Docklands Science Park Pty Ltd and Innovation Australia

Case [2015] AATA 973

Docklands Science Park Pty Ltd and Innovation Australia [2015] AATA 973 (16 December 2015)

Division

GENERAL DIVISION

File Number

2014/6494

Re

Docklands Science Park Pty Ltd

APPLICANT

And

Innovation Australia

RESPONDENT

DECISION

Tribunal

Egon Fice, Senior Member
Date 16 December 2015  
Place Melbourne

The decision under review is affirmed.

..............................[sgd]..........................................

Egon Fice, Senior Member

Catchwords

INNOVATION – registration of activities of applicant as core research and development activities – activities of nanoparticle production, geopolymer engineered products and development of environmental engine – insufficient evidence to establish activities conducted were core research and development activities – decision under review affirmed

PRACTICE AND PROCEDURE – Administrative Appeals Tribunal – statutory requirement to conduct private hearing – private hearing requirement does not automatically prohibit publication of name of parties or witnesses

Legislation

Administrative Appeals Tribunal Act 1975 (Cth) s 35
Income Tax Assessment Act 1997 (Cth) ss 355-5, 355-20, 355-25

Industry Research and Development Act 1986 (Cth) ss 27J, 30D, 30E

Cases

RACV Sales and Marketing Pty Ltd and Innovation Australia [2012] AATA 386
(26 June 2012)

Scott v Scott [1913] AC 417

Secondary Materials

J T Gourley, ‘Geopolymers in Australia’ (2014) 50(1) Journal of the Australian Ceramics Society 102

REASONS FOR DECISION

Egon Fice, Senior Member

16 December 2015

  1. Docklands Science Park Pty Ltd (Docklands Science Park) is a company comprised of 12 issued shares and a paid-up capital of $12.  On 22 September 2012 Docklands Science Park lodged with AusIndustry (now Innovation Australia) an application for registration of research and development (R&D) activities.  Its application was in respect of five projects or activities listed as:

    Project 1-2 Nano Particles with CSIRO 

    Project 2-3 Geopolymer Engineered Products

    Project 3-4 Environmental Engine

    Project 4-5 Hydro Seeps power generation and water harvesting

    Project 5-1 Development of pulse combustion driven thermoacoustic cooling

  2. In a letter dated 24 September 2012 AusIndustry approved the registration of those activities.  However it reminded Mr John Martin, a director of Docklands Science Park, that:

    Registration of activities does not, by itself, render the activities described in this registration as eligible core or supporting R&D activities, nor is it an indication of compliance with the requirements of the R&D Tax Incentive.  Determining the eligibility of activities under the R&D Tax Incentive is the responsibility of the R&D entity, under self-assessment.

  3. On 12 March 2013 AusIndustry informed Docklands Science Park that it had been identified for compliance desk review and further information was requested regarding the 2012 income year registration.  Following that review, AusIndustry wrote to Docklands Science Park on 3 September 2013 stating that its registration was considered to have a high risk of non-compliance with the eligibility requirements of the R&D Tax Incentive program.  That was because Docklands Science Park had not demonstrated that the five projects identified were core R&D activities or that the activities were supporting R&D activities.  In an accompanying letter also dated 3 September 2013, AusIndustry set out in detail its understanding of the information provided to it in respect of the activities set out in…

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AGLC
Docklands Science Park Pty Ltd and Innovation Australia [2015] AATA 973
Case
[2015] AATA 973
Decision Date

CaseChat Overview and Summary

Docklands Science Park Pty Ltd sought a review of decisions made by Innovation Australia (the Board) that the activities it conducted were not eligible for the Research and Development tax incentive. The activities in question were the production of nanoparticles in collaboration with CSIRO, the development of geopolymer engineered products, and the development of an environmental engine. The case was heard by the Administrative Appeals Tribunal, where a significant issue was whether the Board's decision to require a private hearing meant that the names of the parties and witnesses should also be kept confidential.

The primary legal issue was whether the activities conducted by Docklands Science Park constituted core research and development activities as defined in the relevant legislation. A secondary issue was whether the requirement for a private hearing under the statute also mandated the non-disclosure of the parties' and witnesses' names. The Tribunal examined the evidence provided by Docklands Science Park and found it insufficient to meet the criteria for core research and development activities. There was no documentation of systematic experimentation, observation, evaluation, or logical conclusions derived from these activities. Consequently, the Tribunal concluded that the activities did not qualify as core research and development activities.

The Tribunal also addressed the issue of confidentiality in the context of a private hearing. It noted that while hearings must be held in private, this did not automatically prohibit the disclosure of the parties' and witnesses' names. The Tribunal relied on previous case law, RACV Sales and Marketing Pty Ltd and Innovation Australia, to conclude that the absence of a specific order under the Administrative Appeals Tribunal Act did not justify the use of pseudonyms. The Tribunal held that it was in the public interest to disclose the identities of the parties and witnesses and that the documents in evidence should also be made available to the public and all parties.

The Tribunal affirmed the Board's decision that the activities of Docklands Science Park did not qualify as core research and development activities. It further ruled that the private hearing requirement did not necessitate the concealment of the parties' and witnesses' names. The decision made by Innovation Australia on 26 November 2014 was upheld.

Orders

Orders of the court

The decision under review is affirmed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

There was no evidence of any experimentation, observation and evaluation leading to logical conclusions relating to the registered activities for the income years in question. There was no evidence of a systematic progression of work. Therefore, I must find that the activities registered with regard to the Environmental Engine do not fit the definition of core R&D activities as set out in s. 355-25 (1) of ITAA 97.PRIVATE HEARING – DISCLOSURE OF PARTIES AND EVIDENCE At the conclusion of hearing this matter, Mr Holcombe submitted that there was an issue with the name of the applicant in the decision. Although it is not entirely clear from the file in this matter, it appears the Tribunal allocated a pseudonym to the applicant shortly after it lodged its application on the ground that the hearing of this matter was required to be held in private. In fact, s. 30E of the R&D Act provides:(4) Despite section 35 of the Administrative Appeals Tribunal Act 1975:(a)hearings of proceedings for review of an internal review decision are to be held in private; and(b)during the proceedings, the Tribunal may, by order:(i) give directions as to the persons who may be present during all or part of a hearing of the proceedings; and(ii) give directions of a kind mentioned in subsection 35(3) or (4) of that Act. Prior to 1 July 2015, provisions almost identical to those now found in s. 30E were to be found in s. 39T(4) of the R&D Act. It provided:The hearing of a proceeding relating to a decision covered by subsection (1) must take place in private and the Administrative Appeals Tribunal may, by order:(a)give directions as to the persons who may be present; and(b)give directions of a kind referred to in paragraph 35(2)(b) or (c) of the Administrative Appeals Tribunal Act 1975. I should also explain that s. 35 of the Administrative Appeals Tribunal Act 1975 (AAT Act) was amended commencing 1 July 2015. Relevantly, it now provides:(1) Subject to this section, the hearing of a proceeding before the Tribunal must be in public.(2) …(3) The Tribunal may, by order, give directions prohibiting or restricting the publication or other disclosure of:(a)information tending to reveal the identity of:(i) a party to or witness in a proceeding before the Tribunal; or(ii) any person related to or otherwise associated with any party to or witness in a proceeding before the Tribunal; or(b)information otherwise concerning a person referred to in paragraph (a).(4) The Tribunal may, by order, give directions prohibiting or restricting the publication or other disclosure, including to some or all of the parties, of information that:(a)relates to a proceeding; and(b)is any of the following:(i) information that comprises evidence or information about evidence;(ii) information lodged with or otherwise given to the Tribunal.… The issue raised by Mr Holcombe was dealt with by the Tribunal (Deputy President SA Forgie and I) in RACV Sales and Marketing Pty Ltd and Innovation Australia [2012] AATA 386 (26 June 2012). The relevant provision at that time was s. 39T(4) of the R&D Act. We concluded, at [235]:In the absence of an order under s. 35 of the AAT Act, we do not consider that this section either justifies or permits an applicant to be identified by a pseudonym. We will explain why we hold that view.

Decision

Reasons for decision

Having carefully examined all the documents taken into evidence in the course of the hearing and having reviewed the transcript of the oral evidence given, I am unable to conclude that any of that evidence warrants the making of non-publication or non-disclosure orders pursuant to s. 35 (3) or (4) of the AAT Act on confidentiality grounds or any other grounds. I find that it is in the public interest that the contents of documents received in evidence should be made available to the public and all parties. Furthermore, I also find that it is in the public interest to disclose the identity of the applicant and any persons who gave evidence in the course of the proceeding. The applicant should not be referred to by the pseudonym incorrectly allocated to it.CONCLUSION On 21 May 2014 Innovation Australia (the Board) made findings pursuant to s. 27J of the R&D Act that the registered activities of Docklands Science Park, being Nano Particles with CSIRO; Geopolymer Engineered Products; and the Environmental Engine were not core R&D activities for the purposes of s. 355-25(1) of ITAA 97. Docklands Science Park sought an internal review of those decisions pursuant to s. 30D of the R&D Act. On 26 November 2014 the Board confirmed the decisions made on 21 May 2014. Having reviewed the s. 30D decisions, I have found that they were correct. I agree with Mr Holcombe’s submissions that documentation is necessary to substantiate the R&D activities claimed by an applicant. It is the absence of documentation which has resulted in my findings. Such documents are required for the purpose of evidencing experimental activities whose outcome cannot be known or determined in advance but can only be determined by applying a systematic progression of work based on established science; and which proceeds from hypothesis to experiment, observation and evaluation and leads to logical conclusions. That process will establish that the purpose of conducting the activities is to generate new knowledge in the form of new or improved materials, products, devices, processes or services. An applicant cannot succeed in establishing those requirements in the absence of detailed documentation recording the process of each activity as it develops. Accordingly, I affirm the internal review decision made by the Board on 26 November 2014 in respect of each of the claimed R & D activities.

Ratio Decidendi

Legal Principle Established

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