Inglewood Olive Processors Limited v Chief Executive Officerof Customs [2005] FCAFC 101 (31 May 2005)

Last Updated: 1 June 2005

FEDERAL COURT OF AUSTRALIA

Inglewood Olive Processors Limited v Chief Executive Officer of Customs [2005] FCAFC 101

TAXES AND DUTIES – Customs and Excise – Anti-Dumping Legislation – Customs Act 1901 (Cth), Part XVB – definition of ‘subsidy’ – where ‘production aid’ paid to European olive growers but not to exporters – where allegedly subsidised goods sold on open market - whether payment conferred a benefit in relation to European olive oil – whether Review Officer addressed the wrong question – ‘pass through’ benefit test – whether Review Officer’s decision unreasonable

TAXES AND DUTIES – Customs and Excise – Anti-Dumping Legislation – Customs Act 1901 (Cth), Part XVB – Chief Executive Officer’s obligation to terminate investigation pursuant to subsection 269TDA(2) – where Chief Executive Officer applied incorrect test in relation to state of satisfaction – whether Review Officer also applied incorrect test – s 269TDA(2)(b)(i)

WORDS AND PHRASES – ‘subsidy’, ‘countervailable subsidy’


Customs Act 1901 (Cth) ss 269T(1), 269T(2AC), 269TAAC, 269TACC, 269TDA(2)


Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 186 CLR 259 applied
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 cited
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 cited




INGLEWOOD OLIVE PROCESSORS LIMITED v CHIEF EXECUTIVE OFFICER OF CUSTOMS and TRADE MEASURERS REVIEW OFFICER

NSD 85 of 2005





KIEFEL, WEINBERG & EDMONDS JJ
31 MAY 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 85 OF 2005

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	INGLEWOOD OLIVE PROCESSORS LIMITED ACN 081 111 597 APPELLANT
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS FIRST RESPONDENT TRADE MEASURES REVIEW OFFICER SECOND RESPONDENT
JUDGES:	KIEFEL, WEINBERG & EDMONDS JJ
DATE OF ORDER:	31 MAY 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.	The appeal be dismissed.
2.	The appellant pay the respondents’ costs of and incidental to the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 85 OF 2005

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	INGLEWOOD OLIVE PROCESSORS LIMITED ACN 081 111 597 APPELLANT
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS FIRST RESPONDENT TRADE MEASURES REVIEW OFFICER SECOND RESPONDENT

JUDGES:	KIEFEL, WEINBERG & EDMONDS JJ
DATE:	31 MAY 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT

Introduction

1 This is an appeal from a Judge of this Court ([2004] FCA 1659 now reported [2004] FCA 1659; (2004) 214 ALR 289) dismissing the application of the appellant to review decisions of the first respondent (‘the CEO’) and the second respondent (‘the Review Officer’) pursuant to the Customs Act 1901 (Cth) (‘Customs Act’) terminating an investigation into the alleged subsidisation of olive oil exported to Australia from Greece, Italy and Spain.

Background

2 On 13 October 2003 the appellant lodged an application under s 269 TB(1) of the Customs Act requesting the Minister for Justice and Customs (‘Minister’) to publish dumping and countervailing duty notices in respect of certain olive oil exported to Australia from one or more of the countries mentioned.

3 Following this application, on 12 November 2003 the CEO initiated an investigation into the alleged subsidisation of certain olive oil from Greece, Italy and Spain and the alleged dumping of certain olive oil from Italy. On 17 November 2003 the CEO widened the investigation to include the alleged dumping of certain olive oil from Spain.

4 The goods under inquiry (hereinafter referred to as ‘European olive oil’) are extra virgin and blended olive oil in package sizes of 240ml, 500ml, 1 litre, 2 litre, 3 litre and 4 litre containers for retail sale. Bulk olive oil was specifically excluded from the application.

5 The appellant claimed that a countervailable subsidy was received in respect of the European olive oil and that this had an effect on the price of olive oil through the production stage and resulted in the European olive oil having a lower price in Australia.

6 On 24 May 2004 the CEO terminated Customs’ investigations into the alleged subsidisation and the alleged dumping. On 8 June 2004 the appellant applied to the Review Officer for review of the CEO’s decision to terminate the investigation into the alleged subsidisation. On 23 August 2004 the Review Officer affirmed the CEO’s decision. The appellant confined its application for review in this Court to the decision to terminate the investigation into the alleged subsidisation.

The Legislative Scheme

7 The provisions of the Customs Act relevant to this matter are found in Part XVB, which is headed, ‘Special provisions relating to anti-dumping duties’. Section 269SM sets out an overview of Part XVB and provides, inter alia:

"(1) This Part deals with the taking of anti-dumping measures in respect of goods whose importation into Australia involves a dumping or countervailable subsidation of those goods that injures, or threatens to injure, Australian industry. Those measures might consist of the publication of a dumping duty notice or a countervailing duty notice or the acceptance of an undertaking on conditions that make it unnecessary to publish such a notice.

(2) ...

(3) Divisions 1, 2 and 3 deal with the preliminary and procedural matters leading to a Ministerial decision to publish or not to publish a dumping duty notice or a countervailing duty notice or to accept an undertaking instead of publishing such a notice.
...
(9) Divisions 8 and 9 establish an independent reviewer, the Trade Measures Review Officer, and provide for the Review Officer to review Ministerial decisions to publish or not to publish dumping duty notices or countervailing duty notices and also a range of decisions made by the CEO."

8 Sub-s269TB(1) provides:

"(1) Where:

(a) a consignment of goods:

(i) has been imported into Australia;
(ii) is likely to be imported into Australia; or

(iii) may be imported into Australia, being like goods to goods to which subparagraph (i) or (ii) applies;

(b) there is, or may be established, an Australian industry producing like goods; and
(c) a person believes that there are, or may be, reasonable grounds for the publication of a dumping duty notice or a countervailing duty notice in respect of the goods in the consignment;

that person may, by application in writing lodged with the Customs in accordance with subsection (5), request that the Minister publish that notice in respect of the goods in the consignment."

9 S269TC sets out the circumstances under which the CEO may reject an application under sub-s269TB(1) and what must be done by way of public notice if the CEO does not reject the application.

10 Sub-s269TDA(2) provides:

"(2) If:

(a) application is made for a countervailing duty notice; and

(b) in an investigation, for the purposes of the application, of an exporter to Australia of goods the subject of the application, the CEO is satisfied that:

(i) no countervailable subsidy has been received in respect of any of those goods; or
(ii) a countervailable subsidy has been received in respect of some or all of those goods but it never, at any time after the start of the investigation period, exceeded the negligible level of countervailable subsidy under subsection (16);

the CEO must terminate the investigation so far as it relates to the exporter."

11 Fundamental to an understanding of the relevance of these provisions and their application to the facts the subject of these proceedings are the concepts of ‘countervailable subsidy’ and ‘subsidy’.

12 A ‘countervailable subsidy’ is defined in s269TAAC:

"(1) For the purposes of this Part, a subsidy is a countervailable subsidy if:

(a) it is specific; and
(b) it is not an excluded subsidy.
(2) Without limiting the generality of the circumstances in which a subsidy is specific, a subsidy is specific:

(a) if, subject to subsection (3), access to the subsidy is explicitly limited to particular enterprises; or
(b) if, subject to subsection (3), access is limited to particular enterprises carrying on business within a designated geographical region that is within the jurisdiction of the subsidising authority; or
(c) if the subsidy is contingent, in fact or in law, and whether solely or as one of several conditions, on export performance; or
(d) if the subsidy is contingent, whether solely or as one of several conditions, on the use of domestically produced or manufactured goods in preference to imported goods.

(3) Subject to subsection (4), a subsidy is not specific if access to the subsidy:

(a) is established by objective criteria or conditions set out in primary or subordinate legislation or other official documents that are capable of verification; and
(b) those criteria or conditions do not favour particular enterprises over others and are economic in nature; and
(c) those criteria or conditions are strictly adhered to in the administration of the subsidy.

(4) Despite the fact that access to a subsidy is established by objective criteria, the Minister may, having regard to:

(a) the fact that the subsidy program benefits a limited number of particular enterprises; or
(b) the fact that the subsidy program predominantly benefits particular enterprises; or
(c) the fact that particular enterprises have access to disproportionately large amounts of the subsidy; or
(d) the manner in which a discretion to grant access to the subsidy has been exercised;

determine that the subsidy is specific.
(5) In making a determination under subsection (4), the Minister must take account of:

(a) the extent of diversification of economic activities within the jurisdiction of the subsidising authority; and
(b) the length of time during which the subsidy program has been in operation.

(6) A subsidy is an excluded subsidy if the Minister is satisfied that:

(a) it is specific but described in paragraph (a), (b) or (c) of Article 8.2 of the Agreement on Subsidies and Countervailing Measures; or
(b) it is a domestic support measure that meets the criteria or conditions set out in Annex 2 to the Agreement on Agriculture."

13 Sub-s269T(1) defines ‘subsidy in respect of goods that are exported to Australia’ as being:

"(a) a financial contribution:

(i) by a government of the country of export or country of origin of those goods; or
(ii) by a public body of that country or of which that government is a member; or
(iii) by a private body entrusted or directed by that government or public body to carry out a governmental function;

that is made in connection with the production, manufacture or export of those goods and that involves:

(iv) a direct transfer of funds from that government or body to the enterprise by whom the goods are produced, manufactured or exported; or
(v) a direct transfer of funds from that government or body to that enterprise contingent upon particular circumstances occurring; or
(vi) the acceptance of liabilities, whether actual or potential, of that enterprise by that government or body; or
(vii) the forgoing, or non-collection, of revenue (other than an allowable exemption or remission) due to that government or body by that enterprise; or
(viii) the provision by that government or body of goods or services to that enterprise otherwise than in the course of providing normal infrastructure; or
(ix) the purchase by that government or body of goods provided by that enterprise; or

(b) any form of income or price support as referred to in Article XVI of the General Agreement on Tariffs and Trade 1994 that is received from such a government or body;

if that financial contribution or income or price support confers a benefit in relation to those goods."

14 Sub-s269T(2AC) provides:

"A subsidy is taken to have been received in respect of particular goods:

(a) whether the benefit conferred by the subsidy is conferred directly or indirectly in relation to those goods; and
(b) whether or not the subsidy involves, or will involve, the payment or grant of any form of financial assistance."

15 S269TACC contains provisions for determining whether a subsidy confers a benefit and the amount of subsidy attributable to the benefit. It provides, inter alia:

"(1) If:

(a) a financial contribution referred to in paragraph (a) of the definition of subsidy in subsection 269T(1); or
(b) income or price support referred to in paragraph (b) of that definition;

is received in respect of goods, the question whether that financial contribution or income or price support confers a benefit, and, if so, the amount of subsidy attributable to that benefit, are to be worked out according to this section.

(2) If a financial contribution in respect of goods is a direct financial payment received from a government of a country, a public body of that government or of which that government is a member, or a private body entrusted or directed by that government or public body to carry out a governmental function, a benefit is taken to be conferred because of that payment.

(3) If:

(a) there is no financial contribution of the kind referred to in subsection (2) received in respect of goods; but
(b) a financial contribution of another kind, or income or price support, is received in respect of those goods from a government of a country, a public body of that government or of which that government is a member, or a private body entrusted or directed by that government or public body to carry out a governmental function;

the question whether that financial contribution or income or price support confers a benefit is to be determined by the Minister.

(4) In determining whether a financial contribution confers a benefit, the Minister must have regard to the following guidelines:

(a) the provision of equity capital from the government or body referred to in subsection (3) does not confer a benefit unless the decision to provide the capital is inconsistent with normal investment practice of private investors in the country concerned;
(b) the making of a loan by the government or a body referred to in subsection (3) does not confer a benefit unless the loan requires repayment of a lesser amount than would be required for a comparable commercial loan;
(c) the guarantee of a loan by the government or a body referred to in subsection (3) does not confer a benefit unless, without the guarantee, the enterprise receiving the loan would have to repay a greater amount;
(d) the provision of goods or services by the government or body referred to in subsection (3) does not confer a benefit unless the goods or services are provided for less than adequate remuneration;
(e) the purchase of goods by the government or body referred to in subsection (3) does not confer a benefit if the purchase is made for more than adequate remuneration.

(5) ...

(6) If a benefit is conferred:

(a) by a financial contribution in the form referred to in subsection (2)--the total amount of subsidy attributable to the benefit is an amount equal to the payment; or
(b) by the making of a loan by the government or a body referred to in subsection (3)--the total amount of subsidy attributable to the benefit is an amount equal to the difference between the amount required to be repaid on that loan and the amount that would be required to be repaid on a comparable commercial loan; or
(c) by the guarantee of a loan by the government or a body referred to in subsection (3)--the total amount of subsidy attributable to the benefit is an amount equal to the difference between the amount required to be repaid upon the loan so guaranteed and the amount that would be required to be repaid upon a commercial loan, without that guarantee, adjusted for any difference in fees; or
(d) by any other financial contribution, or income or price support as referred to in subsection (3)--the total amount of subsidy attributable to the benefit is an amount determined by the Minister, in writing, in accordance with the regulations made for the purposes of this section."

16 A decision by the CEO to terminate an investigation under sub-s269TDA(1) is reviewable by the Review Officer pursuant to para 269ZZN(b). If an application for the review of a termination decision is not rejected under s269ZZR, the Review Officer must make a decision on the application by either affirming the reviewable decision or revoking it: Sub-ss269ZZT(1). In making his decision, the Review Officer must have regard only to information that was before the CEO when the CEO made the reviewable decision and the Review Officer’s decision must be made within 60 days after receipt of the application for review: Sub-ss269ZZT(4) and (5).

17 The Review Officer’s decision on a review has effect as if it were a decision made by the CEO and takes effect from the time the Review Officer makes the decision: s269ZZV.

Grounds of Appeal

18 In this Court, the appellant abandoned a number of grounds relied on below.

19 No challenge was made to the primary judge’s findings and conclusions that:

(i) The CEO had jurisdiction to terminate the investigation if satisfied that there was no countervailable subsidy, without the need for any reference of any preliminary issue to the Minister in order to reach that state of satisfaction: [25], [27];
(ii) the Review Officer had jurisdiction to review the CEO’s termination decision: [28];
(iii) the statutory question posed to the CEO (and on review, the Review Officer) is not whether the Minister could be satisfied that there is a countervailable subsidy but whether the CEO (or the Review Officer) is satisfied that no countervailable subsidy has been received in respect of relevant goods exported to Australia: [29]-[31]; and
(iv) at no time did the Customs Report make a finding that there was a subsidy within the meaning of s269T in respect of the European olive oil: [28]-[41].

20 In this Court, the appellant agitated three grounds:

(i) The obligation to terminate the investigation under sub-s269TDA(2) arises, inter alia, if the CEO is satisfied that no countervailable subsidy has been received in respect of the relevant goods [sub-para (b)(i)] and the CEO’s conclusion at [7.6] of the Customs Report that:

"Customs is not satisfied that production aid confers a benefit on the exporter and, for that reason, it considers that the subject production aid is not a countervailable subsidy".

did not address the correct question.
The primary judge erred in failing to find that the Review Officer applied to sub-para 269TDA(2)(b)(i) the same erroneous test as the CEO: (‘The first ground’).
(ii) The definition of ‘subsidy’ in s269T, the provisions of sub-s269T(2AC) deeming a subsidy to have been received in respect of particular goods in the circumstances therein mentioned and s269TACC which contains provisions for determining whether a subsidy confers a benefit and the amount of subsidy attributable to the benefit, all refer to the benefit being conferred ‘in relation to those goods’ – the goods exported to Australia, in this case, the European olive oil – and the primary judge erred in failing to find that the CEO, and the Review Officer, applied the wrong test by either or both:

(a) asking the question whether production aid conferred a benefit on the exporter rather than in relation to the exported goods; and
(b) treating as determinative the fact that the subsidised goods were sold on the open market for a market price: (‘The second ground’).

(iii) The decisions of the CEO and the Review Officer were wholly unreasonable and involved an improper exercise of power – the decisions were so unreasonable that no reasonable decision maker could have been them: (‘The third ground’).

The First Ground

21 The primary judge found, correctly in our view, that the CEO had erred in expressing the test of sub-para 269TDA(2)(b)(i) in the negative – that he was not satisfied that a countervailable subsidy had been received in respect of the relevant goods – rather than in the affirmative – that he was satisfied that a countervailable subsidy had not been received in respect of those goods.

22 The appellant below, and in this Court, argued that the Review Officer made the same error when he said at [45] and [46] of his reasons:

"The fundamental question to be answered in this case is whether production aid paid to olive growers confers a benefit on the export to Australia of olive oil from Greece, Italy and Spain. The Review Officer considers that there is insufficient information available to categorically and definitely determine this issue beyond all reasonable doubt – in fact the Review Officer doubts that it is indeed possible to do so given that there are more than two million olive growers in the EU and more than eleven thousand olive oil processing and packing plants in Greece, Italy and Spain alone. The Review Officer is confined to studying the available information which is restricted to information that was available to Customs at the time Customs made its termination decision.

In the first instance, based on detailed and exhaustive study of all the available information, the Review Officer is convinced that there is absolutely no evidence at all (other than mere assertion and allegation) that production aid paid to olive growers does confer a benefit on the export of olive oil to Australia from Greece, Italy and Spain" (emphasis added).

23 The primary judge observed at [37] of her reasons for judgment that in the earlier part of this passage the Review Officer appears to be applying the same erroneous test as the CEO. It is not clear from her Honour’s reasons, to which particular part she was referring. There is nothing in the first sentence that suggests that the Review Officer duplicated the error; indeed, that sentence is no more than a convenient and orthodox way of posing the issue for determination free of the complexities that might otherwise be introduced by a notion of a state of satisfaction. Perhaps it is a reference to the words which follow, commencing: ‘The Review Officer considers that there is insufficient information available to categorically and definitely determine this issue beyond all reasonable doubt ...’.

24 Whatever ‘the earlier part of this passage’ is intended to refer to, her Honour concludes that the words in [46] of the Review Officer’s reasons, namely, ‘... the Review Officer is convinced that there is absolutely no evidence at all ... that production aid paid to olive growers does confer a benefit on the export of olive oil to Australia from Greece, Italy and Spain’, is a clear statement that the Review Officer is satisfied that there is no benefit. With respect, we think this conclusion is open to challenge. A statement that there is no evidence of the existence of a particular fact is not the same as a statement that the fact in issue does not exist. Indeed, the former comes perilously close to saying that the Review Officer was not satisfied that a countervailable subsidy was received in respect of any of the relevant goods, whereas the section calls for the decision maker to be satisfied that no countervailable subsidy was received in respect of these goods.

25 But there are other reasons why we think the primary judge’s conclusion on this ground is correct. The Review Officer’s reasons for decision should be read in their entirety. Such a reading records that the Review Officer started with the correct question [45]:

"The fundamental question to be answered in this case is whether production aid paid to olive growers confers a benefit on the export to Australia of olive oil from Greece, Italy and Spain".

and finished with an answer to that question [56]:

"The Review Officer considers that production aid paid to olive growers in Greece, Italy and Spain is not a subsidy to the export of olive oil to Australia from those countries because it does not confer a benefit in respect of the goods exported to Australia and the subject of this inquiry".

26 Where an administrative decision-maker both starts and ends their deliberations with the correct legal test, a court should not readily infer legal error as a consequence of infelicitous or loose language somewhere in between: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 186 CLR 259 at 271. As was said a little later (at 272) in the joint judgment in that case:

"... the reasons of an administrative decision maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed".

27 In this context, it is important to note that when the matter was before the Review Officer no one raised the issue of whether the CEO had applied the wrong test, in the manner argued before the primary judge and in this Court. It was not suggested that the language used by the CEO meant that he failed to reach the appropriate state of satisfaction. That issue arose for the first time in this Court before the primary judge. It is scarcely surprising, in those circumstances, that the Review Officer may have adopted some of the expressions used by the CEO without focussing upon whether they reflected the correct legal test. By way of example, and perhaps the high point of the appellant’s argument, is what the Review Officer says at [34] of his reasons:

"Customs was not satisfied that production aid conferred a benefit on the exporter (of olive oil) and, for that reason, Customs considered that production aid was not a countervailable subsidy. In other words, Customs found that there was no countervailable subsidation of olive oil exported to Australia. Under these circumstances, the law dictates that Customs must terminate its investigation and this Customs did."

28 The last sentence of that paragraph can be read as an endorsement of the erroneous approach on the part of the CEO referred to in the first sentence, while the second sentence could be read as indicating that the Review Officer saw no difference between a statement of negative satisfaction and a statement of affirmative satisfaction.

29 But to rely on this passage, either alone or together with the Review Officer’s statement of negative satisfaction at [55] of his reasons, as a foundation for the argument that the Review Officer made the same error as the CEO would, in our view, be unwarranted having regard to the matters to which we have already referred.

30 Additionally, there are passages in the Review Officer’s reasons that make it tolerably clear that he was satisfied of the relevant matters, and did not fall into the error made by the CEO. For example at [49] of his reasons for decision he says:

"... the Review Officer’s analysis of the evidence that is available supports the proposition that production aid paid to olive growers does not confer a benefit on the export of olive oil to Australia from Greece, Italy and Spain."

31 We read this as a statement of affirmative satisfaction of the matters therein referred to. It is repeated at [54] of his reasons and, most importantly, in the Review Officer’s conclusion at [56]. This is not a case in which one can properly infer, from other passages, taken out of context, that the state of satisfaction required by sub-para 269TDA(2)(b)(i) was not achieved.

32 For these reasons, the appellant’s first ground of appeal should be rejected.

The Second Ground

33 The first limb of this ground is that the CEO and the Review Officer erred in law by addressing the wrong question – that each considered whether production aid paid to olive growers conferred a benefit on the exporters rather than in relation to the exported goods – the European olive oil.

34 So far as the CEO’s decision is concerned, the primary judge concluded, correctly in our view, that s269ZZV had the consequence that the CEO’s decision was superseded by the Review Officer’s decision and, if the Review Officer’s decision is not affected by reviewable error, there is no basis on which this Court may interfere with the CEO’s decision.

35 It is clear, in our view, that the CEO in applying the ‘pass through’ of benefit test in respect of production aid to an upstream producer, the olive grower, looked to whether it conferred a financial benefit on the exporter, rather than in relation to the exported goods. So much is manifest from the CEO’s reasons at [7.5.3.4] and his conclusion at [7.6]. In this regard, the primary judge did not directly address the first limb of the second ground when she said at [44]:

"It is not necessary for me to summarise the whole of the argument. It is sufficient to note that, once the CEO decided, as he was entitled to do, that the production aid was not paid in relation to the European olive oil, it was necessary for him to consider if, nonetheless, it conferred a benefit in relation to the European olive oil. In other words whether the benefit of the subsidy ‘passed through’ to the European olive oil."

36 What her Honour said was undoubtedly correct, but it is, in our view, difficult to resist the conclusion that the CEO erred insofar as he addressed the question whether production aid paid to olive growers conferred a benefit on the exporter, rather than in relation to the exported goods.

37 However, in our view, the Review Officer made no such error. There are repeated references in the Review Officer’s reasons that make it abundantly clear that he correctly addressed the right question, namely, whether the production aid paid to the olive growers conferred a benefit in relation to the exported goods. One need only refer to the first sentence of [45], [46], the first sentence of [49], the first sentence of [53], [54], [55] and the first sentence of [56] of those reasons. The Review Officer repeatedly refers to the question being whether production aid to growers confers a benefit on the export of olive oil. At [56], in conclusion, he said:

"The Review Officer considers that production aid paid to olive growers in Greece, Italy and Spain is not a subsidy to the export of olive oil to Australia from those countries because it does not confer a benefit in respect of goods exported to Australia and the subject of this Inquiry."

38 The second or alternative limb to the second ground seeks to assail the economic reasoning of the Review Officer in reaching his conclusion (at [56] of his reasons) that production aid paid to olive growers in Greece, Italy and Spain is not a subsidy to the export of olive oil to Australia from those countries because it does not confer a benefit in respect of those goods.

39 The submission that the Review Officer treated as determinative the fact that the subsidised goods were sold on the open market for a market price oversimplifies the reasoning process of the Review Officer. But even if it were an accurate statement of that process, such treatment does not disclose or involve any reviewable error.

40 The Review Officer relied on a number of matters for his conclusion at [56] of his reasons, including:

(i) Although there is evidence of some vertical integration of olive oil production in Spain and, to a lesser extent, in Italy and Greece, the available information indicates that the industries in those countries are characterised by large numbers of independent growers, mills and other processing and distribution facilities (such as refiners, filterers, blenders, packages and exporters) [44].

(ii) The EU is also a significant importer of olive oil from non-EU countries such as Tunisia, Turkey and other Mediterranean basin countries – a large proportion of these imports is blended with EU production and sold domestically or re-exported [44].

(iii) The structure of the markets in Greece, Italy and Spain (being characterised by little vertical integration, very large numbers of olive growers and olive oil processors, producers and exporters and significant competition from both other EU countries as well as from non-EU countries) precludes the possibility of any industry participants holding market power or being in a position to determine market prices independently from the competitive forces of supply and demand [49].

(iv) Prices in the EU of both the input to olive oil and olive oil itself are determined or extraneously imposed by competition and market forces. Accordingly, it would seem that production of both olives and olive oil in Greece, Italy and Spain are price-takers and that their incomes are, as a result, dependent on prevailing market prices and quantities produced and sold [50].

(v) Market forces dictate the price of each transaction in the supply chain for olive oil – prices appear very much to be competitively determined and not driven by the payment of production aid in Greece, Italy and Spain (it seems to be internalised by the olive growers) [51].

41 The Review Officer went on to consider the question of what would happen to the price of the input to olive oil (olives) if production aid were withdrawn. His analysis may be summarised as follows:

(i) Competition and market forces determine input prices; olive producers in the EU are price-takers in that they cannot influence prevailing market price.

(ii) Producers in both the EU and the rest of the world face the same underlying market price.

(iii) Under such circumstances, it seems likely that, if production aid to olive growers were withdrawn, market forces of supply and demand would still determine prevailing prices and the net effect of withdrawal of production aid would be likely to be a reduction in olive growers’ income in the EU and possibly some related contraction in supply.

(iv) Given the substantial competition in the market from both EU and non-EU olive producers, it seems likely that prevailing market prices could still be determined by the mechanics of supply and demand (as is presently the case) and not by reference to the amount of production aid withdrawn. This analysis, albeit hypothetical, lends weight to the argument that the payment of production olive growers does not confer a benefit on the export of olive oil to Australia and Greece, Italy and Spain.

42 Neither the Review Officer’s reasoning process nor his hypothetical analysis discloses reviewable error. It amounts to no more than a finding of fact that there was no causal relationship between the production aid paid to olive growers and the price of the European olive oil exported to Australia. That some other finding may have been open on the same facts does not demonstrate reviewable error. The appellant’s submission that a contrary finding is self-evident, even by reference to elementary economics, does not advance the appellant’s case. The Review Officer was plainly unimpressed by the appellant’s expert witness, describing the opinions proffered in his report as based on questionable and contentious assumptions which either arguably or demonstrably do not hold in reality. Those observations were damning. The weight to be accorded to the expert’s view was a matter for the Review Officer, and not for the Court on judicial review.

43 For these reasons, the second ground of appeal should be rejected.

The Third Ground

44 In our view, the primary judge cannot be said to have erred in not dealing sufficiently with the appellant’s unreasonableness arguments separately from its earlier arguments in the light of the argument before her (Transcript, pp.37, 38):

"MR HUTLEY: ...our final submission is, having regard to the other matter, that the matter is Wednesbury unreasonable as to the consequent relief in respect of each decision.
HER HONOUR: You don’t make any submissions on that ground that go beyond what you’ve already said actually.
MR HUTLEY: In essence, no your Honour, except on this point that if your Honour were to be against me on onus - no I think what your Honour puts to me is correct".

45 The Review Officer was satisfied both that there was no reliable evidence of countervailable subsidisation and, moreover, that there was positive evidence that production aid paid to olive growers did not confer a benefit in relation to the exported goods, the European olive oil, so it was not a countervailable subsidy. Having reached this state of satisfaction, he was bound to affirm the CEO’s decision.

46 Before us, the appellant’s senior counsel sought to give this third ground additional impetus by contending that the Review Officer’s decision was so unreasonable that no reasonable person could have arrived at that decision (or irrational, if that is different) on the basis that it ignored the opinion of its expert, Professor Foster. Alternatively, he contended that the bare finding that world olive oil prices fell by 17% by reason of the bounties paid to olive growers in Europe necessitated a finding that the olive oil ultimately exported to Australia benefited from the production aid paid. That is a view that might no doubt be open, but it is not a view that commended itself to the Review Officer. He explained why he did not come to that conclusion, and his reasoning cannot, in our view, be described as ‘irrational’. There is a far cry between reasoning that is regarded as incorrect, even assuming that one disagrees with the conclusion, and reasoning that is unreasonable in the Wednesbury sense. Criticism of a tribunal on the ground that it gave inadequate weight to certain considerations and undue weight to others and that, in consequence, its ultimate decision is based upon a process of reasoning flawed in these respects, is not a case of Wednesbury unreasonableness: Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at 628 per Gleeson CJ and McHugh J; see too Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 at [36] per McHugh and Gummow JJ.

47 In our view, this third ground should also be rejected.

48 For these reasons, the appeal must be dismissed. The appellant should pay the respondents’ costs of and incidental to the appeal.

I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kiefel, Weinberg and Edmonds.

Associate:

Dated: 31 May 2005

Counsel for the Appellant	Mr S Gageler SC with Ms K Eastman
Solicitors for the Appellant	Baker & McKenzie
Counsel for the Respondent:	Mr A Robertson SC with Mr S Lloyd
Solicitors for the Respondent:	Australian Government Solicitor
Date of Hearing:	9 May 2005
Date of Judgment:	31 May 2005