Southbank Corporation Pty Ltd and Australian Trade Commission [2000] AATA 79 (9 February 2000)

Last Updated: 15 February 2000

INTERIM REASONS FOR DECISION [2000] AATA 79

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q1999/1026

GENERAL ADMINISTRATIVE DIVISION )

Re SOUTHBANK CORPORATION PTY LTD

Applicant

And AUSTRALIAN TRADE COMMISSION

Respondent

INTERIM DECISION

Tribunal Mr K L Beddoe (Senior Member)

Date 9 February 2000

Place Brisbane

Interim Decision : I am satisfied that it is open for the Tribunal to find that the applicant supplied convention facilities to overseas organisers of conventions for the purposes of section 10 of the Export Market Development Grants Act 1997.

Decision No 79/2000 (Sgd) K L Beddoe

Senior Member

CATCHWORDS

EXPORT GRANTS : Meaning of supply - Financial assistance - Financial incentives - Eligible products - Eligible services - Tourism - supply for consideration

Export Market Development Grants Act 1997 ss 3, 5(1), 10, 25(2), 28, 29, 33, 63, 107

Export Market Development Grants Regulations 1997

Airports (Business Concessions) Act 1959 s 7(1)

Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297

Williams & Hodgson Transport Pty Ltd (1985) 64 ALR 521; (1985) FCR 499

Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1986) 68 ALR 376

REASONS FOR DECISION

9 February 2000 Mr K L Beddoe (Senior Member)

1. The applicant applied for review of a decision of the respondent Commission which partially allowed a claim for grant under the Export Market Development Grants Act 1997 ("the Act").

2. Both parties have requested the Tribunal to make a preliminary decision on the meaning of "supply" as it appears in its past tense in section 10 of the Act.

3. The long title of the Export Market Development Grants Act 1997 ("the Act") adequately explains the purpose of the Act as the grant of financial assistance to provide incentives for the development of export markets.

4. Section 3 of the Act sets out the object. The object is given effect 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 Australian goods, services, intellectual property and know-how.

5. Part 3 of the Act defines who is eligible for a grant (s5(1)). The underlying principle is that 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;

shall be eligible for a grant (s5(2)).

6. Section 107 of the Act defines eligible products to include eligible services which is defined to include eligible tourism services.

7. Regulation 9 and Schedule 2 of the Export Market Development Grants Regulations 1997 have the effect of including the provision of convention venues and facilities in the definition of tourism services in section 107 of the Act.

8. A tourism service is an eligible tourism service if:

(a) the service is supplied in Australia to a person that is not a resident of Australia; or

(b) the service is supplied in Australia:

(i) to a person that is a resident of Australia; but

(ii) for supply by that person, in the course of trade, to a person that is not a resident of Australia (s25(2)).

9. Part 5 of the Act defines what are the eligible expenses of an applicant for a grant. The underlying principle is that only expenses relating to specific promotional activities genuinely incurred by applicants for the purpose of marketing eligible products in foreign countries should qualify (s28).

10. Expenses incurred by an applicant for a grant are eligible expenses if the conditions of section 29 of the Act are satisfied. In particular the expenses must be claimable expenses in respect of an eligible promotional activity under section 33 of the Act.

11. The amount of grant is determined in accordance with part 6 of the Act. The provisional grant amount is worked out by reference to section 63. Nothing turns on this for present purposes.

12. What is relevant is the provisions relating to export earnings under section 10 of the Act. The section refers to earnings for eligible products set out in the section in tabular form.

13. In particular the table includes the following:

"5 an eligible tourism service (indirect tourism service) supplied by the person: (a) to another person that is a resident of Australia (inbound tour operator); but (b) for supply by the inbound tour operator, in the course of trade, to a person that is not a resident of Australia 20% of the amount or value of the consideration received during the year for the supply of the service to the inbound tourist operator

7 an eligible tourism service (other than indirect tourism service) supplied at any time by the person to a person that is not a resident of Australia" the amount or value of the consideration received during the year for the supply of the service

14. At the hearing Mr Ridgeway appeared for the applicant and Mr Logan SC appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Act is before the Tribunal as T documents. No other evidentiary material is before the Tribunal at this stage.

15. The details of the applicant's claim for grant are set out in Document T5. The dispute involves the amounts stated to be export earnings. That dispute arises out of how the term "supplied", as it appears in section 10 of the Act, is to be interpreted.

16. The dispute arises because the respondent says that the applicant must be in a direct contractual relationship with the overseas entity for the earnings to come within the items. Except for one instance, which has been conceded, the respondent refused the claim because of the lack of contractual relationship between the applicant as supplier and the overseas entities from which the earnings were derived. The basis of the respondent's decision is that the applicant derives its earnings from professional conference organisers in Australia rather than the overseas organisations which use the Brisbane Convention Centre.

17. The applicant says the Australian conference organisers are merely facilitators for overseas organisations so that the applicant in fact supplies its services to those overseas organisations.

18. The applicant submits that "supply" has its ordinary meaning of "provide or furnish" (Oxford English Dictionary and Macquarie) and does not have a narrower meaning consistent with "provide or furnish pursuant to contract". The applicant concedes, however, that supply per se is not sufficient and it must be "supply for consideration". The applicant says this excludes gratuitous transactions.

19. The applicant relies on dicta of the High Court in Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297. There were two issues but the relevant issue was whether an off airport duty free store was supplying goods within Sydney Airport, in contravention of section 7(1) of the Airports (Business Concessions) Act 1959, when it delivered Customs controlled goods previously purchased off airport to its customers at the Airport. The Commonwealth argued that the delivery of goods to customers at the Airport was a relevant "supply" of goods within the meaning of the said section 7(1).

20. The leading judgment is that of Menzies J (McTiernan J agreeing). At page 309 his Honour said:

"The word "supply" is a word of wide import. It could, perhaps, in some circumstances be applied to the giving of a book or a box of chocolates. As used here, however, the word cannot have such a wide connotation. The prohibited supply does not cover anything which is not part of a business transaction. It is significant that what is prohibited by s7 may be authorised under s8 as a business concession. It is, however, obviously part of a business transaction to deliver goods that have been sold elsewhere for delivery at a particular place. I have come to the conclusion that such delivery amounts to supplying goods whether the delivery is regarded as pursuant to a contract or as made upon the authority of the purchaser. It is an essential element of the company's business that, unless delivery is made to an aircraft, it should occur at the point of the departure of the passengers to board outgoing aircraft. It must be within the airport. Such delivery is, in my judgment, the supply of goods within the airport. It was argued for the company that it could not "supply" goods at the airport because the property in the goods had passed, at the latest, upon entry for export. To accept this, however, would be to accept an altogether too narrow meaning of the word "supply". The supply of goods does not necessitate a change in ownership of the goods supplied. In many cases the word "supply" is equivalent to the word "provide" and it often happens that a person is provided by others with what belongs to him. Thus a shop, which has a home delivery service, supplies goods upon delivery notwithstanding that they may have been bought in the shop, or by telephone, or by mail order. A supplier is not merely one who sells. He may be one who delivers. It would, I think, be wrong to call the company the supplier of goods at the point when an entry for export has been passed. To become a supplier something more would still be necessary, namely the delivery of goods to the purchaser. Looking at the transaction from the point of view of the customer, it is I think, obvious that it is not until delivery that the purchaser is supplied with the goods which he has bought."

21. I was also referred to the decisions of the Federal Court in Williams & Hodgson Transport Pty Ltd v Castlemaine Tooheys Ltd (1985) 64 ALR 521 (Wilcox J) and (1985) 7 FCR 499 (Sweeney and Lockhart JJ, Fox J dissenting). I will return to that case later with reference to the ultimate decision in the High Court reported at (1986) 68 ALR 376.

22. The applicant's submission is that it supplies the convention facilities to the overseas organiser/promoter and not to the local facilitator. In particular the local professional conference organiser manages the various providers of goods and services in Australia and pays for those goods and services.

23. The applicant also relies on the Explanatory Memorandum circulated by authority of the Minister for Trade in relation to the Export Market Development Grants Bill 1997. That memorandum includes the following explanation:

"Clause 10, by means of a table, cross matches eligible product against the type of export earnings which are eligible in respect of that product. For goods this is earnings received or receivable; for services, intellectual property rights and know-how, it is earnings actually received in that grant year only. Where a tourism operator provides their service to an Australian inbound tour operator for on supply to an overseas visitor, 20% of the earnings received by the original operator may be claimed as eligible export earnings. To minimise double counting, the inbound tour operator's export earnings are limited to 80% of receipts from the overseas purchaser."

24. The respondent also says that "supply" means provide or furnish. The respondent submits that the applicant supplies tourism services by rental of its convention centre on a one party to another party basis and not a chain of supply. The conference organiser leases the space required and makes a separate supply of that leased space to the overseas visitor. Furthermore, the supply is "supply for consideration" (s107) which confines the intended meaning of supply to the applicant and the person who leases the space from the applicant. This submission depends on a further submission that there can only be one supplier to the overseas organiser.

25. The respondent doubts that a conference organiser can be characterised as an inbound tourist operator but that is a point I do not need to decide at this stage.

26. The respondent says the word "supply" should not be construed to include "on supply". The respondent does accept however that letting or supply of the floor space can be accepted as a service within the terms of section 10.

CONSIDERATION

27. The definition of supply as "supply for consideration" limits the meaning of the word so as to exclude gratuitous supply. However I am not satisfied that, subject to that limitation, the word supply as used in section 10 is other than a word of "wide import" (Menzies J in Sterling Nicholas as set out above).

28. I do not understand his Honour to suggest in Sterling Nicholas that the word should be construed in any sense other than provide or furnish. In particular Menzies J rejected submissions based on a concept of passing of property under a contract and adopted a meaning consistent with passing of possession by delivery.

29. In Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1986) 68 ALR 376 the High Court decided that delivery of beer by the appellant to Queensland Raidfast Express (QRX) as carrier to the exclusion of other carriers or delivery to purchaser licencees did not constitute a restrictive trade practice. The beer was sold ex-brewery with property to pass on delivery.

30. Brennan J explained the circumstances of the case at ALR 383 as follows:

"The sale of beer by the brewer to the licensees is a supply by way of sale. The supply by way of sale occurs at a licensee's premises when the beer is delivered. There is no supply by the brewer to a licensee at the brewery door in Milton. When QRX picks up the beer at the brewery door, there is no sale; no appropriation of beer to an agreement for sale; no transfer of property in the beer. QRX takes possession of the beer under its contract with the brewer; the brewer is the bailor, the carrier its bailee.

Once it is appreciated that the beer transported by QRX is supplied by the brewer to a licensee only at the licensee's premises, it is impossible to suppose that the transport services rendered by QRX are acquired by the licensee. The beer supplied at the licensed premises may be described as "delivered beer" to distinguish it from beer at the brewery door, but the delivery services supplied by QRX are acquired by the brewery, not by the licensee. The licensee acquires only delivered beer."

31. It is clear that the brewery and the licensee were in a contractual relationship. It is also clear that the brewery supplied the beer to the licensee even though it was facilitated by the carrier. Given the explanation by Brennan J the case is of little assistance here.

32. In Sterling Nicholas the sale occurred prior to the supply with property passing on sale rather than on delivery. The essential point was that the goods were still under Customs control. As set out above Menzies J said that the supply of goods does not necessitate a change in ownership of the goods supplied. It can be equivalent to the word provide. As the parties submitted that is to be construed in the sense of provide or furnish.

33. I am satisfied that it is open to find that the applicant provides its convention centre to the overseas organisers of conventions albeit that the said provision of the facilities is organised by Australian professional conference organisers.

34. If I am right that the definition of supply merely excludes gratuitous supply then I am satisfied that not only is it open to find that the applicant supplies convention facilities to overseas organisers of conventions but there need not be a contractual relationship between the applicant and the overseas convention organisers. The applicant receives payment for the supply of its convention facilities and that is sufficient, in my view for the purposes of section 10 where the supply is to a person not a resident of Australia. Section 10 does not require that the consideration received for the supply be received from an overseas source.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the interim decision herein of Mr K L Beddoe (Senior Member)

Signed:

T G Lowther

Associate

Date/s of Hearing 15 December 1999

Date of Decision 9 February 2000

Solicitor for Applicant Mr Ridgeway

Counsel for the Respondent Mr Logan SC

Solicitor for the Respondent Australian Government Solicitor