Consideration and disposition
6 The parties were in substantial agreement concerning the principles guiding the admissibility of evidence in a judicial review case. Generally speaking, evidence which was not before the primary decision-maker is not admissible in judicial review proceedings, however, ultimately the issue falls to be determined by reference to the grounds of judicial review and the particular circumstances of the case (see, for example, McCormack v Commissioner of Taxation [2001] FCA 1700; 114 FCR 574 at [38] per Sackville J; Australian Retailers Association v Reserve Bank of Australia [2005] FCA 1707; 148 FCR 446 at [442] and [457]-[459] (Australian Retailers Association) per Weinberg J and Chandra v Webber [2010] FCA 705; 187 FCR 31 at [40] per Bromberg J).
7 In Australian Retailers Association, in circumstances where there was a claim of Wednesbury unreasonableness, Weinberg J admitted, with some reluctance, competing expert economic evidence on the question whether a decision by the Reserve Bank concerning EFTPOS interchange fees would promote efficiency and competition in the relevant market. And in Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381 expert evidence was admitted in a judicial review challenge which claimed that a fisheries management plan was unreasonable or irrational in operation. Expert evidence from a statistician was admitted as to a mathematical fallacy underpinning a quota formula in the plan.
8 According to the applicant, the alleged unreasonableness to which [7] of the originating application relates derives from the following three elements:
(a) the interchangeable use of two economic concepts, return on investment and profit margin, which the applicant says cannot be equated;
(b) the flawed "assumption", originally formulated by reference to return on investment but then transposed to profit margin, that a producer would achieve the same profit margin in a competitive market (with higher input costs) as it achieved under a market situation (with lower input costs); and
(c) on the basis of that assumption, calculating the amount of profit by applying the same profit margin that the applicant had achieved under the market situation in China to the higher substituted costs used by the ADRP.
9 The applicant explained that the purpose of Mr Houston's report was to provide an explanation of the economic concepts in paragraph 76 and the methodological difficulties with the assumptions made in that paragraph, so as to enable the Court to frame and deal with the unreasonableness ground of review. This was by assisting the Court to understand the basis for the applicant's claim that the approach of the ADRP in calculating the amount of profit, by applying a profit margin that it achieved in a market situation to substituted and higher input costs, was unreasonable in the ADJR sense.
10 The reasons advanced by the respondents in support of their submission that the Houston Report is inadmissible as irrelevant should not be accepted.
11 First, while it appears that the parties are not in dispute as to the meaning of the technical expressions "profit margin" and "return on investment", Mr Houston's answer to question 1, to which this matter relates, informs his evidence concerning questions 2 to 5.
12 Secondly, I consider that Mr Houston's answers to questions 2 and 3 are relevant as to the reasonableness of the assumption upon which paragraph 76 operates.
13 Thirdly, as to the answers to questions 4 and 5, I do not consider that evidence to be directed to the ultimate issue (which, in any event, is now affected by s 80 of the Evidence Act). The evidence is admissible in support of the applicant's claim that the approach of the ADRP to calculating the amount of profit was unreasonable by applying a profit margin that it achieved in a market situation to substituted and higher input costs.
14 It seems to me significant that, in this case, as was the case Australian Retailers Association, the relevant statutory framework incorporates economic principles and concepts. This is reflected in provisions such as s 269TAC of the Customs Act which deals with how the "normal value of goods" is to be determined and contains concepts such as "market", the costs of production or manufacture of goods in the country of export and profits on sale. Similarly, in the Customs (International Obligations) Regulations 2015 (Cth), reg 43 focusses in part on the question whether records are in accordance with generally accepted accounting principles in the country of export and "reasonably reflects competitive market costs associated with the production or manufacture of like goods". Regulation 45 deals with the determination of profit for the purposes of s 269TAC(5B) of the Customs Act. These are all economic concepts. In such circumstances, while I respectfully agree with Weinberg J's remarks in Australian Retailers Association at [459] that the tender of evidence going to the ground of review of unreasonableness should not be encouraged, it is difficult to reject as inadmissible expert economic evidence which goes to the question of whether the decision-maker acted unreasonably or irrationally and not in accordance with sound economic principles. As I understand the position at this time, these are the matters which are addressed in Mr Houston's Report. In my respectful view, his evidence is relevant and, in principle, is admissible in relation to ground 7 of the originating application.
15 The observations of Barrett J in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1263, to which my attention was drawn, were made in a very different statutory context and legal framework and are distinguishable. The same may generally be said concerning some of the observations of Collins J in R (on the application of Lynch) v General Dental Council [2003] EWHC 2987 (Admin), although his Lordship's observations at [24] are not inconsistent with the course I have taken in the particular circumstances here:
24. It is clear that the court's function must not be usurped. But it seems to me that the court must be enabled to carry out its function. To do this it must understand the material which is put before it. There is in my view a real distinction between the report from an expert which seeks to explain what is involved in a particular process (in this case, treatment) and how complicated that process is and one which goes on to opine that it was irrational for the body to have reached the conclusion it did. I recognise that in this jurisdiction the obtaining by a defendant of a report which disagrees with the views of the claimant's expert may neutralise those views since the court cannot and will not decide the issue of fact. However, it seems to me that in a truly technical field, where the significance of a particular process is in issue expert evidence can be admitted to explain the process and its significance. Cases where this can be permitted will be very rare and what I have said should not be regarded as opening the door to the admissibility of experts' reports in all cases such as this which involve judicial review of an expert tribunal or body. Equally, the court must be careful to recognise and to apply the distinction to which I have referred, albeit in some instances it may be somewhat difficult to see where the line should be drawn.
16 For these reasons, I do not accept the respondents' overall objection to the admissibility of the Houston Report. That objection was expressed at a high level of principle and applied to the Houston Report as a whole. The respondents sought to reserve their position in relation to any specific and technical objections to parts of the Houston Report. Although the applicant opposed this course I consider that the respondents should not be prevented from making individual objections on the basis of matters such as form. Any such individual objections, together with a short statement of their basis, should be filed and served no later than ten business days before the hearing.
17 In the light of this advance ruling, it will be a matter for the respondents to consider whether they wish to adduce competing expert evidence. Any such evidence should be filed and served by no later than 20 business days before the hearing. If there is to be competing economic expert evidence, consideration will be given to directing the experts to prepare a joint report.
18 It is also appropriate to make further directions with a view to the substantive hearing being conducted early year.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.