HYFN (Australia) Pty Ltd and Australian Trade Commission
[2012] AATA 114
•27 February 2012
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2012] AATA 114
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/3562
GENERAL ADMINISTRATIVE DIVISION )
Re HYFN (AUSTRALIA) PTY LTD Applicant
And
AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Senior Member R W Dunne Date27 February 2012
PlaceAdelaide
Decision The Tribunal affirms the decision under review.
..............................................
R W DUNNE
(Senior Member)
CATCHWORDS
TRADE AND COMMERCE – Export Market Development Grant – eligible expenses – approved promotional purpose – substantiation – whether claimable expenses in respect of eligible promotional activities – use of EMDG Administrative Guidelines – onus of proof – decision under review affirmed.
Export Market Development Grants Act 1997 (Cth) ss 28(2), 29, 33(1) and (2), 37(1), 46
EMDG Administrative Guidelines, Part 5Speedo Knitting Mills Pty Ltd v Commonwealth of Australia (1981) 37 ALR 417
Webster and Australian Trade Commission [2002] AAT 1278
Parker Pen (Aust) Pty Ltd v Export Development Grants Board (1983) 46 ALR 612
Re: Elderstone Nominees Pty Ltd and Australian Trade Commission [2007] AATA 1265REASONS FOR DECISION
27 February 2012 Senior Member R W Dunne introduction
1.On 12 November 2008, HYFN (Australia) Pty Ltd (“applicant”) applied to the Australian Trade Commission (“Austrade”) for a grant under the Export Market Developments Grants Act 1997 (“the Act”) in respect of expenses totalling $219,909 incurred in its business in the 2007/2008 financial year. Austrade approved the application in relation to expenses of $208,407 and paid the applicant a grant of $99,605. Austrade did not approve a claim for expenses of $11,502 and the applicant requested a reconsideration of its decision. Following a review of the application, Austrade confirmed the original decision and the applicant applied to this Tribunal for a review of that decision.
2.At the hearing, the applicant was represented by a director, Mr David Jacobs, who was assisted by Mr John Taylor, a grants consultant. Ms R Gray (of counsel) appeared for Austrade. I received into evidence the T Documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Exhibit R1), together with the following exhibits:
·summary of evidence of Mr Andre Klavins dated 24 June 2011;
·summary of evidence of Mr Raymond Radice dated 27 June 2011; and
·summary of evidence of Mr Robert Harker dated 23 June 2011.
issue for the tribunal
3.The issue for determination is whether the expenses of $11,502 not approved by Austrade in respect of the 2007/2008 financial year are eligible expenses for the purposes of the Act.
legislation
4.The Act provides for an assistance scheme under which small and medium Australian exporters committed to and capable of seeking out and developing export business can be reimbursed part of their expenses incurred in promoting their products (see s 3 of the Act).
5.Part 5 of the Act defines what are eligible expenses of an applicant for a grant (see s 28(1) of the Act). Section 28(2) provides;
“28 Object of Part
….
(2) The underlying principle is that only expenses relating to specific promotional activities genuinely incurred by applicants for the purpose of marketing eligible products in foreign countries should qualify.”
6.Section 29 of the Act describes what are eligible expenses and reads;
“29 Eligible expenses—general
Subject to section 30, expenses incurred by an applicant for a grant in respect of a grant year are eligible expenses if the following conditions are satisfied:
(a)the expenses are, under section 33, claimable expenses in respect of an eligible promotional activity;
(b)if the applicant is an approved joint venture—the expenses are related to the approved activity, project or purpose of the joint venture;
(c)the expenses were incurred (within the meaning of Division 3) by the applicant:
(i)if the applicant is not a grantee in respect of any previous grant year—during the grant year or the immediately preceding year; or
(ii)in any other case—during the grant year;
(d)the expenses, together with other expenses of the applicant that satisfy paragraphs (a) to (c), add up to $20,000 or more.”
7.The claimable expenses in respect of eligible promotional activities are set out in s 33 of the Act, which, for present purposes, relevantly reads;
“33 Claimable expenses in respect of eligible promotional activities
(1)The activity specified in column 2 of an item in the following table is an eligible promotional activity in relation to an applicant.
(2)The expenses specified in column 3 of an item in the following table, to the extent to which they are not excluded expenses under Subdivision 4, are claimable expenses of the applicant in respect of the activity specified in column 2 of that item.”
Claimable expenses in respect of eligible promotional activities Column 1
Item
Column 2
Activity
Column 3
Expenses
1A maintaining one or more overseas representatives on a long term basis in foreign countries to the extent to which the representatives are maintained for approved promotional purposes all reasonable expenses incurred by the applicant in:
(a) maintaining the representatives; and
(b) meeting the expenses incurred by the representatives in soliciting business for the applicant;
up to a limit of:
(c) if the applicant is a grantee in respect of any previous grant year—$200,000 for the grant year; or
(d) if the applicant is not a grantee in respect of any previous grant year—$200,000 for the grant year and the immediately preceding year
… 4 the provision, primarily for an approved promotional purpose, of free samples to a person that is not a resident of Australia, as follows:
(a) provision outside Australia of samples relating to any eligible product of the applicant;
(b) provision in Australia of samples relating to eligible tourism services supplied by the applicant
all reasonable expenses incurred by the applicant that are attributable to the actual cost of providing the samples … 6 provision by the applicant or its agent of promotional literature or other advertising material to the extent to which this is done for an approved promotional purpose all reasonable expenses incurred by the applicant in payments to persons that, in the opinion of the CEO of Austrade, were not closely related to the applicant
8.Section 37 of the Act requires that an eligible promotional activity be for an approved promotional purpose and relevantly provides;
“37 Approved promotional purpose—eligible products
(1)For the purposes of section 33, an eligible promotional activity in relation to an applicant is for an approved promotional purpose if it is carried out for the purpose of creating, seeking or increasing demand or opportunity in a foreign country for any of the following:
(a) eligible goods owned by the applicant and that the applicant intends to sell for export or to export and sell;
(b) if the applicant is making goods in Australia—eligible goods:
(i) made in Australia by the applicant; and
(ii)that any person intends to sell for export or to export and sell;”
…
9.Section 46 of the Act refers to excluded expenses and reads;
“46Expenses for which applicant is paid
(1) Expenses of an applicant in respect of an eligible promotional activity related to a particular approved promotional purpose are excluded to the extent (if any) to which the applicant has been paid, or is entitled to be paid, any consideration for anything done by the applicant to further that purpose.
(1A) However, subsection (1) does not apply to expenses of an applicant incurred as an events promoter.
(2) For the purposes of subsection (1), any action by the applicant to write off, waive or otherwise release a person from, an obligation to pay any consideration is to be disregarded.”
background facts
10.The background facts are largely not in dispute. The applicant was an exporter of wine during the 2007/2008 financial year. The wine export activity was conducted through its overseas representative, Mr Alan (Zhipeng) Lin, who was based in China. The arrangements took place pursuant to an Overseas Representative Agreement dated 25 July 2007. In Schedule 1A of its grant application relating to claims for overseas representation, expenses amounting to $23,663 for “Advertising, Design & Gift boxes July – Sept 07” were included. The expense items comprised the following:
Expense Items
Amount
A
Design
$468
B
Display boxes and bags – deposit
$625
C
Display boxes and bags – balance
$1,874
D
Display box 2 design
$469
E
Display box deposit
$5,030
F
Schilian magazine advertisement
$3,619
G
Display box 2 balance
$7,654
H
Wooden gift boxes
$781
I
Jinpengchen newspaper advert
$3,143
Total
$23,663
11.In the course of the audit of the application, Austrade’s Assistant Manager Grants SA/NT (Mr Klavins) advised the applicant by email dated 12 May 2009, in the following terms:
“As discussed at audit I advise that Austrade considers the claimed expenses for boxes to be packaging.
If you are able to identify how much of this expense was used in free samples please provide your workings as soon as possible.”
12.The applicant’s grants consultant (Mr Taylor) responded:
“We accept that some of the boxes have been used as packaging and that an adjustment is necessary.
The boxes given away with samples provided at the trade shows and those recorded in the sample register were for marketing and promotional purposes. No record has been kept as to the actual number dispensed for each purpose. However we think that a conservative estimate would be 30% for marketing and promotional purposes.”
13.As a result, the disputed expenses for display boxes and bags were apportioned as follows:
Expense Items Amount 100% Allowed
in Full30% Allowed 70% Not
AllowedA
Design
$468
$468
B
Display boxes and bags – deposit
$625
$188
$438
C
Display boxes and bags – balance
$1,874
$562
$1,312
D
Display box 2 design
$469
$141
$328
E
Display box 2 deposit
$5,030
$1,509
$3,521
F
Schilian magazine advertisement
$3,619
$3,619
G
Display box 2 balance
$7,654
$2,296
$5,358
H
Wooden gift boxes
$781
$235
$546
I
Jinpengchen newspaper advert
$3,143
$3,143
Total
$23,663
$11,502
14.On 7 October 2009 and after the conclusion of the audit, in a notice of determination, Austrade approved the export grant of $99,605 for the 2007/2008 grant year. On 20 November 2009, the applicant (through Mr Taylor) requested an internal review of Austrade’s determination. The applicant included a table in its request which detailed all the expense items that had been included in Schedule 1A of its grant application and the apportionment of the items that had been approved. The table was substantially as set out in paragraph 13 above. In relation to the table and the expense items in it, Mr Taylor relevantly said:
“The applicant includes this table to document the calculation methodology and to distinguish between adjusted items and non-adjusted items. Also, to point out that it is the same items (i.e. gift boxes and bags) allowed at a rate of 30% on the one hand and disallowed at a rate of 70% on the other. The adjustment approach taken is inconsistent with the view that the boxes are packaging and therefore ineligible.
The expenses claimed at Item 14 in Schedule 1A relate to nine (A-I) separate and related expenses totalling $23,663. Acquittal of this $23,663 was by way of offset against monies owed by the overseas representative to the applicant and booked in GY 0708.”
15.By letter to the applicant dated 26 July 2010, Austrade confirmed its original decision.
evidence of mr klavins, mr radice and mr harker
16.Mr Klavins is the Assistant Manager Grants, South Australia and Northern Territory at Austrade. Following the applicant’s grant application and a client risk assessment, he had conducted an audit of the application. He visited the applicant’s registered office on 6 May 2009 (Exhibit R1, T10 at page 96) and met with Mr Jacobs and Mr Taylor. He was shown photographs of the gift boxes that were included in the application. He said he was told that customers had to purchase products to obtain the boxes. As to the 30% portion of the disputed expenditure that had been allowed, no level of substantiation had been provided. He then referred to the email from Mr Taylor dated 18 September 2009 (Exhibit R1, T22 at pages 228-229) in which Mr Taylor was proposing a greater apportionment of the disputed expenditure. The email relevantly read:
“1. The ‘Display Boxes…’ described at ‘B’&’C’ are according to the applicants documentation used primarily for POS display as per the description of use given by the applicant. Therefore we maintain that these expenses are claimed at 100%.
2. The ‘Display Box 2’ described at ‘D’’E’&’G’ are used Trade fairs (Guangzhou, Jieyang, Shanghai) and various Tasting Events as per the description of use given by the applicant. The applicant estimates that 50% of the approx. 5,000 ‘boxes’ produced were for promotional purposes. We accept that some of these boxes were used as packaging. Therefore we maintain that these expenses are claimed at 50%.
3. The ‘Wooden Gift Boxes’ described at ‘H’ were given away with samples provided at the trade shows for marketing and promotional purposes and some used as packaging. No record has been kept nor has the applicant estimated the actual number dispensed for each purpose. It is this expense for boxes which we agree is to be claimed at 30% (this is consistent with our email of 12/05/09)
Therefore and using the same exchange rate you have used I find that RMB 59,600 i.e. $9,310 is eligible and the balance $7,122 is ineligible”
Mr Klavins said that, in his email dated 25 September 2009 (Exhibit R1, T 22 at page 228), he had advised Mr Taylor that he would not accept the greater apportionment and that “on the information available to me my proposed adjustments should stand”.
17.Mr Radice is a Senior Grants Auditor, South Australia and Northern Territory at Austrade. He conducted the internal review of Austrade’s determination. In relation to the review, he emailed Mr Taylor on 16 July 2010 (Exhibit R1, T28 at page 253), relevantly stating:
“Austrade is happy to assess the bags and boxes under schedule 4 instead of schedule 6. To assist me in doing this. Can you please provide supporting documents that show the breakdown of the number of bags and boxes that were provided for sales and the number that were provided for free samples? This way I will be able to determine the right percentage to apportion the expenditure. Austrade noted that the initial application allowed 30%. I am happy to accept this amount should you choose. If the applicant is able to substantiate a higher percentage, I am happy to allow this”.
18.Mr Harker is State Manager Grants, South Australia and Northern Territory. In his witness statement (Exhibit R4), he referred to the email from Mr Taylor dated 12 May 2009 (see paragraph 12 above). In relation to the email, at paragraph 12 of his witness statement he said:
“Austrade accepted the estimate of 30% and determined that it would allow 30% of the cost as promotional on the basis that such proportion was claimed as having been given away as free samples (being an eligible promotional activity pursuant to item 4 of the Table to section 33 of the EMDG Act). Accordingly Austrade disallowed 70% of the disputed expenses.”.
19.In response to questioning by Ms Gray, Mr Harker said he was not aware of any substantiation documents that related to the expenses incurred on the display boxes that were in dispute. Nor was he aware of any documents relating to the approved promotional purpose for which the display boxes were used. In cross-examination by Mr Jacobs, he said he was satisfied about the type of expenses that had been incurred. However, he was unable to comment on the extent of any additional substantiation documents that had not been provided. When asked by Mr Jacobs why Austrade’s consideration of the grant application had taken from the commencement of the audit on 6 May 2009 until the issuing of the notice of determination on 7 October 2010, Mr Harker said the delay had been caused by a lack of available resources.
evidence of mr taylor
20.Mr Taylor was the grants consultant who acted for the applicant in relation to the grant application. He said he was an expert in the field of export market development grants and, as measured by Austrade, he was a “preferred consultant” on its website. He was aware of similar expense items as those in dispute being claimed and approved on other occasions by Austrade, as falling with the EMDG Administrative Guidelines. He had reviewed the disputed items prior to the application and was satisfied that the expenses had been incurred and acquitted and properly substantiated.
21.In cross-examination by Ms Gray, Mr Taylor said that there were invoices evidencing the incurring and acquittal of the disputed expenses. Ms Gray called for production of the invoices. He said the display boxes had not been used as packaging, but had been given away as gifts. He did not agree that, to get the boxes, a customer had to buy wine.
22.Ms Gray then referred Mr Taylor to his emails to Mr Klavins dated 12 May 2009 (see paragraph 12 above) and 18 September 2009 (see paragraph 16 above) and to the differing expense proportions (30% and 50%) that had been proposed. Mr Taylor disagreed that he had changed his story in the two emails in order to get a greater claim for the applicant, and he was not now telling a different story to the Tribunal. In re-examination by Mr Jacobs, he said the increased proportion had been proposed in order for the application to go forward and for a determination to be made by Austrade.
evidence of mr jacobs
23.In giving his evidence in chief, Mr Jacobs said that only one display box had been shown to Austrade during the audit. Wine had been sent to the applicant’s overseas representative and wine had been given away. There were records of boxes and bags purchased by customers, but not of boxes and bags given away. The reference in Schedule 1A of the application to gift boxes given away during the period from July – September 2007 was to the boxes given to the overseas representative, not to the boxes given away to customers by the overseas representative.
24.In cross-examination by Ms Gray, Mr Jacobs said that all the display boxes in Schedule 1A were given away as trade samples at trade shows. He did not know what all the boxes were used for. A number were supplied at point of sale to consumers for marketing and promotional purposes. He then said that boxes were not sold with product, they were given away. To get a box from an end retailer, a consumer would have to buy wine. When referred to the email at Exhibit R1, T 22 at page 229 regarding the change in expense proportions, he said the sole purpose of the email was to obtain a determination from Austrade. He wanted to consider the determination and decide whether to proceed to the Tribunal for review. The factual statements made in the email were being used for the purpose of “negotiation” with Austrade, and there was evidence available to support the increased basis of apportionment outlined in the email. The evidence was contained in Exhibit R1, T22 at page 232, and invoices would be available to show how the amounts referred to in that evidence were arrived at.
25.When questioned further by Ms Gray, Mr Jacobs said he had no records of what retailers, distributors or wholesalers did with the display boxes given to them. When visiting retailers, distributors and wholesalers himself he saw them using the boxes as point of sale items. The boxes were provided to consumers at point of sale for promotion, not as part of the products sold to them.
consideration
Were the expenses of $11,502 not approved by Austrade in respect of the 2007/2008 financial year eligible expenses for the purposes of the Act?
26.Part 5 of the Act defines what are eligible expenses of an applicant for a grant. Only expenses relating to specific promotional activities incurred for the purpose of marketing eligible products in foreign countries may qualify. Eligible expenses are claimable expenses in respect of an eligible promotional activity. An eligible promotional activity is for an approved promotional purpose if it is carried out for the purpose of creating, seeking or increasing demand or opportunity in a foreign country for the applicant’s goods. The claimable expenses in respect of an eligible promotional activity are set out in s 33(2) of the Act. In the present case, the claimable expenses in respect of eligible promotional activities are capable of falling within Item 1A, Item 4 and Item 6 of the Table in s 33(2).
27.The disputed expenses for display boxes and bags that have not been allowed by Austrade amount to $11,502. It is the applicant’s contention that the disputed expenses do not relate to product packaging, but relate to small value gifts or promotional or advertising materials. As such, they are eligible expenses and should be taken into account in the making of the grant to the applicant. However, the onus of proving that the disputed expenses are eligible expenses falls upon the applicant. This was made clear in Speedo Knitting Mills Pty Ltd v Commonwealth of Australia (1981) 37 ALR 417 where Woodward J was dealing with s 4 of the Export Market Development Grants Act 1974 (“1974 Act”). Section 4 set out what was “eligible expenditure” under that Act. At page 423[44], he said:
“The plaintive contends that the expenditure in dispute is, or was, eligible and seeks a declaration in those terms. In my view it therefore carries the onus of establishing the fact upon which it relies in order to succeed in obtaining such a declaration. It must prove that the expenditure in respect of which the claim is made was primarily and principally for the purpose or for one of the purposes set out in s 4.”
28.Similarly, in Webster and Australian Trade Commission [2002] AAT 1278, the Tribunal said (at paragraph 78):
“The issue of whether or not the applicant incurred reasonable expenses under the Act is within her own knowledge and, in that situation, an absence of supportive material may lead to an unfavourable inference being drawn against her and a determination made, in accordance with the civil standard of proof, that her claim will be unsuccessful.
29.The expression “approved promotional purpose” is referred to in s 37 of the Act. The issue of purpose was considered by Lockhart J in Parker Pen (Aust) Pty Ltd v Export Development Grants Board (1983) 46 ALR 612. There, the learned Judge was again analysing s 4(1) of the 1974 Act. He said (at page 621):
“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 suceptible of testing in cross-examination, are intrinsically inpenetrable and inscrutable.” [emphasis added]
EVIDENCE OF MR JACOBS AND MR TAYLOR
30.It was the evidence of both Mr Jacobs and Mr Taylor that the disputed display boxes had not been sold with product, but had been given away as gifts. Mr Jacobs said that one had been sent to the applicant’s overseas representative and had been given away. There were records of boxes and bags purchased by customers, but not of boxes and bags given away. He said that all the display boxes in Schedule 1A were given away as trade samples at trade shows, but he did not know what the boxes were used for. They were not sold with product. To get a box from an end retailer, a consumer would have to buy wine.
31.Mr Taylor said that he had reviewed the disputed items prior to the grant application and was satisfied that the expenses had been incurred and acquitted and properly substantiated. There were invoices available that evidenced the incurring and acquittal of the disputed expenses.
32.There was much discussion and evidence about the change in expense proportions appearing in Exhibit T18 at page 204 and Exhibit 22 at page 229. Ms Gray submitted that the increase in the expense proportions from 30% to 50% had been introduced to enable the applicant to obtain a greater grant from Austrade. I am unable to accept this submission. I am satisfied that Mr Jacobs was engaging in a process of negotiation with the apportionment rates with a view to obtaining a notice of determination from Austrade. As a result and as estimated by the applicant, Austrade determined that it would allow 30% of the cost of the display boxes for marketing and promotional purposes as having been given away as free samples. This beneficial concession was made by Austrade in the absence of substantiation and evidence of an approved promotional purpose for the expenses.
33.The applicant contended that the display boxes and bags constituted small value gifts. However, there was no evidence that the boxes and bags were given away separately to the sale of the product. Mr Jacob submitted that the boxes were designed to display the product and to stimulate its sale. In this regard, I note the following description that appears in the applicant’s statement of facts, issues and contentions which was amended on 11 May 2011:
“The Applicant’s disputed items did not merely identify specific and limited characteristics but served to
· distinguish and highlight the product on the shelf, and
· promote and advertise the brand, even beyond the shop shelf, and
· provide a small value gift to enhance the purchase experience.” [emphasis added]
The reference above to “enhancing the purchase experience” suggests to me that there was a purpose for the boxes that related to the sale of the wine (and hence was packaging), rather than promotional or advertising.
34.Re: Elderstone Nominees Pty Ltd and Australian Trade Commission [2007] AATA 1265 concerned an application for a grant under the Act and involved promotional stickers attached to frozen meat packs. At paragraph 37 of its decision, the Tribunal said:
“Something that is produced for the purpose of affixing to a product for sale and which merely identifies the product, identifies it has having a particular origin, identifies it as having come from a particular manufacturer or supplier or identifies it has having a particular characteristic, cannot be properly described as “promotional’ or “advertising”.”
35.In the course of giving his evidence, Mr Klavins referred to his report when he attended the applicant’s office on 6 May 2009 (Exhibit R1, T10 at page 96). An extract from the report relevantly reads:
“Also discussed the claim for gift boxes and was shown a box that bottles of wine are put in after you buy. I said it was either packaging or sales related. Mr Jacobs said it was general advertising of the range and not the bottle contained therein. Told him even neck tags are not eligible yet alone boxes.”
36.In my view and on the evidence, the display boxes were provided as point of sale items for the wine product and were similar in purpose to the stickers in Re Elderstone. There was nothing about the boxes themselves which could properly be described as “promotional” or “advertising”, and the evidence adduced on behalf of the applicant did not establish otherwise.
37.During the course of the proceedings, reference was made to the EMDG Administrative Guidelines (“Guidelines”), in particular, Guidelines 5.8.7, 5.8.8 and 5.8.9. As Ms Gray rightly pointed out, the Guidelines are not the Ministerial Guidelines referred to in s 101 of the Act. As she submitted (which submission I accept), the Guidelines are administrative only and do not support the applicant’s position. Even if Guideline 5.8.7 includes expenditure for eligible items (such as small value gifts which contain the applicant’s logo), the applicant must still establish the relevant approved promotional purpose. On their face, the disputed boxes as small value gifts have no intrinsic value or purpose other than as packaging for wine.
38.During the hearing and in making her closing submissions, Ms Gray called for production if invoices or other documents evidencing the incurring, acquittal and substantiation of the disputed expenses. It became apparent that such invoices and other documents were not included in the T documents. Mr Jacobs said that the documents existed in his office and that he could produce copies of them to the respondent and the Tribunal. I directed that the applicant produce the invoices and other documents, along with written submissions supporting its contention that the documents evidenced the incurring and acquittal of the disputed expenses for the purpose required by s 37 of the Act. I also directed that the respondent review the documents and written submissions furnished by the applicant and provide further written submissions in reply.
SUBSTANTIATION, PURPOSE AND WRITTEN SUBMISSIONS
39.In response to my direction, the applicant provided invoices which purported to evidence the incurring, acquittal and substantiation of the disputed expenses. The applicant also provided written submissions, but many merely repeated the submissions contained in its amended statement of facts, issues and contentions dated 11 May 2011. And the written submissions did not support the purpose requirements of s 37 of the Act.
40.One written submission related to evidence sought to be adduced from Ms Sheilagh Sullivan of Setanta Wines during the hearing. That evidence was that expenses for items similar to those in the present case had been allowed by Austrade in other cases. In my view, this evidence was not relevant and I did not give it consideration. Other written submissions related to matters that had already been addressed earlier in these reasons. As to the invoices and other documents provided by the applicant, they did not address the question of the purpose of sourcing the boxes and bags, nor did they provide any detail as to the manner in which the boxes were used. Many of the invoices related to wine sales, not to the boxes and bags themselves. Several of the invoices related to the 2006/2007 grant year and there was no explanation as to why the original receipts or invoices in respect of the claimed items in the 2007/2008 grant year had not been provided. As submitted by Ms Gray (which submission I accept), the invoices and documents provided did not represent those called for and those which, it was indicated in Mr Jacob’s evidence, could be produced.
41.In response to my direction, Ms Gray provided a number of written submissions for Austrade in reply, including the following:
“If the bags and boxes were purchased by HYFN for example by the director or by the overseas representative it would be expected that there would be invoices or receipts with respect to the purchase of these items. It would also be expected that there would be records as to the manner in which these items were used. Such documents have been called for and not produced. The applicant has not provided substantiation of either the expenditure or the relevant purpose.”
…
“At the hearing before the Administrative Appeals Tribunal evidence was given by both the director of the Applicant, Mr David Jacobs, and the Export Marketing Development Grant Consultant, Mr John Taylor. This evidence did not emphasise the creation of demand, or the seeking to increase demand by AUSFN or AUSFN’s customers.”
42.In my view, the evidence of both Mr Jacobs and Mr Taylor did not adequately address the requirements of Part 5 of the Act in relation to the disputed expenses, and the further invoices and documents provided did not support or advance the applicant’s case. Austrade accepted the 30% portion of the disputed expenses for marketing and promotional purposes as a beneficial concession or grant in the absence of substantiation. The applicant has not shown that some greater beneficial grant is warranted.
DECISION
43.For the reasons outlined above, the Tribunal affirms the decision under review.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne
Signed: .....................................................................................
Administrative AssistantDate/s of Hearing 8 November 2011
Date of Decision 27 February 2012
Advocate for the Applicant Mr D Jacobs
EMDG Consulting
Counsel for the Respondent Ms R Gray
Solicitor for the Respondent Lachlan Partners Legal
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