The construction of the Act
345 The Parliament identified in s 3(1) its object in enacting the Act so that the construction of its other provisions could be approached having regard to the achievement of that object, consistently with s 15AA of the Act Interpretation Act. The chapeau to s 3(1) is critical for it crystallises in a few words that the object of the Act is to create a regulatory framework for coastal trading in Australia with the particular elements that are then set out in pars (a)-(f).
346 Next, s 3(2) specifies how the Parliament structured the Act in order to achieve the regulatory framework, namely by the creation of a licensing system for vessels used to engage in coastal trading (as defined in s 7) that would ensure unrestricted access to Australian waters to vessels used under a general licence (s 3(2)(a)). In comparison, s 3(2)(b) emphasised that the object was also to be achieved by ensuring that vessels used under a temporary licence had their access to Australian waters restricted in time and to the specific voyages that were authorised by the licence, and those used under an emergency licence were only to have access required to deal with the particular emergency. Thus, the Act was intended to create a regulatory framework for coastal trading in which general licensees had unrestricted access and other vessels, which could be their competitors, would have their access limited in time and to particular voyages or emergency situations.
347 The word "ensuring" that introduced each aim in s 3(2) indicated the importance of the width of access to engage in coastal trading differentially given by each available licence. The elements of the desired regulatory framework are spelt out in s 3(1)(a)-(f). Elements (b), (c) and (d) in s 3(1) are focused on a regulatory framework to achieve the development of long term growth and utilisation of an Australian shipping industry. That aim can be discerned by the recognition of the need for the regulatory framework to facilitate that industry's long term growth (element (b)), enhance its efficiency and reliability as part of a national transport system (element (c)) and maximise use of vessels with general licences (i.e. on the general register: element (d)).
348 However, elements (a), (e) and (f) in s 3(1) are not as clearly directed, if considered literally. Robertson J saw element (a) as applying to a broader shipping industry than one that was merely Australian, i.e. as including ships with temporary licences and to that industry contributing to the economy by its direct impact on the economic position of, among others, Australian consignors and consignees of cargo. Similarly, competition in coastal trading and efficient movement of cargo and passengers between Australian ports may not be seen as readily promoted or ensured by restricting cheaper alternatives to general licensees (as in elements (e) and (f)).
349 Nonetheless, the ordinary and natural meaning of element (a) in s 3(1), read in its context in s 3 and in the Act as a whole, is that the regulatory framework should promote a shipping industry in Australia that will itself contribute to the broader Australian economy. And, the Act aims to achieve this under s 3(2), particularly by encouraging ships to be under general licences so that they will have unrestricted access to Australian waters. That contribution to the nation's economy was contemplated by the cognate legislation enacted as a package with the Act. Similarly, it is unlikely that a regulatory framework to promote competition in coastal trading, as contemplated by element (e) in s 3(1), would be achieved, principally, by issuing ships with temporary licences that restricted their access to Australian waters. Rather, the promotion of the competition referred to in element (e) is more likely to be advanced by a viable Australian shipping industry that utilises ships on the general register, but with the opportunity for temporary licensees' vessels to compete for coastal trading opportunities. Similarly, the efficient movement of passengers and cargo between Australian ports (element (f)) is more likely to be ensured if there is a larger number of vessels under general licensees with unrestricted access plying the coastal trade than with a regulatory framework that has more vessels under temporary licensees that restrict their access to Australian waters in terms of time and numbers of authorised voyages.
350 The nature of the regulatory framework envisaged by s 3(1) is also informed by, and interacts with, the conditions that the Act creates for the issue of the three classes of licence through which vessels can have access to Australian waters to engage in coastal trading. A general licence can be issued for up to five years (s 16(1)). And, the importance of the place of general licences in the achievement of the object can be seen in s 63(1). That gives the Minister power to give a temporary licensee a notice to show cause in given circumstances why its licence should not be cancelled if he considers it "is being used in a way that circumvents the purpose of the general licence provisions or the object of the Act". Importantly, s 21(a) and (b) provides that a general licence must contain conditions that the ship be on the general register and that each seafarer working as part of her crew has the right to undertake such work in Australia, either because of his or her Australian citizenship or capacity to do so under a visa issued by the Australian Government. And, s 13(2)(a) and (b) prescribe complementary preconditions for a valid application for a general licence.
351 In contrast, a temporary licence has a condition that the ship be on the international register, but has no conditions as to a ship's crew (s 40). The three objects of the international register identified in s 15A of the Shipping Registration Act complement, in part, the single object in s 3(1) of the Act. There is an interrelationship in the two Acts between the object in s 15A(b) (providing an internationally competitive register to facilitate the long term growth of the Australian shipping industry) and element (b) in s 3(1) (providing a regulatory framework for coastal in Australia that (b) facilitates the long term growth of the Australian shipping industry).
352 What is striking about the process identified in the Act in ss 30-37 and the criteria in s 63(1), is the absence of any reference to prices or freight rates (for carriage of passengers or cargo) or the costs that the applicant, general licence holder or shipper will incur to perform the voyages. The prescribed subject of matter of the negotiations under s 32(3) and (4) concerns only the physical characteristics of the general licensee's vessel's equipment to carry the cargo and her degree of availability to do so. When s 32(4) refers to the negotiations under s 32(3) having regard to the requirements of the shipper of the cargo, it means what it says - namely, those requirements of the shipper that relate to the vessel's equipment and availability. There is no requirement for the negotiations under s 32(3) that the applicant and general licensee discuss commercial issues such as freight rates or contractual terms. Rather, the regulatory regime is concerned with whether the general licensee's unrestricted access to Australian waters to provide its cargo services should be affected by the issue of a temporary licensee permitting the applicant to be able to perform a voyage or voyages that the general licensee's vessel is capable of undertaking. Hence, the power in s 63(1) to cancel a temporary licence is also actuated by its use in respect of voyages, loading dates, loading and discharge ports, previous variations and the provision relating to the grant of a general licence. Again, s 63(1) does not deal with freight rates or commercial terms as a possible mechanism for misuse of a temporary licence.
353 Third parties who either become aware of the application through the Department's website or by the Minister's direct notification under s 30(b)(ii), also have two business days to make "written comments on the application" if they are directly affected by it (s 33). The Minister is given power in s 34 to decide the application and must do so (subject to any extensions under ss 34(5) or 77) within 15 business days after the application was made (s 34(4)): i.e. ordinarily within nine business days of being notified of the outcome of the negotiations under s 32(2)(b).
354 Critically, s 34(3) prescribes four mandatory considerations to which the Minister must have regard in making his decision on whether to grant a temporary licence, namely, first, the outcome of the negotiations as notified by the applicant under s 32(2)(b), and his objective assessment of each of the three matters that were substantially the subject of those negotiations. That is, s 34(3) requires the Minister to consider the applicant's report to him of whether it agreed with the general licensee as to the extent to which its vessel was equipped to carry the cargo and it could do so in a timely manner, having regard to the actual shipper's requirements, if any, and then to consider for himself, whether the vessel is, in fact, so equipped, whether, in fact, it can carry the cargo or can do so within five days of the expected loading dates having regard to the reasonable requirements (as to the two subject matters in s 32(3)) of a shipper of the kind of cargo specified in the application.
355 The task under s 34(3) involves the Minister considering objectively whether the general licensee's vessel could perform the voyage, and do so within the particular timeframe of five days before and after the expected loading dates, having regard to the reasonable requirements of a shipper of the kind of cargo in question. Such reasonable requirements could involve issues such as the ship's cargoworthiness, the characteristics of the proposed cargo, (e.g. whether it consists of perishable goods), the capacity of a vessel to handle specialised cargo, or whether there are possible residues or contaminants from prior cargoes that may adversely affect the kind of cargo to be carried. However, the reasonable requirements referred to in s 34(3)(d) that the Minister must consider are those specified in ss 32(3) and 34(3)(b) and (c), and do not extend to commercial issues such as freight rates or contractual terms or the economic position of a shipper, such as Pacific Aluminium. The mandatory considerations in s 34(3) concern, and only concern, the subject matter of the specific negotiation topics prescribed in s 32(3) and (4).
356 However, the Minister is also entitled, pursuant to s 34(2), to have regard to other matters, whether or not he receives a notice in response to an application from a general licence holder. Those include matters going to past conduct of the applicant (s 34(2)(a), (b), (c)), whether any proposed vessel is on the international register, any ownership relationship between the applicant with both the vessel and cargo to be carried on her (s 34(2)(ba)), any written comments provided to the Minister under s 33 (s 34(2)(d)), any reports as to the applicant's performance under previous temporary licences that the applicant had provided under s 62 (which requires such reports to be given to the Department no later than 10 business days after the end of each voyage authorised by a temporary licence) (s 34(2)(e)), and critically, the object of the Act and "any other matters the Minister thinks relevant" (s 34(2)(f) and (g)).
357 There is a fundamental difference between the operation of ss 34(2) and (3). That is because the former is permissive while the latter is mandatory in relation to matters to which the Minister must or may have regard. This difference will be examined below in these reasons.
358 The provisions of s 63(1) are instructive on how the Minister will have regard to matters under s 34(2)(f) and (g). That is because an application for the grant or variation of a temporary licence cannot be used, anymore than such a licence if issued could be used, to circumvent, as s 63(1) provides, "the purpose of the general licence provisions or the object of this Act". The transparency of the process for the grant, variation and utilisation of a temporary licence involves publication of details of the voyages, loading and discharge dates and ports and cargo carried. None of the mandatory steps in the process is concerned with commercial terms or freight rates. Moreover, ss 34(3) and 63(1) direct attention to the importance, in the regulatory framework, of the general licence provisions and the capacity of a general licensee's vessel to perform, in a timely manner, the carriage of the cargo sought by the applicant for a temporary licence.
359 If the Minister decides to grant a temporary licence, s 35(2) identifies the details of the licence that must be published on the Department's website, s 40 specifies the conditions to which it is subject and s 37(2) identifies the matters that the licence itself must specify, none of which relate to commercial terms or freight rates. If the Minister decides to refuse the application for the temporary licence he must give written notification of that decision to the applicant with his reasons, and must publish his decision (but not reasons) on the Department's website (s 39(2)).
360 The process for a variation of a temporary licence prescribed by Subdiv D of Div 2 of Pt 4 of the Act is similar to that in Subdiv A, and specifically follows ss 30-34, except that, as s 53 provides, the Minister can also have regard to any prior applications for a variation of a temporary licence made by the applicant. Thus, s 51(2) requires the applicant to specify similar details of the proposed voyages as are required by s 28(2), and s 57(2) requires any varied licence to specify the matters set out in s 37(2), none of which concern commercial terms or freight rates.
361 Where a statute requires a decision-maker to have regard to one or more particular matters, he or she must take each such matter into account and give it weight "as a fundamental element in making his determination": R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329 per Mason J; R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 333 per Gibbs CJ, 338 per Mason J; Telstra Corporation Ltd v Australian Competition and Consumer Commission (2008) 176 FCR 153 at 181 [103], [105] per Rares J, applied in Telstra Corporation Ltd v Australian Competition Tribunal (2009) 175 FCR 201 at 242 [267] per Jacobson, Lander and Foster JJ.
362 Here, s 34(3) requires the Minister to consider the matters it specifies as the central elements in his deliberative process. He may also have regard, and give weight, to matters referred to in s 34(2), mindful that the weight given to those matters could not justify the grant of a temporary licence that would be used, as s 63(1) indicates, in a way that circumvents the purpose of the general licence provisions or object of the Act. Thus, the purpose of power to grant a temporary licence is not available to be used a means for an applicant to circumvent the purpose of the general licence provisions or the object of the Act.
363 The purpose of the general licence provisions is to enable a general licensee to seek to carry any cargo available in the coastal trade and to give it unrestricted access to Australian waters to do so. The general licensee will have employed a crew on its vessel and become subject to the obligations of an employer under the Fair Work Act and the Seafarers' Rehabilitation and Compensation Act, none of which will apply to any ship the subject of the temporary licence. The mandatory criteria, the subject of negotiations required under ss 32(2)-(4) and fundamental to the Minister's deliberative process under s 34(3), deal with the capacity of the vessel in terms of equipment, time and suitability of any general licensee(s) who has (or have) given a notice in response to an application for a temporary licence to carry the identified cargo having regard to the reasonable requirement of a shipper of that kind of cargo in respect of those subjects. Ordinarily, if the general licensee's vessel is equipped, available and suitable to carry the cargo as required, the Minister would give those matters weight as a fundamental element in his consideration of whether to grant a temporary licence that would have the consequence of supplanting the general licensee from using its ship to do so.
364 The legislation passed cognately with the Act contemplated that there would be two markets for Australian shipping - the coastal trade and the international market (see s 3(1)(c), (d), (e) and (f) of the Act and s 15A(6) of the Shipping Registration Act). Moreover, element (d) in s 3(1) of the Act makes maximisation of the use in coastal trading of vessels in the general register an integral part of the regulatory framework: i.e. the use of a general licensee's vessels where it is available and satisfies the criteria in s 34(3). That construction is reinforced by s 63(1). If the Minister considers that, under s 34(3), a general licensee's vessel is ready and able to perform the carriage of cargo that is the subject of a temporary licence application, the central elements in the statutory deliberative process will have been determined adversely to the applicant.
365 Nonetheless, the Minister can still exercise a discretion to grant the application having regard to considerations in s 34(2), but not in such a way that the purpose of the unrestricted access of the general licensee to perform the carriage or the object of the Act is circumvented (s 63(1)). Thus, s 34(2)(ba) allows the Minister to give weight to the consideration that the applicant owns both the vessel, which is also in the international register, and cargo and the cargo will be carried on that vessel. Ordinarily, the use of an applicant's own ship to carry cargo it also owns would not be likely to circumvent the purpose of the general licence provisions or the object of the Act. That is because such an applicant would be proposing to use its own ship in the course of its own business, as opposed to bringing into Australian waters or the coastal trade a ship not on the general, or perhaps the international, register for a purpose that, prima facie, would infringe the entitlement of the general licensee to use its ship to perform the carriage.
366 Similarly, s 34(2)(d) enables the Minister to have regard to any comments he receives under s 33 from persons, other than a general licensee including the shipper, including, unions or business associations who, or whose members, are directly affected by the determination of the application. In addition, the Minister may also have regard to the object of the Act and any other matters he thinks relevant under s 34(2)(f) and (g). The potential scope of matters available for the Minister's consideration, particularly under s 34(2)(d) and (g), is broad. However, the discretion to decide whether to grant a licence and the subject matter to which the Minister may have regard are not completely at large as s 63(1) demonstrates. The factors in s 34(2) permit the Minister to have regard, for example, to the economic consequences for a shipper or consignee of the alternatives presented by use of the general licensee's or applicant's vessel for the carriage of the cargo.
367 The decision whether to grant a temporary licence is, after all, that of the Minister, or his delegate. It may have political consequences, hence the flexibility offered to the Minister by the authority in s 34(2)(d) and (g) to have regard to comments of persons directly affected or other matters he thinks relevant.
368 Nonetheless, the Minister must exercise the discretions to grant or refuse an application or variation in ss 34(1) or 53 reasonably, having regard to the matters in s 34(3) and such, if any, of the matters in s 34(2) as he considers appropriate in the circumstances, including the object of the Act. This involves a weighing process. There is a well recognised division between the role of an administrative decision-maker to assess the merits of a proposed exercise of a statutory power or discretion by weighing criteria properly open to him or her and the function of the Court in judicially reviewing the lawfulness of that exercise. The Court does not have the function of considering whether it agrees with the merits of the decision-maker's choice. Rather, the function of the Court in such a judicial review is to consider whether the decision-maker acted lawfully in accordance with the process and statutory criteria that conferred the power on him or her to do so. But, sometimes, the weighing process undertaken by the decision-maker can itself miscarry.
369 Recently (and after Robertson J gave his reasons) the High Court explained the applicable principles in Li 297 ALR 225. There, Hayne, Kiefel and Bell JJ said (297 ALR at 247 [67]; and see too at 236 [23]-[24] per French CJ, 257-258 [109]-[112] per Gageler J):
"In Klein v Domus Pty Ltd [(1963) 109 CLR 467 at 473], Dixon CJ said that where discretions are ill-defined (as commonly they are) it is necessary to look to the scope and purpose of the statute conferring the discretionary power and its real object. The ordinary approach to statutory construction, reiterated in Project Blue Sky [194 CLR 355], requires nothing less. The legal standard of reasonableness must be the standard indicated by the true construction of the statute. It is necessary to construe the statute because the question to which the standard of reasonableness is addressed is whether the statutory power has been abused [H W R Wade and C Forsyth, Administrative Law, 10th ed, Oxford University Press, Oxford, 2009, p 296]." (emphasis added)
Their Honours said that a decision-maker must understand his or her statutory powers and obligations (297 ALR at 248 [71]) and continued (297 ALR at 249-250 [72], [75]-[76]):
"[72] … Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [(1986) 162 CLR 24 at 41], Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is "manifestly unreasonable". Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.
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[75] In Peko-Wallsend, [162 CLR at 41-2; referring, inter alia, to Wednesbury Corporation [1948] 1 KB at 230; and Parramatta City Council v Pestell (1972) 128 CLR 305 at 328; [1972-73] ALR 811 at 825-6] Mason J, having observed that there was considerable diversity in the application by the courts of the test of manifest unreasonableness, suggested that "guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion". House v R [(1936) 55 CLR 499 at 504-5] holds that it is not enough that an appellate court would have taken a different course. What must be evident is that some error has been made in exercising the discretion, such as where a judge acts on a wrong principle or takes irrelevant matters into consideration. The analogy with the approach taken in an administrative law context is apparent.
[76] As to the inferences that may be drawn by an appellate court, it was said in House v R [55 CLR at 505] that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification." (emphasis added)