Re Minister of Industry and Commerce and Brian Gallagher, Assistant Secretary, Quota Central Branch, Australian Customs Service v East West Trading Co Pty Limited [1986] FCA 45 (3 March 1986)

FEDERAL COURT OF AUSTRALIA

Re: THE MINISTER FOR INDUSTRY AND COMMERCE AND BRIAN GALLAGHER, ASSISTANT
SECRETARY, QUOTA CENTRAL BRANCH, AUSTRALIAN CUSTOMS SERVICE
And: EAST WEST TRADING Co. PTY. LIMITED
No. G271 of 1985
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Fox J.
Morling J.
Beaumont J.

CATCHWORDS

Administrative Law - Customs Tariff quota - decision to revoke base quota entitlement and withdraw previous import performance entitlement - whether made under an enactment - administrative scheme to allocate quota - whether representation as to what would be considered in determining allocation of quota - whether factors considered were within scheme - whether irrelevant considerations taken into account - scheme not to be construed as legislative.

Administrative Decisions (Judicial Review) Act 1977 s. 5(1)(e)

Customs Act 1901 s. 273

Murphyores Incorporated Pty. Ltd. v. Commonwealth of Australia [1976] HCA 20; (1976) 136 C.L.R. 1 ref'd to

Sean Investments Pty. Ltd. v. Mackellar (1981) 38 A.L.R. 363; (1982) 42 A.L.R.676 ref'd to

Gurleven v. Minister for Immigration & Ethnic Affairs (unreported, Full Federal Court, 24 February 1984) ref'd to

Peninsula Anglican Boys School v. Ryan (unreported, Wilcox J., 17 October 1985) ref'd to

HEARING

SYDNEY
3:3:1986

ORDER

Appeal allowed.

Set aside the orders made herein on 28 August 1985; in lieu thereof order that the respondent's application be dismissed.

Order that the respondent pay one-half of the appellants' costs before the learned Judge and on this appeal.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

DECISION

The respondent in this appeal was the applicant under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") for relief in respect of decisions made by the second appellant, as the delegate of the first appellant, under the Customs Act 1901 ("the Act"). The decisions were communicated by letter dated 22 November 1984, and related to the position of the present respondent East West Trading Co. Pty. Limited ("East West Trading") in respect of import quotas for certain clothing items.

2. The decisions were expressed as follows:

"I have therefore decided to revoke the remaining balances on

base quota allocations for 1984, and to withdraw the previous
import performance entitlements (PIP) held by East West
Trading Company Pty. Ltd. in the following quota categories:
101, 102, 103, 105, 106, 107, 108, 110, 111, 112, 113, 114,
116, 122.

As a result of this decision, the applications for transfer
of previous import performance have been lapsed."

3. The scheme or policy to which the decisions have reference, and the terms thereof, are fully explained in the reasons of his Honour (Neaves J.) and I shall attempt only a brief description, sufficient for an understanding of these reasons.

4. The source of the scheme and of what was done is s.273 of the Act:

"273. (1) The Minister may determine, by instrument in
writing, that, subject to the conditions, if any,
specified in the determination, an item, or a
proposed item, of a Customs Tariff that is
expressed to apply to goods, or to a class or
kind of goods, as prescribed by by-law shall
apply, or shall be deemed to have applied, to the
particular goods specified in the determination.

(2) The Minister may make a determination under the
last preceding sub-section for the purposes of an
item, or a proposed item, of a Customs Tariff
whether or not he has made a by-law for the
purposes of that item or proposed item.

(3) Where, under this section, the Minister
determines that an item, or a proposed item, of a
Customs Tariff shall apply, or shall be deemed to
have applied, to goods, that item or proposed
item shall, subject to this Part and to the
conditions, if any, specified in the
determination, apply, or be deemed to have
applied, to those goods as if those goods were
specified in a by-law made for the purposes of
that item or proposed item and in force on the
day on which those goods are or were entered for
home consumption."

5. A quota is established in relation to certain goods. Nominated importers have access to this quota, and they consequently pay less duty on particular items than otherwise would be the case. About 85 per cent of the quota (we understand it is now less) is known as the base quota and is allotted to particular importers in accordance with the scheme. The remaining 15 per cent is open for application by the importers, and others, on something of an auction or lottery basis. Goods of the description in question may be imported, beyond the quota, but a higher rate of duty is payable.

6. The scheme for allocation of the base quota is based on "previous import performance" (P.I.P.) which is represented by a fraction, or percentage, calculated on the quantity or value of the goods imported by the particular importer during an earlier period. This fraction or percentage is applied to the 85 per cent. Importers having a base quota entitlement due to previous import performance are invited in the second half of the calender year to apply for a quota in the following year, but their maximum entitlement is fixed. A quota, and a P.I.P. entitlement can be transferred, on application to the authorities. The effect of transfer of a P.I.P. entitlement, or a significant part of it, can be a reduction in the transferor's quota for subsequent years.

7. Having in mind the obvious financial advantage of having access to the quota, the Department seeks to control that access, and to confine it in a way I will mention.

8. A notice of contention was filed in the proceedings, by the present appellants. The only point now remaining for consideration is whether the notified withdrawal of the P.I.P. entitlement was made under an enactment, i.e. s.273 of the Act. It is conceded by the appellants that the fixation and the revocation of base quota allocations are made under that enactment, in short that the quota system is effected under the Act. It is submitted, on the other hand, that the P.I.P. scheme is purely an administrative matter, not governed by, or having its source in, any enactment.

9. Given that the quota system is effected under the Act, it seems to me that the method of allocating the quota, including the P.I.P. aspect must also be regarded as done under the Act so that a decision respecting it, as occurred in the present case, must also be treated as made under the enactment.

10. The remaining question is whether the decisions in the present case are subject to review under the Judicial Review Act. The decisions were communicated by the Delegate to the respondent by the letter of 22 November 1984, to which I have referred.

11. Formal determinations purporting to be made under s.273 of the Act were made on the same day, in effect cancelling the allocation of quota to East West Trading, and withdrawing its P.I.P. entitlement.

12. The "scheme" is set out in unstructed fashion in a number of documents, over a period of many months. His Honour's conclusion was that its benefits were intended to enure for "genuine importers" and that this term was treated in the scheme as equivalent to "beneficial owner" of the goods. This term, he said, was clearly distinguished in the documents from persons who merely "make quota available" or whose business is "renting" quota entitlements or who were engaged in "the business of speculating in quota" or "who seek to obtain control over P.I.P. or quota for the purpose of future transfer" or "who see quota as a commodity in which to trade".

13. His Honour then said:

"It is clear, I think, that the basis upon which the second
respondent arrived at his decision was that the applicant's
use of its quota allocation was not, in his view, consistent
with a requirement which he referred to as "the genuine
importer requirement" but which was not the requirement
concerning beneficial ownership to which I have referred."

The paragraph in the letter of 22 November to which I have referred was then set out, as illustrative of his Honour's conclusion. He then said:

"It follows, in my view, that, although the second respondent
posed the question for his determination in terms of the
scheme as published, his decision is explicable only on the
basis that he relied on matters extraneous to it. The
consequence is that the second respondent took into account
considerations that were irrelevant to the question he had to
decide."

14. It seems to me, with respect, that the scheme was not setting out a list of mutually exclusive criteria. Rather was there a generic category or concept, which was explained in the paragraph in question, as it had been before, of "exploiting the scarcity value of the quota". In a letter of 8 October 1984 to East West Trading the second appellant said:

"Mr. V.B.Melwani,
East West Trading Co Pty Ltd
72 Cooper Street
SURRY HILLS NSW 2010

Dear Mr Melwani

I refer to our discussions on 5 October, your letter of 24
September and earlier correspondence concerning the use of
quota held by East West Trading Co. Pty Ltd and the
Government's policy that quota only be available to genuine
importers.

The Government policy for assistance to the textiles,
clothing and footwear industries has included in it a number
of features which facilitate changes in quota holdings in
order that importers may align their quota with their
commercial requirement. These features include the
transferability and tender quota provisions. They also
include the "genuine importer" criteria whereby quota may be
withdrawn where it is established that the quota is held
essentially for purposes such as speculation in or trading or
leasing of quota rather than as part of an import program.

I indicated in the discussions referred to that my
consideration of what constitutes a genuine importer does not
only involve an examination of documentation associated with
the importation and clearance of quota goods in order to be
satisfied that orders were placed, credit established
shipping arranged and entry executed in the name of the quota
holder. It is also appropriate and relevant that I look at
the essential character of a quota holder's commercial
relationship with the overseas supplier, the Australian buyer
and any other party that has an apparent interest in the
goods involved.

If the conclusion can reasonably be drawn that the essential
character of a quota holder's activity is to exploit the
scarcity value of his quota inconsistent with the "genuine
importer" criteria, then I believe the appropriate decision
is that the quota holder's allocation and PIP be withdrawn.

Enquiries by the Quota Control Branch to date relating to the
use of quota held by East West Trading indicate that from
most importations in 1983 and to date in 1984 the essential
character of involvement by East West Trading has been based
on arrangements whereby its quota allocations are made
available to compliment or supplement an import program of
other parties, generally quota holders themselves.

In the light of our inquiries and our tentative findings from
them, I again invite you to demonstrate that quota use by
East West Trading is consistent with the genuine importer
criteria.

Yours sincerely,

BRIAN GALLAGHER

(Brian Gallagher)
Assistant Secretary
Quota Control Branch

15. Quite obviously, the quota (and P.I.P.) had value, as they enabled goods to be imported at a lower tariff than otherwise applied to those goods. The exploitation could take many forms. The phrase "genuine importer" was a convenient catch-phrase, which could be given the meaning of beneficial ownership, but was often used in the documents in a wider sense. The Customs authorities had in the present case formed a view on material available to them that East West Trading had been acting in conjunction with others to "exploit the scarcity value of the quota". To import the goods and pay for them itself obviously did not mean at all that there was no such exploitation. Indeed, in the absence of approval to a transfer of part of P.I.P. or quota, exploitation will most likely take place by the importer importing the goods on his own account, - as part of his quota.

16. I therefore disagree with his Honour's conclusion on the facts. It is necessary however to turn to the law. When s.5(2)(a) refers to taking into account an irrelevant consideration and s.5(2)(b) refers to failing to take a relevant consideration into account, the references are to the requirements of the law. The law is to be ascertained by reference to the enactment under which the decision is made. (See Sean Investments Pty.Ltd. v. Mackellar (1981) 38 ALR 363: (1982) 42 ALR 676: Gurleven v. Minister for Immigration & Ethnic Affairs unreported, Full Federal Court, 24 February 1984). In the present case, this is s.273. It does not mention quota, it deals with tariff rates and does so totally without reference to individuals or companies. The quota scheme has been created under the section, but is a long way from its language. Understandably, the validity of the scheme has not been challenged before us.

17. It does not seem to me that because of the lack of more specific legislation, one should try to elevate the scheme to the status of law. Private rights of action may conceivably arise out of its operation, but that is a different matter. The quota scheme may be controlled and limited in some respects, having in mind the sections of the Act under which it operates, but it is not, in reality or in effect, a statute, and its various provisions are not to be construed as if they were of legislative effect.

18. The scheme is concerned with matters of policy, and in this area, the Minister has a wide discretion. The effect of any change in policy, where the taking into account of irrelevant considerations, as well as natural justice were in issue, was discussed by Wilcox J. in Peninsula Anglican Boys School v. Ryan (unreported, 17 October 1985. pp 31-33 of judgment).

19. I am therefore of the opinion that the appeal should be allowed, the orders made by his Honour set aside, and I agree with the order for costs proposed by Morling and Beaumont JJ.

The Minister for Industry and Commerce and his delegate, Mr. Brian Gallagher, Assistant Secretary, Quota Control Branch, Australian Customs Service, appeal from orders made by a single Judge of the Court on the application of the respondent, East West Trading Co. Pty. Limited, pursuant to s.5 of the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act"). The orders made by the learned Judge set aside certain decisions made by Mr. Gallagher on 22 November 1984, inter alia, revoking the remaining balances on the respondent's "1984 Textile Clothing and Base Tariff Quota Allocation" granted to it by the Minister pursuant to s.273 of the Customs Act 1901 ("the Act"). That provision is in these terms:

"(1) The Minister may determine, by
instrument in writing, that, subject to the
conditions, if any, specified in the
determination, an item, or a proposed item, of a
Customs Tariff that is expressed to apply to
goods, or to a class or kind of goods, as
prescribed by by-law shall apply, or shall be
deemed to have applied, to the particular goods
specified in the determination.

(2) The Minister may make a determination
under the last preceding sub-section for the
purposes of an item, or a proposed item, of a
Customs Tariff whether or not he has made a
by-law for the purposes of that item or proposed
item.

(3) Where, under this section, the Minister
determines that an item, or a proposed item, of
a Customs Tariff shall apply, or shall be deemed
to have applied, to goods, that item or proposed
item shall, subject to this Part and to the
conditions, if any, specified in the
determination, apply, or be deemed to have
applied, to those goods as if those goods were
specified in a by-law made for the purposes of
that item or proposed item and in force on the
day on which those goods are or were entered for
home consumption."

2. It is common ground that the Minister's powers to make a determination in respect of particular goods pursuant to s.273(1) of the Act include a power to make a determination in respect of goods owned by a particular person or persons. It is also common ground that tariff quotas fixed pursuant to s.273(1) in respect of particular goods in particular ownership are used as a method of controlling imports to levels determined by government: although there is no prohibition on the importation of goods outside of the quota arrangements the higher rates of duty provide a disincentive to do so (see Trimknit Manufacturing Pty. Ltd. v. Harvey Bates, Full Federal Court, unreported, 15 November 1984, per Lockhart, J. at p 2).

3. On 15 August 1980 the Minister for Business and Commerce and the Minister for Industry and Commerce announced a seven year programme of tariff quota for the textile, clothing and footwear industries intended to commence from 1 January 1982. The programme was structured to allow 85% of the quota bearing the lower tariff rate to be distributed to importers on the basis of their history of importing. Consequently, the levels of imports were determined for the period 1 July 1978 to 30 June 1980 and the figures obtained became the base performance levels or "previous import performance". The base performance levels were determined in a number of quota categories which corresponded to different types of goods imported.

4. It was intended that the base performance levels were to be increased annually for the seven years of the programme. The remaining 15% of the quota was to be distributed by tender. The details of the scheme were outlined and publicised in a series of Bureau of Customs notices.

5. Bureau of Customs notice 80/175 dated 13 October 1980 stated that each applicant for quota would "in due course be required to submit a statement setting out brief details of the business operations and certifying that he or his company are engaged in the business of importing goods within the categories claimed." Bureau of Customs notice 81/24 dated 6 February 1981 stated that base quota would only be allocated in each of the seven years of the programme to "genuine importers", defined as "importers who are still in the business of importing and trading in the goods." The notice also stated that persons claiming to be indent agents would have to establish that they provided other services to customers rather than merely making quota available; and that persons whose business in quota goods was "renting" quota entitlement to others would be ineligible for quota allocation.

6. This notice dealt with transferability of quota as follows:

"15. . . . . For the benefit of importers who wish
to transfer quota which for any reason they are
unable to utilise themselves it is pointed out
that the balance of quota available in a quota
period may be transferred and the base
performance from which the quota was derived may
also be transferred. However, the base
performance will only be transferred if the
transfer request specifically says so. In other
words, the transferring of the balance of
current quota need have no effect on base
performance."

7. The respondent applied for tariff quota for the quota year commencing 1 January 1982 and an allocation of quota in respect of that quota year was subsequently made to the applicant.

8. By letter dated 22 July 1982 the Department invited the respondent to apply for an allocation of base quota for the quota year commencing 1 January 1983. The letter said that "Base Quota may only be issued to genuine importers who hold Previous Import Performance (PIP)." The respondent completed a pro-forma application dated 30 July 1982 for 1983 base quota. In the application the respondent undertook that any base quota would be used for the purpose of entry and clearance of goods owned by the respondent. The respondent was subsequently allocated quota in respect of the year commencing 1 January 1983.

9. Australian Customs Notice 83/100 (18 May 1983) replaced certain earlier notices and outlined new arrangements to operate from the date of its issue as follows:

"3. CONTROLS ON THE TRANSFER OF QUOTA ARE AIMED
AT TRADERS WHO SPECULATE IN QUOTA. THE CONTROLS
ARE NOT AIMED AT THOSE WHO USE QUOTA IN
IMPORTING AND CLEARING GOODS.

4. Quota entitlements have been made
transferable to allow improved access to quota
for those importers who can use it effectively
to import goods. Any transfer of quota
allocations which relates to the business of
speculating in quota (as opposed to trading in
goods) is clearly outside of this objective and
will not be approved.

5. Transfers of PIP will not be approved if the
proposed transferee is ineligible to receive
quota. Holders of PIP who do not qualify for
the issue of quota are advised to arrange
transfer of the PIP to an eligible importer as
soon as possible.

6. Importers are cautioned against entering
into arrangements which purport to allow others
to exercise commercial control over PIP or quota
allocations which are held in their name. If it
becomes evident that arrangements of this type
are being used by quota speculators, the PIP
concerned will not be recognised for future
quota allocations and/or the quota instrument
will be revoked. This will have the effect of
increasing quota allocations to genuine
importers.

QUOTA BROKERS AND QUOTA TRADERS

7. Brokers who act to bring a transferor and
transferee together to facilitate a transfer
provide a service to importers which is
consistent with the aims of the quota schemes.

8. However, quota traders who seek to obtain
control over PIP or quota for the purpose of
future transfer are regarded as speculators.
Transfers on their behalf will not be
processed."

10. Australian Customs Notice 83/127 dated 6 July 1983, dealing with applications for base quota for the year commencing 1 January 1984, informed importers that:

"Holders of PIP can be issued with quota only if
such quota is to be used to enter goods at quota
rates of duty. . . .

Importers are cautioned against entering into
arrangements which purport to allow others to
exercise commercial control over PIP which is
held in their name. If it becomes evident that
arrangements of this type are being used by
quota speculators, the PIP concerned will not be
recognised for future quota allocations. This
will have the effect of increasing quota
allocations to genuine importers.

It is pointed out that quota is issued to
importers only so that they may enter their own
goods for home consumption. In future importers
may be asked for detailed Statutory Declarations
that they were the beneficial owners of specific
clearances against quota which were entered for
home consumption in their name. Failure to
supply a suitable declaration when required
could jeopardise further allocation of quota.

TRANSFERS OF PREVIOUS IMPORT PERFORMANCE

CONTROLS ON THE TRANSFER OF PIP ARE AIMED AT
TRADERS WHO SPECULATE IN QUOTA. THE CONTROLS
ARE NOT AIMED AT THOSE WHO USE QUOTA IN
IMPORTING AND CLEARING GOODS.

. . . . quota will not be issued . . . unless it is to
be used to enter for home consumption goods
which are beneficially owned by the quota
holder."

11. By letter dated 4 July 1983 the respondent was invited to apply for an allocation of 1984 base quota. The letter read in part:

"You are now invited to apply for an allocation
of Base Quota for 1984 using the enclosed form,
provided that you genuinely intend to import
quota goods in 1984. I direct your attention to
Section 234(e) (sic) of the Customs Act which is
re-produced below. Applications will not be
accepted unless signed by the applicant
personally or by an authorised officer of the
applicant.

It is pointed out that quota is issued to
importers only so that they may clear for home
consumption at quota rates of duty goods which
they beneficially own. In future importers may
be asked for detailed Statutory Declarations
signed by an office bearer of the company that
they were the beneficial owners of specific
imports against quota which were entered for
home consumption in their name. Failure to
supply a suitable declaration when required
could jeopardise further allocation of quota.

Measures which are being taken to control the
issue and transferability of quota are designed
to combat speculation in quota. Any importer
who seeks quota as a means to import and clear
goods has no cause for concern at these
measures. Genuine importers who wish to vary
their quota holding in a particular year to
respond to market supply or demand may do so
without fear.

Quota is not available to those who see quota as
a commodity in which to trade. . . . "

12. The respondent applied on 7 July 1983 undertaking that upon the issue of any 1984 base quota allocated as a result of this application, the base quota will be used, for the purposes of entry and clearance of goods owned by the respondent at the time of entry for home consumption.

13. The respondent was allocated quota in respect of the year commencing 1 January 1984 and determinations, signed by the second appellant as delegate of the Minister, were made in relation to the respondent. The body of each such determination read:

"In pursuance of Section 273 of the Customs Act
1901, I, the delegate of the Minister for the
time being administering the said Act, hereby
determine that the item in Part II of Schedule 4
to the Customs Tariff Act 1982, as proposed to
be altered, set out in Column 1 of the Table
hereunder, shall apply to goods that are:

(i) specified in Column 3 of that Table and to
which a tariff classification in Schedule 3
to the Customs Tariff Act 1982, as proposed
to be altered, set out in Column 2 of that
Table opposite that item applies; and

(ii) entered for home consumption not earlier
than the first day of January 1984 and not
later than the thirty-first day of December
1984 in total not in excess of such
quantity or of such value as is specified
in words and figures in Column 4 of that
Table - entered for home consumption by the
owner specified above."

14. Australian Customs Notice 84/127 (29 June 1984) was issued in relation to applications for 1985 base quota. It provided in part:

"APPLICATIONS FOR 1985 BASE QUOTA

It is anticipated that letters will be
despatched early in September 1984 to all
holders of PIP inviting them to apply for their
1985 base quota allocation. This letter will
include details of PIP holdings, as indicated
by Quota Control Branch files, on 31 August
1984. An opportunity will be provided for PIP
holders to have these details rechecked, and
confirmed PIP holdings on this date will be the
basis for 1985 base quota allocations.

In applying for an allocation of quota in 1985
PIP holders will be required, as has been the
case in past years, to sign a statement to the
effect that they intend to use 1985 quota to
import goods beneficially owned by them.

Requests for transfers of PIP received after 31
August will be processed in the normal way, but
any transfer approved will not be reflected in
1985 quota allocations; the PIP holder as at 31
August (i.e. the transferor) will retain the
entitlement to the 1985 allocation subject to
his meeting normal genuine importer criteria.
Should this PIP holder request transfer(s) of
his 1985 allocation, an explanation may be
sought of his request in the light of his
previously signed statement of intention to
import."

15. On 1 August 1984 a notice over the signature of the second appellant was sent to all base quota holders. It included the following:

"I am writing to you concerning 1985 allocation
of base quota to import textile, clothing and
footwear products.

As in previous years all base quota holders will
be required to apply for their 1985 base quota
allocation, and the application will include a
statement to be signed by the quota holder to
the effect that they undertake to use the quota
to clear for home consumption at quota rates of
duty goods that are beneficially owned by the
quota holder. This undertaking is an important
element in a range of measures which seek to
ensure that quota is available to genuine
importers by discouraging activities such as
speculation in and leasing of quota.

Application forms for a 1985 base quota
allocation will be despatched to all PIP holders
in early September 1984, for completion and
return to the Quota Control Branch by 28
September 1984."

16. The respondent entered into agreements to transfer its previous import performance entitlements and applications for approval of those transfers were lodged with the second appellant in August and September 1984. These are the transfers referred to in the decision of the second appellant, the subject of the present application, as lapsed.

17. The decision in respect of which an order of review is sought was contained in a letter dated 22 November 1984 written by the second appellant to Mr. Melwani, the managing director of the respondent. It reads as follows:

"I refer to my letter of 12 September 1984 and to
discussions and correspondence both before and
after that date concerning quota allocations to
East West Trading Company Pty. Ltd.

I and other officers of the Quota Control Branch
have carefully examined your use of quota in
1983 and to date in 1984. Information available
from our records identifies overseas suppliers
from whom goods were sourced and also identifies
other Australian importers using those
suppliers. It is possible also to identify the
shipping arrangements and Customs Agents
involved in each entry lodged with customs.

From our examination, the following points can
be made in respect of quota use by East West
Trading during the period in question

- many of the orders placed by East West Trading
have identical, consecutive or otherwise
similar order numbers to those placed by
certain other quota holders;

- there are other obvious points of similarity
in these orders including

. Style Numbers
. Garment descriptions
. Labels on, and sewn into, garments
(including labels exclusive to other
Australian suppliers/retailers).

- in many instances an order placed by East West
Trading has corresponded with an order by
another quota holder which has exhausted or
nearly exhausted the other quota holder's
allocation.

- in several instances there is an apparent
connection between shipping and Customs
clearance arrangements for imports by East
West Trading and arrangements for similar
imports by some other quota holders.

In discussions on 20 July, 23 August and 5
October officers of this Branch, including
myself, have raised with you these aspects of
the use of quota by EWT. From my involvement in
those discussions and from the reports I have
received of the discussions at which I was not
present, I am satisfied that the points of
similarity between the import arrangements and
quota use of EWT and the arrangements of some
other quota holders are not coincidental.
Indeed the discussions referred to have
confirmed that the goods entered for home
consumption against quota allocations to East
West Trading were ordered on instructions from
those other quota holders who had similar orders
and were sold to them after clearance.

Our examination of documents has established
that orders were placed, letters of credit
established and shipping arrangements were made
in the name of East West Trading. I do not seek
to refute your claim that you have borne the
financial risk associated with the importation
and entry (of) goods subject to quota.

The quota arrangements applying to textiles,
clothing and footwear products include a
provision that quota be available only to
genuine importers; that is, for use in respect
of goods beneficially owned by the importer.

Where it becomes evident that arrangements for
quota use are not consistent with this
provision, quota allocations may be revoked and
PIP not recognised for future allocation.

As I have indicated in earlier communications,
it is appropriate that I consider the essential
character of a quota holder's activities, as
well as documentary evidence of ownership of
goods entered against quota allocations, in
forming an opinion, and coming to a decision as
to whether those activities are consistent with
the genuine importer provisions.

On the basis of the information available to me,
I am satisfied that the essential character of
the use by East West Trading of its quota
allocations in 1983 and 1984 has been to exploit
the scarcity value of the quota through
arrangements whereby its quota holdings were
made available to other parties to complement or
supplement an import program of those other
parties, and to avoid the controls maintained on
transfers to ensure importers align their quota
holdings with their requirements. As such, the
quota use is not consistent with the genuine
importer requirement.

I have therefore decided to revoke the remaining
balances on base quota allocations for 1984, and
to withdraw the previous import performance
entitlements (PIP) held by East West Trading
Company Pty. Ltd. in the following quota
categories: 101, 102, 103, 105, 106, 107, 108,
110, 111, 112, 113, 114, 116, 122.

As a result of this decision, the applications
for transfer of previous import performance have
been lapsed. . ."

18. On 22 November 1984 further determinations under section 273 of the Act were made whereby it was determined that the relevant items in the Customs Tariff Act 1982 were no longer to apply to goods entered for home consumption by the respondent.

19. The decision of 22 November 1984 thus had two major consequences for the respondent. First, it revoked the balance of its 1984 quota allocation and thus deprived it of the ability to import further goods in 1984 at a favourable rate of duty. Secondly, the effect of the decision was to give notice to the respondent that it would not be allocated a quota in 1985.

20. The learned Judge held that the decision (which, in substance, amounted to two separate decisions) was reviewable under the Judicial Review Act, since it was a decision made under s. 273 of the Act. He held further that the making of the decision was an improper exercise of the power conferred by the Act in that, in making it, the second respondent took into account an irrelevant consideration (vide s.5(1) (e) of the Judicial Review Act as expanded by s.5 (2) (a) thereof). His Honour was of the view that the quota scheme itself laid down the conditions which a quota holder was required to observe if he was to be entitled to the benefit of a quota and to renewal of it. Those conditions included a requirement that a quota holder continue to be a "genuine importer".

21. His Honour was further of the view that an examination of the scheme revealed that it sufficiently identified a "genuine importer" as a person who imports goods in his own name into Australia provided only that he is the beneficial owner of the goods at the time of import.

22. His Honour found that, in making his decision, the second respondent took into account other considerations in deciding whether the respondent was a genuine importer for the purposes of the scheme. Indeed, it was virtually conceded that this was the case. Undoubtedly those other considerations went beyond the question whether the respondent was the beneficial owner of the goods at the time they were imported into Australia. Accordingly, his Honour was of the view that the respondent was entitled to have the decision set aside.

23. It was conceded at the hearing at first instance and on appeal that insofar as the second appellant's decision was a decision to revoke the remaining balances on the respondent's 1984 quota allocation, it was a decision made under s. 273 of the Act. However, it was contended that the decision to withdraw the respondent's Tariff Quota Previous Import Performance entitlements was not reviewable because it was not a decision made "under an enactment" and hence not a decision to which the Judicial Review Act applied. It was submitted that the scheme in respect of the allocation of quotas was purely administrative, that it operated independently of any statutory provisions and that the decision to withdraw the respondent's Previous Import Performance entitlements was a decision made purely with reference to the administrative scheme.

24. This argument was rejected by the trial Judge. He was of the opinion that the decision to withdraw the respondent's Previous Import Performance entitlements involved a decision to refuse to make a determination under s. 273 of the Customs Act extending to the respondent in respect of the year commencing on 1 January 1985 any entitlement to import goods within the relevant categories at the lower rate of duty.

25. Counsel for the appellants conceded that a decision to refuse to make an allocation of quota to the respondent for 1985 would be a decision under s. 273 and hence reviewable under the Judicial Review Act. However, it was submitted that it was not proper to characterise the decision of 22 November 1984 as a refusal to allocate a 1985 quota to the respondent. In effect, it was submitted that the application for review was premature to the extent that it sought to have reviewed that part of the decision which withdrew from the respondent its Previous Import Performance entitlement.

26. In our opinion, his Honour was correct in holding that the whole of the decision of 22 November was a decision to which the Judicial Review Act applied. We agree that, in the context of the circumstances in which it occurred, the decision was a decision both to revoke the respondent's entitlement to the balance of its 1984 quota allocation and a decision to refuse it an allocation of quota in 1985. It was thus, in its entirety, a decision made under s.273 of the Act.

27. We turn now to consider the arguments of substance presented on the appeal.

28. It is first necessary to construe the various statements made on behalf of the Minister as to the manner in which he Proposed to exercise his discretion under s.273. These statements have been described as a "scheme". It would be more accurate to describe them as statements of policy as it stood from time to time. Over the years in question, a number of features are emphasised. There is reference to the need to be engaged in the business of importing goods and to be a "genuine importer". There are statements that quota allocations are made only to importers bringing in their own goods, i.e. goods which they beneficially own. On the other hand, no allocation would be made to those engaged in the business of "speculating" in quota as opposed to trading in goods or to those who "rent" quota or to those who allow others to exercise "commercial control" over quota.

29. It may be accepted that it is possible to discern in these announcements a statement of intention that quota will not be allocated to those importers who do not have the beneficial ownership of the goods imported. But we do not think that it is possible to construe the statements as making a representation or even an indication on the part of the Minister that if an importer can demonstrate that he beneficially owns the goods, he will, by reason of that fact alone, receive or continue to receive quota. The communications are silent on the point and, in our opinion, there is no warrant in importing into what was said any such positive commitment on the part of the Minister. The discretion vested in him by s.273 (1) is a broad one (see Murphvores Incorporated Pty. Ltd. v. Commonwealth of Australia [1976] HCA 20; (1976) 136 CLR 1 per Stephen, J. at p 14; per Mason, J. at p 24). Only by the most explicit language could the Minister enter into a positive commitment of the kind now suggested. We find no such language here.

30. Since we are unable to read into these communications any commitment on the part of the Minister, in the events which have happened, to make or not to revoke (see Acts Interpretation Act 1901 s. 33 (3)) a determination pursuant to s. 273 in favour of the respondent, it must follow that the respondent's case must fail: the statements in question, properly construed, amount to no more than a representation that quota would not be allocated in certain circumstances including the case where the importer does not beneficially own the goods. There was no representation or indication that quota would necessarily be allocated to any person who could demonstrate that he beneficially owned the goods he was importing.

31. In its further amended application, the respondent put its case in a number of different ways as follows:

"1. That a breach of the rules of natural
justice occurred in connexion with the
making of the decision, in that the second
respondent considered it without informing
the applicant fully of the particular
respects in which it may be alleged the
applicant transgressed the relevant policy.

2. That the making of the decision was an
improper exercise of the power conferred by
the Customs Act 1901, in that the second
respondent took into account irrelevant
considerations (namely, as to the
applicant's on-sale of goods imported by
it) and failed to take into account
relevant considerations (namely, as to the
applicant bearing the risk of its importing
business and being the beneficial owner of
the goods it imported).

3. That the making of the decision was an
improper exercise of the said power, in
that it is so unreasonable that no
reasonable person could have so exercised
the power.

4. That the decision involved an error of law,
for the same reasons as are referred to in
2 above.

5. That there was no evidence or other
material to justify the making of the
decision, the second respondent having
based the decision on the existence of the
fact that the applicant was, alternatively,
not the beneficial owner of the goods it
imported or was not a genuine importer."

32. The first ground, alleging a denial of natural justice, was not pressed before the learned Judge. The case sought to be made by the respondent before the learned Judge and before us was put in two ways : first, that the appellants took into account irrelevant considerations and secondly, that the appellants found, contrary to the facts, that the respondent did not meet the genuine importer requirements of the quota scheme. For the reasons already given, in our view, the respondent could only obtain judicial review if it could establish, at the least, that involved in the scheme was a representation, or perhaps an indication, that quota would necessarily be granted to any importer who could demonstrate that he was "genuine" in the sense that he beneficially owned the goods being imported. As a matter of construction, we are unable to spell out any such representation or indication from the communictions which were made.

33. We would add that even if it were possible to interpret the appellants' pronouncements as constituting a representation or indication that quota would be allocated to particular importers in certain circumstances, it does not follow that the enquiry was to be limited to the question whether the importer beneficially owned the goods. In other words, if, contrary to our view, the material issued by the appellants did contain an undertaking that allocation would be made to certain importers, we would not construe the statements made by the appellants as confining themselves to the strictly legal question of beneficial ownership. No doubt this was one matter which the respondent had to establish in order to qualify as a "genuine importer", but the communications, read as a whole, show that the appellants intended to take into account, in deciding to allocate quota, not only the question of title to the goods, but all the circumstances of the case. In other words we would read the statements made as intended to do no more than afford practical illustrations of situations where "genuine" importing would not be assumed rather than an attempt to state exhaustively the legal criteria by which an importer qualifies for, or is disqualified from, an entitlement to quota allocation.

34. In the circumstances it is unnecessary for us to express any view on the question whether relief under the Judicial Review Act would be available in the event, contrary to our findings that a departure from the terms of the quota scheme were established. (See Salemi v MacKellar [1977] HCA 26; (1977) 137 C.L.R. 396 per Stephen, J. at pp. 442-3; Kioa v West, High Court, unreported, 18 December 1985 per Mason, J. at p. 36; cf. Ansett Transport Industries (Operations) Pty. Ltd. v The Commonwealth [1977] HCA 71; (1977) 139 C.L.R. 54 at pp.74 et seq; and see Regina v Secretary of State for the Home Department, Ex parte Khan [1984] EWCA Civ 8; (1984) 1 WLR 1337; cf. R v Department of Employment, Ex parte Jabbar, unreported, 23 January 1985, per Woolf, J.. See also Peninsula Anglican Boys School v Ryan, unreported, 17 October 1985, per Wilcox J.). In this connection it should be noted that the respondent did not argue before the learned Judge or before us that the case fell within the "Wednesbury" principle (see Associated Picture Houses Ltd. v Wednesbury Corporation [1947] EWCA Civ 1; (1948) 1 K.B. 223. That is that the exercise of the power in question was so unreasonable that no reasonable person could have so exercised it. (See Judicial Act, s.5(2) (g)).

35. We would allow the appeal and order that the respondent's application be dismissed.

36. Since the appellants have failed on their objection to jurisdiction, it is appropriate that the respondent should pay only one-half of the appellants' costs before the learned Judge and before us. If applied for, the respondent should be granted a costs certificate in respect of the appeal pursuant to s. 6(1) of the Federal Proceedings (Costs) Act 1981.

37. We would make the following orders:

1. Appeal allowed.
2. Set aside the orders made herein on 28 August 1985; in lieu thereof order that the respondent's application be dismissed.
3. Order that the respondent pay one-half of the appellants' costs before the learned Judge and on this appeal.