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Federal Court of Australia |
Last Updated: 22 October 2003
Distilled Spirits Industry Council of Australia Inc v Food Standards Australia New Zealand [2003] FCA 1139
ADMINISTRATIVE LAW - judicial review - application to modify food standards - application refused - whether decision-maker addressed the correct question or misconstrued statute - where primary object of statute public health and safety - whether decision-maker gave weight to this object to exclusion of other relevant considerations.
ADMINISTRATIVE LAW - judicial review - effect of preliminary recommendation - where valid/lawful recommendation of statutory body a prerequisite to final decision of council of ministers.
ADMINISTRATIVE LAW - judicial review - application to modify food standard - decision whether to exempt duty free alcohol from general alcohol labelling requirements - where applicant provided no empirical evidence to support exemption being granted - whether decision-maker's refusal to extend time for applicant to make submissions constituted denial of procedural fairness - whether decision-maker required to inform itself of evidence beyond that received in submissions.
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Judiciary Act 1903 (Cth)
Federal Court of Australia Act 1976 (Cth)
Australia New Zealand Food Authority Act 1991 (Cth)
Imported Food Control Act 1992 (Cth)
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Australian Conservation Foundation v Forestry Commission (1988) 19 FCR 127
Enichem ANIC v Anti-Dumping Authority (1992) 39 FCR 458
Minister for Immigration and Multicultural Affairs v Anthonypillai [2001] FCA 274; (2001) 106 FCR 426
Minister for Immigration and Ethnic affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273
Minister for Immigration & Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323
Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 353
R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32; (1979) 180 CLR 322
Re W (an infant) [1971] AC 682
DISTILLED SPIRITS INDUSTRY COUNCIL OF AUSTRALIA INC v FOOD STANDARDS AUSTRALIA NEW ZEALAND
N630 of 2002
MADGWICK J
17 OCTOBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
|
1. The application be dismissed.
2. The applicants pay the respondents' costs as assessed or taxed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
|
JUDGE: |
MADGWICK J |
DATE: |
16 OCTOBER 2003 |
PLACE: |
SYDNEY |
HIS HONOUR:
1 This is an application made by the Distilled Spirits Industry Council of Australia Inc ("DSICA") and DIAGEO Australia Ltd ("DIAGEO"), formerly Guinness United Distillers and Vintners (Aust) Ltd, praying in aid of s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"), s 39B (1A)(c) of the Judiciary Act 1903 (Cth), ss 22 and 32 of the Federal Court of Australia Act 1976 (Cth) and the Court's accrued jurisdiction, to review:
(1) the decision of Food Standards Australia New Zealand ("FSANZ"), a statutory body formerly known as the Australia New Zealand Food Authority, published and furnished to the applicants on 3 June 2002, recommending to the Food Standards Australia New Zealand Council ("the Council"), (formerly known as the Australia New Zealand Food Standards Council), that it reject an application made by the first applicant under s 12 of the Australia New Zealand Food Authority Act 1991 (Cth) ("the Act") for variations to be made to be made to the Food Standards Code established under the Act to exempt spirits and liqueurs from certain labelling requirements ("the Final Recommendation Decision"); and
(2) the decision of the Council made on 24 May 2002 and furnished to the applicants on or about 3 June 2002 by FSANZ's letter dated 31 May 2002, rejecting the draft variation of the standard sought by DSICA's application ("the Rejection Decision").
2 The applicants sought orders to have the Final Recommendation Decision and the Rejection Decision set aside and declared invalid and to have the matter referred back to FSANZ for further consideration according to law.
Background and chronology
3 Pursuant to the Imported Food Control Act 1992 (Cth) ("the IFC Act"), the Australian Quarantine and Inspection Service ("AQIS") is responsible for enforcement of the Food Standards Code made under the Act in relation to importation of food. The IFC Act requires that all food imported into Australia comply with that Code.
4 In a letter dated 8 March 2000, AQIS informed DSICA that on legal advice it would commence enforcing certain labelling standards set for alcoholic beverages and other products sold in duty free stores, where previously it had not done so. The letter allowed until 30 June 2000 for compliance with the following ANZFS Code standards:
* standard 1.2.2 clause 3 which requires the label on a package of food to include the name and business address in Australia or New Zealand of the supplier of the food.
* standard 2.7.1 clause 3 which requires beverages containing more than 0.5% alcohol by volume, to be labelled with a statement of the approximate number of "standard drinks" in the package.
5 By letter dated 17 March 2000, FSANZ confirmed to DSICA that there was no provision in the ANZFS Code exempting alcoholic beverages sold through duty free shops from these labelling requirements.
6 On 6 June 2000, DSICA lodged an application with FSANZ (Application A418) to vary the Food Standards so as to exempt spirit and liqueur products, sold through duty free stores for export, or in the case of in-bound duty free products, for personal import, from the labelling requirements of that Code.
7 There is a complex statutory process for dealing with such application which, so far as presently relevant, involves the following steps:
Application: s 12
Preliminary assessment: s 13 - accept or reject application
If accept - notify applicant and invite submissions from applicant: s 13A
notify public, inviting written submissions: s 14
Full assessment: s 15
FSANZ to: prepare draft food regulatory measure: s 1 SA(I)(a) or
reject application: s 1 SA(I)(b) and give notice to applicant: s 17A
Notice to applicant, appropriate government agencies, those who made submissions under s 14 and the public, inviting submissions: s 17
Recommendation decision after inquiry
In the case of a food standard: make recommendation to Council to adopt or reject: s 18
FSANZ duty to give notice of s 18 recommendation to applicant, agencies, those who made submissions and the public: s 19
Council: adopts, amends, rejects or returns draft variation on standard: s 20
8 The process that was followed in this case was, in summary:
DSICA's Application: s 12 - 6 June 2000
Preliminary assessment: s 13 - accept application - 14 February 2001
Accepted - notified DSICA and invited submissions: s 13A
notified public, inviting written submissions: s 14
DIAGEO makes submission, 14 March 2001
Full assessment: s 15 - 19 September 2001
FSANZ adopts option 1 - to allow variation of Code which DSICA applied for
FSANZ prepares draft food regulatory measure: s 15A(I)(a)
Inquiry after FSANZ prepares draft food regulatory measure
Notice to DSICA, those who made submissions (including DIAGEO) and the public, inviting submissions: s 17
25 Oct 2001 DIAGEO submits that FSANZ is correct to adopt option 1 for reasons FSANZ gave
Draft Final Recommendation Decision after inquiry:
21 December 2001 - Board of FSANZ (not unanimous) shifts from previous thinking
Feb 2002 - FSANZ, in-house solicitor, Mr Fladun, warns Board that DSICA is entitled to common law procedural fairness before any recommendation decision to reject
8 March 2002 - FSANZ provides DSICA with "Authority-in-confidence" copy of draft Final Recommendation Decision and invites any further submission within 21 days
13 March 2002 DIAGEO requests more time
22 March 2002 FSANZ tells Mr Preece (consultant to DIAGEO) that DIAGEO can only make submissions through DSICA
27 March 2002 Mr Preece proposes particular form of further response to FSANZ
28 March 2002 Mr Halmarick emails DSICA (Mr Broderick) with comments, mainly not incorporating the Preece suggestions
28 March 2002 DSICA forwards comments to Mr Preston, DSICA's solicitor.
28 March 2002 Mr Preston sends DSICA submission
FSANZ gives notice of s 18 recommendation to applicant, agencies, those who made submissions, the public: s 19
FSANZ Council, s 20: 24 May 2002 - adopts FSANZ's Recommendation decision to reject application
9 It is necessary to expand on that summary.
10 On 14 February 2001, FSANZ issued a Preliminary Assessment Report pursuant to s 13 of the Act indicating that it accepted Application A418 and that it would make a full assessment of it pursuant to s 13A of the Act. FSANZ then invited public submissions from interested individuals and organisations, on matters that would assist FSANZ make its final assessment, pursuant to s 14. Numerous submissions were made to FSANZ by lobby groups, industry associations and various departments of government in both Australia and New Zealand.
11 By facsimile dated 14 March 2001, DIAGEO made a submission in relation to Application A418. Among other things, it stated:
`Legal anomalies and inconsistencies with Australia's International ObligationsA clear discrepancy exists between the provisions of the "Imported Food Control Act" (the Act) and corresponding provisions of State/Territory Food Acts. The former mandates compliance with the Code whenever food is "imported" whereas the latter imposes a similar obligation only when food is "sold".
This discrepancy was highlighted in the Imported Food Review Committee Report (1998) which also acknowledged that it places an unfair burden on importers, which could be avoided by appropriate changes to the legislation.
In addition, the inconsistencies highlighted above and the position which AQIS has chosen to adopt in relation to the issues, are at variance with Australia's international obligations under World Trade Organisation agreements, which commit Australia to the removal of barriers to the importation of goods and services into this country.
The position taken by AQIS contravenes the almost universally accepted belief that the duty free market is separate from the domestic market and should not be subject to domestic labelling requirements - This allows duty free to be treated as a single - `world' market within which stocks can be moved to where they are needed under a standard export label. The flexibility and economies of scale implicit in these arrangements are self evident and extremely important to our industry. Moreover, on a practical level, we cannot understand AQIS concerns that duty free supplies might be diverted - to the Australian domestic market, as this would be breaking the law and traders would potentially be liable to quite severe penalties.'
12 On 21 March 2001, the Nuance Group (Australia) Pty Ltd ("Nuance"), which operates duty free stores across Australia, forwarded a submission to FSANZ, supporting the application of DSICA to amend the FSANZ Code so as to exempt spirit and liqueur products sold at duty free stores from the relevant labelling requirements. Their submission was very like that of DIAGEO and in parts identical with it. Nuance raised a number of practical difficulties should the labelling requirements be imposed:
`LabellingAlcohol beverages sold in Duty Free stores in Australia and New Zealand carry the name of the manufacturer and indicate the alcohol content. The only labelling requirement that is not shown but is required for the sale of these beverages in the Australian domestic market is details of the number of standard drinks in the container.
In Australia and New Zealand [for convenience called "ANZ" in this judgment] a standard drink is 10 grams of alcohol. No other country in the world has a requirement for standard drink labelling. In the UK, manufacturers are voluntarily showing the number of `units' in the container. However a unit (standard drink) in the UK is 8 grams of alcohol. In the USA a `standard measure' is 12 grams of alcohol. In Europe and Asia, there is no standard measure.
Therefore, it is obvious that travellers, other than Australians, have no concept of a `standard drink'. Requiring standard drink labelling for Duty Free alcohol beverages would be irrelevant to many consumers and totally unnecessary.'
13 On 2 August 2001, the Board of FSANZ voted to approve FSANZ's acceptance of DSICA's application and on 19 September 2001 FSANZ issued a Draft Assessment Report (Full Assessment - Section 15) ("Draft Recommendation"), pursuant to s 15 of the Act. This report recommended acceptance of DSICA's application and included a draft variation of a food regulatory measure exempting spirit and liqueur products sold through duty free shops from the relevant labelling requirements.
14 The Draft Recommendation stated that:
`By exempting spirits and liqueurs for domestic duty free sale from certain labelling requirements under the Code, consistency between domestic and international food standards, the efficiency and international competitiveness of the food industry, and fair trading in food is promoted and encouraged, without significant detriment to public health and safety, or to the provision of adequate consumer information relating to food.'
15 FSANZ then invited public submissions on the Draft Recommendation. Thirteen submissions were received by FSANZ. DIAGEO, unsurprisingly, informed FSANZ of their enthusiastic support for the recommendation made by FSANZ.
16 A submission from the National Expert Advisory Committee on Alcohol, dated 23 October 2001, provided evidence as to the value for health and safety purposes of standard drinks labelling:
`The health and economic cost of alcohol use and misuse in Australia is enormous (last estimated at $4.5 billion per annum) and we need to make best use of all public health strategies in our attempts to reduce these human and financial costs (Collins and Lapsley, 1996). Alcohol is the only range of foodstuffs dealt with by [FSANZ] that is responsible for substantial numbers of deaths every year and an even greater number of injuries and serious illnesses. The labelling of alcoholic containers with information about standard units/drinks is one of the many strategies employed to reduce alcohol-related harm.The new alcohol guidelines from the National Health and Medical Research Council identify clearly the numbers of drinks per day that result in a health benefit or an increased risk of serious harm. Analysis of the 1998 National Drug Strategy Household survey has shown that at least 67% of all alcohol consumed in Australia is done so in excess of these guidelines (National Alcohol Indicators, 2001).
Alcohol content varies both within and between products; this makes it difficult for consumers to accurately calculate the quantity of alcohol beverage equal to a standard drink. Research has shown that consumers significantly underestimate the number of standard drinks in their preferred drink. This underestimation increases the risk of people unknowingly consuming alcohol above recommended levels thereby increasing the potential for alcohol-related harm. Standard drink labels enable consumers to accurately calculate their intake of alcohol should they wish to do so.
The costs that would be borne by the alcohol industry, and ultimately the consumer, must be viewed in light of the overall costs of alcohol-related harm to the community. The fact that Australian wine makers voluntarily introduced standard drinks labelling prior to the introduction of compulsory labelling suggests that this section of the industry did not consider the associated costs excessively onerous. Standard drinks labelling must be consistently applied to all alcohol containers, including those sold in the duty-free market and imported products in order to deliver an effective and consistent message.
There are substantial amounts of alcohol imported into Australia each yea and they should be labelled in ways that meet Australian standards. The comment by DSICA that standard drinks labelling "does not appear in any other national or international food standards" should be seen as an indication of the progressive nature of Australian policy on this issue. Australia has taken a lead on the issue of standard drinks labelling and the peak health bodies in a number of other countries, including Canada, USA, and the United Kingdom, have since recommended the adoption of such labelling.'
17 Having regard to the nature of the submissions received in response to the Draft Recommendation, particularly those that did not support the recommendation, FSANZ provided DSICA with an opportunity to consider and comment on the submissions. On 3 December 2001, DSICA responded to eleven of the submissions it had received.
18 A file note written by Mr Liehne, FSANZ's General Manager Standards, of 18 February 2002, recording the proceedings at a meeting held on 14 February 2002 and attended by Mr Gordon Broderick (DSICA), Mr Lindebmayer, Mr Fladun (FSANZ) and Mr Liehne and FSANZ. Mr Liehne reported:
`Duty Free Alcohol* Mr Broderick was informed that the [FSANZ] Board were of a mind to reject the application and that the issue would be considered further at the February Board meeting.
* Mr Broderick noted that the earlier public position of the Board in a draft assessment was to agree to an exemption from labelling requirements for duty free spirits and that this represented a significant shift of position.
* It was pointed out that there was significant discussion in the Board and that there was not a unanimity view at any stage in the discussion. The Board, however, agreed to the release of the draft assessment to seek further comment and to clarify the impact of the proposed changes.
* Mr Broderick indicated that the industry considered this possible change of view to be not in their interest and proposed to take the matter up through lobbying of Ministers to have the Board position overturned.
* Mr Broderick asked whether as the applicant, DSICA would have a `final say' before the matter was referred to Ministers. Mr Lindenmayer responded in the affirmative.' (emphasis added)
19 A U-turn then occurred in the direction of thinking within FSANZ. In December 2001, a meeting of the FSANZ Board was held to consider the intended Final Recommendation Decision and statement of supplementary reasons. Among other things, the Board decided to recommend that the ministerial Council reject the draft variations to Standards 1.2.2 and 2.7.1 as sought by DSICA.
20 In February 2002 the Board decided to notify DSICA of the proposed, radically changed Final Recommendation Decision and give DSICA the opportunity to provide a final submission in response. At this meeting the FSANZ Board was advised by its solicitor, Mr Fladun, of questions of possible judicial review under the AD(JR) Act:
`Relevantly, natural justice requires, in the circumstances of this application, that the Authority's decision be put to the applicant so that the applicant has the opportunity to respond.There is a duty on decision makers to ensure that a party who will be adversely affected by a decision is not `left in the dark' as to the risk of the (adverse) finding being made (in this case rejection) and thus deprived of the opportunity of placing material before the decision maker which, had it been placed before the decision maker, might have resulted in a different decision. This principle has been adopted by the Privy Council [Mahon v Air New Zealand Ltd & Others (1983) 50 ALR 1931] and the Australian High Court [Annetts & Others v McCann & Others (1990) 97 ALR 177].
This adds an additional step to those prescribed by the Australia New Zealand Food Authority Act 1991, however, a number of High Court decisions have clearly stated that the right to be heard in opposition to any potential adverse finding exists unless the legislation under which the decision is made expressly excludes that right (e.g. Annetts case and Re Minister for Immigration and Multicultural Affairs Ex Parte Miah [2001] HCA 22; (2001) 75 ALJR 889). The ANZFA Act does not expressly exclude that right.
The prescribed process in the ANZFA Act between the time when the Authority prepares drafting, at Draft Assessment and Final Assessment is such that the Applicant is `kept in the dark' as to the Authority's final decision. The Act only requires that the Applicant be informed of the Authority's recommendation. This, by itself, does not satisfy natural justice requirements where the Authority decides to recommend rejection of the Application.
The Courts have made it clear that the additional step is necessary to avoid a breach of natural justice.'
21 By letter dated 8 March 2002 to DSICA, FSANZ provided DSICA with an "Authority-in-confidence" copy of its draft Final Recommendation Decision. That report indicated that a recommendation should be made by FSANZ to the Council to reject the draft variation and that spirits and liqueurs sold duty free should continue to be subject to the relevant labelling requirements. Relevantly, the covering letter stated:
`I note that on 14 February 2002 Mr Ian Lindenmayer and [FSANZ] staff met with Mr Gordon Broderick of DSICA and discussed aspects of this application. Mr Lindenmayer indicated to Mr Broderick that at its December 2001 meeting the Board had expressed reservations about the application and were of a preliminary view that the draft variations should not be adopted by the Ministerial Council. However, Mr Lindenmayer also stated that DSICA would be given the opportunity to have a final say in relation to the matter. Mr Broderick indicated that DSICA could prepare a final reply very rapidly. Furthermore, I understand that the Authority's General Counsel, Mr John Fladun has discussed this application with you on a number of occasions over the preceding month. I am told that Mr Fladun informed you that the applicant would be provided with an opportunity to reply to the Board's [draft Final Recommendation Decision]. Considering these factors, the Board concluded that 21 days is sufficient time for the applicant to prepare a final response.' (emphasis added)
22 The executive summary of the draft Final Recommendation Decision stated:
`It is proposed that spirits and liqueurs for domestic duty free continue to be subject to standard drink labelling requirements in Standard 2.7.1 and the requirement to label the food with a name and address of the supplier in Australia or New Zealand in Standard 1.2.2.The preferred option does not address the potential trade disparity between Australian and New Zealand duty free shops on the one hand and foreign duty free shops on the other. However, this decision recognises the primacy of the Authority's first statutory priority - the protection of public health and safety. Relevantly, this objective was advanced by the implementation of standard drink labelling in 1994. The potential trade disparity, in the standard drink labelling sense, was created in 1994, and justified on public health grounds.
The Authority, in weighing the conflicting objectives does not consider there to be a sufficiently persuasive case to interfere with this important health initiative. Nor does the Authority find sufficient justification to interfere with the public health and safety provision of name and address requirements.' (emphasis added)
23 The draft Final Recommendation Decision outlined the circumstances in which the labelling requirements had originally been introduced:
`Standard drink labellingIn August 1991 the then National Food Authority received an application from the Australian Ministerial Council on Drug Strategy to revise the Food Standards Code to include a requirement that alcoholic beverages be labelled with standard drink information.
The Authority conducted a Full Assessment and Inquiry in relation to the application and in July 1993 a draft provision giving effect to the application was recommended to the Ministerial Council.
In December 1994 the Ministerial Council adopted the labelling requirement and the provision was gazetted ... on 22 December 1994, with a 12 month lead in time.
The standard drink labelling provision is presently contained in Standard A1 of Volume 1 and Standard 2.7.1 of Volume 2 of the Food Standards Code. At present the requirement is only optional in New Zealand. The provision will become mandatory in or around December 2002 when Volume 1 of the Code and relevant parts of the New Zealand Food Regulations are expected to be repealed.
The Full Assessment Report of March 1993 for the Standard Drink Application provides the following observations:
* The introduction of standard drink labelling is recommended on the basis of research findings and other informed opinion suggesting strongly that this form of labelling furthers the objectives of public health and safety and consumer information by more adequately informing consumers of alcohol content than existing or other methods.
* Some submissions were concerned that the measure may introduce trade barriers, having the effect of increasing costs, and interfere with consumer choice. There are no international food standards or regulations in other countries requiring standard drink labelling. However, exporters and importers already re-label so as to comply with labelling requirements.
* The potential advantages derived from standard drink labelling are considered to outweigh any real or perceived disadvantages associated with its introduction.
The Authority's inquiry into the application in June 1993 did not depart from the position taken during the Full Assessment phase. The Inquiry report acknowledged that Australia may be the first country to introduce standard drink labelling, but that the advantages outweighed considerations of trade disparity, costs and availability of product.
The reasons for the position adopted by the Authority in 1993 regarding the standard drink application are of considerable relevance to the present application (Application A418).' (emphasis added)
24 The draft noted specifically that no empirical evidence had been submitted supporting the arguments made either by proponents or opponents of the application:
`There is an absence of any empirical or other evidence in the arguments advanced by both proponents and opponents of the application. The cases for and against the application are based on mere assertions concerning the likely effects of intervention or status quo. The absence of any real evidence to support either case makes an assessment of the matter difficult.Ultimately, the Authority's conclusion must turn on a balancing of competing objectives. On the one hand the application would remove standard drink labelling from a section of the market. Although this section may be small, the effect, in the Authority's view, must inevitably compromise the primary objectives of public health and consumer information. On the other hand, the applicant and proponents submit that the interests of a consistent market and an internationally competitive food industry will be compromised if the application is not implemented.
The Applicant's contention is that a continuation of the status quo will result in a significant decrease in availability of spirits and liqueurs in duty free outlets because the cost of re-labelling is prohibitive and the Australian and New Zealand market is not sufficiently large to warrant the extra cost. There is no evidence to either support or contradict this contention. Accordingly, any finding the Authority could make in relation to this question would be speculative and guess work.
In these circumstances, the Authority is compelled to prefer the primary statutory objectives of public health and safety and consumer information to other considerations such as a consistent market and an internationally competitive food industry.
The Authority cannot find any convincing justification for disturbing, albeit marginally, the important public health initiative of standard drink labelling.
This reasoning applies equally to the exemption for name and address, in Australia or New Zealand, of the supplier of the food. The applicant contends that supplier details (from the place of origin, i.e. name and address details in Scotland for Scotch Whisky) already appear on the products in question and that there are practical difficulties with providing a name and address in Australia or New Zealand. The difficulty is that the importer in Australia or New Zealand would need to `over-label' to incorporate their name and address. This, the Applicant says, will add further to the cost, which, in the Applicant's submission, makes the exercise commercially unviable.
Again, this contention is not accompanied by supporting evidence. Without such evidence the Authority must prefer a retention of the current name and address requirements. In the absence of such evidence, a contrary conclusion would again be speculative.
Furthermore, even if the Authority was to accept the Applicant's argument on this issue, because of the Authority's conclusion regarding standard drink labelling, the product would require `over-labelling' anyway. The Authority's conclusion on standard drink labelling thus renders nugatory the Applicant's contentions about name and address requirements.'
25 FSANZ invited DSICA to provide final submissions and material in relation to the draft Final Recommendation Decision's recommendation within 21 days.
26 By letter dated 13 March 2002, Mr Ainsbury, External Affairs Director DIAGEO, expressed surprise at the reversal of FSANZ's earlier decision and again pointed to the additional costs that compliance with the IFC Act would impose. DIAGEO requested an unspecified amount of further time to prepare evidence quantifying the impact of the decision "from both a commercial and consumer perspective", and sought confirmation that "the rejection of the application will be `put on hold' for a period whilst our arguments are prepared". DIAGEO's letter says:
`The Board's reversal of its position on this matter has taken the industry by surprise, and is considered a very disappointing outcome. [DIAGEO] itself will be a significant loser from this result, and will see costs associated in now complying with the Imported Food Control Act increase markedly at the detriment of duty free consumers. Others in the industry will no doubt be faced with similar issues.[DIAGEO] has not had the opportunity as yet to examine the public file, the Board minutes, and any correspondence to the applicant, nor has it yet had the opportunity to consult with the spirits and duty free shop industries in respect of any next steps. However, irrespective of the intentions of the other parties, given the significance of the impact on the business, [DIAGEO] intends to commence an appeal process against this outcome unless there is scope to revisit the Board's decision. In its draft assessment, [FSANZ] put forward very sound reasons to exempt Duty Free products from the requirements for domestic labelling. Their conclusion was clear and precise. We are amazed that the [FSANZ] Board could now see reasons to reject the application and overturn their detailed arguments.
For the moment, we are asking that the Board's recommendations not go to Ministerial Council for ratification until [DIAGEO] has had an opportunity to examine relevant documents and put together further arguments. Whilst these arguments will include many of those previously raised in submissions by the applicant and industry, we believe that the Board has not fully understood the extent of the commercial ramifications of its decision in the context of an insignificant market. Our arguments will now seek to quantify the impact of the decision from both a commercial and consumer perspective.
At this point, we would appreciate confirmation that the rejection of the application will be "put on hold" for a period whilst our arguments are prepared ... .'
27 FSANZ did not reply to that letter. However, on 27 March 2002, there was a meeting between FSANZ's solicitor Mr Fladun and a DIAGEO advisor Mr Preece, a consultant with PricewaterhouseCoopers, who had been briefed by Mr Halmarick, consultant to and former External Affairs Director of DIAGEO, to meet with representatives of FSANZ to ascertain the position of FSANZ in relation to DSICA's application and DIAGEO's adjournment request contained in Mr Ainsbury's letter of 13 March 2002. Mr Fladun indicated that:
`No party other than the applicant can now make further comment - all other parties have had two opportunities to put their case. [DIAGEO] will need therefore to feed into DSICA's case.'
28 Mr Preece forwarded a memorandum, dated 27 March 2002, to Mr Halmarick recording the outcome of the meeting with Mr Fladun. Mr Preece wrote:
`...The [FSANZ] position is clear, as articulated by John Fladun:
The process in determining the application is over, the Board has voted 4-6 to accept [FSANZ's] draft Final Assessment which had denied DSICA's application.
...
To review its position, [FSANZ] would need "persuasive new evidence", including provision of relevant "empirical data". Subsequent discussions with Standards Liaison, indicate a precedent for a change of position has been based on compliance costs.
...
Recommendations for the DSICA correspondence.
* Under the heading "What is the status quo" include something like:
Spirits and liqueurs destined for the duty free market are not distributed in the same manner as those intended for the domestic market. The world's distributors are structured in such a way that duty free operations are a separate business division from the remainder of distribution. The duty free market comprises unique bottle sizes or packaging for each brand, and significantly, a generic label suitable for global usage.
Thus, duty free product arriving in Australia for the domestic duty free market, as with duty free product arriving in any country for its domestic duty free market, carries distinctive packaging, generally around internationally consistent customs allowances, and a generic label. Duty free product is not moved into the Australian retail market, not only are package sizes generally larger and therefore price restrictive, but significantly distributors are aware that they are unlikely to have met local consumer labelling requirements.
* Under a new heading "What does it mean for industry"
What will be required now is one of a number of activities to be undertaken to ensure compliance:
1. Orders placed on the duty free division by the Australian distributor of a brand, to be identified during packaging, with Australian destined packaging runs to be separated so as to apply a compliant label; or
2. Duty free orders arriving in Australia to be unpacked at the wharf under AQIS supervision, and manual application of over labels which contain sufficient information for compliance;
3. No longer make orders from the duty free division, but utilise domestic retail product for duty free sale (ONLY if allowable under distribution agreements) and reduce consumer choice and value from duty free shopping.
Realistically, it will be either option 1 or 2 given the nature of the duty free market. There will of course be costs involved in complying with the Imported Food Control Act (IFC Act), which at this point are not certain but will be significant on-going annual costs for which recovery will be required through increased prices for consumers. Importantly for the Australian duty free shop industry, costs not being passed on for consumer shopping duty free in other countries, thus making Australian duty free shopping less competitive.
At a glance, option 1 will require the following:
- a label compliant with the IFC Act, and suitable for the distributor, be produced for Australian orders; and
- bottling runs to be made periodically for each brand, which apply the compliant labels,
- or compliant labels applied bottle by bottle on Australian orders whilst still in the distributor's warehouse.
Conservatively, the duty free operations of the distributors could charge the Australian distributors up to $1,000,000 per annum for this service, based upon very rough estimates. [FSANZ] needs to be aware that actual quotes are difficult, and would take more time to prepare properly, given that these labelling needs have never been required by any other Government previously. This represents a brand new commercial practice to be established and implemented, to meet the new AQIS requirements.
Option 2 will be similar in price, given that the production of unique labelling, and a manual bottle by bottle application is conducted by the Australian distributor instead of the international distributor. Although, having said that, additional wharf charges incurred during the re-labelling process could inflate this price, unless AQIS allowed ... "prohibited import" product to be moved and re-labelled at the distributors premises.
What would concern the industry is that such costs are being incurred, on products which are more than likely to be either consumed by a non-resident of Australia, or consumed outside of Australia. Indications from the duty free industry are that only 20% of all duty free spirits [sales] are made through inwards duty free shops, and that a significant proportion of these sales are to non-residents for whom "standard drinks" means nothing.
Further, the industry finds it difficult to differentiate between the outwards duty free shop in a travellers port of destination, or the duty free shop, and yet "standard drinks" labelling requirements will apply to just the inwards duty free shop sales. The duty free industry is a global industry, hence the structure of a global spirit distributor's business by operating a separate duty free division to serve that unique duty free market.
The industry is certain that the IFC Act would not be imposed by AQIS on non-commercial amounts of spirits imported in the baggage of private travellers, and indeed, that duty free product which is consumed in Australia will only ever enter local consumption in such a form. Interestingly, the IFC Act also allows for "failed" foods to be re-exported - is that not what occurs in well over 80% of duty free sales?'
29 Ultimately, in response to FSANZ's letter of 8 March 2002, seeking DSICA's comments, Mr Preston, solicitor of Weekes Preston Lawyers, wrote to FSANZ on DSICA's behalf on dated 28 March 2002, contesting the assertion that there was no empirical evidence and emphasising that "[FSANZ] has statutory mechanisms to obtain from Applicants such information as is required to enable [FSANZ] to properly assess an application":
`...Why the change:
DSICA's biggest concern with the draft Report is that no substantive reason is given for the dramatic about-face in [FSANZ's] approach to the issue, from recommending a draft variation at full assessment a scarce 6 months ago, to the proposed abandonment of such drafting now.'
30 As to DSICA's purported failure to adduce evidence, Mr Preston said:
`...DSICA does not wish to labour this point, but would note -
[FSANZ] has statutory mechanisms to obtain from Applicants such information as is required to enable [FSANZ] to properly assess an application. If [FSANZ] truly felt such information was required, DSICA would have expected [FSANZ] to use its statutory power to request information. To bewail a lack of "real evidence" at this late stage of the proceedings is [dis]ingenuous.
DSICA's analysis of market impacts, should the Application not proceed, can only be "mere assertion" because nowhere else in the world requires standard drink labelling and local name and address for duty free spirits and liqueurs. There simply is no evidence of actual market impacts in such a case, because the proposed regulation is unprecedented. To dismiss such analysis as "mere assertion", however, is unduly pejorative. Any study of microeconomics would predict such results as DSICA foreshadows. By way of example, one member of DSICA makes the following comment:
"Having to produce special labels exclusively for the comparatively small ANZ sector of the world wide Duty Free market will require significant additional costs. Some estimates are up to $1 million. However this is a rough estimate. What greatly concerns the Duty Free operators is that such costs would be incurred on products which are more likely to be consumed either by non residents of ANZ or consumed outside of ANZ. Indications from the duty free industry are that only 20% of all duty free spirits and liqueurs are made through inwards duty free shops and that a significant proportion of these are to non residents for whom "Standard drinks" means nothing".'
31 The FSANZ Board met on 6 May 2002. With one minor exception the Final Recommendation Decision adopted by it was in the same terms as the draft thereof which the applicants saw. The minutes record:
`In the Authority's view, DSICA's argument ignores the iterative process involved in developing variations to food standards (either by way of application or proposal). This process involves a consideration at `Draft Assessment' followed by a further consideration at `Final Assessment'. If the latter step was to be a mere formalisation of the first step, then the Final Assessment phase would be nugatory. In the case of Application A418, the Authority prepared draft variations at Draft Assessment. However, during the Final Assessment phase, the Authority considered that it had not given sufficient weight to the important government public health initiative of standard drink labelling, and as such changed its position. This, in the Authority's view, raises no error of law or logic in its preliminary Final Assessment....
The Authority accepts that the labelling exemptions may promote consistency between domestic and international food standards; it may promote the efficiency and international competitiveness of the food industry, and fair trading in food. The labelling exemptions may not cause significant detriment to public health and safety. The exemptions may not cause significant detriment to the provision of adequate consumer information relating to food. However, the Authority's Statement of Reasons concluded that the absence of any evidence/data in relation to these matters means that a finding on the extent of the impact would be speculative and unsupportable.
On the other hand, in the Authority's view, having considered the matter further since the Draft Assessment phase, particularly the reasons for the standard drink labelling initiative, the labelling exemptions would prejudice, albeit somewhat marginally, that important public health initiative. The effect would be marginal insofar as the application would exempt standard drink labelling only on spirits and liqueurs sold in duty free outlets. It would also be marginal in the sense that only some of the duty free incoming sales are to Australian and New Zealand purchasers (DSICA estimates inward duty free sales to Australians and New Zealanders in the order of 20% of all duty free sale in the Australian and New Zealand market).
In evaluating the matter further, and at some length, during the Final Assessment phase the Authority considers it is entitled to deviate from its draft Assessment position on the basis that, in the case of standard drink labelling and name and address of the supplier, the marginal prejudice to public health initiative, if 20% can be considered marginal, outweighs ((in the Authority's view) considerations such as consistency between domestic and international food standards and the efficiency and international competitiveness of the food industry. Furthermore, the Authority considers that the 20% figure quoted by DSICA is not a marginal one and that if it were to accept the proposition that a prejudice of public health interests in relation to 20% of Australian and New Zealand consumers was acceptable, this would create an untenable precedent.'
32 The FSANZ Board then voted to recommend rejection of the application. FSANZ published a statement of reasons pursuant to s 18(1) of the Act and later furnished it to the applicants as Attachment 3 to its Final Recommendation Decision.
33 On 24 May 2002, the Council held a meeting to consider FSANZ's recommendation to it, and DSICA's submission of 28 March 2002. As to the issue of evidence the Council adopted the following:
`...The issue of evidence
DSICA asserts that the Authority, in raising the absence of evidence to support the application at the Final Assessment phase, is ingenuous (sic) - presumably the intended word was `disingenuous'. DSICA also states that the Authority in that case should have taken positive steps to seek out the evidence. This assertion ignores the fact that prior to the Authority commencing its Final Assessment it forwarded all the submissions to DSICA for a response to the issues raised in them. The Alcohol Advisory Council of New Zealand's submission, for example, expressed concern about the application stating it could find no evidence to support it. Moreover, the draft Final Assessment Report and Statement of Reasons was provided to DSICA for their comment. The DSICA reply of 28 March 2002 contains no evidence relating to increased labelling costs, but rather focuses on matters of procedure and assertions of inconsistency between the Draft Assessment and Final Assessment positions adopted by the Authority - in essence, that [FSANZ], without justification, changed its mind. ...
DSICA, under the `evidence' heading then states that `there simply is no evidence of actual market impacts in such cases', criticising the Authority for its characterisation of the arguments for and against the application as `mere assertions'. Yet the DSICA reply acknowledges that their case is one of assertion because there is no evidence, and invites the Authority to prefer their assertions over the assertions of those opposing the application. The Authority's draft Statement of Reasons addresses this issue by stating -
In these circumstances, the Authority is compelled to prefer the primary statutory objectives of public health and safety and consumer information to other considerations such as a consistent market and internationally competitive food industry.
The Authority cannot find any convincing justification for disturbing, albeit marginally, the important public health initiative of standard drink labelling.
Conclusion
In the Authority's assessment, DSICA has not provided sufficient justification in its reply of 28 March 2002, either in the form of evidence or argument, for departing from its preliminary Final Assessment position in relation to the application.'
34 On 24 May 2002, the Council rejected the proposed draft variation, pursuant to s 20(1)(c) of the ANZFA Act ("the Rejection Decision"). DSICA was informed of this by letter dated 31 May 2002.
Relevant Legislation
35 Section 2A sets out the objectives of the Act:
`The object of this Act is to ensure a high standard of public health protection throughout Australia and New Zealand by means of the establishment and operation of a joint Food Authority to achieve the following goals:(a) a high degree of consumer confidence in the quality and safety of food produced, processed, sold or exported from Australia and New Zealand;
(b) an effective, transparent and accountable regulatory framework within which the food industry can work efficiently;
(c) the provision of adequate information relating to food to enable consumers to make informed choices;
(d) the establishment of common rules for both countries and the promotion of consistency between domestic and international food regulatory measures without reducing the safeguards applying to public health and consumer protection.'
36 Under s 3A "food" clearly includes alcoholic beverages. The functions of FSANZ are set out in s 7. One of those functions is, "in accordance with this Act, to develop draft standards and draft variations of standards, to make recommendations to the Council in relation to those drafts where necessary and to review standards ... ".
37 The "Council", as the definition in s 3 makes clear, is a Council of Ministers of the Commonwealth, the States and the Territories.
38 Section 10 sets out the relevant objectives of FSANZ:
`(1) The objectives (in descending priority order) of the Authority in developing food regulatory measures and variations of food regulatory measures are:(a) the protection of public health and safety; and
(b) the provision of adequate information relating to food to enable consumers to make informed choices; and
(c) the prevention of misleading or deceptive conduct.
(2) In developing food regulatory measures and variations of food regulatory measures, the Authority must also have regard to the following:
(a) the need for standards to be based on risk analysis using the best available scientific evidence;
(b) the promotion of consistency between domestic and international food standards;
(c) the desirability of an efficient and internationally competitive food industry;
(d) the promotion of fair trading in food.'
39 Section 13 provides:
`(1) The Authority must make a preliminary assessment of the application....
(2)
...
(b) whether the application is so similar to a previous application for the development or variation of a food regulatory measure that it ought not to be accepted.'
40 Under s 13A the Authority must accept or reject the application. If it accepts the application, s 15 provides that it must make a "full assessment" of the application. Section 13A and s 14 necessitate notification to the public of acceptance and the invitation of submissions. Section 15(3) provides:
`In making a draft assessment of the application, the Authority must have regard to:(a) any submissions made to it within the specified period in response to a notice given under section 13A or 14; and
(b) the objectives and matters listed in section 10; and
(c) whether costs that would arise to bodies or persons from a food regulatory measure developed or varied as a result of the application outweigh benefits that would arise to the public from the measure or variation; and
(d) whether there are any alternatives (available to the Authority or not) which are more cost-effective than a food regulatory measure developed or varied as a result of the application; and
any other relevant matters.'
41 Section 15A(1) provides:
`After making a draft assessment of the application, the Authority must:(a) prepare in writing a draft food regulatory measure or a draft variation of a food regulatory measure; or
reject the application.'
42 Section 18 provides:
`(1) ... after holding an inquiry to consider ... a draft variation of a standard, the Authority must recommend to the Council:(a) that it adopt... the draft variation of the standard; or
(b) that it adopt... the draft variation... subject to such amendments as the Authority considers necessary; or
(c) that it reject... the draft variation...;
and give the Council its reasons for making that recommendation.'
43 Section 34 empowers FSANZ effectively to require an applicant to provide such further information it considers necessary on pain of the application being taken to have been withdrawn.
44 Section 40 requires that one member of FSANZ shall be a State or Territory officer having responsibility for public health matters and that one must have a "background in consumer rights". The Chairperson must possess expertise in at least one of a number of relevant fields, but public health and consumer rights are, as indicated, given special emphasis.
45 Section 25D of the Acts Interpretation Act 1901 (Cth) provides:
`Where an Act requires a tribunal, body or person making a decision to give written reasons for the decision, whether the expression "reasons", "grounds" or any other expression is used, the instrument giving the reasons shall also set out the findings on material questions of fact and refer to the evidence or other material on which those findings were based.'
Application for judicial review
46 The amended application to the Court for judicial review alleges as grounds for review that FSANZ:
(i) made a jurisdictional error in that FSANZ misconceived its function and asked itself the wrong question;
(ii) failed to observe procedures which were required by law to be observed in connection with the making of the Final Recommendation Decision.
(iii) made an error of law in reaching findings of fact where there was no material or other evidence to justify the findings within s 5(1)(f) of the ADJR Act and within the principles relating to the "no evidence" rule at common law;
(iv) failed to take into account relevant considerations which it was bound to take into account;
(v) by its Final Recommendation Decision made a decision so unreasonable that no reasonable decision-maker could have made it;
(vi) made an error of law with regard to an onus of proof lying on DSICA;
(vii) exercised its power inflexibly in accordance with a policy without regard to the merits of DSICA's case;
(viii) denied both DSICA and DIAGEO procedural fairness by:
* failing to offer them a reasonable opportunity to make submissions on FSANZ's departure from the provisions of international agreements to which Australia is a party;
* failing to offer them a reasonable opportunity to make submissions on FSANZ's departure from its policy relating to the procedure for processing applications for variations to the Code; and
(ix) denied the DIAGEO procedural fairness by failing to offer it an extension of time to make submissions in response to the "Authority-in-Confidence" copy of the Final Recommendation Decision which it was given.
47 The Council's Rejection Decision was said to be affected by the errors infecting FSANZ's decision.
Issues
48 The respondents submitted a number of preliminary and general objections to the grounds of review pressed by the applicants. First, they submitted that the Court should not entertain any review of the Final Recommendation Decision because the ultimate decision and the decision in respect of which the applicants are aggrieved is the Rejection Decision. Second, they say that the grounds of review, in respect of the Final Recommendation Decision, misstate the reasons as provided by FSANZ; seek to construe the reasons as provided by FSANZ with "an eye keenly attuned to discerning error"; or impermissibly attempt to question the "weighting" given by FSANZ to considerations relevant to the decision-making process. The respondents also say that the applicants' grounds of review impermissibly impose a duty on FSANZ to obtain further information where no such duty exists.
(i) Jurisdictional error - FSANZ misconceived its function and asked itself the wrong question
49 The applicants submitted that there were several ways in which FSANZ asked itself a question which was not the question or test posed by s 10 of the Act:
* "FSANZ regarded itself as compelled to prefer the objective of public health and safety and consumer information as a primary objective, in comparison with considerations of a consistent market and an internationally competitive food industry."
* FSANZ failed to consider the objectives set out in s 10(1)(b) and (c) of the Act.
* FSANZ failed to ask itself whether the promotion of consistency between domestic and international food standards (s 10(2)(b)) could be achieved without threatening the protection of public health and safety, and whether enforcement of the requirement to label spirits and liqueurs with the names and addresses of suppliers in Australia and New Zealand would render the importation of such products for sale in duty free shops a commercially unviable exercise.
* FSANZ misconceived its function by giving more weight to the considerations set out in s 10(1) than those in subsection (2) and by regarding the proposed variations to the food standards as "a departure from the status quo, when in fact the status quo was that the exception was in practice in place, because AQIS [had] not [enforced] these requirements".
* FSANZ treated the objective of public health and safety as a conclusive consideration without asking itself whether its decision promoted its own goals, set out in s 2A and particularly s 2A(d).
50 The respondents submit that, as an express object of the Act is "to ensure a high standard of public protection", no error is exposed by FSANZ making a recommendation that promotes public health and safety and consumer information. FSANZ had considered all of the submissions advanced upon it, and upon a "fair reading" of FSANZ's reasons it can be seen that FSANZ:
`...carefully set forth all advantages and disadvantages being urged upon it; did not give pre-eminence to any one factor, be it an advantage or a disadvantage; carefully set forth all disadvantages being urged upon it - "public health" being but one of those disadvantages; and then expressly attempt to "weigh" those contentions. It concluded: "these benefits do not outweigh the fundamental public health importance of standard drink labelling".'
(ii) Failure to observe procedures
51 As to this ground, the applicants submit that FSANZ failed to perform its statutory duty to "have regard to" the matters referred to in s 10(2) of the Act. The applicant also submitted that the Statement of Reasons attached to the Final Assessment Report does not comply with FSANZ's duty to give reasons pursuant to s 18(1) of the Act, "whether or not that provision is coupled with and expanded by s 25D of the Acts Interpretation Act 1901 (Cth)" because it wholly fails to explain FSANZ's process of reasoning as required by the common law.
52 The respondents submit that FSANZ plainly did have regard to the matters set out in s 10(2) of the Act and further submit that this ground adds nothing to the applicant's claim that FSANZ failed to take into account relevant considerations (see below). The respondents also submit that this ground of review should be rejected because a statement of reasons was provided by FSANZ in accordance with s 18 of the Act, as acknowledged expressly in the applicant's application to the Court.
(iii) Error of law and "no evidence"
53 The applicants pressed the no evidence ground with respect to three alleged factual findings, namely:
(i) the absence of labels stating a supplier's name and address "would remove a critical link in the chain of supply, and could potentially jeopardise trace-back and recall operations";
(ii) to continue the name and address labelling requirement would not impose a cost which would make the supply of such products commercially unviable for importers; and
(iii) unless the labelling requirement that the supplier's name and address be retained, important health and safety objectives would be compromised.
54 The applicants submitted that FSANZ had not regarded the submissions made by interest groups as amounting to evidence. However, FSANZ did not obtain any material itself with respect to these issues. It simply made factual findings which lacked any evidential basis.
55 The respondents submitted that this ground must be rejected because there was material or other evidence to justify the findings, particularly the findings of fact upon which the decisions were based - namely as to health and public safety. The respondents submitted that the `no evidence' ground, identified in s 5(1)(h) of the AD(JR) Act and limited in operation by s 5(3), is not made out, and there is no room for any independent no evidence ground under the s 5(1)(f) rubric of "error of law".
(iv) Failure to take into account relevant considerations
56 The applicants submitted that FSANZ failed to take into account the following considerations referred to in paras (a) - (d) inclusive of s 10(2).
57 The applicants also submitted that FSANZ failed to take into account its own Guide to Applications and Proposals Processing ("FSANZ Guide"), dated November 2001, by:
* not taking into account Australia's obligations under the Sanitary Phytosanitary Measures Agreement ("SPS Agreement") and the Technical Barriers to Trade Agreement ("TBT Agreement") of the World Trade Organisation ("WTO");
* making its Final Recommendation Decision in the same term as the draft Final Recommendation Decision;
* by failing to compare international regulations with Australian and New Zealand regulations; and
* by failing to assess the health, economic and social impacts on all sectors of the community, and not considering the type of information required to make that analysis.
58 The respondents submitted that FSANZ had met its statutory obligation, pursuant to s 10(2) of the ANZFA Act, to `have regard to' these matters as evidenced by material in its Preliminary Assessment Report dated 14 February 2001 and in the draft Final Recommendation Decision issued to DSICA on 8 March 2002. The respondents also alleged that the FSANZ Council "had such matters [at] the forefront of its attention" when coming to its decision. The respondents say that the draft Final Recommendation Decision placed DSICA on notice that FSANZ considered there to be "a striking absence of any empirical or other evidence in the arguments advanced by both proponents and opponents of the application"; DSICA's response was not to adduce any such evidence but to assert that FSANZ should exercise its statutory power to obtain such evidence.
59 The respondents further say that there is nothing to indicate that there was any scientific evidence that FSANZ had not considered. As to FSANZ's duty to have regard to "risk analysis using the best available scientific evidence", the respondents contended that either that had been done or there was no such duty because no such evidence was available. FSANZ had taken into account differences between domestic and international food standards, efficiency and competitiveness in the food industry, and fair trading. That there were competing submissions and values to be addressed by FSANZ does not support a claim that those submissions or factors which did not prevail were not taken into account.
(v) Unreasonableness
60 The applicants submit that FSANZ's Final Recommendation Decision was so unreasonable that no reasonable authority could have reached it. The applicants pressed Wednesbury unreasonableness on the bases that:
* although FSANZ thought it had no reliable evidence about the effect of enforcement of the labelling requirements upon trade disparities, cost and availability of products and consequential effects upon the commercial viability for DIAGEO and other members of DSICA to import such products to be sold in duty free shops, FSANZ failed to make its own enquiries about such matters.
* FSANZ was of the view that it needed to obtain further information to complete its inquiry, but did not attempt to obtain further information despite its power it to so under s 34(1) of the Act.
* DIAGEO had provided evidence of the nature of the impact on the industry and on the availability of products in duty free shops in Australia and the kind of evidence that would need to be obtained, but was told by FSANZ that no further comment would be accepted. Disregarding this attempt to furnish evidence, FSANZ proceeded to forward its report to the FSANZ Council for approval.
* FSANZ's decision involves unequal treatment, without justification, of the labelling requirements of spirits and liqueurs purchased for personal use and imported into Australia and New Zealand, depending upon whether the products are purchased overseas or purchased at a duty free shop in Australia.
61 The respondents submitted that there is no reason why FSANZ should not leave it to the applicants to advance such evidence, including empirical evidence, as they sought fit to support their application. FSANZ was under no obligation to make inquiries, any such duty being confined to "exceptional circumstances": Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155, which did not exist here. Further, FSANZ gave careful consideration to all available material and expressly addressed the question of "unequal treatment".
(vi) Error of law as to onus of proof
62 The applicants submitted, pursuant to s 5(1)(f) of the AD(JR) Act, that FSANZ placed an onus of proof on DSICA which was not required by the Act or by any other law, by requiring "convincing justification for disturbing...the important public health initiative of standard drink labelling" (and by imposing the same onus of proof with respect to the application to exempt labelling of the local name and address of the supplier).
63 The respondents submitted that no onus of proof was imposed upon the applicants. It was a matter for the applicants to set forth the bases upon which they wished to advance their application. No duty existed whereby FSANZ was required to make out the applicants' case.
(vii) Power exercised inflexibly in accordance with a policy
64 In contravention of the requirements of s 5(1)(e) and s 5(2)(f) of the AD(JR) Act and the asserted common law requirement to give proper, genuine and realistic consideration to the decision, the applicants submitted that FSANZ had maintained a policy since 1993 enforcing standard drink labelling requirements and required the applicants to provide compelling reasons as to why it should make a decision to diminish that policy even to a small extent. The relevant alleged statement of policy is contained in the Statement of Reasons (Attachment 3) of the Final Recommendation Decision:
`The reasons for the position adopted by the Authority in 1993 regarding the standard drink application are of considerable relevance to the present application (Application A418). Notably, the two principal objectives underpinning the 1993 regulatory measure remain the Authority's priority objectives in dealing with Application A418. The Authority's position with respect to standard drink requirements has not changed since 1993. Therefore, it would require compelling reasons to introduce measures which would diminish the regulatory measure, regardless of the extent of that diminution.'
The applicants submitted that this amounted to a refusal to listen to what DSICA had to say as to why an exception should be made to that policy.
65 The applicants allege that FSANZ exercised its power inflexibly in accordance with that policy without regard to the merits of DSICA's case, because FSANZ failed to make any findings of fact necessary for FSANZ to take into account the considerations enumerated in s 10(2) of the Act.
66 The respondents submitted that such a statement, contained within a statement of reasons, does not constitute a statement of policy and, in any event, it is an approach which was not inflexibly applied by FSANZ.
(viii) Procedural Fairness
- International Agreements
67 Applying the reasoning of Minister for Immigration and Ethnic affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273 the applicants submitted that Australia's entry into the SPS Agreement and the TBT Agreement of the WTO generated a legitimate expectation that FSANZ would not depart from the provisions of those agreements in determining applications for variations of food standards, without first giving them a hearing. In making the Final Recommendation Decision FSANZ departed from the SPS and TBT Agreements without first giving DSICA and DIAGEO an opportunity for a hearing on that issue, which amounted to a denial of procedural fairness.
68 The applicants also submitted that they were denied procedural fairness because FSANZ departed from a policy in the FSANZ Guide that they claim generated a legitimate expectation that FSANZ would only assess an application for variation of the ANZ Food Standards Code and proceed to make a decision, taking into account Australia's obligations under the SPS and TBT agreements of the WTO.
- Failure to offer reasonable opportunity to make submissions
69 The applicants submitted that the FSANZ Guide stated that FSANZ would base its Final Recommendation Decision on the "draft Final Recommendation Decision" and the only changes to the text would be based on comments to the "draft Final Recommendation Decision" and changes to the regulatory decision or discussion that might flow from those comments. The Guide continued:
`It may in some rare cases be necessary to conduct public meetings and further consultation where there are significant changes to the draft standard proposed following the second round of public consultation at the end of the Draft Assessment stage.In all cases the applicant will be apprised of developments and any new information which [FSANZ] may rely upon to make a decision. The applicant, in these circumstances, will be given the opportunity to comment on any new information.'
70 The FSANZ Guide also stated that FSANZ would identify relevant international regulations in order to compare them with Australian and New Zealand regulations; consider the likely regulatory impact on all sectors of the community, including consumers and the food industry; think about and ask for the type of information that would be used in that analysis, including the possible costs and benefits of the regulation, and its health, economic and social impacts; and consider the type of information that would help with the analysis at the early stage of the initial assessment, so that questions could be included in the report made under s 13 of the Act or to allow an applicant time to gather the necessary information.
71 The applicants submitted that FSANZ, in making its Final Recommendation Decision in the same terms as its draft Final Recommendation Decision, departed from the guidelines in the FSANZ Guide. DSICA and DIAGEO were denied procedural fairness once FSANZ failed to offer DSICA a reasonable opportunity for a hearing on its proposed departures from the statements in the FSANZ Guide.
- Failure to offer extension of time to make submissions
72 The applicants submitted that when FSANZ reversed its decision in the draft Final Recommendation Decision, DSICA was not afforded a reasonable opportunity to present a case and prepare evidence before FSANZ released the Final Recommendation Decision. Although FSANZ invited further submissions within 21 days, the applicant claims that FSANZ's failure to respond to DIAGEO's letter dated 13 March 2002, which sought further time to make submissions and prepare empirical evidence, and its refusal to allow DIAGEO to respond except through DSICA, constituted a denial of procedural fairness.
73 The respondents' submissions dealt with each of the three aspects of procedural fairness together; each of these grounds should be rejected because the applicants had been given extensive procedural fairness; having obtained a preliminary assessment which the applicants viewed as favourable, they thereafter sought to preclude subsequent reconsideration of the matter; the applicants were made fully aware of the issues being considered by the Authority; and procedural fairness provides the opportunity to be heard, but not an assurance that it will be properly utilised by the party wanting to be heard.
74 As to the failure to offer an extension of time, the respondents further submitted that FSANZ was under no obligation to put any review "on hold" for an unspecified time so that DIAGEO could "re-canvass arguments previously put". The respondents submitted that no obligation to do so is prescribed by the Act. Alternatively, the purpose of affording an opportunity to be heard arises so that those whose interests may be affected by a decision may advance such submissions to protect those interests. In the present case, DSICA was the body created for the purpose of protecting the interests of its members, including those of DIAGEO and it was reasonable in the circumstances to require DIAGEO to make its final response through DSICA.
(ix) The Council's Rejection Decision affected by errors infecting FSANZ's decision
75 The applicants submitted that the FSANZ Council's decision was infected by the same errors which, in its submission, vitiated FSANZ's decision. In addition, the Council took the view that to vary the Code would create an "undesirable precedent of compromise in food regulation". This view, the applicants alleged, reinforced the error made by FSANZ of failing to consider the merits of DSICA's application.
Non-prejudicial error
76 The respondents submitted finally, that even if one of the grounds of review could be made out, any error in the FSANZ's Final Recommendation Decision was a non-prejudicial error and/or relief should be refused as a matter of discretion. The Council decision, in particular, being a decision by ministers of state, is within that "band of decisions" with which a court should not interfere: Re W (an infant) [1971] AC 682 at 700; cited with approval in Australian Conservation Foundation v Forestry Commission (1988) 19 FCR 127 at 132.
CONSIDERATION
Preliminary
77 It is useful to begin with an appreciation of the presently relevant legislative policy expressed by s 10 in its context. Read as a whole, the Act, including s 2A and s 10, is primarily aimed at public health protection. Its next most important aim appears to be to foster consumer confidence, by, among other things, requiring that adequate information on food consumed or prepared in Australia and New Zealand is available to consumers. Section 40 shows that.
78 The s 10(1) "objectives" are not merely graded aspirations, aimed to inform decision-making in a vague, background way, they are to be the subject of active consideration in all instances of developing food regulatory measures and variations of such measures. That is shown by the requirements that the Authority must "also" have regard to the subs (2) considerations: FSANZ is to have regard to their additional subs (1) objectives additionally to those in subs (2).
79 In relation to the s 10(2) considerations, it seems to me that special emphasis has been placed by Parliament on standards for food regulatory measures being based on the use of scientific evidence to analyse relevant risks. The Act speaks in s 10(2)(a) of a "need" for standards to be so based, indeed based on the "best available" scientific evidence. A "need' for something is a stronger concept than its "desirability" or its "promotion", both the latter concepts being employed in the following paragraphs of subs (2).
80 A statutory requirement that a decision-maker "have regard to" a consideration is an injunction to treat it as, at least potentially, a basically important matter. In R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32; (1979) 180 CLR 322, 329 Mason J (Gibbs CJ agreeing) said of such a requirement that it requires the decision-maker "to take [it] into account and to give weight to [it] as a fundamental element in making his [or her] determination". That is not to say that, in every case, a particular consideration will be of much or even any weight, once weighed, but regard must be had to it. Nor need attention be confined to matters to which regard is expressly required to be had, if there are other relevant matters properly able to be taken into account.
81 As part of the emphasis on evidence-based standards, s 10 also aims (among other things) at not putting unjustified restrictions on domestic and international commerce in food, as defined.
82 The importance of the process whereby FSANZ arrives at the recommendation it is required by s 18 to make to the Council, lies not only in the general requirement that any statutory body should proceed lawfully. The Council, comprised of ministers of state, may itself only validly and/or lawfully make decisions under s 20 on a validly and/or lawfully made recommendation by FSANZ. I use the clumsy expression "validly and/or lawfully made" to accommodate the prospect sanctioned in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 353 at 393 that, although an act done in breach of a statutory procedural requirement might not, after inquiry as to the statutory purpose, be held to be invalid, nevertheless its unlawfulness might ground declaratory or injunctive relief. On that basis, there would be no discretionary ground to withhold relief, if the applicants can otherwise show remediable breach of the relevant procedural law in relation to FSANZ's Final Recommendation Decision.
83 It is also trite that an administrative decision-maker's reasons are not to be read in a `pernickety' fashion nor with an eye excessively "attuned to the discernment of error" but, in that sense, beneficially.
Misconception of function?
84 It seems to me that FSANZ did not misconceive its function or ask itself any wrong question.
85 FSANZ was obliged to have as its uppermost objective the protection of public health and safety. Alcoholic drinks, including spirits, notoriously can prejudice public health and safety and there was some scientific opinion evidence before FSANZ to that effect.
86 FSANZ was entitled to give some evidentiary weight to the existing relevant food standard as a factor in the protection of public health and safety and/or permissibly perceive that the submissions on both sides and the argument were long on assertion and short on hard evidence. Short of such evidence, the weight FSANZ should give to the existing standard, bearing in mind FSANZ's proper, uppermost statutory objective was a matter for FSANZ. The materials pointed to in detail in the respondents' submissions bear out the proposition that the relevant objectives and/or considerations to FSANZ were not ignored. There were competing considerations put forward by way of assertions. The judgment that the primary objective, and the existing standard's probable contribution to it, were not outweighed by other relevant considerations betokens no misconception of FSANZ's, or the Council's, function. Nor does it indicate that either FSANZ or the Council asked itself any wrong question.
Wider significance of that conclusion
87 This conclusion really also disposes of much of the balance of the applicants' submissions. The applicants, through understandable caution, framed their legal criticisms of the decisions sought to be impugned in every reasonably possible way, having regard to s 5 of the AD(JR) Act, that they could be framed. Thus, on analysis, the supposed failures to observe procedures are, in substance, but another way of expressing conceptual criticisms of FSANZ's processes which, in my opinion, as I have just indicated, have no substance.
Error of law and "no evidence"
88 Section 5(1)(h) of the AD(JR) Act must be read subject to s 5(3). These provisions are in the following terms:
`The ground specified in paragraph (1)(h) shall not be taken to be made out unless:(a) the person who made the decision was required by law to reach that decision only if a particular matter was established, and there was no evidence or other material (including facts of which he or she was entitled to take notice) from which he or she could reasonably be satisfied that the matter was established; or
(b) the person who made the decision based the decision on the existence of a particular fact, and that fact did not exist.'
89 Section 5(3)(a) would appear to require more than the common law notion of making out a no-evidence argument, and, in any case, "severely limits" the operation of s 5(1)(h): Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 357 - 358 per Mason CJ. However the applicants rely on the ground in s 5(1)(f), "that the decision involved an error of law". It appears difficult to me, despite the seeming anomaly, in the light of the existence in s 5(1)(j) of the catch-all ground "that the decision was otherwise contrary to law", to deny that s 5(1)(f) might be wide enough to add the common law no-evidence ground of invalidity to those available. Each ground in a section such as s 5, in the field of administrative law should be given its full and independent weight: see Minister for Immigration & Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323, 349 - 352. I assume therefore that the ground asserted, if made out, could be justiciable under the AJDR Act. In any case the Court's other sources of jurisdiction would appear ample for the task.
90 The difficulty is that the substance of the asserted ground is not shown to be an operative error. Let it be assumed that there was in law insufficient material to warrant the criticised findings about the local name and address labelling requirements. The alternative argument employed and adopted by FSANZ appears either irrefutable or well open to it. FSANZ said:
`... even if the Authority was to accept the Applicant's argument on [the identification labelling] issue, because of the Authority's conclusions regarding standard drink labelling, the product would require "over-labelling" anyway. The Authority's conclusion about standard drink labelling thus renders negatory the Applicant's contentions about name and address requirements.'
91 Thus, the applicants must show that both of the two kinds of labelling requirements have unlawfully been perpetuated by the respondents. Thus the ground asserted would not, in the Court's discretion, warrant relief, assuming its validity.
Failure to take into account the considerations set out in s 10(2)
92 What I have said disposes of the argument based on s 10(2)(a) as to the need for standards based on scientific evidence-based risk analysis. The truth is that FSANZ placed a high emphasis on this consideration. In the circumstances, the considerations referred to in s 10 (2)(b), (c) and (d) all fell to be weighed in the light of the applicants' assertions about commercial difficulties, anomalies, costs and likely loss of and trade in Australian and New Zealand duty free shops. FSANZ had regard to these matters but those considerations simply did not prevail. The ground asserted is not made out.
"Wednesbury" unreasonableness
93 Three of the alleged instances of unreasonableness relate to FSANZ's failure itself to obtain, or foreclosing DIAGEO from providing, hard evidence which FSANZ asserted was lacking.
94 Decision-making, it has been observed, is a "real world" activity: Enichem ANIC v Anti-Dumping Authority (1992) 39 FCR 458, 469 The real world was such that DSICA was a manifestly experienced, well-advised industry body in the field of food regulation concerning distilled spirits. DIAGEO was a large, equally experienced and well-advised corporate player on the same field. DSICA's and DIAGEO's interests exactly coincided in this matter. DIAGEO had confidence in DSICA and every opportunity to influence its submissions. All this would have been well-known to FSANZ by its senior employees such as Mr Fladun.
95 DIAGEO and DSICA complain that the hard evidence concerned would be difficult to obtain or assemble. Knowledge of and access to it, however, either exclusively resided in them or were at least as easily available to them (because of the commonality of their position with that of the Australian and New Zealand duty free shops) as to FSANZ. DIAGEO and DSICA contented themselves with making assertions and asking for an indefinite adjournment of further proceedings on the application they had pursued, without any real explanation of why there were difficulties.
96 To suggest that, in not further requiring further evidence from either of the applicants or from anyone else, or in not acceding to DIAGEO's proposal to put the whole project "on hold", FSANZ behaved as no reasonable public authority could have, is an heroic submission, or would be if it had any substance at all. In my opinion, it does not.
97 The remaining suggestion of unjustified unequal treatment of vendors of spirits purchased and imported into Australia and New Zealand, depending on where they were purchased, simply begs the question: how should the competing considerations, of which that was one, be assessed? There was nothing unreasonable, to the high legal standard required in order to warrant judicial intervention, in taking the view that no compromise, even marginally in the matter of standard drinks labelling, to the extent that it could be policed by Australia and New Zealand authorities, was more important than such an anomaly.
Error of law as to onus of proof
98 By saying that, absent "convincing justification" for disturbing what they regarded as "the important public health initiative" of standard drink labelling, they would not do so, the respondents were imposing no onus of proof on the applicants. In using that language, FSANZ was describing an intellectual test that the language of the Act permitted. For FSANZ to find that such a test was not surmounted by the material to hand does not suggest that the respondents imposed any evidentiary burden on anyone.
Inflexible adherence to a policy
99 Reasons were given by FSANZ as to why even a marginal departure from standard drinks labelling was thought to be a retrograde step in the interests of public health and safety. Those reasons cannot be regarded as so far fetched as to amount to a sort of bias, namely refusing to look at the particular case at hand or at some new consideration. Moreover, as the respondents point out, for some little time the applicants' assertions were carrying the day. That FSANZ, having initially favoured the applicants submissions, reconsidered the matter in favour of preserving the existing regulatory standard is some evidence of a genuine willingness to think and to eschew unwonted rigidity.
Denial(s) of Procedural Fairness
100 You can lead a horse to water ... .
101 Both the applicants had months of opportunity to assemble and present the material which Mr Marr's affidavit shows could have been got together. If what the applicants were saying about commercial and organizational difficulties was correct, even more material could fairly obviously have been turned up - in the course of the hearing I made some particular suggestions, but any specialist legal practitioner or lobbyist with some experience (and the applicants had both readily available) would have been able to advise more and, it may well be, better practical lines of enquiry than those thus suggested.
102 Both applicants, as it were, boxed in the heavyweight division of advocacy, formal and informal, in relation to regulatory bodies and interests. They made choices as to what would suffice and be most effective as advocacy in relation to this matter. Their judgments for a time looked to be right. When FSANZ changed its preliminary view, it kept the applicants fully apprised of the new thinking and made them fully aware of the areas where their earlier submissions were thought to be lacking. FSANZ required that DIAGEO, the largest of the spirit importers represented by DSICA, should further respond, if it wished, through DSICA which, after all had made the application that FSANZ was considering.
103 It is true that detailed factual material would need to have come from Europe. However, the edifice of food and drink regulation in Europe is, notoriously, not renowned for "touching the ground lightly". If DIAGEO's Australian operation has representatives of the high calibre that I saw and heard in evidence, I doubt that its European parent is less well served. In many and varied cases, judges of this court are accustomed to seeing weighty and detailed evidence in recondite fields produced with great speed and efficiency, and persuasively presented. I see no reason why FSANZ, a trans-national regulator of such commercially and otherwise sensitive matters as food and drink standards, might not reasonably have had similar expectations of the achievable from DIAGEO and DSICA. Given the speed of electronic communication now available, there is nothing about the twenty-one day time limit which, on its face, appears unreasonable as a final opportunity for such parties who had already had more than ample opportunity, to add anything they wished. Nor has it been satisfactorily explained to me why, in the actual circumstances, twenty-one days were not enough. It is no fault of FSANZ's that the opportunity given to the applicants was not as forensically well-used as it might have been.
104 It was discourteous for FSANZ not to have replied to the DIAGEO letter of 13 March 2002. On the other hand, so far as I have been made aware, there was nothing to prevent DIAGEO from following the matter up much more urgently than it actually did - nine days later - if it really did want to put more material before FSANZ. As I have indicated, it is far from certain that DIAGEO actually did want to do that. Administrative law, to some extent, confines its help, in the case of those who can help themselves, to those of them that do so.
105 The test is whether, in all the circumstances, each applicant has had a fair opportunity to be heard. In my opinion, each has.
106 As to other particular ways in which a procedural fairness arguments were put:
* Alleged departure from international agreements - no actual failure to accord a right to be heard has been shown. No emphasis was ever placed on these agreements by either applicant. No additional prejudice was pointed to. FSANZ gave the applicants (DIAGEO via DSICA, and reasonably so, I think) its complete draft re-think. There was no denial of a fair opportunity to be heard.
* FSANZ "Guide" - FSANZ told the applicants (in the case of DIAGEO via DSICA) its current thinking. There was in the circumstances no lack of procedural fairness.
CONCLUSION
107 For these reasons, the application will be dismissed with costs.
108 As I foreshadowed during the hearing and despite my legal conclusions, I nevertheless feel some degree of unease for the interests of Australian and New Zealand duty free retailers and their employees, and of Australian and New Zealand workers "up stream" from them, that is to say, in an aspect of the Australian and New Zealand public interest. My concern is that, although it is the legal responsibility of the applicants alone, FSANZ may not have had before it either:
* the hard evidence that the appellants say can be produced to indicate substantial commercial difficulties of compliance with standard drinks labelling, or:
* rigorous scientific scrutiny of the actual value of such labelling, even as part of a "standard drinks information" scheme for the Australian and New Zealand public.
109 If any further application to like effect as the instant (failed) one should be made to FSANZ by either present applicant or by any other appropriately interested person or group, I note that, to say no more, s 13(2)(b) does not necessitate foreclosure of a reconsideration of the matter.
I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. |
Associate:
Dated: 17 October 2003
Counsel for the Applicants: |
Professor M Allars |
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Solicitor for the Applicants: |
Acuiti Legal |
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Counsel for the Respondents: |
Dr G Flick SC Mr T Thawley |
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Solicitor for the Respondents: |
Office of Legal Counsel of FSANZ |
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Date of Hearing: |
5 - 6 December 2002 |
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Date of Judgment: |
17 October 2003 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2003/1139.html