Re Comptroller-General of Customs and Garrick William Hand v Kawasaki Motors Pty Limited [1991] FCA 518; 103 ALR 661;

Re Comptroller-General of Customs and Garrick William Hand v Kawasaki Motors Pty Limited [1991] FCA 518; 103 ALR 661; - FCA 1991 case summary — Zoe

[116]

1. On 2 January 1990 Mr W. O'Brien of the Australian

Customs Service contacted Mr R. Woodleigh, Managing

Director of Hydo-Bike (Aust) Pty Limited. Mr O'Brien

was informed, amongst other things, that the company

had officially launched their "jet-ski" on that day and

that descriptive material and a video would be

forwarded to the Australian Customs Service by the end

of the week.

2. On 14 February 1990 Mr G. Hand visited the premises of

Hydro Bike (Aust) Pty Limited and interviewed Mr R.

Woodleigh, its Managing Director in relation to the

local manufacture of jet skis. On 28 February 1990 Mr

Hand wrote a Minute to his superviser in which he

reported upon his visit to those premises. Of

particular significance are the following extracts from

that Minute:

"Mr Woodleigh advised that the company is in

the process of changing its name to THUNDERBOLT

JET SKIS and relocating the factory to Unit 3

Taree Street, Burleigh Heads, Phone No. (075)

934472."

....

"A Jet Ski was on firm order (deposit paid) and

the ski was close to completion. It was to be

delivered to Stoney Creek Motor Cycles, Sydney

by Monday 19 February."

3. The Minutes states that Mr G. Hand was advised that

the company was changing its name to Thunderbolt Jet

Skis Pty Limited with Mr Woodleigh still as Managing

Director. Significantly, the Minute also states that

the company:

"...has manufactured a proven prototype, is

currently actively seeking orders, has a lease

for factory premises with options, has obtained

necessary patents, finance arranged, prepared

advertising etc and is dedicated to the

production of an Australian made jet ski."

4. As a result of that visit Mr G. Hand was satisfied

that the company had a firm order for a jet ski, a

number of inquiries for orders and was provided with

projected production figures.

5. Mr G. Hand was also satisfied that Thunderbolt Jet

Skis Pty Limited (formally Hydro-bike (Aust) Pty

Limited had produced a proven prototype and was

actively seeking orders for the supply of jet skis.

6. In a letter dated 23 April 1990 Mr Woodleigh wrote to

the Australian Customs Service providing photographs of

the Thunderbolt Jet Skis Pty Limited jet ski assembly

line and advising of the production level of jet skis

and the average construction time.

7. On 25 May 1990 Thunderbolt Jet Skis Pty Limited wrote

to the Australian Customs Service. Enclosed with the

letter was a video illustrating the operation of the

jet ski, together with an invoice evidencing the sale

on 25 May 1990 of one jet ski to a New South Wales

company.

8. On 14 June 1990 the General Manager of Thunderbolt Jet

Skis Pty Limited Ms K. Chaffey wrote to the Australian

Customs Service and stated the following:

"I confirm that Thunderbolt Jet Skis Pty

limited is now in full production with regards

to the manufacture of 'Australian Made Jet

Skis', and have all the components to complete

(..) units.

Of these (..) units, (..) fully completed and

being used for promotions and advertising

purposes. Of the remaining (..), (..) are

fitted with motors and only require the

finishing touches."

(The deletions were made to preserve confidentiality.)

9. An article in the Gold Coast Bulletin of 29 June 1990

entitled "Jet Ski maker takes on the world" cites

states that Thunderbolt Jet Skis Pty Limited was soon

launching the jet ski in competition with Kawasaki Ltd.

The article is not inconsistent with the local

manufacturers' intention to launch the jet ski and with

the production of a limited quantity for sale.

10. On 6 July 1990 as delegate of the Comptroller-General

of Customs in respect of the previously mentioned

legislation, Mr G. Hand revoked the TCO.

The statement contained the following reasons for decision:

11. In coming to the decision to revoke the TCO on 6 July

1990, Mr Hand, as delegate of the Comptroller-General

had to be satisfied that if the Order were not in place

and an application were to be made as at that date for

a concession order in respect of "SKI CRAFT, ride on,

direct drive, jet pump propelled" such an application

would not have been granted.

12. This required him to address the provisions of section

269C of the Act and the definitions contained within

section 269B. To this end, Mr Hand had to be

satisfied that goods serving similar functions were not

produced in Australia or such goods were not capable of

being produced in Australia in the normal course of

business.

13. Mr Hand has noted on the relevant file that

Thunderbolt Jet Skis Pty Limited provided information

concerning the jet ski that it had produced or was in

the course of producing. He also had before him

information described in paragraphs 5 to 12. Mr Hand

had to consider if the jet ski craft of the latter

company could constitute "identical goods" (within the

meaning of sub-section 269B(3) of the Act) to those

falling within the TCO. On the basis of the

information available in the relevant file I consider

that it likely that Mr Hand did consider that the jet

ski was such.

14. On the basis of the information on the relevant file,

Mr Hand did consider whether there was any cross-elasticity

of demand (within the terms of sub-section

269B(4) of the Act) between the jet ski of Thunderbolt

Jet Skis Pty Limited and the craft described in the

TCO.

15. The jet ski produced by Thunderbolt Jet Skis Pty

Limited is, on the information provided by the latter

company, a jet powered ski craft. It is used for

recreational purposes and is a craft falling within

similar applications to craft falling within the TCO.

If it is assumed that the jet ski and craft falling

within the TCO were available within any market, any

decrease in the price of the imported craft would

result in a decrease in the demand for Thunderbolt Jet

Skis Pty Limited's craft.

16. The information provided by Thunderbolt Jet Skis Pty

Limited and available to Mr Hand demonstrates that the

jet ski was in the stage of being launched upon the

market and there had been production of one if not more

jet skis. The existance of quotations, orders and an

invoice for the sale of one unit and the action taken

by the company to retain a Marketing Consultant

indicates that the jet ski was available for order and

sale in the ordinary course of business.

17. Mr Hand did accept that Thunderbolt Jet Skis Pty

Limited had demonstrated a production capacity for jet

skis and that the company had manufactured a jet pump

propelled, direct drive, ride on ski craft and that

there was cross elasticity of demand between the

company's craft and those referred to in the TCO.

18. In my opinion, based on the information contained in

the relevant file Mr Hand determined that had the TCO

not been in place and had he received an application

for a tariff concession order in relation to "jet pump

propelled, direct drive, ride on, ski craft" that

concession would not have been grated. On 6 July 1990

Mr Hand revoked the TCO.

[121]

.....in ordinary circumstances, a finding of fact, including an

inference drawn from primary facts, will not constitute a

reviewable decision because it will be no more than a step

along the way to an ultimate determination. Of course an

ultimate determination which depends upon a finding of fact

vitiated by error of law or made without evidence is

reviewable: see s.5(1)(f) and (h). In such a case the finding

of fact may be challenged as an element in the review of the

ultimate determination. But the point remains that ordinarily

a finding of fact will not be susceptible to review

independently of the ultimate decision.

Powerful considerations support the correctness of this view.

The Administrative Appeals Tribunal Act 1975 (Cth) ("the

A.A.T. Act") provides specifically for review on the merits by

the Administrative Appeals Tribunal. It is scarcely to be

supposed that the Parliament, in so providing, nevertheless

intended to invest the Federal Court with a similar

jurisdiction under the A.D.(J.R.) Act, for that would be the

effect of that Act if it were to confer jurisdiction to review

findings of fact generally. Indeed, the concept of judicial

review which finds literal expression in the title of the

A.D.(J.R.) Act and in its operative provisions tells against

the existence of such a wide jurisdiction. The expression

"judicial review", when applied to the traditional review

functions of the superior courts in our system of justice,

exercisable by means of the prerogative writs and the grant of

declaratory relief and injunction, ordinarily does not extend

to findings of fact as such. To expose all findings of fact,

or the generality of them, to judicial review would expose the

steps in administrative decision-making to comprehensive review

by the courts and thus bring about a radical change in the

relationship between the executive and judicial branches of

government. Amongst other things, such a change would bring in

its train difficult questions concerning the extent to which

the courts should take account of policy considerations when

reviewing the making of findings of fact and the drawing of

inferences of fact.

[127]

Accepting orders

Kawasaki submitted that the respondent had regard to a number

of irrelevant considerations. Some of the considerations

pointed to are that Thunderbolt:

1. planned to market its jet skis worldwide;

2. was actively seeking orders;

3. provided a quote for supply to the Philippines.

Following the views of the Full Court in Amcor, as I must, I

find that these considerations were relevant to the question

whether the local manufacturer was accepting orders in the

normal course of business.

Supply

I agree with Kawasaki's submission that the respondents should

have asked themselves and determined whether the Thunderbolt

product was commercially marketable; that is, they should have

addressed the question whether Thunderbolt was capable of

supplying the orders it was seeking.

Again, Kawasaki submitted that a number of irrelevant

considerations were taken into account, namely that

Thunderbolt:

4. had obtained relevant patents and trade names;

5. had stocks of engines and could obtain other parts at

short notice;

6. showed the jet ski in use on video.

I find that these considerations were relevant to the issue of

ability to produce but not of sufficient substance and weight

to found a conclusion that Thunderbolt was producing or capable

of producing an identical product to the Kawasaki jet ski

described in the TCO within the ordinary course of business.

Kawasaki submitted that the Australian jet ski product was as

at 6 July 1990 not yet manufactured but was merely a prototype

or, as it was described at the hearing, a "home-made back yard

jet ski". The one jet ski sold by the Australian manufacturer

was not a production model. Mr McCaffrey testified that there

was a fine line between seeing this particular model as a poor

quality product or as a prototype. He also testified that in

order for this particular jet ski to be produced on a

production or manufacturing line, what was needed was "total

redesign, retesting and then tooling up for the manufacturer.

That could be anything from three months to one year." I

accept this evidence.

As with the cross elasticity test, the respondents argued that

the quality of the Australian product was not a relevant

consideration. They also submitted that there was no evidence

to suggest that the quality was so inferior as to require the

exercise of a discretion not to revoke.

On this issue, both these submissions are clearly wrong. The

Full Court in Amcor stated that to achieve the statutory

capability to supply the goods, they must be of an acceptable

quality. The evidence established that the single Thunderbolt

jet ski produced was qualitatively inadequate. It may even

still be experimental or at least still be in a developmental

phase. In other words, Thunderbolt was unable to supply a jet

ski of sufficient quality to comply with the features of the

"competitive environment" which Amcor requires.

Kawasaki further submitted that, having regard to the conflict

between the information in the newspaper article and other

information, and in the context of earlier misstatements as to

when production would be occurring, the respondents should have

made further inquiries. On this basis it was contended that

there should be a finding that Thunderbolt jet skis were in

fact not in commercial manufacture as at 6 July 1990 and that

the company was not then capable of producing jet skis in the

normal course of business. The respondents, in this

submission, had made an unreasonable decision by virtue of

undue weight being given to irrelevant factors and lack of

consideration for relevant factors.

I agree with Kawasaki's submissions in these respects. What

the second respondent saw and learned in his February visit was

of minimal value as support for his conclusions on production

and supply. The dubious, unreliable and inconsistent nature of

Mr Woodleigh's various assurances and promises must or ought to

have raised further doubts, at least sufficiently to have

required further inquiries. The evidence presented at this

hearing could not found a proper conclusion that identical or

functionally similar goods were actually being produced in

Australia or were capable of being produced here in the normal

course of Thunderbolt's business.

In my opinion, the respondents did not sufficiently or in

substance consider this question and there was insufficient

evidence before them to make an affirmative finding if it had

been considered. To all intents and purposes the evidence

makes it impossible to conclude that Thunderbolt could have met

the Amcor requirements of supply in a competitive environment

of quality goods at a competitive price within a reasonable

time. This was a significant error.

At a glance

Court

Decision date

Source

Judgment (154 paragraphs)

Re Comptroller-General of Customs and Garrick William Hand v Kawasaki Motors Pty Limited [1991] FCA 518; 103 ALR 661; (1991) 32 FCR 243 (1992) 25 ALD 635 (Extracts) (4 November 1991)

Parties

Legislation Cited (3)

Cases Cited (18)