Industry Tourism and Resources

Case [2004] FCA 1438

FEDERAL COURT OF AUSTRALIA

Kimberley-Clark Australia Pty Limited v Secretary to the Department of

Industry Tourism and Resources [2004] FCA 1438

ADMINISTRATIVE LAW – subordinate legislation – financial assistance by government to Australian resident manufacturers – textile, clothing and footwear industry – whether manufactured products fall within categories designated for assistance under statutory scheme – consideration of manufacturing process and nature of products manufactured – government decision below adverse to manufacturer upheld by AAT – whether AAT decision vitiated by erroneous construction of subordinate legislation – relevance of amendments to subordinate legislation after decision-making and prior to administrative review

Textile, Clothing and Footwear Strategic Investment Program Act 1999 (Cth), ss 3, 8, 112), 14(2) and 85A(1)
Textile, Clothing and Footwear Strategic Investment Program Scheme 1999, Part 1 of Schedule 1
Acts Interpretation Act 1901 (Cth), ss 15AA(1) and 15AB(1)

The Australian Gas Light Co v The Valuer General (1940) SR (NSW) 126, applied
Hepples v Federal Commissioner of Taxation (1991-1992) 173 CLR 492, referred to
Grain Elevators Board (Vic) v Dunmuncle Corporation (1946) 73 CLR 70, referred to
Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403, referred to
Commissioner for Inland Revenue v Hang Seng Bank Ltd [1991] 1 AC 306, referred to
Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203, referred to
Interlego AG v Croner Trading Pty Limited (1992) 39 FCR 348, referred to
Birch v Allen (1942) 65 CLR 621, applied
Rose v Department of Social Security (1990) 21 FCR 241, distinguished

KIMBERLEY-CLARK AUSTRALIA PTY LIMITED v SECRETARY TO THE DEPARTMENT OF INDUSTRY TOURISM AND RESOURCES

NSD 1120 OF 2003

CONTI J
8 NOVEMBER 2004
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1120 OF 2003

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:

KIMBERLEY-CLARK AUSTRALIA PTY LIMITED
APPLICANT

AND:

SECRETARY TO THE DEPARTMENT OF INDUSTRY TOURISM AND RESOURCES
RESPONDENT

JUDGE:

CONTI J

DATE OF ORDER:

8 NOVEMBER 2004

WHERE MADE:

SYDNEY

Index to Reasons for Judgment

Paras
1 to 13 Background and details of disallowed claims
14 to 21 The legislative authority for establishment of the Scheme
22 to 27 Textile, Clothing and Footwear Strategic Investment Program Scheme 1999
28 to 36 The review by the AAT of the evidence below
37 to 39 The findings of the AAT is summary
40 to 50 The discussion of the Scheme by the AAT
51 to 68 The AAT’s reasoning for dismissal of KCA’s case below
69 to 70 Issues framed by Kimberley-Clark Australia Pty Limited as arising
71 to 82 The reasoning of Kimberley-Clark Australia Pty Limited in support of its grounds for application for administrative review
83 to 90 Amendment of the Scheme after the decision-making under challenge
91 to 106 The submissions of the respondent Secretary on the appeal
107 to 111 Conclusions

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1120 OF 2003

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:

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Industry Tourism and Resources [2004] FCA 1438
Case
[2004] FCA 1438
Decision Date

CaseChat Overview and Summary

Industry Tourism and Resources was the subject of a judicial review brought by KCA before the Federal Court of Australia. KCA, a manufacturer, challenged a decision made by the Administrative Appeals Tribunal (AAT) that rejected its claim for grants under the AusIndustry Textile Clothing and Footwear Strategic Investment Program Scheme 1999. The legal issues before the court involved the interpretation of the Scheme, specifically whether certain textile finishing activities conducted by KCA constituted manufacturing activities and whether its products were eligible for grants. The court had to determine whether the AAT correctly applied the statutory provisions and whether the decision was legally sound.

The court examined the evidence presented by KCA’s expert witness, Professor Griffith, who provided detailed explanations about textile finishing processes and the nature of KCA’s manufacturing activities. The court noted that the AAT had implicitly accepted Professor Griffith’s evidence as it was not challenged. The court further considered whether the amendment to the Scheme, made shortly before the AAT’s decision, could be used to interpret the original Scheme. The court referred to various authorities that suggested an amendment could be used to construe earlier legislation, particularly when the earlier legislation is ambiguous. However, the court also noted the need to be cautious and avoid altering the meaning of the earlier statute to fit the later amendment.

The court concluded that the AAT’s decision should be set aside and the case remitted to the AAT to reconsider KCA’s claims in light of the court’s findings. Specifically, the AAT was directed to determine whether KCA’s textile finishing activities were manufacturing activities and whether its products were eligible for grants. The court also ordered the respondent to pay KCA’s costs of the proceedings and granted liberty to either party to apply regarding the form and implementation of the orders.

Orders

Orders of the court

1. The decision of the Administrative Appeals Tribunal of 24 July 2003 in favour of the respondent Secretary to the Department of Industry, Tourism and Resources be set aside.

2. The case the subject of the proceedings for review be remitted to the Administrative Appeals Tribunal:

(i) to determine according to law the applicant’s claims for expenditure grants on the basis that each of the textile finishing activities as found by the Tribunal constituted a manufacturing activity within the meaning of para 5(1)(a) of the AusIndustry Textile Clothing and Footwear Strategic Investment Program Scheme 1999; and

(ii) to determine according to law whether or not each of the applicant’s products was an eligible TCF product as defined in s 3 of that Scheme.

3. The respondent pay the applicant’s costs of the proceedings.

4. Either party have liberty to apply as to the form and carrying into effect of these orders in order to give full expression to the accompanying reasons for judgment.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Thereafter the AAT summarised the remainder of the Scheme conveniently as follows:‘The Scheme requires that if an entity intends to apply for a Type 1, Type 2 or Type 3 grant, they must apply to the Secretary to be registered for the Scheme (s 31(1)). The applicant is not eligible to register unless it carries on an eligible TCF activity (s 31(2)). The claim, made in accordance with s 52, is then assessed by the Secretary (s 61) who must be satisfied that if the claim is for a Type 1 grant, the amount of expenditure is eligible within the meaning of s 15; if the claim is for a Type 2 grant, the expenditure is eligible within the meaning of ss 23 - 26; and if it is a Type 3 grant, the amount of the expenditure is the total eligible TCF value added by the entity in accordance with s 28. Sections 64, 65 and 66 provide caps, respectively, for Type 1, 2 and 3 grants. Section 85A imposes an overall limit on the total grants that become payable to an entity during a particular year of income of the entity. At the time of making the claim, the applicant may request that the Secretary determine if the applicant is entitled to a grant (s 75). If the Secretary is satisfied that the applicant does qualify, then the Secretary must determine the amount to be paid (s 76). Section 87 provides that an entity affected by and dissatisfied with a decision may request the Secretary to reconsider the decision. Section 88(6) empowers the Tribunal to review the decision.’The review by the AAT of the evidence below The AAT reviewed at length the written statement provided to the AAT by KCA’s expert witness Professor Griffith, an emeritus professor of the University of New South Wales, where he was head of the School of Fibre Science and Technology from 1985 to 1997. Professor Griffith holds various honorary positions, including Chairman of the Australian National Advisory Council of the Textile Institute, and has wide experience as a consultant textile technologist, both to the Federal and State Governments and to other bodies, and has extensive research experience; he has more recently published widely in textile technical and general literature. The factual basis for Professor Griffiths’ statement provided to the AAT, concerning KCA’s manufacturing processes, was derived from the evidence furnished by three witnesses for KCA, namely Messrs Langer and Kirk and Dr Hearne. It is unnecessary for me to review their evidence, since the AAT appears to have implicitly accepted the same in the light of those aspects of the reasons for decision relating to Professor Griffiths’ testimony. Professor Griffith was the only textile technologist who gave evidence in the proceedings. KCA made the submission that Professor Griffith’s testimony was not challenged by contrary evidence, and that the same was accepted by the AAT. That submission would appear to be correct. Professor Griffith provided, in his initial statement of 29 August 2002 to the AAT, explanations at some length upon the following subjects:(i)the structure and features of textiles, and their major applications, being to clothing and furnishings;(ii)the processes of textile finishing, which, when applied to textiles, produce particular desired properties, including the increasingly common form of fabric finishing known as lamination; and(iii)the process of lamination, commonly involving the adhesion of a layer of foam to a fabric for enhanced thermal insulation. Those explanations of Professor Griffiths, accompanied by definitions provided in ‘Textile Terms and Definitions’ published by the Textile Institute, which he described as ‘the foremost international professional body of textile science and technology’, are largely reproduced in the reasons for decision of the AAT. Those definitions included ‘textile’, ‘fabric’, ‘fibre’, ‘finishing’ and ‘laminated fabric’.

Decision

Reasons for decision

CONTI J
KCA sought further as a consequence that KCA’s claim should be remitted to the AAT to determine the quantum thereof, on the basis of findings in its favour sought in the preceding paragraph. Thus KCA sought the remission to the AAT for determination of all issues in relation to this sixth ground of appeal. In the light of the complexities of the issues I am also determining, and the outcome of such determinations, I do not think that it is appropriate that I should resolve the merits of this additional complex issue, at least in advance of my publication of the principal issues arising on the application presently in the course of review. Amendment of the Scheme after the decision-making under challenge The issue addressed by this segment has been foreshadowed already in these reasons. The Textile Clothing and Footwear Strategic Investment Scheme Amendment 2003 (No 1) (‘the Amendment’) was gazetted on 23 July 2004, which was one day prior to the AAT’s handing down of its reasons for decision on 24 July 2004. In the course of the hearing below, the question arose as to whether the amendment may be properly taken into account in determining the proper construction of the Scheme prior to that amendment being made. Primarily, KCA’s submissions to the Court were framed in terms that seemingly raise no basis for consideration of the terms of that recent amendment to the Scheme. Nevertheless KCA additionally pressed for the resolution of this further issue in principle, in the context of the present application for judicial review, and referred me to authority purportedly bearing upon the issue, which I will now summarise. In Hepples v Federal Commissioner of Taxation (1991-1992) 173 CLR 492 at 539, McHugh J spoke of his ‘… difficulty with the notion that the terms of an amendment enactment can throw light on an earlier enactment’, but nevertheless referred to the existence of ‘high authority for the proposition that the terms of an amendment Act may be used to construe the Act which it amends’, being Grain Elevators Board (Vic) v Dunmuncle Corporation (1946) 73 CLR 70 at 85-6 (per Dixon J as he then was) and Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403 at 414 (per Lord Sterndale MR. His Lordship’s dictum in Cape Brandy was later approved by the Privy Council in Commissioner for Inland Revenue v Hang Seng Bank Ltd [1991] 1 AC 306 at 324 (Lord Bridge delivering the advice of the Judicial Committee of the Privy Council). More recently in Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203 however, a Full Federal Court (Lockhart Burchett and Gummow JJ) said at 212 as follows:There was some debate before us as to the circumstances in which courts are entitled to examine a later statute to determine whether it throws any light upon the interpretation of an earlier statute. Plainly this course can be taken when the words of an earlier statutory are ambiguous, but if the words of the earlier statute are clear, little assistance can be gained from the later statute. Also, care must be exercised to ensure that the words in the later statute have not been inserted to remove possible doubts…’Subsequently in Interlego AG v Croner Trading Pty Limited (1992) 39 FCR 348 at 382, Gummow J (with whose reasons both Black CJ and Lockhart J agreed) observed as follows:‘There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, or at least to avoid a result which would render the amendment unnecessary, or futile or deficient…’

Ratio Decidendi

Legal Principle Established

Established by: CONTI J

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