Nepenthe Wines Pty Ltd and Australian Trade Commission
[2008] AATA 974
•3 November 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 974
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S 200600407
GENERAL ADMINISTRATIVE DIVISION ) Re NEPENTHE WINES PTY LTD Applicant
And
AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date3 November 2008
PlaceAdelaide
Decision The Tribunal sets aside the decision under review, and in place of that decision, decides that the sales of wine produced by the applicant and exported to Click Imports during the financial year ended 30 June 2005 should be taken into account as export earnings of the applicant for the purposes of assessing its entitlement to a grant under the Export Market Development Grants Act 1997 (Cth) in respect of that year. The Tribunal remits the matter to the respondent for reconsideration in accordance with these reasons.
D G Jarvis
(Signed)
Deputy President
CATCHWORDS
TRADE AND COMMERCE - Industry assistance - export market development grant - distributorship agreement between Australian wine producer and importer in USA – whether parties later entered into tripartite agreement with interposed Australian company – subsequent variation to agreement – whether property in wine passed to interposed company by virtue of variation – relevance of course of conduct – decision under review set aside and matter remitted to respondent for reconsideration
Export Market Development Grants Act 1997 (Cth), ss 109 and 110
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Haynes v McNeil (1906) 8 WALR 186
NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract, (9th Australian Edition, 2008)
REASONS FOR DECISION
3 November 2008 Deputy President D G Jarvis 1. In the financial year ended 30 June 2005 the applicant, Nepenthe Wines Pty Ltd (Nepenthe), carried on business in Australia as a vigneron and producer of wines, which it marketed under its own label. Nepenthe made an application pursuant to the Export Market Development Grants Act 1997 (Cth) (EMDG Act) for a grant in relation to wine exported from Australia during that year.
2. The Australian Trade Commission (Austrade) adjusted the export earnings claimed by Nepenthe by disallowing sales of $398,848.00, being the total of some twenty sales of wine that were exported to the United States of America during the relevant year, on the basis that the sales had been made to an Australian resident and not to an overseas purchaser. Following a request for review by Nepenthe, that decision was subsequently affirmed. Nepenthe has now applied to this tribunal for review of that affirming decision.
Issues before the Tribunal
3. The wine in question was purchased by Kooka Wines Inc, carrying on business as Click Imports (Click Imports), a corporation organised and existing under the laws of the State of Washington, USA. The issue before the tribunal is whether the wine that was the subject of the disputed sales was exported by Nepenthe, or whether the wine was sold to a buyer in Australia, namely Click Exports Pty Ltd (Click Exports), and whether that buyer exported the wine to Click Imports in the USA. This issue will in turn depend upon whether I am satisfied that property in the wine passed from Nepenthe to Click Imports.
Background
4. Nepenthe entered into a distributorship agreement, effective 1 January 2000, with Click Imports. The agreement was entered into for the purpose of promoting, selling and distributing Nepenthe’s wines in the USA. It contains detailed and comprehensive provisions as to the relationship between the parties, and is in a form commonly used where producers of goods appoint an overseas corporation to market and sell products in an overseas market.
5. Pursuant to clause 1 of the agreement, Nepenthe grants to Click Imports the exclusive right to promote, sell and distribute its wines in the USA, and by clause 2(a), this right is not assignable.
6. Under clause 2(b), unless Nepenthe otherwise instructs Click Imports, all orders to Nepenthe for wine are to be placed through Click Imports, and Click Imports is to be responsible for payment of such orders.
7. Under clause 3 of the agreement, the initial term of the agreement is five years commencing from 1 January 2000, and at the end of the initial term and each successive term, the agreement is renewed automatically for additional terms of five years. Rights of termination in various events, including breach, are provided for in clause 9. Under clause 9(d), the agreement can be terminated “at any time effective immediately on mutual agreement in writing signed by both parties” (exhibit R1, T9, page 98).
8. Provision is made in clause 5 for the parties to agree upon a budget or projected sales for future years, and this clause concludes:
“(Nepenthe) agrees to sell Merchandise to (Click Imports) as long as this Agreement is in force and in the amounts as agreed to by the parties on an annual basis or in effect by operation of the Agreement.” (exhibit R1, T9, page 97).
9. Clause 7 of the Agreement refers to shipment and the passing of title and risk. It provides as follows:
“(a) (Nepenthe) shall supply the Merchandise ordered by (Click Imports) palletized and crated for shipment, F.O.B., to the port of departure stipulated by (Click Imports).
(b) Except as provided in this Agreement, title and risk of loss or damage shall pass from (Nepenthe) to (Click Imports) upon delivery of the merchandise on board the shipping vessel at the F.O.B. point.”
10. Clause 17 provides for the modification of the agreement. It reads as follows:
“Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if evidenced in a writing signed by each party or an authorised representative of each party.”
11. After the commencement of the distributorship agreement, Nepenthe exported wine to Click Imports in accordance with the agreement.
12. According to the witness Tracie Lee Battersby, the Commercial Manager of Click Exports, that company was incorporated in December 1999 as a specialised service provider to export fine wine to the USA (exhibit R5, paragraph 5). In a letter to Nepenthe dated 24 March 2000, being soon after the commencement of the term of the distributorship agreement, Click Exports made the following suggestion:
“To ensure that your wine is shipped efficiently we would like to suggest that we use the services of a company called ‘The Vintessential Group’, who are specialist and licensed wine exporters. The services they provide cover all the major aspects required to export wine safely to its final destination. They will ensure that all the documentation and transportation is expedited with minimal cost and time.” (exhibit R5, Annexure C)
The letter then requested Nepenthe’s thoughts on the proposal.
13. In a further letter dated 5 May 2000 the Casama Group (of which Click Exports was a part) advised Nepenthe as follows:
“We have noted your concerns in regard to using an outside service to attend to all export documentation. We have therefore engaged Tony Liali to work with Click Exports to provide the services in-house. The services she will provide include:
• complete form B’s;
• complete all export levy documentation and payment;
• liaising with Click Imports USA and your winery re : availability of wine;
• liaising with John Crack for delivery and shipment of wine.
…
Click Imports USA will fax you their official order with Click Exports Pty Ltd as the exporter. Your invoice should be addressed to Click Exports FOB (plus GST from 1st July). Bills of Lading will be issued by John Crack to Click Exports. Trading terms will remain unchanged.
…
We are confident that the above approach further streamlines operations and paperwork, and as a result provides you a better service.” (exhibit R5, Annexure C)
From later communications it is apparent that the reference to John Crack relates to John Crack Freight Services, which I understand was the shipping company engaged to ship the wine to Click Imports.
14. It appears from a facsimile of 11 September 2000 that Nepenthe understood that the earlier communications related to “changes to export procedures” whereby Click Exports would be “handling the paperwork for the Click orders in future”. The facsimile sought clarification as to what costs would be involved. Click Exports responded on 13 September 2000 that there would be no extra costs to Nepenthe, and referred again to services that it would provide. The facsimile added:
“Nepenthe are to invoice Click Exports for each shipment FOB (plus GST). Click Exports will pay as per your usual trading terms with Click Imports.” (exhibit R5, Annexure C)
15. After this matter came on for hearing, counsel for Austrade said that he had been instructed that Nepenthe had entered into a tripartite agreement between Click Exports, Click Imports and Nepenthe, and that this agreement made it clear that the exporter of the Nepenthe wine was Click Exports and not Nepenthe. The proceedings were then adjourned to enable the parties to search for and provide a copy of the asserted tripartite agreement.
16. Austrade subsequently tendered four different tripartite agreements between four different Australian wineries, Click Exports, and Click Imports (or in one case, the Click Wine Group), which agreements were said to be in the same terms as the asserted tripartite agreement involving Nepenthe. The copy “sample” agreements produced made it clear in each case that the Australian winery sold its wine to Click Exports for on-sale to Click Imports in the United States. However, the agreements were not themselves identical. It was provided in three of the agreements produced that title in the goods would pass from the producer to Click Exports upon delivery of the merchandise to the warehouse or shipping vessel at the F.O.B. point, but in the fourth agreement, there was a retention of title clause, and payment was to pass to Click Exports or to Click Imports “as the case may be” when the producer had been paid in full for the merchandise (see the “Shipment” clauses in Annexures D and E to exhibit R1, and exhibits R8(a) and R8(b)).
17. I was subsequently provided with evidence of searches that had been made by Nepenthe, Click Exports and Click Imports for a copy of the asserted tripartite agreement. No-one could find a copy. For reasons to which I will refer below, I find that no such tripartite agreement was ever entered into by Nepenthe Wines.
18. Prior to the resumed hearing, officers of Click Exports provided further information about Click Exports and its function and relationship with Click Imports. Ms Battersby deposed that in 2001, Click Exports and Click Imports entered into an “overseas representation agreement”. This agreement states in part:
“Whereas, (Click Exports) wishes to establish and develop a market in the United States of America for its branded and merchandised Australian wines, it hereby appoints (Click Imports) as its USA marketing agent for the furtherance of this purpose.” (exhibit R5, Annexure A)
The agreement also provides that Click Imports is to refer all orders to Click Exports. As a result, Click Imports was not to make direct orders to Australian wineries where their wines were sourced by Click Exports (see exhibit R5, paragraphs 10 and 11, and Annexure B).
Legislative Scheme
19. Section 3 of the EMDG Act provides in effect that the object of the Act is to bring benefits to Australia by encouraging the creation, development and expansion of foreign markets for (relevantly) Australian goods, by providing for an assistance scheme under which small and medium Australian exporters committed to and capable of seeking out and developing export business are repaid part of their expenses incurred in promoting their products.
20. Section 4 provides for entitlement to a grant where an eligible person has incurred eligible expenses in a grant year “in relation to eligible products” (s 4(b)). Section 107 contains definitions of relevant expressions, including “eligible products” which are defined to mean “eligible goods”.
21. Sections 109 and 110 provide for when a person is taken to sell eligible goods in circumstances where the seller sells eligible goods at a time when the goods are in Australia, and the buyer later exports the goods. At the relevant time, these sections provided as follows:
“109 Sale of eligible goods
A person is taken to sell eligible goods only if Austrade is satisfied that the property in the goods passes from that person to a person that is not a resident of Australia at the time when the goods are sold.
110Seller taken to export eligible goods in certain circumstances
If:
(a)a person (seller) sells eligible goods at a time when the goods are in Australia; and
(b)the buyer later exports the goods;
the seller (not the buyer) is taken to export the goods.”
22. It was common ground that the wine produced by Nepenthe constituted “eligible goods” for the purposes of ss 109 and 110 of the EMDG Act.
Parties’ Contentions
23. Nepenthe contends that under the distributorship agreement effective 1 January 2000, title in wine exported to Click Imports passed from Nepenthe to Click Imports upon delivery of the wine on board the shipping vessel at the F.O.B. point (see clause 7, which is set out in paragraph 9 above), and that under ss 109 and 110 of the EMDG Act, Nepenthe, and not Click Exports, is taken to sell the wine, and so was the entity entitled to a grant under the EMDG Act. Nepenthe further contends that this position was not affected by the role which Click Exports assumed after the commencing date of the distributorship agreement.
24. Austrade contends that as had occurred with other Australian wineries, Nepenthe, Click Exports and Click Imports had entered into a tripartite agreement that took the place of the distributorship agreement, and that under the tripartite agreement, title in goods passed from Nepenthe to Click Exports, thus entitling Click Exports to the grant under the EMDG Act. In the alternative, Austrade contends that because of the role assumed by Click Exports, Click Exports became the purchaser of the goods from Nepenthe, and that Click Exports then exported the goods to Click Imports; that Click Imports was the agent of Click Exports for distributing the wine so purchased in the United States of America; and that Click Exports, and not Nepenthe, was entitled to the grant.
Consideration
25. The above competing contentions raise a number of questions, which I will consider in turn.
Did the applicant enter into a tripartite agreement?
26. In her evidence Ms Battersby from Click Exports confirmed the belief to which she had deposed in an affidavit (exhibit R5) that Click Imports, Click Exports and Nepenthe “ratified” a tripartite agreement in or about 2001. However, she further said that she had been unable to locate a copy of the tripartite agreement to which she referred, and believed that it may have been misplaced due to office moves over the years.
27. The former secretary of Click Exports, one Frank Joseph Kraps, deposed that he was “almost certain” that a tripartite agreement with Nepenthe was “ratified” by Click Imports, Click Exports and Nepenthe (exhibit R4). He also confirmed that Click Exports was unable to locate a copy of any such agreement and said that he thought that the agreement might have been lost in the course of moving offices over the years. He gave evidence that Click Exports had engaged a retired gentleman, a Mr Cardillo, to contact some five or six Australian wineries from which Click Imports was purchasing wine in order to prepare tripartite agreements and have them executed. He said that if there had been an issue with one of the wineries not signing an agreement, he would have known of that, since Mr Cardillo reported to him. However, Mr Kraps conceded that he could not recall signing all of the tripartite agreements that would have been involved, and that it was possible, but highly unlikely, that a tripartite agreement was not signed with Nepenthe.
28. James Tweddell, the managing director of Nepenthe at the relevant time, gave evidence that he had no knowledge of any tripartite agreement until the matter had been raised during the course of the present proceedings. The distributorship agreement had been executed by him and his late father, Dr Tweddell, and he said that it was not possible that any tripartite agreement would have been signed off without his involvement. He said that the distributorship agreement had rolled over at the expiration of the initial term of five years commencing from 1 January 2000, since there had been no need to replace the arrangements with Click Imports. He also said that he continued to have discussions directly with Click Imports as to pricing strategies, marketing contributions and marketing opportunities in the USA, and enquiries were made directly to Nepenthe from Click Imports as to the availability of stock before orders were received by Nepenthe.
29. Nepenthe’s business had been taken over before the hearing, but a Ms Tania Webster was called by Nepenthe. She said that she had previously worked as Mr Tweddell’s personal assistant, and had archived all of Nepenthe’s papers after the take over. She gave evidence that she went through all of the Nepenthe files back to 1998, but had not found a copy of any tripartite agreement with Click Exports. She said that if Dr Tweddell had signed any tripartite agreement, she would have found it.
30. In view of the potential importance of whether any tripartite agreement was entered into, I gave Austrade the opportunity, after the conclusion of the oral evidence adduced by each party, to make further enquiries of Click Imports to see whether they had a copy of any tripartite agreement with Nepenthe. Austrade subsequently produced an affidavit of Peter Marion Click (exhibit R7). Mr Click deposed that by about 1999, Click Imports held distributorship agreements with “approximately one dozen” wineries, and he explained the purpose of Click Export’s role in consolidating the export process to Click Imports. He said that his recollection was that “most, if not all, Australian wineries signed a tripartite agreement” (exhibit R7, paragraph 11), and that after Click Exports’ arrangement had crystallised, Click Imports dealt solely with Click Exports as far as the purchase of Australian produced wine was concerned, and that all wines produced by Nepenthe were purchased from Click Exports. He also said that no tripartite agreement with Nepenthe had been found, despite searches for it, and that he did not specifically recall signing any such agreement. He did not say why it was that no such agreement could be found.
31. There is therefore conflicting evidence as to the beliefs and recollections of different officers of the three parties involved. Mr Cardillo, the person involved in arranging for the execution of tripartite agreements by the Australian wineries in question (five or six wineries according to Mr Kraps, or approximately one dozen according to Mr Click) was not called as a witness. None of the three parties was able to locate a copy of a tripartite agreement with Nepenthe. No correspondence referring to any such agreement was produced, and the exchange of communications to which I referred in paragraphs 12-14 above did not contemplate that some further formal agreement should be executed. I find that no such agreement was ever entered into by Nepenthe.
32. Counsel for Austrade also contended that the course of conduct between the parties was consistent with the terms of the sample tripartite agreements, and that this was evidence that such an agreement had been entered into. Counsel relied in support of his contention on Haynes v McNeil (1906) 8 WALR 186 and Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. It is of course clear from those and other authorities that a contract can arise from a course of conduct, particularly where the parties are involved in a long term commercial relationship. However, whether such a course of conduct constitutes a contract, or a variation of some pre-existing contract between the parties, will depend on the facts of each case. In the present matter, there was no proof that a form of tripartite agreement had ever been proffered to Nepenthe by Click Exports. As I have said, the exchange of communications relating to the proposed role of Click Exports does not refer to any tripartite agreement; nor does it suggest that any further action would be necessary on the part of Nepenthe, notwithstanding that the exchange of communications concluded after the proposed commencement date of the altered arrangement entailing the services of Click Exports. In Empirnall Holdings, a printed contact had been submitted by one party to the other, but never executed. However, that was not what occurred in the present matter.
33. I regard the contention based in the course of conduct as unconvincing. I find from the communications referred to in paragraphs 12-14 above and from Mr Twedell’s evidence that Nepenthe understood that Click Exports’ role was simply to facilitate the process of shipping and exporting the wine in question. On that understanding on the part of Nepenthe, the course of conduct was equally consistent with the continued existence of the distributorship agreement.
Relevance of role of Click Exports
34. The above communications from Click Exports record its proposed role in relation to the export of wine to Click Imports, and the response from Nepenthe evidences Nepenthe’s understanding of the changes that would be entailed in consequence of Click Exports’ proposals. However, it was not suggested that Nepenthe or Click Imports (either itself or through the agency of Click Exports) terminated the distributorship agreement by mutual agreement pursuant to clause 9(d), or in accordance with the unilateral rights of termination contained in clause 9, and the relevant letters from Click Exports were not expressed as notices of termination of the distributorship agreement.
35. Further, the communications relating to the role of Click Exports were not expressed to be a modification of the distributorship agreement in a form that would satisfy clause 17 of the distributorship agreement, which requires any modification of the agreement to be in a writing signed by each party or its representative. However, I consider that the changes to the distributorship agreement were binding notwithstanding that the changes were effected informally, that is, not in accordance with clause 17: see NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract, (9th Australian Edition, 2008) at [4.32] page 201, where it is suggested that “the very clause governing contract changes may itself be changed (usually tacitly by the conduct of the parties)”.
36. The communications from Click Exports as to their role, which they said would commence from 1 June 2000, were understood by Nepenthe to constitute “changes to export procedures”, with Click Exports “handling the paperwork for the Click orders in the future” (see paragraph 14 above). This is consistent with the way in which the proposed varied procedures emanated; that is, Click Exports’ role was expressed to be a variation of the proposal in the first letter (being the letter of 24 March 2000, to which I referred in paragraph 12 above) where the purpose of the proposed change was said to be “to ensure that (Nepenthe’s) wine is shipped efficiently.” I find that the exchange of letters and facsimiles constituted a variation of the original distributorship agreement, and that (as can be inferred from the affidavit of Mr Click, exhibit R7) Click Exports negotiated that variation on behalf of Click Imports.
37. Furthermore, the documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) indicate that the course of dealing between Click Imports and Nepenthe changed over the period after the commencement of the distributorship agreement and up to the year in dispute. Early in that period, Click Imports placed orders directly on Nepenthe, and Nepenthe invoiced Click Imports and was paid by Click Imports. However, later on, and consistently with the communications from Click Exports, Click Exports sent orders to Nepenthe, Nepenthe invoiced Click Exports, and Click Exports paid the invoices. To that extent, I infer that the distributorship agreement was varied by the subsequent course of conduct of the parties.
Does the distributorship agreement subsist, or was it replaced by the variation involving Click Exports?
38. If the subsequent variation of the distributorship agreement had the effect of replacing that agreement, then it would follow that property in the wine that was the subject of orders from Click Exports would have passed from Nepenthe to Click Exports as purchaser, and Click Exports would then have been the exporter of the wine for the purposes of the EMDG Act.
39. When a commercial agreement is varied by a later agreement (whether expressly or by a course of conduct) it is necessary to determine whether the variation brings about a termination of the original agreement, and if not, whether it effected a partial termination, or the addition of further terms to the original agreement. A number of cases dealing with such issues are discussed in Cheshire and Fifoot’s Law of Contract, (9th Australian Edition, supra) at [22.5]. It appears from those authorities that the above issues must be determined by the intention of the parties as disclosed in the later variation agreement. The learned authors also refer to authorities that suggest that the question of whether or not parties intended to terminate their original contract can be inferred from the degree to which the original contract has been modified, so that if the new terms are so far inconsistent with the original contract so as to destroy its substance, it can be inferred that the parties intended to abrogate it and replace it with a new and independent contract.
40. It is apparent from its facsimile of 11 September 2000 that Nepenthe did not intend that the original distribution agreement would be terminated; rather, Nepenthe simply understood that Click Exports would be providing certain services to facilitate the export of wine to Click Imports. It therefore cannot be said that there was a common intention by the parties to terminate the original distributorship agreement. Further, the communications between Click Exports and Nepenthe only related to the export services that were to be provided by Click Exports; the communications did not deal with the large majority of the matters that were covered by the original distributorship agreement so as to disclose an intention by the parties to terminate that agreement or to replace it with the agreement constituted by the exchange of communications between Click Exports and Nepenthe.
41. The authors of Cheshire and Fifoot refer to one other factor, namely that where parties are added to a contract that otherwise remains unchanged, the general rule is that a new contract comes into existence in place of the former contract; that is, that there has been a novation. However, that is not what occurred in the present matter. The original contract did not remain unchanged, but was varied by the involvement of Click Exports. As I have said, Click Exports did not become a party to the original distributorship agreement; rather, Click Exports was acting on behalf of Click Imports to facilitate the performance of the distributorship agreement.
42. As I have said above, the course of conduct between the parties was not inconsistent with the continued existence of the distributorship agreement as varied by the services that Click Exports was providing, if (as I infer was the case) Nepenthe assumed that Click Exports was merely acting on behalf of Click Imports to facilitate the procedures involved in exporting the wine in question to Click Imports. Further, the ongoing relations between James Tweddell and Click Imports, to which I referred in paragraph 28 above, were also consistent with the continued existence of the distributorship agreement.
Did the variation affect the agreement between Nepenthe and Click Imports as to the passing of property?
43. Under clause 7 of the distributorship agreement property in the goods exported to Click Imports passes from Nepenthe to that corporation. The proposal by Click Exports did not stipulate that the wine would be sold by Nepenthe to Click Exports. Nor did the proposal refer to clause 7 of the distributorship agreement, or to the issue of the passing of the property in the wine forwarded by Nepenthe in response to orders placed by Click Exports. Click Exports’ stated proposed role of facilitating the export of the wine was not inconsistent with the continued operation of clause 7. Indeed, in a different clause, namely clause 3(b), the distributorship agreement expressly contemplates that orders to Nepenthe might be placed otherwise than through Click Imports and that someone other than Click Imports might be responsible for payment of orders. Those situations are expressed to apply if Nepenthe so instructs Click Imports, whereas in the events that occurred, they arose at the instigation of Click Exports (in order to assist Click Imports), but the distributorship agreement does not provide that the alternative arrangements for placing orders and payment contemplated by clause 3(b) affect clause 7(b), which provides for the passing of title from Nepenthe to Click Imports.
44. For the above reasons I find that the operation of clause 7 was not affected by the variation to the distributorship agreement arising from Click Exports’ proposal, or by the course of conduct adopted by the parties. I am satisfied that by virtue of clause 7 of the distributorship agreement, property in the wine in question passed from Nepenthe to Click Imports. That corporation was not a resident of Australia at the time when the wine was sold to it. The wine was sold at a time when the goods were in Australia, and Click Imports later exported the wine, using the services of Click Exports, to facilitate such export. As a result, the sales of the wine in question should have been taken into account by Austrade when calculating Nepenthe’s entitlement to a grant under the EMDG Act.
Other Matters
45. Nepenthe also placed reliance on the fact that it was not adding GST to the price of the wine in question, and referred to a letter dated 3 April 2001 ruling which it had obtained from the Australian Taxation Office (exhibit R1, T31, page 198). This ruling is not, of course, determinative of the issue before me. However, it is a further illustration of Nepenthe’s understanding, that is, that Nepenthe was itself exporting the wine, and that the sales were therefore not subject to GST.
46. I referred in paragraph 19 above to the overseas representation agreement between Click Exports and Click Imports. It was contended that by virtue of that agreement, Click Imports became the agent of Click Exports, and therefore it was not correct to regard Click Exports as being the agent of Click Imports.
47. However, there is no evidence that Nepenthe was provided with a copy of the agreement, or (except to the extent to which I have referred in paragraphs 13 and 14 above) that it was made aware of the relationship between Click Exports and Click Imports. Further, it is a basic tenet of the common law that with certain specific exceptions, whatever a person may do personally, may be done by another on his or her behalf. The existence of the overseas representation agreement does not mean that Click Imports could not have requested Click Exports to carry out relevant actions on its behalf, and therefore as its agent, in facilitating the export and shipment of wine to it. I find from the exchange of communications that produced the variation to the agreement, and from the evidence of James Tweddell, that Nepenthe understood that Click Exports was acting on behalf of Click Imports in facilitating and expediting the export and shipment of the goods to Click Imports.
48. The intention of the parties as to the effect of Click Exports’ involvement is also evidenced by the assurance by Click Exports that the role of Click Exports would not entail extra costs to Nepenthe (see the fax dated 13 September 2000 from Click Exports to Nepenthe Wines, exhibit R5, Annexure C). That assurance would presumably not have been given if Click Exports had contemplated that by virtue of its role, property in the goods would have passed from Nepenthe to Click Exports, thus depriving Nepenthe of the ability to claim a grant under the EMDG Act.
49. In reaching my conclusion, I have not overlooked the reference in the letter of 5 May 2000 to Click Exports being described as “the exporter,” but this reference must be construed in the context of that letter and the communications that preceded and followed it, and it is not inconsistent with Nepenthe’s understanding of the role which Click Exports was to assume.
50. I have also not overlooked the references in Mr Click’s affidavit to the way in which Click Imports and Click Exports functioned, that is that Click Imports did not make any direct purchases from Nepenthe, that the wines produced by Nepenthe were purchased by Click Imports from Click Exports, and that Click Exports did not represent Click Imports in Australia or make binding relationships on behalf of Click Imports with others. However, whilst those matters were no doubt clear to Mr Click, and are consistent with the terms of the overseas representation agreement between Click Exports and Click Imports to which I have referred above and with the tripartite agreements that were entered into with certain other Australian wineries, there is no evidence that Nepenthe was informed of those matters, or that it agreed to the situation described by Mr Click. On the contrary, I have referred above to evidence (which I accept) that Nepenthe did not understand those matters. I find that there was no agreement between Nepenthe and Click Imports to interpose Click Exports as the purchaser of the wine exported to Click Imports.
51. For the sake of completeness, I also refer to an email dated 21 November 2006 from one Karla Horwitz, the Chief Financial Officer of the Click Wine Group, in which she confirms that:
“Click Exports is ordering/ buying the wine from Nepenthe on behalf of Click Imports.” (exhibit R1, T31, p 196)
Nepenthe relied on that email in support of its argument that Click Exports was in fact the agent of Click Imports. The email is consistent with the finding that I have made as to the role of Click Exports, but I do not regard the email in itself as conclusive; the relationship between Click Exports and Click Imports is a question of law that must be determined by this Tribunal in the light of all of the facts relevant to that issue, and the assertions or views of witnesses as to the nature of the legal relationship between the parties are not binding on this Tribunal.
Decision
52. The Tribunal sets aside the decision under review, and in place of that decision, decides that the sales of wine produced by the applicant and exported to Click Imports during the financial year ended 30 June 2005 should be taken into account as export earnings of the applicant for the purposes of assessing its entitlement to a grant under the Export Market Development Grants Act 1997 (Cth) in respect of that year. The Tribunal remits the matter to the respondent for reconsideration in accordance with these reasons.
I certify that the 52 preceding paragraphs are a true copy
of the reasons for the decision herein of
Deputy President D G JarvisSigned: .....................................................................................
Lisa Wunderer AssociateDates of Hearing 11 September 2007, 14 March 2008, 29 July 2008 and 23 September 2008
Date of Decision 3 November 2008
Advocate for the Applicant Mr W Colmer
Counsel for the Respondent Mr P d’Assumpcao
Solicitor for the Respondent Australian Government Solicitor
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