Neat Domestic Trading Pty Ltd v Awb Ltd and Another

[2003] HCA 35

---

(Judgment by: McHugh J, Hayne J, Callinan J)

Neat Domestic Trading Pty Ltd
vAwb Ltd and Another

Court:

Judges: Gleeson CJ

McHugh JKirby J

Hayne J
Callinan J

Subject References:
Administrative law
Administrative decisions
Judicial review
Whether private company making decision under an enactment
(CTH) Administrative Decisions (Judicial Review) Act 1977 ss 3(1), 5(2)(f), 6(2)(f)
(CTH) Wheat Marketing Act 1989 s 57

Legislative References:
Administrative Decisions (Judicial Review) Act 1977 - s 3(1); s 5(2)(f); s 6(2)(f)
Wheat Marketing Act 1989 - s 57

Hearing date: 14 November 2002
Judgment date: 19 June 2003

Canberra

---

Judgment by:
McHugh J
Hayne J
Callinan J

[31] Over the years, Australia has had many different marketing schemes for its primary products. Some ^[8] have been established by state legislation; some ^[9] have been established by federal legislation. This appeal relates to the federal regulation of some aspects of the export marketing of wheat. The particular questions raised concern the operation of s 57 of the Wheat Marketing Act 1989 (Cth) (the 1989 Act).

[32] At the times relevant to these proceedings, s 57(1) of the 1989 Act prohibited the export of wheat unless the Wheat Export Authority (the authority), established by the 1989 Act, (a) had given its written consent to the export of the wheat and (b) the export of the wheat was in accordance with the terms of that consent. Subsection (1A) of that section provided that this prohibition did not apply to what the Act refers to as "nominated company B": AWB (International) Ltd (AWBI). AWBI is a company limited by shares, incorporated under the Corporations Law of Victoria. At the times relevant to these proceedings it was a wholly owned subsidiary of AWB Ltd (AWB), another company limited by shares, also incorporated under the Corporations Law of Victoria. There were two classes of shares in AWB: A class and B class. A class shares could be issued only to "growers" -- persons producing an annual average of at least 331/3 tonnes of wheat per year. Each grower could hold only one A class share. The holder of A class shares had voting rights, and the number of votes depended upon the average annual tonnage of wheat delivered by that shareholder to the AWB group. Holders of A class shares were not entitled to dividends. A class shares were redeemable preference shares. B class shares were intended to be capable of being traded on the Australian Stock Exchange Ltd and carried the right to participate in dividends. Holders of A class shares controlled the board of AWB.

[33] The object of AWB, stated in its constituent document, was "to be primarily involved in the business of Grain Trading". This was further defined as the undertaking of grain trading activities and investments with a view, among other things:

... in relation to wheat growers who sell pool return wheat to the company or its subsidiaries, to maximise their net returns from the pools by securing, developing and maintaining markets for wheat and wheat products and by minimising costs as far as practicable.

The reference to "pool return wheat" was a reference to arrangements by which growers and others sold wheat to a single purchaser which would then negotiate the sale of that wheat overseas. At the times relevant to these proceedings that purchaser, or pool company, was AWBI. ^[10] The pool company would take the amounts it received from sales of wheat of a particular type or grade and divide the returns (net of costs) rateably among those who had supplied the grain that was sold. These arrangements were often referred to as "single desk" selling arrangements. There was to be a single seller of Australian wheat in overseas markets and thus no competition between sellers of Australian wheat in those markets.

[34] Before giving a consent to the export of wheat, s 57(3A) obliged the authority to consult AWBI. Subsection (3B) then provided that:

The Authority must not give a bulk-export consent without the prior approval in writing of [AWBI]. For this purpose a consent is a bulk-export consent unless it is limited to export in bags or containers.

Between November 1999 and February 2000 the appellant made six applications to the authority for its consent to the export of durum wheat in bulk. In each case the authority refused its consent because AWBI did not give its approval in writing. The central question in this appeal is whether AWBI's failure to give approval was legally infirm.

[35] The appellant brought proceedings in the Federal Court of Australia seeking, among other things, declarations that the authority's refusals of bulk-export consents were unlawful and void. It further alleged that AWBI had not consulted with the authority and that AWBI's refusal to consult with the authority, and its refusal to approve the exports was, in each case, a decision of an administrative character made under s 57 of the 1989 Act, or conduct engaged in for the purpose of making such a decision. The appellant alleged (among other things) that AWBI had failed to take account of all relevant considerations, had taken into account irrelevant considerations, and had applied a policy without regard to the merits of the particular application. It claimed a declaration that AWBI's decision or conduct was unlawful and void. Other allegations were made, and other relief was claimed, under the Trade Practices Act 1974 (Cth). Those other claims do not fall to be considered in this appeal.

The proceedings below

[36] At first instance, the primary judge (Mathews J) dismissed the appellant's proceeding. ^[11] The primary judge found ^[12] that "the effective reason" for AWBI's refusal to approve the application for the consents the appellant sought was, in each case, the existence of its policy that "in the current market environment" no bulk-export consents would be approved. Her Honour further found that AWBI had arrived at this policy because to approve bulk-export consents would not be consistent with the obligation, imposed on AWBI by its constituent document, to maximise returns to growers who sold wheat into AWBI wheat marketing pools. ^[13] That being so, her Honour found ^[14] that AWBI, in making its decisions to refuse approval, did not fail to take account of relevant considerations.

[37] The appellant appealed to the Full Court of the Federal Court. That court (Heerey, Mansfield and Gyles JJ) dismissed the appeal. ^[15] Heerey J concluded ^[16] that AWBI's decisions were "outside the province of administrative law". Because AWBI was a company incorporated under the Corporations Law, engaged in trade and commerce, it "must be free as a matter of commercial judgment to adopt what might be regarded in administrative law terms as an inflexible policy". ^[17] There was, in his Honour's view, ^[18] "no breach of any rule or principle of administrative law which had the effect that AWBI was acting outside s 57(3B)" in refusing its approval.

[38] Neither Mansfield J ^[19] nor Gyles J ^[20] considered it necessary to decide whether decisions to grant or withhold approval for the purposes of s 57(3B) were decisions of an administrative character made under an enactment, or were beyond the reach of administrative law. Their Honours preferred to rest their conclusion on the proposition that, as a commercial entity, AWBI could lawfully consult only its own interests in deciding whether to grant approval. ^[21]

[39] The appellant contended that, to understand the way in which the 1989 Act's marketing scheme operated, it was necessary to consider not only the scheme of the 1989 Act as a whole, but also the historical background against which the scheme was enacted. It is as well, therefore, to say something about that history.

Regulation of wheat marketing

[40] Since the end of World War II there has been a series of federal Acts dealing with aspects of the marketing of wheat. ^[22] (There had been earlier federal legislation affecting the wheat industry ^[23] but the war of 1939-45 marks a convenient point at which to begin reference to past legislation.) As originally enacted, the 1989 Act provided a very different regime for the marketing of wheat from that provided by it at the times relevant to this matter. The Australian Wheat Board, a statutory corporation tracing its roots to the Wheat Industry Stabilization Act 1948 (Cth), ^[24] played a central role in the marketing scheme for which the 1989 Act originally provided. As enacted, the 1989 Act provided for the Australian Wheat Board to control the export of wheat. By s 57, as it then stood, export of wheat, without the board's consent, was forbidden.

[41] In 1997 and 1998, significant changes were made to the 1989 Act and the scheme for which it provided. The explanatory memorandum for the Wheat Marketing Legislation Amendment Bill 1998 (by which the second part of these changes were made) described their purpose as being to "restructure" the Australian Wheat Board "from a statutory marketing authority to a grower owned company". From 1 July 1999, there were to be three grower-owned companies involved in the marketing of wheat -- AWB, AWBI and a third company undertaking domestic trading of grains and other non-pool commercial activities not handled by AWB. A Wheat Export Authority was to control exports of wheat and to monitor the performance of AWBI in relation to the export of wheat.

[42] As amended by the 1998 Bill, the 1989 Act provided (in s 5(1)) that the Wheat Export Authority had the functions:

(a)

to control the export of wheat from Australia;

(b)

to monitor [AWBI's] performance in relation to the export of wheat and examine and report on the benefits to growers that result from that performance.

The explanatory memorandum for the 1998 Bill noted that there was to be a National Competition Policy review of wheat legislation in 1999-2000 and that what it described as AWBI's "export monopoly" would expire in 2004. The export monopoly was said to provide "a tool to conduct the export marketing of Australian wheat to maximise the net returns to growers". The explanatory memorandum also recorded that options considered for providing that export monopoly had included: legislating the monopoly for all wheat exports to the grower company [AWBI]; legislating the monopoly for bulk wheat exports to that company with a separate mechanism to manage exports by other than AWBI; and:

Legislat[ing] the monopoly to an independent statutory body to manage, with a legislative requirement that wheat export rights reside with the new grower company [AWBI] for a prescribed period.

It was said that this third option had been chosen.

[43] The apparent complexity of this history may be contrasted with the brevity of the legislative expression of the scheme that was introduced in 1997 and 1998. The central provisions of that legislation have already been mentioned. They are the prohibition on export of wheat without the authority's consent, ^[25] the exemption of AWBI from that prohibition, ^[26] and the provisions of s 57(3A) and (3B) that required the authority, before giving a consent to export, to consult with AWBI, and provided that the authority not give a bulk-export consent without AWBI's prior approval in writing. To those provisions there may be added reference to s 57(3E) which required the authority to "issue guidelines about the matters it will take into account in exercising its powers" under s 57, and reference to s 57(7) requiring the authority, before the end of 2004, to conduct a review, and report to the minister about, among other things, AWBI's conduct in relation to consultations for the purposes of s 57(3A) and the granting or withholding of approvals for the purposes of s 57(3B). Reference should also be made to s 57(6) which provided that:

For the purposes of subsection 51(1) of the Trade Practices Act 1974, the following things are to be regarded as specified in this section and specifically authorised by this section:

(a)

the export of wheat by [AWBI];

(b)

anything that is done by [AWBI] under this section or for the purposes of this section.

The appellant's contentions

[44] The appellant had contended at trial that, because AWBI had not acted lawfully in failing or refusing to give its written approval, s 57(6) did not apply and that the appellant could, therefore, maintain claims that AWBI had contravened the Trade Practices Act. That issue may, however, be put aside.

[45] Although put in a number of different ways, central to the appellant's contentions was the proposition that AWBI did not consider, but should have considered, "the merits" of each application which the appellant had made to the authority for a bulk-export consent. It was said that, had the merits been considered, AWBI could have, indeed should have, concluded that to approve the giving of consent would not have detracted from the "single desk" selling arrangements or the pursuit of AWBI's legitimate commercial objectives. In the language of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act) it was said that there had been "an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case". ^[27]

[46] These contentions proceeded from the premise that AWBI's decision to give or not give approval to the grant of an authority to export was regulated by the 1989 Act. Again, to adopt the language of the Judicial Review Act, the appellant's contentions were premised on the proposition that to give or not give approval in writing was "a decision of an administrative character made ... (whether in the exercise of a discretion or not) under an enactment". ^[28] The validity of this premise must be examined.

AWBI and the Act

[47] AWBI does not owe its existence to the Act; it is a company limited by shares incorporated under the Corporations Law. To a very great extent, its powers, and the powers and obligations of its organs, are regulated by the applicable companies legislation. So, for example, at the time of the events giving rise to this appeal, its board of directors owed duties to its sole shareholder, AWB. The content of those duties was to be found in the Corporations Law of Victoria and the considerable body of judge-made law affecting directors' duties. The central duty of the board of AWBI was to observe its constitution and to pursue the interests of the company as expressed in that document. As a wholly owned subsidiary of AWB those duties would, no doubt, have required the board of AWBI to pursue the interests of its parent (and thus, its parent's shareholders) to the extent that those interests were compatible with other obligations of AWBI. In fact the interests of the two companies coincided. The constituent documents of both AWB and AWBI required that AWBI seek to maximise returns to those who sold wheat into AWB wheat marketing pools.

[48] If AWBI gave its approval to the authority giving a bulk-export consent it may not be entirely clear whether the authority had a discretion to refuse consent. For present purposes, it is convenient to consider both possible constructions. On one construction of the 1989 Act the authority would retain no discretion to refuse a consent once AWBI had given its approval in writing. If that were so, it would be evident that AWBI's decision to give, or not give, approval would be determinative. The competing view is that the authority retained a discretion to refuse a bulk-export consent, even if AWBI had given its approval to it. On that view AWBI's role might better be described as exercising a power of veto. No matter which construction is correct, it is necessary to recognise that, under s 57 of the 1989 Act, a company incorporated under ordinary companies legislation for the pursuit of commercial purposes is given a role to play in connection with permitting what otherwise is conduct (exporting wheat) forbidden by federal statute on pain of penalty. And the company given this role is itself exempted from the operation of this prohibition.

[49] At the least, then, there is an intersection between the private and the public. A private corporation is given a role in a scheme of public regulation. The parties could point to no other federal legislation in which there was a similar intersection. If processes of privatisation and corporatisation continue, it may be that an intersection of this kind will be encountered more frequently. ^[29] At its most general this presents the question whether public law remedies may be granted against private bodies. More particularly, do public law remedies lie where AWBI fulfils the role which it plays under the 1989 Act?

[50] We would answer this second, more particular question, "No". That answer depends in important respects upon the particular structure of the legislation in question. It is not to be understood as an answer to the more general question we identified.

[51] There are three related considerations which lead us to give that answer. First, there is the structure of s 57 and the roles which the 1989 Act gives to the two principal actors -- the authority and AWBI. Secondly, there is the "private" character of AWBI as a company incorporated under companies legislation for the pursuit of the objectives stated in its constituent document: here, maximising returns to those who sold wheat through the pool arrangements. Thirdly, it is not possible to impose public law obligations on AWBI while at the same time accommodating pursuit of its private interests.

The roles of the authority and AWBI

[52] Section 57 gives the authority, not AWBI, the power to give the consent to export without which an offence is committed. It is the authority's decision to give its consent which is the operative and determinative decision which the 1989 Act requires or authorises. ^[30]

[53] The authority is created by the 1989 Act and derives its functions and powers entirely from that Act. In that sense it is a creature of the 1989 Act. The authority may not give consent without AWBI's prior approval in writing. That approval was a condition which must be satisfied before the authority might give its consent. It was, in that sense, a condition precedent which had to be met before the authority could lawfully exercise the power which the 1989 Act conferred on it to give its consent to the proposed export. ^[31]

[54] Unlike the authority, AWBI needed no statutory power to give it capacity to provide an approval in writing. As a company, AWBI had power to create such a document. No doubt the production of such a document was given statutory significance by s 57(3B) but that subsection did not, by implication, confer statutory authority on AWBI to make the decision to give its approval or to express that decision in writing. Power, both to make the decision, and to express it in writing, derived from AWBI's incorporation and the applicable companies legislation. ^[32] Unlike a statutory corporation, or an office holder such as a minister, ^[33] it was neither necessary nor appropriate to read s 57(3B) as impliedly conferring those powers on AWBI.

[55] On that understanding of s 57(3B) AWBI's determination to approve the authority's giving consent was not a decision under an enactment for the purposes of the Judicial Review Act. The approval was a condition precedent to the authority considering whether to give its consent to export.

[56] If the authority had any discretion about giving a consent once AWBI had given its approval, the authority would have had to exercise that discretion having regard to the nature, scope and purpose of the power and the context in which it is found. ^[34] It is those matters which would be relevant for the decision-maker to take into account. It is in these "public" considerations that the "merits" which the appellant said had not been considered would be found.

AWBI

[57] The two other considerations we have mentioned (the "private" character of AWBI and accommodating public law obligations with AWBI's private interests) are conveniently dealt with together. AWBI, not only does not owe its existence to the 1989 Act, it, and its organs, had the various obligations we have mentioned earlier. Chief among those was, and is, the pursuit of its private objectives. So far as its constituent documents and applicable companies law principles are concerned, reference to any wider "public" considerations would be irrelevant.

[58] Because the 1989 Act did not expressly or impliedly require or authorise AWBI to decide whether to approve the issue of a bulk-export permit, AWBI could not be compelled, by mandamus or otherwise, to decide whether to grant or not grant its approval. It was under no statutory, or other, obligation to consider that question.

[59] It follows that s 57(3B) is not to be read as imposing on AWBI a duty to consider those matters that we have described as "public" considerations when deciding whether or not to grant approval. That is, s 57(3B) is not to be read as requiring AWBI to consider matters of the kind which the authority should take into account in forming its decision whether to grant its consent. Nor should it be read as shifting to AWBI the obligation to take account of matters derived from the subject-matter, scope or purpose of the Act which bear upon a decision whether a particular export should be permitted. The subsection did not require AWBI to consider those matters to the exclusion of consideration of its own commercial interests; it did not require AWBI to give preference to those matters over its own commercial interests. Section 57(3B) neither modified nor supplanted the obligations which AWBI and its organs had under its constituent documents and applicable companies law principles.

[60] The appellant did not contend, whether in this court or in the courts below, that AWBI was not entitled to take its own interests into account in deciding whether to give its approval to the authority's grant of consent. But once it is accepted that AWBI may consider its own commercial interests, a distinction between those interests, and what were said to be the "merits" of an individual application for approval, cannot be drawn. As pointed out earlier, the "merits" of an individual application are, for present purposes, those matters derived from the context of the 1989 Act and the subject-matter, scope or purpose of the Act which are identified as bearing upon the decision. We have referred to these as "public" considerations.

[61] Under the 1989 Act AWBI could export without consent. It could, indeed it should, have been seeking to maximise returns to those who sold wheat through the pool arrangements. One way of doing that was to remain the sole bulk exporter of wheat. Remaining the sole bulk exporter was consistent with the form of export monopoly preferred in the explanatory memorandum to the 1998 Bill -- a monopoly managed by the authority but possessed by AWBI (the new grower company) pursuant to its "wheat export rights".

[62] If remaining the sole bulk exporter of wheat was a consideration that might legitimately be taken into account by AWBI when deciding whether to give approval to the authority consenting to bulk export of wheat (and the appellant did not submit to the contrary) it is a consideration which could outweigh any countervailing consideration which an applicant for consent could advance. It could outweigh any countervailing consideration derived from the context of the 1989 Act, or from the nature, scope or purpose of the 1989 Act's provision that AWBI's prior written approval was a necessary condition for the authority's giving its consent.

[63] That being so, there is no sensible accommodation that could be made between the public and the private considerations which would have had to be taken to account if the 1989 Act were read as obliging AWBI to take account of public considerations.

[64] For these reasons, neither a decision of AWBI not to give approval to a consent to export, nor a failure to consider whether to give that approval, was open to judicial review under the Judicial Review Act or to the grant of relief in the nature of prohibition, certiorari or mandamus.

[65] The appeal should be dismissed with costs.