East West Trading Co. Pty Ltd v Minister For Industry & Commerce & Anor [1985] FCA 348

CATCHWC RDS * ALMINISTRATIVE LAN - Jucicial review - Quota scheme for importation of yoods - Decision cto revoke balances of

allocation of base quota and to withdraw previous import

performance entitlements - Whether an improper exercise of

power by reason of irrelevant considerations being taking unto

account,

Admini3trative Decisions (Judicial Review) Act 1977, 3.5

Customs Act 1901, s.273

EAST WEST TRADING CO. PTY. LTD. v. THE MINISTER FOR INDUSTRY AND COMMERCE and ANOR.

G 3399 of 1984

Neaves J. 17 July 1985

Canberra

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY No. .G 399 of 1984

GENERAL DIVISION

BETWEEN : EAST WEST TRADING CO. PTY. LTD. Applicant

AND: THE MINISTER FOR INDUSTRY AND COMMERCE

First Respondenc

BRIAN GALLAGHER, ASSISTANT SECRETARY, OUGTA CONTROL BRANCH, AUSTRALIAN CUSTOMS SERVICE

Second Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER : Neaves J. DATE OF ORDER 3 17 July 1985 WHERE MADE : Canberra

THE COURT ORDERS THAT the further hearing of the application

be adjourned to a date to be fixed to hear submissions as to

the orders to be made to give effect to the conclusion

reached by the Court that the decision of the second

respondent should be set aside.

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

fti_ ThE

EW Sw WALES DISTRICT REGISTRY '

FREPEFSL COURT OF SUSTFALTIS ,

a

5, es 'oO mn ro

-

SEVERAL DIVISION , ;

Ltd.

Decisions (Judicial Review) Act

respect of

"the

BETWEEN: AST WEST TRADING Co. PY. LID. Applicant AND: THE MINISTER FOR INDUSTRY AND

COMMERCE

First Respondent BRTAN GALLAGHER. ASSISTANT SECRETART, OUCTS CONTROL BRANCH,

AUSTRALIAN CUSTOMS SERVICE

Second Fespondent

Neaves J.

17 July 1985

REASONS FOR JUDGMENT

This is an application by East West Trading Co. Pty.

applicant") under section 5 of the Administrative

1977 for an order of review in

a decision made by Mr Brian Gallagher ("the second

respondent") under section 273 of the Customs Act 19061 ("the act"), That decision is deseribed in the Further amended application filed herein on behalf of the applicant on 5

December 1984 as a decision -

rn

'ko revoke the teémaining balances on the applicant 5 1284 Textile 'flothina and Footwear Base Tariff Quota Aliocation, and to withdraw the arpeliicant 3

Tarife Quota Previous Imeort Fertormance entitlements in quota cateyorres Lol, 102, ly3, 105, lué. 19°, LOB. 119. Lil. i12, 115. i1t. lle

and LIZ. and to treat tue applicann 3s applications For transfer of certain ot ics said Freavyious Impcrr Fertormance entitlements as lapsed."

Tarift quotas are a method of controlling imports ro levels determined by the Australian Government. Where aoods are allocated a particular quota they may be imported ab a rate of dutv which is generally lower than the rate applicable if aoods are imported bevond the quota Levels or are not otherwise the subfect of a quota. There 15 na prohibition on the importation of qoods outside the quota arrangements: but,

where such goods are imported, what are in substance additional or penalty rates of duty are applied. so as to discourage

imports.

The legislative machinery by which tariff quotas are imposed is to be found in section 273 of the Act. That section

provides -

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

apply. or shall be deemed to have applied. to the particular qoods specified in the determination.

(2) The Minister may make a determination under the last preceding sub-section for the purposes of an item. or a proposed item. ot a Customs Tariff

us

whether or mot ne has made a by-law for the purposes of thar 1tem or proposed item

63) Where, under chis 3ection, the Minister determines that an item. or a4 proposed item. of a Customs Tariff shall apply. or shall be deemed ro have applied, to goods. that item or proposed @tem shall. subject to thiz Part and to the conditions, if any, specitied in the determination, apply. or be

deemed to have applied. to those aqoods as 1t those qoods were specified in a by-law made for the

purposes of that item or proposed item and in force on the day on which those goods are or were entered for home consumption."

By virtue of sub-section 9(1) of the Act. the Minister may delegate his powers under. inter alia. section 273. A power so deleuated, when exercised by the delegace. is deemed to have been exercised by the Minister tsub-section 3(2)). There 15 no aispukte that the second respondent was at all material times a person to whom the Minister's powers under

section 273 had been deleaated.

On 15 Auqust 1980 the Minister for Business and

Consumer Affairs and the Minister for Industry and Commerce

announced new assistance arrangements to be operative from 1

January 1982 which were to provide a seven year programme of tariff quotas for the textile, clothing and footwear

industries. The announcement said that -

"Although the program broadly maintains existing tarilff quota arrangements for apparel and some finished textile products and applies tariff quotas

to footwear it introduces changes which increase the flexibility of the quota system and provide for a controlled increase in imports."

The new arrangements were outlined in a series of

Bureau of Customs notices. Under the programme. tariff quotas were to apply to househoid textiles. apparel and footwear. There were to be quota catedories comprising different classes of woods. The initially established quota levels tor each mateqory oF youds were to be based on fne levels of imports in the Lwo vear period 1 July 1278 to 30 June 1980 but those levels; were to be increased annually. All aoods covered by the relevant quota category entered for home consumption in that two vear period. if entered correctly, were to be taken into account in ascertaining base performance (or previous import pertormance)?. Once established, the base performance was to remain for the seven year period of the programme and was to be applied in each year to determine the importer's share of the

total available quota in the relevant categories. The

proportion of quota to be allocated on the basis of historic performance was to be 85% of initially established quota

levels. importers' entitlements to this quota being determined

on their base performance. The remainder of quota was to be sold by tender. The arrangements that had been current under

the previous programme for the transfer of quota between

parties were to continue to apply.

Clauses 19 and 20 of Bureau of Customs notice 80/175

(13 Gctober 1980). under the sub-heading "Bona Fides of

Applicants", provided -

WI

'18 Eacn applicant will in due course be required fo qubmit a statement secking out briet details or the business operations and certifvina that he or nls cimpany ace ancdaqmed un the business of tmportinag yoods within the categories claimed. It 1s emphasised that the statement must be signed by the applicant or a responsible official ot an applicant company and sratements sidqned by persons

external to the ordanisation will not be acceptaple. 20, A further Customs Notice will be issued

providing the form of the statement. APPLICATIONS FOR QUOTA WILL NOT BE CONSIDERED COMPLETE WITHOUT THIS STATEMENT AND FAILURE TO LODGE IT CORRECTLY COMPLETED WILL MEAN QUOTA WILL NOT BE ISSUED TO THAT APPLICANT. "

Bureau of Customs notice 81/24 (6 February 1981) made 1t clear that, under the arrangements to operate from 1 January 1982. base quota would oniy be allocated in each of the seven years of the programme to those described as "qenuine

importers". That expression was explained as meaning -

"importers who are still in the business of importing and trading in the goods to which the

particular quota 1s applicable".

The notice informed applicants of the form of the statement of bona fides required to be furnished and reminded them that the Act provided penalties for the supply of false or misleading

statements.

a

Attached to Ene notice was a pro forma statement to be

completed by each applicant for tariff yuota for the quota year

commencing lL January L2R2 reading as follows > Ae er ee i ae a \Name) eee ee renee eet ee see eee ee eee ee eee ee (Address?

declare that I am

* the Applicant ~ a Director ot the Applicant Companv

* The Secretary or Che Applicant Vompany,

and that during the Ewo vears endina 30 June 1980 *Tythe Applicanc Company was enaaged in importing and trading in the goods for which application for 1982 quota was made. I further declare that *I;the Applicant Company -*am/is still enaaged in the importation and trading in those goods for which application for 1982 quota was made.

I declare that all the information contained in this Statement is true and correct and acknowledge that any grant of quota to -*me/the Applicant Company in respect of the quota categories applied for is subject always to the truth and correctness of this statement.

wee ewes (Siqnature:"

An applicant was to delete whichever of the provisions marked

with an asterisk were inapplicable.

The notice also contained the following provisions -

"d, This Statement must be completed and signed by the applicant or an officer of the applicant company. Statements siqned by persons external to the applicant company. e.g, customs agents, consultants. accountants, etc will NOT be accepted ....

sJ

5. Tk 15 emphasised that the purpose of this Statement 15 £9 ensure that the appiicank for quota (l,) was during all. or parr or. the base pertod

ttwo vear period ending 30 june 1980) and 2) is Stitl engaged in the business of importinu and tradina in the parricular auota qoods. aA separate

Stacement will be called tor before the commencement of eacn quota year after 1982.

B. Fersons claiming to be indent agents will have to establish that they do provide other services to customers rather than merely make quota available. before 1982 quota will be issued toa them.

3. Persons whose business in quota goods is in renting' quota entitlement to others will he INELIGIBLE for quota allocation."

In relation to the transterability of quota, Bureau of

Customs notice 81/24 provided -

"15. .... For the benefit ot importers who wish to transfer quota which for any reason Chey are unable to utilise themselves it is pointed out that the balance of quota available in a quota period may be

transferred and the base performance from which the quota was derived may also be transferred.

However. the base performance will only be transterred if the transfer request specifically gays so. In other words. the transferring of the

balance of current quota need have no effect on base performance."

The applicant applied for tariff quota for the quota

year commencing 1 January 1982. the application being accompanied by the necessary statement as to its bona fides which had been completed on its behalf. An allocation of quota in respect of that quota year was subsequently made to the

applicant.

reel

The implementation of the new arrangements brought

about some changes in the previously existing procedures for

the transfer of quota. Australian Customs notice 82/62 (15 April 1982) consolidated and replaced the notices setting out

details of the previously existing procedures. It was provided that. 1n qeneral, quota might be transferred in whole or in part between parties within the particular quota cateaory of qoods concerned. Under the sub-heading "Effect of Transfer"

the notice provided -

"The acquisition of quota tor a specific quantity of qoods asa result of a transter, gives the transferee the riaght to import and enter for home consumption under quota by-law rates of duty, those qoods the subiect of the quota within the remaining period of validity of the quota instrument."

The notice also dealt with "Previous Import

Performance (PIP) Transfers" as follows -

"Applications to transfer previous import performance must be submitted qiving full details of the category, the quantity to be transferred, the name. owner code and reqistered business

address of the transferee. The transferor and

transferee will be sent a letter of advice when the transfer has been effected."

By letter dated 22 July 1982 the applicant was invited to apply for an allocation ot base quota for the quota year

commencing 1 January 1983. The body of the letter read -

w

"1983 Base guota - Textiles, Clothing and Footwear

LOSING DATE FOR APPLICATIONS 31 Auwrust 1982

The Sovernment has decided that Base Quota mav only be issued to Tenuine importers who hold Previous Import-Performance i PIE). A3 Deparcmental records indieate Phar vou hold PIP. vou may now apely tor an allomation of Base Quoka using the s»nclosed form. provided Chak you qenninely intend to import auogta qdovas in 1383.

Your attention is drawn to Section .34(5) of the Customs Act which is reproduced below.

Completed application forms must be received in this office by 31 August 1982 otherwise entitlement to 1983 Base Quota may be forfeited.

Australian Customs Notice No 82/141 sets out

entitlement provisions in respect of PIP transferred after the date of this letter."

Section 234(e) of the Ack as then in force created an offence. punishable by a maximum penalty of §1,000. of making in a document produced to an officer ot Customs a statement

untrue in any particular. The maximum penalty was subsequently

increased.

The applicant completed a pro-forma application dated

30 July 1982 for 1983 base quota. The application read -

"The applicant named below applies for the allocation of Base Quota for the calendar year 1983 based upon holdings of previous import performance.

The applicant undertakes that upon the issue of any 1983 base quota allocated as a result of this application, that Csicl the base quota will be used. for the purpose of entry and clearance of qoods owned by the applicant, at the appropriate concessional rate of duty as specified in the Customs (Tariff; Act."

The applicant was subsequentliv atlocated quota in respect of

the year commencing 1 January 1983.

. $" Australian Customs notice 83/106 (18 May 1983) replaced certain earlier notices and outlined new arrangements

to operate from the date or its issue. Paragraphs 3-9 were

in the following terms -

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

4. Quota entitlements have been made transferable to allow improved access to quota tor those importers who can use it effectively to import goods. Any transfer ot quota allocations which telates to the business of speculating in quota (as

opposed to trading in goods) 1s clearly outside of this objective and will not be approved.

5. Transfers of PIP will not be approved if the proposed transferee is ineligible to receive quota. Holders of PIP who do not qualify for the issue of

quota are advised to arrange transfer of the PIP to an eligible importer as soon as possible.

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

and/or the quota instrument will be revoked. This will have the effect of increasing quota

allocations to genuine importers.

QUOTA BROKERS AND QUOTA TRADERS

7, Brokers who ack to bring 1 transferor and transferee toqether to facilitate a transter provide a gervice to importers which 1s consistent with the aims of the quota schemes.

ll.

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

APPLICATIONS FOR TRANSFER OF BASF QUOTA ALLOCATIONS 9. The whole or part of a base quota allocation may be transferred fo a qenuine importer.... Transter applications in duplicate must be made by

the transferor and transferee on the torms set out in Attachments A and B to this Notice."

Under the sub-headina "Etfect of Transfer of Base

Quota Allocations', paragraph 16 provided -

"16. THE QUOTA ISSUED AS A RESULT OF A TRANSFER OF

QUOTA ENTITLEMENT WILL ONLY BE VALID FROM THE DATE OF THE ISSUE OF THE QUOTA INSTRUMENT UNTIL 'THE

EXPIRY OF THE QUOTA PERIOD...."

Under the sub-heading "Transfers of Previous Import

Performance (PIP)". paragraph 20 read -

"20. Applications to transfer PIP must be submitted in duplicate by the transferor and transteree on the forms set out in Attachment C and D to this Notice, The forms must be submitted with a covering letter signed by the PIP holder or an authorised otficer of the PIP holder."

Attachment A to that document set out the form of request to transter base quota allocation. Attachment B set out the form of application for approval to receive base quota allocation by transfer. An applicant was required to state and

declare -

"Cary that I believe the {Formation contained in this application to be true and correct, and

tb: that the tariff quota detailed in this application will. if obtained, be used by the applicant for the purposes of

entry and clearance of goods owned by the applicant, at the time of entry for

home consumption,

(c) that no other party has any encumbrance on the quota."

Attachment C set out the form of request to transfer previous import performance and required the applicant to

state -

"that no other party has any encumbrance on this Previous Import Performance at or pricr to the date

of this request."

Attachment D. the form of application for approval to

receive previous import performance by transfer, required the

transferee to state -

"that no other party has any encumbrance on this Previous Import Performance."

Australian Customs notice 83/127 (6 July 1983) related

to applications for base quota for the vear commencing 1

January 1984. It recorded that letters had been sent to all

holders of previous import performance inviting only those who

were genuine importers to apply for such quota. It continued -

"ELIGIBILITY FOP QUOTA ALLOCATION

Holdera of PIP can be issued with quota only if such quota 1s to be used to enter aoods at quota

rates of duty. Transfers or PIF will not be approved it the proposed transreree 1s ineligible to receive quota. Holders of PIP whe do not

qualify for the 1s3ue of quota are advised to arranae transfer of the PIF to an eliaible importer as soon aS possible and certainly before 31 Auqusr 1983 it the FIP is ro qualifv for issue of 1984 quota,

Importers are cautloned aqainst entering into arranvements which purport ro allow others to exercise commercial control over PIP which 1s held in their name. Ir ait becomes evident that arrangements of this type are being used by quota speculators, the PIP concerned will not be recognised for future quota allocations. This will have the effect of increasing quota allocations to genuine importers.

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

TRANSFERS OF PREVIOUS IMPORT PERFORMANCE

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

Where a request to transfer PIP is received in accordance with the administrative procedures detalled in ACN 83/100, and before close of business on 3] Auaust 1983, the transferee will be entitled to apply for 1984 quota. For a request received after 31 Auqust 1983 the transferor will retain the rights to apply for 1984 quota. However quota will not be issued in either case unless it is to be used to enter for home consumption goods which are beneficially owned by the quota holder."

Lk.

By letter dated 4+ July 1982 the applicant wag invited

to apply for an aslocation oc 1984 base quota. The letter read

in part - .

"Departmental records indicate that you hold Previous Import Pertormance (PIP) 1n one or more of the Textiles, Clothing and Footwear quota categories.

You are now invited to apply for an allocation of Base Quota for 1984 using the enclosed form.

provided that vou genuinely intend to amport quota goods in 1984. I direct your attention to Section

234(e) of the Customs Act which 1s re-produced below. Applications will not be accepted unless sianed by the applicant personally or by an authorised officer of the applicant.

It 1s pointed out that quota is issued to importers only so that they may clear for home consumption at

quota rates ot duty qoods which thev beneficially own. In Future importers may be asked for detailed Statutory Declarations siqned by an office bearer of the company that they were the beneficial owners of specific imports aqainst quota which were entered for home consumption in their name. Failure to supply a suitable declaration when required could jeopardise further allocation of quota.

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

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

If you decide to decline quota in one or more categories tor 1984 it will not affect your entitlement to future base quota allocation within the seven year TCF programme. However, you are requested fo advise your intentions for 1984 as

300n as possible. It you do not require all or

15.

part of your quota in 1984 in one or more categories you must advise this office in writing by the closing date of 31 August 1983.

TRANSFERS OF PIP

If you wish to transter your PIP and a request to transter is received in this office by Close of Business on 31 Auqust 1983, the transferee will be entitled to apply for 1984 quota.

Tf your request for transter of PIP 1s received after 31 Auqust 1983, vou. as transferor will retain your 1984 quota entitlement but that quota will not be issued unless vou intend to use it to import and clear qoods.

Complered application forms must be received in this office by Close of Business on 31 Auqust 1983. otherwise entitlement to 1984 quota will be forreited by you and issued to other quota holders.

The applicant applied on 7 July 1983 in the following

terms -

"The applicant named below applies for the allocation of Base Quota for the calendar vear 1984

based upon holdings of previous import performance in Categories: 101 102 103 105 106 107 108 110 112 #2112 #113 #2114 #116 «122.

The applicant undertakes that upon the issue of any 1984 base quota allocated as a result of this application. the base quota will be used. for the

purposes of entry and clearance of aqoods owned by the applicant at the time ot entry for home

consumption."

The applicant was allocated quota in respect of the year commencing 1 January 1984 and determinations. signed by

the second respondent as delegate of the Minister, were made in

relation to the applicant. The body of each such determination

read -

issued in

the Customs Act ster for the time hereby determine } to the altered, shall

"In pursuance of 1901, I. the detedate of being administering the s that the item in Fark II oa Customs Tarirf Sch 1982, set out in Column 1 ot apply to goods that are:

H

ws % fe ia aa

sed ca be ® hereunder,

specitied in Column 3 of Ehat Table and to which a tariff classification in Schedule 3 to the Customs Tariff Act 1982. as proposed to be altered, set out in column 2 of that Table opposite that

1tem applies: and

(i)

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

(1i)

Australian Customs notice 84/127 (29 June

relation to applications for 1985 base quota.

provided in part -

"APPLICATIONS FOR 1985 BASE QUOTA

will be despatched

It is anticipated that letters all holders of PIP

early in September 1984 to inviting them to apply for their 1985 base quota allocation. This letter will include details of

indicated by Quota Control Branch files, on 31 Auqust 1984. An opportunity will be provided for PIP holders to have these details rechecked, and confirmed PIP holdings on this date will be the basis for 1985 base quota allocations.

PIP holdings, as

1984) was

qt

In applying for holders will be required, as has past years, they intend to use 1985 quota beneficially owned by them.

an allocation of quota in 1985 PIP

been the case in

to sign a statement to the effect that

fo import goods

Requests tor transfers of PIP received after 31 August will be processed in the normal way, but any transter approved will not be reflected in 1985 quota allocations; the PIP holder as at 31 Auqust \1.@. the transferor) will retain the entitlement

to the 1985 allocation subject to his meeting normal genuine importer criteria. Should this PIP holder request transfer(s) of his 1985 allocation, an explanation may be sought of his request in the light of his previously signed statement of intention to import."

Jn 1 Auqust 1984 a notice over the siaqnature of the

second respondent was sent to all base quota holders. Tt

included the following -

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

As in previous vears all base quota holders will be required to apply for their 1985 base quota allocation, and the application will include a statement to be signed by the quota holder to the effect that they undertake to use the quota to

clear for home consumption at quota rates of duty goods that are beneficially owned by the quota

holder. This undertaking is an important element in a range of measures which seek to ensure that quota is available to genuine importers by discouraging activities such as speculation in and

leasing of quota.

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

The applicant entered into agreements to transfer its previous import performance entitlements and applications for

approval of those transfers were lodaqed with the second

respondent in Auqust and September 1984. These are the

18.

transters referred to as lapsed in the decision the gubyect of

the present application.

'

The decision in respect of which an order of review is zouaht was contained in a letter dated 22 November 1984 written by the second respondent to Mr Melwani. the managing director

of the applicant. Tt read as follows -

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

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

From our examination, the following points can be made in respect of quota use by East West Trading during the period 1n question

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

quota holders;

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

» Style Numbers

. Garment descriptions

» Labels on, and sewn into, garments (including labels exclusive to other Australian suppliers/retailers).

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

:

Fy

in several instances' tMere 15 an apparent connection petween shipping and Customs clearance arrangements tor imports by East West Trading and arrangements tor similar imports by some other quota holders.

In discussions on 20 July, 23 August and 5 October officers of this Branch. including myself, have raised with you these aspects of the use of quota by ENT. From my involvement in those discussions

and from the reports I have received of the discussions at which I was not present, I am satisfied that the points of similarity between the import arrangements and quota use of EWI and the arrangements of some other quota holders are not coincidental. Indeed the discussions referred to have contirmed that the goods entered for home consumption against quota allocations to East West Trading were ordered on instructions from those other quota holders who had similar orders and were sold to them atter clearance.

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

goods subject to quota.

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

owned by the importer. Where it becomes evident that arrangements for quota use are not consistent with this provision, quota allocations may be

revoked and PIP not recognised for future allocation.

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

On the basis of the information available to me, T am satisfied that the essential character of the use by East West Trading of its quota allocations in 1983 and 1984 has been to exploit the scarcity

20.

value or the quota through arrangements whereby its quota holdings were made available to other parties

to complement or supplement an import program of those other parties, and Fo avoid fhe controls maintained on transters to ensur2 importers align

their quota holdings with their requirements. As such, " the quota use 13 not consistent with the qenuine importer requirement.

I have therefore decided to revoke the remaining balances on base quota allocations ror 1984. and £o

withdraw the previous import performance antiftlements (PIF) held by East West Trading Company Pty. Ltd. in the following quota

categories: iOl., 1602. 103, 105, 106. 167, 168, 110. 111, 112. 113, 114, 116, 122.

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

The Minister for Industry and Commerce has provided a procedure whereby persons who are refused allocations of base quota may, 1f they are of the opinion that the decision is incorrect, lodge an appeal to him through with ECsicl the Independent Adviser on textiles, clothing and footwear quotas »--. This procedure does not of course affect any rights of appeal through the courts."

On 22 November 1984 further determinations wunder

section 273 of the Act relating to the applicant were made whereby it was determined that the relevant items in the Customs Tariff Act 1982 were no longer to apply to goods of the description to which those items applied entered for home

consumption by the applicant.

The applicant. pursuant to section 13 of the

Administrative Decisions (Judicial Review) Act 1977, requested

the second respondent to furnish a statement in writing setting

out the findings on material questions of fact. referring to

the evidence or other material on which those findinas were based and aiving the reaaons for the decision. The statement was turnished on 4 February 1985. Te 1s too lengthy to be set out here in full but 1t 1s necessary to refer to certain parts

of it.

After referring to the general nature of the scheme as published in the relevant notices to some of which reference has already been made and to the policy that quota was not to be "held or traded principally because of its scarcity value" but was only to be held by, and available to, ""qenuine importers", that is to those who had an import requirement for it (paragraph 9). paragraphs 12 and 13 of the statement read as

follows -

"12. On 11 August 1983, the Minister for Industry and Commerce approved the continuation of the Department's interpretation of 'genuine importer' for quota purposes. This interpretation permitted the Department to regard an importer as genuine, within the quota regime, if he had a genuine need

for the full amount of quota applied for, in order to clear his own goods at within quota rates

of duty.

13. The administration of the genuine importer policy involves a number of procedures and checks to ensure that quota is used by quota holders to import goods which they beneficially own.

. Before base quota is allocated each year, holders of PIP are required to complete and sign an application for quota. The application includes an undertaking that the applicant will use the quota for the entry for home consumption of qoods beneficially owned by the applicant.

tu bt

- Where a substantial proportion of quota 13 transferred, the quota holder 15 asked to explain the use of that quota and to establish his requirement for future periods. If he as able to provide a reasonaple explanation of transfers and of future intentions quota is released unconditionally. If a satisfactory solution is not provided. or 1f transfer activity proceeds. quota may be allocated on a contirmed order basis or the quota allocation and PIP cancelled. Tf queta allocation is placed ona confirmed order basis the quota holder retains the right ko transfer his PIP entitlement and any outstanding allocation.

. Where there is evidence that the quota holder 1s using or trading his quota in a manner consistent with exploiting its

scarcity value the quota hoider 1s asked

to explain his activity. If a satisfactory explanation 1s provided the quota is released unconditionally. If

the quota holder is unable to establish that the quota is being used consistent with the genuine importer criteria then quota allocation and PIP entitlement may be cancelled."

Having referred to the applications made by the applicant for the allocation of base quota for the years

commencing on 1 January 1982, 1983 and 1984 respectively, to reports of interviews had by Customs officers with Mr Melwani who, as I have said. was the managing director of the applicant. to correspondence between the parties and to the applications made in August and September 1984 by the applicant

for approval of the transfer of its previous import performance entitlements, the statement under section 13 referred to an examination which the second respondent had made of a number of

entries for home consumption made by the applicant and entries

tv iw

for similar qonds made by certain other persons. That examination was said to have identified certain similarities between the entries of the applicant and those of other

et

parties.

What was said in the statement under section 13 in cespect of that examination was supplemented by an affidavit sworn by the second respondent on 11 March 1985. From that affidavit it appears that the second respondent made an examination not only of the relevant entries but also of the supporting documents relating thereto, including invoices, bills of lading, packing lists, letters of credit and orders placed on overseas suppliers. It is unnecessary to set out the details of the documents examined by the second respondent. It is sufficient to refer qenerally to the conclusions at which the second respondent arrived as a result. To take one example, the second respondent said he had examined the documents relating to three importations by the applicant in February and

March 1984 of goods supplied by Macau Knitters Limited and the

documents relating to two importations by a firm called Manhattan Mens Wear of similar goods in March 1984. From his examination of those documents the second respondent made what

he called "the following observations" -

"(a) the qoods ordered by Manhattan Mens Wear and East West were ordered from the same

supplier, Macau Knitters Ltd

{pb} all shipments were labelled Huntley, on the hang tags and labels

{c) sales confirmation numbers were consecutive

(d) style numbers were the same for four of the five invoices

(e) the Bill of Lading numbers were consecutive

(f) the two shipments to Manhattan Mens Wear arrived on the same vessel as one of the East West importations

(a) from Mr Wells' interview notes of discussions between Mr Morgan and Mr Melwanil ... Mr Melwani stated that East West were qiven samples and orders. East West imported and aqave 90 day credit."

Mr Wells and Mr Morqan were officers of Customs. The second

respondent then expressed his conclusion as follows -

"In the light of the similarities between the entries for home consumption by East West and Manhattan Mens Wear, and the discussions with East West which established that goods imported by East West with these entries were for Manhattan Mens Wear I considered the applicant's involvement to be principally because he had quota available."

The statement under section 13 set out the reasons for

the decision in the following terms -

"36. An integral element of the present TCF sectoral program is that quota is available only to qenuine importers. There are a number of provisions of the sectoral progran, including the provisions for transfer of quota and PIP and the sale of quota by tender which seek to afford to importers the flexibility to align their quota with

36A.

37,

38.

39.

25.

their tmporting c2quirement. The 'genuine importer' provision reflects

the government's recognition that quotas impose quantitative limitations which could encourage rhe retention of. or trading in quotas other Enan ror an importing requirement to the detriment of che flexibility intended for

amporters.

Importers are regarded as 'Genuine Importers' if they enqaye in the business of importing and trading in the goods to which quota allocated to them is applicable. Practices which involve

the retention or trading of quotas other than for an importing requirement are

actively discouraged. These practices include the leasing or renting of quota whereby quota allocation 1s made available for use by others, and speculation in quota allocations whereby quota is bought and sold by a person who has no intention to use Cit] to import goods. Measures involved in the implementation of the qenuine importer policy are outlined in paragraph 13 above.

The 'qenuine importer' criteria Csicd has been widely publicised both during and before the introduction of the current 7 year systems arrangements for the TCF industries. In inviting holders of previous import performance to apply for quota for the quota years 1982, 1983 and 1984 the requirements that quota be used as part of a genuine importer requirement has been emphasised. A number of other public statements in particular Australian Customs Notices have also spelt the requirements of the genuine importer policy.

The 'genuine importer' criteria Csicl is an established and integral part of the current TCF arrangements and has been brought to the attention of base quota holders and prospective importers.

From the information available to me in respect of the use of quota allocated to East West for the 1983 and 1984 quota

arrangements it is evident that:

40.

41.

many of the orders placed by East Wesr Trading nave identical, consecutive "or otherwise similar order number3 co those placed psy certain other azuora helders

there are other obvious points of Similarity in these orders including

- Style Numbers - Garment descriptions

- Labels on. and sewn into qarments (including labels exclusive co other Australian suppliers/retailers).

in several instances there is an apparent connection between shipping and Customs clearance arrangements for aimports bv East

West Trading and arrangements for similar imports by some other quota holders.

In discussion on 20 July. 23 August and 5 October the quota use by East West Trading was discussed with officers of the Quota Control Branch. From mv involvement in the discussion of 5 October and from the reports I have received at the discussions at which I was not present I am satisfied that the points and Csict similarity between import arrangements and the quota use of East West. and the arrangements of some other quota holders are not coincidental. The discussions referred confirmed that the qoods entered for home consumption against quota allocations to East West were ordered on instructions from other quota holders who had similar orders. and was sold to those other quota holders after clearance.

I have noted the claim by East West that orders were placed, letters of credit established and shipping arrangements made in its name. Even if the company's claim that it has borne the financial

43.

When

respondents

27.

risk assoctated with the importation and entry of goods subject to quota us correct. this would not necessarily estaplish that the use ot quota was consistent with the qenuine importer' criteria Csicd.

I have considered the claim made by F.G. Packer & Co. on behalf of East West that 1t 1s an irrelevant factor to consider whether or not East West $s various purchasers themselves have imported or hope to lmport yoods similar to those imported by East West.

on the basis of the information available to me at the time a decision wags taken on 22 November 1984, I was

satisfied that the essential character of the use by East West of a substantial

part of its quota allocations in 1983 and 1984 was of a type consistent with the exploitation of the scarcity value of quota, in that the company entered arrangements whereby its quota holdings were made available to other parties to complement or supplement an import program of those other parties and whereby the controls maintained on transfers to ensure importers alian their quota holdings with their import requirements were avoided. In the light of the foreqoing I decided that quota used by East West Trading was not consistent with the 'genuine importer' requirement. I therefore revoked the

remaining balances on base quota allocations to the company for 1984. I

also withdrew previous import performance entitlements held by East West and caused applications for

transfer of previous import performance to be lapsed."

the application came on for hearing the

objected to the jurisdiction of the Court to

entertain the application. It was submitted that the Court

lacked jurisdiction to hear the application in so far

as it

28.

relates to the decision of the second respondent to deprive the applicant of the benefit ot the remaining balances ot its quota allocation-for the year that commenced on 1 January 1984 on the

ground that the decision was one which. at the time the

application came on for hearing, could have no operative effect

for any purpose, present or future, and that the Administrative

Decisions (Judicial Review: Act 1977, on its proper

construction, does not confer jurisdiction in respect of such a

decision. The decision was said to have no relevant operative

effect because -

(a) the period during which the 1984 quota allocation could be availed of by the applicant had expired, the relevant determination under section 273 of the Act applying only to goods entered for home consumption not later than 31

December 1984; and

(b) the existence or otherwise of a 1984 base quota allocation was irrelevant to the question whether, under the scheme, the applicant should be qranted base quota in respect of the year commencing

on 1 January 1985.

29.

In so far as the application relates to the withdrawal of the applicant's previous import performance entitlements. it

was submitted that there was no decision to which the

Administrative Decisions (Judicial Review) Act 1977 applied.

The decision. it was said. was not one made "under an enactment" within the meaning of that expression in the definition of "decision to which this Act applies" ain sub-section 3(1) of that Act. the entitlement to previous import performance and the criteria by which eligibility to participate in the administrative scheme was to be determined

being unrelated to any statutory power or statutory provision.

Tt was further submitted that, even if the decision to withdraw the applicant's previous import performance entitlements could be shown to be a relevant and material consideration in respect of a subsequent decision reviewable under the Act, that circumstance might result in the earlier decision being reviewed in the course of reviewing the later decision but it would not result in the earlier decision answering the description of a decision made under an enactment s0 as to be itself the subject otf an application for an order of review. There was, in any event, so it was argued, no relevant

subsequent decision before the Court.

After hearing argument upon the objection I ruled that the Court had jurisdiction to hear the application and stated

that I would give reasons for that ruling when giving judgment

on the substantive application. This I now proceed to do.

30.

The decision to deprive the applicant of the benefit of the remaining balances ot its 1984 base quota allocation. involving as it did a determination under section 273 of the Act having the effect thar the lower rates of duty would no longer be available in respect of qoods of the requisite categories thereafter entered for home consumption by the applicant, was clearly a decision of an administrative

Character made under an enactment so as to attract the

Jurisdiction of this Court under the Administrative Decisions

(Judicial Review) Act 1977. Indeed. so much was conceded by

counsel for the respondents. The Court's jurisdiction to review that decision or the conduct leading up toit was invoked by an application filed on 13 November 1994, an

application which was amended on 30 November 1384 and again on 5 December 1984. Even if it be correct to say that the

decision ceaged to have any operative effect after 31 December 1984, a view which I do not share, that circumstance, while it might affect the relief that might be granted, would not

deprive the Court of the furisdiction which had been

effectively invoked by the filing of the application.

The decision to withdraw the applicant's previous import performance entitlements, considered in the context of Che circumstances in which it occurred, involved in my opinion

a decision to refuse to make a determination under section 273

of the Act extending to the applicant in respect of the vear

31.

commencing on 1 January 1985 any entitlement to import qoods within the relevant categories at the lower rates of duty. So considered, the decision was a decision made under an enactment and as such a decision to which the provisions of che

Administrative Decisions 'Judicial Review) Act 1977 applied.

It was also argued on behalf of the respondents chat

the Court should determine. as a preliminary question, that in the exercise of its discretion it would not entertain the application in so far as it relates to the decision to deprive the applicant of the remaining balances of its 1984 base quota

allocation. It was said that the Court should do so on the ground that there was no relief which could be granted to the applicant which would produce any meaningful or useful result,

the period during which the applicant might avail itself of that quota allocation having expired. I rejected that submission on the basis that it was premature to consider the question of the exercise of the Court's discretion until the Court was seized of the evidentiary material which the parties desired to place before it and the issues had been more clearly

defined.

I turn now to the substance of the application. The applicant relied upon paragraph 5(1)(e) of the Administrative

Decisions (Judicial Review) Act 1977 read with paragraphs

5(2)(a) and 5(2)(g). It was submitted that the making of the

decision was an improper exercise of the power conferred by the

32.

enactment in pursuance of which 1 was purported to be made in that arrelevanr vwonsiderations were taken into account in the exercise of the power and that the exercise of the power was so unreasonable that no reasonable person could have so exercised it. The applicant also submitted that there was no evidence or other material to justify the making of the decision (paragraph 5(1)(h)) by reason of the fact that the second respondent based the decision on the existence of a particular fact, namely that the applicant was not a genuine importer, and that fact did not

exist (paragraph 5(3)(b)).

The applicant's submission, in essence, was that, in making the decision under review. the second respondent, although purporting to carry into effect the administrative scheme embodied in the various notices and other documents by which the terms of that scheme had been made known to those

whose activities it was designed to regulate including the

applicant, had in fact departed from the scheme as so notified

and had relied on matters extraneous to it.

It was submitted that an analysis of the relevant notices and other documents embodying the scheme demonstrated that the grounds upon which the applicant might be deprived of its entitlement to the remaining balances of its 1984 base

quota were -

{a)

(b)

(c)

(d)

Counsel relied on the circumstance that the second

respondent had made no

ta tw

that the applicant was not, in respect of aoods imported in its name during 1983 and 1984, the genuine importer of those goods within the meaning that the scheme assigned to that expression, that 1s to say, @& person who was the beneficial owner of the goods at' the time they were entered for home

consumption pursuant to the Act:

that the applicant was not bona fide engaged in the business of importing and trading in goods within the relevant

categories;

that the applicant was speculating in

base quota, that is buying or selling

such quota for a profit: or

that the applicant had leased or rented its quota or had entered into arrangements whereby other persons had "commercial control" over the base

quota allocated to it.

finding adverse to the applicant on any

34.

of the above matters. Indeed, 1n relation to the question

whether the' applicant was a qenuine umporter, counsel emphasised Ehak the second respondent had not disputed that the applicant bore the financial r1sk associated with the importation and entry ot the goods and had expressly found that the goods imported by the applicant were sold by 1t after the Clearance of the qoods through Customs. The fact that the second respondent regarded it as significant that those sales had been made to traders who had themselves been allocated base quota in respect of the same type of goods did not show, so it was submitted, that the goods were not beneficially owned by

the applicant at the time of entry. Indeed, the finding was

consistent only with the applicant being the beneficial owner

of the goods at the time of entry.

Counsel for the respondents submitted that the second respondent had found. as a fact, that what the applicant had done was to make its quota available to supplement or complement the importing programmes of others. That finding or conclusion was said to involve, in substance. findings that

there were other importers who wished to import quantities of

qoods at the lower rates of duty but who did not have sufficient quota to enable them to do so and that those importers made arrangements with the applicant whereby the applicant would make its quota available for the purpose of

supplementing or complementing those importers' programmes.

The applicant was said to have agreed with each of those other

35.

importers that it would place an order for goods specified by

that importer, at a time specified by that importer, with an

Overseas supplier specified by that importer, those goods to

bear labels as specified by that importer and to be shipped on a vessel and voyage so specified. The arrangement was also said to provide that the applicant would purchase the goods in its own name. pay the overseas supplier, import the goods as

beneficial owner and re-sell them to the other importer at an

agreed price.

It was Further submitted that. although the arrangement with those other importers included a provision

that the applicant would import the goods as beneficial owner, the applicant was at all times subject to a contractual

obligation to re-sell the goods, or otherwise pass the property in them, to the other party or, alternatively, that the goods were, While in the applicant's hands, subject to a trust in favour of the other importer. In this way and to this extent it was true to say, so it was submitted, that the other

importer had control of the whole transaction, including

control of the applicant's use of its quota.

Counsel submitted. however, that the true legal

analysis, whatever it might be. of what took place between the applicant and the other importers was not to the point: it was sufficient, he arqued, that what had occurred could reasonably

be seen by the second respondent "to fall outside the purpose

36.

and intention of the quota scheme". In this regard counsel pointed to pdfagraphs 5 and 8 of Bureau of Customs notice 81/24 '6 February 1981) the text of which 1s set out above and submitted that 1t was reasonable For the second respondent to find that the applicant was not "engaged in the business of importing and trading in the particular quota goods" but was "merely making quota available". It was also reasonable, 30 it was submitted. for the second respondent to find that what occurred involved the applicant entering into arrandements which purported "to allow others to exercise commercial control over PIP or quota allocations" held in its name (see Australian Customs notice 83/100 (18 May 1983), paragraph 6). The substance of the matter was, so counsel submitted, that the applicant had agreed to use its quota as directed by the other importer while importing the goods in its own name and remaining the beneficial owner thereof at the time of entry. In the result, the conclusion was open to the second

respondent, so ait was submitted, that the applicant was not a

"genuine importer".

In the alternative. counsel for the respondents took wider ground. Conceding for the purpose of this alternative argument that the applicant's mode of carrying on its business was not in breach of any of the terms of the administrative scheme as announced in the various documents and notices to which reference has been made, nevertheless it was submitted

that it was open to the second respondent to reach the decision

es) ~

he did on the basis that the applicant s conduct did not fall

within "the spirit and intention of the policy" in relation to

quotas.

.

Counsel's argument on this alternative way of putting

the case for the respondents may be summarised as follows -

(a} The scheme, not being contained in a statute of in regulations made under a statute, was nothing more than a

statement of how the policy in relation

to quotas was to be administered. Accordingly, the scheme might be changed at will by the Minister or by any delegate of the Minister. Having regard to the width of the power conferred by

section 273 of the Act, a decision to vary or amend the scheme would not, in ordinary circumstances, involve taking

into account irrelevant considerations or failing to take into account relevant

considerations.

(bp) Just as the Minister or a delegate might vary the scheme in any way he chose, so he might interpret terms in the scheme

in whatever way he saw fit. If his

38.

interpretation was one that the words could not bear, that only meant that what he had done ina particular case

was to decide that the scheme should not

apply according to its terms in that ease. His decision in that regard would not be subiect co challenge unless he had regard to matters falling outside the scope of the wide discretionary

power conferred upon him.

(c) What the second respondent decided was that, by reason of the applicant s

conduct as he found it to be, the applicant's entitlements under the scheme should be cancelled or revoked.

In doing so he had regard only to

factors that were relevant to the matter under consideration. In particular, it

was not correct to say that, because the second respondent adopted a different test of "genuine importer" than that set out in the scheme. he was thereby taking into account an 1rrelevant consideration. Such a proposition could be sustained only if it could properly

be said that the scheme was in the

(d)

iw w

nature of an exclusive and exhaustive code whicn could not be departed from as a matter of law - a proposition which could only be sustained 1f the scheme

were embodied in a legislative

instrument.

The discretion of the Minister or any delegate was at large since the statute does not prescribe any particular

considerations that must. or must not, be taken into account. The applicant was unable to point to any statutory

provision or to anv necessary implication arising from any statutory

provision that gave rise to any relevant

obligation as to what it was necessary

to take into account in making sucha decision or, on the other hand, what it

was improper to take into account. The applicant could only point to the

"definition" contained in the scheme which, of its nature, might be revoked, amended or not applied administratively, there being no statutory obligation to apply it as an exclusive and exhaustive

code.

40.

The resolution of the question whether the decision made by the second respondent was tainted with illegality 1s to be approached by first identifying the parameters of the issue which the second respondent perceived as being before him for determination. On the evidence. there 1s no doubt that he posed for himself the question whether the applicant. in dealing 1n the categories ot goods in respect of which it had

base quota allocation, had acted otherwise than in accordance

with the administrative scheme the details of which had been publicly notified and upon which importers, including the applicant, were expected and entitled to rely. That this was the approach adopted 1s made abundantly clear when regard is had to the letter dated 22 November 1984 by which the decision was conveyed to the applicant, the statement under section 13 of the Administrative Decisions (Judicial Review) Act 1977 and the affidavit sworn by the second respondent on 11 March 1985. By contrast. the second respondent did not approach the matter as an exercise of the power conferred by section 273 of the Act divorced from the terms of the scheme as published. It follows that, as the alternative argument presented on behalf of the respondents depends upon treating the second respondent as having adopted the latter approach. the argument lacks the necessary foundation in fact and it is unnecessary to consider

what would have been the result had he done so.

+H.

From the oedinning, the emphasis in the documenrs evidencing the scheme was upom an applicann for base quora allocation being "engaged in Fhe business of importing qoods within the cateaories claimed' and being a "qenuine importer". an expression explained in Bureau of Customs notice 81/24 as

meaning an importer who was in the business of "importing and trading in the goods to which the particular quota 1s applicable". In respect of applications for the quota year commencing on 1 January 1983 specific reference was made for the first time to an applicant for a quota allocation being required to undertake that the quota would be used for the purpose of entry and clearance of goods "owned by the applicant" and 1t¢ wa3 made clear in subsequent documentation that the test for determining whether an applicant was a "zenuine importer" was whether the applicant was the "beneficial owner" of the goods at the time they were entered for home consumption. The test of beneficial ownership was

emphasised particularly in Australian Customs notice 83/127 (6

July 1383) by which importers were informed that they might in

future be required to furnish detailed statutory declarations in respect of specific clearances of goods that they were the beneficial owners thereof. Reference miaght also be made to the letter dated 4 July 1983 inviting the present applicant to apply for an allocation of 1984 base quota. The emphasis on beneficial ownership is also apparent in the documentation

relating to 1985 base quota allocations. Specific mention of

the same test was also made from time to time in relation to

to.

the arrangements for the transrer of base quota allocations .3ee Attacnment B to Australlan Customs notice 93/100 (18 May

1362) and Australian Customs notice 82/127 '(6 July 1i983)).

The distinction was clearly drawn in the documentation between ""qenuine importers" in the sense i have explained and persons who merely "make quota available" (see Bureau of Customs notice 81,24 (6 February 1981), paragraph 8). or whose business {s in "renting" quota entitlement (ibid. paragraph 9), or who are engaged in 'the business of speculating in quota" (Australian Customs notice 83/100 (18 May 1983), paragraph 4). or who "seek toa obtain control over PIP or 'quota for the purpose of future transfer" (ibid. paragraph 9). or "who see quota as a commodity in which to trade" (letter dated 4 July 1983 to the present applicant). It was also made abundantly plain that controls on the transfer of quota were aimed at Craders who speculated in quota and not at those who used quota in "importing and clearing goods" (see Australian Customs notice 83/100 (18 May 1983), paragraph 3: Australian Customs notice 83/127 (6 July 1983); and the letter dated 4 July 1983 to the present applicant). And, by Australian Customs notice 83/100 (18 May 1983). paragraph 6, importers were first cautioned against "entering into arrangements which purport to allow others to exercise commercial control over PIP or quota

allocations which are held in their name": see also Australian

Customs notice 83/127 (6 July 1983).

T agree with che submission made on oehalf of the aoplicant that the second respondent made no finding thak the applicant was not, in respeck of any goods in the tslevant categories entered by it for home consumption luring 1985 and

1984. the Tenuine importer fhereot in the sense in which that

expression was used in the documentation evidencing the scheme.

Indeed. the second respondent appears clearly to have accepted that. in respect of the transactions in relation to which he examined the entries and supporting documents. the applicant was at the date of the relevant entries the beneficial owner of the qoods to which those entries related and that the qoods were subsequently sold by the applicant. I have already adverted to the submission made on behalf of the respondents that the applicant was at the time of the entry of the goods subject to a contractual obligation to re-sell the specific goods. or okherwise pass the property in them, to another party or, alternatively, that the goods were. while in the applicant's hands, subject to a trust. To accept any part of that submission would. in my opinion. involve going far beyond any finding that the second respondent made. To regard him as finding that the goods were subject to a trust would be entirely inconsistent with what he said in his letter dated 22

November 1984 to the applicant and in the statement furnished under section 13 of the Administrative Decisions (Judicial

Review) Act 1977.

44.

I aiso agree with the submission that the second

respondent made no finding that the applicant had sold base quota at a profit and thus had been engaged in speculating in it. Nor did he make a finding that the applicant had leased or rented 1ts quota or had entered into arrangements whereby other persons had "commercial control" over the base quota allocated to it. I am unable to accept the submission by counsel for the respondents that the finding that the applicant had made its quota available to supplement or complement the importing programmes of others should be read as a finding that the applicant entered into arrangements with other importers of the elaborate kind which counsel suggested. If counsel's

submission accurately reflects the views which the second

respondent formed, the letter dated 22 November 1984 and the

section 13 statement are singularly inapt to convey that

Meaning. In any event the material which was before the second respondent would not, in my view, support the findings which

the submission postulated.

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

test the second respondent applied is epitomised in the following extract from his letter dated 22 November 1984 to the

applicant -

45.

"On the basis of the information available to me, I am satisfied that the essential character of the use by East West Trading of its quota allocations in 1983 and 13984 has beén co exploit the scarcity value of the quota through arrangements whereby its quota holdings were made available to other parties fo complement or supplemenc an import program of those other parties, and to avoid the controls maintained on transfers to ensure importers align

their quota holdings with their requirements. As such. the quota use 1s not consistent with the genuine importer requirement."

Reference might also be made to paragraph 43 of the statement

furnished under section 13 of the Administrative Decisions (Judicial Review) Act 1977 which 1s set out above and is to the

same effect.

It follows, in my view, that, although the second

respondent posed the question for his determination in terms of

the scheme as published. his decision is explicable only on the basis that he relied on matters extraneous to it. The consequence is that the second respondent took into account considerations that were irrelevant to the question he had to decide. I should add, in deference to the argument presented by counsel for the respondents, that so to conclude does not,

in my view, involve erecting the terms of the scheme intoa statute or to treat those terms as having statutory force or as being immutable at the hands of those having authority to make

changes therein.

For

the decision balances of withdrawing

entitlements

to.

these reasons I have reached the conclusion chat

of the second réspondent revoking the remaining the applicant s 1984 base quota alivcation and the "applicant s previous Lmport performance

should be set aside. The further hearing of the

application will be adjourned to a date to be fixed. If the

parties are

unable to agree upon the orders which should be

made consequential upon the conclusion to which [I have come I

shall hear submissions thereon.

I certify that this and the preceding 45 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice

Neaves Associate

Dated: 17 July 1985