Supreme Court annuls import licence refusal for failing to ascertain facts and misapplying price-fixing power.

[*841] 1968 August 10

(TRIANTAFYLLIDES, J)

REVISIONAL JURISDICTION

In the matter of Article 146 of the Constitution

Philippos Demetriou & Sons Ltd.,

Applicant,

and

The Republic of Cyprus, through

The Minister of Commerce & Industry,

Respondent.

(Case No. 321/66).

Trade - Import licence - Refusing import licence, in respect of skimmed spray milk powder, under the Defence (Importation of Goods) Regulations 1956 -

Decision the product of a defective exercise of the relevant discretionary powers, as not preceded by the correct ascertainment of all material facts, after the reasonably necessary enquiry for the purpose - Misconception regarding power to fix the minimum retail price at which locally packed milk powder would be sold in Cyprus.

Administrative Law - Principles - An administrative act or decision has to be preceded by the correct ascertainment of all material facts, after the reasonably necessary inquiry for the purpose.

A. Myrianthis, for the Applicant.

L. Loucaides, Counsel of the Republic, for the Respondent.

JUDGMENT

The following Judgment was delivered by:-

TRIANTAFYLLIDES. J.: By this recourse the Applicant company complains against a decision of the Respondent to refuse it an import licence in respect of two tons of skimmed spray milk powder; such powder was to be imported [*842] in bulk, and then it would he packed locally by the Applicant in packets of 7/2 lb. and 1 lb., for sale in Cyprus.

The relevant application of the Applicant is dated the 1st October, 1966 and it is exhibit 1A in these proceedings. The decision to refuse such application was taken on the 13th October, 1966, as it appears from an entry on exhibit 1A, which reads as follows:

"This import as you know is regulated for reasons of local production. As control over the proposed imports is not possible your request cannot be entertained".

This entry is signed by Mr. Andreas Thrassyvoulides, the Senior Officer, Imports and Internal Trade, in the Respondent Ministry.

On the 22nd November, 1966 the managing director of the Applicant, Mr. Vassilios Demetriou, addressed a letter to the Respondent (see exhibit 2) in relation to the refusal, of the import licence in question; he stated, inter alia therein that, as already-packed milk powder was allowed to be imported, the decision to refuse the import licence applied for by the Applicant was discriminatory.

A reply was given by the Respondent on the 5th December, 1966 (see exhibit 3) in which it was stated that E the import licence had been refused in view of the fact that it was intended to promote the consumption of locally produced fresh milk.

Milk powder could be imported freely, in any form, in bulk or otherwise, until the 10th February, 1966, when the [*843] Respondent published in the official Gazette (Not. 70, 3rd- Supplement) a Notice under the Defence (importation of Goods) Regulations, 1956, taking out of the then in force Open General Import Licence imports of milk powder; then onwards such imports can only be made on the strength of an import licence for each import.

As stated in evidence by Mr. Thrassyvoulides, this step was taken after repeated representations to Government by cattle - breaders; a communique explaining the policy behind such step, namely, the protection of the local milk industry, was published in the press on the 11th February, 1966 (see exhibit 6).

It is common ground that import licences have continued to be issued to importers in relation to imports of already-packed milk powder, of the same nature as the one which the Applicant had sought to be allowed to import in bulk, and pack locally.

Mr. Thrassyvoulides has stated in evidence that the locally produced milk, which was to be protected by means of the Notice of the 10th February, 1966, was the fresh cow milk; he explained that the importation of milk powder in bulk was disallowed, because, if such powder were to be packed, and then sold, locally, this would result in making available for local consumption milk costing much less than the locally produced fresh cow milk.

Mr. Thrassyvoulides has explained that, at the material time, cowmilk was being sold at 50-60 mils per oke, whereas the liquid milk to be made from milk powder imported in bulk, and packed locally, by the Applicant, would coat only [*844] 22 mils per oke; therefore, it was in the public interest to refuse the import licence applied foe by the Applicant. He admitted that he had based the said cost of 22 mils per oke on the actual cost of the milk powder to be imported by the Applicant; but he added that the difference in price, from locally produced fresh cowmilk, would be, so great as to cover all possible overheads of the Applicant, and that it was taken for granted that they would not amount to more than another 22 mils per oke of milk to be made out of the milk powder sought to be imported by the Applicant.

On the other hand, it has been contended by the Applicant company that such milk would not cost less, or be sold at a lower price, than the locally produced fresh cowmilk; it would only compete with the already-packed imported brands of milk powder.

It is quite clear that the purpose of Respondent in refusing the import licence applied for by the Applicant was the protection, in the public interest, of the local milk industry, and not the protection of any vested interests of importers of already-packed brands of milk powder.

It follows, that it was very material to establish, with sufficient accuracy, the actual cost of the milk to be made out of the milk powder which the Applicant sought to import in bulk and pack locally. Only then it would be known with certainty whether such milk would, in any case, compete, effectively, as regards price, with the locally produced fresh cowmilk, or whether it would only compete, as regards price, with the already-packed imported brands of milk powder. [*845]

I have no difficulty in finding that a reasonably necessary inquiry has not been conducted, in this respect, by the Respondent, before the sub judice

decision was reached. The evidence before me, especially that of Mr. Thrassyvoulides, bears out this view, fully. It is quite clear that neither was the Applicant requested by the Respondent to submit details of his estimated costs for the packing locally and the marketing of the milk powder sought to be imported in bulk, nor did the Respondent seek to ascertain, by any other means, the total cost of such milk to the eventual consumer.

It is a firmly established principle of Administrative Law that an administrative act or decision has to be preceded by the correct ascertainment of all material facts, after the reasonably necessary inquiry for the purpose. (See, inter alia, Iordanou and The Republic, 1967, 4 J.S.C, R53 at p. 464). It follows that, in the circumstances of the present case, the sub judice

decision is the product of a defective exercise of the relevant discretionary powers, in that it has been reached in contravention of the said principle; it is, thus, contrary to law, and in abuse and excess of powers of the Respondent, and it, therefore, has to be annulled.

It is now up to the Respondent to reconsider the relevant application of the Applicant for an import licence and to decide on it in the light of this Judgment and of all material, legal and factual, considerations.

There is a further ground on which I should annul the sub judice

decision, and this is that the Respondent [*846] has acted in this matter -under a misconception of law; my reasons for this view are as follows: -

It is common ground that the import licence applied for by the Applicant was refused by virtue of the powers vested in the Respondent under the Defence (importation of Goods) Regulations 1956, as they were in force at the material time.

Mr. Thrassyvoulides - who has dealt with the matter in issue on "behalf of the Respondent - told the Court that the Respondent would not "be entitled, in granting the Applicants application for an import permit, to fix the minimum retail price at which the locally packed milk powder would he sold in Cyprus.

Yet, it is clear that such power was possessed by the Respondent, by virtue of regulation 3(1)(a) of the aforesaid Regulations.

It follows, therefore, that the Respondent, in refusing the import licence in question, was acting -under a most material misconception of law; the misconception being most material because what led to the refusal of the import licence was the fear of undercutting in price the locally produced fresh cowmilk.

Of course, even if the Respondent had borne in mind the existence of the power to fix the price of the locally packed by the Applicant - milk powder, the import licence might still have been refused on proper grounds; but the fact remains that the licence was refused under the misconception that the said power did not exist, and it follows, thus, that the sub judice decision has to be annulled so that the matter may he examined in its proper legal context. [*847]

In the circumstances, I do not find it necessary to deal with any other of the issues which have been raised in this case.

The sub judice decision is, in the result, declared to be null and void and of no effect whatsoever.

Also, there shall be an order for £25 costs against B Respondent and in favour of the Applicant, (including the costs adjudged on the 2nd December, 1967), without prejudice to any other costs already specifically ordered to be paid by the Respondent.

Sub judice decision annulled.

Order for costs as aforesaid.