CATCHWORDS Administrative appeals - Export grants - Whether consideration for consignment of frozen lamb should have been excluded from export earnings - Whether finding that goods sold outside Australia should be based upon location of goods at time of sale or place at which contract entered into - Date at which goods "received" for shipment - Whether receipt at cold stores for shipment or merely storage - Constructive receipt Export Expansion Grants Act 1978, ss.3, 5(1) (a), 5(1) (b), 5 (3) (a) WESTERN AUSTRALIAN LAMB MARKETING BOARD v. EXPORT DEVELOPMENT GRANTS BOARD No. WA G25 of 1982 CORAM: Bowen C.d., Toohey & Fitzgerald JJ. Perth 9 May 1983 IN THE FRDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) No. WA G25 of 1982 ) ) DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL GENERAL ADMINISTRATIVE DIVISION BETWEEN: WESTERN AUSTRALIAN LAMB MARKETING BOARD Appellant and EXPORT DEVELOPMENT GRANTS BOARD Respondent oO R DER Bowen C.J., Toohey and Fitzgerald JJ. JUDGES MAKING ORDER WHERE MADE Perth DATE 9 May 1983 THE COURT ORDERS THAT: 1. The appeal be dismissed with costs. IN THE FEDERAL COURT ) OF AUSTRALIA ) No. WA G25 of 1982 WESTERN AUSTRALIA ) DISTRICT REGISTRY ) ) GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL GENERAL ADMINISTRATIVE DIVISION BETWEEN: WESTERN AUSTRALIAN LAMB MARKETING BOARD Appellant and EXPORT DEVELOPMENT GRANTS BOARD Respondent CORAM: Bowen C.J., Toohey & Fitzgerald JJ. DATE: 9 May 1983 REASONS FOR JUDGMENT THE COURT: This is an appeal by the Western Australian Lamb Marketing Board ("the Marketing Board") from part of a decision of the Administrative Appeals Tribunal given on 9 July 1982. The Tribunal upheld the decision of the Export Developments Grants Board ("the Grants Board") to exclude from the export earnings of the Marketing Board for the year which commenced on 1 July 1978 the consideration ($1,640,695.00) which the Marketing Board received for portion of a consignment of lamb which was exported to Japan on the motor vessel "Akizuki Maru". The lamb constituted "eligible goods" within the meaning of the Export Expansion Grants Act 1978 ("the Act") up to and including 30 June 1979. By Statutory Rule 1979 No. 105, the lamb became "excluded goods" after that date. Some of the consignment was loaded prior to 30 June but that portion involved in the dispute was not loaded until July 1979. The facts, which are not now in dispute, may be briefly summarized. The lamb was slaughtered in 1978. At that time it was intended for export to Iran. Frozen lamb must be stored at a steady temperature in a freezer or cold store. It is undesirable to move frozen lamb from freezer to freezer. There were no freezing facilities available for the Marketing Board's use in the inner harbour area of the Port of Fremantle. Accordingly, the lamb in question, together with other lamb due for shipment to Iran, was held by the Marketing Board in storage at Perth's four major cold stores, namely the West Australian Meat Commission Store at Robb Jetty, the West Australian Meat Commission Store at Midland Junction, the Frigoscandia Store at Spearwood and the Fremantle Cold Stores. These cold stores are all within the Perth Metropolitan Industrial area and were between 4 and 35 kilometres from Fremantle. The lamb held at the Robb Jetty and Midland Junction cold stores had been killed in adjacent abattoirs. The other two cold stores held country killed lamb. The evidence did not establish that the lamb was held in the available cold stores closest to the inner harbour area of the Port of Fremantle. For example, it was not shown that the lamb held at Robb Jetty and Midland Junction was there because there was no room in any cold store closer to Fremantle. In about May 1979 after it had been apparent that Iran would not accept the lamb, a contract for its sale was made in Japan between the Marketing Board's agent and Japanese purchasers. For the purposes of the Act, what was done by its agent is deemed to have been done by the Marketing Board: sub-s.3(2). After the contract was entered into, arrangements were made to export the lamb to Japan on the "Akizuki Maru" which was due to arrive in Fremantle 22 June 1979. Because of engine trouble the "Akizuki Maru" did not berth in Fremantle until the afternoon of 24 June 1979. Arrangements were then made to load the lamb at a sufficient rate to complete the loadiny by 30 June 1979. Loading commenced, but only 192.152 tonnes had been loaded when the waterside workers walked off the vessel. Loading was not resumed until 6 July 1979 after which the balance of the consignment, 1306.848 tonnes, was loaded. The normal procedure was followed in respect of the loading. Instructions for the release of identified lamb from the cold stores, its transportation to the ship by refrigerated trucks, and its loading onto the ship had been conveyed by telex to the cold stores, the transport company, and the ship's agent on 18 June 1979. The ship's agent thereafter determined the times of the actual movements of the lamb from cold stores to ships and was treated as having the authority to control that movement. However, the lamb remained in the physical possession of the cold stores and there was no movement of it until the dates upon which it was carried to "Akizuki Maru" and loaded on board. The consideration excluded by the Grants Board from the Marketing Board's export earnings was the amount which the parties agreed the Marketing Board received for the portion of the consignment loaded after 30 June 1979 onto the "Akizuki Maru". The Grants Board is responsible for administering the Act. Its decision which was the subject of review by the Administrative Appeals Tribunal was made pursuant to s.17 of the Act. The Marketing Board's claim to an export grant is principally founded on s.5. That section reads 1n part ;: "5.(1) Subject to this section, a reference in this Act to the export earnings of a person, in relation to a year, shall be read as a reference to the sum of - (a) in respect of eligible goods sold in Australia by that person at any time and exported by him during that year - so much of the consideration received or receivable by that person in respect of the sale and export as is attributable to - (i) the free on board value of the goods; (ii) the packaging of the goods; and (iii) export payments insurance premiums in respect of the goods; (b) in respect of eligible goods exported by that person at any time and sold outside Australia by him during that year - an amount equal to the amount that would have been calculated in respect of the goods under paragraph (a) if they had been sold in Australia: (c) ... (d) coe (e) ... (2)... (3) For the purposes of paragraph (1) (a) - (a) the date of export of goods exported under a bill of lading shall be deemed to be (2) the date shown on the bill of lading; or {ii} the date on which they are received for shipment at the port or airport of export, whichever 1s the earlier; {b) the date of export of goods sold as stores for use on ships or aircraft that are intended to leave Australia shall be deemed to be the date of the sale; and {c) the date of export of any goods shall be deemed to be the date on which they are received for shipment at the port or airport of export. (4) 2... (5) ... ". The Marketing Board raised two grounds of appeal, namely that: "... the Tribunal was wrong in law after finding that that contract for the sale of lamb was concluded outside Australia holding that section 5(1)(b) of the Export Expansion Grants Act 1978 was not applicable to such sale. Alternatively, if the tribunal was correct in holding the goods were sold in Australia it should have held that they had been exported by the appellant on the 22nd June 1979 because on and from that date such goods had been "received" for shipment at the port within the meaning of section 5(3)(a) of the Act". The First Ground The Tribunal held that the place where goods were sold for the purposes of the Act was not the place where the contract of sale was concluded but the place where the goods were situated at the time of sale. It said that the rules for determining where a contract is made are both legalistic and technical, frequently turning on the intention of the parties and the terms of the contract; and that the result is often artificial and absurd. It seemed to the Tribunal that it would be more consonant with the nature of the legislation, "where the terminology of the business world has substantially been adopted", if it were possible to determine the problem "by the application of simple non-technical tests". The Tribunal found support for its approach in sub-s.3(3) and perhaps sub-s.3(4). After setting out sub-s.3(3), the Tribunal said : "This section spells out specifically the circumstances in which it applies, namely to goods in Australia at the time of the sale, and the physical presence of the goods is the determining factor. There seems no reason why such a factor should not be equally applicable to s.5(1) (a); the words 'goods sold in Australia' being a contraction of the words in s.3({3) 'sells goods at a time when the goods are in Australia'. Likewise in s.5(1){(b) goods 'sold outside Australia' would mean goods sold at a time when they are outside Australia. Further support is available from a perusal of s.5(3) which provides, for the purposes of s.5{1) (a) only, for the determination of a deemed date of export. Thus it applies only to goods sold in Australia and not to goods sold out of Australia. If, on our interpretation of s.5(1) (b), goods "sold outside of Australia" means goods physically outside of Australia at the time of sale, there is obviously no need for the legislation to provide for these goods a deemed date of export. They have already been exported, the date of which is known at the time of sale. Thus, consistently with this approach, the legislation only provides a deemed date of export for goods exported subsequent to the date of sale. This confirms our view that s.5(1)(b) applies only to goods which are outside Australia at the time of sale". We agree with the Tribunal's conclusion and state our reasons for doing so. It is necessary, before turning to s.5 of the Act, to note the general structure of the legislation. Broadly speaking, export grants are intended only to be attracted by Australian goods, i.e. goods "manufactured, produced, assembled or processed in Australia" (see the definition of "eligible goods" in sub-s.3(1), and sub-s.4(1)), or Australian services, Australian industrial property rights, or Australian know-how (see the definition of "eligible internal services", "eligible industrial property rights", and "eligible know-how" in sub-s.2({1)). Further, only Australian residents, in respect of businesses substantially carried on in Australia, are entitled to export grants: see sub-s.3(1) "resident of Australia", sub-s.5(2) and s.8. Another basic requirement to attract export grants is that the buyer must be a resident outside Australia: sub-s.3(4). When such a buyer later exports the goods, it is the seller not the buyer who becomes entitled to the export grant: sub-s.3(3). There is throughout those provisions a basic dichotomy drawn between persons, things, and conduct "in Australia" on the one hand and persons, things and conduct "outside Australia" on the other. That distinction, which is related to Australia as a physical entity, is even more apparent when the provisions are looked at and not merely summarized. The phrases "in Australia" and "outside Australia" are constantly and consistently used by way of contrast. If attention then be directed to para.5(1) (a) of the Act in conjunction with sub-s.5(3) and the definition of "export" in sub-s.3(1), it is clear that the concern of para.5(1) (a) 1s with goods which are physically located in Australia at the time of sale and are thereafter exported from Australia. We do not think 10. there is room for the view that when para.5(1) (a) speaks of "eligible goods sold in Australia" it calls for an investigation of the place where, for legal purposes, the contract of sale was entered into. Direct emphasis is given to the physical location of the goods by sub-s.3(3). Paragraph 5(1) (a) refers only to goods "in Australia" exported by the seller. By sub-s.3(3), as already mentioned, if an overseas buyer later exports the goods, it is the seller who is deemed to do so; in that sub-section the goods are not referred to as "sold in Australia" but as goods which are sold "at a time when the goods are in Australia". Similarly, we are of the opinion that para.5(1)(c) of the Act, taken with sub-s.5(4), is concerned with the physical location at which the supply of eligible services occurs. Paragraphs 5(1)(b) and (e) are also perfectly consistent with this view of the operation of s.5. In our opinion, to construe para.5(1)(b) as directed to the place at which, in point of law, the contract of sale is entered into rather than to the location of the goods at the time of sale would be to distort the entire scheme of the legislation. The assumption underlying paras.(a) and (b) of sub-s.5(1), whether or not the assumption is entirely well founded, is that the sale of eligible goods may take place while the goods are still in Australia before they are exported from Australia 11. or that the goods may first be exported from Australia and then, while outside Australia, be sold. In the former case, the date of export is the relevant date for the determination of entitlement to an export grant (para.5(1)(a)). In the latter case it is the date of sale (para.5(1) (b)). The Tribunal having found that the lamb was still in Australia when it was sold, and that finding standing unchallenged, it follows that para.5(1) (b) had no application. This conclusion makes it unnecessary to deal with the other answer offered by the Grants Board to this ground of appeal. We simply note that if the goods were sold outside Austral1a, they were when exported on 16 July 1979 no longer eligible goods, lamb having been excluded from this status as from 1 July 1979. The second ground The Tribunal held that although the lamb was sold in Australia it was not exported during the relevant year. It reached that conclusion because of the deeming provision in para.5(3})(a). Although the Lamb was exported under a bill of lading, that document did not show a date earlier than 1 July 1979. Hence the Marketing Board could bring itself within para.5(1) (a), only if the lamb was "received for shipment at the port of export" before that date. 12. The Tribunal was sympathetic to the notion that "there is much to be said for accepting that receipt into a conveniently placed cold store, albeit beyond the normally accepted limits of the port or airport, would be tantamount to 'receipt for shipment at the port of export'". The Tribunal continued ; "However such is not the case here. None of the frozen lamb can be said to have been received into the various cold stores for 'shipment'. It was received in some cases for freezing, in so far as it came from the adjacent abattoirs, and in all cases it was received for storage, and held for storage until uts ultimate fate was determined". The fact that goods are received for freezing or for storage 1s not incompatible with their receipt for shipment but it is clear that the Tribunal was expressing a view that, in the circumstances, the receipt of the lamb by the cold stores could not be said to be receipt by any person for the purpose of shipment. Before the Tribunal and before this Court, the Marketing Board argued that although the lamb may not have been received for shipment when first placed in the cold stores, there was constructive delivery and correspondingly constructive receipt of the goods for shipment when, by telex dated 18 June 1979, the Marketing Board instructed the cold stores to release the lamb to Brambles, a cartage company. Although ail the telexes were 13. not put in evidence, 1t is apparent from the reasons of the Tribunal that it accepted that corresponding telexes were sent to Brambles and to Tropical Traders, the shipping agent. Because of the industrial trouble the lamb remained in cold storage until work resumed on 6 July 1979. In our view, concepts of constructive delivery and constructive receipt, drawn by analogy from the law of bailment, find no place in s.5 of the Act. The legislation is concerned with the physical location and movement of goods and it 1s the physical receipt of goods for shipment at the port of export with which sub-s.5(3) is concerned. The telexes of 18 June did no more than make it possible for the shipper to obtain possession of the lamb, a possession that was not taken until after 1 July 1979. This conclusion makes it unnecessary to deal with other matters that were argued during the course of the hearing. The Grants Board did not contend that the definition of "port", in this case the Port of Fremantle, is to be found in state legislation and, at least tacitly, it accepted that goods may be received for shipment at the port of export when received for shipment at facilities adjacent to the port proper. It is unnecessary for us to comment on this aspect. 14. The Marketing Board submitted that the phrase "for shipment at the port of export" in para.5(3) (a) was merely descriptive of the purpose of receipt, involving no requirement that the goods be received "at the port", whatever meaning may be attached to that expression. The Grants Board argued that the phrase contained two factual components, receipt at the port and receipt for shipment. That argument found favour with Deputy President Todd in Moody & Co. Pty. Ltd. v. Export Development Grants Board (unreported decision delivered 29 April 1983). The Deputy President commented : "The phrase 'received for shipment at the port ... of export' isa composite phrase involving both the quality of the action involved in respect of the goods and the location of the place where that action occurs". That view may well be correct but it is unnecessary to reach a conclusion on the point. For the reasons given earlier we are of opinion that the second ground of appeal cannot succeed. The appeal must be dismissed with costs. I certify that this and the thirteen preceding pages are a true copy of the Reasons for Judgment herein of their Honours Bowen C.J., Toohey and Fitzgerald JJ. ssociate Dated: 9 May 1983