Luna Lighting International Pty Ltd (Formerly Con Kallergis Pty Ltd) and Australian Trade Commission
[2000] AATA 881
•6 October 2000
DECISION AND REASONS FOR DECISION [2000] AATA 881
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V1999/1448
GENERAL ADMINISTRATIVE DIVISION )
Re LUNA LIGHTING INTERNATIONAL PTY LTD (formerly CON KALLERGIS PTY LTD)
Applicant
And AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Mr B. H. Pascoe, Senior Member Mr D. Elsum, AM, Member Mr W. G. McLean, Member
Date6 October 2000
PlaceMelbourne
Decision The Tribunal affirms the decision under review.
..…..(Sgd) B. H. Pascoe..............
Senior Member
CATCHWORDS
EXPORT MARKET DEVELOPMENT GRANT – under insolvency administration – insolvent when grant payable – whether entitlement preserved – statutory construction – intention of legislation
Export Market Development Grants Act 1997
Sargood Brothers v Commonwealth of Australia (1910) 11 CLR 258
Cooper Brookes (Woolongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Mills v Meeking & Another 91 ALR 16
REASONS FOR DECISION
6 October 2000 Mr B. H. Pascoe, Senior Member Mr D. Elsum, AM, Member Mr W. G. McLean, Member
This is an application to review a decision of the respondent to refuse to make a payment of a grant to the applicant for the 1997/1998 grant year pursuant to the Export Market Development Grants Act 1997 ("the Act") because the applicant was under insolvency administration as defined by section 15 of the Act.
At the hearing the applicant, Luna Lighting International Pty Ltd (formerly known as Con Kallergis Pty Ltd) was represented by Mr I. R. Jones of counsel and the respondent by Mr P. Hanks of counsel. No witnesses were called by either party. The Tribunal had the documents provided by the respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T17). An affidavit of Mr J. Dandanis, solicitor, with a copy of the results of a company search was tendered by the applicant. The respondent tendered copies of determinations by the Minister of the "initial payment ceiling amount" and the "balance distribution date" for the 1997/1998 grant year together with the determination of Austrade of the "payout factor" for that year.
The facts of this matter were not in dispute and a statement of agreed facts set out the following:
"1.On 11 June 1998, the Minister determined, pursuant to s 68(1)(a) of the Export Market Development Grants Act 1997 (the Act), the initial payment ceiling amount for grant year 1997/1998 to be $60,000.
2.By an application lodged with the Respondent on 26 November 1998, the Applicant applied for a grant under the Act in respect of the 1997-98 grant year.
3.By Notice of Determination 176444 dated 8 February 1999, Austrade determined that the Applicant was entitled to a provisional grant amount of $132,012, of which $60,000 was immediately payable and the balance, $72,012, 'may be forwarded with this year's final distribution, depending on available funds'.
4.On 8 February 1999, in accordance with s 83(3)(a) of the Act, the Applicant was paid an advance equal to the initial payment ceiling of $60,000 by Notice of Determination No. 176444.
5.On 12 May 1999 Kenneth S Sellers and David Neil Lockwood (the Administrators) were appointed as Joint and Several Administrators of the Applicant. Accordingly, subject to s 15(2) of the Act, the Applicant became 'under insolvency administration' for the purposes of the Act on 12 May 1999.
6.On 15 June 1999, the Minister determined, pursuant to s 68(1)(b) of the Act, the balance distribution date for grant year 1997/98 to be 15 June 1999.
7.The Administrators did not provide a certificate under s 15(2) of the Act that the Applicant was able to pay all its debts as and when they become due and payable.
8.On 18 June 1999, the Administrators forwarded a facsimile letter to the Respondent, in which they stated that, as at that date, the Applicant's debts were frozen and, until the creditors passed an appropriate resolution, the Administrators would 'not be in a position to accurately determine the company's solvency position'.
9.On 18 June 1999, the Respondent decided that no further payment could be made to the Applicant in respect of the 1997/98 grant year.
10.On 21 June 1999, a delegate of the respondent determined, pursuant to s 69 of the Act, the 'payout factor' for the grant year 1997/98 to be 0.9894189.
11.Following a request for reconsideration, the Respondent decided, on 24 November 1999, to confirm the decision that no further payment could be made to the Applicant in respect of the 1997/98 grant year.
12.On 17 December 1999, the Applicant applied to the Tribunal for review of the decision that no further payment could be made to the Applicant in respect of the 1997/98 grant year.
13.On 15 May 2000, the Applicant ceased to be 'under insolvency administration' for the purposes of the Act."
Under the Act, there is a cap on annual funding of grants which, in the relevant year, was $150 million. To allow for this cap, provisional entitlements in excess of the "initial payment ceiling amount" of $60,000 were to be paid in two stages. Firstly, the initial payment ceiling amount was paid. As soon as practicable after the "balance distribution date" as determined by the Minister, Austrade calculated the "payout factor" so as to limit the total amount of grant to the total available, or capped, funds. In the 1997/98 year the payout factor was 0.9894189 which would have given the applicant an entitlement to a balance of $71,250. However, pursuant to section 87 of the Act, the respondent determined that the grant was not payable to the applicant as it was under insolvency administration.
Section 87 of the Act provides (so far as is relevant to this matter):
"87(1) Despite Subdivision 2, a grant, or an advance on account of a grant, is not payable to a person if, at the time when, or at any time after, the person becomes entitled to the grant or advance:
(a) …—the person or (where applicable) an associate of the person; …
(b) …
is under insolvency administration.(2) Subsection (1) does not affect the validity of a payment of grant, or of an advance on account of grant, to the person at a time when:
(a) …—neither the person, nor any associate of the person; …
(b) …
was under insolvency administration."
This section follows sections 85 and 86 which use the same language applying to a person who ceases to be a resident of Australia or to a person against whom there is a disqualifying conviction outstanding. Section 15 defines "under insolvency administration" and provides in subsection (2) that a body corporate is taken not to be under insolvency administration "…if there is in force a certificate given by the person administering the body corporate stating that the body corporate is able to pay all its debts as and when they become due and payable." There was no dispute that the applicant was under insolvency administration from 12 May 1999 to 15 May 2000 within the meaning of the Act.
It was submitted for the applicant that the effect of section 87 is to ensure that payments of grant are not made to companies whilst under insolvency administration but not to remove the entitlement to the grant. It was said that the section should not be constructed so as to take away an existing entitlement or right unless the clear words of the statute so allow. Mr Jones argued that there was a distinction between the language of eligibility or entitlement and that of payment. It was submitted that if Parliament had intended to exclude an entitlement or right, it would have used the language of ineligibility to such entitlement or right rather than the grant being "not payable". It was said that such an interpretation promoted the purposes of the Act and should be adopted pursuant to section 15AA of the Acts Interpretation Act 1901.
For the respondent it was submitted that there was no ambiguity or difficulty of construction of section 87 and its clear meaning was that a grant is not payable to a company which is under insolvency administration at the date of entitlement or at any time thereafter, other than where an advance or the balance of a grant has been made before insolvency administration. It was argued, further, that, even if two constructions were open, the clear purpose of the Act was to deny payments to non-residents, persons with a disqualifying conviction and insolvent companies. It was said to be impractical and would require additional legislation for the respondent to hold an amount of entitlement on account of an insolvent company during insolvency to be paid in the event of the company coming out of insolvency administration.
It is noted that, under sections 7(1)(f) and 13 of the Act, there is no eligibility for a grant where an applicant is under insolvency administration at the time of application for a grant. It was submitted for the respondent that these sections result in no entitlement where the applicant was insolvent at the date of application while section 87 results in loss of payment of any entitlement where insolvency arises at or after the time of the determination of an entitlement.
We have no difficulty in accepting that the words of section 87 of the Act are clear in denying the payment of an advance or any balance of a grant to a company which comes under insolvency administration after becoming entitled to a grant. Pursuant to section 80 of the Act, the applicant became entitled to a grant on 8 February 1999 when the respondent made the determination. Under section 81(3), as the provisional grant amount was greater than the "initial payment ceiling amount", the applicant was entitled to receive an advance equal to that initial payment ceiling amount of $60,000. Pursuant to section 81(2)(b), the balance of the grant was then payable when the final amount of the grant was determined. This latter section is contained in Subdivision 2 of Division 3 of Part 7 of the Act. Section 87 commences with the words "Despite Subdivision 2…" and provides that a grant is not payable if, at the time the company became entitled "or at any time after", the company is under insolvency administration.
In this case, the applicant became entitled to a grant on 8 February 1999, correctly received an advance at that date, would have been entitled to payment of the balance after calculation of the payout factor in June 1999 but, after the applicant became entitled and before that subsequent payment date, was under insolvency administration. As a consequence, the balance of the grant was not payable. These are the clear words of the section.
The applicant sought to rely on the words of O'Connor J in the High Court decision of Sargood Brothers v The Commonwealth and Another (1910) 11 CLR 258 (at page 279):
"It is a well recognized rule in the interpretation of Statutes that an Act will never be construed as taking away an existing right unless its language is reasonably capable of no other construction."
However, it should be noted that this passage from the judgement is followed by the following words:
"… On the other hand, it must never be forgotten that rules of interpretation are formulated for the purpose of aiding the Court in ascertaining the intention of the legislature from the language it has used. This Court has on many occasions laid down and acted upon principles of interpretation applicable in this case. In the State of Tasmania v. The Commonwealth (1 CLR 329, a p 339) the learned Chief Justice adopted the following statement from the judgment of Lord Chief Justice Tindal in the Sussex Peerage Case (11 Cl. & F., 85, at p 143):—'My Lords, the only rule for the construction of Acts of Parliament is, that they should be construed according to the intent of the Parliament which passed the Act. If the words of the Statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do in such a case best declare the intention of the law-giver.' ..."
In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 Gibbs CJ said (at page 305):
"…if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. …On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice."
In the same case Mason and Wilson JJ said (at page 321):
"Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended."
In Mills v Meeking and Another (91 ALR 16), Dawson J, in commenting on section 35 of the Interpretation of Legislation Act 1984 (Vic), which is in very similar terms to section 15AA of the Acts Interpretation Act 1901, said (at pages 30 and 31):
"… The approach required by s 35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to rewrite it, in the light of its purposes."
In our view, this is not a case where the literal meaning of section 87 should be modified to conform with a different legislative intention. We have no doubt that the section clearly reflects the intention of the legislature to deny payment to a person who is under insolvency administration. To meet the applicant's expectation the section would need to be rewritten to specifically preserve the entitlement to payment whilst a company is under insolvency administration with such payment to be made if and when the company ceases to be under such insolvency administration. Apart from being somewhat impractical, it requires more than a different interpretation of the section but a rewriting of it. Here, the words and the intention are clear and unambiguous. The combination of subsections (1) and (2) of section 87 are, in our view, a clear expression of the legislature to deny payment of a grant to an applicant who is under insolvency administration at a time when such payment is due.
It follows that the decision under review is affirmed.
I certify that the twelve (12) preceding paragraphs are a true copy of the reasons for the decision herein of
Mr B. H. Pascoe, Senior Member
Mr D. Elsum, AM, Member
Mr W. G. McLean, MemberSigned: .....................................................................................
Personal AssistantDate/s of Hearing 17 August 2000
Date of Decision 6 October 2000
Counsel for the Applicant Mr I. R. Jones
Solicitor for the Applicant Zaparas & Dandanis
Counsel for the Respondent Mr P. Hanks
Solicitor for the Respondent Tuckers
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