Webster and Australian Trade Commission
[2002] AATA 1278
•10 December 2002
DECISION AND REASONS FOR DECISION [2002] AATA 1278
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2001/667
GENERAL ADMINISTRATIVE DIVISION )
Re JENNIFER WEBSTER
Applicant
And AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Mr RG Kenny, Member
Date10 December 2002
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
....................(Sgd)....................
RG Kenny
Member
CATCHWORDS
GRANTS - Export Market Development Grant - engagement to distribute brochures in Hong Kong – reasonable expenses – use of administrative guidelines – onus of proof – standard of proof
Export Market Development Grants Act 1997 ss 3, 4, 29, 33, 35, 37
Jones v Dunkel (1959) 101 CLR 298
McDonald v Director-General of Social Security (1984) 6 ALD 6
Re Kirby and Collection of Customs (1989) 20 ALD 369
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 6 AAR 259
Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
Minister, Local Government and Ethnic Affairs v Gray (1994) 50 FCR 189
Australian Trade Commission v Hellay Laboratories Pty Ltd (2001) 67 ALD 1
REASONS FOR DECISION
10 December 2002 Mr RG Kenny, Member
Application
On 30 August, 2000, Jennifer Webster (the applicant) lodged an application to Austrade for a grant under the Export Market Development Grants Act 1997 (the Act) in relation to her business for the 1998/1999 and 1999/2000 grant years (see T4). Her business traded under the name of Gumnuts Farm/Horseriding Resort and is located at Canungra in Queensland.
On 22 November 2000, an authorised officer approved, in part, her application (see T7). On 20 December 2000, the applicant sought review of that decision and, on 4 July 2001, a further decision was made by Austrade pursuant to which an additional amount was allowed to the applicant (see T9). The applicant received a grant amount of $9,543 but the following claims were disallowed:
$4,950 for marketing visits made by Colin Webster, the applicant's husband, to the Gold Coast; and
$81,250 for amounts paid to marketing consultants for the printing and distribution of brochures in Hong Kong between 20 July 1998 and 12 February 2000.
On 1 August 2001, the applicant lodged an application for review of that decision by the Administrative Appeals Tribunal (the Tribunal) (see T1). The application for review related only to that part of the determination which rejected the applicant's claim for the expenses in respect of the consultancy fees, that is $81,250.
The applicant attended the hearing but was not represented. Austrade (the respondent) was represented by Mr D Rangiah of Counsel who was instructed by the Australian Government Solicitor. In evidence were the T Documents (T1 – T9) (Exhibit 1) and the following:
Exhibit A1 a statement, dated 6 March 2002, by James Webster, the applicant's son;
Exhibit A2 applicant's submission dated 9 January 2002;
Exhibit A3 applicant's written submission;
Exhibit A4 diaries of daily records of business;
Exhibit A5 a statement from the applicant dated 22 July 2002;
Exhibit R1 an Export Market Plan Guide (with annexures);
Exhibit R2 respondent's Statements of Facts and Contentions;
Exhibit R3 a statement, dated 2 January 2002, by James Webster;
Exhibit R4 an affidavit, dated 12 July 2002, of Geoff John O'Connell; and
Exhibit R5 an affidavit, dated 25 July 2002, of Anna Bishop.
Issues and Legislation
The object of Act is set out in section 3 thereof which reads:
"The object of this Act is to bring 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."
In accordance with section 107 of the Act, the term Austrade means the Australian Trade Commission. The entitlement of a person to a grant is provided for in section 4 of the Act which reads:
"Subject to this Act, a person that:
(a)is eligible under Part 3 for a grant in respect of a grant year; and
(b)has incurred eligible expenses in that grant year in relation to eligible products; and
(c)has applied for a grant in accordance with Part 7;
is entitled to a grant in respect of that grant year in the amount worked out under Part 6."
Under section 29 of the Act, eligible expenses include those incurred by an applicant for claimable expenses in respect of an eligible promotional activity as provided for under section 33 of the Act. Section 37 of the Act sets out what constitutes an approved promotional purpose and it is not disputed that the kinds of marketing activities for which the applicant lodged her claim meet the requirements of that provision. Section 33 of the Act, as it read at the relevant time, set out six types of eligible promotional activities and listed the claimable expenses relating to each of these. In the applicant's case, the activity at item 6 was raised and the provision described the claimable expenses as comprising all of the reasonable expenses incurred by the applicant in:
"engaging as a consultant on a short term basis (either in or outside Australia) a person that, in Austrade's opinion, is not closely related to the applicant, to the extent to which the person undertakes market research, or marketing activities, related to an approved promotional purpose."
Section 35 of the Act sets out what constitutes reasonable expenses. It reads:
"(1) Austrade is to determine for the purposes of section 33 whether any expenses incurred by the applicant are reasonable.
(2) If it appears to Austrade that any expenses incurred by the applicant in respect of an eligible promotional activity may not be reasonable, Austrade must:(a) notify the applicant, in writing, that it is of that opinion and of its reasons for being of that opinion; and
(b) ask the applicant to establish, within the period specified by Austrade, that the amount of the expenses was reasonably payable for the activity for which the expenses were incurred.
(3) If Austrade determines that any expenses of the applicant are not reasonable:
(a) Austrade must determine the amount that it considers to be reasonable for those expenses; and
(b) expenses in that amount are taken to be the reasonable expenses of the applicant for the purposes of this Division.
(4) In making a determination under subsection (1), Austrade must take into consideration any information given by the applicant in answer to Austrade's request under paragraph (2)(b)."
In its Statement of Facts and Contentions, the respondent referred to extracts from the Administrative Guidelines as being of relevance. These are published by the respondent to assist decision makers to implement the Act. The relevant guidelines are reproduced later in these reasons.
10. In her initial claim, the applicant included the amount of $81,250 that she said was paid, between about 20 July 1998 and about 12 February 2000, to Brian and Josephine Climo as short-term consultants for the printing and distribution of brochures and for the promotion of her business in Hong Kong (see T4/35,36). The respondent did not accept that such payments were substantiated by the applicant and rejected that part of the applicant's claim for that reason and also because the consultancy was not a short term one. It is not disputed that the applicant is eligible under Part 3 of the Act or that she has made application in accordance with Part 7 of the Act. The issues for the Tribunal are whether the amount of $81,250 comprised eligible expenses in the grant year and whether the consultancy was conducted on a short term basis.
Applicant's Evidence
11. At the hearing, the applicant gave the following evidence.
12. She first met Mr Brian Climo about thirty-five years ago in Sydney when he was involved in the sale of real estate and she was a property developer. She met him again, by chance, about six years ago on the Gold Coast. She met Mrs Josephine Climo some time later. Mr and Mrs Climo had a business interest in the fashion industry in Hong Kong but lived on the Gold Coast at that time. She had seen the Climos at their Burleigh Heads home on perhaps two occasions and believed that they had lived on the Esplanade but did not know their precise address. She entered into the consultancy arrangement with them and, when she had to make contact, she would leave a message on Mr Climo's mobile phone and he would then contact her. She was not aware of where the Climos lived in Hong Kong and nor did she have any telephone or facsimile number in Hong Kong to contact him.
13. The Climos had been willing to assist her with her claim initially and to provide her with relevant bank and transfer documents and references to their airline travel by providing frequent flyer records and they also provided her with other information such as maps of Hong Kong where brochures had been distributed. They had then become angry when asked to provide copies of their bank statements and taxation returns. She has now lost contact with them although she believed that they might be living in America. She could not recall the last contact that she had with Mr Climo and agreed that she had not contacted Telstra or any business associates of Mr Climo in Australia to determine his whereabouts. She also said that she could not see what relevance his evidence would have for the hearing. She was referred to the letter, undated but received by facsimile on 2 October 2000 (see T7 at 132), from Mr Climo where he indicated that he was willing to provide information as long as someone was prepared to pay for it. The letter reads:"We refer to your request for our tax returns for the years 1998 and 1999 and advise that we are not in the habit of supplying copies of our tax returns to clients. As to your request for information on the transmission of your payments to Hong Kong where the work took place we are pleased to supply the following data. All of these transmissions took place through our Bankers. Copies of these transmissions can be organized through either records in Hong Kong or the banks concerned here in Australia. However, that will require quite a lot of work, which somebody must pay for, as these records go back some way. The bank is asking $60 per hour to go through their old records as they have informed us that they only retain their copy at the bank for one month.
I can assure you that these transmissions are genuine!
2.7.98 $2000
10.7.98 $3000
20.7.78 $3000
TOTAL $8000 Receipt no. 309751 – 20.7.9810.8.98 $3000
12.8.98 $3000
28.8.98 $2000
TOTAL $8000 Receipt no. 309752 – 1.9.9817.9.98 $5000
23.9.98 $3000
TOTAL $8000 Receipt no. 309753 – 1.10.982.11.98 $800 Receipt no. 309754 – 7.11.98
3.2.99 $8000 Receipt no. 309755 – 10.2.99
16.6.99 $5000
21.6.99 $3000
29.6.99 $ 250
TOTAL $8250 Receipt no. 309756 – 1.7.9920.7.99 $5000
3.8.99 $2500
6.8.99 $ 750
TOTAL $8250 Receipt no. 309757 – 7.8.9913.9.99 $5000
14.9.99 $3250
TOTAL $8250 Receipt no. 309758 – 4.10.9927.10.99 $2000
29.10.99 $1000
1.11.99 $1000
4.11.99 $2000
TOTAL $6000 Receipt no. 309759 – 10.11.99The balance of $2250 on this occasion was taken over to Josphine in Hong Kong on my trip departing Australian on 19.11.99.
10.2.00 Receipt no. 309760 – 12.2.00 $8,250 Given personally to Josephine to take back to Hong Kong after the Chinese New Year break.
Your request for a report on our activities follows.
We arranged for the printing and letterbox distribution of your leaflets in the Chinese written language throughout the residential and commercial areas of Hong Kong using local itinerate workers. We covered practically the entire Island of Hong Kong and the Kowloon Peninsular as far out as, but not including, the sparsely populated areas of The New Territories. This encompasses one of the most densely populated areas on earth with thousands of Sandwich Housing high rise buildings occupied by hundreds or sometimes thousands of people mostly able to afford the $1,000,000 plus price tag for such accommodation.
We feel that this is one of the most ideal markets anywhere for letterbox promotions, a view that has been confirmed by your positive feedback concerning the success of the campaigns.
Trusting that you find this information adequate."
14. The applicant agreed that the third entry of "20 July 1978" should read "20 July 1998". She was unable to recall the particular date of any single payment to Mr Climo and said it could have been within a week of the transmission but she was not able to say. She denied that she was unwilling to declare a date because she was aware that the frequent flyer records of Mr Climo were in evidence and that this may well indicate that payments were made at times when he was not in the country.
15. It was about sixty kilometres or one hour's drive from her farm to Burleigh Heads where she would meet Mr Climo at various places such as in a restaurant or a transit centre or any other convenient place where she could provide him with cash payments for carrying out his promotional work. He came to the farm on a couple of occasions but Mrs Climo did not attend any of the meetings that she had with Mr Climo.
16. The payments were made in cash to Mr Climo in individual amounts as they became available but the only receipts that she had were for the total amounts of $8,000 or $8,250. Initially, in her evidence, she said that she was not sure what the progressive payment amounts were but later said that they were most likely to have been in $4,000 sums. When asked why she did not wait until she accumulated amounts of $8,000 before making payments to Mr Climo, she said that she could have done so and agreed that it might have been more convenient to do so. She was referred to Schedule 6 of her claim which listed payments to short-term consultants (see T4/30) which recorded a total of five payments of $8,000 to Mr Climo. The applicant agreed that the amounts had not been paid in sums of $8,000 but that receipts were issued for those amounts within a week of the final payment. She was referred to receipts she had received from the Climos (see T7/128) and she conceded that these were consecutively numbered, were completed in identical handwriting and in identical terms and that they spanned the period 1998 to 1999. She denied that the receipts had been prepared after Austrade had rejected her claim.
17. The applicant said that she was an experienced business woman and had been involved in business activities all of her life. She knew that there should be no mistake in her keeping of records and that was why she got receipts. It did not occur to her that there would be an error in the amounts on the receipts.
18. The applicant was referred to a letter, dated 1 July 1998 (see T7/83), to the applicant from the Climos which included the comment: that the payment method of $8,000 up front was to be renewed when they got close to running out of funds. She said that things were arranged this way because the monies would be paid and she would then see how things went. There had been no indication of the duration of any arrangement between her and the Climos other than that, when an $8,000 amount had been given and utilised, there would be another such segment of operation and, in total, there were ten such segments. She had not thought about the length of any association with the Climos. She was asked to comment on why the letter from the Climos made no reference to the number of brochures, the area of distribution or the methods of supervision of the brochure delivery arrangement and she said that she had trusted Mr Climo and expected him to carry out the plan by having the leaflets printed and distributed in Hong Kong and thought that this would be done within a month although she had not ever tried to find this out.
19. The applicant recalled a visit to Gumnut Farm by the auditor, Geoff O'Connell, who inspected her books and operations. She told him that she kept a cash tin and she denied that she had told Mr O'Connell that she had paid Mr Climo in lump sum amounts of $8,000 but agreed that she told him nothing about the progressive payment amounts. She said that he must have assumed that the amounts were in lump sums of $8,000.
20. The applicant said that the payments were over two five month periods with a period of five months between them during which she had decided not to spend the money on the brochures because of other needs but agreed that this was despite the fact that the brochures had been successful in developing new customers. She also wanted to concentrate on the Chinese holiday periods. The applicant denied that she was trying, by having two separate five month periods, to make it look like a short-term consultancy.
21. The applicant agreed that she had utilised an expensive and wasteful strategy in that the brochures may well have been dropped into the letterboxes of people in Hong Kong who were non-travellers, non-Australian travellers or, if Australian travellers, then ones who were not likely to go to the Gold Coast. She also said that it was a well-known method of dispersing brochure-type material.
22. The applicant was not sure what the individual cost of a brochure was and could not recall whether she told Mr O'Connell if they were three cents each. She said that Mr Climo had done five runs of 200,000 to 225,000 each time. After considering the cost, she thought that the actual cost was thirty-five cents, which she said was "cheap". Subsequently, she said that the price may have been in the order of 3.5 cents.
23. The applicant kept a diary of the activities at Gumnuts Farm for the purposes of recording the activities that took place with tourists, describing it as an accurate record of information for receipts of monies from tourists for taxation records (see T7/126) and of information for data that she provided to Austrade in documents such as the Analysis of Export Sales by Market and her records for August 1998 and August and November 1999 in her written submission of January 2002 (exhibit A2). The diary was the only source of information concerning the monies paid by tourists although she said that she only gave them receipts if requested to do so. She did not keep contact details for the tourists.
24. She did not bank the money she received from tourists as much of the business was conducted on a cash basis and she lived some twenty kilometres from a bank and did not want to keep a lot of cash around the premises. There were two trips to the Gold Coast each day to pick up customers but the bank at which she operated her accounts was in Beaudesert. She relied upon her diary to track income but she relied upon her receipts to track her outgoings because, if she paid for something in cash, she always obtained a receipt. When dealing with her accountant, she would provide him with the receipts and also the diary which contained a record of all income and also some personal reminders to herself.
25. The applicant agreed that the diary made no reference to the Climos but also said that it was not meant to do so because it was only concerned with recording income. She said that she might have records of her meetings with Mr Climo but would probably not be able to find them. When she was in the process of arranging a meeting with Mr Climo, she would have a sheet of paper on which she noted the various matters that she had to attend to on that day and would drive to the Gold Coast and conduct activities such as shopping. Her diary did not record her trips to the Gold Coast.
26. She said that all of the Hong Kong customers who presented a brochure were given a 20% discount. The applicant was referred to particular diary entries on 2 and 3 August 1999 (exhibit A2) and to a reference to a 10% discount to a customer on that date. She was also referred to a similar 10% discount entered in the diary on 9 and 10 August 1999. She said that she did not always write the discount in the book and that the amount that appeared in the diary was the amount she actually received after any discounting. The applicant was referred to an entry on 19 August 1999 for "Mr Chang", where an amount of $600 was discounted by 10% to a total of $540, and to an entry on 23 August 1999 for "Mr Yuen" where an amount of $1,400 was discounted by $140 to a total of $1,260. She conceded that, throughout her diary, there was no reference to any 20% discount for any customer whether from Hong Kong or otherwise but said that this would be expected in relation to activities apart from farm stays which were the focus of the brochures.
27. The applicant was referred to another diary entry in August 1998 for "Mr Ng". She said that she thought this was a Chinese name and had charged him $540 for three double bookings which would have been the discounted rate of $180 per double. In relation to her pricing structures, she had a normal retail rate of $135 per customer and the double price would be $270. There were no limits on what she could charge Australian tourists and the standard rate was $90 per day. However, with overseas customers, she had to ensure that the amount that she charged meshed with the amounts that had been quoted by respective travel agents. Like all other accommodation outlets on the Gold Coast, she had a double tier fee structure involving a retail rate and a base or wholesale rate.
28. The applicant was referred to documents headed Analysis of Export Sales by Market (see T5/45,65) which were completed by her following the lodgement of her claim and in support of it. There, she distinguish between various categories of nationality in the customers who came to Gumnuts Farm including groupings of "Chinese", "Japanese", "European", "US", "Singapore", "Australian" and "unknown'. She said that the information was compiled by going through her daily diaries with nationality being attributed by the person's name, which was largely guesswork, as the nationality was not recorded in the diary. When there was a booking for a group of several people, in a name that she thought was Chinese, she attributed Chinese nationality to all of them. She denied that she had attempted to represent this to Austrade as being a precise representation of customer types of category by nationality.
29. The applicant was referred to a letter, dated 29 August 2000 (see exhibit R1), written by Bill Kaye whom she had nominated as her consultant for the purposes of processing her claim. It described the role of the Climos preparing and distributing Chinese language brochures in Hong Kong and surrounds as well as doing "general marketing". The applicant agreed that there had been no other marketing apart from the distribution of brochures although she said that the Climos also provided her with some general guidance about marketing in Hong Kong. She denied that this letter from Bill Kaye had been designed to give the impression to Austrade that the Climos had played a greater role than mere brochure distribution.
30. The applicant was referred to another element of her initial claim which related to expenses incurred by her husband in travelling to the Gold Coast on two days per week for fifty weeks of the year. She said that he had been engaged in visiting 400 of the brochure outlet points on the Gold Coast as a form of "soft sell" to agents, hotels and unit-block reception areas and that this was for the purpose of selling day trips rather than farm stays, which involved accommodation, and which were the main purpose of the Hong Kong brochure drops. She said it was not possible to market farm stays through the Gold Coast hotel and unit reception areas because this involved competing with those entities. The applicant conceded that, for one month of the period claimed, he had been overseas and had not made the trips. When asked why she had not pursued that element of her claim, she said that she had failed to keep appropriate records and that it would be difficult for her to establish the claim. She denied that she had failed to pursue the claim because there were false elements to it.
Evidence of James Webster
31. The applicant called her son, James Webster, to give evidence. He said that he had worked at Gumnuts Farm since he was at school. His role was to meet customers at the Gold Coast, where he would collect tickets or cash payments from them and any brochures that they had, and take them to the farm. He said he always collected the money and would take it to his mother who would enter the amounts in the diary. He said he worked there in 1998 and had noticed an increase in business in the form of farm stays in the second half of 1998 beginning in around July or August. He said that not all visitors from Hong Kong had vouchers and that he could not recall when the Hong Kong brochures began to be presented but he thought it might have been in August 1998. He said that he did not do all of the pickups of customers.
32. Mr Webster was referred to a statement that he had made (see exhibit R3) on 2 January 2002 in which he said that he "would, occasionally, if asked, collect the money" from the customers. He agreed that, in the statement, he had used the word "occasionally" and that, in his evidence at the hearing, he had said that it was routinely his task to collect the monies.
Evidence of Geoff O'Connell
33. Geoff O'Connell was called to give evidence by the respondent. He is the Queensland Manager, Export Markets Developments Grants, and said that he had been working with Austrade for twenty years and that he was a qualified accountant. He investigated the applicant's claim on behalf of the respondent and completed an affidavit (exhibit R4) in which he stated:
"1. On 15 September 2000 I attended at the business premises of the Applicant namely, Gumnuts Farm/Horseriding Resort situated at Canungra in Queensland. The purpose of my visit was to attend a meeting with Mrs Webster and her consultant to discuss her application for an Export Market Developments Grant.
2. In attendance at the meeting were Bill Kaye, Mrs Webster's consultant, an Ian Wilson, who was a temporary employee with the Australian Trade Commission, Mrs Webster and myself. Mr Webster was present but only for a short period of time, for the first five minutes of the meeting.
3. My recollection is that the meeting took approximately two hours.
4. I opened up the discussion focusing on the business activities of the business and then we discussed the earnings claimed and expenditure claimed in order to give Mrs Webster and her consultant an opportunity to verify the claim. I specifically remember attending at this particular appointment because it was quite unique. In particular, I was surprised by the answers that were made to the questions that I asked about the cash payments made to Mr and Mrs Climo for brochures, distribution of brochures and travel as consultants.
5. At the time of the appointment I wrote in my own handwriting notes on the schedule of the 1999/00 application form lodged by the Applicant situated at T4 folios 14-34. On 19 October 2000 I sent an e-mail to the Applicant's consultant requesting further information. A copy of this e-mail is at folio 47 of the 'T' documents.
6. The Applicant subsequently responded through her consultant and the response is at folios 44-46 of the 'T' documents. The consultant onforwarded the correspondence to the Australian Trade Commission.
7. My assessment summary and report is at pages 37-43 of the 'T' documents and I notice that after page 43 should be another page that was accidentally omitted from the 'T' documents. Now produced and shown to me and marked 'GJO1' is a copy of that page.
8. In response to my questions about the payments of sums of $8,000.00 paid in cash, I specifically recall Mrs Webster telling me during that interview on 19 September 2000 that she kept $8,000.00 in cash in a box in her room under the bed and that she paid $8000.00 in one lump sum to the Climos each time she made a payment and that was why the receipts were for $8,000.00. There was no suggestion by her during that interview that she paid the Climos sums totalling $8000.00.
9. I also specifically recall that Mr Webster told me during the interview on 15 September 2000 that she recorded everything in her diaries which concerned the receipt and payment in cash. I had a quick look at the diaries during that meeting and I noted that some of the notations were in pencil and they were quite hard to read. I did not confront Mrs Webster about these seemingly incomplete records at the time of my visit but I did request samples to be sent to me subsequently in respect of the cash sales and payments."
34. Mr O'Connell said that he believed there were some unusual features to the running of the Gumnuts Farm enterprise in particular because of the large amounts of cash that were involved which were used to make payments for various services. He said that he had never seen cash incomings and outgoings of the kind referred to except when dealing with opal miners who ran cash businesses.
35. He also said the method of promotion was unusual in that 30% of the claims that he deals with involve lots of promotion rather than an indiscriminate leaflet drop to an untargeted audience. He also believed that the consultancy was unusual in that Mr Climo did not appear to have any expertise in the area. He said that it seemed to be based upon the fact that they and the applicant were former friends or colleagues.
36. In relation to the reference to $8,000 payment amounts, Mr O'Connell said that he believed the tone of his questioning was such that it would indicate that he was looking for the amounts actually paid rather than accumulated sums. He agreed that he had discussed many matters with the applicant at the farm and that the total amount of time spent upon the Hong Kong aspects of her claim would have been about ten minutes of the two hours that he was present.
37. In relation to where monies were kept at the farm, Mr O'Connell said that he could recall the applicant using the phrase "box under the bed" as being where the monies were kept and that this was his recollection of the conversation. In relation to the diaries, Mr O'Connell said that he could recall many pencil notes and that the diary entries were difficult to read.
Respondent's Submission
38. The respondent provided a detailed written submission to the effect that the Tribunal could not accept the applicant's evidence that she paid $81,250 in cash to the Climos and also that the nature of any consultancy was not short term.
39. In relation to the payments of money, it was noted that the applicant gave varying accounts of the amounts she paid to Mr Climo but eventually claimed to have made progressive payments of $4,000 and it was submitted that a successful businesswoman would recall and keep a record of the amounts, be able to advise when at least some of the payments were made, obtain a receipt for each amount actually delivered and that an inability to advise of precise dates may be explanied by the presence of frequent flyer records which provided evidence of when Mr Climo was not in Australia. It was also submitted that the idea that the applicant had numerous meetings with Mr Climo in various locations at the Gold Coast in order to give him multiple amounts of cash to make up each $8,000 or $8,250 lot, rather than deposit the amounts into his bank account, was not credible and also that the applicant's lack of knowledge of the Climos' contact reference in Hong Kong would make it unlikely that she would wait for a receipt to arrive at some time in the future.
40. The respondent submitted that the Tribunal should accept the evidence of Mr O'Connell that the kind of marketing adopted by the applicant was unusual in his experience and also that she had advised him that there were five individual payments of $8,000 and five of $8,250 and that this was what the applicant had represented to be the case in her application for the grant.
41. In relation to the brochures, it was submitted that it was not credible that the applicant would not be aware of their unit cost as this was a guide to the number of brochures that were going to be distributed. She denied telling Mr O'Connell that the cost of the brochures was three cents each but, after referring to them as being thirty-five cents each, resiled from this evidence and said that the cost was in fact 3.5 cents per brochure.
42. It was submitted that the unreliability of the applicant's evidence was reflected in the alleged marketing visits to Gold Coast hotels and operators by her husband on two days per week for fifty weeks for each of the 1998/1999 and 1999/2000 years (T4/18-19) and the disontinuance of the appeal against Austrade's rejection of that claim. The applicant admitted that her husband was not in Australia for the entire period and an obvious inference is that she declined to pursue her claim because it would have required her to call her husband to give evidence. An inference should be drawn that the evidence of the applicant's husband would not have assisted the applicant's case under the principle in Jones v Dunkel(1959) 101 CLR 298.
43. The respondent submitted that the "Analysis of Export Sales by Market" provided to Austrade was a clear attempt to represent that she had received a very substantial proportion of her income from Chinese visitors in that it purported to indicate precisely the nationality of the visitors to her business and to give a precise monetary breakdown of the amount received from each of those nationalities when that information was not contained in the diaries. She admitted that she had taken "a bit of a punt" but nothing in the material presented to Austrade indicated that she had done so.
44. The respondent also submitted there was a significant inconsistency between the Climos letter at T7/132 and the evidence of the applicant concerning her request for information. She claimed that she asked him to provide his bank statements yet the letter indicates that the applicant's request was "for information on the transmission of your payments to Hong Kong" and there is no suggestion from Mr Climo that the applicant ever asked for copies of his bank statements.
45. A further submission was that the applicant had attempted to mislead the respondent by representing that the Climos also did "general marketing" on her behalf whereas she admitted in evidence that there was no such "general marketing". Further, it was submitted that the discrepancies in her evidence as to why she stopped her campaign should be noted and that, if there was a successful campaign, it is unlikely that she would have stopped it and, if she did, she would know the reason.
46. It was submitted that the correspondence and other material relied upon by the applicant which was purportedly from Mr and Mrs Climo should be given no weight by the Tribunal because the respondent was denied the opportunity to cross-examine the Climos in circumstances where the Tribunal was asked to rely upon the applicant's credit; because the applicant sought to bolster her credit by reference to the Climo's correspondence where there were discrepancies between the applicant's evidence and the material provided by the Climos; because there are real questions over the veracity of the material provided by the Climos; and because the applicant did not demonstrate that she had made adequate attempts to contact the Climos and have them attend the hearing or, at least, to have them provide further material supporting her case apart from posting a summons to an address which was pointed out by the respondent at a telephone directions hearing when she indicated that she did not know where to send a summons.
47. The respondent referred to the receipts allegedly provided by Mrs Climo and noted that they were consecutively numbered with virtually identical notations made on them with the same pen and bearing no business name and giving the appearance that they could simply be bought from a stationers' shop. The applicant produced no objective evidence of when she received these receipts, such as a mail book or envelopes with post marks, and they could have been prepared by the applicant herself. It was submitted that this could apply to other evidence, in particular the letter dated 1 July 1998 (T7/83) purporting to set out some of the terms of the alleged agreement, because it was only produced to the respondent on 20 December 2000, when other letters providing further information had previously been sent on 29 August 2000 (see supplementary T documents), 2 October 2000 (T5/52) and 26 October 2000 (T5/44).
48. In relation to the evidence of James Webster, it was submitted that there were unexplained inconsistencies between his oral evidence, where he said that he would collect the money from tourists every day when he was working, and his statement (Exhibt R3), where he indicated that he would "occasionally" collect the money. The respondent also noted that neither James Webster nor, indeed, the applicant were able to produce any of the brochures they say they collected.
49. It was submitted that, although there is no onus of proof in the Tribunal, it is for the applicant to persuade the Tribunal of all matters necessary to make out her case: Parker Pen (Australia) Pty Ltd v Export Development Markets Board (1983) 46 ALR 612. It was also submitted that the approach of the Full Federal Court in McDonald v Director-General of Social Security (1984) 6 ALD 6 should be noted. In that case, it was held that there was no legal onus of proof but that the legislation being applied by the Tribunal could place an onus on one of the parties to establish the facts upon which the decision depended. There could be situations where the Tribunal is unable, after reviewing the available material, to decide a question of fact one way or the other. In resolving such uncertainty, the decision maker should be guided by the terms of the legislation under which the decision is being made. In that case, where the decision was whether or not to cancel a pension, such a state of uncertainty meant that the decision maker had failed to achieve the requisite state of mind and the pension should not be cancelled.
50. In the present case, the decision to be made is not whether to cancel any entitlement held by the applicant, but whether her application for a grant in respect of the $81,250 she alleges she paid should be allowed. The situation is the opposite of that in McDonald. Thus, if the Tribunal is left in a state of uncertainty as to whether or not the applicant paid the amount of $81,250, it should reject her application for a grant in respect of that amount: Lodkowski v Comcare (1998) 53 ALD 371.
51. Finally, it was submitted that, even if the Tribunal were satisfied that the applicant had paid $81,250 to the Climos, it would reject the application in respect of that amount on the basis that the Climos were not engaged "as a consultant on a short term basis" within sub-section 33(2) of the Act for reasons including the following:
The Climos were allegedly engaged between 20 July 1998 and 10 February 1999 (6½ months) and then between 1 July 1999 and 12 February 2000 (7½ months) (seeT4/30-31). The engagement is to be properly characterised as extending between 20 July 1998 and 12 February 2000, a period of some nineteen months. Even if it is characterised as being an engagement for two separate periods, these totalled fourteen months and may be described as medium term, but cannot be described as short term.
The applicant seeks to characterise the transactions as a series of short term engagements. It is submitted that this is an entirely artificial way of describing the transactions. Merely because a number of payments are alleged to have been made does not mean that the Climos were short term consultants. Otherwise, any lengthy arrangement could be disguised in the same way as a series of short term engagements.
The true character of the alleged engagement appears from the Climos' letter dated 1 July 1998 (T7/83). In that letter it was said that "the payment of $8, 000 upfront to be renewed when we get close to running out of funds". There is no indication of the duration of the agreement and the document suggests that the arrangement was to continue indefinitely as long as it worked.
The applicant's evidence for stopping the first series of payments in February 1999 was unsatisfactory.
52. The respondent submitted that the evidence provided by the applicant was an attempt to make the alleged engagements look as if they were a series of short term engagements and disguise the fact that, in reality, the engagement was medium or long term and relied upon Australian Trade Commission v Hellay Laboratories Pty Ltd (2001) 67 ALD 1 at 27-37, 52.
Applicant's Submissions
53. The applicant also made a detailed written submission in which she described herself as a Queens guide with a batchelor degree in modern Asian studies and as having worked as a media planner in advertising agencies for five years and then in running her own businesses for thirty years, including Gumnuts Farm for seventeen years. She referred to the following matters and made the following points in support of her case.
54. She was critical of the manner in which Austrade had processed her application and in the comments made by Mr O'Connell and Mr J Robinson in their reports (at T5/57,58; and T8/157-160). In particular, she referred to the description of her business as being able to provide limited accommodation as incorrect; to the reference to the Climos as "friends" as incorrect as they were business acquaintances; to the comment about cash being kept in "a box under the bed" as not one that she had made; to the reference to the number of entries in exercise book in pencil as being incorrect; to the comment that the method of advertising by brochures in Hong Kong as being "unusual" as wrong because it had proved to be very effective, cost efficient, innovative and had developed a niche market in a structured way; to the comment that payments to the Climos could not be verified as wrong as they provided bank transfer documents showing money being transferred (T7/132,133) and it was not her fault that the Climos refused to provide their bank records; to the reference to the lack of the Climos' tourism background as being irrelevant because they provided a unique cultural and business experience, facilities for printing and delivering fliers and she trusted them; and to the consecutive numbering and identical print on her receipts as being related to the keeping of a separate receipt book for her by the Climos.
55. Her business involves both daily activities such as horse riding as well as the provision of overnight acconmodation or farm stays. It was largely a cash-based business and a summary of receipts for her business in the 1999-2000 fincial year reveals amounts taken by cheque and cash as being $166,974.85 and $213,424.00, respectively, and this high cash income is properly noted in the tax returns for 1998/99 and 1999/2000 (T7/122-127, 144-154). Cash is kept in a medium size cash tin but she does not store it "under the bed" as it would not fit and she did not tell Mr O'Connell at the audit that it was kept there. She had shown the source of funds for the claimed expenses by producing copies of her diaries showing that approximately 50% - 60% of her income was in cash.
56. Cheques were usually received from schools, agencies, hotels etc and these were paid into her bank account and all cheque account payments were recorded in the cheque books and bank statements. Eftpos payments were recorded by receipt or bank statement. With cash, all amounts received were recorded in the daily diary, which was kept next to the phone at all times, against the bookings and kept in the cash tin for use for wages or cash payments, for which receipts are collected. All receipts, cheque books and bank statements were taken to the accountant on a six monthly basis for reconciliation and preparation of annual income and taxation returns.
57. Her bank was in Beaudesert, some twenty kilometres from the farm and in the opposite direction to the Gold Coast. A bank on the Gold Coast could not be used for depositing monies on either of the two trips made each day as the first trip, at about 12.30 pm, involved a bus loaded with returning or newly collected customers and the second returned to the Coast after the banks had closed. There were also security concerns in having large sums on the bus and the banks would have charged fees to deal with the cash. She accepted that it was unusual to keep such a large cash float on the premises without banking it. However, her business is unusual, in that it was unusual for a large business, with a large cash flow to be isolated in the country twenty kilometres from the nearest bank. Apart from the security aspects and costs, of constantly making special trips into town to deposit cash, the bank would charge fees on the transactions.
58. The respondent confused two separate actions: the payments to Mr Climo and the transmission of that money to his bank Hong Kong. He did not operate an account dedicated to her so that his bank dealings included activities for other Australian businesses and this may be the reason for his unwillingness to provide his bank account records. There was no reason for these to correlate by date or amount with her payments to him. Further, there is no evidence that Mr Climo was not in Australia at any times when she claimed to have met with him. She denied that she was evasive in giving evidence about the dates of payments to Mr Climo as she did not recall the dates and was not aware that she would need to because a receipt for the full amount was to be sent to her. She referred to the record of transfers by Mr Climo to his bank (see T7/13) where the notation dated 10 February 2000 is: "$8,250 given personally to Josephine to take back to Hong Kong after the Chinese New Year break". She submitted that the obvious meaning of this is that Mr Climo had given the money to Mrs Climo to physically take to Hong Kong, rather than transmitting it. No permanent record of her individual instalments to Mr Climo was kept as it was reasonable to rely on the "price of the contract" that is $8,000/$8,250 and because receipts, for which the Climos kept a "special receipt book" for these transactions, arrived from Hong Kong within a short time after each final payment. The fact that the $8,000/$8,250 were mainly paid in instalments was not hidden from Mr O'Connell; rather, he simply did not ask about that aspect of the payments.
59. In relation to her not being aware of the specific arrangements made to supervise the distribution of the brochures, she did not need to know this as she relied on the Climos. Austrade had accepted her brochure distribution expenses in Australia and she was equally unaware of the detailed arrangements for distribution in those cases.
60. In relation to the suggestion that she had attempted to mislead Austrade by referring to general marketing, she submitted that this was what the Climos did to fulfil their engagement in that they advised her to offer discounts and where to distribute brochures and these were discussed in her meetings with Mr Climo as these were not solely for making payments to him. There was also discussion about the progress of the campaign (see T7/133) and whether there would be amendment to the brochure of which there were several, perhaps six or seven, different versions (seeT7/84).
61. Austrade has gone further than was required to show an audit trail by demanding information about the Climos' business relationships in Hong Kong and demanding that they provide their tax returns and bank statements. This was not reasonable as it was not her role to know how the Climos had carried out their functions, as distinct from whether they did so. The guidelines relied on by Austrade were contrary to natural justice, to the terms of the Act and to commonsense and the appropriate standard was "the balance of probabilities" rather than "beyond reasonable doubt". In any event, she had provided an audit trail which complied with the guidelines and which established "beyond reasonable doubt" that her relationship with the Climos was bona fide.
62. In particular, she had shown that she received goods or services for the claimed amount as demonstrated by copies of the brochure; a letter from the Climos dated 1 July 1998 stating that they would create/print and distribute brochures in Chinese to the residential and business areas of Hong Kong, for an initial contract of $8,000 worth or approximately 225,000 brochures; a letter received in October 2000 from the Climos confirming that they had carried out this and nine further contracts; an "Analysis of Export Sales by Market" for 1999/2000 showing that the Chinese trade was double that of her other markets, that is Japan and Arab States; photocopies of representative months out of her diaries showing the Chinese bookings; copies of maps, supplied by the Climos where they distributed the fliers; frequent flier records from the Climos showing flights to and from Hong Kong; receipts for the cash paid to the Climos; and records of cash transfers to Hong Kong.
63. She referred to Mr Robinson's report (T8/159) where he claimed that she only had export sales of approximately $100,000 in the Hong Kong market and compared this to two years of promotion costs, that is $81,250 for 1998/99 and 1999/2000. She submitted that the promotion cost for one year should have been considered in the comparison and that this was $41,250.
64. There is a distinction between daily tour brochures and the Hong Kong brochures. The former are carried by approximately four-hundred Gold Coast hotels and motels who earn a commission and these help to make their customers' holidays more enjoyable. The latter were produced in Hong Kong and advertised farmstays which the hotels and motels on the Gold Coast would not carry because they competed with their business. She had no fixed prices for farmstays and the brochures showed either a 10% or 20% discount but no price was given as this would enable negotiations to take place on an individual basis with prices generally based on the retail rate of $100 per night per adult, children half price, but sometimes on the wholesale rate of $130.
65. She referred to her confusion about the unit cost of each brochure and submitted that this was a matter of mathematics. She had not entered into the arrangement on the basis of the cost of each brochure but, rather, on the basis that a total of $8,000 would purchase the preparation and distribution of 200,000 to 225,000 brochures. She also submitted that the area of distribution was among wealthy apartment owners and that brochure distribution was a common marketing strategy.
The applicant submitted that the diaries confirmed that discounts were given to customers and she referred to various entries including those for 23 and 24 August 1999 (exhibit A2/19) where fourteen adults were booked in the name of Xuen and where the amount of $1,400 appears with a deduction of $140. She submitted that the discounts were not always written into the diary as the purpose of the diary was to record the amount received. Her first visitor with a brochure was Mr Ng on 5 August 1998 and he was given a 10% discount for a total of $540 for "3 doubles".
67. In relation to her classification of customers by nationality, she submitted that she had extensive contact with Asian tourists on a daily basis over the previous seventeen years while owning Gumnuts Farm and that she was capable of categorising ethnic origin to a high degree of certainty. Her reference to taking a "bit of a punt" as to the nationalities from the names of the customers was not a "guess" but an informed classification.
68. The campaign was discontinued in February 2000 for the following reasons: it was a short-term engagement to test the market; marketing had been done in Singapore, Malaysia and the United Kingdom and Austrade had been slow to make disbursements for these; because of cash shortages due to these other marketing strategies; because of the need to pause for a few months to see if a market was building; and because of information in September/October 2000 from Mr Climo that he would be unable to accept further engagements for the Hong Kong marketing as his wife's family were emigrating to the United States of America and disposing of the factory where the brochures were printed. She said that the aim of this short term testing of the market by "letter box drops" was to see if the farmstays could prove to be a popular product. She submitted that short term means not long term and that the Climos were short-term consultants engaged for five $8,000 promotions which lasted approximately one month each in the first year and then a further five promotions in the following year at the higher price of $8,250 per contract with her intention being that she would test the market and purchase further segments if it proved successful.
69. In relation to dicontinuing the claim concerning her husband's marketing visits to Gold Coast, she said that he averaged two days per week visiting approximately 400 outlets which carried the daily tour vouchers and he visited approximately twenty outlets per week, thereby visiting each outlet approximately twice per year and the busy ones at least once per month. He worked two days per week and, on the few occasions when he was sick or away, he worked more days in the previous or later weeks. She said that she had not kept records and had not known that she could apply for an Austrade Grant until approximately February 2000. In any event, she submitted that he was out of the country for 26 days only, which means that he was in the country for 49 weeks. Without brochures, and the goodwill of the local hotels and motels, there would be next to no business at all. No adverse inference should be drawn against her because her husband did not give evidence. She said that she had not been asked whether there was some reason why he was not called. She said that he now 73 years of age, is hard of hearing and has begun to suffer from memory loss and now only participates in the business in a minor way. She said that he was not a party to the transactions or the meetings with the Climos.
70. In relation to the evidence of her son, she said that he was asked what his duties were and he answered in the present, recounting his duties as they are now in 2002. In his letter at Exhibit R3, he was describing what he did at the time in 1998/99, when he didn't have as much responsibility. His functions have steadily grown since then.
71. The applicant submitted that the refusal by Austrade to accept her advertising expenses in relation to marketing in Hong Kong should be considered in the light of its acceptance of her expediture in relation to other markets in Singapore, the United Kingdom and in Melbourne and Sydney which were all approved.
Consideration
72. The applicant and her husband own and operate Gumnuts Farm Horseriding Resort which provides a range of rural activities and also provides, either separately or in conjunction with those activities, overnight accommodation, called farmstays. The applicant is responsible for promotional arrangements and this includes the distribution of brochures to various places such as Gold Coast unit blocks and hotels to advertise the resort's activities. Her claim to Austrade is for reimbursement of expenses associated with the preparation and distribution of brochures in Hong Kong.
73. It was noted above that the respondent has referred to and relied in this case on administrative guidelines which have been published to provide guidance to those who administer the Act. These read:
"5.30.13 Where large value expense items and especially "overseas representation" expenses are acquitted by payment of cash, the applicant will have to provide sufficient evidence and an "audit trail" to Austrade that proves beyond all reasonable doubt that the applicant has genuinely incurred the particular expense.
5.30.14In identifying the "audit trail", the applicant should demonstrate that there is evidence:
the applicant received goods or services for the claimed amount;
as to the source of funds for the claimed expenses;
that the applicant received value for money;
as to how the recipient or provider of the goods used the cash."
74. The Tribunal, whilst not bound to apply such policy guidelines (see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) may do so and, indeed, will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 6 AAR 259 at 267; Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86 and Minister, Local Government and Ethnic Affairs v Gray (1994) 50 FCR 189 at 206-7.
75. In this case, the guidelines purport to place an obligation on the applicant to prove her case and, moreover, to do so beyond reasonable doubt. In the absence of a legislative provision to the contrary, there is no onus of proof on a person in the applicant's position in proceedings before the Tribunal although there may be an obligation to adduce evidence in support of a claim: see McDonald v Director-General of Social Security (1984) 6 ALD 6. However, in circumstances to which it applies, section 35(2)(b) of the Act has the effect of placing an onus on the applicant of establishing that the amount of expenses was reasonable. This is where notice is given by Austrade that expenses incurred by the applicant in respect of an eligible promotional activity may not be reasonable and where it requests the applicant to establish, within a period specified by Austrade, that the amount of the expenses was reasonably payable for the activity for which the expenses were incurred. The letter dated 19 October 2000 (see T5/47) from Mr O'Connell to the applicant's nominated consultant, Bill Kaye, gave a 14 day period in which further information had to be provided.
76. However, there is no provision in the Act which would support the adoption of the criminal standard of proof, that is beyond reasonable doubt, and I am satisfied that, to the extent that the applicant carries an onus, it needs to be discharged to the civil standard of proof (reasonable satisfaction or balance of probabilities): see Re Kirby and Collection of Customs (1989) 20 ALD 369.
77. Even if there were no onus of proof on the applicant, I am satisfied that she has an obligation to point to evidence that supports her claim in the sense described in McDonald v Director-General of Social Security (1984) 6 ALD 6. In that case, the Full Court of the Federal Court was concerned with the terms of the Social Security Act 1947 and it said (at 11):
"It is true that facts may be peculiarly within the knowledge of a party to an issue, and a failure by that party to produce evidence as to those facts may lead to an unfavourable inference being drawn – but it is not helpful to categorize this common sense approach to evidence as an example of an evidential onus of proof. The same may be said of a case where a good deal of evidence pointing in one direction is before the Tribunal, and any intelligent observer could see that unless contrary material comes to light that is the way that the decision is likely to go. Putting such cases to one side, there can be no evidential onus of proof in proceedings before the Tribunal unless the relevant legislation provides for it …
If the Tribunal finds itself in a state of uncertainty after considering all of the available material, unable to decide a question of fact either way on the balance of probabilities, it will be necessary for it to review carefully the decision it is reviewing. If, for example, it is a decision whether or not to cancel a pension, in the light of changed circumstances, then it has failed to achieve the statutory requirement of reaching a state of mind that the pension should be cancelled. If, on the other hand, it is a decision, to be made in the light of fresh evidence, whether or not the pension should ever have been granted in the first place, then it has failed to be satisfied that the person ever was permanently incapacitated for work."
78. The issue of whether or not the applicant incurred reasonable expenses under the Act is within her own knowledge and, in that situation, an absence of supportive material may lead to an unfavourable inference being drawn against her and a detemination made, in accordance with the civil standard of proof, that her claim will be unsuccessful.
79. The arrangement between the applicant and the Climos was entered into informally although the applicant relied upon the letter, dated 1 July 1998, from Mr and Mrs Climo as indicating the nature of the agreement. The letter reads (see T7/83):
"Dear Jenny and Colin,
Following our recent meeting we confirm that we are happy to be involved in the printing and distribution of flyers for your resort.
The distribution will be in the residential and business areas of Hong Kong.
Flyers will need to be in Chinese which Josie can do, however, they will be hand written neatly, with the artwork provided by you; should still work ok.
We won't say too much in the flyer anyway, mainly use it to them to phone you when they hit oz.
The payment method of $8000 up front to be renewed when we get close to running out of funds is ok by us.
Trusting you get lots of business from our efforts
Yours truly
Brian and Josephine Climo."
80. That document falls well short of setting down all of the details that might be expected in any agreement between them. For example, it makes no reference to the time-frame over which the task of distributing the brochures is to take place; the number of brochures that would be produced for the amount of $8,000; or the means by which payments are to be made by the applicant.
81. There is no material before the Tribunal to support the applicant's evidence that she met with Mr Climo on a regular basis on the Gold Coast. There are no entries in the diaries to that effect and the applicant's explanation that this was because the purpose of the diaries was only to record income is not supported by an analysis of the various entries in them (see exhibit A4). In addition to records of income, the diaries contain many entries relating to things that need to be done in relation to the business. For example, on 8 November 1999, there are entries referring to the need to contact various persons including a "brochure company re new brochure" and, on 3 December 1999, there is an entry which reads: "James pick up brochures from Color Pro". There are many other such entries which do not pertain to income; but there is no reference to any meeting with Mr Climo.
82. There are no receipts for any of the progressive payments that the applicant stated that she paid to Mr Climo. The only evidence of receipts is for the total amounts of $8,000 or $8,250 (see T7/128–131). There are inconsistencies in the applicant's evidence concerning these payments. In her evidence, she was unsure of the amounts progressively paid but, after questioning, settled on the amounts of $4,000. That is not consistent with the record of transmissions which are set out in the letter from the Climos (at T7/132 noted above in paragraph 13) which nominates transmitted amounts of sums varying from $250 to $5,000 with none of them being in the amount of $4,000.
83. I accept that the applicant's business was conducted, to a significant degree, on a cash basis. This was described by Mr O'Connell as being unusual and the applicant accepted that description as being correct. However, in some particulars, the applicant's evidence differed from that of Mr O'Connell. He recalled being told by the applicant that she made payments in sums of $8,000 or $8,250 rather than progressive amounts; the applicant said that she had not hidden that information from Mr O'Connell. To the extent that there is variation in their evidence, I prefer that of Mr O'Connell.
84. Mr Climo's frequent flyer record was in evidence at T7/74, 75 and some of the dates of transmissions listed at T7/132 coincide with periods when those records show that Mr Climo was not in Australia. Thus, a transmission is noted for 20 July 1998 and the frequent flyer records show that Mr Climo was not in Australia between 14 July and 3 August 1998. Another transmission is noted on 28 August 1998 and the records show absence from Australia between 22 August and 13 September 1998. A third example is a transmission noted for 3 February 1999 when the record shows an absence between 18 January and 14 February 1999. The Tribunal did not have the advantage of questioning Mr Climo about those records or those transmissions but they raise doubt about the correctness of the dates provided by Mr Climo.
85. The applicant was not able to explain where the Climos are presently located. In her evidence, she said that she believed that they might be living in America. In her written submission, she was more definite in that she said they were emigrating to the United States of America and disposing of the factory where the brochures were printed. The applicant has made little attempt to locate the Climos and I cannot accept her statement that she did not see what relevance their evidence would have to her claim. The assertion that the Climos became angry when she sought further information from them is not consisitent with the tone of the letter of October 2000 (T7/132) which indicated an unwillingness to provide copies of taxation returns but expressed no such sentiment in relation to the provision of bank records. Rather, reference was made to the costs associated with obtaining such information.
86. The applicant gave vague descriptions of the pricing structures that applied to farmstays and of the levels of discounting that she offered. The evidence included only one example of a brochure that had been distributed in Hong Kong. It is translated into English (see T5 at 48) and refers to both "day tours" and "stay overs" and advises that the brochure entitles the bearer to a 20% discount. No distinction is made between tours and stays although the applicant said that the discount only applied to the latter. In her evidence, the applicant said that were other such brochures and that varying discount rates were offered in them. However, no other brochures were provided to the Tribunal. The diaries contain relatively few references to discounts. These are to be found in entries on 9 August 1999 for 10% in the name of "Lisa" where the booking was for ten adults and three children; on 23 August 1999 for 10% in the name of "Xuen" where the booking was for "4 doubles"; on 5 October 1999 for 10% in the name of "Ching and family" where the booking was for six adults and four children; on 12 November 1999 for 10% in the name of "So" where the booking was for three doubles; on 25 November 1999 for 10% in the name of "Polanka" where the booking was for two family rooms; on 22 December 1999 for 10% in the name of "Ching" where the booking was for five adults and eight children; and on 9 January 2000 for 10% (for cash) in the name of "Yoko" where the booking was for six adults. There are many other entries with no references to discounts and, for example, there is an entry on 27 October 1999 in the name of "Chou" for sixteen adults and eight children. The applicant claimed that her first visitor with a brochure was Mr Ng on 5 August 1998 and that he was given a 10% discount for a total of $540 for "3 doubles". The entry appears in the diary on that date but there is no reference to either a brochure or a discount.
87. The diary entries noted above make no reference to the presentation of a brochure. That is despite many references to brochures being received and noted in other entries in the diary, for example, on 6 August 1999 in the names of "Jenny" and "Jarrett"; on 7 August 1999 in the name of "Watson"; on 9 August 1999 in the name of "Muir"; on 11 August 1999 in the name of "Strange"; on 3 December 1999 in the name of "Keane"; and on 13 August 1998 where reference is made to "Japanese brochure". None of these entries records any discounting.
88. As part of her claim, the applicant completed a document entitled "An Analysis of Export Sales by Market" in which she purported to attribute nationality to customers by referring to specific amounts received from groups of persons described by her (see T5/65) as "Chinese", "Japanese", "Arab", "European and US", "Aussie" and "unknown". In her evidence, she said that this classification process was "bit of a punt" as to the nationalities from the names of the customers but, in her submission, she referred to the process as being an informed classification. I do not accept that proposition. The applicant's diaries do not provide any means of identifying visitors in accordance with their country of origin. In so far as Hong Kong visitors are concerned, no brochures were retained and no tally was kept of the number of brochures handed in. This, in itself, is surprising in that the applicant claimed that the campaign with the Climos had been a success but no record was kept of the visitors who had availed themselves of a discount from a Hong Kong brochure. The evidence shows that discounting was applied but this was to persons with a variety of names and often in the context of a booking for more than a single family. There is no supporting evidence that any discounting of 20% was given or that the discounting which was applied was in any way related to the person's origin in Hong Kong, to having presented a brochure from Hong Kong or, indeed, to being Chinese.
89. In her evidence, the applicant gave differing estimates of the cost of the brochures with the variation being from 3.5 cents to 35 cents. Her explanation was that she did not need to be mindful of the unit price because her focus was on the total number for the total contract price. Again, I do not accept that a person in the applicant's position would not have a better understanding of the cost of each brochure.
90. I am also satisfied the oral evidence of James Webster was inconsistent with his written statement. He told the Tribunal that he always collected the money from visitors. In the statement, he had used the word "occasionally". He was not able to give a satisfactory explanation of this difference and I reject the applicant's explanation that it was matter of whether he was answering for the present or the past. I also consider it to be significant that Mr Webster could not recall detail of the first presentations of the Hong Kong brochures.
91. The applicant's husband was not called to give evidence. The applicant submitted that this was due to hearing and memory loss, low level of participation in the business and not being a party to the transactions with the Climos. The letters written by the Climos are addressed to both the applicant and her husband; he was referred to by the applicant in her claim as being actively involved in marketing on the Gold Coast as recently as June 2000; and there was no material, medical or otherwise, before the Tribunal to support the applicant's contention that he would not have been able to give evidence. The applicant conceded in her submissions that her husband had not been in Australia for the entire period for which she alleged that he had made visits twice per week to the Gold Coast but denied that this was the reason for not continuing with her claim for expenses associated with that activity. I do not accept her explantion that this was done because she had not kept appropriate records. That description applies equally to her claim in relation to the Hong Kong marketing. I accept the respondent's submission that the evidence of the applicant's husband would not have assisted the applicant's case.
92. Having regard to all of the material before me, I am not satisfied that the applicant has incurred the expenses that she has claimed in relation to distribution of promotional material in Hong Kong. Therefore, I can not be satisfied that, for the purposes of section 33 and sub-section 35(1) of the Act, the alleged expenses were reasonable or that, for the purposes of section 29 of the Act, they were eligible expenses. To the extent that the applicant may bear the onus of proving her claim, I am reasonably satisfied that she has not done so and her claim must fail. To the extent that the applicant bears the responsibility to adduce supporting material, in the sense referred to in McDonald v Director-General of Social Security (1984) 6 ALD 6 at 11, I am satisfied that she has not done so and, again, her claim must fail.
93. That finding is sufficient to dispose of this matter and it is not necessary to consider the issue of whether any arrangement that the applicant had with the Climos comprised an eligible promotional activity as described at item 6 of section 33 of the Act and, in particular, whether there was an engagement of a consultant on a short term basis.
Decision
94. The Tribunal affirms the decision under review.
I certify that the preceding 94 paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member
Signed: Sarah Oliver
AssociateDates of Hearing 27 May 2002 and 25 July 2002
Date of Decision 10 December 2002The Applicant Appeared in Person
Counsel for the Respondent Mr D Rangiah
Solicitor for the Respondent Ms Bishop, Australian Government Solicitor
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