Brett Cattle Company Pty Ltd v Minister for Agriculture

RARES J: 1 On 2 June 2020, I gave reasons for determining the principal issues then in play in this representative proceeding: Brett Cattle Company Pty Ltd v Minister for Agriculture, Fisheries and Forestry (2020) 274 FCR 337. In those reasons, I found (at 431-432 [391]-[395]) that the then Minister for Agriculture, Fisheries and Forestry, Senator the Hon Joe Ludwig, had committed misfeasance in public office by making the Export Control (Export of Live-stock to the Republic of Indonesia) Order 2011 (the second control order) on 7 June 2011. The second control order prohibited the export of live cattle from Australia to Indonesia for six months with immediate effect. 2 I found (at 434-435 [405]) that, had the Minister acted lawfully, it was likely that he would have made, within a reasonable time after 6 or 7 June 2011, a control order (an exceptions order) that imposed a general prohibition of any exports of live cattle to Indonesia, but subject to him having power to grant exceptions in the same way as he ultimately acted on 6 July 2011. Then he made the Export Control Repeal Order 2011 (the repeal order) that repealed the second control order (and its predecessor that banned live cattle exports to certain named abattoirs in Indonesia) and, contemporaneously, the Secretary of the Department made the Australian Meat and Live-stock Industry (Export of Live-stock to the Republic of Indonesia) Order 2011 (No 2) (the third AMLI order). The third AMLI order gave the Secretary a discretion to permit export of live cattle from Australia to Indonesia where the Secretary was satisfied that they would be processed in a closed loop system. Such a system required the exporter to have in place arrangements to ensure that any consignment of live cattle would be the subject of transport, handling, slaughter and related operations that were in accordance with the 2010 Terrestrial Animal Health Code, being guidelines promulgated by the World Organisation for Animal Health (known by the acronym OIE) (the OIE code). 3 The parties to this representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (being the applicant, Brett Cattle Company Pty Ltd, and the respondents, the Minister and the Commonwealth (collectively, the Commonwealth)) now have agreed to an order for a separate question that they estimate will require a four week-long hearing before the new docket judge following my retirement on 14 November 2023. 4 During the course of argument today I raised, again, a concern about the justiciability of the issue Brett Cattle now seeks to have the Court decide (and that it had floated in closing submissions at the trial in December 2018 but, after I raised the same concern, had not advanced), namely, whether the second control order caused the Indonesian Government to limit the numbers of live cattle able to be imported into Indonesia once trade resumed after 6 July 2011 when the Minister made the repeal order and the Secretary made the third AMLI order. My concern was that any examination of, and findings about, the reasons for the conduct of the Indonesian Government in giving effect to its sovereign right to control imports into its territory was not justiciable or ought not be permitted. I will explain below the factual background, the essence of the points of claim and the legal issues involved.

Background 5 There was no pleaded issue or argument during the trial as to what numbers of cattle would have been exported to Indonesia in 2012 and 2013 had the Minister not made the second control order. The only issue at that time related to whether more live cattle could have been exported after 7 June 2011 than were in fact exported had the Minister not made the second control order. 6 In my reasons, I found that, had the Minister made an exceptions order instead of the second control order, at least 88,000 more head of cattle would have been exported than the 412,057 actually exported in 2011 (Brett Cattle 274 FCR at 440 [432], 448 [462]). No live cattle were exported during July 2011. The parties agreed that the total numbers of live cattle exported in the next years were 276,295 head in 2012, 448,950 in 2013 and 715,806 in 2014. 7 I also found (at 444-445 [444], [447] and 448 [462]): The Commonwealth's submissions demonstrated that the theory on which Brett Cattle postulated its calculation involved double-counting the capacity of each supply chain, first in the assured export system and then in the ESCAS [Export Supply Chain Assurance System] system. However, that demonstration exposed a fallacy under which both sides appear to have made their submissions about the lost export period. That fallacy arose because Brett Cattle's methodology overlooked that each approved supply chain's ultimate maximum capacity in 2011 operated for a lesser time than it would have, had there been no absolute prohibition on exports under the Second Control Order. The supposed double-counting resulted in a significant understatement of lost exports of live cattle to Indonesia, not the other way round. ... Thus, if an Exceptions Order had been made, each importer would have been able to satisfy the Minister or the Department of its ability to operate a closed loop supply chain with animal welfare standards at least consistent with the OIE Code weeks earlier than when it obtained the first ESCAS approval. Once the importer had done so, I infer that it would have immediately begun acting as it ultimately did in seeking to bring as many of its customer abattoirs into a condition to meet the then anticipated ESCAS requirements or those that would have applied in the assured export system. In other words, once the three importers had been able to satisfy the requirements of the assured export system, they would have begun investing immediately into increasing the numbers of cattle they could process in their closed loop supply chains, as they actually did once the ESCAS system began. That means that the number of lost days before the importer's first ESCAS approval represented the loss of the chance to import a larger volume of cattle at the end of 2011 when their ESCAS supply chains had a much greater capacity. .. Thus, it is likely that, had the Minister made an Exceptions Order, about 88,000 head, or approximately the balance of the unfilled Indonesian quota, would have been exported. However, this methodology and assessment has not been considered by the parties. Accordingly, before determining the question of what exports would have been made in 2011 had an Exceptions Order been made, I will allow them to make further submissions as to any errors in the methodology or analysis that I have undertaken in arriving at the provisional findings above. I am also to make a finding about what allowance might be appropriate having regard to the need for me to assess the value of the loss of opportunity. (emphasis added) 8 On 29 June 2020, I made orders resolving the individual claim of Brett Cattle and answering common questions, including: 6. The following questions are common to the claims of the Applicant and Group Members and are answered as follows: ... (3) What would have happened had the Minister acted lawfully? The Minister would have made a control order that provided exceptions to the general prohibition in the Second Control Order in, or to the effect of, the exceptions clause in cl 5 of the First Control Order for the reasons at [404]-[427] of the judgment, and as a consequence of the reasons at [428]-[462] at least an additional 88,000 head would have been exported in 2011 under an Exceptions Order. ... THE COURT NOTES THAT: 9. The issues of the Indonesian market's maximum capacity for the importation of cattle in 2011 and 2012, the amount of any Indonesian import quotas or permits in 2011 or 2012 and the availability of shipping to enable cattle exports from Australia in 2011 and 2012 have not been determined by the judgment for the purpose of Group Members' claims. (emphasis added) 9 Thus, the only outstanding issue as to the number of live cattle that would have been exported in 2011 was whether, on the evidence adduced at the trial, had the Minister made an exceptions order on or about 9 or 10 June 2011 (as I found at 439 [425]), I had calculated correctly that at least 88,000 more head of live cattle would have been exported to Indonesia in 2011 than the 412,057 head that were in fact exported. 10 I said in Brett Cattle Company Pty Ltd v Minister for Agriculture (No 2) [2020] FCA 916 at [4]: As I noted in [462] of my reasons, the methodology and assessment at which I arrived, as reflected in the Commonwealth's proposed wording for the answer to question 3, had not been considered by the parties. That was because I found at [445] that both sides' submissions had proceeded on an erroneous basis as to how to approach the issue of what would have happened had the Minister acted lawfully. The parties have agreed on the notation to be made as part of the final orders rather than take up the opportunity that I afforded them to address the methodology and assessment that I adopted in my reasons. That was for the practical reason that it may be that the total number of head in respect of which group members will claim to have suffered loss will be, or not exceed, about 88,000 head, in which case any more precise examination of the unresolved issues in the agreed notation will not be needed. (emphasis added) 11 Over the subsequent three and a half years, the parties have been engaged in negotiations and mediations before the Honourable Peter Jacobson KC seeking to arrive at a resolution of the claims of group members. Earlier this year, it became apparent they had reached an impasse over issues including, among others, the question of how many live cattle, if any, in addition to those actually exported in 2011, 2012, 2013 and 2014 would have been exported had the Minster not made the second control order but instead made an exceptions order. The applicant subsequently abandoned any claim that more live exports would have been made in 2014 than in fact occurred. 12 Ultimately, on 14 July 2023, following a number of case management hearings in which the parties debated how, and if at all, this issue should be resolved, I ordered that the applicant plead its counterfactual points of claim that specified its case in relation to the issue of how many live cattle additional to the actual number, it alleged, would have been exported to Indonesia in each of the years 2011, 2012, 2013 and 2014 had the Minister made an exceptions order instead of, and about contemporaneously with, the second control order.

The points of claim 13 The applicant pleaded in its points of claim that the feedlots and abattoirs in Indonesia, that the Secretary had approved pursuant to his powers under the third AMLI order (being equivalent to those in the exceptions order), had a significantly greater capacity to receive exports than the quotas set by the Indonesian Government for, or the actual number of, live cattle exported for which the importers had obtained import permits from it. The applicant alleged that up to a total of about 800,000 more live cattle could, and would, have been exported in the three years 2011, 2012 and 2013 than actually occurred. The critical allegation in the points of claim is par 47, which reads: As a result of the imposition of the Second Control Order on 7 June 2011, the Indonesian Government changed its approach to the granting of import permits for imports of Australian live cattle, including by: (a) lowering the number of import quotas granted for the years 2011 to 2013, as compared with previous years; (b) applying the import quotas strictly (or more strictly than they otherwise would have applied them in the Counterfactual Scenario), rather than revising the quotas as needed to take into account demand for Australian live cattle imports and price stability; (c) slowing the time that it took for import permits to be issued. Particulars (i) Outline of evidence of Joni Liano filed on 8 September 2023. (ii) Outline of evidence of Prabowo Respatiyo Caturroso filed on 8 September 2023. (iii) Outline of evidence of Adikelana Adiwoso filed on 8 September 2023. (iv) Outline of evidence of Gregory John Pankhurst filed on 8 September 2023. (v) Joint expert report of Timothy Lindsey and Simon Butt dated 7 September 2023. (emphasis added) 14 The points of claim also alleged that: (1) the Indonesian Government made announcements that the annual quota for live cattle imports from Australia: (a) for 2011 would be 500,000 head (announced on 28 December 2010) (par 43); (b) for 2012 would be 283,000 (announced in around December 2011) (par 48); (c) for 2013 would be 267,000 (announced in around December 2012), but, during the second half of 2013, it issued permits for an additional 25,000 head (pars 49 and 50); (2) had the Minister made an exceptions order rather than the second control order, the Indonesian Government: (a) would have set quotas of 500,000 head for each of 2012 and 2013 (par 51); (b) further or alternatively, would have permitted imports from Australia that would have satisfied demand for live cattle totalling (inclusive of the actual numbers imported) (par 52): (i) 619,380 head in 2011 (i.e., an additional 207,323 to the actual exports of 412,057); (ii) 578,452 head in 2012 (i.e. an additional 302,157 to the actual exports of 276,295); and (iii) 746,343 head in 2013 (i.e. an additional 297,393 to the actual exports of 448,950 (see Brett Cattle 274 FCR at 440 [432]). 15 The outlines of evidence particularised in par 47 of the points of claim, that were included in the agreed court book for today's hearing but were not put into evidence, demonstrated the applicant's compliance with the orders that I made on 14 July 2023 that it serve on the Commonwealth all of the evidence it wished to lead in support of the points of claim. Some of the outlines make assertions about statements critical of the Australian Government that Ministers of the Indonesian Government allegedly made to other persons. Those assertions appear to be hearsay that are unlikely to be received into evidence, at least as evidence as truth of the facts asserted about the reasoning behind, what Brett Cattle alleges, was the Indonesian Government's reaction to the making of the second control order in 2011, on which the pleading in par 47 appears to rely. 16 Here, the evidence which the applicant proposes to lead from two experts of Indonesian law, Professors Simon Butt and Timothy Lindsey (but also did not read on this application), suggests that the Indonesian Government had a constitutional obligation to ensure food security for its citizens, including by the possibly conflicting means of promoting self-sufficiency within, and or allowing imports into, Indonesia or use of a combination of those means at different points of time in accordance with that Government's then perception of its national interest and the appropriate means and policies to achieve such food security. 17 In preparing for today's hearing, I have had regard to that material, not as evidence, but for the purposes of determining what orders would be appropriate to make today to set down for determination the issues raised by the points of claim before the new docket judge. 18 My preliminary impression is that, in particular, par 47 of the points of claim alleged that the making of the second control order by the Australian Minister caused the Indonesian Government to act differently to how it would otherwise have acted had the Minister made an exceptions order. This raised the issue of the motivations of the Indonesian Government in administering its laws and performing its duties to make policies and governmental decisions about selling, and adhering to quotas for, live cattle from Australia and the timing of the issue of import permits in 2011, 2012 and 2013. Those were decisions by a foreign sovereign government acting lawfully within its own territory.

Consideration 19 This raises the question whether the allegation in par 47 of the points of claim infringes what has been called "the act of State doctrine" (see Moti v The Queen (2011) 245 CLR 456 at 473 [44] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ). The doctrine is encapsulated in the dictum of Fuller CJ in Underhill v Hernandez 168 US 250 (1897) at 252 that "the courts of one country will not sit in judgment on the acts of the government of another done within its own territory". Mason CJ, Wilson, Deane, Dawson, Toohey and Gaudron JJ said in Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30 at 41 that the principle rests partly on international comity and expediency as explained in what the Supreme Court of the United States had said in Oetjen v Central Leather Co 246 US 297 (1918) at 304, namely: To permit the validity of the acts of one sovereign State to be reexamined and perhaps condemned by the courts of another would very certainly "imperil the amicable relations between governments and vex the peace of nations." 20 Lord Wilberforce described the principle as one of "judicial restraint or abstention" that is not discretionary but "inherent in the very nature of the judicial process": Buttes Gas and Oil Co v Hammer [1982] AC 888 at 931G932A. 21 Mason CJ, Wilson, Deane, Dawson, Toohey and Gaudron JJ said in Heinemann 165 CLR at 44 that the principle renders a claim unenforceable where the subject matter of one or more claims and the issues that they are likely to generate "present a risk of embarrassment to the court and of prejudice to the relationship between its sovereign and the foreign sovereign". Their Honours held that for "the purposes of the principle of unenforceability … the action is to be characterized by reference to the substance of the interest sought to be enforced, rather than the form of the action" (at 46). They referred to this doctrine as a principle of international law that has long been recognised, namely that, in general, courts will not adjudicate upon the validity of acts and transactions of a foreign sovereign State within the sovereign's own territory (at 4041). 22 In Moti 245 CLR at 475476 [51][52], French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ explained that, despite its absoluteness, the dictum of Fuller CJ in Underhill 168 US at 252 will not be applied in all situations, particularly where it is necessary for an Australian court to state its conclusions about the legality of the conduct of a foreign government or persons through whom such a government has acted. They said that the act of State doctrine might not prevent a domestic court examining and pronouncing upon the exercises of power by a foreign government if those acts only constituted a preliminary for the decision of a question, which in itself is subject to the competency of the domestic (here, Australian) court. 23 I am concerned that the way in which par 47 of the points of claim is pleaded appears to require the Court to examine, as a matter of substance, whether, in the period in 2011 after the Minister made the second control order, and in 2012 and 2013, the Indonesian Government decided to allow less imports of live cattle into Indonesia (including by setting lower quotas, issuing fewer or less generous import permits and or delaying the issue of import permits) because of the Minister's conduct in doing so. 24 The setting of import quotas, issuing of permits and the timeousness with which permits are issued appear to be within the scope of sovereign acts of the Indonesian Government that it was able to exercise in accordance with its laws and perception of its national interest, including in the implementation of policies as to self-sufficiency or the number of live cattle that it considered appropriate to the needs and circumstances of the time or any other consideration that it took into account. My present impression is that the act of State doctrine would appear to preclude this Court adjudicating as to whether, in the exercise of its sovereign authority, the Indonesian Government was motivated by the second control order to act in the ways alleged in par 47 of the points of claim, including in determining that it could or would have acted differently had the Minister made an exceptions order. 25 As a matter of principle, the Indonesian Government's considerations of its legal obligations and policies as well as balancing what it conceived to be in Indonesia's national interest were, and would be, matters for it alone. Ordinarily, if a similar allegation about the motivations of a Minister or Cabinet of an Australian Government in making a decision were sought to be litigated here, it would be the subject of a claim of public interest, or matter of state, immunity. In form, it could be said that the counterfactual propositions advanced in the points of claim do not engage the act of State principle. However, in substance, the points of claim depend upon the allegation in par 47, namely that the reason that the Indonesian Government acted as it did in 2011 (after the Minister made the second control order), 2012 and 2013 in applying and enforcing its laws relating to the numbers of live cattle that it permitted to be imported from Australia was a consequence of the making of the second control order: Heinemann 165 CLR at 46. 26 For this Court to rule that a foreign government was motivated by, or reacted to, an act of the Australian Government in setting import quotas and issuing import permits for the purposes of ensuring the performance of its constitutional and governmental functions, and would have acted differently had the Australian Government also acted differently, seems to me to be within the area proscribed by the act of State principle. 27 However, the parties had not made submissions on this issue for today and were not in a position to argue it. Accordingly, it is not possible to decide now whether Brett Cattle can be allowed to propound the claim based on par 47 of the points of claim. Given that the parties want to conduct an estimated four-week hearing to decide an issue that arises on the pleading and appears to have a serious risk of being found not to be justiciable, I thought it appropriate to raise my concern. This concern may need to be resolved at some point in the litigation. It may well be that the new docket judge will consider, after the parties have also given consideration to this question, it desirable to have a Full Court consider whether par 47 of the points of claim raises as an issue that is or is not justiciable or ought not to be decided. Of course, it may well be that, in arriving at my preliminary view, I have overlooked some critical factor or not perceived the application of the principles correctly, since I have only raised this with the parties today.

Conclusion 28 In my opinion, the applicability of the act of State principle raises an important question that requires some further consideration that the new docket judge may consider necessary to be determined prior to the separate question I have ordered. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rares.