Chief Executive Officer of Customs v ICB Medical Distributors Pty Ltd [2007] FCA 1538 | Case summary

THE APPLICATION TO AMEND AND THE DECLARATION SOUGHT BY CUSTOMS 55 Customs' proposed amended notice of appeal and application for an order for review seeks leave to add the following prayer for relief: 'That it be declared that the last paragraph to Note 6 to Chapter 90 in the Tariff Act has effect such that "footwear and special insoles designed to correct orthopaedic conditions" are "orthopaedic appliances" only if such footwear and special insoles are "either (1) made to measure or (2) mass-produced, presented singly and not in pairs and designed to fit either foot equally".' 56 In my opinion it would be inappropriate to grant such a declaration in this matter. The circumstances in which Note 6 of Chapter 9 can operate are varied. I am not in a position to review all of them or to assess the impact which any particular form of declaratory relief might have on other goods. 57 If I had found that the Tribunal made an error in its approach, it would have been appropriate to remit the matter to it to proceed in accordance with the law. 58 What a 'special insole' is in any particular case must be a question of fact, as must the question as to whether the good satisfies any of the criteria in Note 6 which might bring it to assessment under heading 9021. The proposed declaration is loosely framed and objectionable in form: Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 579 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ. 59 Customs argued that the question of construction addressed by its proposed declaration was not determinative in the Tribunal but would be likely to be determinative if the matter were remitted. I do not agree. The characterisation of the goods would remain a question of fact on any remitter. The construction in the proposed declaration does not clarify whether the goods are or are not 'special insoles' or orthopaedic appliances outside Note 6 to Chapter 90, as I have held. Declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ. The proposed declaration does not answer any question in respect of the goods. It is framed in the abstract. 60 I am of opinion that the proposed amendment does not raise a fairly arguable claim to final relief and ought be refused: Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154-155 per Dawson, Gaudron and McHugh JJ.

DID THE TRIBUNAL ERR IN FAILING TO CONSIDER CUSTOMS' CASE? 36 Here, the issue for decision by the Tribunal was a question of fact: did the goods have the essential character at the time of importation of 'orthopaedic appliances' or of 'special insoles'? The Tribunal proceeded to find as a fact that the function which the goods performed was not the function of an insole. One of the functions of an insole is to line the inside of a shoe. The Tribunal at [26] quoted from a paper entitled 'The History of Shoes: Shoemaking' by Cameron Kippen, who was an academic, which said that an insole provided 'a platform upon which the foot can operate and separates the upper [of the shoes] from the lower'. The Tribunal used this to illustrate the difference between an insole or special insoles and the orthotic inserts here. 37 The patent for the goods to which the Tribunal referred described the goods as orthotic inserts. The detailed description of the preferred embodiment of the patented goods included a statement that it: '… is adapted to be inserted into an article of footwear such that in use the insert lies between the footwear and the underside of the person's foot so as to provide a degree of biomechanical support and control for the foot.' 38 As noted above, there were many references in the evidence about particular views of what an orthosis could be called. The Tribunal did not need to go through each of these explaining its conclusions about them. Its task, as the classifier, was to examine the goods in the condition in which they were imported and form its assessment of their essential character as an informed observer: Chandler 4 CLR at 1729 per Barton J; Times Consultants 16 FCR at 462 per Morling and Wilcox JJ. 39 In characterising the goods the Tribunal was entitled to have recourse to common-sense, as Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ emphasised in Collector of Customs v Agfa-Gevaert Pty Ltd (1996) 186 CLR 389 at 400. 40 It was for the Tribunal to evaluate, as a factual matter, the essential character which it perceived the goods to have. It also had to identify what the word 'insole' meant as an ordinary English word. That is why it was open to the Tribunal to select its characterisation of the best description of the goods as being orthotic inserts of the kind described in the patent. 41 I am of opinion that Customs' characterisation of the Tribunal's approach to its case is not correct. The Tribunal's reasons show that it proceeded in a conventional manner. First, it identified what the goods were in the condition in which they came to be imported into Australia. It found that they were orthopaedic appliances within the meaning of heading 9021. It explained that this finding was made because the goods were 'more properly defined' as an artificial external device such as a brace or splint which prevented or assisted relative movement in the limbs. In this finding the Tribunal was expressing its ascertainment of the essential character of the goods. It explained that the finding was based on the ordinary and natural meaning of an orthopaedic appliance. That meaning was one which Customs accepted was open to the Tribunal based on its earlier decision in JS Levy (unreported Tribunal decision No 101; dated 8 September 1978) and the Oxford English Dictionary definition. 42 Secondly, the Tribunal explained that an insole, in its ordinary and natural meaning (the inner sole of a shoe or boot), did not have the same essential character or perform a function as extensive as that of an orthotic insert of the character of the goods. It referred to the terms of the patent for the goods and came to the conclusion that these goods did not have the essential character of goods within the meaning of the terms 'footwear' and 'special insoles' as used in Note 6 to Chapter 90. 43 In my opinion, the reasons given by the Tribunal informed the parties why it came to the conclusion that it did. It made a finding as to how the goods would be viewed by an informed observer when they arrived at the wharf in Australia. In Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272, Brennan CJ, Toohey, McHugh and Gummow JJ deprecated an attempt to scrutinise, overzealously on judicial review, the reasons of an administrative decision-maker. 44 Brennan J said in Repatriation Commission v O'Brien (1985) 155 CLR 422 at 446 that a decision of the Tribunal , if it is made in accordance with the statutory provisions that govern the exercise of its power, is not invalidated by a mere failure to expose fully the reasons for making it. Although that was a dissenting judgment, the principle his Honour stated is of general application (see Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 349 [75] per McHugh, Gummow and Hayne JJ). Of course, much will depend on the extent of the decision-maker's exposure of a reasoning process in determining whether or not the decision can stand. So, in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme (2003) 216 CLR 212 at 224 [39], Gleeson CJ, Gummow and Heydon JJ referred to the authorities which enabled a court to infer that, where a decision-maker did not give any reason for his or her decision, he or she had no good reason for it. That is not this case. An obligation to give reasons, such as is found in s 43(2B) of the Administrative Appeals Tribunal Act, did not oblige the Tribunal to give a subset of reasons why it accepted or rejected individual pieces of evidence. It is sufficient if the Tribunal, as the decision-maker, sets out its findings 'on those questions of fact which it considered to be material to the decision which it made and to the reasons it had for reaching that decision': Yusuf 206 CLR at 349 [68] per McHugh, Gummow and Hayne JJ; see too Repatriation Commission v Cotton (2006) 93 ALD 118 at 128 [42] where I cited the authorities and SZCOQ v Minister for Immigration and Multicultural Affairs [2007] FCAFC 9 at [14] per Moore J, [27]-[28] per Besanko J, and [53]-[61] per Buchanan J (dissenting). 45 The different descriptions in the evidence before the Tribunal of other goods (than those which ICB imported) made by other people in other contexts, to some of which I referred above, resulted from factual assessments about those other goods by those other persons. Customs referred the Tribunal to those matters and there is no reason to doubt that it gave genuine and real consideration to them. 46 Customs asserted that the Tribunal did not consider its argument that if one looked at how other people described other goods for non customs purposes, the Tribunal should have concluded that the application for review be dismissed. Having considered the material Customs said was not addressed by the Tribunal, I am unable to see any error of law in the Tribunal's reasons or decision. That material went to the issue of characterisation. The Tribunal explained its reasons for its characterisation of the actual goods it was considering. The Tribunal was conscious of the argument of Customs and referred to its statement of facts and contentions (at [28]). There was no need for the Tribunal to go through a myriad of individual instances of what other people considered for other purposes was an appropriate expression to use in respect of other goods. 47 I am satisfied that the Tribunal addressed the correct question, understood the arguments and had regard to all relevant considerations and ignored irrelevant ones. This was a situation in which the Tribunal was not obliged to give more reasons than s 43(2B) of the Administrative Appeals Tribunal Act required. It set out its findings on material questions of fact and referred to the evidence and other material on which they were based, explaining logically why it came to the characterisation it did: cf: Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 at 422-423; 74 ALJR 405 at 416-417 [65]-[67] per McHugh J. As Davies and Beazley JJ said in Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at 13F-G, it is fundamentally a question of fact whether goods have an essential character and what that character is (see too at 14G-15B; and per Hill J at 16A). 48 In my opinion the Tribunal was not obliged to give any more detailed explanation than it did as its reasoning process. That process was adequately disclosed. It dealt with the sole issue before it, characterisation, in a common-sense and lucid manner.

Chief Executive Officer of Customs v ICB Medical Distributors Pty Ltd

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