos.

103. The material requested and provided raised no serious question about the fitness of the applicant to be granted the licence in question. Although it is not necessary so to decide, I doubt whether some of the additional matters which the respondent raised in his requests for further information are reasonably capable of relating to the issue of fitness.

104. It should be expressly noted that no issue was made concerning the positive answer in Part C of the form concerning Mr Hercus' previous record. That record was not put into evidence. Mr Hercus had been associated with a previous licensee and his record had not then been regarded as adversely affecting the issue of fitness of that licence. It was not suggested that such record, whatever it was, raised any reasonable ground supporting a refusal of the application.

105. Accordingly, there is no discretionary reason to refuse relief. The decision to refuse the licence is set aside ab initio. There was no serious reason for the respondent not to have granted the licence as soon as the application had been considered. There was no reason to suggest that it could not have been considered by, say, 31 July 1992. Whether it should have been granted on or from 1 August (a Saturday) or 3 August (a Monday) is a moot point.

106. The decision not to consider the application finally until 17 September 1992, was wrong. The failure to consider the application for renewal of the licence was, as a consequence, also wrongful. Whether there needed to be any subsequent renewal is not entirely obvious. It is a matter which should be the subject of further argument if it is considered necessary for that issue to be determined.

107. I propose to hear the parties as to the nature and extent of the consequential orders required to ensure that the applicant is placed in the same position as it would have been had the respondent made the decision he was legally obliged to have made upon receipt of the application.

108. I will also hear the parties as to costs.