Total Design Pty Ltd and Australian Trade Commission [2002] AATA 22 (17 January 2002)

Last Updated: 17 January 2002

DECISION AND REASONS FOR DECISION [2002] AATA 22

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/54

GENERAL ADMINISTRATIVE DIVISION )

Re TOTAL DESIGN PTY LTD

Applicant

And AUSTRALIAN TRADE COMMISSION

Respondent

DECISION

Tribunal Mr K L Beddoe (Senior Member)

Date 17 January 2002

Place Brisbane

Decision The Tribunal affirms the decision under review.

(Sgd) K L Beddoe

Senior Member

Decision No: 22/2002

CATCHWORDS

EXPORT MARKET - whether eligible for grant - whether eligible to claim expenses - meaning of "sample"

Export Market Development Grants Act 1997 s 29, 33, 41

REASONS FOR DECISION

Mr K L Beddoe (Senior Member)

1. The applicant applied for an export market development grant for housing plans and designs supplied to a government authority and a consultant in the Philippines. That claim was rejected by the respondent and the applicant lodged an application for review in this Tribunal.

2. The Export Market Development Grants Act 1997 ("the Act") provides 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 (S 3).

3. Where a person is eligible under Part 3 of the Act for a grant, has incurred eligible expenses in the grant year in relation to eligible products, and has applied in accordance with Part 7, that person is entitled to a grant worked out under Part 6 (S 4).

4. Eligible expenses are determined by the provisions in Part 5 of the Act. In particular section 33 provides for claimable expenses in respect of eligible promotional activities. There are six categories of activities which are embraced by section 33.

5. Relevant to this case is Item 4 which describes the eligible activity as follows:

"the provision, primarily for an approved promotional purpose, of free samples to a person that is not a resident of Australia, as follows:

(a) provision outside Australia of samples relating to any eligible product of the applicant;

(b) provision in Australia of samples relating to eligible tourism services supplied by the applicant"

6. To be eligible, expenses within the terms of section 29 of the Act must be claimable expenses under section 33.

7. At the hearing Mr Ryan represented the applicant and Mr Rangiah appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits. Oral evidence was given by Mr Ryan who I understand to be the controlling mind of the applicant company.

8. I make the following findings of fact. The applicant's claim for a grant for the financial year 1999/2000 included amounts totalling $51,957 for free samples. Refusal of that claim resulted in a loss of the grant entitlement claimed of an amount of $35,106.

9. The applicant describes itself as a site planning and architecture consultant.

10. The samples in question have been described in three categories as follows:

(a) Naga Houses The Philippines

(b) School Designs The Philippines

(c) Police Housing APB Housing The Philippines

11. The sample plans described in (a) and (b) were presented to a provincial governor in the Philippines and the sample plans described in (c) were presented to a firm of consultants also in the Philippines.

12. The claim is based on the costs of preparation and presentation of the sample plans. Most of the costs being in the preparation of the plans.

13. It is clear on the evidence and I find that the plans in question are not final plans but might be characterised as concept plans. Such plans were not specifically drawn for the recipients but were used only as concept plans. They were not building plans.

14. The applicant expected that the concept plans would result in the ideas being adopted in building projects so that building plans would be prepared and sold to builders who adopted the concepts exhibited in the concept plans.

15. I am satisfied that the concept plans were copyright of the applicant and can be correctly characterised as intellectual property. It is clear from the evidence that the applicant intended to retain ownership of the copyright in the concept plans so that although the presentation of the plans exhibited the concepts there was no transfer of property in the plans to the recipients. It may well be that the copyright vests in an associated firm but I am unable to determine that matter. The plans exhibited to the Tribunal bear the name of "Bernard Ryan and Associates". It is not clear whether the applicant trades under that name. However it is not necessary to determine the point.

16. Document T10 satisfies me that the subject plans are concept plans and not building plans. This is confirmed by the documents forming T7 and in particular by the letters dated 26 August 1998 and 27 August 1998.

17. There is no dispute that the plans were provided to persons who were not residents of Australia.

The Applicant's Submissions

18. The plans are correctly characterised as products. They were not sold. They had been developed over many years and constitute samples of that development. They were not offered with a fee schedule. The plans were able to be given away by the applicant.

19. It is not necessary that a sample be the same as the final product. Here the plans were used as a Marketing exercise to market the designs rather than particular sets of plans.

The Respondent's Submissions

20. Section 33 of the Act is not satisfied. The plans and designs were not provided free of charge. The applicant did not give away its property in the plans.

21. To be a sample the thing given away must be a sample of an eligible product of the applicant. The expenses claimed are not the cost of providing free samples.

22. The expenditure claimed was for product development. The Act allows the cost of providing free samples. Section 41 of the Act excludes expenses of a capital nature.

Consideration

23. The plans are correctly characterised as concept plans. As such they communicate ideas being the intellectual property of, I assume for present purposes, the applicant. They illustrate in graphic form what another person might explain by written word or oral presentation.

24. Those ideas have been developed by the applicant, at considerable cost, over a period of time and remain the property of the applicant.

25. All that the applicant provided was concept plans communicating those ideas. The value of those plans is not to be determined by the cost of developing the ideas but rather the cost of making paper copies and provision of those paper copies. In this case that cost was not disclosed as to the cost of copying, but would in my view be minimal. Presentation costs being air freight charges are set out at T4/22 as being $161.00.

26. The word "sample" has meanings which depend upon context. It may be a specimen or portion taken from a larger item or quantity, eg a sample of ore, or it maybe a typical example of goods manufactured eg as found in sample bags.

27. In this case the concept plans are not samples within the ordinary meaning of "sample". They are correctly characterised as communications of ideas and do not represent examples of plans which may ultimately be provided. I am satisfied that it was the communication of ideas that is the essence of the presentations to the persons in the Philippines. The cost of paper copies of the plans and the cost of the presentation of those copies was de minimis.

28. For these reasons the decision under review will be affirmed.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member)

Signed: .....................................................................................

Associate

Date/s of Hearing 24 July 2001

Date of Decision 17 January 2002

For the Applicant Mr Ryan

For the Respondent Mr Rangiah