REMOSO PTY LTD (trading as HOLDEN SPECIAL VEHICLES) and SECRETARY, DEPARTMENT OF INNOVATION, INDUSTRY, SCIENCE AND RESEARCH
[2010] AATA 271
•16 April 2010
Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL N° 2008/5043
GENERAL ADMINISTRATIVE DIVISION
Re:PREMOSO PTY LTD (trading as HOLDEN SPECIAL VEHICLES)
Applicant
And:SECRETARY, DEPARTMENT OF INNOVATION, INDUSTRY, SCIENCE AND RESEARCH
Respondent
CORRIGENDUM
Tribunal: Mr Egon Fice, Member
Mr Conrad Ermert, Member
Date:28 April 2010
Place:Melbourne
Members Fice and Ermert made a Decision under s 43 of the Administrative Appeals Tribunal Act1975 (the Act) on 16 April 2010.
The Applicant’s solicitor advised the Tribunal on 27 April 2010 that there is an error in paragraph 63 of the decision and in the omission of the names of junior counsel at the end of the decision.
In accordance with s 43AA(1) of the Act, the Tribunal directs that the Registrar change 30 December 2008 to 30 September 2008 in paragraph 63; and at the end of the decision under Counsel for the Applicant add Mr M Fleming and under Counsel for the Respondent add Mr T Clarke.
(sgd) Egon Fice
Member
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 271
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/5043
GENERAL ADMINISTRATIVE DIVISION ) Re PREMOSO PTY LTD
(trading as HOLDEN SPECIAL VEHICLES)Applicant
And
SECRETARY, DEPARTMENT OF INNOVATION, INDUSTRY, SCIENCE AND RESEARCH
Respondent
DECISION
Tribunal Mr Egon Fice, Member
Mr Conrad Ermert, MemberDate16 April 2010
PlaceMelbourne
Decision The Tribunal sets aside the decision under review and in substitution decides that the Applicant is eligible for registration as an automotive component producer pursuant to s 26(2) of the ACIS Administration Act 1999. (sgd) Egon Fice
Member
AUTOMOTIVE INDUSTRY - registration as an automotive component producer –producer of automotive components for use in the production of a motor vehicle by a motor vehicle producer – fitment of components to partially completed motor vehicles – sale of components - produced as original equipment to at least $500,000 and production value of automotive components produced in Australia comprising at least 50 per cent of all automotive components produced in 12 months preceding application – meaning of current registration - meaning of ceases to have effect - decision under review set aside with Tribunal’s decision effective as per s 43(6) of the Administrative Appeals Tribunal Act 1975
ACIS Administration Act 1999 ss 3, 6, 7, 12, 14, 15, 17, 26, 110, 114
ACIS Administration Regulations 2000 regs 11, 12, 14
Acts Interpretation Act 1901 s 15AB
Administrative Appeals Tribunal Act 1975 s 43
Aged Care Act 1997 ss 10-1, 10-2
Customs Tariff Act 1995 Ch 87 of Sch 3
Goods Act (Vic) 1958
Migration Act 1958 s 82(4)
Lesi v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 134 FCR 27
Re Bolton; Ex Parte Beane (1987) 162 CLR 514
Re Spicer Axle Structural Components Australia Pty Ltd and Secretary, Department of Industry, Tourism and Resources [2006] AATA 1004
Secretary, Department of Health and Ageing v Marnotta Pty Ltd (2005) 88 ALD 720
Benjamin’s Sale of Goods, 7th Ed., 2006
REASONS FOR DECISION
16 April 2010 Mr Egon Fice, Member Mr Conrad Ermert, Member 1. On 1 May 2008 Premoso Pty Ltd (Premoso) applied to the Secretary, Department of Innovation, Industry, Science and Research (AusIndustry/the Secretary) for registration as an automotive component producer (ACP) pursuant to the ACIS Administration Act 1999 (the ACIS Act). On 30 September 2008 a delegate of AusIndustry notified Premoso in writing that its application had been refused. It did so because Premoso had failed to:
(a)satisfy AusIndustry that it was eligible to apply for registration as an ACP under s 17(1)(a)(ii) of the ACIS Act;
(b)provide satisfactory evidence that it was a producer of automotive components within the meaning of the ACIS Act; and
(c)satisfy AusIndustry that it had sold a thing produced from component parts.
2. On 27 October 2008 Premoso lodged an application with the Tribunal pursuant to s 114(c) of the ACIS Act seeking a review of AusIndusty's decision.
3. The issues which we must determine are whether Premoso:
(a)is a producer of automotive components;
(b)produces automotive components for use in the production of a motor vehicle by a motor vehicle producer;
(c)produced automotive components as original equipment to the value of at least $500,000 in the 12 months preceding its application; and
(d)can establish that its production value of automotive components produced in Australia comprises at least 50% of the production value of all automotive components it produced in the 12 months preceding the application.
producer of automotive components
4. Section 3 of the ACIS Act provides that the purpose of the Act is to give transitional assistance to encourage competitive investment and innovation in the Australian automotive industry. Under the Automotive Competitiveness and Investment Scheme (ACIS), eligible participants receive duty credits which can be applied against customs duty payable or paid on certain eligible imports. The Scheme applies not only to ACPs, but also to motor vehicle producers (MVPs), automotive machine tool producers (AMTPs) and automotive service providers (ASPs).
5. Mr Joel Stoddart, who is employed by Premoso in the position of Engineering Manager, gave evidence about the nature of the work conducted by Premoso. He said that in his role as Engineering Manager, he was responsible for all of Premoso's engineering functions including vehicle development, certification, safety and budget development/control. It was his duty to oversee the engineers, technicians and computer aided design operators employed by Premoso.
6. According to Mr Joel Stoddart, Premoso obtains a range of Holden motor vehicles which have been partially manufactured by GM Holden Ltd (Holden) and it modifies those vehicles to produce a range of sports motor vehicles with special design, appearance and enhanced performance. These modifications are made to the powertrain, interior, exterior, chassis and braking components of standard Holden vehicles. After the vehicles have been modified, they are returned to Holden which then sells them to motor vehicle dealers for on-selling to the public. They are sold under the brand name Holden Special Vehicle or HSV. Holden exports HSV motor vehicles for sale in the United Kingdom, the Middle East and New Zealand. The design and performance enhancement of HSV motor vehicles includes:
(a)a modified engine to give it increased power and performance;
(b)modified braking and suspension systems to improve the overall vehicle handling and performance;
(c)modified body panelling to give it an appealing performance vehicle appearance; and
(d)modified interior body trim to give the motor vehicle an appealing sense of luxury.
7. According to Mr Joel Stoddart, Premoso conducts its operations at Clayton in Victoria as well as Elizabeth in South Australia, and it employs over 200 workers. The arrangements between Premoso and Holden are at arm's length and the parties are not related. Premoso conducts the modification work for Holden pursuant to an agreement entitled Holden Special Vehicle Agreement dated 31 January 2008 (the HSV Agreement).
8. For the purpose of obtaining registration as an ACP, Premoso relied on a list of 10 automotive components it said it had assembled from component parts and, after assembly, had fixed, installed or incorporated into the Holden core vehicles. They were:
(a)road wheel (front, rear and spare);
(b)front suspension unit;
(c)rear suspension unit;
(d)rear stabilizer bar;
(e)front bumper;
(f)front fender vents;
(g)rear bumper;
(h)rear quarter panel cap;
(i)sailplane centre unit; and
(j)utility endgate.
9. Premoso provided exploded drawings showing the various sub-components that are assembled to produce the relevant automotive component. Premoso also provided a bill of materials setting out all of the sub-components assembled to produce the relevant automotive component. Although Premoso, in its original application, relied on the production of a number of other automotive components, the above 10 items were the only ones relied upon to establish its right to be registered as an ACP.
10. Insofar as it is relevant, s 17 of the ACIS Act provides:
(1)A person (not being a group of related companies that is treated as a single person in accordance with section 21) who is a producer of automotive components may apply to the Secretary for registration as an ACP if:
(a) in the 12 months preceding the application:
. . . .;
(ii)the production value of the automotive components produced by the person in Australia as original equipment was at least $500,000 and comprised at least 50% of the production value of all automotive components produced by the person; or
. . .
11. The expression a producer of automotive components is not defined in the ACIS Act. The Shorter Oxford English Dictionary defines produce as:
3. To bring forth. To bring into existence. a. gen. To bring (a thing) into existence from its raw materials or elements; to give rise to, bring about effect (an action, condition, etc.).
12. Section 7 of the ACIS Act, insofar as it is relevant, provides:
Assembly of components can be production
(1)For the purposes of this Act, a person is taken to produce a thing even if the process of production consists entirely of assembling the thing from component parts and the person does not produce any of those component parts.
No production unless sale has occurred
(2)For the purposes of this Act, a person is taken to produce a thing only at the time when the person sells the thing produced.
13. Quite clearly, for the purposes of the ACIS Act, the concept of production is broader than that generally understood by the verb produce. The second point to note is that s 7(2) is, in effect, a deeming provision such that a person cannot be said to produce a thing until and unless that thing is sold. Although Mr Caleo SC, who appeared for Premoso, said that s 7(2) goes only to timing and that productive activity can take place in any event prior to sale, it seems to us that s 7(2) goes further than that. If the thing produced is never sold, then, as far as the ACIS Act is concerned, that person has not produced an automotive component if the thing can be so described. Useful assistance may be obtained from the explanatory memorandum to the ACIS Administration Bill 1999 and ACIS (Unearned Credit Liability) Bill 1999. The explanatory memorandum refers to the minimum requirements under ACIS for recognising production generally. Clause 7 reads:
Clause 7 – meaning of production of goods and provision of services in Australia
This clause sets out the minimum requirements under ACIS for recognising production generally, and production in Australia of: engines; motor vehicles; engine components; automotive components; automotive machine tools; automotive machine tooling; and the provision of automotive machine services. These definitions are required for determining eligibility for registration under ACIS and for determining the value of production for calculating ACIS production credit.
14. As we understand it, s 7(2) of the ACIS Act makes it clear that the Act only recognises production if the thing produced is sold. There is no production unless that event takes place and the production is taken to occur when it is sold.
15. The expression automotive component is defined in s 6 of the ACIS Act as follows:
automotive component means any component (whether its construction or assembly has been completed or not):
(a)that is for use in any type of vehicle that, if imported, would be classified to Chapter 87 of Schedule 3 to the Tariff; or
(b)that has the essential character of a component to which paragraph (a) applies;
other than a component of a kind that is declared by the regulations not to be an automotive component.
16. Chapter 87 of Schedule 3 to the Customs Tariff Act 1995 deals with: Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof. There was no issue about the fact that if Premoso was a producer of automotive components, those components would fall within the definition set out in s 6 of the ACIS Act.
17. In his witness statement made on 3 April 2009, Mr Joel Stoddart set out in some detail the process in which Premoso engages to construct HSVs. This work is conducted under the HSV Agreement. The objectives of the HSV Agreement are set out in cl 2 and, insofar as they are relevant, they provide that Premoso is to:
(a)design, engineer, develop, manufacture and market at the request of Holden or Dealers a range of HSV motor vehicles;
(b)design, engineer, develop, manufacture, market and distribute a range of HSV parts and HSV accessories for fitment to HSV motor vehicles;
(c)design, engineer, develop, manufacture, source and market a range of HSV Individual Products and to arrange for the fitment of such products to Holden vehicles at the request of Holden or Dealers; and
(d)sell and distribute merchandise and apparel approved by Holden.
18. Premoso is responsible for designing, engineering, developing, manufacturing and marketing these vehicles. The HSV motor vehicles, when completed, are collected by Holden which then sells them to motor vehicle dealers. Contrary to what is stated in cl 2 of the HSV Agreement, Mr Joel Stoddart said that Premoso no longer develops HSV motor vehicles at the request of dealers.
19. In effect, Premoso takes a range of Holden models from Holden and modifies those core vehicles to produce a HSV motor vehicle. Mr Joel Stoddart gave a brief overview of the operation as follows:
(a)approximately 2 to 3 years prior to the launch of a new Holden motor vehicle model, Premoso receives from Holden the broad specifications of the range of motor vehicles that will form part of the new model launch. From these specifications Premoso commences the design, development and engineering process to modify those vehicles;
(b)Premoso then commences a Product Program to determine the appearance of the Holden motor vehicle as the HSV motor vehicle; calculating the power output, wheel and tyre size and technical features that can be packaged into the HSV motor vehicle; and it estimates the number of HSV motor vehicles that will be sold per annum in order to calculate a target profit margin;
(c)Premoso conducts a costing of the development of the HSV motor vehicle;
(d)Premoso then commences the design, development and engineering of specific elements and components of the HSV motor vehicle including:
(i)the design and look of the vehicle by clay modelling and computer aided design drawings;
(ii)conducting engineering studies on exhaust systems, air intake and power and torque output;
(iii)designing components to fit the engine such as cooling systems, air intake systems and exhaust systems;
(iv)modifying the chassis components of the vehicle to suit the performance requirements including the suspension units and stabiliser bars;
(v)because Premoso does not manufacture the components used to modify the core Holden motor vehicles, it works closely with engineers from supply companies to develop components meeting the specifications and requirements established by Premoso;
(e)Premoso is responsible for sourcing tooling which is required to manufacture the various components used on the HSV motor vehicles; the tooling obtained is tested for its capability to manufacture dimensionally verified component parts in required volumes;
(f)the components produced during tool trials are then fitted to test vehicles and undergo an approval process;
(g)Premoso pays for and owns the tooling that is used to manufacture components on its behalf although the tooling remains in the possession of the component manufacturer;
(h)a number of test vehicles are obtained from Holden to which components are assembled to validate all aspects of the final HSV motor vehicle; and
(i)Premoso is then ready to commence modifying Holden motor vehicles to produce HSV motor vehicles.
20. Premoso sources core Holden vehicles from Holden's manufacturing plant in South Australia. The production of those vehicles has not been completed and the core vehicle is fitted with slave (returnable) bumper bars and road wheels. A core vehicle is not certified as meeting Australian Design Rules and is not registered or roadworthy so as to be capable of being driven on public roads. On receipt of the core vehicle, Premoso removes the slave components as well as other standard automotive components from the vehicle which are to be replaced by HSV automotive components. Premoso then either fits its components directly onto the motor vehicle or it assembles the automotive components from various sub-components to form the relevant automotive components which are then fitted to the motor vehicle.
21. For the purposes of its application for registration as an ACP, Premoso relied only on its activity in assembling sub-components sourced from other suppliers which it assembles to form the HSV components fitted to the core Holden motor vehicles. Presumably, this was because other components which are designed by Premoso and manufactured using tooling owned by it could not be said to have been produced, in the sense of manufactured, by it. For that reason, Premoso relied only on the components set out above in paragraph 8 for the purposes of its application for registration as an ACP.
22. Mr Stephen Stoddart (no relation to Mr Joel Stoddart), the National Automotive Manager for ACIS in AusIndusty’s Victorian Office, provided a written statement dated 1 May 2009. In that statement, Mr Stephen Stoddart was critical of Mr Joel Stoddart's statement regarding the assembly of the 10 components relied on by Premoso. Mr Stephen Stoddart was concerned that there was no detail of the alleged assembly activities in relation to the components upon which Premoso relied. Mr Stephen Stoddart also referred to an inspection of Premoso's premises conducted by two of AusIndustry's officers. He said that those officers reported they did not observe any manufacturing equipment or production lines nor did they observe any components being assembled. Apparently, they observed fitment activities being carried out in a factory which largely consisted of a series of stations, rather than production lines.
23. Subsequent to Mr Stephen Stoddart's witness statement being served on Premoso, Mr Joel Stoddart provided a supplementary witness statement dated 27 July 2009. That witness statement dealt specifically with each of the 10 components said to have been assembled by Premoso and relied upon to establish its eligibility for registration as an ACP. Attached to that witness statement in respect of each component relied upon, is what is described as a process control plan (PCP). The PCP sets out the sequence and steps required to be taken to assemble, from sub-components, each automotive component claimed to have been produced by Premoso. Although Mr Stephen Stoddart, in a supplementary witness statement dated 7 October 2009, accepted Premoso had substantiated that it carried out the production of a thing within the meaning of s 7 of the ACIS Act, he did not accept that was the case for all of the 10 automotive components relied on by Premoso. Nevertheless, Mr Stephen Stoddart accepted that the supplementary witness statement of Mr Joel Stoddart substantiated that some degree of off-vehicle assembly occurred in relation to 9 of the 10 automotive components upon which Premoso relied. The exception was the rear stabilizer bar.
24. Mr Stephen Stoddart's opinion was that the PCP provided by Mr Joel Stoddart regarding the rear stabiliser bar disclosed a fitment process rather than the assembly of a component. We do not agree. The PCP regarding the rear stabilizer bar discloses that the original sway bar is removed from the motor vehicle. The operator then applies rubber grease to each end of a new rear stabilizer bar prior to the placement of new rubber bushes at the mounting points. The steel mounting brackets are then placed over the rubber bushes and the sway bar is refitted to the vehicle. Although it is undoubtedly correct to say that the degree of assembly involved in preparing the rear stabilizer bar is minimal, it nevertheless involves assembly of some components to the new sway bar before it can be refitted to the motor vehicle. Section 7(1) of the ACIS Act does not suggest that any particular degree of assembly is required to establish production. In our opinion, the assembly of sub-components prior to fitment satisfies the production requirement as set out in s 7(1) of the ACIS Act.
25. As for the other nine components relied on by Premoso, we accept that all of those components require some degree of off-vehicle assembly prior to fitment or refitment to the motor vehicle. Therefore, we find that each of the components referred to above in paragraph 8 are components which are produced by Premoso as that expression is used in the expanded meaning of production in s 7(1) of the ACIS Act. There was no issue about the fact that each and every one of those components satisfies the definition of automotive component in s 6(1) of the ACIS Act. They all have the essential characteristic of a part of a vehicle which, if imported, would be classified to Chapter 87 of Schedule 3 of the Customs Tariff Act 1995.
Does Premoso sell the automotive components produced?
26. As we have mentioned above, s 7(2) of the ACIS Act deems production of a thing to occur only when the person sells the thing produced. The word sale is defined in s 6 of the ACIS Act by stating that it has a meaning affected by s 6(2). Section 6(2) provides:
(2)For the purposes of this Act, the regulations may specify:
(a)circumstances in which a sale of goods or services is taken to have occurred; and
(b)circumstances in which a sale of goods or services is taken not to have occurred.
27. The ACIS Administration Regulations 2000 (the ACIS Regulations) deal with when a sale of goods or services is taken to occur. Insofar as it is relevant, reg 12 provides:
(1)For paragraph 6 (2) (a) of the Act, a sale of goods or services is taken to have occurred, for the purposes of the Act, in the circumstances mentioned in subregulation (2), (3), (4) or (5).
(2)A sale of goods or services is taken to have occurred if:
(a)in the case of goods — title to the goods passes from the seller to the buyer for the first time, and the seller:
(i)has received cash or other consideration for the goods; or
(ii)has an enforceable claim against the buyer in respect of the goods; or
. . .
28. The problem, from AusIndustry's perspective, appears to have been the form of the invoices Premoso issued to Holden following the supply to Holden of a HSV motor vehicle. Examples of a sales order and a tax invoice disclose that the invoiced sum is not broken down into its constituent parts. It is merely a lump sum for a vehicle based on what are described as HSV standard items on the invoice. GST of course has been added to the lump sum but there is no way possible from the invoice or sales order to determine the cost of the components billed to Holden.
29. In his written statement dated 3 April 2009, Mr Joel Stoddart set out a table indicating the total revenue which was attributable to each component relied on for the purposes of this application and which was fitted to a HSV motor vehicle for which Holden was charged. Mr Joel Stoddart said that the total revenue was calculated by adding the following cost inputs as well as a margin for profit:
(a)the external and internal costs of designing, developing and engineering the relevant automotive components and associated tooling;
(b)the price paid by Premoso for each sub-component assembled to form the relevant automotive components;
(c)the value of labour applied in the assembly of the sub-components to form the relevant automotive component prior to fitment to the HSV motor vehicle;
(d)the allocation of marketing costs; and
(e)the allocation of general business overheads of expenses such as rent, electricity and management salaries.
30. Mr Joel Stoddart also said that where costs had been allocated to activities which also involved tooling, marketing and general overheads and expenses, they were calculated by attributing a proportional value to those costs based on: the number of component parts that make up the relevant automotive component; the total number of component parts that are fitted to a HSV motor vehicle; total revenue received from modifying Holden motor vehicles to produce HSV motor vehicles; and the number of HSV motor vehicles which were modified in the 12 month period preceding the application. That calculation resulted in total revenue of $31,867,226 for the 12 month period preceding the application to be registered as an ACP.
31. Mr Joel Stoddart readily agreed that the above calculation had been undertaken solely for the purpose of the registration application. Ordinarily, Premoso did not need to know the total revenue figure for each relevant automotive component. This figure was calculated by Mr Mark Phillips, a chartered accountant from the firm Grant Thornton Ltd, Chartered Accountants. He described himself as the head of Grant Thornton's Automotive Industry Services Team. While Mr Phillips' evidence dealt more specifically with the production value question in the 12 month period preceding the application for registration as an ACP, which we deal with in more detail below, there can be no question that the costs of assembly of the relevant components together with their costs and a profit margin are passed on to Holden via the general invoicing system.
32. In order to satisfy reg 12(2)(a) of the ACIS Regulations, it must be shown that title to the goods has passed from the seller to the buyer for the first time, and that the seller has received cash or other consideration for the goods or has an enforceable claim against the buyer in respect of the goods.
33. Mr P Gray of counsel, who appeared on behalf of AusIndustry, submitted that at the time Premoso invoiced Holden for the components and work carried out to convert those vehicles to HSV motor vehicles, the components had merged with the vehicle. He submitted that the parties treated the transaction as the sale of a service and that no title existed in the components produced by Premoso.
34. Mr Gray also submitted that because an automotive components producer eligible for ACP registration must produce those components as original equipment, and the expression original equipment is defined in s 6(1) of the ACIS Act as an automotive component for use in the production of a motor vehicle or an engine by a motor vehicle producer, Premoso cannot be said to fall within the s 17(1)(a)(ii) requirements. According to Mr Gray, Premoso cannot satisfy that requirement because, even if it was the producer of automotive components, those components are not used by a motor vehicle producer in the production of a motor vehicle but rather, the components are used by Premoso in the production of a HSV motor vehicle. Also, Mr Gray submitted that Premoso could not satisfy the alternative definition of original equipment which is an automotive component designed to the specifications of a motor vehicle producer and purchased by that producer for post assembly fitment to a motor vehicle.
35. We have no difficulty in accepting Mr Gray's second submission regarding original equipment. The Premoso produced components are clearly not purchased by Holden for post assembly fitment to a motor vehicle. Mr Joel Stoddart's evidence was that the motor vehicles provided by Holden to Premoso are not in a completed state in that they do not satisfy roadworthy requirements. The components fitted by Premoso to those vehicles would not, in our opinion, satisfy the description of a post assembly fitment to a motor vehicle. The vehicles destined to become HSV motor vehicles are completed only after Premoso has fitted its components to those vehicles.
36. As for the first limb of the definition of original equipment, Mr Gray submitted that the legislative context of sub paragraph (a) of the definition of original equipment requires the applicant to produce and sell the automotive component, to a motor vehicle producer, so that the motor vehicle producer may use the component in the production of a motor vehicle. According to Mr Gray, for Premoso to fit within (a) of the definition, it would need to be both the producer of automotive components and also a motor vehicle producer. We cannot agree with Mr Gray's interpretation of (a) of the definition of original equipment. That sub paragraph says nothing at all about any particular person or entity fitting automotive components to a vehicle which is in production, but which has not yet been completed.
37. Although it might be said that the ACIS Act did not envisage an automotive component producer fitting its components to an unfinished motor vehicle provided by a motor vehicle producer, in our opinion, there is no reason why automotive components produced for use in a motor vehicle and fitted by the producer of those components as a part of the production of a motor vehicle by a motor vehicle producer would fall outside limb (a). It cannot be said that Holden ceases to be the producer of the motor vehicle merely because that vehicle has been modified, in the course of production, to produce a HSV motor vehicle. In effect, Holden has sub-contracted part of its production process to Premoso to enable it to produce a special high performance range of Holden vehicles.
38. Therefore, in fulfilling the objectives set out in the HSV Agreement, Premoso, at Holden's request (and not Dealers, as stated by Mr Joel Stoddart) conducts the preliminary work of designing the fit-out and look of a new HSV motor vehicle. Although it is said to manufacture such vehicles, that expression, used in the context of the HSV Agreement, means that it does the work necessary to convert a standard Holden vehicle into a HSV motor vehicle which is then sold as such by Holden. Holden remains the motor vehicle producer and Premoso's role is simply one of modifying a standard vehicle in the course of its final production to produce what is known as a HSV motor vehicle. For those reasons, we find that Premoso does produce automotive components in Australia as original equipment.
39. Mr Gray also submitted that the essential character of automotive components, as that expression is defined in the ACIS Act, is that they are components produced for use in vehicles. Therefore, according to Mr Gray, given that automotive components are not produced until those components have been sold, which is some point after they have been fitted to the motor vehicle by Premoso, that is not consistent with what he described as the forward looking ordinary usage of the expression for use in motor vehicles. That is because the components have already been fitted to (used in) a completed vehicle at the time when they are deemed to have been produced.
40. We do not accept Mr Gray's analysis of the definition of automotive component in the ACIS Act. The expression for use in any type of vehicle is not intended to have a temporal significance. The ordinary meaning of the word for includes: suitable to the needs of something ú books for children. 15 having its function or purpose ú scissors for cutting hair (Chambers 21st Century Dictionary). Our view is, given the fact that the expression occurs in a definition which attempts to explain the meaning of the expression automotive component, what the definition does is explain that such components must be suitable to be used in a motor vehicle which, if imported, would be classified to Chapter 87 of the Customs Tariff Act 1995, or which would have as their function or purpose, use in that type of vehicle.
41. Our view is supported by what Deputy President Forgie said in Re Spicer Axle Structural Components Australia Pty Ltd and Secretary, Department of Industry, Tourism and Resources [2006] AATA 1004 at [76]. She said that even if the thing referred to (in this case the automotive component) is never used at all, it would nevertheless retain its essential character as an automotive component. The definition is not intended to create a temporal restriction on the operating provisions in the Act. That much is evident from the fact that the definition contains an alternative meaning in sub-paragraph (b) which provides that the component has the essential character of a component to which paragraph (a) applies. Sub-paragraph (b) clearly indicates that the definition is intended to simply convey the essential character of what is described as an automotive component, rather than to place some restriction on the point of time at which a component must be fitted to a motor vehicle. The error in Mr Gray's submission is highlighted by the fact that he referred to the relevant use as the fitment of the component. Although quite clearly a component must be fitted to a motor vehicle before it can be used in that vehicle, the definition of the expression automotive component says nothing about whether it is in fact fitted or at which particular time in the process it is fitted.
42. The process of purchasing HSV motor vehicles from Premoso by Holden was explained in Mr Joel Stoddart's witness statement of 3 April 2009. He said that Holden issues a purchase (or sales) order indicating the type of HSV motor vehicle required by Holden and the price Holden will pay for that vehicle. According to Mr Joel Stoddart, the price for a particular type of HSV motor vehicle is agreed between the parties beforehand. In fact, cl 8.9 of the HSV Agreement indicates that the parties engage in negotiations to establish the price of the goods and services supplied by Premoso to Holden. Also in evidence was a tax invoice Premoso issued to Holden for the vehicle the subject of the sales order. The invoice simply contains the sales order price with the addition of GST. Mr Joel Stoddart agreed that there was no discrete payment for the components, but rather for the vehicle as a whole delivered in its modified form to Holden. This, according to Mr Gray, demonstrated that there was no sale of the automotive components which had, at that time, merged with the vehicle. He submitted that the parties regarded the transaction as a sale for the service provided by Premoso to Holden and that Premoso had no title in the individual component parts used to manufacture the HSV motor vehicle.
43. However, as Mr Caleo submitted, Premoso does not give away the components. Mr Phillips said in his witness statement of 28 July 2009 that although the invoicing by Premoso to Holden does not identify or separate the labour cost from the component cost, the cost of components is embedded in the invoiced price. Also included in those costs are the indirect fixed costs of conducting Premoso's operations.
44. Mr Gray submitted that in the absence of any evidence in the Agreement as to when title to the components supplied by Premoso passed to Holden, title to the components could only pass when they are fitted to the vehicle being the time when the goods were unconditionally appropriated to the contract; or, alternatively, at the point at which Premoso returns the HSV motor vehicle to Holden.
45. With respect to Mr Gray, he appears to have overlooked the fact that prior to Premoso commencing any work to convert a standard Holden motor vehicle into a HSV motor vehicle, the parties have agreed on the range of modifications to be made to the vehicle and the price to be charged by Premoso for producing to Holden a completely modified vehicle in accordance with the contract. At that point, there appears to be, amongst other things, a contract for the sale of unascertained or future goods by description. It is not unusual for goods, under various statutory provisions dealing with the sale of goods, to be classified as specific goods or unascertained goods (see for example Benjamin's Sale of Goods, 7th Ed., 2006 at [88] and also the Goods Act (Vic) 1958 (Victorian Goods Act)). Common to most statutes dealing with the sale of goods, property is said to pass when it is intended to pass. The intention of the parties is usually ascertained by reference to the terms of the agreement between them and their conduct in the particular circumstances. In fact the Victorian Goods Act sets out rules for ascertaining intention. Rule 5(1) provides that where there is a contract for sale of unascertained or future goods by description, and goods of that description are unconditionally appropriated to the contract, property in the goods passes to the buyer at that point.
46. Therefore, in our opinion, there has been a sale of automotive components by Premoso to Holden and title in the automotive components passes from Premoso to Holden for the first time when the components are appropriated (put aside) for a particular vehicle and not necessarily when they are fitted to a vehicle. At that point in time, we would expect that Premoso had an enforceable claim against Holden in respect of the goods if it did not receive cash or other consideration for them subsequently. The fact that Holden pays Premoso for other costs it incurred in the course of modifying a standard Holden motor vehicle does not, in our opinion, alter the fact that a sale of goods is taken to have occurred.
47. For the reasons we have set out above, we find that Premoso is a producer of automotive components and, subject to it meeting the production value requirements in s 17(1)(a)(ii) of the ACIS Act, it should be registered as an ACP.
production value
48. We have already found that the automotive components produced by Premoso are produced in Australia and they are properly described as original equipment as that expression is defined in s 6 of the ACIS Act. Therefore, the only remaining obstacle for Premoso to overcome is it must establish that the value of the automotive components produced was at least $500,000 in the 12 months preceding its application, and that those components comprised at least 50 per cent of the production value of all automotive components produced by it.
49. The expression production value is defined in s 6(1) of the ACIS Act. Insofar as it is relevant to an ACP, s 6(1) provides:
(b)In relation to an automotive component produced by a particular ACP – the value of that automotive component;
. . .
Worked out in accordance with regulations made for the purpose of this definition.
50. Regulation 11(1) of the ACIS Regulations provides:
(1)For paragraph (b) of the definition of production value in subsection 6 (1) of the Act, the value of an automotive component produced by an ACP in a period is the total revenue from sales of the automotive component in the period.
. . .
(4)For this regulation, in working out the total revenue from sales, or from the provision of services, the amount of any indirect tax in relation to the sales, or the provision of services, that would otherwise be included in the revenue is to be excluded.
51. Premoso lodged its application with AusIndustry for registration as an ACP on 1 May 2008. Therefore, the relevant 12 month period preceding the application is between 2 May 2007 and 1 May 2008.
52. Regulation 14 expands the definition of production value for the purposes of s 17 although, as far as registration of an ACP is concerned, where s 17(1)(a) of the Act applies, the expression refers to the total revenue from sales of the automotive components in the 12 months preceding the application. Regulation 14 also excludes the amount of any indirect tax in relation to sales.
53. In its application for registration as an ACP, Premoso stated that the total production value of automotive components produced in Australia as original equipment during the preceding 12 months was $95,289,879. It also stated that the total production value of automotive components produced in Australia during that period was $105,858,577. However, as is evident from the bills of materials produced by Premoso to AusIndustry in support of its production value calculations, the production valuation figures arrived at included numerous components which were sourced from suppliers and manufacturers, and simply fitted to a HSV motor vehicle. In other words, many of these components would not satisfy the meaning of the expression production of goods for the purposes of the ACIS Act.
54. On 19 September 2008, in response to a request from AusIndustry for further information in support of its application, Premoso provided another calculation of its sales. The figure provided by Premoso was $86,516,554. However, as is stated in the table under which are set out various quarter sales figures, the figure of $86,516,554 relates only to original equipment components sold in the Australian market. That figure did not include the sale of original equipment components sold overseas. In addition to that information, Premoso also claimed that the non-original production value of automotive components for the 12 month period amounted to $10,343,796. It also produced automotive services to the production value of $8,016,775.
55. At the time this application was brought before the Tribunal, Premoso had limited its calculation of total revenue to eight of the 10 automotive components set out in paragraph 8 above. It identified the value of that production as $31,867,226. Mr Joel Stoddard’s statement of 3 April 2009 indicates that the front fender vents were included in the front bumper value, and the rear quarter panel cap had been included in the rear bumper value. Although AusIndustry was critical of Premoso for aggregating the front fender vents and the rear quarter panel cap production values with other components, indicating that this was done without explanation, an explanation was in fact proffered by Mr Phillips in his statement of 28 July 2009. Mr Phillips said that the revenue attributable to the front fender vents was included in the revenue attributable to the front bumper because this was consistent with the structure of Premoso’s bill of materials and it was administratively simple to do so. Nevertheless, he separated out the value of those two items. The same explanation was given in respect of the rear quarter panel cap and again, Mr Phillips separated out the value of the rear bumper and the rear quarter panel cap.
56. AusIndustry also appeared to be critical of the fact that Premoso had apportioned various indirect costs and an unspecified profit margin to each component. However, this was addressed in some detail by Mr Phillips.
57. Mr Phillips explained that because Premoso had never had cause to formally allocate revenue against the relevant automotive components in the past, it had to develop a logical methodology for doing so. It did this with the assistance of the accounting firm Grant Thornton. It used the following methodology:
(a)it identified the direct costs, indirect costs and profit margin for each HSV motor vehicle by model;
(b)it then allocated the direct costs, indirect costs and profit margin for each HSV motor vehicle to every component used in the modification of each HSV motor vehicle by reference to the bill of materials for each model;
(c)it then identified that part of the costs and profit margin for each component that was attributable to labour which involved removing components from the core motor vehicle; assembling the relevant automotive components from component parts; and fitting parts to the HSV motor vehicle;
(d)the cost and profit margin of labour was then multiplied by the number of HSV motor vehicles modified by Premoso during the 12 month period preceding the ACIS application and the result was the total revenue attributable to each relevant automotive component for the 12 month period; and
(e)it validated the accuracy of the calculations by comparing the revenue received by Premoso from Holden in the 12 months preceding the ACIS application and the cost and profit margin for each motor vehicle as identified, multiplied by the number of HSV motor vehicles modified in the 12 month period.
Mr Phillips said that this validation process confirmed that there was no material variance between the two figures.
58. In summary, Mr Phillips said that the total revenue attributable to each relevant automotive component comprised: the direct costs allocated to each component multiplied by the number of components produced in the 12 month period aggregated with the indirect costs allocated to each relevant component multiplied by the number of those components produced in the 12 month period together with the profit margin allocated to each relevant component multiplied by the number of relevant motor automotive components produced in the 12 month period.
59. Mr Phillips then described in detail how direct costs, indirect costs and profit margin were identified for each HSV motor vehicle (by model) and were allocated to every component produced by Premoso. Having examined those details and the very extensive spreadsheets relied on by Mr Phillips, we are satisfied that this calculation of the production value of the components the subject of this claim are sufficiently accurate for the purposes of this application by Premoso.
60. Mr Phillips also provided an explanation for why the production value amount provided by Premoso to AusIndustry in May 2008 and September 2008 substantially exceeded the total revenue calculated to have been received by Premoso from Holden in respect of the relevant components. Mr Phillips said that the figure $83,912,908 represented the total invoiced in the 12 month period preceding Premoso’s application for registration as an ACP. Attached to Mr Phillips’ statement was a summary of those amounts taken from Premoso’s computerised accounting system. Also attached to Mr Phillips’ statement were spreadsheets setting out the total revenues received by Premoso from Holden in respect of each of the components set out in paragraph 8 for each quarter; commencing from the second quarter in 2007 and broken up into each model of HSV vehicle produced by Premoso. That detail satisfies us that the figure of $31,867,226 properly states total revenue received by Premoso from Holden for the sale of those components. Accordingly, we find that the production value of the automotive components produced by Premoso in Australia as original equipment was at least $500,000.
61. The final criterion which must be satisfied by Premoso to establish its eligibility for ACP registration is that the automotive components produced in Australia as original equipment must comprise at least 50 per cent of the production value of all automotive components produced by it. The fact the Premoso invoiced Holden the amount $82,912,908 in the 12 month period preceding its application for ACP registration, at first glance, caused us some concern about whether it in fact met the 50 per cent production value requirement. However, on examination of the bills of materials for each HSV model provided by Premoso to AusIndustry, it is clear that many automotive components are sourced by Premoso from producers in a finished state and they are simply substituted for existing components on the vehicle supplied by Holden. Although Premoso may have, in some cases, provided tooling to produce those components and quite possibly the precise specifications relating to them, those components were clearly not manufactured by Premoso and, in that sense, produced by Premoso; nor do they fit within the extended meaning of production of goods set out in s 7(1) of the ACIS Act. For that reason, we are satisfied that those items would not fall within the description of the automotive components referred to in s 17(1)(a)(ii), and in particular, the requirement that the production value relied upon comprises at least 50 per cent of the production value of all automotive components produced.
62. Mr Phillips has set out as an annexure to his witness statement a list of components and the revenue derived from the sale of those components which are produced by Premoso but not as original equipment. In the 12 month period preceding Premoso’s application for registration, the value of those components was $2,191,785. Therefore, in our opinion, Premoso does satisfy the requirement that the production value of the automotive components it produced in Australia as original equipment comprised at least 50 per cent of all automotive components produced by it.
Conclusion
63. For the reasons we have set out above, we find that Premoso does meet the eligibility requirements for registration as an ACP set out in s 17(1)(a) of the ACIS Act. Section 26 of the ACIS Act provides that the Secretary must examine each application for registration and, as soon as practicable, but before the end of the consideration period, determine whether to grant the application. Although Premoso lodged its application on 1 May 2008, the Secretary required Premoso to provide further information and therefore the consideration period, as calculated under s 26(4), was extended. The Secretary finally made a decision on 30 December 2008 refusing Premoso’s application for registration as an ACP.
64. If the Secretary is satisfied that the applicant is able to satisfy the requirements set out in s 26(2) of the ACIS Act, the Secretary must grant the application. As far as the application before us is concerned, the only element that the Secretary was dissatisfied with was that set out in s 26(2)(a), in that Premoso was not eligible to apply for registration because it did not meet the requirements of s 17(1)(a)(ii) of the ACIS Act. Having found that Premoso does meet the requirements of s 17(1)(a)(ii), we are satisfied that Premoso is eligible to apply for registration. The Secretary did not raise issue with any of the other requirements set out in s 26(2) of the ACIS Act. We have therefore treated the applicant as having satisfied all of the other requirements set out in that subsection. Accordingly, in our view, the Secretary must grant the application of Premoso to be registered as an ACP.
65. Contrary to the decision of the Secretary made on 30 September 2008, we find that Premoso is a producer of automotive components for the purposes of the ACIS Act. We also find that Premoso produced automotive components in Australia to the value of at least $500,000 in the 12 months preceding its application for registration and that the automotive components that it produced comprised at least 50 per cent of the production value of all automotive components produced. Therefore, Premoso satisfied the eligibility criteria set out in s 17(1)(a) of the ACIS Act for registration as an ACP. The only issue remaining for us to determine is the date on which our decision should take effect.
Date of Effect of Decision
66. In an ordinary case, the date of effect of a Tribunal decision is governed by s 43(6) of the Administrative Appeals Tribunal Act 1975 (the AAT Act). It provides that where a decision is made by the Tribunal in substitution for the decision of a person (at first instance), the decision is deemed to be a decision of that person and upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, it is deemed to have had effect on and from the day on which the decision under review has or had effect. Section 43(5A) of the AAT Act provides that, unless the Tribunal specifies that its decision is not to come into operation until a later date, it comes into operation forthwith upon the giving of the decision. Therefore, applying s 43(6) of the AAT Act, the registration of Premoso as an ACP should be effective commencing on 30 September 2008.
67. However, there is one complicating factor. On 30 June 2009 the Secretary accepted Premoso’s application for registration as an ASP. At the present time, that registration remains current. The problem, according to Mr Gray, is that under s 14(1) of the ACIS Act, a person may only have one current registration under ACIS as either an MVP, ACP, AMTP or ASP. By giving our decision effect from 30 September 2008, it would appear that Premoso could not satisfy s 14(1) of the ACIS Act from 30 June 2009. Mr Gray also directed our attention to s 15 of the ACIS Act which provides:
15 Rule about the effect of further applications for registration on existing registrations
If:
(a) a participant applies for another registration under ACIS; and
(b) the Secretary grants the later application;
the original registration ceases to have effect immediately before the day on which the later application for registration is granted.
68. Mr Caleo submitted that if Premoso was successful in this application for review, and it was registered as an ACP commencing on 30 September 2008, that registration would be the current registration up until 29 June 2009, the day before the Secretary accepted Premoso’s application for registration as an ASP. On that day, its registration as an ACP would cease to have effect in accordance with s 15 of the ACIS Act. From 30 June 2009 until the date of this decision, Premoso’s registration as an ASP would be in effect. If Premoso then elected to do so, it could apply to the Secretary under s 110(2)(c) of the ACIS Act seeking deregistration as a participant. Upon deregistration, Premoso’s ACP registration would revive and have effect once more.
69. Mr Caleo’s submissions depend on the meaning which should be given to the phrase ceases to have effect in s 15 of the ACIS Act.
70. Mr Caleo, relied on the Full Court of the Federal Court of Australia (Mansfield, Selway and Bennett JJ) decision in Lesi v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 134 FCR 27. In that case, Mr Lesi, who held a permanent residence visa, was deported from Australia under the Migration Act 1958 (the Migration Act) after having been sentenced to four years imprisonment for possessing heroin for sale. Some 18 months after he was deported, the AAT set aside the deportation decision and in substitution decided that Mr Lesi not be deported from Australia. On deportation, s 82(4) of the Migration Act operated to cause his permanent visa to cease to be in effect. The Minister in that case argued that at the time of his deportation, Mr Lesi’s permanent visa, which he then held, ceased to be in effect, and the Minister argued that it could not be revived. The Court set about determining the meaning of the expression ceases to be in effect.
71. The Court observed that the phrase ceases to be in effect was used in contrast with the concept of cancellation of visas under the Act. The Court noted that the Migration Act contained extensive references to the cancellation of visas and it came to the following conclusion, at 40:
[53] It is apparent that the Act has carefully addressed when and how a visa may be cancelled, and the consequences of its cancellation. The fact of a visa ceasing to be in effect in certain circumstances is something which the Act has dealt with differently. The expressions "cease to be in effect" or "be in effect" are not defined in the Act. They should be taken to have their ordinary English meaning. There is no indication in the Act that they have some different or more refined meaning. Consequently, we consider the expression "cease to be in effect" simply means cease to be operative to provide the entitlements which the visa would otherwise provide. The visa itself is not to be taken to have been cancelled under s 82(4) simply because the provision does not say so.
72. Mr Gray submitted that the decision in Lesi should not be applied in this particular case. That is because s 14(1) of the ACIS Act provides that the person may only have one current registration. Premoso’s contention regarding the word current would require it to be construed as meaning operative or effective rather than giving it its ordinary meaning, presently existing. According to Mr Gray, Premoso’s proposed construction of s 15 would therefore require a strained construction to be placed on s 14(1).
73. In support of his submissions, Mr Gray referred to the revised explanatory memorandum to the ACIS Administration Amendment Bill 2000 (Item 22). Relevantly, it states:
Proposed new s 14 sets out the rules providing a person can only hold one registration under ACIS at a time. …
Proposed new s 15 provides that if a participant applies for a second registration under ACIS, and the application is granted, this will have the effect of cancelling the existing registration from immediately before the day on which the later application for registration is granted.
74. Mr Gray submitted that the explanatory memorandum suggests a legislative intention contrary to Premoso’s proposed construction of s 15.
75. Mr Gray finally submitted that there is nothing inherent in the meaning of the expression ceases to have effect that requires it to be construed as producing a lesser effect than the outright lapsing, cancellation or determination of a particular status under the applicable legislative scheme. He referred to the Federal Court decision in Secretary, Department of Health and Ageing v Marnotta Pty Ltd (2005) 88 ALD 720. Mr Gray submitted that the Federal Court in that case construed the expression ceases to have effect in s 10-1 of the Aged Care Act 1997 (Aged Care Act) as operating to terminate rather than merely leave in abeyance an age care provider’s approval under that act. He submitted that North J expressly rejected the age care provider’s argument by analogy with the Lesi case.
76. With respect to Mr Gray, Marnotta relied on the Lesi case for a different reason, as Justice North said, at 728:
[35] Marnotta relied on Lesi to support the contention that the delegate's decision to revoke the approval as a provider remained operative until the decision was set aside by the tribunal in the same way that the deportation order in Lesi remained operative until the decision of the tribunal to set it aside.
77. It should be apparent that Marnotta relied on Lesi for the purpose of establishing the operation of s 43(6) of the AAT Act, which is a deeming provision. The Full Court in Lesi expressed its concern that in Lesi’s case, the application of s 43(6) to the deportation order could not have been intended to render invalid or unlawful that order which was validly and lawfully made and implemented prior to it being set aside by the Tribunal. In Marnotta’s case, the appellant was concerned only with the question whether aged care had been provided in the six month period following revocation of Marnotta’s approval as a provider of residential care places. Section 10-2 of the Aged Care Act provided that if an approved provider did not provide any aged care during a continuous period of six months, the approval lapsed on the day after the end of that period. Section 10‑1(1)(a) of the Aged Care Act provided that an approval as a provider of aged care ceased to have effect if the approval lapsed under s 10-2.
78. North J distinguished Lesi on the basis that the outcome in that case depended on the construction of s 82(4) of the Migration Act. In order to test the meaning of s 82(4), the Full Court was prepared to assume that the deportation order remained in effect until the date of the decision to set it aside. Therefore, in Lesi’s case, the Court was not required to determine whether the deportation order did or did not have effect in the period between its making and the date on which the Tribunal set it aside. Therefore, as North J said at 729:
[40] To undertake the exercise, one must ask whether the legislature intended that s 10.2(1) of the Act would apply so that where the revocation decision was made but was set aside more than 6 months afterwards, and where the provider did not provide aged care for the 6-month period between the revocation and the decision to set aside, the approval as a provider would lapse at the end of the period of 6 months in which the care was not provided. …
and at 730:
… There is no indication that the legislature intended that this rule would not apply when the reason for the break in continuity related to a delay in the finalisation of a legal challenge to a revocation decision. …
79. As far as the construction of the phrase ceases to be in effect is concerned, North J said, at 731:
[43] Finally, Marnotta submitted that, by providing that the approval ceases to have effect, the legislature contemplated that the approval could end when the revocation decision was made, but revive when the revocation decision was set aside. Marnotta relied on the construction of the phrase "ceases to be in effect" adopted in Lesi. However, the statutory context was entirely different in that case. By the terms of s 10.1 of the Act an approval ceases to have effect if it lapses or is revoked. So the section, in effect, has an internal definition which the statute in Lesi did not have. Further, s 10.1(2) of the Act [Aged Care Act] refers to an approval which ceases to have effect by reason of a suspension of the approval. Thus, [there] is a contrast in the section between an approval which ends permanently, namely, an approval which ceases to have effect as a result of lapse or revocation, and an approval which ends temporarily, namely an approval which ceases to have effect as a result of suspension. Accordingly, there is no scope in s 10.1 of the Act for the construction adopted in Lesi.
80. As to the construction of the words used in s 14(1) of the ACIS Act, the expression current registration is not defined. Therefore, the word current should be given its ordinary meaning having regarding to the context in which it appears in the Act. The adjective current clearly modifies the noun registration. Furthermore, it appears in Division 3, Subdivision A of the ACIS Act. Section 12 provides an overview of the Act and s 12(3) provides that Division 3 contains rules concerning the number of registrations a person can have under ACIS and the effect further registrations may have on a participant’s registration. Chamber’s 21st Century Dictionary defines the word current as: 2 belonging to the present current affairs. When used as an adverb (currently) it means: at the present time. The fact that the word registration was seen to need qualification points to the fact that a person may have more than one registration at any particular point in time but that only one of those registrations can be described as current. It seems to us that if the legislature envisaged that a person could only hold one form of registration at a particular point in time, there would have been no need to qualify the noun registration.
81. We agree with Mr Caleo’s submission that the qualification given to the word registration must indicate that the registration should be presently effective or operative rather than presently existing. That also accords with the fact that s 15 provides that if on a later application, registration is granted under another category, the original registration ceases to have effect. We agree with Mr Caleo’s submission that the effect of registration is very different to its existence. If the legislature had intended that the grant of a later application would have caused the original registration to cease to exist, we would have expected that the words used would have clearly indicated deregistration or cancellation of the original registration. Further support may be gained for this construction by reason of the fact that s 110 of the ACIS Act sets out the grounds upon which the Secretary may deregister a participant and included amongst those grounds is where the participant asks the Secretary to be deregistered. It would have been a simple matter, when the legislation was being drafted, to include under s 110 a reference to the fact that deregistration would occur if it ceased to have effect. However, s 110 does no such thing.
82. The language used in the explanatory memorandum appears to support the argument advanced by Mr Gray, although the expression can only hold one registration under ACIS at a time is rather loose and possibly equivocal. Although s 15AB of the Acts Interpretation Act 1901 (Acts Interpretation Act) provides for the use of material not forming part of the Act to assist in the interpretation of a provision, the use of such materials is restricted to the following circumstances:
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b)to determine the meaning of the provision when:
(i)the provision is ambiguous or obscure; or
(ii)the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
83. There are at least two problems with Mr Gray’s reliance on the explanatory memorandum. The first is that it does not fall within any of the three categories set out in s 15AB(1) of the Acts Interpretation Act. There is no question that the meanings of the expressions used in s 14 and s 15 of the ACIS Act should be given their ordinary meaning taking into account their context; there is no ambiguity or obscurity; and use of the ordinary meaning of the expressions in question in the context of the Act and the purpose or object underlying it does not lead to a result that is manifestly absurd or unreasonable.
84. Even if we are wrong about that, we do not accept Mr Gray’s submission that the explanatory memorandum plainly suggests a legislative intention contrary to the applicant’s proposed construction of s 15. The legislature’s intention is not reflected in the explanatory memorandum. Rather, it is a document prepared by the Minister’s policy advisers based on the policy intended to be given effect by the legislation. Regardless, that does not permit us to substitute the words used in the explanatory memorandum for the words used in the legislation. The High Court has clearly stated this in Re Bolton; Ex Parte Beane (1987) 162 CLR 514. In that case, Mason CJ, Wilson and Dawson JJ said, at 518:
… The words of a Minister must not be substituted for the text of the law. Particularly is this so when the intention stated by the Minister but unexpressed in the law is restrictive of the liberty of the individual. It is always possible that through oversight or inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens, the task of the Court remains clear. The function of the Court is to give effect to the will of Parliament as expressed in the law. …
85. In our opinion, we are bound by the words used in the legislation which are clearly different to those used in the explanatory memorandum. Adopting that approach does not disregard the context in which the words appear nor does it produce an absurd or unreasonable result.
86. There is another reason why we cannot accept Mr Gray’s submissions to the effect that there was nothing inherent in the meaning of the expression ceases to have effect that requires it to be construed as producing a lesser effect than the outright lapsing, cancellation or determination of an existing registration. The expression ceases to have effect is clearly different to any words which might suggest that the registration has ceased to exist. The ordinary meaning of the word effect in Chamber’s 21st Century Dictionary is: 3 operation; a working state. An example of the use of this expression is the coming into effect of legislation. It is not uncommon for Bills which have passed both houses of parliament and which have been assented to by the Governor-General, to come into effect at a later date. Their existence as law is not altered by the fact that they have not yet come into effect. Clearly, their existence is distinct from the commencement of their operation. Our view is further supported by the fact that although the ACIS Act contains express provisions for deregistration in s 110, there is nothing linking the deregistration provisions with ss 14 and 15 of the Act. That indicates to us it was not intended that the operation of s 15 would result in the earlier registration ceasing to exist.
87. Because of our views expressed above, we consider that we should not alter the coming into operation of our decision pursuant to s 43(5A) of the AAT Act. Rather, we believe that our decision should come into effect in accordance with s 43(6). We would set aside the decision made by AusIndustry on 30 September 2008 refusing to register Premoso as an ACP. Instead, we find that Premoso is eligible for registration as an ACP and that pursuant to s 26(2) of the ACIS Act, the Secretary must grant Premoso’s application.
I certify that the eighty-seven [87] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr Egon Fice, Member and Mr Conrad Ermert, Member(sgd): Leah Berardi
ClerkDates of Hearing 3 & 4 February 2010
Date of Decision 16 April 2010
Counsel for the Applicant Mr C Caleo, SC
Solicitor for the Applicant HWL Ebsworth Lawyers
Counsel for the Respondent Mr P Gray
Solicitor for the Respondent Australian Government Solicitor
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