Kenny and Australian Trade Commission [1999] AATA 759 (13 October 1999)

Last Updated: 18 October 1999

CATCHWORDS - EXPORT MARKET DEVELOPMENT GRANT - Grants Entry Test - applicant not given requisite period of time to provide further information to the Australian Trade Commission in accordance with sub-section 22(2) of the Export Market Development Grant Act 1997 - decision to refuse application for grant - applicant unable to provide further information to Tribunal - decision affirmed.

Export Market Development Grants Act 1974 - S 13K

Export Market Development Grants Act 1997 - Ss 4, 5, 18, 19, 20, 21, 22, 80, 107

Export Market Development Grants (Repeal and Consequential Provisions) Act 1997 - S 3

Cash Converters Ontario Pty Ltd and Australian Trade Commission, [1999] AATA 86 (16 February, 1999, Deputy President Barnett, Associate Professor Fayle, Senior Member and Dr Wood, Member)

DECISION AND REASONS FOR DECISION [1999] AATA 759

ADMINISTRATIVE APPEALS TRIBUNAL )

) Q1999/497

GENERAL ADMINISTRATIVE DIVISION )

Re ROBERT FRANCIS KENNY

Applicant

And AUSTRALIAN TRADE COMMISSION

Respondent

DECISION

Tribunal Miss S A Forgie (Deputy President)

Date 13 October, 1999

Place Brisbane

Decision The Tribunal affirms the decision of the respondent dated 22 May, 1998 and affirmed by a further decision dated 28 July, 1998.

S A FORGIE

Deputy President

REASONS FOR DECISION

On 5 May, 1999, the applicant, Mr Robert Francis Kenny, applied for review of a decision of the respondent, the Australian Trade Commission ("the Commission"), dated 22 May, 1998 and confirmed by a further decision dated 28 July, 1998. The Commission's decision had been that Mr Kenny had failed to satisfy the requirements of the Grants Entry Test in respect of the 1996/1997 grant year. The consequence of this decision was that Mr Kenny was not eligible for an export market development grant for the grant year 1996/1997.

2. At the hearing, Mr Kenny represented himself and Mr Logan of counsel represented the Commission. The documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T documents") were admitted in evidence together with a copy of the determination by the Australian Trade Commission dated 8 July, 1997. Mr Kenny gave oral evidence in support of his case . The Commission did not lead oral evidence in support of its case.

THE ISSUE

3. The only issue in this case is whether Mr Kenny satisfies the Grants Entry Test under the provisions of the Export Market Development Grants Act 1997 ("1997 Act").

BACKGROUND

4. There was no dispute between the parties as to the facts in this case. The only dispute was as to their consequence. In view of that and on the basis of the oral and written evidence, I have made the following findings of fact.

5. Mr Kenny trades as Sprintco Trading. On 30 June, 1997, he lodged a form called a "registration form for first time applicants" (T documents, page 22). In that document, he described the goods and services to be exported as "boat trailers; towing equipment:- towbars, towballs, wiring plugs/sockets; rust treatment." The target country was Japan. The total sales turnover for 1995/1996, the export sales turnover for 1995/96 and the estimated expenditure for 1996/1997 EDMG claim were all marked as "TBA". The Commission acknowledged receipt of that form on 1 July, 1997 and sent Mr Kenny various documents to assist him in his preparing an application for a grant (T documents, page 41).

6. On 28 November, 1997, Mr Kenny lodged an application for a grant for the 1996/97 grant year (T documents, pages 18-21). Mr Kenny also completed schedules relating to overseas representation, marketing visits, communications, free samples and export earnings. He also completed and lodged a document entitled "Export Market Plan Guide", which included the Grants Entry Test (T documents, pages 30-40). Mr Kenny provided certain information in response to the questions asked in the Grants Entry Test and, in order to protect his business interests, offered to provide other information orally. In answering questions about his financial plan, Mr Kenny stated that he had lost $21,000.00 in the grant year 1995/96 and $37,000.00 in the grant year 1996/97. Based on his oral evidence at the hearing, I find that Mr Kenny needed the grant if he was to resume his exporting operations to Japan.

7. On 1 May, 1998, an officer of the Commission requested additional information from Mr Kenny (T documents, pages 47-48). He was asked to provide the information by 15 May, 1998. Mr Kenny and the officer had a discussion on 14 May, 1998 and Mr Kenny was granted an extension of the time until 12 May, 1998, in which to provide the information.

8. On 19 May, 1998, Mr Kenny had another discussion with the officer. Based on the oral evidence of Mr Kenny and the record of the discussion, I find that the following is an accurate record of part of the discussion:

"Robert Kenny rang me again on 19/5/98 and advised me 'what could he do to ensure I paid a grant'. I advised that he had to respond to my documentation requirements and if he passed the GET and other eligibility criteria of the EMDG ACT in relation to his application then a grant would be paid. I asked him whether he needed more time to respond to my information requests as he could have until the end of May if this could help him retrieve the documents from Japan etc. He said 'he could not get any of the information I needed even if he was given 6 months but needed the grant now.' He asked whether I could pay him the grant myself and I said no that I needed the information requested." (T documents, page 43)

9. On the same day, the officer determined that Mr Kenny had not demonstrated he had the resources both financial and operational to sustain export activities and consequently has not passed the Grants Entry Test (T documents, page 50). On 22 May, 1998, the determination was approved. A notice of the Commission's determination that Mr Kenny's grant did not meet the Grant Entry Test was approved pursuant to section 80 of the 1997 Act.

CONSIDERATION

10. Mr Kenny argued that, had he been given the time permitted by sub-section 22(2) of the 1997 Act, he would have been able to travel to Japan and would have been able to obtain the information required to satisfy the Grants Entry Test. Had he been given the time, he said, his brother would have sold his car and lent him the proceeds for a short period of time. Mr Kenny would then have used the money to travel to Japan and "pulled a profit" in the short term. The profit would have come from the sale of a car which he would have exported from Japan to Australia or to another country where he could have sold it for a profit. Mr Kenny said that he would then have been able to have obtained the required information and repaid the loan from his brother. This course of action had been agreed between him and his brother in late April, 1999 and his brother had taken it to car yards for quotations. It could not be implemented, Mr Kenny said, because he did not receive the Commission's request for further information until 4 May, 1998 even though it had been dated 1 May, 1998. That, taken with the fact that he had been permitted less time in which to respond to the Commission's request for additional information than he was permitted under sub-section 22(2) of the Act, meant that he could not provide the information.

11. In considering Mr Kenny's case, I have looked first to the Export Market Development Grants Act 1974 ("1974 Act"). That was the legislation in operation when Mr Kenny lodged his registration form for first time applicants. On the following day, however, the 1997 Act came into operation (1997 Act, section 2). The inter-relationship and operation of the 1974 Act and the 1997Act was the subject of the Export Market Development Grants (Repeal and Consequential Provisions) Act 1997 ("the RCP Act"). The 1974 Act was repealed by virtue of that legislation (section 3 and Schedule 1, item 1) but, by virtue of Schedule 1, item 2, the 1974 Act had a continuing operation in relation to unfinalised claims in respect of claims made in respect of the grant year 1995/96 and any preceding grant years (see also Schedule 1, item 3). The RCP Act also made transitional provision in relation to those registrations which had been effected and those determination which had been made while the 1974 Act was in operation (RCP Act, Part 3). As Mr Kenny's registration was not effected until 1 July, 1997, it was effected when the 1997 Act was in operation rather than the 1974 Act. The provisions of the 1974 Act and of the RCP Act are, therefore, not relevant in this matter.

12. Section 4 of the 1997 Act provides that a person is entitled to a grant in respect of a grant year to which the Act applies and in the amount worked out under Part 6 if he or she is eligible under Part 3 in respect of a grant year, has incurred eligible expenses in that grant year in relation to eligible products and has applied for a grant in accordance with Part 7.

13. The object of Part 3 is set out in section 5 which provides that:

"(1) This Part defines who is eligible for a grant.

(2) The underlying principle is that only small or medium Australian businesses that:

(a) are developing export markets for eligible products; and

(b) have a prospect of success in their export enterprise;

should be eligible for a grant."

14. Among those specified in Part 3 as being eligible for a grant is an individual who is a resident of Australia (paragraph 6(1)(a)). Mr Kenny is such a person. Mr Kenny's registration was effected pursuant to Division 5 of Part 3 of the 1997 Act. Subject to qualifications which are not relevant in this case, that Division applies to a person (other than an approved body, approved joint venture or approved trading house) who intends to apply for a grant in respect of a grant year unless the person is a grantee in respect of a previous grant year or whose application in respect of the immediately preceding grant year is pending (sub-section 18(1)). Such a person must apply, before the end of the grant year, to be registered for the purposes of the Act (sub-section 19(1)). The "grant year" means the year commencing 1 July, 1996, 1 July, 1997 or 1 July, 1998 or a grant year within the meaning of the 1974 Act other than a year commencing on or after 1 July, 1998 (Part 9, section 107). Mr Kenny was a person who came within section 18 and whose application was registered on 1 July, 1997 pursuant to section 19.

15. Where a person has been registered pursuant to section 19 but has not passed the Grants Entry Test under the 1974 Act, he or she must take a test under section 20 of the 1997 Act (sub-section 20(1)). The test is taken at such time as the Commission considers it appropriate to apply the test. The purpose of the test is:

"... to find out whether the export enterprise in relation to which the person is seeking a grant has a prospect of success" (sub-section 20(2)).

The Commission is to decide who passed the test (sub-section 20(3)) and, if a person has not passed the test, must tell the person in writing which requirement of the test was not satisfied (sub-section 20(4)).

16. The Commission may determine in writing the requirements that a person must satisfy to pass the Grants Entry Test. The determination may require that person to supply particular information from existing documents or from documents which are to be prepared (section 21). A determination was made by the Commission on 8 July, 1997 (Exhibit 1). That determination stated that:

"1. In this test:

'first time applicant' means an applicant to which subsection 18(1) of the Export Market Development Grants Act 1997 applies.

'Austrade' means the Australian Trade Commission.

2. A first-time applicant at the time of taking the grants entry test:

(i) must have export activities which are planned - 'planned export activities' - (including, as an example only, export activities where the claimant has conducted research into the existence of a potential market);

(ii) must have planned export activities which are not on their face unachievable;

(iii) must have and be likely to continue to have a management involved in and with the ability to achieve the planned export activities;

(iv) must have and be likely to continue to have financial resources capable of supporting the planned export activities;

(v) must have and be likely to continue to have staff of the number and with the skills capable of supporting the planned export activities;

(vi) must have and be likely to continue to have a production and supply capacity to support the planned export activities;

(vii) must have export activities which are not on their face unlawful or impracticable (including as examples only (a) the planned export of alcohol to a country where the sale of alcohol is prohibited; (b) the planned export from Australia of goods for which consent is necessary for their export and where the consent is unlikely to be given; (c) where raw material of a product is unavailable); and

(viii) must have planned export earnings which are not on their face unachievable.

3. A first-time applicant is required to give Austrade any existing document(s) which contain the information on which the applicant relies to show that it passes the grants entry test. Where a first-time applicant has no such document(s) the applicant is required to prepare and give to Austrade a document setting out in relation to the applicant the information on which the applicant relies to establish that it passes the grants entry test as set out in 2 above.

4. Power is conferred on Austrade to decide whether an applicant passes or does not pass the grants entry test."

17. Austrade may also request the person to give it information about a particular matter which it specifies in a written notice and which it requires to decide whether the person passes the Grants Entry Test (sub-section 22(1)). The period specified in the notice must be not less than twenty eight days (sub-section 22(2)).

18. There is no question that the Commission gave Mr Kenny fewer than twenty eight days in which to respond to its written notice for information. It does not follow from its breach of sub-section 22(2) that Mr Kenny must be regarded as having complied with the Grants Entry Test. In order to satisfy that test, Mr Kenny must meet the requirements specified in the Commission's determination (see paragraph 16 above). Although initially not given twenty eight days in which to provide the information, he has since had ample time in which to do so. In reviewing the Commission's decision that Mr Kenny had failed to meet the requirements of the Grants Entry Test, the Tribunal is permitted to have regard to all information available at the time it hears the application for review.

19. I have had regard to that information in the manner described by the Tribunal in Cash Converters Ontario Pty Ltd and Australian Trade Commission [1999] AATA 86, 16 February 1999, Deputy President Barnett, Associate Professor Fayle, Senior Member and Dr Wood, Member) in considering whether the applicant had met the Grant Entry Test earlier prescribed under section 13K of the 1974 Act and formulated in a determination made by the Commission on 26 July, 1996. Two of the criteria required to be met by the applicant were that it:

"(d) must have and be likely to continue to have financial resources capable of supporting the planned export activities;

...

(h) must have planned export earnings which are not on their face unachievable." (Cash Converters Ontario Pty Ltd, paragraph 62)

20. The Tribunal said:

"The test should be applied on available information and reasonable projections which with hindsight, such as is the present case, one can test their reasonableness. In the Tribunal's opinion, at the time that the test is applied, by reference to s13J(3), there must be available evidence to provide a reasonable inference that the test is met. The test is not that actual results have been predicted with accuracy but that the expectations were, at the time, reasonable." (paragraph 66)

21. Mr Kenny's argument is that he had only a small window of time in May, 1998 in which he could borrow the money from his brother, travel to Japan, make a profit for himself and obtain the information and return to Australia. When he was only given fourteen days initially and then a further seven days, he said that his brother was unable to proceed with his plan. On the basis of his oral evidence, I find that Mr Kenny has been unable to provide the information in more recent times because he cannot afford to travel to Japan to obtain it and his brother is no longer in a position to lend him money to enable him to do so. He has no finances which would enable him to undertake the export activities he proposes for the future.

22. With regard to the particular requirements specified in the determination, it follows that I am satisfied that Mr Kenny does not have and is not likely to have financial resources capable of supporting the planned export activities.

The consequence of my findings is that Mr Kenny has failed to satisfy the requirements of the Grants Entry Test.

23. For the reasons I have given, I affirm the decision of the respondent dated 22 May, 1998 and confirmed by a further decision dated 28 July, 1998.

I certify that the twenty three preceding paragraphs are a true copy of the reasons for the decision herein of Miss S A Forgie (Deputy President)

Signed: ......................................... M Martinez Associate

Date of Hearing 9 September, 1999

Date of Decision 13 October, 1999

Applicant In person

Counsel for the Respondent Mr J Logan

Solicitor for the Respondent Australian Government Solicitor