Australian Trade Commission v NRS Group Pty Ltd

[1997] FCA 1073

FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW - Export Market Development Grants Act - whether subject expenditure “claimable expenditure” - meaning of “samples” - meaning of “technical information” - whether words which should be given their ordinary meaning - whether “technical information” provided - whether evidence provided a sufficient basis for finding of Administrative Appeal Tribunal - whether Administrative Appeals Tribunal decision on a point of fact or a question of law.

Administrative Appeals Tribunal Act 1975 (Cth) s 44(1)
Export Market Development Grants Act 1974 (Cth) ss 11A(1), 11C(1), 11D(1)(a)
Industrial Research and Development Incentives Act 1976 (Cth)

Collector of Customs v Agfa-Gevaert Ltd (1997) 141 ALR 59, appl
Collector of Customs v Pozzolanic Enterprises Ltd (1993) 43 FCR 280, appl
Collins v Minister for Immigration & Ethnic Affairs (1981) 36 ALR 598, appl
Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6, appl
VIP Airfreight Pty Ltd v Australian Trade Commission (1990) 23 FCR 451, refd
Waterford v Commonwealth (1987) 163 CLR 54, appr

AUSTRALIAN TRADE COMMISSION v NRS GROUP PTY LTD
NG 733 of 1996

DAVIES J
SYDNEY
17 OCTOBER 1997

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY )          No. NG 733 of 1996
  )
GENERAL DIVISION  )

On appeal from the General Administrative Division of the Administrative Appeals Tribunal

BETWEEN:             AUSTRALIAN TRADE COMMISSION

Applicant

AND:  NRS GROUP PTY LIMITED

Respondent

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application be dismissed with costs.

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

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY )          No. NG 733 of 1996
  )
GENERAL DIVISION  )

On appeal from the General Administrative Division of the Administrative Appeals Tribunal

BETWEEN:             AUSTRALIAN TRADE COMMISSION

Applicant

AND:  NRS GROUP PTY LIMITED

Respondent

Coram:          Davies J
Date:              17 October 1997
Place:             Sydney

REASONS FOR JUDGMENT

This application, which seeks an order of review with respect to a decision of the Administrative Appeals Tribunal (“the Tribunal”), comes before the Court under s44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). Therefore, it raises only a question of law.

The respondent, NRS Group Pty Ltd (“NRS”), applied to the Tribunal for review of a decision of the applicant, the Australian Trade Commission (“Austrade”), rejecting claims made by NRS under the Export Market Development Grants Act 1974 (Cth) (“the Act”) for the financial years 1992-93 and 1993-94.

NRS is the owner and operator of a video production facility that provides technical facilities for the making of television programs. On 16 September 1994, the applicant applied for a grant under the Act in relation to the production of certain videos. The respondent rejected the portion of the grant relating to the production of the following videos:-

1992-93          Australia in Profile  $  2,000
  Australia Down Under  $ 88,005
  America Down Under  $ 32,946
  Living in Asia/Oceania  $ 36,283

Promotional Video Tapes  $ 20,568

1993-94          The Treehouse Gang  $ 57,212
  Blue Water Dreaming  $ 53,685
  Australian Baseball Bloopers  $ 18,675
  Dubbing costs  $   9,873

Show Reel costs  $     524

Total:  $319,771

After the respondent sought internal review of this decision, $31,742 of the total amount was found to be eligible under s11C of the Act. The remainder, $288,299 was the subject of the Tribunal's decision.

The Tribunal held that the decision under review denying the grants should be set aside and that the matter should be remitted to the applicant to determine remaining issues in the claim. The Tribunal held that NRS had satisfied all three of the requirements for “eligible expenditure” set out in s11A(1) of the Act which provides:

“11A.     (1)       Expenditure is eligible expenditure of a person (other than an approved trading house, approved joint venture or approved consortium):

(a)     only if it is incurred by the person; and
         (b)     only to the extent to which it is claimable expenditure (see Division 2);            and

(c)only if it is qualifying export development expenditure for the particular person  (see Division 4).”  (emphasis added)

Before the Tribunal, satisfaction of s11A(1)(a) was conceded. The Tribunal found in favour of the respondent on the questions of “claimable expenditure” and “qualifying export development expenditure”.

In this Court, the argument centred around the question whether the subject expenditure was “claimable expenditure”.  Two relevant provisions were:-

"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

...

11D.          (1)   Expenditure is claimable expenditure if:

(a)it is incurred by way of expenses (including costs of delivery) that, in the Commission’s opinion, are directly attributable to providing, without charge, samples or technical information to a person outside Australia;”

The claim of NRS did not fall within s11C as it was excluded by a provision which I have not set out, s11C(1)(b), which precludes expenditure paid or payable to a person in Australia who is employed by the claimant or an associated company. NRS put its claim under s11D which has a lesser restriction. But one can see that the provision without charge of samples or technical information is a means of soliciting business. Both sections are aimed at those steps which are taken to promote the export of goods from Australia.

NRS has a video production facility in the Australian Capital Territory which provides technical facilities for the making of television programs.  In addition, NRS produces programs itself and develops concepts therefor.

In the production of the videos in respect of which the claim was made in the 1992-93 year, NRS used video materials to which it had access in its files, as the materials had earlier been produced by NRS for a client or clients.  NRS took material which either had not been used or was otherwise available to it, made up the short sets of videos which I have listed, and sent those videos overseas as examples of the work which NRS had the capacity to do.  The claim was made of course only in respect of the cost of reprinting and collating the material, not of producing the original work.

In the 1993-94 year, a similar set of videos was made with respect to "Australian Baseball Bloopers" and "Blue Water Dreaming", material for which was already on file.  Evidence was given that the tapes as prepared were not intended to be marketed and, indeed, were not marketable as the original programs had been commissioned and the copyright resided in the sponsoring organisations.

The video "The Treehouse Gang" was in a different category.  NRS wished to obtain orders to produce children's programs.  "The Treehouse Gang" was a children's series designed and produced by NRS to show the ability of  NRS to make programs of that type.  At the time of the hearing before the Tribunal, NRS was hopeful that it would obtain such a contract from an organisation called "The Learning Channel", to which it had forwarded "The Treehouse Gang".

On the evidence given to the Tribunal and which the Tribunal accepted, the subject videos were not produced for sale but as examples of what NRS could do.  They were supplied free of charge to persons overseas from whom NRS sought contracts.

NRS claimed that the videos were "samples or technical information" and that the expenditure thereon was allowable expenditure under s11D.

Throughout the evidence of the principal witness for NRS, Mr G. Patrick, the word "sample" was often used.  Mr Patrick referred to the videos as "these sample programs."   As to “technical information”,  Mr Patrick gave this evidence, inter alia:-

"It shows your capabilities?---Yes, in a whole range of technical sense.

What were the elements in The Tree House Gang again, the technical elements you wanted to highlight?---In the set, the multi camera shoot which is a studio based shoot.  The construction of the set.  The fact that there was a set there.  The original music.  The music was recorded out of the studios.  The use of single camera.  The animation and just the general, what you also show is the capabilities of directors in terms of cutting shots when it is right and the editing to actually make the edit cuts at the appropriate points and whatever.

So you were showing your ability to do those things?---Yes.  And part of it is just the actual look of the program on the screen.  There is a vast difference in the way television is produced.

...

Weren't you just intending to convey to the people in America the technical capabilities you had and what you could do?---Yes."

Because an experienced person looking at the videos could judge the techniques used and the quality of those techniques, NRS put the case that the videos were samples and that they were the means by which NRS provided technical information concerning its productions.

For my own part, were I to decide the matter for myself, I would hold that the subject videos were "samples", because they were examples of work which NRS had done in the past and could do in the future.

The primary decision-maker considered that the videos were not samples.  The following reasons were given, inter alia:-

"It has been viewed that the programmes produced is not an actual sample but rather a demonstration of the claimant's capabilities, not providing their facilities free for a production.  This is in line with treatment of advertising production houses, who claim."

For my own part, I would not draw such a distinction between a sample program and a demonstration program.  A "sample" is defined in the Macquarie Dictionary as:-

"1.a small part of anything or once of a number, intended to show the quality, style, etc., of the whole; a specimen."

The Macquarie Dictionary gives this meaning, inter alia, of "demonstrate":-

“2.  to describe and explain with the help of specimens or by experiment."

If a producer, builder, an artist or a writer is asked for a sample of his or her work, ordinarily that which is provided or pointed to is an example of the work that has been done in the past and, in the case of an artist or a journalist, it is not expected that that which has been done in the past will be exactly replicated by that which is done in the future.  The matter pointed to or provided will be simply an example of the type and quality of the work which the artist or writer can do.

Without deciding this point, the Tribunal accepted that the cost of the subject videos was a cost of providing "technical information". “Technical information” is not defined in the Act. The Tribunal came to an understanding of that phrase by reference to a number of sources. One such source was the Guidelines for the Administration of the Act. The Guidelines note that the term “technical” “is interpreted widely as meaning skills, methods or capabilities of the products or services being promoted”. Other sources included the definition of “technical information” in the Industrial Research and Development Incentives Act 1976 (Cth), the Macquarie Dictionary’s definitions of both “technical” and “information” and VIP Airfreight Pty Ltd v Australian Trade Commission (1990) 23 FCR 451, where Wilcox J considered the meaning of the phrase “technical services”.

The Macquarie Dictionary provides a number of meanings of “technical”, including the meaning:-

"(2) peculiar to or characteristic of a particular art, science, profession, trade, etc; technical details."

“Information” is defined as:-

"(1) knowledge communicated or received concerning some fact or circumstance; news.

(2)    knowledge on various subjects, however acquired."

In VIP Airfreight (above), Wilcox J said at 671 in relation to the meaning of “technical services”:

"... `technical services'  may be furnished by a person who has simply learned about a field of knowledge through practical experience ... [the respondent] says that the word `technical' refers to scientific or mechanical knowledge ... I see no reason to limit the term `technical services' in the manner urged on behalf of the respondent ... I find the dictionary definitions compelling. They indicate that the word `technical' is appropriately applied to a trade or occupation which depends upon a body of knowledge, without further limitation.”

In view of the width of the term “technical information”, the Tribunal was satisfied that the expenditure on the subject videos was claimable expenditure on providing  “technical information”, for the videos conveyed information as to the technical qualities of the works of NRC.

Counsel for Austrade submitted that the Tribunal made an error of law by misdirecting itself as to the meaning of s11D(1)(a), by substituting for “providing ... technical information” the concept of providing demonstrations of technical proficiency or quality.

Section 44(1) of the Administrative Appeals Tribunal Act restricts appeals to the Court from tribunal decisions to questions of law. An incorrect finding of fact does not constitute an error of law: Waterford v Commonwealth (1987) 163 CLR 54 at 77-78.

The distinction between questions of fact and questions of law has been considered in a number of recent cases in this court, such as Collector of Customs v Pozzolanic Enterprises Ltd (1993) 43 FCR 280 and Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6, and in the High Court, in Collector of Customs v Agfa-Gevaert Ltd (1997) 141 ALR 59. In Pozzolanic, the Court identified five general propositions including the following at  287-8:-

“2.The ordinary meaning of a word or its non-legal technical meaning is a question of fact: Jedko Game Co Pty Ltd v Collector of Customs (NSW) (supra); New South Wales Associated Blue-Metal Quarries Ltd v Commissioner of Taxation (Cth) (1956) 94 CLR 509 at 512; Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78; Neal v Department of Transport (1980) 3 ALD 97 at 107-108.

...

5.The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law: Hope v Bathurst City Council (1980) 144 CLR 1 at 7 per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v Collector of Customs (SA) at 379 (Sheppard and Burchett JJ).

The fifth proposition as stated by the High Court in Hope v Bathurst City Council (supra) was elaborated by reference to the remarks of Fullagar J in Hayes v Commissioner of Taxation (Cth) (1956) 96 CLR 47 at 51:

`Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law.'

This principle is qualified when a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words.  Where it is reasonably open to hold that they do, then the question whether they do or not is one of fact: Hope v Bathurst City Council at 8.  Mason J there cited the observation of Kitto J in New South Wales Associated Blue-Metal Quarries Ltd v Commissioner of Taxation (Cth) (supra) at 512:

`The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the ... operations fall within the ordinary meaning of the words as so determined; and that is a question of law ... If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact ...’"

In Sharp Corporation v Collector of Customs, where the question was whether the meaning of the words “essential character” was a question of fact or of law, Davies & Beazley JJ said at 12:-

"... it is primarily a question of fact, not of law, as to what is the meaning of an ordinary English word or phrase as used in a statute in its ordinary sense and so also is the question whether, there being different conclusions reasonably open, a particular set of facts comes within the description of such a word or phrase."

Hill J came to the same conclusion for substantially similar reasons, at 16.

The High Court of Australia, in Collector of Customs v Agfa-Gevaert Ltd, considering whether some words in the term “silver dye bleach reversal process” should be given the meaning which trade usage indicated and others their ordinary meaning, noted at 63 that while “general expositions of the law are helpful in many circumstances ... they lose a degree of their utility when ... the phrase or term in issue is complex or the inquiry that the primary decision-maker embarked upon is not clear.”  The Court held at 64-5 "that the determination of whether an ‘Act uses [an] expression ... in any other sense than that which they have in ordinary speech’ is always a question of law: NSW Associated Blue-Metal Quarries Ltd (1956) 94 CLR 509 at 511-12.”   There is of course no dispute in the present case that the words "samples or technical information" carry their meaning in ordinary parlance.

Perhaps the most constant principle running through the cases is that the meaning of an ordinary word or phrase, as used in a statute in its ordinary sense, is a question of fact or, to put it another way, whether the facts as found fall within the legislative prescription is a question of fact: Pozzolanic at 287; Sharp Corp v Collector of Customs at 12, 15; Collector of Customs v Agfa-Gevaert Ltd at 63.

In the present case, I am satisfied that the decision of the Tribunal was a decision on a point of fact and that no question of law was involved. I am satisfied that it was open to, indeed correct for, the Tribunal to find that the subject videos were "samples or technical information". They were produced as examples of the work which NRS could do and of the techniques which NRS used. The term “samples” and the words "technical information" are words which should be given their meaning in ordinary parlance. Neither expression has a narrow or technical limitation nor is any such limitation to be implied from the Act. Both terms have a wide ambit. In my opinion, there was no error of law in the Tribunal's approach to this matter, although, had I decided the matter myself, my reasoning would have been a little different.

Of course, the subject videos did not themselves have the essential character of “technical information”.  But that was not required by s11D.   It was sufficient that they were the means by which “technical information” was provided.  They supplied technical information because they were samples of the work of  NRS and, from those samples, technical information as to the quality and characteristics of the work could be gleaned.  Indeed, because there can be so much complexity in the making of a video, the technical qualities of the work of NRS could probably best be judged only by looking at  a completed video.

The conclusion that the appeal from the decision of the Tribunal is concerned with a finding of fact, rather than a finding of law, does not mean that no question of law may be raised in an appeal against that decision. As Davies & Beazley JJ stated in Sharp Corporation  v Collector of Customs at 12:-

"... in any particular decision, although the decision may be a factual one, all the usual grounds of review will apply for they are regarded as being illustrative of questions of law. Thus a decision-maker may have failed to provide procedural fairness or may have failed to take into account a relevant fact, or may have had regard to an irrelevant matter or the decision may have been so unreasonable that no reasonable decision-maker could have come to it. Examples where Courts have inquired under these principles into the facts found by administrative decision-makers are Commissioner of Taxation (Cth) v McCabe (1990) 26 FCR 431; Bushell v Repatriation Commission (1992) 175 CLR 408."

The only such ground that was raised on behalf of Austrade was that there was no evidence on which the Tribunal could base the conclusion which it reached. This ground of appeal was explained by Fox, Deane & Morling JJ in Collins v Minister for Immigration & Ethnic Affairs (1981) 36 ALR 598 at 601:-

"An appellant who attacks a conclusion of the Tribunal because of deficiency of proof said to amount to error of law must show, if he is to succeed, that there was no material before the Tribunal upon which the conclusion could properly be based."

The finding of fact attacked in this case is that the videos themselves provided “technical information”.  Counsel for Austrade claims that the evidence cited by the Tribunal in support of its finding on “technical information” was not material on which the conclusion could properly be based. One piece of evidence so described was the evidence of Mr Graham Patrick, managing director of the company. His evidence in relation to “The Treehouse Gang” was that it was “a sample of our technical capabilities” and that “the people who know the industry could recognise the styles and techniques used”.   Another piece of evidence was a request from a cable television network, The Learning Channel, for proposals for the development of new programs. Under the heading “Sample Work”, a request was made for:-

"Demonstration tape (a pilot, demo or trailer of program; or actual footage that has been shot for proposed project)

(If none of the above are available, submit a sample tape from the proposed producer which illustrates the technical quality expected in the new production.)” (emphasis added)

In my opinion, the evidence provided a sufficient basis for the Tribunal's finding.  I am satisfied that, on the material before it the Tribunal was entitled to arrive at the decision which it did.

I should add that, in my opinion, the submission was not an appropriate one.  Once the nature and function of the videos had been explained by the evidence, it was not a matter for evidence but for the Tribunal to decide for itself whether the statutory criteria were fulfilled, that is to say, whether the facts fell within the meaning of  the words “samples or technical information”, which are words of ordinary parlance. 

Accordingly, the application will be dismissed with costs.

I certify that this and the preceding 11 pages
are a true copy of the Reasons for Judgment herein
of the Honourable Justice Davies.

Associate:

Dated: 17 October 1997

Counsel for the applicant:  R.M. Henderson
Solicitor for the applicant:  Australian Government Solicitor
Counsel for the respondent:  W.S. Johnson
Solicitor for the respondent:  J.S. O’Connor, Harris & Co
Date of hearing:  23 June 1997
Place of hearing:  Sydney
Date of judgment:  17 October 1997