Secretary, Department of Industry Tourism and Resources v Brambles Australia Ltd
[2006] FCAFC 56
•3 May 2006
FEDERAL COURT OF AUSTRALIA
Secretary, Department of Industry Tourism & Resources v Brambles Australia Ltd [2006] FCAFC 56
ADMINISTRATIVE LAW – appellant provides specially moulded trays for transport of components and in facilitating automotive assembly process – refusal of application for registration as an automotive service provider under ACIS Administration Act 1999 (Cth) – whether appellant provided services “relating solely to production” – whether appellant provided “production services” – whether “production” limited to activities within Australia – Administrative Appeals Tribunal misapplied statutory test – no error of the primary judge – appeal dismissed
ACIS Administration Act 1999 (Cth) ss 6, 7, 19, 26
ACIS Administration Regulations 2000 (Cth)IW v The City of Perth and Others (1997) 191 CLR 1
Randwick Corporation v Rutledge (1959) 102 CLR 54
Ryde Municipal Council v Macquarie University (1978) 139 CLR 633
Salvation Army(Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159SECRETARY, DEPARTMENT OF INDUSTRY TOURISM AND RESOURCES
v BRAMBLES AUSTRALIA LIMITEDVID 1230 OF 2005
NICHOLSON, MANSFIELD AND BENNETT JJ
3 MAY 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
VID 1230 OF 2005
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
SECRETARY, DEPARTMENT OF INDUSTRY TOURISM AND RESOURCES
APPELLANTAND:
BRAMBLES AUSTRALIA LIMITED
RESPONDENTJUDGE:
NICHOLSON, MANSFIELD AND BENNETT JJ
DATE OF ORDER:
3 MAY 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
- If the parties agree to the proposed orders or to other orders by consent, they may forward notification of said consent to the chambers of the presiding judge by Monday 8 May at 4pm.
- Otherwise, the proceedings are stood over to Thursday 11 May 2006 at 10.15am for the purpose of making orders giving effect to these reasons, including orders as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
VID 1230 OF 2005
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
SECRETARY, DEPARTMENT OF INDUSTRY TOURISM AND RESOURCES
APPELLANTAND:
BRAMBLES AUSTRALIA LIMITED
RESPONDENT
JUDGE:
NICHOLSON, MANSFIELD AND BENNETT JJ
DATE:
3 MAY 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
CHEP Australia (‘CHEP’), a business owned by Brambles Australia Limited, has applied for registration as an automotive service provider (‘ASP’) pursuant to s 19 of the ACIS Administration Act 1999 (Cth) (‘the Act’). The Secretary of the Department of Industry, Tourism and Resources refused the application pursuant to s 26(3) of the Act. That decision was affirmed by the Administrative Appeals Tribunal. The primary judge upheld an appeal, set aside the Tribunal decision and remitted the matter to the Tribunal for determination.
An ASP is defined in s 6 of the Act as a person registered as an ASP under s 26. Eligibility to apply for registration depends on the person being a provider of “automotive services” (s 19(1)). The question before the Tribunal and the primary judge was whether Brambles was a provider of automotive services. If a person is a provider of automotive services, there are the other criteria to be met prior to registration as an ASP.
“Automotive services” are defined in s 6 of the Act to mean:
‘design, development, engineering or production services of a kind declared by the regulations to be automotive services for the purposes of this Act.’
That definition, in turn, requires consideration of the kinds of services that comprise “automotive services”, as set out in reg 9(2) of the ACIS Administration Regulations 2000 (Cth) (‘the Regulations’). Brambles claims entitlement through reg 9 as a provider of automotive services, being production services for motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling, ‘relating solely to’ production. Automotive machine tools must be ‘designed and built to be used solely for the production of motor vehicles, engines, engine components or automotive components’ pursuant to reg 8(2)(a)(i) or be ‘designed and built to be used solely for facilitating the provision of automotive services’ pursuant to reg 8(2)(a)(ii). Therefore it is open to Brambles to show that it is a provider of automotive services, either by way of reg 9 as a provider of automotive services for motor vehicles, engines, engine components or automotive components, or by reg 9 and reg 8 as a provider of automotive services for automotive machine tools.
While both reg 9(2) and reg 8(2) were the subject of consideration by the Tribunal and by the primary judge, it is agreed that the route to reg 8(2) is satisfaction of reg 9(2). Accordingly, the question for consideration on appeal is whether the Tribunal’s construction of the words ‘relating solely to’ in reg 9(2), which precluded CHEP from establishing that its services were ‘relating solely to production of motor vehicles [and] automotive machine tools [etc]’, was correct.
FACTUAL MATTERS NOT IN DISPUTE
The facts as found by the Tribunal are not in dispute. They are helpfully set out in the appellant’s submissions and the decision of the primary judge at [6]:
(i)CHEP provided container pooling services to three of Australia’s automotive manufacturers, including Holden. The evidence presented to the Tribunal dealt only with the services provided by CHEP for the Holden V6 engine programme.
(ii)CHEP had a contract with Holden to provide a customised returnable container system for the V6 engine programme. The containers (or trays) were designed after consultation with Holden as to the needs of its production line and were designed especially for a V6 engine or a particular associated component.
(iii)The trays, designed in various configurations to take and protect different engine components from damage such as corrosion and rubbing, were delivered (or made available) by CHEP to a manufacturer in the United States, where the manufacturer filled the trays with engine components. The trays were then stacked, capped, strapped together, placed on pallets and loaded into sea containers and conveyed to Australia by Holden’s selected shipping line.
(iv)On arrival in Australia, the pallets of trays were removed from the containers by persons engaged by Holden and sent to Holden’s production line at Fisherman’s Bend. The trays were placed next to the operator on the production line, where the engine components were removed from trays as they were required on the production line. As the trays were emptied, they were stacked and delivered by Holden to CHEP, which cleaned and inspected each tray, packed the empty trays into sea containers and sent them to the United States, where they were filled again for return to Australia.
(v)The design of the trays took into account the space constraints of Holden’s motor vehicle assembly production line, the need to enable processes to be carried out efficiently on that production line and ergonomic considerations relating to personnel working on the production line.
(vi)CHEP was obliged to ensure that sufficient trays were available to meet Holden’s scheduled requirements. CHEP was paid by Holden for each V6 engine component delivered to Holden, with payment structured to allow recovery of the cost of the returnable container system.
THE LEGISLATION
“ACIS” is an abbreviation for the “Automotive Competitiveness and Investment Scheme”.
The relevant legislative framework has been usefully summarised and emphasised by the primary judge at [9] – [13]:
‘9. The purpose of the Act is set out in s 3. It is:
“…to provide transitional assistance to encourage competitive investment and innovation in the Australian automotive industry in order to achieve sustainable growth, both in the Australian market and internationally, in the context of trade liberalisation.”
10. The Act establishes the ACIS. This scheme enables “participants” to receive duty credits, which can be used to offset duty paid, or payable, on certain eligible imports. A “participant” is defined as including an ASP.
11. Section 19(1) of the Act specifies the criteria for eligibility to apply for registration as an ASP. The first requirement is that the person “is a provider of automotive services”. The second requirement is that the value of the automotive services be of a requisite size. Under s 26(2) of the Act, the Secretary is obliged to grant an application for registration if satisfied that:
· the applicant is eligible to apply for that registration (s 26(2)(a));
· certain procedural requirements have been, or can be, satisfied (s 26(2)(b)-(f)); and
· registering the applicant would further the purpose of the Act (s 26(2)(g)).
12. The only registration requirement at issue in this proceeding is that the person be a “provider of automotive services”. A definition of “automotive services” is set out in reg 9(2) of the [Regulations]. It provides that “automotive services” are:
“design, development, engineering or production services for motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling, relating solely to:
(a)design, development, engineering or production, Including normal design functions…”.
13. Section 6 of the Act provides that “production has the meaning given in section 7”. However, s 7 does not exhaustively define the word production. Rather, it sets out a list of circumstances in which a person will be “taken to produce” a thing, the time at which a person is taken to produce a thing, when certain things are “taken to have been produced in Australia”, and when automotive services are taken to have been “provided in Australia”.’
(original emphasis)
Section 7(1) provides that 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. That covers the factual situation in the present case. Other subsections of s 7 raise further factual requirements that are not directly relevant to the appeal. There is, however, a general deeming of production in Australia where activities during production of the motor vehicle have taken place in this country.
THE DECISION OF THE TRIBUNAL
Brambles failed in the Tribunal for two reasons. First, the Tribunal held that Brambles had failed to establish that the trays related to production because they did not relate to their assembly with other components of the motor vehicle on the production line. Secondly, the trays were not designed and built solely for production or for facilitating the provision of automotive services. Rather, they were primarily designed and built for transportation. As such, they were held to also be related to the supply of the components and so not solely to the production of the motor vehicle.
In determining whether Brambles was a provider of automotive services within s 19(1) of the Act, the Tribunal considered whether Brambles was a provider of ‘production services for motor vehicles...relating solely to…production’ (reg 9(2)). This raised two questions to be considered in the context of the legislation:
(1) What does “production” mean?
(2) What is necessary for services to be “related solely to” production?
Neither “production” nor “production services” are defined in the Act. Instead, s 7 specifies when items are ‘taken to have been produced in Australia’ and when a person is ‘taken to produce’ a thing. The Tribunal looked to dictionary definitions of and cases discussing the meaning of “produce” and “production” and also “manufacture”. It concluded at [35] that “production” in the Act ‘means the act of producing, creating or manufacturing the thing that it is produced, created or manufactured’ and that ‘there can be no production unless the thing that is produced is different from that out of which it is made’.
The word “Services” was acknowledged to be of wide application but ‘imports always the notion of some assistance or accommodation being made available by one person to another’ (IW v The City of Perth and Others (1997) 191 CLR 1).
In determining the appropriate meaning of “production services” the Tribunal looked to grammar, s 15AA of the Acts Interpretation Act 1901 (Cth) and the purpose or object and context of the Act. It also included in its consideration the meaning of “solely” which modified “production services” in the context of the Act, it concluded at [46], that “solely” should be given the meaning of ‘only’ or ‘to the exclusion of all else’. This led to the conclusion at [46] that Brambles’ services must relate only (and to the exclusion of all else) to the services specified in reg 9(2)(a) to (d).
Acknowledging that ‘relating to’ is of wide import, the Tribunal determined that the expression ‘relating to’ in reg 9(2) is qualified by the word “solely”. The construction that the Tribunal adopted was that each of the services must have a connection with and so be related to the activities specified in reg 9(2)(a) to (d). The Tribunal, after considering Ryde Municipal Council v Macquarie University (1978) 139 CLR 633, concluded:
‘[t]hey may have an incidental connection with another activity but they may not have any collateral connection, however small, to any activities that are not specified... including normal design functions.’
It concluded at [46] and again at [48] that, if the activities are collateral ‘even in a small way’, those collateral activities cannot be said to be solely related to the specified activities.
The Tribunal determined at [52] that, if the “production services” are to come within reg 9(2)(a):
‘they may not relate to any collateral or independent activity although they may incidentally fulfil another role or achieve another purpose’.
The Tribunal then said at [54]:
‘[t]he assistance or activities directed to the act of production, and so the production assistance, must relate to one or more of those aspects of the finished motor vehicle that sits in the showroom and to none of the other activities that may be required to get it there.’
The reasoning of the Tribunal (at [55] – [56]) was as follows. CHEP’s activities were not directed to the act of producing the V6 engine components. Its activities were related solely to the provision of purpose-built trays enabling the items to be carried by others. It was not itself engaged in the carriage of the goods. The delivery of the components in CHEP’s trays did not mean that its activities were related to the assembly of the V6 engine and associated components into a motor vehicle. They were related to the supply of the items but not to their assembly with other components and so not to the production of the motor vehicle. Accordingly, the CHEP system’s activities could not be considered “production services” and so were not “automotive services” within reg 9(2)(a).
In essence, the Tribunal concluded that, while the CHEP trays provided by Brambles facilitated production services and facilitated the assembly of motor vehicles, they were designed and built for transportation. The services were not part of the production line and they related to supply but not to assembly. The Tribunal accepted that the delivery of the engine components was vital for the production of motor vehicles but concluded that the delivery of the components in CHEP’s trays related to supply not to their assembly with other components and so not to the production of the motor vehicle. The Tribunal was satisfied that the CHEP system was an integral part of the production system for motor vehicles but held that the production services may not relate to any collateral or independent activity ‘although they may incidentally fulfil another role or achieve another purpose’. As transportation was one of the intended uses of the trays, they were therefore not designed and built to be used solely for the provision of automotive services. Accordingly, Brambles did not supply “automotive services” within reg 9(2).
Having found in its consideration of reg 9(2) that the trays were not designed and built solely for the production of motor vehicles, engines, engine components or automotive components, the Tribunal held that the trays were not “automotive machine tools” within the meaning of reg 8(2)(a)(i).
The Tribunal found that the trays were built for Holden’s purposes. However, some of those purposes related to facilitating, in the sense of ‘make easier or less difficult’, the provision of production services and some related to the transportation of the V6 engine components. Transportation, not being directed to the act of production, was not regarded as the provision of automotive services. As transportation was one of the intended uses of the trays, the Tribunal held that it followed that the trays were not “automotive machine tools” designed and built to be used solely for facilitating the provision of “automotive services” within the meaning of reg 8(2)(a)(ii).
DECISION OF THE PRIMARY JUDGE
The primary judge determined that the Tribunal had erred in its construction of reg 9(2) and that the Tribunal’s conclusion was not open to it on the facts that it found. Mr Hanks QC, who appears with Ms Orr for the Secretary, submits that the primary judge saw reg 9(2) as posing at least two questions:
(1)was the relationship between the services provided by Brambles and production at Fisherman’s Bend the sole relationship required by reg 9(2)?
(2)were the services properly characterised as “production services” for the purposes of reg 9(2)?
His Honour formulated the central issue as being whether the Tribunal erred in finding that CHEP’s services do not relate solely to production. His Honour observed at [52] that, on the Tribunal’s reasoning, even if CHEP’s services were related to production, their relationship to “transportation” or “supply” to the production line took them outside the ambit of reg 9(2).
The primary judge accepted Brambles’ submission that “production” in the context of the Act is not limited to the “production line” and is properly construed as a globally integrated process.
His Honour’s conclusion is set out at [55] and [57]:
‘55. …In the present proceeding, it is common ground between the parties that CHEP’s trays cannot be used for any function other than transportation of specific parts from manufacturers to Holden’s plant in Australia. Therefore, to the extent that CHEP’s services are services of transportation, it is transportation solely relating to production. The services are not services of transportation for the purpose, for instance, of on-selling the parts and engines to third parties, or transporting parts that are not used exclusively in Holden’s production process. They do not, in my view, relate to an independent or collateral purpose.
…
57. In my opinion, the AAT construed the term “relating solely to … production” in reg 9(2) too narrowly. The effect of its construction was to require CHEP’s services to “constitute” rather than relate solely to production. In approaching the matter in that way, the AAT fell into error.’
The primary judge commented at [62] that the Tribunal appeared to have assumed that for something to be a production service, it must at least be related to assembly and noted (at [62]) that CHEP’s services are, in any event, related to assembly. His Honour, at [64], characterised as a finding of fact the Tribunal’s finding that the services related to supply and did not relate to assembly and therefore could not be production services. His Honour noted the ‘logical difficulty’ with the Tribunal’s reasoning and concluded at [65] that, on the basis of its own findings of fact, this finding was not reasonably open to the Tribunal.
Having determined the first question (as set out in [21] above) in the affirmative, the primary judge, according to Mr Hanks, considered the second question as one still to be determined by the Tribunal, because the Tribunal discussed but did not decide the meaning of “production services”. Mr Cavanough QC, who appears with Mr Fleming for Brambles, contends that both questions were answered.
CONSIDERATION
In his support of the Tribunal’s reasoning, Mr Hanks sought to explain the difference between incidental activities which, according to the Tribunal would come within the test of ‘relating solely to’ and collateral activities which would not. The latter, he submits, were ‘activities which [do not] have a sufficiently close relationship to production to properly be described as incidental. Rather they are perhaps preliminary to but have their own distinctive character. They are not sufficiently connected to qualify them as incidental.’ ‘If the services not only have a relationship to production but also have a relationship to some activity which is not production and not incidental to production...they are not relating solely to production because they have another relationship’.
The Tribunal’s findings of fact make it clear that CHEP was not responsible for the production or carriage of the components. CHEP provided purpose-built trays that enabled the components to be transported to Holden’s production line at Fisherman’s Bend. The trays were placed on the production line in a specified orientation to enable the components to be taken from the trays and used in the production of Holden’s motor vehicles.
The components themselves were used in the production of motor vehicles, within the Tribunal’s concept of “production”. Those components were transported to the place of assembly in a tray that was specifically designed, not only to transport but also to arrange the components to facilitate and enable their utilisation in the assembly of the motor vehicle.
The Secretary contends that the primary judge’s finding that “production” encompasses activities occurring outside Australia is inconsistent with the scheme and terms of the Act. We do not see how, in this case, that is so. The assistance is directed towards the Australian automotive industry, specifically the manufacture of Holden V6 engines at Fisherman’s Bend. Section 7(1) of the Act specifically acknowledges that assistance is directed to the place of assembly, including the use of component parts not produced by the producer of the motor vehicle. Unlike the remaining subsections of s 7 which specify that certain aspects must be conducted in Australia, there is no specification in s 7(1) of the site of manufacture of the component parts. Section 7(6) which applies, subject to s 7(1), deals with a component taken to have been produced in Australia. The deeming provisions of s 7 recognise that parts of the production process for an engine component or a motor vehicle may take place outside Australia.
Mr Hanks specifically draws attention to an example given by the primary judge of components being transferred from one Australian plant to another, at different locations. He accepts that production may extend beyond one particular Australian plant or location but not to activities carried out at locations outside Australia. It seems to us that, as a matter of logic, once it is accepted that production can extend beyond a single plant and that provision of transport of components from one location to another constitutes automotive services for the purpose of the production of motor vehicles at the assembly plant, it follows that such transportation constitutes automotive services irrespective of the location of the site from which the component parts are transported.
There is no dispute that the CHEP trays and activities related to production and that the sole purpose of the trays and their carriage to Australia where they were placed on the assembly line was to utilise the components in the production of motor vehicles. Mr Hanks concedes that the sole purpose of the transportation of the trays containing the components was to deliver them so that they could be used in the assembly of a motor vehicle. What is said is that the activity also related to the carriage of the goods from the United States to Australia. If that can be said to be incidental to the production, it comes within the ‘relating solely to production’ test but if it is collateral to production, it does not. The difference, it was accepted, was a matter of degree. As it was put by Mr Hanks, where the activity was extraneous to production, it was not encompassed by reg 9(2) and facilitation of production is not within the regulation.
Mr Cavanough submits that the production process means more than mere assembly and includes design, development, engineering and production. On this basis, with an integrated process, no question of what is ‘incidental’ or ‘collateral’ arises and the trays are an integral part of the production process. On this interpretation, the requirement in reg 9(2) that the services included are those ‘relating solely to’ production excludes services that occur at a different stage of the process of development of a motor vehicle. Examples he provides include marketing services or services in the nature of overheads for the whole of the Holden enterprise. He draws support from the recognition in reg 9(2)(a) of the stages of development of a motor vehicle, ‘design, development, engineering or production’, which are the physical steps necessarily involved in the creation of a motor vehicle. He contends that where, as here, the sole purpose of CHEP’s activities was the physical production of a motor vehicle or the engine for a motor vehicle, there can be no doubt that reg 9(2) applies. The trays were specially designed for Holden component parts and have no other purpose. The way Mr Cavanough puts it, production does extend to services overseas, as long as they are services that solely relate to the production by Australian producers of motor vehicles or engines. Here, the services relate solely to Holden Australia’s integrated system for producing Australian engines, recognising the need to bring in parts from overseas.
We accept Brambles’ submission that the reference to “production” in reg 9 is to the production stage or phase in the overall process that leads to the creation of a motor vehicle, engine, component, tool or tooling. Whatever the extent of the “production” phase for a vehicle or engine, it includes the assembly of the component parts into that vehicle or engine. It is reasonable to assume that some or all of the components need to be transported from a location separate from that of the production line itself.
Even if this interpretation were not accepted, the primary judge’s conclusion is, with respect, correct.
In Ryde, the High Court considered whether land that Macquarie University was renting out was used by the University for the purposes of the University and solely for those purposes. In the context of use for the purposes of the University, Gibbs ACJ distinguished between a use which is ‘wholly ancillary to’ or which ‘directly facilitates’ the carrying out of the object and a use that is only ‘collateral’ or ‘additional’ to the purpose. His Honour emphasised (at 644) that it is correct to concentrate attention upon the particular use but not in isolation. He concluded that the use of the land was ‘wholly ancillary to, and directly facilitated, the carrying out of the principal objects of the University; it was not collateral or additional to those purposes’. Gibbs ACJ then turned to consider whether the use was “solely” for the purposes in question. His Honour pointed out that the question must be considered from the point of view of the University and said: ‘[t]he fact that the University derives some subsidiary and incidental benefit from using the land for its purposes does not mean that the land is not used exclusively for University purposes’. In Ryde, the University was not pursuing the independent object of obtaining revenue from rents, even if the amount in question was substantial but was pursuing the objects of the University. Stephen J (with whom Murphy J agreed) expressed views in similar terms (at 650), to the effect that another incident of use does not detract from sole use. His Honour noted at 651 that, in Randwick Corporation v Rutledge (1959) 102 CLR 54, Windeyer J distinguished ‘collateral or independent’ use from ‘incidental to the stipulated use’.
As submitted by Brambles and as stated in Salvation Army(Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 and affirmed in Ryde at 644, it is a question of fact whether, when a word such as “solely” is used, something is outside a stipulated purpose. As such, the Secretary contends that the Tribunal finding that the services were not related solely to production is not reviewable by the Court.
The Tribunal, however, specifically purported to adopt the test in Ryde and Salvation Army but then applied the “ordinary meaning” of “solely” as ‘“only” or “to the exclusion of all else”’. The test purportedly applied by the Tribunal was that, to be collateral, the purpose had to be independent, as distinct from incidental. The Tribunal accepted ‘incidental’ but not ‘collateral’ activities and seemed, at [45] and [48], to apply a test of ‘collateral’ as an activity that relates in a small way to an activity other than production. The Tribunal’s approach focused on the fact of transportation and, in effect, isolated that activity from the purpose of the transportation; the assembly of the components into the engine of the motor vehicle.
On its own findings of fact, the Tribunal accepted at [53] that the trays were an integral part of the system adopted by Holden at Fisherman’s Bend for the production of its motor vehicles. There was no finding that the trays had any purpose or use independent of that system. The purpose of the trays was the delivery of components for assembly into motor vehicles. Incidentally, they had to be transported from the United States to Australia. If there were no production of Holden motor vehicles in Australia, there would have been no CHEP trays manufactured.
The Tribunal misapplied the statutory test of ‘relating solely to production’. The primary judge held that the act of transportation to the production line was itself related to production. We are of the opinion that effecting transport of component parts from their location of manufacture to the location of the production line in trays specifically designed and used for that purpose, is a service related solely to production. The CHEP trays are also designed for use in the production line to orient the component parts for the purpose of assembly of the engines. The fact that they are also used in transport is incidental to production, in the sense in Ryde and, accordingly, within the statutory test.
The appellant submits that the finding as to whether CHEP’s services are related solely to production is a factual finding and that the primary judge usurped the fact-finding role of the Tribunal. His Honour’s conclusions were based upon the application of the statutory test to the factual findings of the Tribunal. He held that the Tribunal misapplied that statutory test. Such error is reviewable. We see no error in that approach.
THE CROSS-APPEAL
Brambles’ eligibility as an ASP under s 19(1) depended on Brambles being a provider of “production services” and therefore of “automotive services”. The primary judge concluded that, while the Tribunal wrongly found that CHEP’s services were not “production services” within reg 9(2) because they did not relate solely to production, it did not follow that they were such services. His Honour was of the view that further factual findings were necessary and remitted the matter to the Tribunal.
Brambles submits that the appropriate course is to remit the matter to the Secretary, rather than to the Tribunal.The Secretary supports the course taken by the primary judge.
Production services
The Secretary contends that the question before the Tribunal was the application for ASP registration under s 19 of the Act. The Tribunal dealt only with the precondition in s 19(1) that the applicant be a provider of “automotive services”. The production value of Brambles’ services is yet to be determined (s 19(1)(a) to (c)).
The primary ground of the cross-appeal is that, on the basis of the Tribunal’s findings of fact, only one conclusion was open to the Tribunal in law, namely that Brambles’ services did constitute “production services” within the meaning of the reg 9(2). This is said to follow from the fact that the services amounted to services ‘relating solely to production’ and were, therefore, ‘for production’. As they were “production services” for the purposes set out in reg 9(2), it is submitted that they necessarily constituted “automotive services”. A ground of the cross-appeal is that the primary judge erred in not finding that the services were “automotive services”.
This proposition was rejected by the primary judge at [76].
As the primary judge emphasised at [70], “production” is not limited to the Holden plant at Fisherman’s Bend and encompasses the manufacture of parts and engines in the United States, the transport of those parts to Australia and the final assembly at Holden’s plant. Therefore, Brambles’ services must be “production services” within reg 9(2).
Mr Cavanough’s point is simple. If the services relate solely to production, they must necessarily relate to production and be “production services”. The Act does not require that they be services of production but, rather, ‘for motor vehicles [etc]’.
In addition, Mr Cavanough contends that the occasion to raise “complexities” has passed and that the matter proceeded before the Tribunal and the primary judge on the basis that the only question was that concerning the meaning of ‘relating solely to production’. He submits that all other factual criteria of reg 9(2) were met and not in dispute before the Tribunal. It had never, he says, been suggested that there were other reasons for at least this service, the CHEP system, not to be within the Act and Regulations.
Mr Hanks draws attention to reg 9(2). He submits that the services must have three requirements:
(i) they must be, in this case, “production services”;
(ii)they must be for one of the objects in reg 9(2), that is motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling; and
(iii)they must relate solely to one of the activities in reg 9(2)(a), in this case, “production”.
Mr Hanks submits that the answer to (i) does not necessarily follow from his Honour’s findings on (ii) and (iii). He contends that these raise different and distinct concepts so that the services might relate solely to “production” but still not be “production services” for the stated objects.
Mr Hanks also takes issue with the primary judge’s finding that “production” is a globally integrated process that encompasses the manufacture of parts and engines in the United States, their transport to Australia and their final assembly at Holden’s plant. He submits that the structure and intent of the Act means that the focus is solely on the Australian automotive industry. He submits that the matter should be remitted to the Tribunal and that one of the issues to be decided on remittal is whether services outside of Australia qualify as “production services”. The reasoning of the primary judge, he submits, takes the concept of production beyond the scope and intent of the Act. The Act focuses on investment and innovation in the Australian automotive industry. That industry may be part of a globally integrated process but, for the purposes of the Act, it is discrete. Mr Hanks submits that the statement of the primary judge would affect the Tribunal’s assessment of what constitutes “production services” and improperly extend the application of the Act. Mr Hanks asks that, if the appeal is unsuccessful in that Brambles can be said to be a provider of “automotive services”, then remittal to the Tribunal be made, taking into account a correct statement of what may qualify as “production services”.
When his Honour’s remarks with which Mr Hanks takes issue are examined, in our view they go no further than recognise that, in order to compete internationally, the Australian automotive industry purchases component parts internationally and assembles them in Australia (see, for example, s 7(1) of the Act). The primary judge rejected the proposition that the Tribunal required “production services” to be limited to the production line. In that context, the primary judge commented at [70] that “production” in the context of the Act is properly construed as a ‘globally integrated process’. By s 7(7) of the Act, Brambles’ services are deemed to have been in Australia. That was not considered by the Tribunal and seems to have been accepted.
The Tribunal hearing was conducted on the basis that the live issue was whether reg 9(2) had the effect of frustrating the claim for registration. The issue as framed by the Tribunal at [3] was:
‘It was agreed between the parties that the Tribunal would consider only one of the potential issues between them. That was whether Brambles is eligible to be registered as an Automotive Service Provider on the basis that it is a provider of production services and so of automotive services within the meaning of [the Act].’
The Tribunal engaged in a detailed consideration of the words “production”, “service” and “production services”, commencing at [26]. It recognised that it was to consider the expression ‘production services for motor vehicles [etc]’ in reg 9(2). It then commenced a consideration of “relating to” and “solely” at [42]. At [52], the Tribunal concluded that, within reg 9(2), the “production services” are:
‘services, being assistance or activities, related solely to production and so to the act of producing. If they are to come within r 9(2)(a), they may not relate to any collateral or independent activity although they may incidentally fulfil another role or achieve another purpose. We also note the use of the word “for” in r 9(2)(a). The ordinary meanings of the word “for” in a context such as this are:
“…2. intended to belong to, suit the purposes or needs of, or be
used in connection with: a book for children, a box for gloves… (Macquarie Dictionary, 2nd edition, 1987’.(emphasis added)
It was in that context that the Tribunal held at [53] that it was an integral part of the system at Fisherman’s Bend that V6 engine components required for production of some of Holden’s motor vehicles were made in the United States and brought to Australia. It also found at [53] that it was an integral part of that system that those components were supplied as required by the production line. Further, at [53] it found that the CHEP system was ‘an integral part of the system, installed by Holden for the production of its motor vehicles’(emphasis added).
The Tribunal then concluded at [54] that this was not sufficient for the application of reg 9(2). It said that ‘[t]he assistance or activities directed to the act of production…must relate to one or more of those aspects of the finished motor vehicle that sits in the showroom and to none of the other activities that may be required to get it there’.
The logic that the Tribunal applied to find that Brambles did not provide services related solely to production is the same logic that led the Tribunal to find that Brambles’ services were not for production. That was based on the reasoning at [55] that Brambles’ activities commenced after the production of the components and were directed to the carriage of the components and the provision of purpose-built trays enabling the components to be carried by others. Reinforcing the fact at [56] that delivery of the components was vital because ‘they are required in the production of motor vehicles’, the Tribunal concluded that, because the services related to the delivery of the components in CHEP’s trays ‘does not mean that they are related to that assembly, solely or otherwise’ (emphasis added).
Was there any other factual finding or conclusion necessary to be made by the Tribunal to determine whether CHEP’s services were “production services”? It seems to us from reading the Tribunal’s decision that it fully considered whether Brambles’ services were “production services” within reg 9(2)(a).
In its final reasons for decision dated 14 May 2004, given after the initial reasons, the Tribunal made it clear that the parties had agreed that it would consider the one system, the CHEP system, and whether that meant that CHEP had provided “production services”. Its finding, as set out in the detailed reasons dated 13 October 2003, dealt with the question whether Brambles is a provider of “production services” and so of “automotive services” within the meaning of the Act. As the Tribunal said at [6] of the final reasons, ‘affirmation of the decision [of 13 October] would mean that the matter had been finally determined and Brambles could consider other options available to it’. The Tribunal noted its reservation that it had considered only one of the activities conducted by Brambles, only one of the criteria that had to be met if Brambles were to be eligible to apply for registration as an ASP under s 19 and had not considered the application of s 26(2) of the Act.
We agree with the primary judge that the Tribunal was in error in its determination of the meaning of reg 9(2). It would seem that the matter proceeded before the Tribunal on the basis that there was no additional factual finding to be made or further consideration that needed to be given by the Tribunal with respect to the provision of production services.
While it is not completely clear, the Tribunal did not, as we read the decision, consider that there outstanding matters that would need to be dealt with by it with respect to reg 9(2). It is apparent that the Tribunal considered that it had dealt with all aspects of reg 9(2). Other than the issue of “production services” being ‘for motor vehicles [and] automotive machine tools [etc]’, no other issue has been identified. There is no need to remit the matter to the Tribunal for further consideration on this aspect.
Section 19
Section 19 provides:
‘Application for ASP registration
(1)A person who is a provider of automotive services may apply to the Secretary for registration as an ASP if:
(a) in the 12 months preceding the application:
(i)the production value of automotive services provided by that person in Australia was at least $500,000; and
(ii)at least 50% of that production value was for services related to the production of motor vehicles or original equipment; or
(b)where paragraph (a) does not apply-the person is able to demonstrate, to the satisfaction of the Secretary, that in the 12 months following the application:
(i)the production value of automotive services proposed to be provided by that person in Australia is likely to be at least $500,000; and
(ii)at least 50% of that production value is likely to be for services related to the production of motor vehicles or original equipment; or
(c)where neither paragraph (a) nor (b) applies-the person has been given permission by the Minister, under section 20, to apply for registration as an ASP.
(2)The application must be made in accordance with Division 5 and conform to any specifications set out in the regulations.’
Having been held, erroneously, to fail on the pre-condition of being a provider of “automotive services”, Brambles seeks an order that the matter be remitted to the Secretary to determine the other matters specified in s 19(1). The question is whether the Tribunal was obliged to consider those additional matters under s 19 and whether the relevant facts were before the Tribunal. If that was the case, the appropriate order is that the matter be remitted to the Tribunal. If those matters had not yet been determined by the Secretary, or if it were accepted that Brambles satisfies the remaining criteria on s 19, the matter should be remitted to the Secretary.
Again, while it is not completely clear from the Tribunal decision, the decision records at [3] and counsel confirmed that the matter proceeded in the Tribunal on the basis of consideration of the pre-condition for registration as an ASP, namely that Brambles provided “automotive services” with respect to Holden V6 engines. It would seem that the Secretary has yet to address the remaining requirements of s 19. Accordingly, the appropriate course on this aspect is for the matter to be remitted to the Secretary.
Section 26(2)
The criteria of s 26(2) of the Act are cumulative and the Secretary must be satisfied of each of the matters there specified before granting an application for registration. In the decision under review, the Secretary dealt only with eligibility in s 26(2)(a) which Brambles failed to establish. That decision was the subject of review by the Tribunal and upheld. However, we note that the Tribunal’s reasons for decision (final) of 14 May 2004 at [6], contains a suggestion that there were other matters determined by the Secretary under s 26(2) and remitted to the Tribunal. These have not been identified.
We understand that there are time constraints on the outcome of Brambles’ application under the Act. In the circumstances, as there are outstanding matters to be determined by the Secretary, we propose to remit the matter to the Secretary for consideration with the direction that Brambles has satisfied one of the requirements of s 19, namely that it is a provider of “automotive services”. As this order depends upon an understanding of the way the matter proceeded in the Tribunal, we will defer making the order for seven days or such earlier time as is convenient to the Court and the parties to allow the parties to inform the Court if this understanding is not correct.
Proposed Orders
The Court proposes the following orders for consideration by the parties:
1.The appeal be dismissed.
2.The cross-appeal be allowed.
3.Order 3 of the Orders of Weinberg J of 16 September 2005 be set aside.
4.The matter be remitted to the appellant for consideration of the remaining criteria of ss 19 and 26(2) of the ACIS Administration Act 1999 (Cth).
5.The appellant pay the respondent’s costs of this appeal.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Nicholson, Mansfield and Bennett. Associate:
Dated: 3 May 2006
Counsel for the Appellant: P Hanks QC & R Orr Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: AL Cavanough QC & MF Fleming Solicitor for the Respondent: Minter Ellison Date of Hearing: 23 February 2006 Date of Judgment: 3 May 2006
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