THE WIZARD GROUP PTY LTD And AUSTRALIAN TRADE COMMISSION

[2011] AATA 383

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 383

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/4123

GENERAL ADMINISTRATIVE DIVISION		)
Re		THE WIZARD GROUP PTY LTD

Applicant

And AUSTRALIAN TRADE COMMISSION

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date26 May 2011  

PlaceBrisbane

Decision The decision under review is affirmed.  

..............Signed.................

Deputy President

CATCHWORDS

TRADE & COMMERCE – industry assistance - export market development grants – statutory criteria for eligibility – invalid application – decision under review affirmed.

Export Market Development Grants Act 1997 (Cth) ss 3, 6, 7, 9, 10, 70, 73, 73A

Export Market Development Grants (Australian Net Benefit Requirements) Determination 2008 s 4

Export Market Development Grants (Information and Document Requirements) Determination 2008 s 4

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Singh v Minister for Immigration and Citizenship [2011] FCAFC 27; (2011) 190 FCR 552

Formosa v Secretary, Department of Social Security (1988) 46 FCR 117

Minister for Immigration & Ethnic Affairs v Kurtovic (1990) 21 FCR 193

REASONS FOR DECISION

26 May 2011   Deputy President P E Hack SC    

Introduction

1.On 30 November 2010 the Wizard Group Pty Ltd (Wizard), in its capacity as trustee, lodged an application with the respondent, the Australian Trade Commission (Austrade) for an export market development grant. On 24 May 2010 Austrade decided to refuse the application. That decision was confirmed on internal review on 25 August 2010.

2.Wizard now seeks a review of that decision in the Tribunal. For the reasons that follow I consider that the decision was correct and should be affirmed. The application by Wizard failed to satisfy the statutory criteria for eligibility and was correctly rejected, albeit for different reasons to those that Austrade now advances.

Legislative background

3.The Export Market Development Grants Act 1997 (Cth) has the stated object[1] of bringing,

“…benefits to Australia by encouraging the creation, development and expansion of foreign markets for Australian goods, services, intellectual property and know‑how. It does so by providing for an assistance scheme under which small and medium Australian exporters committed to and capable of seeking out and developing export business are repaid part of their expenses incurred in promoting those products.”

[1] Section 3 of the Act.

4.By virtue of s 6 of the Act a body incorporated under the Corporations Act 2001 (as Wizard is) is eligible for a grant in respect of a grant year “if it satisfies the conditions applicable to it under section 7.” The eligibility requirements for applicants acting as trustee are set out in s 7(4) of the Act. Those in paragraphs (aa) and (i) are the only ones of present relevance. They provide:

“(4)  A person acting as trustee of a trust estate is eligible for a grant in respect of a grant year if the following conditions are satisfied:

(aa)  the person was, in the opinion of the CEO of Austrade, genuinely carrying on business in Australia during the grant year as trustee of the trust estate;

…

(i)  if:

(i)  the person is a grantee in respect of 2 or more previous grant years; and

(ii)  the application made by the person (as trustee of the trust estate) for a grant in respect of the grant year sets out a statement that the person chooses (in that capacity) grants option B in relation to the grant year;

the CEO has decided under section 9 that the person (in that capacity) meets the Australian net benefit requirements in relation to the grant year.”

5.Division 2 of Part 3 of the Act expands upon the notion of “Australian net benefit” referred to in s 7(4)(i). Where an applicant, as trustee, is a grantee in respect of two or more previous grant years and sets out a statement that the applicant chooses, in the applicant’s capacity as trustee of the trust estate, grants option B in relation to the grant year,

“…the CEO of Austrade must decide whether the applicant, in that capacity, meets the Australian net benefit requirements in relation to the grant year.”[2]

[2] Section 9(2) of the Act.

6.Section 10 of the Act allows the Minister to determine, by legislative instrument, specified requirements that are Australian net benefit requirements for a grant year. The Export Market Development Grants (Australian Net Benefit Requirements) Determination 2008, made by the Minister for Trade on 25 June 2008, specified[3] those requirements in these terms:

[3] Section 4 of the Determination. The Determination has since been amended by the Export market Development Grants (Australian Net Benefit Requirements) Amendment Determination 2010 (No 1) and by the Export market Development Grants Legislation Amendment Determination 2010 (No 1) however those amendments do not affect applications made in relation to the grant year commencing on 1 July 2008. 

“For section 10 of the Act, the specified requirements are:

(a)   the size of the commercial return received, or receivable, from the applicant’s international business activities in the grant year; and

(b)   the applicant’s financial position; and

(c)   whether the applicant has the financial resources to maintain its international business activities; and

(d)   whether the applicant’s international business activities generate or will generate substantial economic benefits for Australia in each of the following areas:

(i)    employment in Australia;

(ii)    new capital investment in Australia;

(iii)    introduction of new technologies in Australia;

(iv)    new value‑added operations in Australia.”

7.The mechanisms for applying for, and payment of, a grant are dealt with in Part 7 of the Act. Section 70 is in these terms:

“(1)  A person may make an application to the CEO of Austrade for a grant in respect of a grant year.

(2)  The application must:

(a)  be in a form, and be made in a manner, approved by the CEO of Austrade; and

(b)  be made within:

(i)  5 months after the end of the grant year; or

(ii)  if the circumstances specified in an instrument under subsection (4) exist in relation to the application—such greater number of months after the end of the grant year as is specified in the instrument.

(2A)  …

(2B)  If:

(a)  an applicant is not an approved body; and

(b)  the applicant is a grantee in respect of 2 or more previous grant years; and

(c)  the applicant is applying in the applicant’s capacity as trustee of a trust estate;

the application must set out not more than one of the following statements:

(d)  a statement that the applicant chooses, in that capacity, grants option A in relation to the grant year;

(e)  a statement that the applicant chooses, in that capacity, grants option B in relation to the grant year.

(2C)  If:

(a)  an applicant is not an approved body; and

(b)  the applicant is a grantee in respect of 2 or more previous grant years; and

(c)  if the applicant is applying in the applicant’s own right—the application sets out a statement that the applicant chooses grants option B in relation to the grant year; and

(d)  if the applicant is applying in the applicant’s capacity as trustee of a trust estate—the application sets out a statement that the applicant chooses, in that capacity, grants option B in relation to the grant year; and

(e) a determination is in force under section 73A;

the application must be accompanied by:

(f)  such information (if any) as is specified in the determination; and

(g)  such documents (if any) as are specified in the determination.”

8.Section 73 of the Act has significance in the present case. It provides:

“(1)  The CEO of Austrade may refuse to consider an application if:

(a)  the application is not in accordance with paragraph 70(2)(a); or

(b)  the applicant, or (if the applicant is a body corporate that was a member of a related company group) a related company, has not complied with a request of the CEO under section 72; or

(c)  an individual who has helped, in a prescribed capacity, to prepare the application has not complied with a request of the CEO under section 79.

Note:          For prescribed capacity see subsection 74(2)

(2)  The CEO of Austrade must not consider an application made more than 5 months after the end of the grant year to which it relates.

(3)  The CEO of Austrade must not consider an application if the application breaches subsection 70(2A), (2B) or (2C).”

9.Finally, s 73A of the Act permits the CEO of Austrade, by legislative instrument, to specify information or documents for the purposes of s 70(2C) of the Act. The Export Market Developments Grants (Information and Document Requirements) Determination 2008 was made by that official on 24 June 2008. It provided[4]:

[4] Section 4 of the Determination. Amendments have since been made by the Export Market Development Grants (Information and Document Requirements) Amendment Determination 2010 (No 1) however those amendments do not affect applications made in relation to the grant year commencing on 1 July 2008.

“(1)   For paragraphs 70 (2C) (f) and (g) of the Act, the following information and document requirements are specified:

(a)    the applicant’s business plan, including the applicant’s international marketing strategy;

(b)    the applicant’s audited statement of income, including:

(i)    the income received by the applicant from international sources for the grant year; and

(ii)    the income receivable by the applicant from international sources for the year following the grant year;

(c)    the applicant’s audited profit and loss statement for the grant year and the year preceding the grant year;

(d)    the applicant’s audited balance sheet for the grant year and the year preceding the grant year;

(e)    a statement that details the economic benefits generated, or that will be generated, from the applicant’s international business activities in each of the following areas:

(i)    employment in Australia;

(ii)    new capital investment in Australia;

(iii)    introduction of new technologies in Australia;

(iv)    new value‑added operations in Australia.

(2)   For subsection (1), a reference to:

(a)    an audited statement of income; or

(b)    an audited profit and loss statement; or

(c)    an audited balance sheet;

is a reference to a document that has been audited by a person who is a registered company auditor for the Corporations Act 2001.”

The case for austrade

10.It is a simpler exercise to consider the issues raised by this application by reference to the contentions Austrade puts forward, each of which, it argues, has the effect that the decision should be affirmed.

11.First it says that Wizard did not comply with the mandatory requirements of ss 70(2)(b) and 70(2C) of the Act with the result that Wizard was not eligible for a grant. Then it contends that, in any event, Wizard’s application did not satisfy the Australian net benefit requirement. Finally, Austrade submitted that Wizard was ineligible by virtue of s 7(4)(b) of the Act, that is, it was a grantee in respect of eight or more previous grant years. In the course of the hearing I ruled that Austrade ought not be permitted to rely upon the documents that it relied on to make good that third argument and I need not consider it further.

The information requirements

12.In my view the application lodged on 30 November 2009 did not comply with the requirement of s 70(2C) of the Act that it be accompanied by “such information” and “such documents” as specified in the Export Market Development Grants (Information and Document Requirements) Determination. None of the matters specified in clauses 4(1)(a) to (e) of the Determination were provided.

13.That being so the validity of the application fell to be determined by reference to the test in Project Blue Sky Inc v Australian Broadcasting Authority[5] namely,

“…whether it was a purpose of the legislation that an act done in breach of the provision should be invalid.”

[5] [1998] HCA 28; (1998) 194 CLR 355, 390 at [93].

In my view it plainly was.

14.That conclusion flows from the words of the Act and from its legislative history. The language of s 70(2B) of the Act is unequivocally mandatory – “the application must be accompanied …” And, for additional emphasis, s 73(3) of the Act prohibits the CEO of Austrade from considering an application that breaches any of ss 70(2A), (2B) or (2C).

15.Section 73(2) of the Act was introduced in 1999 following a decision of the Tribunal that interpreted s 70(1)(b) of the Act, that is, the requirement to make applications within five months of the end of the grant year, as being mandatory. The Explanatory Memorandum to the amending bill spoke of the amendment as being,

“...intended to remove any possibility that Austrade has the power to accept an application lodged subsequent to the conclusion of 5 months after the end of a grant year.”

16.It follows that, in my view, the application made by Wizard was invalid and that Austrade ought not to have considered it. Ideally, the response to the application ought to have been a decision in those terms. Regrettably, it was not.

17.Austrade, wrongly in my view, dealt with Wizard as if the Act gave Austrade power to accept late applications. It gave a series of extensions of time to allow Wizard to provide additional information. But the fact that an official assumes the fact of a power does not operate to create the power. The Full Court of the Federal Court in Singh v Minister for Immigration and Citizenship[6] referred to:

“…the fundamental principle of the separation of powers: that officers of the executive government have no power to alter the state of affairs ordained by the legislature. It is this principle that underlies the proposition that there can be no estoppel against a statute.”

[6] [2011] FCAFC 27; (2011) 190 FCR 552, [47]. See also Formosa v Secretary, Department of Social Security (1988) 46 FCR 117; Minister for Immigration & Ethnic Affairs v Kurtovic (1990) 21 FCR 193.

And in this case it is that principle that requires me to give effect to the words of the Act rather than the view that officials may have had of its operation. The Act imposes a deadline in mandatory terms; its requirements cannot be ignored, even by the officials administering it.

18.It is most unfortunate that officials of Austrade were apparently unaware of the amendments that had been made to the Act. There must have been some level of understanding because the published Guidelines set out the requirements of the relevant Determination. But, seemingly, that understanding was not shared by all. Mr Porter, the director of Wizard, characterised the acts of Austrade in its dealing with Wizard as having been in bad faith. On the material before me I would not reach that conclusion. It is more likely, I think, that the officials lacked a proper understanding of the operation of the Act.

19.In the result I am satisfied that the application made by Wizard on 30 November 2009 did not comply with the mandatory requirements of Part 7 of the Act and accordingly, in the language of s 4 of the Act, Wizard did not apply for a grant in accordance with Part 7. It was thus ineligible for a grant and I will affirm the decision.

20.I find it unnecessary to consider the second argument by Austrade that the application did not meet the Australian net benefit requirements for the 2008-09 year and make no comment on the merits or otherwise of that argument.

21.On the material before me it is apparent that Austrade’s handling of Wizard’s application fell below proper standards. Wizard was encouraged to obtain further material, no doubt at some cost, when in reality it ought to have been told, no later than 1 December 2009, that its application could not be considered. It is a matter where Wizard ought consider whether it may have a remedy under the Australian Government’s Scheme for Compensation for Detriment caused by Defective Administration.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: ........Signed........................................................
  Associate

Date of Hearing  26 May 2011        
Date of Decision  26 May 2011
The Applicant was self-represented          
Counsel for the Respondent     Dr M Allars 
Solicitors for the Respondent    Mallesons Stephen Jaques