Doble Telescopic Lighting Pty Ltd and Australian Trade Commission

[2015] AATA 1014

Doble Telescopic Lighting Pty Ltd and Australian Trade Commission [2015] AATA 1014 (23 December 2015)

Division	GENERAL DIVISION
File Number	2015/1804
Re	Doble Telescopic Lighting Pty Ltd
APPLICANT
And	Australian Trade Commission
RESPONDENT

DECISION

Tribunal	Senior Member A C Cotter
Date	23 December 2015
Place	Brisbane

1. Pursuant to s 42C(3) of the Administrative Appeals Tribunal Act 1975 (Cth) the Tribunal gives effect to the terms of agreement reached between the parties as follows:

a)    The Tribunal decides that the part of the decision of the Respondent made on 17 June 2014 in relation to the matters below be set aside and the following be substituted, resulting in an allowed total of $13,353.00:

(i)       In relation to Trip 14 (claimed airfare $3,614.00 and overnight allowance of $4,200.00), 50% be allowed in the amount of $3,907.00;

(ii)      In relation to Trip 11 (claimed airfare $8,395.00 and overnight allowance of $6,300.00), 50% be allowed in the amount of $7,348.00 on the proviso that this has not been subsequently claimed and/or paid by the Respondent; and 

(iii)     In relation to intellectual property expenses (claimed $8,390.00), 25% be allowed in the amount of $2,098.00.

2.     The Tribunal affirms the balance of the reviewable decision as it relates to overseas representation. 

...............................[Sgd].........................................

Senior Member A C Cotter

CATCHWORDS

EXPORT MARKET DEVELOPMENT – grant – substantiation of expenses – agreement reached between parties as to certain expenses – effect given to agreement between the parties pursuant to s 42C(3) Administrative Appeals Tribunal Act 1975 – insufficient evidence to substantiate remaining expenses – remainder of decision under review affirmed

LEGISLATION

Export Market Development Grants Act 1997 (Cth) ss 33, 37

REASONS FOR DECISION

Senior Member A C Cotter

23 December 2015

INTRODUCTION

1. Doble Telescopic Lighting Pty Ltd (“Doble”) developed a range of off-grid solar lighting products designed specifically for locations that are not connected to an electricity grid, such as refugee camps and developing countries. Its main product, Bright Beam, is a tent pole which has contained LED light bulbs and has connections for a mobile phone and solar battery.

2. In February 2014, Doble lodged an application with the Australian Trade Commission (“Commission”) under the Export Market Development Grants Act 1997 (Cth) (“EMDG Act”). It had not previously received a grant from the Commission. The application, for the 2012-2013 grant year, was in respect of expenses incurred in relation to overseas representation, marketing visits, marketing consultants, trade fairs and promotional events, promotional literature and advertising, together with intellectual property registration. The total expenditure claimed amounted to $161,752.00.

3. Doble received the Commission’s Notice of Determination in June 2014. In it, the Commission allowed the grant in the sum of $56,662.00, after making a number of adjustments to the amounts claimed.

4. The following month, Doble requested the Commission to undertake an internal review of the decision. That resulted in a slight variation of the original decision, allowing reimbursement for one additional item. All other expenditure items appealed were disallowed and consequently, the original decision regarding those expenses was upheld.

5. Dissatisfied with the result, Doble sought a review of the decision by this Tribunal, contending that specific items disallowed are eligible expenses under the EMDG Act. Those disallowed expenses fell into three distinct categories: overseas representation; two marketing trips; and intellectual property registration.

6. At the commencement of the hearing, I was informed by the parties that agreement had been reached between them in respect of the expenses concerning marketing trips and intellectual property registration, such that it was not necessary for the hearing to proceed in relation to those components. I foreshadowed my intention to deal with those parts of the proceeding pursuant to s 42C(3) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”). The hearing therefore proceeded in relation to the remaining component, the expenses in relation to overseas representation. The parties subsequently provided me with a signed Agreement as to Terms of Decision (“Agreement”) in relation to the agreed components. I indicated that I was satisfied that a decision in those terms would be within the Tribunal’s power and reiterated my intention to act in accordance with s 42C(3). This decision therefore gives effect to the terms of the Agreement, as well as dealing with the remaining component in respect of which the hearing proceeded.

   THE ISSUE FOR THE TRIBUNAL

7. The remaining issue centres on a contractor agreement dated 6 November 2012 which Doble had in place with its European based overseas representative, Mr Mick Matthews. Under the agreement, Mr Matthews was to, among other things, set up and maintain Doble’s “office” and presence in Geneva; develop and maintain partnerships and relationships between Doble and the United Nations’ system and Geneva based non-government organisations; follow up and manage those relationships; source and maintain database contacts for Doble’s operations; and provide assistance and input into developing strategy from sales, partnerships and pilots.[1]

   [1] Exhibit 1, T Documents, T 5 page 47, Contractor Agreement (clause 4B).

8. The commencement date was shown as 1 November 2012 and the expected timeframe for the agreement was expressed as “40 hrs per/month for three months with mutual option to renew past that date”. The remuneration was described as: “each monthly invoice will total €1250”. [2]

   [2] Ibid, page 52, Contractor Agreement (Schedule).

9. It transpired that Mr Matthews’ services were used for longer than the initially envisaged three months.  While a part of Mr Matthews’ expenses were allowed, a portion, totalling $5,556.00 was disallowed as its purpose was “not substantiated”.

10. The issue that remains for me to determine is whether that decision should be affirmed, varied or set aside.

11. I summarise below the parties’ respective contentions.

    THE COMMISSION’S CONTENTIONS

12. The Commission’s contention was that Doble had not established that the contractor agreement was extended beyond its initial three month term. It therefore said that the activities and invoices provided were outside the agreement and were not claimable expenses.[3]

    [3] Exhibit 1, T Documents, T 4, page 20, Section 37 Statement, paragraph [38].

13. While the Commission acknowledged that that the agreement afforded an option to renew past the completion date, it noted that there were no details as to how a party might exercise the option; the mere existence of an option to renew was, it said, insufficient to demonstrate that the right was exercised and that the agreement was extended.[4]

    [4] Ibid, pages 19-20, paragraph [36].

14. The Commission pointed to Mr Matthews’ unsigned letter of 11 September 2014, written almost two years after the initial consultancy agreement, as failing to provide additional evidence to substantiate the claim.[5]  That was despite the fact that Mr Matthews said that he could provide “all necessary evidence in support of this is [sic] needed”.[6]

    [5] Ibid, page 20, paragraph [37].

    [6] Exhibit 1, T Documents, T 17, page 123, letter from Mick Matthews dated 11 September 2014.

15. The Commission also referred to a further document provided by Doble, being a summary of goals and outcomes for Mr Matthews and Doble for 2013, prepared by Mr Martin Doble, one of Doble’s directors. It expressed the view that Mr Matthews’ role would “naturally grow and evolve and change as the [associated Light Foundation] gains momentum”.  It then went on to list week-to-week goals and expectations but that was “not intended to take precedence over [the] contractor’s agreement”.[7] The Commission contended that those remarks, together with some of the further tasks described, had the effect of expanding Mr Matthews’ role. Although the note was undated, it seems likely, from its terms, that it was prepared in the latter part of 2012 or early in 2013, while the three month contractor agreement was still operative.

    [7] Exhibit 1, T Documents, T 20, pages 136-137, Mick Matthews and Doble Telescopic Lighting goals and expectations 2013, undated.

    DOBLE’S CONTENTIONS

16. Doble’s position was that the contractor agreement was extended verbally and that the further work undertaken by Mr Matthews was pursuant to it.[8] It was said that the further activities and invoices were consistent with the agreement and therefore, were claimable expenses.[9]

    [8] Exhibit 5, Applicant’s Statement of Facts, Issues and Contentions dated 6 October 2015, paragraph [11].

    [9] Exhibit 2, Applicant’s submissions, undated, paragraph [10].

17. Mr Simon Doble, one of Doble’s directors, gave evidence to the effect that after discussion, the Doble management team, of which he was a member, agreed to extend Mr Matthews’ arrangements so that he could be involved in the preparation of a report for a United Nations High Commissioner for Refugees (“UNHCR”) meeting in Geneva at the end of March 2013. The report had to be finalised by the end of February/early March, and Mr Matthews was heavily involved in that task. As a consequence, Mr Matthews’ agreement was verbally extended by one month. Mr Doble was not directly involved in the discussion with Mr Matthews concerning the extension, saying that was likely to have been conducted by his brother and fellow director, Martin (who was overseas at the time of the hearing).

18. During cross-examination, Simon Doble said that he had not previously seen Mr Matthews’ letter of 11 September 2014. As to the goal and expectations summary signed by Martin Doble, he said that he had seen that document once before, although he could not say when. He did say, however, that he was familiar with the work outlined and agreed that the note was the basis for the extension of Mr Matthews’ agreement.

    CONSIDERATION

19. The question I have to determine is whether the Commission was correct in disallowing the later invoice of Mr Matthews because it could not be substantiated.

20. In considering that question, it is important to bear firmly in mind that the EMDG scheme is capped; there is a finite amount of money allocated to fund the administration of the scheme and the payment of grants. Section 96 of the EMDG Act gives the Chief Executive Officer of Austrade the power to adjust an applicant’s eligible expenses in certain circumstances, including where expenses incurred in respect of an eligible promotional activity may not have been properly substantiated. Provisions such as that and sections 33 and 37 are designed to ensure that the available funding is distributed appropriately in accordance with the intent and purpose of the EMDG Act, and to prevent abuse.[10]

    [10] See Exhibit 1, T Documents, T 4, page 15, Section 37 Statement, paragraph [21].

21. There is no dispute that the invoices rendered by Mr Matthews for activities specifically performed by him under the terms of the contractor agreement were claimable expenses.  The Commission allowed a number of those expenses. The question which arises in the present case is whether the further work activities undertaken by Mr Matthews can likewise fall under the umbrella of the contractor agreement, or whether they have to be considered further.

22. It is true that the three month contractor agreement contained a mutual option to extend its term beyond that initially envisaged (the end of January 2013). The agreement itself being silent on the means by which that option could be exercised, I have no doubt that it was capable of being exercised verbally, as Mr Doble suggested occurred.  

23. The difficulty in the present case is that there is no direct evidence as to what was actually agreed verbally with Mr Matthews, and what exactly was expected of him in terms of the activities he was to perform. There was no evidence led from either Martin Doble or Mr Matthews as to what was discussed and indeed, if the option to extend was actually exercised, or whether a new or varied agreement was entered into in its place. In saying that, I note that Mr Matthews’ letter of 11 September talks of his continuing to provide marketing services “after the expiration of our initial agreement”,[11] which suggests that perhaps a fresh agreement was entered into.

    [11] My emphasis.

24. The only indication on the evidence available is that contained in Martin Doble’s summary of goals and expectations for 2013, which is expressed in terms of growing and evolving the role Mr Matthews was to play, presumably in addition to, and not taking precedence over, the contractor agreement. That suggests that further activities were to be undertaken by Mr Matthews stretching beyond what was anticipated under the initial contractor agreement. In those circumstances, one could not assume that, simply because of the agreement he originally had in place and the fact that its term could be extended, the activities he was subsequently asked to perform automatically fell within the scope of that agreement. Nor could it be assumed that the relevant related invoices were likewise automatically claimable; further inquiry was necessary. For that reason, it was only appropriate, and reasonable, for the Commission to seek further substantiation of the activities that Mr Matthews was undertaking and whether they were appropriately claimable under ss 33 and 37 of the EMDG Act.

25. Further, I did not have available a copy of the actual invoice rendered by Mr Matthews in respect of this later work. However, I note the Commission’s comments at the time that the invoices had no name on them in that they did not identify the representative, Doble, or anyone. According to the Commission, the expenses were claimed in part for a period after the initial three month period and in part for amounts apparently not consistent with the agreed fee arrangement.  Doble responded that it knew the invoices were from Mr Matthews and indicated that they would be re-submitted with his details; presumably, that was done. Doble further noted that “[t]he arrangement with Mick carried on until the last payment for his payment dated 1 November 2013.”[12] The asserted extension of Mr Matthews’ role to November 2013 is at odds with what was contended at the hearing, namely that the contractor agreement was extended only by one month (for February 2013) and that the invoice in question, together with the invoices for the allowed expenses, represented a payment of four months’ work under the agreement. Those inconsistencies, the apparent lack of detail noted by the Commission, and the absence of the invoice in question, also lead me to conclude that the outstanding expenses of Mr Matthews were not adequately documented or substantiated and that the Commission was correct in disallowing the expenses to which the invoice related.

    [12] Exhibit 1, T Documents, T 12, page 105, email from Erik Anderson to John Robinson dated 11 June 2014.

26. I therefore believe that the decision to disallow the overseas representation expenses in the amount of $5,556.00 on the ground of lack of substantiation, was correct.

27. Accordingly, I affirm that part of the reviewable decision as it relates to overseas representation.

28. As to the other components of the reviewable decision which were the subject of the application for review, I make the following decision pursuant to s 42C(3) of the Administrative Appeals Tribunal Act 1975 (Cth).

29. In accordance with subsection 42C(1) of the Administrative Appeals Tribunal Act1975 (Cth):

    (a)the parties have reached an agreement as to the terms of a decision of the Tribunal in relation to a part of the proceeding that is acceptable to the parties; and

    (b)the terms of the agreement have been reduced to writing, signed by or on behalf of the parties and lodged with the Tribunal; and

    (c)the Tribunal is satisfied that a decision consistent with those terms is within the powers of the Tribunal and is appropriate to make.

30. Pursuant to subsection 42C(3) of the Administrative Appeals Tribunal Act1975, the Tribunal decides that the part of the decision of the Respondent made on 17 June 2014 in relation to the matters below be set aside and the following be substituted, resulting in an allowed total of $13,353.00:

    (a)In relation to Trip 14 (claimed airfare $3,614.00 and overnight allowance of $4,200.00), 50% be allowed in the amount of $3,907.00;

    (b)In relation to Trip 11 (claimed airfare $8,395.00 and overnight allowance of $6,300.00), 50% be allowed in the amount of $7,348.00 on the proviso that this has not been subsequently claimed and/or paid by the Respondent; and 

    (c)In relation to intellectual property expenses (claimed $8,390.00), 25% be allowed in the amount of $2,098.00.

I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Senior Member A C Cotter

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Associate

Dated 23 December 2015

Date of hearing	23 November 2015
Advocate for the Applicant	Mr E Anderson
Solicitors for the Respondent	DLA Piper