Sheehan and Department of Industry, Tourism and Resources

[2006] AATA 946

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 946

ADMINISTRATIVE APPEALS TRIBUNAL          №V2006/779

GENERAL ADMINISTRATIVE  DIVISION

Re:           JASON SHEEHAN

Applicant

And:DEPARTMENT OF INDUSTRY, TOURISM AND RESOURCES

Respondent

DECISION

Tribunal:       Mr Egon Fice, Member

Date:8 November 2006

Place:Melbourne

Decision:The Tribunal does not have jurisdiction to review the claimed decision dated 3 August 2006.

sgd Egon Fice

Member

Textile Clothing and Footwear Strategic Investment Program Scheme – jurisdiction – reviewable decision –– delegated power to review decisions – exclusion provisions

Acts Interpretation Act 1901

Administrative Appeals Tribunal Act 1975

Textile, Clothing and Footwear Strategic Investment Program Act 1999

REASONS FOR DECISION

8 November 2006  Mr Egon Fice, Member

1.      By an application dated 30 September 2004 Auspoly International Pty Ltd (Auspoly) (ABN 54 704 748 969) lodged a request with the Department of Industry Tourism and Resources (the Department) for determination of a grant entitlement under the Textile, Clothing and Footwear Strategic Investment Program Act 1999 (the TCF-SIP Act).  The application was in respect of the 2003/2004 Program Years.

2.      The Department advised Auspoly in October 2004 that its grant entitlement was calculated at $187,424.  Auspoly disagreed with that assessment and in November 2004, it requested reconsideration of the grant assessment.  A delegate of the Secretary of the Department, after reviewing the original decision, decided to uphold it. 

3.      Mr Jason Sheehan, a Director of Auspoly, had a number of telephone discussions with the Department regarding a further entitlement (the carry-over entitlement) from the 2003/04 claim year.  Mr Sheehan wrote to the Department in May 2006 urging the Department to accept his viewpoint regarding the carry-over entitlement.  After a further exchange of correspondence, Mr A. Coleman, the Manager of the TCF Policy Group at the Department, wrote to Mr Sheehan on 3 August 2006 stating that he remained of the view that there was no scope under the grants scheme for the further payment sought by Auspoly.  Mr Sheehan claims that this letter contains a decision which is reviewable by the Tribunal.

4.      The Department rejects Mr Sheehan’s view that the contents of the letter of 3 August 2006 constitute a decision which is reviewable by the Tribunal.  It contends that the Tribunal does not have jurisdiction to embark upon a review of the decision made by the Department.

RELEVANT FACTS

5.      On 17 August 2003, Auspoly commenced production of eligible TCF products as defined under the Textile, Clothing and Footwear Strategic Investment Program Scheme (the Disallowable Instrument), which is a Disallowable Instrument for the purposes s 46A of the Acts Interpretation Act 1901.  It lodged a request for a determination of grant entitlement in respect of type one, two and three grants on or about 30 September 2004.  By letter dated 15 October 2004, the Department informed Mr Sheehan that the company’s maximum eligible claim amount would be $357,843.60.  It also advised Mr Sheehan that the actual grant entitlement, which was capped at 15 per cent of the eligible start up amounts (notified by Auspoly to be $1,249,491) was calculated at $187,424.  That payment was made to Auspoly.

6.      Mr Sheehan wrote to the Department on 1 November 2004 requesting a reconsideration of the assessment made on 15 October 2004.  Auspoly stated that in its first year of operation, sales volumes exceeded its initial expectations and that rather than cap the grant entitlement at 15 per cent of eligible expenditure incurred, in the spirit of the grant scheme, the Department should have also allowed the balance of Auspoly’s eligible claim amount by reference to its total eligible revenue.

7.      On 29 November 2004, Ms J. Facey, the Victorian State Manager, wrote to Mr Sheehan informing him that following a reconsideration of the original decision, the Department had decided to uphold that decision.  Ms Facey explained that s 85A(1) and s 85A(2) of the Disallowable Instrument are exclusive and that s 85A(1) could not apply to Auspoly because that section only applied to companies that were not in a start up period.  She explained that because Auspoly was incorporated on 9 May 2003 and began production in September 2003, it was in a start up period as defined in s 85A(5), for the purposes of the 2003/2004 claim.  Attached to that letter from Ms Facey was a statement that if Mr Sheehan was dissatisfied with her decision, he had a right to a further review by this Tribunal and that an application for a review must be filed with the Tribunal within 28 days of receiving the letter. 

8.      Mr D. Gooding, a consultant with Auspoly who appeared on behalf of Mr Sheehan, explained that although Mr Sheehan continued to have telephone discussions with the Department following the 29 November 2004 reconsideration, no further correspondence ensued from Auspoly about the grants entitlement until May 2006. 

9.      On 24 May 2006 Mr Sheehan wrote to the Department regarding discussions which had taken place regarding an entitlement to the carry-over sum of $170,490.60 from the 2003/2004 claimed year.  Mr Sheehan was concerned that the carry-over entitlement would not be paid despite prior advice to the contrary.  Mr Sheehan claimed that there was room in the scheme for the outstanding amount to be paid and he asked the Department for its assistance to make this possible. 

10.     On 5 June 2006 Mr Coleman responded to Mr Sheehan’s letter of 24 May 2006.  Mr Coleman reiterated that there was no provision under the Disallowable Instrument to pay grant amounts in excess of 15 per cent of eligible start-up investment amounts.  Mr Coleman also explained that amendments to the scheme made in 2002 (regarding carry-over entitlements) were limited to non start-up claims.

11.     On 15 June 2006 Mr Sheehan wrote to Mr Coleman stating …we cannot accept your decision…, and he set out the basis upon which he disagreed with Mr Coleman.  The letter concluded with the words: We look forward to your acceptance of our point of view.

12.     On 3 August 2006 Mr Coleman replied to Mr Sheehan’s letter of 15 June 2006 stating that he remained of the view that there was no scope under the scheme for Auspoly to be paid the carry-over sum.

13.     On 28 August 2006, Mr Sheehan filed an application for review with the Tribunal stating that the reviewable decision was made on 3 August 2006 and he attached Mr Coleman’s letter of that date.

THE LEGISLATIVE SCHEME

14.     The TCF–SIP Act commenced on 22 December 1999.  It provides the framework for the implementation of the Textile, Clothing and Footwear Strategic Investment Program.  There were two schemes under the program: the first provided for five grants in respect of expenditure incurred in 2000-2001 to 2004-2005 income years; and the second provided for two grants in respect of expenditure incurred in 2005-2006 to 2014-2015 income years.

15.     Section 22 of the TCF-SIP Act provides that in respect of reconsideration and review of decisions:

(1)The TCF (SIP) scheme must contain provisions under which:

(a)an entity who is affected by a decision of the Secretary under the scheme may, if dissatisfied with the decision, by notice given to the Secretary within such period as is ascertained in accordance with the scheme, request the Secretary to reconsider the decision; and

(b)the Secretary is required to reconsider the decision and is empowered to confirm or revoke the decision or to vary the decision in such manner as the Secretary thinks fit; and

(c)applications may be made to the Administrative Appeals Tribunal for review of decisions of the Secretary that have been confirmed or varied as mentioned in paragraph (b).

(2)The period mentioned in paragraph (1)(a) must not be shorter than 30 days after the day on which the decision first comes to the attention of the entity concerned.

(3)…

(4)…

(5)…

(6)The TCF (SIP) scheme must provide that, if the Secretary confirms, revokes or varies the decision before the end of the period referred to in subsection (5), [30 days], the Secretary must, by notice given to the applicant, inform the applicant of the result of the reconsideration of the decision and the reasons for confirming, revoking or varying the decision, as the case may be.

(7)…

16.     In accordance with the TCF-SIP Act, the Disallowable Instrument provides for a request for reconsideration of a decision by the Secretary at s 87, as follows:

(1)If an entity affected by the decision of the Secretary under the Scheme is dissatisfied with the decision, the entity may request the Secretary to reconsider the decision.

(2)However, subsection (1) does not apply to a decision of the Secretary arising from the application, in relation to:

(a)The entitlement to be paid a grant or the amount of a grant, of section 64, 65, 66, 72, 78, 79, 80, 85A, or 85B; or

(b)The eligibility for a regular advance of a grant, or an amount of a regular advance, or section 51M, 51N, 51O, 51R ,51S, 51T or 51ZD.

(3) A request must:

(a) be in writing; and

(b)set out the reasons for the request; and

(c)be given to the Secretary within 30 days after the entity is notified of the decision or within such further period as the Secretary allows.

17.     Section 88 of the Disallowable Instrument provides for reconsideration by the Secretary of the Department. On receiving a request in accordance with s 87, the Secretary must reconsider the decision and may confirm or revoke the decision or vary the decision in such manner as the Secretary sees fit.  If the Secretary does not confirm, revoke or vary the decision within 30 days after the day on which he receives the request, the Secretary is taken to have confirmed the decision.  If the Secretary confirms, revokes or varies the decision within the 30 days of receiving the request, the Secretary must inform the applicant by notice in writing of the result of the reconsideration of the decision and the reasons for confirming, revoking and varying the decision.

18.     Most significantly, s 88(6) of the Disallowable Instrument provides:

An application may be made to the Administrative Appeals Tribunal for a review of a decision that is confirmed or varied under this section.

JURISDICTION

19. Ms F. McKenzie of Counsel, who appeared on behalf of the Department, pointed out that there was a preliminary issue regarding the proper applicant before the Tribunal. Although Mr Sheehan is named as the applicant, it is clear that the decisions regarding the TCF-SIP Scheme directly affect Auspoly rather than Mr Sheehan. Under s 27 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), where an enactment provides that an application may be made to the Tribunal for a review of the decision, the application may be made by or on behalf of any person or persons whose interests are affected by the decision. Under s 27(2) of the AAT Act an incorporated body is taken to be affected by the decision if the decision relates to a matter included in the objects or purposes of the organisation or association. However, because this issue was raised for the first time at the hearing, Mr Gooding was not prepared to respond to the contention made by the Department that Mr Sheehan is not a party affected by the relevant decision. Without hearing full argument on this point, it would be inappropriate to decide this issue. In any event, because it does not affect the outcome of the jurisdiction question, I have proceeded on the assumption that Mr Sheehan is a person who may apply to the Tribunal under s 27 of the AAT Act.

20.     It is clear, from what Mr Gooding said at the hearing and from the correspondence between Mr Sheehan and the Department, that the disputed decision is the refusal of the Secretary to allow Auspoly a carry-over entitlement of $170,419.60, following the Secretary’s initial decision to pay Auspoly a grant entitlement of $187,424.

21.     Following amendments to the scheme made in 2002, provision was made to carry over amounts which exceeded the maximum allowable in a particular claim year. 

22.     The overall limits on grants entitlements are set out on Sub-division 5.3.3 of the Disallowable Instrument; and as far as Auspoly’s case is concerned, s 85A is most significant.  Insofar as it is relevant, it provides:

(1)The total grants that become payable to an entity during a particular income year of the entity (the claim year) in respect of eligible expenditure incurred by the entity or TCF value added by the entity otherwise than during an eligible start-up period of the entity must not exceed 5 % of the total of the eligible revenue for the entity for the income year of the entity preceding the claim year.

(2)The total of the Type 1, Type 2 and Type 3 grants that become payable to an entity during a particular income year of the entity (the claim year)and any income years of the entity that are earlier than the claim year, in respect of eligible expenditure incurred by the entity during an eligible start-up period of the entity, must not exceed 15% of the total of the eligible start-up investment amounts of the entity for each of the income years of the entity that are earlier than the claim year.

(3)If, in an income year of an entity (the claim year), the total grants that become payable to the entity in respect of eligible expenditure incurred by the entity or TCF value added by the entity would, but for the operation of subsection (1), exceed 5% of the total eligible revenue for the entity for the income year of the entity preceding the claim year, the entity is eligible for the grant of that excess amount in a subsequent year of the Scheme for which a claim is made.

23. Because Auspoly commenced production on 17 August 2003, for the purposes of the scheme, it was held to be in an eligible start-up period which ended 12 months after the day it first began production (s 85A(5)). Because Auspoly was in a start‑up period during the 2003/2004 claim year, the Department determined that the grant for that year must be capped in accordance with s 85A(2) of the Disallowable Instrument. Auspoly requested a reconsideration of that decision in November 2004 on the basis that the Department should have assessed Auspoly’s cap under s 85A(1) of the Disallowable Instrument. However, a delegate of the Secretary, upon reconsideration of the original decision, confirmed that decision. Having confirmed the original decision in writing, as required by s 88(4) of the Disallowable Instrument, that left open to Auspoly the possibility of an application to the Administrative Appeal Tribunal for review of the reconsideration decision by the delegate of the Secretary. I should add, for the sake of completeness, that Ms Facey is a person holding a delegation by the Secretary which permits the Department’s State Manager to reconsider original decisions. Auspoly did not avail itself of this opportunity, which was limited, by reason of s 29 of the AAT Act, to 28 days after the date on which the decision was confirmed. That limitation is also set out in s 22(7) of the TCF-SIP Act.

24.     The application currently before the Tribunal is independent of the reconsidered decision made on 29 November 2004.  Following that decision, Auspoly sought to have the balance of its eligible claim amount paid in the following claimed year.  It argued that for Type 4 and 5 Grants, carry-over amounts allowable on a sales cap basis under s 85A(1) should also apply to grants made under s 85A(2) to an entity during an eligible start-up period.  This was stated in its letter of 24 May 2006 addressed to Mr Coleman.  That letter does not purport to seek reconsideration of a decision made prior to that letter being sent not to pay the claim to the carry-over entitlement.  In the penultimate paragraph of that letter, Mr Sheehan stated:

Mr. Coleman, we believe that there is room in the Scheme regulations for the outstanding amount to be paid to us.  Anything you can do to make this possible would be greatly appreciated as it would solve a real financial headache as a result of the funds not being available.

25.     Mr Sheehan also stated in that letter that the scheme did not, in either s 85A or s 87 of the Disallowable Instrument, cover the specific issue which he addressed.  Because s 87 deals with requests for reconsideration by the Secretary, in my view Auspoly’s letter of 24 May 2006 cannot be a request for reconsideration under s 87 of the Disallowable Instrument.

26.     Mr Coleman’s response of 5 June 2006 refers to a discussion with Mr Gooding; and it simply reiterates the fact that the Department’s view was that the 2002 amendments to the scheme, which introduced the carry-over provisions in s 85A(3), were limited to non start-up situations.  Further, Mr Coleman is not a person authorised by the Secretary to reconsider decisions under s 87 of the Disallowable Instrument. 

27.     In his letter of 15 June 2006 Mr Sheehan raised another issue; that being the application by an associated company known as Auspoly Pty Ltd for registration under the TCF-SIP Scheme.  Mr Sheehan stated that if he had been aware that the grant made to Auspoly would be restricted to 15 per cent of its investment, he may well have taken the decision to incur the capital expenditure in Auspoly Pty Ltd.  Mr Sheehan concluded that letter saying;

We look forward to your acceptance of our point of view.

In my opinion, the letter of 15 June 2006 does not constitute a request for reconsideration by the Secretary of a decision under s 87 of the Disallowable Instrument.  It does not specifically request a review under that section and it appears that Mr Sheehan, from his letter of 24 May 2006, was of the view that s 87 did not in any event apply in these circumstances.

28.     Mr Sheehan maintains that Mr Coleman’s response of 3 August 2006 constitutes the reviewable decision.  However, in my view, that cannot be so for at least two reasons.  First, Mr Coleman does not hold a delegation from the Secretary to review decisions under s 87 of the Disallowable Instrument.  Secondly, the letter simply expresses Mr Coleman’s view about how the TCF-SIP Scheme operates.  It does not address the additional material which seems to form the basis of Mr Sheehan’s complaint in the letter of 15 June 2006.

29. In my analysis I have paid attention to the substance of the correspondence between the parties as opposed to its form. Also, I have taken into consideration the fact that the Tribunal is limited by statute regarding the decisions which it may review. Section 25 of the AAT Act deals with the Tribunal’s powers of review; and it provides that an enactment (a statute) may provide that applications may be made to the Tribunal for a review of decisions made in the exercise of powers conferred by that enactment or by another enactment having affect under the first enactment. It also provides that where an enactment makes provision for review, that enactment must specify the person or persons to whose decisions the provision applies and may specify conditions subject to which the applications may be made. These matters are set out in s 22 of the TCF‑SIP Act. They are then given effect in the Disallowable Instrument by reason of s 87 and s 88 of that document.

30.     The Department argued that even if any of the correspondence from Auspoly in respect of the carry-over entitlement could be construed as a request for reconsideration by the Secretary, s 87(2)(a) of the Disallowable Instrument  precluded a reconsideration by the Secretary. 

31.     Ms Mackenzie submitted that if there was a decision regarding the carry-over provisions in s 85A of the Disallowable Instrument, s 87(2)(a) precluded review of the decision because it arose from the application of s 85A in relation to the entitlement to be paid a grant or the amount of the grant.  I accept that submission.  Section 85A(3) of the Disallowable Instrument deals specifically with the eligibility for a grant in excess of the cap of five per cent of total eligible revenue in a subsequent year of the scheme for which a claim is made.  In other words, it deals with the entitlement to be paid a grant in the year following the claim year.  For that reason, s 87(1) of the Disallowable Instrument, which enables a request to be made for reconsideration of a decision, does not apply even if I were to accept that there has been a decision made by the Secretary regarding the carry-over claim.

32.     I am therefore of the view that the Tribunal does not have jurisdiction to review the claimed decision made by the Department on 3 August 2006.

I certify that the thirty‑two [32] preceding paragraphs are a true copy of the reasons for the decision of:

Mr Egon Fice, Member

signed:     sgd Ursula Noyé

Clerk

Date of hearing:  6 October 2006

Date of decision:  8 November 2006
Advocate for the applicant:        Mr D. Gooding

Solicitor for the respondent:       Phillips Fox