Australian Trade Commission v Australia's Best Foods

[1997] FCA 975

FEDERAL COURT OF AUSTRALIA

Administrative Law - Administrative Appeals Tribunal - appeal from - eligibility for an export development grant - whether criteria for “eligible expenditure” set out in s 11A(3) of the Export Market Development Grants Act 1974 (Cth) are cumulative in effect - appeal allowed.

Matter No. SG25 of 1997

AUSTRALIAN TRADE COMMISSION v AUSTRALIA’S BEST FOODS

VON DOUSSA J
ADELAIDE
19 SEPTEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
)
SOUTH AUSTRALIA DISTRICT REGISTRY	)  No SG 25 of 1997
)
GENERAL DIVISION	)

BETWEEN:	AUSTRALIAN TRADE COMMISSION Applicant
AND:	AUSTRALIA'S BEST FOODS Respondent

JUDGE:	VON DOUSSA J
PLACE:	ADELAIDE
DATED:	19 SEPTEMBER 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The appeal be allowed.

1. The determination of the Administrative Appeals Tribunal be set aside and in lieu thereof there be a determination that the claim for the sum of $18,600 is not one for “eligible expenditure” within the meaning of the Export Market Development Grants Act 1974.

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

IN THE FEDERAL COURT OF AUSTRALIA	)
)
SOUTH AUSTRALIA DISTRICT REGISTRY	)  SG 25 of 1997
)
GENERAL DIVISION	)

BETWEEN:	AUSTRALIAN TRADE COMMISSION Applicant
AND:	AUSTRALIA'S BEST FOODS Respondent

JUDGE:	VON DOUSSA
PLACE:	ADELAIDE
DATED:	19 SEPTEMBER 1997

REASONS FOR JUDGMENT

This is an appeal on a question of law pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). The Australian Trade Commission (“the Commission”) seeks to have set aside a decision of the Tribunal which determined, contrary to an earlier decision of the Commission, that the respondent, Australia’s Best Foods, was entitled to a grant under the Export Market Development Grants Act 1974 (Cth) (“the Act”) in respect of an expenditure of $18,600 in the 1992-1993 financial year.

The short point in the appeal concerns the operation of s 11A(3) of the Act, which provides the basic test of what constitutes “eligible expenditure” of an approved joint venture or an approved consortium.

When the notice of appeal was served the respondent advised the Court that it did not intend to appear on the hearing of the appeal, and did not wish to make any submission on its merits. It has not done so.

The Act establishes an export incentive scheme. An individual, partnership, company or association carrying on business in Australia and incurring eligible expenditure is entitled to apply for a grant by submitting a claim to the Commission under s 13. The Commission is required by s 12 to determine whether the claimant is entitled to a grant, and if so, the amount of the grant. Eligibility for a grant is dealt with in s 14. For the purpose of this appeal the relevant requirement of s 14 is that the claimant has incurred “eligible expenditure in the claim period”: (s 14(1)(a).

By s 3 of the Act, “eligible expenditure” has the meaning given by s 11A. Section 11A is in Division 1 of Part IA-ELIGIBLE EXPENDITURE of the Act, and has the marginal note “Operation of this Part”.Australia’s Best Foods is a joint venture formed to export products produced in Australia, and is an “approved joint venture” for the purposes of the Act. Further it is common ground that its products constitute “eligible goods”. Relevantly s 11A(3) provides:

“11A.(3)         Subject to subsection (4), expenditure is eligible expenditure of an approved joint venture or approved consortium:

(a)only if it is incurred by a member of the joint venture or consortium; and

(b)only if it is incurred in respect of the approved activity, project or purpose of the joint venture or consortium; and

(c)only to the extent to which it is claimable expenditure (see Division 2); and

(d)only if the expenditure is qualifying export development expenditure for the joint venture or consortium (see Division 4).”

The claim submitted by Australia’s Best Foods as eligible expenditure for the purposes of the Act included a claim in respect of the sum of $18,600 paid to a consultant to implement appropriate steps to enable the joint venturers to meet quality standards that would enable them to gain certification in accordance with an internationally recognised standard, ISO 9002.

The Commission, by the determination under review in the Tribunal, had rejected the claim on the basis that the expenditure was not “claimable expenditure” within s 11C in Division 2, and was not “qualifying export development expenditure” within s 11ZC in Division 4. Accordingly the claim failed to meet the criteria laid down in s 11A(3)(c) and (d).

The Tribunal, after reviewing the evidence before it, addressed first the question whether the expenditure was claimable expenditure within s 11C which relevantly provides:

“11C.(1) Expenditure is claimable expenditure if:

(a)It is incurred by way of expenses of, contribution towards expenses of or payments made to, an agent for the purpose of:

(I)the carrying out of market research or the obtaining of market information; or

(ii)the advertising or other means of securing publicity or soliciting business; and ...”

The Tribunal held that the expenditure did not constitute claimable expenditure. The parties were agreed before the Tribunal that the expenditure did not fall within par 11C(1)(a)(i). The Tribunal considered that the expenditure did not fall under par 11C(1)(a)(ii) either. It was not expenditure that advertised or otherwise promoted the respondent’s products, but rather went merely to establishing the standard of the product which was then to become the subject of promotion in the respondent’s export markets.

The Tribunal then went on to consider whether the expenditure was “qualifying export development expenditure” within s 11ZC(1) which relevantly provides:

“llZC.(1)        Expenditure is qualifying export development expenditure for an approved joint venture or approved consortium if, in the Commission’s opinion, the expenditure is incurred primarily and principally for the purpose of:

(a)       creating or seeking opportunities for; or

(b)       creating or increasing demand for;

the sale by a member of the joint venture or consortium for export, or the export and sale by a member of the joint venture or consortium, of eligible goods manufactured, produced, assembled or processed in Australia.”

The Tribunal considered that the expenditure fell within this subsection. It then ordered that the determination of the Commission be set aside and substituted a determination that “the $18,600 incurred is qualifying export development expenditure for an approved joint venture or approved consortium under s 11ZC of the Act” and determined that the respondent was entitled to an export market development grant.

It is plain from the reasons for decision, and from the terms of the determination made by the Tribunal that the Tribunal treated the criteria for “eligible expenditure” set out in pars (c) and (d) of subs 11A(3) as alternatives so that fulfilment of either one was sufficient to make expenditure “eligible expenditure”. In so doing the Tribunal fell into error of law, and reached an erroneous result.

The language of s 11A(3) clearly indicates that each of the paragraphs of the subsection are cumulative in operation. The inclusion of the words “only if” at the commencement of each of the paragraphs leaves no possibility other than that the word “and” at the end of each paragraph is intended to have a cumulative effect.

There is nothing in the language of the subsection, or in its context in the Act, that suggests that the paragraphs in s 11A(3) constitute a class where the word “and” could have a dispersive effect: cf. Re Licensing Ordinance (1968) 13 FLR 143, and Associated Newspapers Ltd v Wavish (1956) 96 CLR 526.

Once the Tribunal had reached the conclusion that the expenditure did not qualify as “claimable expenditure”, the claim was bound to fail as one of the criteria for “eligible expenditure” had not been fulfilled.

The respondent has not appeared to challenge the Tribunal’s conclusion that the expenditure was not “claimable expenditure”, nor, in my view, is there any reason to doubt the correctness on the facts of that conclusion.

In these circumstances the appeal should be allowed, the determination of the Tribunal should be set aside, and the determination of the Commission to disallow the sum claimed of $18,600 as eligible expenditure should be reinstated.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice von Doussa

Associate:

Dated:            

Counsel for the Applicant:	Ms S Maharaj
Solicitor for the Applicant:	Australian Government Solicitor
The Respondent did not appear
Dates of Hearing:	2 September 1997