CRM Gunsports Pty Ltd v Commissioner of Police Service [2001] QCA 475

SUPREME COURT OF QUEENSLAND CITATION: CRM Gunsports P/L v Commissioner of Police Service [2001] QCA 475 PARTIES: CRM GUNSPORTS PTY LTD ACN 060 623 369 (applicant/appellant) v COMMISSIONER OF POLICE SERVICE (respondent/respondent) FILE NO: Appeal No 11272 of 2000 SC No 4312 of 1999 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 9 November 2001 DELIVERED AT: Brisbane HEARING DATE: 10 August 2001 JUDGES: Thomas JA, Byrne and Holmes JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: Allow the appeal with costs to be assessed; set aside the order below and order that the matter be remitted to the respondent to determine, according to law, the appellant’s claim for compensation in respect of stock, plant and equipment made on 31 March 1998; the respondent pay the appellant’s costs of the proceedings below. CATCHWORDS: ADMINISTRATIVE LAW – JUDICIAL REVIEW LEGISLATION – COMMONWEALTH, QUEENSLAND AND AUSTRALIAN CAPITAL TERRITORY – GROUNDS FOR REVIEW OF DECISION – ERROR OF LAW – appeal against dismissal of application for judicial review – assessment of compensation for appellant gun dealer’s business becoming “unviable” as result of gun law Resolutions – where appellant’s business is “unviable” when “at least 50%” decline in revenue reached under Guideline 33(i) - whether trial judge erred in rejecting “Minimum -- 1 of 8 -- 2 Model” claim for stock, plant and equipment - whether on proper interpretation of Guidelines compensation may be awarded in respect of such claim – where misplaced deeming provision has no application for an additional basis for compensation when revenue decline less than 50% Judicial Review Act 1991 (Qld) Weapons Act 1990 (Qld), s 179(6) Weapons Regulations 1996 (Qld), reg 71, reg 71(2), reg 71(3) COUNSEL: S C Williams QC with J Kimmins for the appellant M D Hinson SC for the respondent SOLICITORS: King and Company (Brisbane) acting as Town Agents for Marino Moller (Cairns) for the appellant Queensland Police Service Solicitor for the respondent [1] THOMAS JA: I agree with the reasons of Byrne J. [2] The present problems arise in the implementation of a national compensation scheme following the introduction of restrictions of gun possession and trade after the multiple murders committed at Port Arthur in 1996. The Commonwealth Government has provided funds to the States in order to pay amounts of compensation assessed by the Commissioner of Police in each State. The statutory structure proceeds from s 179(6) (as it is renumbered in statutory reprint No 4) of the Weapons Act 1990, and reg 71 of the Weapons Regulation 1996. On 16 July 1997 guidelines were approved by the Australasian Police Ministers’ Council. It is the proper interpretation of these guidelines that will determine the result of this litigation. [3] The appellant, whose business was the selling, servicing and repairing of firearms and associated goods, was entitled to have a decision made under reg 71(3) of the Weapons Regulation. That regulation includes the following – “(2) The person is entitled to compensation for loss of business to the extent the loss is attributable to resolutions of the Australasian Police Ministers’ Council, made on or after 10 May 1996, about uniform national firearms control. (3) The commissioner is to decide the amount of compensation payable to the person under this section.” [4] Such a decision is one made under an enactment, and is reviewable under the Judicial Review Act 1991. In that way the matter was brought before a judge of the trial division who determined that no reviewable error had occurred. [5] Although the parties have always accepted that the decision should be based upon the 1997 guidelines, I was initially concerned as to whether the commissioner (by his delegate) had wrongly fettered his discretion by the application of guidelines -- 2 of 8 -- 3 which have no statutory force or effect. The police commissioner is given by s71(3) of the Weapons Regulation an unfettered discretion to decide the amount of compensation payable. However in a national scheme such as this there are good reasons for using guidelines which will ensure that the discretion is exercised in a consistent way. I see no error in the commissioner’s delegate treating himself as bound by such guidelines so long as they do not conflict with the primary requirement in s 71(2) of the regulation which recognises an entitlement to compensation for loss of business attributable to the uniform national firearms control resolutions. [6] The real point of contention is whether the commissioner’s delegate erred in concluding that the relevant guidelines required him to assess as “nil” the appellant’s very substantial claims for stock ($466,354) and plant and equipment ($228,490), merely because the appellant’s revenue in the 1997-1998 year was only 31% less than the revenue for 1995-1996. On this basic question I agree entirely with what Byrne J has written and have nothing useful to add. [7] Counsel for the appellant submitted that if the court concluded that compensation might be ordered when the decline in review is less than 50%, and that the commissioner’s delegate had erred, this court should declare or require it to be declared that the appellant’s business has become unviable as a direct result of the resolutions. However a number of factors may need to be addressed in coming to such a conclusion where the decline of revenue is of the order of that here claimed, and it is at least possible that the delegate may wish to consider aspects of quantum which he has so far considered it unnecessary to examine. I have no particular view, favourable or unfavourable, in relation to the claim presented on the appellant’s behalf. Quite simply this court is not in an appropriate position to make the declaration that the appellant now seeks. The appropriate procedure is that the commissioner’s delegate should now proceed to a proper analysis of relevant material and apply the guidelines as this court has interpreted them. [8] I agree with the orders proposed by Byrne J. [9] BYRNE J: Port Arthur buy-back [10] On 10 May 1996, in response to multiple murders at Port Arthur, the Australasian Police Ministers’ Council (“the Council”) adopted resolutions (“the Resolutions”) about uniform national firearms control banning the sale of classes of firearms. [11] On 16 July 1997, the Council approved guidelines (“the Guidelines”) for the assessment of compensation for losses occasioned by the Resolutions. A basis for compensation [12] Section 179(6)1 of the Weapons Act 1990 facilitated implementation of the Resolutions by providing that “compensation for loss of” a gun dealer’s “business” might be the subject of a regulation. By Regulation 71 of the Weapons Regulations 1 As the section is renumbered in the statutory reprint No 4. -- 3 of 8 -- 4 1996, which applies to a “person” such as the appellant “who is or was a licensed” firearms “dealer at any time between 10 May 1996 and 30 September 1997”: “(2) The person is entitled to compensation for loss of business to the extent the loss is attributable to [the Resolutions] ... (3) The commissioner is to decide the amount of compensation payable to the person under this section.” This gun dealer’s claims and their assessment [13] The appellant submitted a claim for $774,149, comprising $50,000 for loss of business, $466,354 for stock and $228,490 for plant and equipment on the basis that the business had become “unviable”, accounting costs totalling $15,507, $1,498 for valuation expenses, and a “redundancy” pay-out of $12,300. [14] The respondent’s delegate assessed the claim at $61,994. The $50,000 loss of business and expenses of valuation components were admitted. Nothing was allowed for stock, plant and equipment, or redundancy. A reduced amount was determined for accounting costs. The issue [15] By proceedings for judicial review, the appellant challenged the rejection of the claim for stock, plant and equipment. The respondent persuaded the primary judge that Guideline 33 required their rejection. As both parties accept that the respondent was legally obliged to assess the claims in accordance with the Guidelines, the question is whether, on the proper interpretation of the Guidelines, some amount may be awarded in respect of stock, plant or equipment. If so, the matter must return to the respondent for re-evaluation. Compensation models [16] The Guidelines envisage that claims for compensation for diminution in the value of a gun dealer’s business may be made under one or other of two “models”: “Minimum” or “Valuation”, at the dealer’s choice. [17] The compensation payable for “loss of business” under the Minimum Model is the lesser of two years’ taxable income or $50,000.2 Under the Valuation Model, the dealer recovers the difference between the value of the goodwill of the business before and after the Resolutions.3 Neither approach to the assessment of business- related losses accords a right to compensation for stock, plant or equipment. Other provision is made for that. Guidelines [18] Relevantly, the Guidelines provide: 2 Guideline 11. 3 Guideline 28. -- 4 of 8 -- 5 “31. If a ... Dealer can prove that its business has become unviable as a direct result of the Resolutions and the dealer wishes to exit the industry, the business will be bought out. 32. To be eligible for this compensation the following will apply; (i) the ... Dealer has to prove that its business was viable prior to the Resolutions and that as a direct consequence of the Resolutions (and for no other reasons), the business was not viable at the date of the final claim. The criteria for unviability is noted in paragraph 33; (ii) ... (iii) the business, which includes all stock, will be purchased. Arrangements will be made for stock to be collected and destroyed on individual circumstances. (iv) ... (v) ... 33. A business will be deemed to have become unviable as a direct consequence (and for no other reasons) of the Resolutions: (i) where the business has claimed for loss of business compensation under the Minimum Model, the business’ revenue must have decreased by at least 50% as a direct result of the Resolutions. An application for the purchase of an unviable business with a decrease in revenue below 50% as a direct result of the Resolutions must be justified by appropriate documentation. (ii) where the business has claimed for loss of business compensation under the Valuation Model, if the valuation shows that prior to the Resolutions the business had positive goodwill, but after the Resolutions the business has negative goodwill 34. ... 35. ... 36. The compensation that will be paid to unviable businesses will be the sum of: (i) loss of business compensation as calculated under either the Minimum Model or the Valuation Model; (ii) value of stock ... at cost held at 30 June 1997 or at the date of the final claim, whichever is the lesser amount, by reference to the dealers’ book, including components and accoutrements held that are -- 5 of 8 -- 6 consistent with stock records and income tax returns; and (iii) compensation for plant and equipment held at 30 June 1997 or at the date of final claim, whichever is the lesser amount. Compensation paid for plant and equipment will be determined as follows: (a) If the business has claimed for loss of business compensation under the Minimum Model – the compensation will be the difference between the market value and the auction value of the plant and equipment. The valuations are to be performed by an independent valuer.” ... The Minimum Model claim for stock, plant and equipment [19] The appellant’s $50,000 claim for loss of business was founded on the Minimum Model. Its claim for stock, plant and equipment was calculated on the basis that the business had, as Guideline 33(i) expresses it, become “unviable as a direct consequence ... of the Resolutions”. [20] Information supplied with the claim indicated that revenue in the 1997-1998 year was 31% less than in 1995-1996. Other accompanying material was designed to show that the business had also been rendered “unviable as a direct consequence ... of the Resolutions”. [21] The claim for stock, plant and equipment was not rejected because the information supplied was thought insufficient to prove that the business had been rendered unprofitable and very likely would remain so. Rather, the delegate rejected it because the 31% decline in revenue was less than the “at least 50%” reduction mentioned in Guideline 33(i). On this approach, no matter how seriously a business may be jeopardized by the impact of the Resolutions, it cannot be treated as “unviable” unless that “at least 50%” revenue decrease threshold is crossed. [22] The primary judge sustained that interpretation: hence this appeal. The arguments [23] The rival contentions are these: According to the appellant, its entitlement is established by the second sentence of Guideline 33(i) if it proves by “appropriate documentation” that the business was “viable” before 10 May 1996; was not viable on 31 March 1998 when the claim was submitted; and had ceased to be viable solely because of the Resolutions. On the respondent’s case, the compensation is not payable unless “revenue” decreases “by at least 50% as a direct result of the Resolutions”; and that decline is also “justified by appropriate documentation”. -- 6 of 8 -- 7 [24] On the construction propounded by the appellant, each sentence of Guideline 33(i) supplies a distinct basis for compensation: where a 50% revenue decline is proved, the business is “deemed ... unviable ...”: no further evidence need be directed to financial sustainability; or where a lesser decrease in receipts is disclosed, “appropriate documentation” must be produced proving that the Resolutions made the business “unviable”. The respondent’s interpretation, however, treats the two sentences as imposing cumulative requirements for the one basis for compensation. The judge’s view [25] In preferring the respondent’s case, the judge was, he said, influenced by two considerations. One concerns the requirement that “appropriate documentation” is needed to justify the claim. Such a requirement is not expressed in the first sentence. This was considered an indication that the Guideline was intended to prescribe one basis for compensation. Still, as his Honour said, it is “obvious that a decrease in revenue of at least 50% could only be demonstrated” to the delegate’s satisfaction by “... records”. So it is not a telling point against the appellant’s contention that the first sentence makes no reference to supporting the claim by documents. The second point, which revolves around the grammatical construction of Guideline 33, raises greater difficulty. For the structure of the Guideline would, as his Honour put it, be “disturbed” by adopting the appellant’s interpretation. [26] Guideline 33 begins with a deeming provision. It is located where it would be expected to be found if it were intended to affect all that follows in sub-paragraphs (i) and (ii). This consideration, as his Honour said, favours the respondent’s interpretation. If there are two available foundations for a claim on the ground that the business has become “unviable” – one, where revenue falls by more than 50%; the other, where it falls by less than 50% but “unviability” is established by other material - the deeming provision can only affect the former. It can have no function to perform if the compensation falls to be assessed on “appropriate documentation”. In other words, the deeming provision cannot do all the work which its placement at the beginning of Guideline 33 suggests was required of it if the second sentence states an additional basis for an award of compensation for tangible assets. Another interpretation [27] In these Guidelines, unfortunately, word arrangement is an uncertain indicator of meaning. The author is not committed to conventional grammar or style: consider, as examples, “the criteria … is”4; stock is to be “destroyed on individual circumstances”;5 and that the expression “and for no other reasons”6 immediately succeeds language in which only one cause is nominated.7 4 Guideline 32(i). 5 Guideline 32(iii). 6 Guidelines 32(i), 33. 7 Incidentally, “unviable” and “unviability” are not mentioned in such works as The Macquarie Dictionary 3rd ed, 1997; The Oxford English Dictionary, 2nd ed, 1989; The Shorter Oxford Dictionary, 2nd ed, 1989; Webster Comprehensive Dictionary Encyclopedia Edition 1988; Oxford English Dictionary Additions Series 1993; The Australian National Dictionary 1988; The Oxford Combined Dictionary of Current English & Modern English Usage 1982; The New Fowler’s Modern English Usage, 3rd ed, 1996; but see Webster’s Third New International Dictionary 1971 defining unviable as “incapable of growth or development” at p 2514. -- 7 of 8 -- 8 [28] The grammatical considerations to which the judge referred aside, none of the Guidelines indicates that the framers intended that a business which had become unprofitable and would remain so exclusively through the impact of the Resolutions should be denied compensation as “unviable” unless there had also been at least a 50% reduction in revenue. Rather, the scheme, as it relates to stock, plant and equipment, appears to proceed upon an assumption that it is so highly likely that a 50% decline in revenue will render a business “unviable” that the compensation may be assessed in such a circumstance without the need for evidence proving additional adverse consequences. That is to say, the first sentence postulates as a sufficient test, or criterion, that “revenue ... have deceased by at least 50% … ”. The second sentence – misplaced because the deeming provision has no application to it – affords another right to compensation on the footing that the business will be bought out – where there is a “below 50%” decline in receipts but records nonetheless demonstrate that the business has become “unviable” as a consequence of the Resolutions. [29] This interpretation does mean that the second sentence of Guideline 33(ii) does not state “criteria” by which the undefined concept of “unviability” is to be ascertained - something which is not readily to be reconciled with the assertion in Guideline 32(i) that “the criteria for unviability is noted in paragraph 33”. But infelicitous expressions are not unusual in these Guidelines. And two significant considerations support the appellant’s interpretation of Guideline 33(i). [30] First, even in these inelegant Guidelines, clear words might have been expected if in a scheme to compensate gun dealers who suffer substantial economic loss through public initiatives to advance the public good an objective was to deny full compensation in respect of a business ruined through the Resolutions. [31] Secondly, once it is accepted, as his Honour correctly concluded, that the burden of establishing a 50% revenue reduction could scarcely be discharged without suitable records, the second sentence is redundant unless it establishes a different foundation for compensation to the “at least 50%” reduction mentioned in the first. Conclusion [32] As the interpretation proposed for the appellant is preferable, the appellant should have an opportunity to attempt to persuade the delegate that the information supplied with its claim proves that its business became “unviable” solely by reason of the Resolutions. Orders [33] The appeal should be allowed, with costs to be assessed, the judge’s orders set aside, and instead it should be ordered that the matter be remitted to the respondent to determine, according to law, the appellant’s claim for compensation in respect of stock, plant and equipment made on 31 March 1998 and that the respondent pay the appellant’s costs of the proceedings below. [34] HOLMES J: I agree with the reasons of Byrne J and the orders he proposes. -- 8 of 8 --