Export Development Grants Board v Miller Pohang Coal Company Pty Ltd

[1985] FCA 388

Re: EXPORT DEVELOPMENT GRANTS BOARD
And: MILLER POHANG COAL COMPANY PTY LIMITED
No. NSW G.410 of 1984
Export Development Grants

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Morling J.
Neaves J.
Wilcox J.

CATCHWORDS

Export Development Grants - Export of coal mined in Australia - Coal won at new mine - Expenditure incurred in relation to sale of interest in mine to overseas purchaser of coal - Finding by Administrative Appeals Tribunal that predominant purpose was sale of coal - Whether Act necessarily requires apportionment of expenditure incurred in respect of dual purposes - Expenditure incurred by member of group of companies other than the member engaged in export sales - Necessity for correspondence in identity between company incurring expenditure and company seeking to sell or to export coal.

Parker Pen (Australia) Pty Limited v Export Development Grants Board (1983) 46 A.L.R. 612 approved.

Export Market Development Grants Act 1974 ss.4, 12

HEARING

SYDNEY
#DATE 9:8:1985

ORDER

The appeal be allowed.

The decision of the Administrative Appeals Tribunal be set aside.

The appeal of the respondent to the Administrative Appeals Tribunal be dismissed and in lieu thereof the decision of the applicant, the Export Development Grants Board, be affirmed.

The respondent pay to the applicant its costs of the appeal to this Court.

JUDGE1

This is an appeal by the Export Development Grants Board ("the Board") against a decision of the Administrative Appeals Tribunal (Mr R F Smart Q.C., Deputy President, Mr G. D Grant and Dr A P Renouf) determining that the respondent, Miller Pohang Coal Company Pty Limited ("MPCC"), incurred "eligible expenditure" in the sum of $53,900.97 during the year ended 30 June 1982 in respect of which it was entitled to a grant under the Export Market Development Grants Act 1974. That sum comprises four items:

. the cost of printing the first copy of a feasibility study in July 1981 $28,289.00

. three-quarters of the cost of air fares

($5,817.50) of a visit to the Republic of Korea ("South Korea") in

September 1981 of Messrs M Blackman, A J Haraldson and J L Watson $4,363.12

. the cost of air fares of a visit to South Korea in November 1981 of Messrs W J Trotter and J J Hanke, Captain J G Evans and Messrs A S Blomfield, M Blackman, A J Haraldson and W Conway $19,003.00

. the cost of air fares of a visit from South Korea to Australia in April 1982 of Mr A Suvoltus $2,245.85

1. The claim by the respondent for a grant under the Act arises out of the efforts of the R W Miller Group of companies to develop a new coal mine at Mount Thorley, near Muswellbrook in New South Wales. R W Miller & Co Pty Limited ("Miller"), the main operating company of the Group, was granted an Authority to Prospect the area in 1976. Thereafter it carried out investigations which satisfied it that the prospect contained approximately equal proportions of soft coking coal and steaming coal and that, subject to finding a sufficient market for both types of coal, the proposed mining operation was economically feasible. The Group anticipated little difficulty in marketing the steaming coal; the problem was to sell the coking coal. Coking coal is used for steel production but Broken Hill Proprietary Limited, Australia's only steelmaker, has its own sources of coking coal. The result, in practical terms, was that the coking coal would have to be sold overseas.

2. Early in 1977 the Group initiated discussions with various overseas steelmakers. These discussions were all on the basis that a purchaser who was prepared to contract to take a sufficient proportion of the output of coking coal would be allowed to acquire a minority equity interest in the venture itself. The judgment of the board of R W Miller (Holdings) Limited ("the holding company"), which company controlled the affairs of Miller, was that it was essential for the Group to be prepared to concede equity if it was to sell a sufficient quantity of coking coal. After unfruitful discussions with other possible purchasers the Group entered into discussions, in about December 1977, with a South Korean steelmaker, Pohang Iron and Steel Co Limited. This company, which is often referred to as "Posco", is controlled by the government of South Korea. At its January 1978 meeting the board of directors of the holding company was informed that the only apparent market for coking coal before 1980 was in South Korea and that there was a good chance of acceptance of Mount Thorley coal in South Korea if equity participation was offered to the buyers. The board authorized management to negotiate with Posco for the purchase by that company of Mount Thorley coking coal in return for participation by it in the venture. At the March meeting that year it was reported that Posco had offered to take certain specified tonnages from 1979 onwards in return for a 20% equity. The board accepted the principle involved in the offer but requested management to negotiate further in an attempt to improve the ratio of tonnages to equity. On 14 June 1978 the Chief Executive of Miller, with the approval of the board of the holding company, signed a Letter of Intent whereby Miller and Posco recorded their desire to develop the Mount Thorley project as a co-venture in which the participation would be Miller 80% and Posco 20%. The Letter set out a series of steps proposed to be taken to carry out this objective, one of which was the promotion of a company to be styled "Miller Pohang Coal Company Ltd" in which Miller would hold 80% of the capital and Posco 20%. There was to be a co-venture for the development of the mine, in the proportion of 80/20, and the new company was to purchase from the co-venturers the total output. Posco indicated its intention to purchase from the new company specified minimum tonnages of coking coal mined at Mount Thorley in each year, commencing in 1979. The Letter also indicated an intent by Posco to give preference to the new company in the procurement of additional high volatile soft coking coal required by it, to maximise its use of Mount Thorley briquetting coal and to use its best endeavours to assist the sale of Mount Thorley coal to other buyers.

3. The Letter of Intent did not create any legally enforceable obligation but the parties proceeded in accordance with its stipulations, with minor variations of detail. In 1979 the holding company acquired a shelf company, Hodano Pty Limited. The name of that company was later changed to Miller Pohang Coal Company Pty Limited. It is the present respondent. Posco created an Australian subsidiary company, Pohang Steel Australia Pty Limited ("Posa").

4. Miller had commenced a technical and financial evaluation, a feasibility study, of the mining project in November 1976. The results of the study apparently became progressively available. The study was completed in about July 1980. It comprised 13 bulky volumes. It was not printed until July 1981. According to the evidence of Mr A J Haraldson, Deputy Chief General Manager of the Miller Group, which was accepted by the Tribunal, while the study was printed to put it in a more usable form for various other purposes, including the raising of finance, the fundamental reason for printing these volumes was to enable Posco to make a final decision whether to commit itself to the venture. A copy of the study was in fact sent to Posco shortly after it was printed. The cost of printing the first copy of the study is the first item allowed by the Tribunal.

5. Negotiations had proceeded between Miller and Posco but, in early September 1981, there were still a number of areas of disagreement. On 7 September 1981 Mr Blackman, the Chief General Manager of the Miller Group, Mr Haraldson and Mr Watson, the Group's General Manager - Marketing, travelled to South Korea for discussions with executives of Posco. The talks extended over two days, 9 and 10 September. At the end of the meeting a Memorandum of Understanding was signed on behalf of each of the two companies, setting out the substance of the arrangement as at that date. The total fares incurred in respect of this visit to South Korea by these three executives was $5,817.50, the whole of which was included in the claim forwarded to the Board. The Tribunal allowed three quarters of that amount, $4,363.12, the reduction reflecting the circumstance that the executives had broken their return journey in Japan for the purpose of attending a one day meeting on a matter unconnected with Mount Thorley.

6. On 17 September 1981 Miller agreed with the New South Wales Minister for Mineral Resources to pay a premium in respect of a coal lease. On 21 September 1981 the Governor of New South Wales signed a coal lease in favour of Miller for a term of 21 years. Miller and Posco then proceeded with final documentation of their arrangement. The documentation, which was completed only during further discussions in South Korea in November 1981, eventually included the following: a co-venture deed, to which the original coal lease was attached, between Miller on the one hand and Posco and Posa on the other and governing the conduct of the project; a coal sub-lease from Miller as sub-lessor to Miller and Posa as sub-lessees, together with a property lease of surface lands from MPCC to Miller and Posa; a contract for the sale of coal from Miller to MPCC; a contract for the sale of coal from Posa to MPCC; a contract for the sale of coal from MPCC to Posco; and a deed of option enabling Miller to recover Posa's 20% interest in the project if Posco failed to take the agreed minimum tonnages of coking coal.

7. Two separate parties of executives of the Miller Group travelled to South Korea in November. Mr Blackman and Mr Conway, General Counsel of the Miller Group, arrived first and spent some days in final negotiations and in completion of the documents just mentioned. On about 8 November they were joined by five directors of Miller: Mr Trotter, Mr Hanke, Captain Evans, Mr Blomfield and Mr Haraldson. On 10 November the documents were signed. Mr Trotter, the Chairman of Miller, and perhaps other directors, signed on behalf of Miller; Mr Haraldson counter-signed as Secretary. Mr Blackman signed on behalf of the holding company. Captain Evans, a director of MPCC, signed on behalf of that company. Mr Haraldson counter-signed as Secretary. The decision as to those to travel to South Korea for the execution of the documents was made by the board of the holding company. The reason for the large contingent of directors was explained by the Tribunal in this way:
   
   

"The Koreans insisted that the agreements should be signed in Korea. Posco and the Koreans regarded the matter as one of considerable importance as it was the first time that a Korean company had had an equity participation in an overseas venture. It was the subject of newspaper articles in Korea at the time and was put to the Miller representatives as being of major significance in the Korean national scene involving some national prestige.

It was of critical importance to everybody, including MPCC, that the consummation of years of endeavour should end upon a harmonious note. The Koreans would have regarded the attendance of anything less than a full delegation from Australia as discourteous, and in our view, bearing in mind the large sums of money involved and the importance of the venture, it would have been inappropriate for other than a full delegation from Australia to have attended and participated both in the finalisation of the agreements and at their signature. After all, a new international market of consequence for Australian exports was being established. Posco was the key to the economic future of MPCC and the parties. It was desirable that Posco should be encouraged to take more than the minimum 500,000 tonnes of coking coal per annum and that it should actively promote the sale of coal for MPCC in Korea and neighbouring countries where it had special influence.

The Chairman of Posco was General Park, an extremely important figure in Korea. He was also the Chairman of the Korean Parliamentary Finance Committee. A favourable impression created by the Australian delegation from the Miller Group was likely to lead to future business and, indeed, possible further sales were discussed. This was an opportunity which no sensible businessman would have missed."

The fares incurred in relation to the visit to South Korea of the various directors and officers in November 1981 ($19,003) is the third item allowed by the Tribunal.

1. In April 1982 General Park and Mr I T Kim, a senior managing director of Posco, visited Australia to attend a ceremony at Mount Thorley at which plaques were unveiled. The Tribunal commented:
   
   

"This was a major opportunity for discussions to take place concerning the sale of Mount Thorley coal and to impress the Chairman and Senior Managing Director of Posco, and to encourage Posco in its endeavours to assist MPCC in the sale of coal throughout Asia. It was an important opportunity to further the sale of coal overseas at the highest level."

For the occasion Mr Suvoltus, the Korean representative of the Miller Group, was recalled from South Korea to Australia. The Tribunal described this as "a wise and prudent move because it enabled there to be on hand someone who was able to advise on what was appropriate from the Korean point of view". The return air fare of Mr Suvoltus, $2,245.85, was also allowed by the Tribunal.

1. The Export Market Development Grants Act is, according to its long title, an Act relating to grants for the purpose of providing incentives for the development of export markets or for the attraction of tourists and other visitors to Australia. The scheme of the legislation is that the Board, which is established by the Act, is required to consider every claim made to it for a "grant entitlement" and to determine whether the claimant has a grant entitlement and, if so, the amount of that entitlement. Where the Board determines that a claimant has a grant entitlement, there is payable to the claimant an amount equal to the amount of that entitlement: see s.12. The "grant entitlement" of a claimant in relation to a grant year was at the relevant time an amount equal to 70% of the "eligible expenditure" incurred by the claimant during the year: see s.15. The definition of "eligible expenditure", which is contained in s.4 of the Act, is therefore of cardinal importance to the operation of the Act.

2. Section 4(2) contains, for the purposes of the section, a lengthy definition of the term "expenditure". The sub-section itemizes various categories of expenses and excludes certain expenses which might otherwise fall within those categories. So far as is relevant for present purposes para.(a) of the sub-section provides:
   
   

"4(2) For the purposes of this section, 'expenditure' means expenditure to the extent to which it is incurred by a claimant ... by way of -

(a) expenses of, contributions 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) advertising or other means of securing publicity or soliciting business,

not being amounts paid or payable to -

..."

1. Section 4(1) relevantly provides that a reference to "eligible expenditure" is a reference to "expenditure" -- that is, of course, expenditure as defined in s.4(2) --
   
   

"... that, in the opinion of the Board, has been incurred by a person primarily and principally for the purpose of creating or seeking opportunities, or creating or increasing demand, for -

(a) the sale by that person for export, or the export by that person and sale by him, of eligible goods manufactured, produced, assembled or processed in Australia;

(b) in the case of a person who manufactured, produced, assembled or processed eligible goods at the time when the expenditure was incurred, the sale for export, or export and sale, of eligible goods manufactured, produced, assembled or processed in Australia by that person;

..."

1. The term "eligible goods" is defined by s.5 in such a way as to include goods produced in Australia where not more than 50 per centum of the value of the goods is attributable to materials not of Australian origin. It includes coal mined in Australia.

2. The right of appeal to this Court from a decision of the Administrative Appeals Tribunal is limited to an appeal in respect of questions of law: see s.44 of the Administrative Appeals Tribunal Act 1975. Provided that there is evidence sufficient to sustain a particular finding of fact, the Tribunal's determination of the facts relating to any matter before it is conclusive. However, counsel for the Board submits that the Tribunal erred in law in a number of respects and that, upon the facts found by it and as a matter of law, it should have upheld the decision of the Board to reject the respondent's claims. He seeks an order setting aside the decision of the Tribunal and, in lieu thereof, dismissing the appeal to it and affirming the decision of the Board or, alternatively, an order remitting the matter to the Tribunal.

3. The first contention of the Board is that, upon the undisputed facts and the findings of the Tribunal, the Miller Group had two purposes in mind in incurring the expenditure the subject of the claims. It wished to sell coal to Posco; it also wished -- or at least was willing -- to sell an interest in the Mount Thorley venture to the South Korean company. Counsel points out, correctly, that a purpose of selling an interest in a business, or in a mining title, is not a purpose falling within s.4(1). Relevantly, that sub-section is concerned only with the sale of goods. Part of the exercise upon which Miller was engaged, he says, was to sell an equity in the venture; and indeed it was this particular aspect of the matter which caused Miller to decide to print the feasibility study. It follows, he says, that it is impossible to describe the expenditure, and certainly the whole of it, as having been incurred for the purpose of creating or seeking opportunities, or creating or increasing demand, for the sale or the export of eligible goods.

4. A difficulty about this argument is the finding of fact of the Tribunal as to the predominant purpose of the Miller Group. The Tribunal said:
   
   

"Certainly, at all material times in 1981 the main and immediate purpose of the Miller Group and MPCC was to secure an overseas market for the soft coking coal and such other markets as it could for the steaming coal including overseas markets. To enable MPCC to secure those markets the Miller Group was prepared to permit a major purchaser of the coal to have equity participation and to hold a minority of the shares in MPCC. This was the manner in which the market was to be secured. The 20% equity participation was an incidental matter both to the Miller Group and MPCC. It was a concession which had to be given to secure assured export sales."

1. There was evidence before the Tribunal to justify that finding. Counsel acknowledges that he is bound by it. He submits, however, that in a case where expenditure is incurred for a multiplicity of purposes it does not matter that one purpose is subsidiary to another purpose, being a purpose referred to in s.4 of the Act. In his submission the use of the words "to the extent to which it is incurred by a claimant" in s.4(2) necessarily means that an apportionment of expenditure is required whenever the claimant had a multiplicity of purposes. It does not matter, he says, that exactly the same expenditure would have been incurred by the claimant if he had been actuated only by a single purpose; for example, where, happening to be in a particular place in order to solicit business, the claimant undertook some other activity not falling within the section. So, in this case he says, the decision to sell an equity in the venture, although merely incidental to the attempt to sell coal, necessarily requires an apportionment of the total expenditure.

2. It is desirable to consider separately the questions whether expenses incurred in relation to selling an interest in the venture are "expenditure" within s.4(2) and, if so, whether they may be "eligible expenditure" within s.4(1). In relation to s.4(2) it is interesting to note that the sub-section does not use the word "purpose" except in the special context of payment to an agent for a specified purpose. Neither does it limit the objects of expenditure by reference to the items specified in subs.(1). Rather it refers to "expenditure to the extent to which it is incurred by a claimant ... by way of expenses of" a particular kind. These words require characterization of the expenses. To the extent that particular expenses are of a specified kind they are "expenditure" within the meaning of the sub-section. The test is an objective one.

3. Although the Tribunal did not address the question whether the various expenses were "expenditure" within s.4(2), it is implicit in its decision that it regarded the expenses incurred in the present case, in relation to the printing of the feasibility study and the air fares, as being wholly "expenses of ... soliciting business". It does not matter, for subs.(2) purposes, whether the relevant business fell within one of the categories specified in subs.(1). Thus, leaving aside for the moment the question whether or not they were incurred by the claimant, the expenses were "expenditure" within the meaning of the sub-section, whether considered as being incurred incidentally to the sale of coal or otherwise.

4. The next question is whether the "expenditure" identified under s.4(2) is "eligible expenditure" under s.4(1). Section 4(1), unlike s.4(2), speaks in terms of purpose. The Board and, on appeal, the Tribunal must be satisfied that the expenditure has been "incurred by a person primarily and principally for the purpose of creating or seeking opportunities, or creating or increasing demand" for the sale of specified goods. By virtue of s.4(2) the "person" referred to must be the claimant or an association referred to in s.4(3); in this case, relevantly, the claimant. The relevant purpose is the purpose of that person and, as the words "primarily and principally" indicate, the purpose of creating or seeking opportunities or creating or increasing demand need not be the sole purpose for which the expenditure was incurred. We agree with the views expressed by Lockhart J. in Parker Pen (Australia) Pty Limited v Export Development Grants Board (1983) 46 A.L.R. 612 at p.621 -- which decision was upheld on appeal to a Full Court (Toohey, McGregor and Morling JJ., 30 March 1984 not reported) -- relating to the significance of "purpose" in this context:
   
   

"The word 'purpose' is, of course, susceptible of a variety of meanings depending on its context. In the context of s.4(1) the inquiry must be to ascertain whether the expenditure was incurred by the person primarily and principally for the purpose of creating or seeking opportunities or creating or increasing demand for the stipulated objects, including the sale by that person for export of eligible goods manufactured in Australia. This involves a subjective element. The purpose must be someone's purpose. It is the purpose of the person mentioned in the sub-section. To ignore subjective elements is wrong. There is, of course, a difference between the essential elements in the notion of purpose and the means whereby purpose is ascertained. Purpose may be gleaned either from subjective or objective elements or, more usually, both. A person may say what his purpose is, but the objective facts may cast doubt upon the credibility or reliability of his statement. It is for the Tribunal of fact to consider all the circumstances and conclude whether the requisite purpose has been established. Objective facts are usually more reliable than mere protestations of purpose, intent or state of mind, which, although susceptible of testing in cross-examination, are intrinsically impenetrable and inscrutable."

1. In the present case, the Tribunal found that the overriding purpose of the Group was to sell Mount Thorley coal. Expenditure incurred by a relevant person for that purpose was, therefore, expenditure incurred "primarily and principally for the purpose" of creating or increasing demand for eligible goods produced in Australia. It does not matter that the immediate occasion of the expenditure was the desire to persuade Posco to purchase an equity interest in the mining development; that was an incidental purpose subsumed by the overriding, primary and principal purpose of selling the coal. Each of the items of expenditure claimed by MPCC was incurred pursuant to that overriding purpose. It was, if expenditure incurred by a proper person, "eligible expenditure" within the meaning of s.4(1).

2. The Board argues, however, that there was no evidence before the Tribunal to suggest that the items of expenditure claimed in this case were expenses incurred by the only relevant person in this case, the claimant respondent. In its decision the Tribunal said that "at all material times in 1981 the main and immediate purpose of the Miller Group and MPCC was to secure an overseas market for the soft coking coal and such other markets as it could for the steaming coal including overseas markets". This was certainly the purpose of the board of the holding company, but there is no evidence as to the possession of any purpose by MPCC. As we have previously indicated, MPCC, the respondent, started life as Hodano Pty Limited, a shelf company. It was purchased by the holding company in about 1979 but between that date and 23 February 1982, when Posa acquired shares in the respondent pursuant to the agreements of November 1981 and when its name was changed to Miller Pohang Coal Company Pty Limited, Hodano carried on no business activities. The board of the company was apparently constituted by Mr Blackman and Captain Evans but the directors only met to undertake the necessary statutory formalities. The company had a nominal capital of two dollars; any expenses it incurred were apparently met by one of the other companies in the Miller Group. In particular the expenses the subject of the present claims were initially met by Miller. Mr Haraldson explained:
   
   

"I think we first claimed certain amounts from the Export Market Development Grants Board in the name of Miller and Company and were advised that we could not claim it on Miller and Company. It should be the name Miller Pohang Coal Company because that was the one in which the sales contracts were written. I am not sure of the timing of that.

Q. Subsequent to that was there some flow of moneys between Miller Pohang and R.W. Miller in relation to these fares?

A. Yes. A flow of money is a way of putting it. It is a matter of entries in books of account. There is a bank account established in Miller Pohang Coal Company but it is mainly used for the flow through of sale receipts only and as a matter of commercial ease we run one set of cheques through our place on Miller and Company cheques and they are debited to Miller Pohang Coal Company when those costs relate to Miller Pohang Coal Company amounts.

Q. So the payments for these fares that was eventually effected by Miller Pohang consisted only in the nature of book entries?

A. Yes."

Mr Haraldson said that there was no board meeting of the respondent to authorize any persons to enter into the November 1981 agreements on behalf of that company. The decisions relating to November 1981 were made by the board of the holding company.

1. Section 4(2) of the Act includes as an ingredient in the definition of "expenditure", relevantly, that it be incurred by a claimant under the Act. Section 4(1) requires that the expenditure be incurred by a person for the purposes of creating or seeking opportunities, or creating or increasing demand, for the sale by that person for export, or the export and sale by that person, of eligible goods manufactured, produced, assembled or processed in Australia. The claimant, therefore, must both have incurred the expenditure and have exported the goods. The present respondent is the claimant and the exporter of the coal but it did not incur any liability in relation to the claimed items at the time the various expenses were incurred. The three items of expenditure incurred prior to 23 February 1982, that is the cost of printing the feasibility study and the fares in respect of the September and November 1981 visits, were each incurred prior to the time when the company carried on any business at all. At the dates of each of those expenditures being incurred the claimant was no more than a shelf company being held by the Miller Group against the prospect of use if and when the negotiations with Posco were successfully concluded. The relevant expenditures were incurred by and in the name of Miller; no doubt because, at that stage, the respondent had neither assets with which to incur expenses nor any interest in so doing.

2. It cannot be said that Miller incurred the expenses on behalf of the respondent. There is no evidence that either company saw the situation as being one of agency; Mr Haraldson's evidence indicates that the holding company thought it appropriate that Miller, "the major operative company" in the Group, incur the expenditure. This is readily understandable, given the considerable financial interest of Miller in achieving an agreement with Posco and the fact that, if the negotiations were unsuccessful, MPCC would never earn revenues from Posco with which to pay the costs which had been incurred. It is true that the intention of the board of the holding company was that MPCC would eventually carry on the business of purchasing coal from the co-venturers and exporting it, inter alia, to Posco but there is nothing to indicate that it was intended to have an independent entrepreneurial role. The price at which MPCC would purchase coal from the co-venturers was not fixed in November 1981. No doubt the price selected from time to time would reflect various commercial considerations including the incidence of income tax. It was open to the parties to fix a price which would return to MPCC no profit, leaving the profit of the mining and export sale of the coal to be taken by the co-venturers, acting as such. Mr Haraldson frankly conceded that the items of expenditure were only debited to MPCC, by book entries, when it was realized that the Export Market Development Grants Act required a correspondence in identity between the person who incurred the expenditure and the prospective exporter. But by then the expenditure had been incurred. A gratuitous book entry by MPCC in favour of Miller in the hope of thereby qualifying MPCC for a grant could not amount to the incurring of expenditure by MPCC for the purpose of creating or seeking opportunities, or creating or increasing demand, for the sale of eligible goods. Rather, it was expenditure incurred for the purpose of seeking a grant under the Act.

3. The cost of fares for the visit to Australia of Mr Suvoltus was apparently incurred in about April 1982, shortly after Posa had become a shareholder in MPCC. There was, however, no suggestion in the evidence that MPCC authorized the expenditure. Once again it appears from Mr Haraldson's evidence that the expenditure was incurred -- and initially included in the claim made to the Board -- by Miller. The evidence does not suggest that MPCC carried on any active business at that early stage.

4. It may be thought unfortunate that a claim for grants under the Export Market Development Grants Act should fail by reason of the fact that particular expenditure, which would otherwise qualify as "eligible expenditure", was incurred by one company rather than another with which it had a close connection. We do not wish to comment upon the desirability of the result. It is enough to say that it flows directly from the tightly framed limitations in the Act; limitations which were, no doubt, inserted by the Parliament in an attempt to ensure that there would always be a close nexus between the eligibility of a claimant for a grant and the development of Australia's export trade. In our opinion the claim made by MPCC to the Board was rightly rejected. In holding that MPCC "can be said" to have incurred the expenditure in question the Tribunal erred in law. The appeal should be allowed with costs. The decision of the Tribunal should be set aside and, in lieu thereof, it should be ordered that the appeal of MPCC to the Tribunal be dismissed and in lieu thereof that the decision of the Board be affirmed.