Theo Holdings Pty Ltd v Hockey

Federal Court of Australia|2000-05-22|Before: Dowsett J

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: THEO HOLDINGS PTY LTD

AND: JOSEPH BENEDICT HOCKEY

AND: THEO HOLDINGS PTY LTD

BACKGROUND 1 Prior to 2 September 1998 Theo Holdings Pty Ltd ("Theo Holdings") and Barok Industries Pty Ltd ("Barok") manufactured fire doors. Theo Holdings and Barok will be collectively described in these reasons as the "applicants". With effect from 3 September 1998 the business was transferred to an unrelated company which adopted the name "Korab Industries Pty Ltd". This company was described in the course of the hearing, and will be described in these reasons as "New Korab". 2 On 15 or 16 April 1999 two notices appeared in the Australian Government Gazette which asserted that the Minister for Financial Services and Regulation, Joseph Benedict Hockey (the "Minister") had formed certain views as to the quality of the fire doors distributed by the applicants and proposed to require them to recall such doors, purportedly pursuant to authority conferred upon him by the Trade Practices Act 1974 (Cth) (the "Act"). The notices invited suppliers of such goods (which description included the applicants) to indicate whether they wished the Australian Competition and Consumer Competition ("ACCC") to hold a conference in relation to the Minister's proposal. I will explain these procedures at a later stage. It is sufficient for present purposes to say that the applicants sought such a conference, and it took place on 7 May 1999. Thereafter, ACCC recommended to the Minister that he should issue the proposed "recall notices" with certain modifications. The Minister did so. The applicants now challenge the validity of those notices in proceedings pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act"). There are also proceedings in which ACCC effectively seeks to enforce the recall notices.

LEGISLATION 3 The Act relevantly provides as follows: 65F. Compulsory product recall (1) Subject to section 65J, where: (a) a corporation (in this section referred to as the "supplier"), in trade or commerce, supplies on or after 1 July 1986 goods that are intended to be used, or are of a kind likely to be used, by a consumer; (b) one of the following subparagraphs applies: (i) it appears to the Minister that the goods are goods of a kind which will or may cause injury to any person; (ii) the goods are goods of a kind in respect of which there is a prescribed consumer product safety standard and the goods do not comply with that standard; (iii) the goods are goods of a kind in relation to which there is in force a notice under subsection 65C(5) or (7); and (c) it appears to the Minister that the supplier has not taken satisfactory action to prevent the goods causing injury to any person; the Minister may by notice in writing published in the Gazette, require the supplier to do one or more of the following: (d) take action within the period specified in the notice to recall the goods; (e) disclose to the public, or to a class of person specified in the notice, in the manner and within the period specified in the notice, one or more of the following: (i) the nature of a defect in, or a dangerous characteristic of, the goods identified in the notice; (ii) the circumstances, being circumstances identified in the notice, in which the use of the goods is dangerous; or (iii) procedures for disposing of the goods specified in the notice; (f) inform the public, or a class of persons specified in the notice, in the manner and within the period specified in the notice, that the supplier undertakes to do whichever of the following the supplier thinks is appropriate: (i) except where the notice identifies a dangerous characteristic of the goods - repair the goods; (ii) replace the goods; (iii) refund to a person to whom the goods were supplied (whether by the supplier or by another person) the price of the goods; within the period specified in the notice. (2) … (3) The Minister may, by notice in writing published in the Gazette, give directions as to the manner in which the supplier is to carry out a recall of goods required under subsection (1). 65G. Compliance with product recall order Where a notice under subsection 65F(1) is in force in relation to a corporation, the corporation: (a) shall comply with the requirements and directions in the notice; and (b) shall not, in trade or commerce: (i) where the notice identifies a defect in, or a dangerous characteristic of, the goods - supply goods of the kind to which the notice relates which contain that defect or have that characteristic; or (ii) in any other case - supply goods of the kind to which the notice relates. 65H. Loss or damage caused by contravention of product recall order Where: (a) a corporation contravenes section 65G by: (i) supplying goods of a kind in relation to which a notice under subsection 65F(1) is in force; or (ii) failing to comply with the requirements of such a notice; and (b) a person suffers loss or damage by reason of a defect in, or a dangerous characteristic of, the goods or by reason of not having particular information as to a characteristic of the goods; the person shall be deemed for the purposes of this Act to have suffered the loss or damage by the supplying of the goods, or by the failure of the corporation to comply with the notice, as the case may be. 65J. Opportunity for conference to be afforded before certain powers exercised (1) Subject to section 65L, where the Minister proposes to publish a notice under subsection 65C(5) or (7) or 65F(1) in relation to goods of a particular kind, the Minister shall prepare: (a) a draft of the notice proposed to be published; and (b) a summary of the reasons for the proposed publication of the notice; and shall, by notice in writing published in the Gazette, invite any person (in this section referred to as a "supplier") who supplied or proposes to supply goods of that kind to notify the Commission, within the period (in this section referred to as the "relevant period") of 10 days commencing on the day specified in the last-mentioned notice, being not earlier than the day on which that notice is published in the Gazette, whether the supplier wishes the Commission to hold a conference in relation to the proposed publication of the first-mentioned notice. (2) A notice published under subsection (1) shall set out a copy of the draft notice under subsection 65C(5) or (7) or 65F(1) and a copy of the summary of the reasons for the proposed publication of the notice. (3) If no supplier notifies the Commission in writing within the relevant period or within such longer period as the Commission allows that the supplier wishes the Commission to hold a conference in relation to the proposed publication of the notice under subsection 65C(5) or (7) or 65F(1), the Commission shall notify the Minister accordingly. (4) If a supplier notifies the Commission in writing within the relevant period or within such longer period as the Commission allows that the supplier wishes the Commission to hold a conference in relation to the proposed publication of a notice under subsection 65C(5) or (7) or 65F(1), the Commission shall appoint a day (being not later than 14 days after the end of that period), time and place for the holding of the conference, and give notice of the day, time and place so appointed to the Minister and to each supplier who so notified the Commission. (5) At a conference under this section: (a) the Commission shall be represented by a member or members nominated by the Chairperson; (b) each supplier who notified the Commission in accordance with subsection (4) is entitled to be present or to be represented; (c) any other person whose presence at the conference is considered by the Commission to be appropriate is entitled to be present or to be represented; (d) the Minister or a person or persons nominated in writing by the Minister is or are entitled to be present; and (e) the procedure to be followed shall be as determined by the Commission. (6) The Commission shall cause a record of proceedings at a conference under this section to be kept. (7) The Commission shall, as far as is practicable, ensure that each person who, in accordance with subsection (5), is entitled to be present or who is representing such a person at a conference is given a reasonable opportunity at the conference to present his or her case and, in particular, to inspect any documents which the Commission proposes to consider for the purpose of making a recommendation after the conclusion of the conference, other than any document that contains particulars of a secret formula or process, and to make submissions in relation to those documents. 65K. Recommendation after conclusion of conference As soon as is practicable after the conclusion of a conference in relation to the proposed publication of a notice under subsection 65C(5) or (7) or 65F(1), the Commission shall: (a) by notice in writing given to the Minister, recommend that: (i) the Minister publish the first-mentioned notice in the same terms as the draft notice r4eferred to in subsection 65J(1); (ii) the Minister publish the first-mentioned notice with such modifications as are specified by the Commission; or (iii) the Minister not publish the first-mentioned notice; and (b) cause a copy of the notice in writing given to the Minister to be given to each supplier who was present or represented at the conference. 65P. Minister to have regard to recommendation of Commission Where the Commission, under section 65K or 65N, makes a recommendation to the Minister in relation to the proposed publication of a notice under subsection 65C(5) or (7) or 65F(1) or in relation to a notice that has been published under subsection 65C(5): (a) the Minister shall have regard to the recommendation; and (b) where the Minister decides to act otherwise than in accordance with the recommendation, the Minister shall, by notice in writing published in the Gazette, set out the reasons for the Minister's decision. 4 Sections 65F and 65J contemplate the Minister initiating the process of "recall" after forming a preliminary view that such a process should occur. Pursuant to s 65J he or she publishes a draft notice with reasons, inviting suppliers of the relevant goods to notify ACCC whether or not they desire a conference in relation to the proposed recall. Clearly, the conference is intended to provide any supplier with an opportunity to put its case (subs 65J(7)) prior to ACCC making a recommendation pursuant to s 65K. The Minister must consider that recommendation but need not adopt it. Where it is not adopted, reasons must be given (s 65P). CHALLENGES TO THE MINISTER'S DECISION 5 The applicants make four complaints concerning the issue of the recall notices, namely: · That the fire doors supplied by Theo Holdings and Barok were not, at the relevant time, "goods" for the purposes of subs 65F(1);

· That the fire doors, to the extent that they were goods, were not intended to be used, or of a kind likely to be used by a consumer as required by that subsection;

· That in reaching his ultimate decision to issue the recall notices, the Minister inappropriately considered material other than the recommendation made by ACCC; and

· That ACCC failed to comply with subs 65J(7) in that it failed to give the applicants access to certain documents.

6 The first and second complaints challenge the Minister's purported power to proceed pursuant to subs 65F(1) in connection with the applicants' doors, whilst the third and fourth concern the procedures followed in this case. It is appropriate to consider firstly the challenges to the Minister's power.

"GOODS" 7 It seems that the Minister was, at all material times, aware that the applicants were no longer manufacturing doors and that any recall notice would relate to doors which were already installed in buildings. The applicants assert that such doors were no longer relevantly "goods" and could not be the subject matter of a recall notice pursuant to subs 65F(1). The respondents submit that when goods have been supplied by a corporation and incorporated into a building, the Minister may issue a recall notice concerning them, provided that they are still able to be identified and severed so that they again are goods. 8 The term "goods" is defined in s 4 of the Act as follows: "goods" includes: (a) ships, aircraft and other vehicles; (b) animals, including fish; (c) minerals, trees and crops, whether on, under or attached to land or not; and (d) gas and electricity; … . 9 The principal commentators have generally treated the definition as reflecting the traditional common law distinction between "fixtures" and "moveables", with some specific extensions. In "Australian Trade Practices Reporter" (CCH Australia Ltd, Sydney, 1998) at p 1363, this passage appears: This extended definition of "goods" leaves in tact the common law distinction between fixtures and moveables (except in regard to minerals, trees and crops). At its narrowest, goods includes all chattels of which physical possession is possible. If they become permanently attached to land or buildings, they lose their character as goods or personalty and become part of the realty. 10 In "Trade Practices Law" by J D Heydon (The Law Book Company Limited, Sydney, 1989) at par 1.1220 the learned author observes: Although the definition of "goods" in s 4(1) is only inclusive, it is unlikely that choses in action and money fall within the meaning of "goods". Bank notes have been held not to be goods. [Sykes v Reserve Bank of Australia (1998) ATPR 41-068 at 40,623-4 per Tamberlin J] Nor does land fall within the definition of "goods". The law has had to deal with several problems in distinguishing goods from land and goods from services. Are items attached to land themselves land? The problem is specifically dealt with so far as minerals, trees and crops are concerned, but what of machinery, fittings, signs and the like? On general principles these items would be goods if they were severed, or to be severed, from land. Hence the representation that a building did not contain asbestos was not a representation about goods, since the asbestos was built in to the building and could not be removed without damaging it. [Multiplex Constructions Pty Ltd v Amdel Ltd (1991) ATPR 41-154 at 53,192 per Brownie J.] The context of the Act may sometimes lead to a different meaning. 11 In "Miller's Annotated Trade Practices Act" (LBC Information Services, Sydney, 2000) at par 1.4.85, it is said that: It appears clear, from subpara (c) of this definition, that the common law distinction between goods and fixtures has been preserved. In basic terms, goods which are affixed to land (or to other goods which are themselves fixed to land) become fixtures, thus losing their character as goods and becoming part of the land itself. Goods which have become fixtures are not included in this definition. 12 That the statutory definition reflects the "ordinary meaning" of the term also appears from the judgment of the Full Court (Lockhart, Gummow and von Doussa JJ) in ASX Operations Pty Ltd & Anor v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 at 468. 13 To some extent, argument proceeded upon the basis that the doors were either goods for the purposes of subs 65F(1) or they were not. However the question may be rather more complex. Sub-section 65F(1) prescribes three criteria which must be met in order that the Minister be entitled to act. Firstly, as already indicated, par 65F(1)(a) requires that there be a supply of goods by a corporation. It is common ground that such supply must be of goods as defined. Secondly, par 65F(1)(b) requires that the Minister form a view as to the nature of the goods, presumably at some time after the supply contemplated by par 65F(1)(a). Probably, the relevant time is that at which the opinion is formed. In other words, it must appear to the Minister that the goods are, at the time at which he forms the opinion, goods which satisfy one of the three alternative requirements of par 65F(1)(b). An opinion about part of a building would not be an opinion concerning goods, suggesting that the goods must still exist in that form at the time at which the Minister forms the relevant opinion. Thus the subject matter of any proposed recall notices must be capable of description as "goods" at two potentially different times. Thirdly, par 65F(1)(c) requires that the Minister form an opinion as to steps taken by the supplier to prevent the goods causing injury. Arguably, this provision also contemplates the continued existence of the "goods" in that form, although other interpretations are possible. 14 If the various requirements of pars 65F(1)(a), (b) and (c) are satisfied, the Minister may make an appropriate publication in the Gazette, requiring the supplier of such goods to do one or more of the acts prescribed in pars 65F(1)(d), (e) and (f). Each of those prescriptions also contemplates the continued existence of the goods as such. For example par 65F(1)(d) authorizes the Minister to require the supplier to take action to recall the goods. It is not clear what is meant by the expression "recall", but it probably includes the various specific steps identified in par 65F(1)(f), namely repair, replacement or refund of the purchase price. If the word "goods" has the meaning attributed to it by s 4, the paragraph would not authorize the Minister to require a supplier to take such steps where the goods have become part of a building and therefore can no longer be so described. It may be possible to sever them from the building so that they are again goods, but this could only be done by, or with the consent of the owner. The Act does not bind such an owner, and obtaining consent to severance would pose a problem for a supplier seeking to comply with a recall notice. Whether or not goods have been incorporated into a building or remain as goods, compliance with a recall notice will usually require such consent. Nonetheless, if it was intended that the Minister be empowered to require removal of part of a building, one would have expected an express conferment of such power. 15 In the course of argument it was suggested that where "goods", although incorporated into a building, are capable of continued identification and capable of removal without substantial damage to the building (or presumably to the "goods"), they may be goods for the purposes of subs 65F(1). Nothing in the Act suggests such an approach. Indeed, it might be thought that subs 65F(6) suggests the contrary. That sub-section provides: Where the supplier, under sub-section (1), undertakes to repair goods or replace goods, the cost of the repair or replacement, including any necessary transportation costs, shall be borne by the supplier. 16 The reference to a supplier undertaking to "replace goods" is obviously to replacement as an alternative to repair or refund as contemplated in par 65F(1)(f). The subsequent reference in subs 65F(6) to the "cost of the repair or replacement" may be wide enough to include the cost of severing goods and reinstalling them after repair, or installing replacement goods, although a narrower meaning, limited to the cost of the actual repair or replacement goods is also possible. In any event, where the supplier chooses to refund the purchase price of the goods, par 65F(6) would not oblige it to pay the cost of removing the defective goods or installing replacements goods (presumably obtained from another supplier). If subs 65F(1) were intended to authorize a recall notice for goods incorporated into a building, one would have expected provision in subs 65F(6) for the payment of such costs. 17 In the course of argument much was said about the need to give full effect to provisions which are designed to protect the public. It was said that accordingly, subs 65F(1) should be broadly construed. In the present case, however, Parliament has used a term ("goods") which has a commonly understood meaning and has defined that term in a way which seems to reinforce that common understanding, albeit with some express extensions. If the clear distinction between goods and fixtures on land is to be abandoned, then that common understanding would be seriously undermined. Such an outcome would be inconsistent with Parliament's adoption and definition of the term in question. 18 Although the matter is of some difficulty, I have come to the conclusion that the Minister's power to issue a recall notice pursuant to subs 65F(1) applies only to the extent to which the "goods" in question meet that description at the time at which the notice is given, as well as at the time of supply by the relevant corporation. It is not presently necessary to consider the position in the event that the goods have ceased to be goods between the time of such a notice and the time when the supplier might reasonably have been expected to comply with it.

"CONSUMER" 19 The second aspect of subs 65F(1) which causes difficulty is the reference in par 65F(1)(a) to "goods that are intended to be used, or are of a kind likely to be used, by a consumer …". The debate concerning this point focussed upon the relevance, for the purposes of s 65F, of s 4B of the Act which provides: (1) For the purposes of this Act, unless the contrary intention appears: (a) a person shall be taken to have acquired particular goods as a consumer if, and only if: (i) the price of the goods did not exceed the prescribed amount; or (ii) where that price exceeded the prescribed amount - the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption or the goods consisted of a commercial road vehicle; and the person did not acquire the goods, or hold himself or herself out as acquiring the goods, for the purpose of re-supply or for the purpose of using them up or transforming them, in trade or commerce, in the course of a process of production or manufacture or of repairing or treating other goods or fixtures on land; and (b) a person shall be taken to have acquired particular services as a consumer if, and only if: (i) the price of the services did not exceed the prescribed amount; or (ii) where that price exceeded the prescribed amount - the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. (2) … (3) Where it is alleged in any proceeding under this Act or in any other proceeding in respect of a matter arising under this Act that a person was a consumer in relation to particular goods or services, it shall be presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services. (4) In this section, "commercial road vehicle" means a vehicle or trailer acquired for use principally in the transport of goods on public roads. 20 It is common ground that the applicants' doors were supplied at a price which was below the prescribed amount. It was apparently accepted in argument that all of the doors manufactured and supplied by the applicants were supplied to builders who incorporated them into buildings built upon land owned by other people and for their benefit. One is inclined to assume that s 4B defines the word "consumer" for the purposes of the Act. The contrary argument advanced by the Minister and ACCC focussed upon the words, "… a person shall be taken to have acquired particular goods as a consumer if …". In effect, it was submitted that the s 4B "definition" should be applied only when the word "consumer" is used in the context of acquisition of goods. The submission did not go to the extent of insisting upon express reference to such acquisition in any provision of the Act in order that s 4B be invoked. Such a position would be untenable because it seems that nowhere in the Act (other than in s 4B) is the word "consumer" used in conjunction with the word "acquire" or any derivative form thereof. It was submitted, however, that analogous language is to be found in provisions such as those contained in Div 2 of Pt 5, particularly ss 67, 69, 70, 71, 72 and perhaps 73. The proposition is that expressions such as "Where a corporation supplies … goods to a consumer … ." are sufficient to invoke the operation of the s 4B definition, whereas the wording of subs 65F(1) is not. 21 This approach implies that the word "consumer" is used with different meanings in different parts of the Act. Such a situation is generally thought to be undesirable in the construction of statutes. One would expect a clear indication of such an unusual parliamentary intention. It is true that s 4B itself uses the common formula of limitation, namely "… unless the contrary intention appears …", but there is nothing in subs 65F(1) which would suggest such a contrary intention, other than the absence of express reference to acquisition of goods. Although this makes the application of s 4B more difficult than it might otherwise have been, I am by no means persuaded that it bespeaks an intention to exclude its application in construing subs 65F(1). Further, subs 4B(3) speaks of a person being "a consumer in relation to particular goods or services". This seems to be inconsistent with the narrow approach to the application of s 4B urged by the Minister and ACCC. 22 If s 4B is not to apply, it is difficult to ascertain the intended meaning of the word "consumer" in subs 65F(1). It is clear that the word is used to limit the circumstances in which the subsection will have effect. If there is no clear indication as to its meaning in the Act, then it is difficult to see how it can be given any limiting effect. Counsel for ACCC submitted that the word should be taken as describing any person who uses (or consumes) goods, excluding any person who uses them for the purpose of creating another product for supply to others. However nothing in the Act justifies such an interpretation. A person who so uses goods is a consumer of them according to ordinary usage. Counsel for ACCC also suggested that a "consumer" for the purposes of subs 65F(1) might be a member of something akin to a social class to be distinguished from persons who cannot be so described. This argument appeared to reflect the loose language of the popular press and "talk-back" radio in which purchasers of goods and services are often characterized as a disadvantaged group, needing protection from unscrupulous exploitation by manufacturers and/or suppliers thereof. Although such a usage may be developing, the criteria for membership of that class remain undefined. 23 The word "consumer" has only a limited role in par 65F(1)(a). The first requirement of that paragraph is supply of goods by a corporation. Although the word "supply" is given an extended meaning by s 4 of the Act, the supply need not be to a "consumer". In fact, the actual recipient of the supply need not be identified at all. The concept of "consumer" in par 65F(1)(a) is relevant only to identification of the nature of the goods which must have been supplied by a corporation in order that subs 65F(1) apply. In other words, as I have already observed, the concept is used to narrow the operation of the sub-section so that not all goods supplied by a corporation are affected by it. Obviously enough, all goods are, or are likely to be consumed by somebody, but the word "consumer" cannot have such a wide meaning for present purposes because if it did, it would provide no limiting effect upon the range of operation of subs 65F(1). It was this consideration which compelled counsel for ACCC to adopt the rather artificial approaches outlined above. I am of the view that s 4B defines the meaning of the term "consumer" for the purposes of par 65F(1)(a). I find some support for that view in the decision of Davies J in Clarke v New Concept Import Services Pty Ltd (1981) 3 ATPR 40-264 at 43,348. It is worth adding that the intended or likely use of goods by a consumer contemplated in subs 65F(1) would normally follow acquisition of the goods in question by such a consumer, although not necessarily from the corporation identified as the supplier for the purposes of par 65F(1)(a). It is reasonable to read the prescription in that paragraph as: where … a corporation … in trade or commerce, supplies … goods that are intended to be used, or are of a kind likely to be used, by a person who acquires those goods as a consumer … . 24 I should add that it is not clear whether the Minister or ACCC seeks to take advantage of the evidentiary presumption in subs 4B(3). I was not directed to any such allegation as is contemplated by that sub-section, although reliance upon the content of the recall notices may have been sufficient. It is not presently necessary to take this matter further.

USE BY A CONSUMER 25 In order to determine whether goods are intended to be used, or are of a kind likely to be used by a consumer, it is necessary to identify the uses to which they can be put. The obvious use of the applicants' doors was for installation as fire doors in buildings, presumably where required by law or otherwise deemed desirable. Presumably, such a door might also have been installed as a "general purpose" door, that is where a fire door was not necessary. Whether or not the cost of these doors would have been prohibitive of such unnecessary use was not canvassed at the hearing. 26 There are two alternative factual situations prescribed by par 65F(1)(a) in connection with the use of goods. One or the other must be satisfied in order that subs 65f(1) apply. They are: · that the goods were intended to be used by a consumer; or

· that the goods were of a kind likely to be used by a consumer. 27 The distinction seems to be between goods intended by the supplier to be used by a consumer on the one hand and goods not so intended, but likely to be so used, on the other. It seems probable that the applicants expected their doors to be purchased by builders for installation in buildings being constructed by them on land belonging to others. A supply to such a builder would be for resupply (by the builder), and so that builder would not acquire the doors as a consumer. It follows that the applicants' doors were not intended for use by a consumer. Whether such a builder would also acquire the doors "for the purpose of using them up or transforming them … in the course of production or manufacture or of repairing or treating other goods or fixtures on land; …", it is not necessary to decide. The terms "production or manufacture" and "repairing or treating" may not be appropriate to describe construction of a building. I should add that counsel for ACCC submitted that persons using buildings in which the doors had been installed might be consumers of those doors. Such a usage of language would be unusual. Further, it is clear that par 65F(1)(a) focuses on the goods at the time of their supply by the relevant corporation. If one were asked at that time to describe the possible use of such a product, one would certainly say that it was for installation in a building. 28 Although the applicants may not have intended that their doors be used by consumers, there would nonetheless have been a supply of goods for the purposes of subs 65F(1) if the goods were of a kind likely to be usedby a consumer. Whether a consumer would be likely to use fire doors (presumably by installing them in his or her own premises) is a factual question which was not addressed in evidence. No doubt it would be a quite complex matter. As it has not been addressed, the applicants cannot attack the Minister's decision upon the basis that the goods were not of a kind likely to be so used.

PROCEDURAL MATTERS 29 As I have said, there are two criticisms of the procedures which led to the issue of the recall notices. One relates to the procedure adopted by the Minister in deciding to issue the notices. The other relates to the procedure adopted by ACCC prior to making its recommendation to the Minister. Of course, the Minister's decision was wholly, or substantially based on that recommendation, and it is conceded that any deficiency in the recommendation may affect the validity of the decision. Nonetheless, the two procedural complaints must be considered separately, although they overlap to some extent. The applicants were a little imprecise in their complaints, but it seems that they relate to two quite complex factual issues which I should explain. 30 The first concerns what has been described in argument as "fire engineering". As I understand it, the major criticism made of the applicants' doors was that they did not comply with certain Australians Standards in that the uninstalled doors could not withstand heat testing in prescribed test conditions. There was some evidence that doors which did not meet those standards might, nevertheless, provide acceptable levels of fire safety, depending upon where they were installed. The parties did not go into the matter in great detail, but, as I understand it, considerations such as actual location of the door and the availability of sprinklers or other fire-suppressive features might be relevant in this regard. These factors were described as "fire engineering". The applicants were anxious to assert that even if their doors failed to comply with Australian Standards when tested in their uninstalled state, nonetheless they would perform to industry standards when installed in accordance with good fire engineering practice. Their complaint is that prior to the conference, ACCC had documents concerning fire engineering, but did not disclose them. It is not suggested that the content of those documents was harmful to the applicants' case, nor is it suggested that they disclosed information which was otherwise unknown to the applicants. It is also unclear whether, prior to the conference, ACCC proposed to consider those documents for the purposes of subs 65J(7), or whether it actually considered them in making the recommendation. 31 The second issue concerns certain correspondence between New Korab and the Minister and/or ACCC, advising that it had recalled certain doors manufactured by it since its acquisition of the business previously conducted by the applicants. There is reason to believe that ACCC made some use of this information in formulating its recommendation to the Minister. I turn now to consider the two procedural complaints.

THE MINISTER'S DECISION 32 The specific criticism made by the applicants is that in making his final decision, the Minister had reference to the ACCC recommendation and also to other documents, some of which, as it is alleged, the applicants had not previously seen. It is submitted that the reference to such unseen documents denied procedural fairness to the applicants, sufficient to invalidate the decision. The applicants referred to the following exposition of the relevant test which appears in the decision of the Full Court in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1993) 127 ALR 699 (per Northrop, Miles and French JJ) at 715, as follows: Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision maker. It also extends to require the decision maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question. 33 Also relevant is the following passage which appears in the judgment of Mason J (as his Honour then was) in Kioa v West (1985) 159 CLR 550 at 584-5: Where the decision in question is one for which provision is made by statute, the application and content of the doctrine of natural justice or the duty to act fairly depends to a large extent on the construction of the statute. … What is appropriate in term of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject-matter, and the rules under which the decision-maker is acting … . In this respect the expression "procedural fairness" more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, i.e., in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations … . 34 That the Minister referred to documents other than the ACCC recommendation in making his final decision appears from par 2 of the affidavit of Raphael Cicchini filed on 18 April 2000, where the documents are listed. For present purposes, I accept that the applicants had not seen all of them prior to the issue of the recall notices. The applicants did not point to any issue raised in the documents which had not been previously raised with them by the Minister or ACCC. At least initially, their case was that the statement, that the Minister had referred to documents which they had not seen, demonstrated that they had been denied procedural fairness. It was pointed out to them in the course of oral argument that this was not necessarily so because the documents may well have related to issues which had been previously ventilated with them. As I understand it, they now complain only as to the two factual issues to which I have referred. I assume for present purposes that the unseen documents referred to those matters. 35 The correspondence between the parties is substantial, but I need only refer to a few items. In a letter dated 25 February 1999 from the Treasury (on behalf of the Minister) to Barok, it was said that available evidence suggested that the applicants' fire doors did not meet relevant requirements and were a threat to safety. This letter is ex "B" to the affidavit of Mr Theo filed on 11 June 1999. The following passage is of particular interest: In December 1998, the Minister was notified of a voluntary recall of "Pyrokor" fire safety doors manufactured between 3 September 1998 and 2 December 1998. The basis of the recall is that the doors do not comply with AS 1905 Part 1 and therefore the doors would not be effective in resisting the passage of fire in buildings. We have also been informed that the fire safety doors manufactured and supplied by Barok Industries Pty Ltd and Theo Holdings Pty Ltd prior to 3 September 1998 are identical to the "Pyrokor" fire safety doors that were recalled, therefore they also fail to meet the mandatory standard. This situation serves to reinforce the seriousness of our concerns. In order to advise the Minister on this matter, I would ask that you provide this Department with documentation and evidence that the fire doors manufactured between the period 1993 and 2 September 1998 by Barok Industries Pty Ltd and Theo Holdings Pty Ltd (while those companies were trading as Korab Industries and Korab and Co Pty Ltd respectively) meet AS 1905 Part 1. Given that this is a serious matter I would appreciate your response urgently … . 36 Thus the applicants had been informed that their doors were considered to be unsafe because of non-compliance with the relevant Australian Standard and that there might be a recall notice. They were also informed that at least to some extent, the Minister's concern was based upon the fact that New Korab had voluntarily recalled fire doors which were said to be of the same construction as the applicants' doors. A subsequent letter dated 10 March 1999 from the applicants' solicitors to the Treasury (ex "D" to the same affidavit) contained the applicants' response to the letter. In particular, there was a detailed denial of the assertion that the New Korab doors were of the same construction as the applicants' doors. 37 The applicants' complaint concerning the fire engineering issue is somewhat unusual. As I have said there were documents held by ACCC, but not seen by the applicants prior to the ACCC conference, which discussed some aspects of fire engineering. The fire engineering issue was discussed at the conference. This appears from the record of the meeting made on behalf of the applicants and from that made on behalf of ACCC. The latter record is ex "AU" to the affidavit of Mr Chiccini filed on 1 July 1999. In a summary of the submissions made by Mr Dutney of counsel on behalf of the applicants, the following passage appears: When considering the performance of fire doors, one must consider the circumstances of their use. Korab only ever manufactured two types of doors; that is, one hour and two hour rated doors, whereas many doors are installed in buildings only requiring doors with a thirty minute fire rating. 38 Similarly, one Ed Soja, who appeared at the instigation of the applicants, is recorded as having said: a single type of test (like that outlined in AS 1530) is not necessarily an indication of total hazard/safety. A test is a one-off and may not represent the variety of fire risks in an actual building. 39 The following exchange is also recorded: Mr Asher sought to clarify whether Mr Soja's view is that there is no risk that the doors may cause injury. Mr Soja said that that is a difficult question to answer but that if people in the building in which the doors were installed were behaving normally there wouldn't be a threat to safety. 40 The applicants' complaint seems to be that had they known of the documents in question (which presumably support their case) they would have taken steps to put the argument concerning fire engineering in a different way. It is difficult to see how the applicants can complain that they did not have an opportunity to address this issue. If they believed that their doors were safe, notwithstanding their failure to comply with the Australian Standards, they must have had some reason for that belief. It is difficult to see any possible basis other than these fire engineering matters. If they wished to put further material before the Minister, going to the issue of safety, they had every opportunity to do so. Procedural fairness requires that a party should know the case to be met, not that he or she be informed of all arguably favourable information which is known to other parties or to the tribunal in question. The argument appears to confuse discovery with procedural fairness. 41 As to the second issue, namely the correspondence concerning New Korab's recall of its fire doors, the applicants were informed that the Minister was concerned about this matter and was treating it as relevant to his assessment of the applicants' doors, based upon his understanding that they were of similar construction. The applicants sought to demonstrate to the Minister that this was not so. Had they been successful in so doing, it would have been inappropriate for the Minister to proceed upon the basis that New Korab's conduct in recalling the doors was relevant to his consideration. For present purposes, however, the only point is that the applicants were told of the potential relevance of the New Korab recall and made submissions concerning that matter. I cannot see that the Minister was obliged to give them any further opportunity to be heard before making his decision. 42 There is no reason to believe that the applicants were denied procedural fairness merely because the Minister had regard to what appears to have been a substantial volume of material, in addition to the ACCC recommendation, before making his decision. The applicants have now had an opportunity to see the material in question and have not identified any area in respect of which they have been denied an opportunity to be heard. THE ACCC PROCESS 43 The complaint concerning the process adopted by ACCC focuses on the requirement contained in subs 65J(7) that: The Commission shall, as far as is practicable, ensure that each person … is given a reasonable opportunity at the conference to present his or her case and, in particular, to inspect any documents which the Commission proposes to consider for the purpose of making a recommendation after the conclusion of the conference … and to make submissions in relation to those documents. 44 It is said that the applicants were not provided with documents relating to the two factual issues to which I have referred. A considerable amount of time at the hearing was taken up in identifying the documents which ACCC was obliged to disclose pursuant to this obligation and in determining whether it had discharged this obligation by taking appropriate steps to do so. It asserted that in the case of some documents, it had discharged that obligation by placing them on a public register to which the applicants were directed. It was conceded, however, that the documents concerning the New Korab recall were not disclosed to the applicants until some time after the conference. The issue was referred to in ACCC's recommendation, and so it is reasonable to infer that prior to the conference, it proposed to consider the documents in question in the process of formulating that recommendation. The position is not so clear with respect to documents concerning the fire engineering issue. For present purposes I am willing to assume, without actually deciding, that ACCC relevantly proposed to consider them in making its recommendation to the Minister but did not disclose them prior to the conference. 45 It is often difficult to identify the consequences of a failure to observe statutory procedures. The question was considered by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, particularly at 388-391 (per McHugh, Gummow, Kirby and Hayne JJ). Relevantly, their Honours said: An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. … … A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales … . In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute" … . 46 The purpose of subs 65J(7) is to enable parties who may be affected by any possible ACCC recommendation to appreciate the issues which that body potentially considers to be relevant, to see relevant documents, to provide evidence and to make relevant submissions. A failure to allow inspection of a particular document would not necessarily render any subsequent recommendation invalid, unless the omission led to a party being deprived of one or more of those benefits. 47 I have demonstrated that the applicants were aware of the fire engineering issue and urged it upon ACCC at the conference. Sub-section 65J(7) is not designed to relieve a party of the entitlement and obligation to make its own decisions as to the conduct of its case at the conference. I stress again that the applicants' complaint is not that ACCC considered documents adverse to their case without their knowledge, but rather that ACCC possessed undisclosed documents which discussed the fire engineering issue. It was not suggested that they contained relevant information which was then unknown to the applicants. In those circumstances I cannot see that they have suffered any material disadvantage in this regard. 48 The position is different with respect to the New Korab correspondence. The applicants were certainly aware that the Minister had said that the recall by New Korab was relevant to the proposed recall notices concerning with the applicants' doors. They had responded by submitting that the construction of the New Korab doors differed from the construction of their own doors. I have concluded that the Minister gave them adequate opportunity to comment upon that matter. At first blush it might seem that this conclusion disposes of the matter. However the structure of the legislation effectively results in the Minister "delegating" part of his function to ACCC. Ministerial compliance with considerations of procedural fairness does not necessarily mean that ACCC has fulfilled the requirements of subs 65J(7). 49 Identification by ACCC of documents which it proposed to consider might have the effect of narrowing the issues to be addressed at the conference. In other words, a wide range of issues may have previously been raised by the Minister with the parties and in referring the matter to ACCC, but after such referral, ACCC may exclude some matters as irrelevant for its purposes. If a particular issue was not addressed in the documents which ACCC identified for the purposes of subs 65J(7), it would be reasonable for the parties to conclude that such issue was not considered by ACCC to be relevant. If the New Korab recall was not raised in the documents identified by ACCC, the applicants might reasonably have assumed that either the Minister, or ACCC, or both had accepted their assertion that the New Korab doors were of different construction from their doors and that the New Korab recall was, therefore, irrelevant. 50 Of course, if the matter had been raised at the conference, then any such misunderstanding may have been resolved, but that, apparently, did not happen. Thus it seems that the applicants were deprived of an opportunity to press their case at the conference as to the inappropriateness of the assumption that because New Korab had recalled its doors, the applicants should also be compelled to recall theirs. It is clear that ACCC was, to some extent, influenced in its recommendation by New Korab's recall. The following passage appears in the recommendation (ex "AP" to Mr Theo's affidavit filed on 11 June 1999): With regard to the use of second-hand doors vis-ŕ-vis new doors, the Commission notes that the new manufacturer of Pyrokor doors (ie those made after 3 September 1998) has voluntarily recalled them. If the doors performed adequately when new it would be unlikely that the new manufacturer would have sufficient concerns to engage in a voluntary recall. 51 ACCC was in breach of subs 65J(7) in failing to inform the applicants that it proposed to consider documents concerning the New Korab recall. This deprived the applicants of the opportunity to put their case on that issue at the conference. The presence in the recommendation of a reference to this issue demonstrates that it played a part in the formulation by ACCC of that recommendation.

JUDICIAL REVIEW 52 Although it is not obvious from the application itself, it became clear during the hearing that the application is made pursuant to s 5 of the ADJR Act. Obviously enough, want of procedural fairness and failure to comply with subs 65J(7) are grounds for review pursuant to pars 5(1)(a) and 5(1)(b) of that Act. The grounds of complaint going to jurisdiction (or power) fit readily within pars 5(1)(c) and (d). Error of law (par 5(1)(f)) might also be an appropriate basis for reviewing the decision. 53 Much of the application suggests that the applicants seek review on the merits, and a substantial amount of the affidavit material also suggests as such. Counsel for the respondents objected to reliance on such material as irrelevant to judicial review. In the course of submissions, the applicants' case was narrowed substantially to the four propositions which I have discussed. In those circumstances I doubt whether the dispute between the parties as to the additional material has any continuing relevance. However, lest there be any doubt, I should make it clear that I have treated material beyond that available to the decision-makers as admissible only for the following purposes: · To demonstrate procedural irregularity, justifying review pursuant to pars 5(1)(a) and 5(1)(b) of the ADJR Act;

· To demonstrate absence of jurisdiction, justifying review pursuant to par 5(1)(c) of the ADJR Act; and

· To demonstrate that a decision was not authorized by the relevant enactment, justifying review pursuant to par 5(1)(d) of the ADJR Act.

54 I doubt whether it is disputed that additional material may be relied upon for those purposes. The decision of Pincus J in Queensland v Wyvill (1989) 25 FCR 512 at 518-20 (reversed on other grounds: see Attorney-General (Cth) v Queensland (1990) 25 FCR 125) and that of Lockhart J in Attorney-General (NT) v Minister for Aboriginal Affairs (1989) 23 FCR 536 at 539-40, demonstrate that such evidence may be used for the purposes of review pursuant to pars 5(1)(c) and (d). OUTCOME 55 I have reached the following conclusions: · That the Minister may publish a notice as prescribed by subs 65F(1) of the Act only in connection with goods;

· That in this context, the word "goods" does not include fire doors which are, at the time of making such declaration, incorporated into buildings;

· That although the evidence demonstrates that the applicants did not intend that their fire doors be used by consumers, it does not demonstrate that such doors were not of a kind likely to be so used;

· That in the procedure adopted by the Minister in making his decision to issue the relevant notices, the applicants suffered no procedural unfairness;

· That in the procedure adopted by ACCC in making its recommendation to the Minister the applicants were not deprived of their opportunity to present their case and to make submissions in respect of documents concerning the fire engineering issue, which the Commission proposed to consider in making such recommendation; and

· That in such procedures, the applicants were deprived of their opportunity to present their case and to make submissions in relation to the New Korab correspondence, which the Commission proposed to consider in making such recommendation.

56 After publishing these reasons, I will adjourn the matter to enable the parties to consider them and to formulate appropriate orders. I will also hear submissions as to costs. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate: Dated: 22 May 2000 Q 144 of 1999 Counsel for the Applicants: Mr R Oliver Mr S A McLeod

Solicitor for the Applicants: Baker Johnson

Counsel for the First Respondent: Mr J A Logan SC

Solicitor for the First Respondent: Australian Government Solicitor

Solicitor for the Second Respondent: Australian Government Solicitor

Dates of Hearing: 17, 18, 19 April 2000

Q 192 of 1999 Counsel for the Applicant: Mr M Swan

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondents: Mr R Oliver Mr S A McLeod

Dates of Hearing: 17, 18, 19 April 2000

Trade Practices Act 1974(Cth)ss 4, 4B, 65F, 65G, 65H, 65J, 65K, 65P

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