CATCHWORDS Administrative Law - Administrative Appeals Tribunal - interpretation of s.9 of Export Expansion Grants Act - whether in circumstances appellant should be treated as not having carried on export business and earned export income which in fact it did carry on and did earn with respect to business which had been sold. Export Expansion Grants Act 1978 Administrative Appeals Tribunal Act Michell Carbonised Wool Exports Pty Ltd v. Export Development Grants Board (1984) 52 A.L.R. 609 Export Development Grants Board v. Michell Carbonised Wool Exports Pty Ltd (1985) 59 A.L.R. 729. A. RAPTIS & SONS v. AUSTRALIAN TRADE COMMISSTON No. G76 of 1985 FORSTER, JENKINSON & SPENDER JJ. ADELAIDE 22 OCTOBER 1986 eee IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY } No. G76 of 1985 ) ) GENERAL DIVISION ON APPEAL from the General Administrative Division of the Administrative Appeals Tribunal constituted by Mr Justice F.R. Fisher, Mr G.D. Grant and Mr G.R. Taylor BETWEEN : A. RAPTIS & SONS Appellant AND: AUSTRALIAN TRADE COMMISSION (substituted for the Export Development Grants Board pursuant to 5.44(4) of the Australian Trade Commission (Transitional Provisions & Consequential Amendments) Act 1985) Respondent MINUTE OF ORDER JUDGES MAKING ORDER FORSTER, JENKINSON & SPENDER JJ. ADELAIDE 22 OCTOBER 1986 WHERE MADE DATE _ OF ORDER THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs to be taxed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G76 of 1985 ) ) GENERAL DIVISION ON APPEAL from the General Administrative Division of the Administrative Appeals Tribunal constituted by Mr Justice F.R. Fisher, Mr G.D. Grant and Mr G.R. Taylor BETWEEN : A. RAPTIS & SONS Appellant AND: AUSTRALIAN TRADE COMMISSION (substituted for the Export Development Grants Board pursuant to s.44(4) of the Australian Trade Commission (Transitional Provisions & Consequential Amendments) Act 1985) Respondent REASONS FOR JUDGMENT CORAM: FORSTER, JENKINSON & SPENDER JJ. FORSTER, J.: The appellant applied to the Export Development Grants Board (the Board) asking that the Board should exercise its discretion under 5.9 of the Export Expansion Grants Act 1978 (the Act) in favour of the appellant ina manner which I deal with later. The Board refused to do so and the appellant applied to the Administrative Appeals Tribunal (the Tribunal) pursuant to sub.s.17(6) of the Act for a review of this decision. The 2. Tribunal affirmed the decision under review and the appellant now appeals to this court pursuant to 5.44 of the Administrative Appeals Tribunal Act on a question of law, that is to say, the proper construction of s.9 of the Act. It is complained that the Tribunal placed an incorrect interpretation upon it. In order that the matter may be understood it is necessary to set out some facts and deal with certain provisions of the Act in some detail. No exception is taken by the appellant to the manner in which the Tribunal dealt with the facts and stated the relevant provisions of the Act and I can therefore do no better than repeat the findings of the Tribunal from p.2 to p.8 of its reasons for decision - "The Act provides for the making of grants to exporters with a view to furnishing incentives for the expansion of exports. The general scheme of the Act is to authorise the Board to determine whether a claimant exporter has an 'incentive grant entitlement' and the amount of such entitlement. This amount is payable to the claimant by the Commonwealth out of monies appropriated for that purpose by Parliament. The amount of the entitlement of a claimant in any year is calculated in accordance with a sliding scale by reference to the claimant's 'export earnings increment' in that year. The question for determination in this matter arises in the following circumstances which can be stated generally and briefly at this stage. The applicant has since 1969 been engaged in the fishing industry. It operates as a vendor and processor of fish and prior to the year in question had exported considerable quantities of lobster and prawns. In 1979/1980, the last full year in which it exported both products, the Board accepted that its proceeds from the export of prawns totalled $18,328,186 and from the export of lobster $624,285. The applicant was at the time 3. operating prawn trawlers on the northern coastline of Australia and processing the prawns in Adelaide. It also had a factory at Port MacDonnell in South Australia where it purchased lobsters from local fishermen and processed them primarily for export. By two interdependent contracts, both dated 17 October 1980, South Australian Fishermen's Co-operative Limited ('Safcol') purchased from Raptis Properties Pty. Ltd. the factory at Port MacDonnell and, from the applicant, its 'fish processing business' in that town. Settlement took place on 31 October 1980. The applicant then ceased to carry on its business at Port MacDonnell, which was conducted by Safcol. The applicant''s export operations thereafter were confined to the export of prawns. However as its export earnings increment was, in accordance with the Act, calculated by reference to the average of 1ts export earnings in the preceding three years, the export earnings from lobster in those prior years were taken into account in subsequent years. The amount of its increment in the later years (exclusively from the prawn earnings) was in consequence not as great as it would have been but for the inclusion of its lobster export earnings. In an effort to maximise its export earning increment, and thus its incentive grant entitlement, for the year ended 30 June 1982, the applicant requested the Board to exercise its discretion under 5.9 of the Act and thereby to reduce, by the amount of the lobster export earnings, its export earnings in the three years preceding the year in question. By that section the Board is empowered in appropriate circumstances to treat the new owner of an exporting business as if it was carrying on and achieving the export earnings of the prior owner of the business. The applicant contended that if this discretion was exercised its export earnings from lobster in the preceding years would become export earnings of Safcol and as a result excluded from the applicant's export earnings in those years. Section 9 provides as follows: '9. Where the Board is satisfied that - (a) at any time, including a time before 1 July 1977, a business or undertaking is or was carried on by a person or 4. persons; and (b) ata later time, by reason of the formation or termination of a partnership or corporation, a change in the membership of a partnership, the acquisition of shares in the capital of a corporation or any other business arrangement, the same business or undertaking or a business or undertaking that, in the opinion of the Board, is or was substantially the same, is or was carried on by a different person or different persons, the Hoard may treat the last-mentioned person or persons, and not the first-mentioned person or persons, as having carried on the first-mentioned business or undertaking at the earlier time and as having had any export earnings resulting from the carrying on of that business or undertaking at that time.' In the present matter the 'first-mentioned person' is the applicant and its export earnings 'at the earlier time' have already been taken into account in determining its export earnings increments in past years and thus 1ts incentive grant entitlement in each of those years. The 'last-mentioned person' is Safcol and the section provides that the Board is entitled to treat Safcol as if it was carrying on 'at the earlier time' the business of the applicant and as having made the export earnings of that business. The manner in which export earnings are taken into account for the purpose of determining the incentive grant entitlement for a particular year ('the grant year') is provided by s.6 of the Act as follows: '6. Subject to this Act, a reference in this Act to the export earnings increment of a person, in relation toa grant year, shall be read as a reference to the amount by which the export earnings of that person in that year exceeds an amount equal to - (a) where the person had export earnings in each of the 3 immediately preceding years one-third of the sum of his export earnings in those 3 years; 5. (b) where the person had export earnings in only 2 of the 3 immediately preceding years - ome half of the sum of his export earnings in those 2 years; (c) where the person had export earnings in only one of the 3 immediately preceding years - one half of the sum of - (i) his export earnings in that one year; and (ii) 67 per centum of his export earnings in the relevant grant year; or (d) where the person did not have any export earnings during the 3 immediately preceding years - 67 per centum of his export earnings in the relevant grant year.' If an exporter desires to obtain a grant, 5.12 requires him to submit a claim to the Board, which is directed by sub.s.11{1) to 'consider every Claim duly made and determine whether the claimant has an incentive grant entitlement and, if 50, the amount of that incentive grant entitlement'. Sub-section (2) provides that if the Board determines that he has an entitlement 'there is payable to the claimant a grant equal to the amount of the incentive grant entitlement 50 determined'. The Board can be required to reconsider a determination or decision it has made, and an application can be made to the Tribunal to review that reconsidered determination or decision: 5.17. Section 13 is important because under it the incentive grant entitlement is calculated on a sliding scale as a diminishing percentage of the export earnings increment. That section provided as follows at the relevant time - '13. Subject to this Act, the incentive grant entitlement of a claimant in relation to a grant year is an amount equal to - (a) where his export earnings increment for that year does not exceed $500,000 - 15 per centum of that increment; (b) where his export earnings increment for that year exceeds $500,000 but does not 6. exceed $5,000,000 - the sum of $75,000 and an amount equal to 10 per centum of the difference between that increment and $500,000; {c) where his export earnings increment for that year exceeds $5,000,000 but does not exceed $10,000,000 - the sum of $525,000 and an amount equal to 5 per centum of the difference between that increment and $5,000,000; or (d) where his export earnings increment for that year exceeds $10,000,000 - the sum of $775,000 and an amount equal to 2.5 per centum of the difference between that increment and $10,000,000.' The reasons which prompted the applicant to seek the application of s.9 of the Act can hest he explained by reference to its export earnings in the relevant years. The Board ultimately accepted these earnings to be as follows: 1981/82 1980/81 1979/80 1978/79 Prawns $22,626,581 $17,331,599 $18,328,186 $13,454,900 Lobster $ 417,109 & 624,285 $ 1,218,168 Total $22,626,581 $17,748,708 $18,952,471 $14,673,068 Earnings Pursuant to 5.6 the export earnings increment of the applicant in respect of the grant year 1981/82 is the amount by which the earnings of that year exceed one third of its export earnings in the 3 preceding years. If the increment calculation is based on total earnings (prawns and lobster) in that period, one third thereof is 617,124,749. It follows from the above table that the increment for the grant year upon which the entitlement will be calculated is $5,501,832. The grant entitlement calculated in accordance with s.13 on these figures is $525,000 plus 5% of 6&501,832, namely $550,092. If however 5.9 1s applied, the lobster export earnings will, on the applicant's contention, be removed as it is Safcol and not the applicant which will be notionally treated by the Board as carrying on that business during the 3 years in question. The total export earnings during those 3 years, excluding the lobster earnings, amount to $49,114,685 and one third thereof is $16,371,562. ' 7. The increment in these circumstances is $6,255,019, an increase of $753,187 which entitles the applicant to an additional grant of $37,659." The appellant argues that the Board has a discretion under 5.9 to treat Safcol as having carried on the lobster business during the three years immediately preceding 1982 which it did not and to treat the appellant as not having carried on the business in these years, which of course it did. It is put that if this is not so, the words "and not the first-mentioned person or persons" in the tenth and eleventh lines of the section are surplus and have no work to do. If in order properly to assess whether or not Safcol has ancreased exports it is necessary to look at the export performance of the business in the years preceding 1982, the section would have accomplished this without the words in question being there. There is some force in this argument but it is possible to regard the words in question as simply adding emphasis to the words immediately Preceding them and being added by the draftsman to make perfectly clear what the effect of an obvious fiction was, or rather, was not. If this is right the words would have some work to do. Other considerations compel me to the conclusion that the words in question should be interpreted as simply adding emphasis to the words "may treat the last-mentioned person or persons" and not as giving the Board a discretion to treat the appellant as if it had had no exports from the lobster business which in fact it of course had had. 8. In the first place the plain intention of the Act is to encourage and reward the expansion of exports. To treat the appellant in the way it asks does not encourage or increase exports from the lobster side of the business nor indeed the prawn side of the business, nor does it reward an increase in exports generally because by the Board treating the appellant in the way it asks no increase in exports is caused to occur. So far as persons in the position of Safcol are concerned if there have been exports in previous years it is necessary to look at these in order to determine if there has been any increase in exports due to the efforts of the new owner of the business. In the second place the appellant has already been rewarded with respect to its exports of lobster in the three years in question and it would be wrong and unjustifiable if it should be in effect rewarded again on the basis that its export of lobsters during the three years preceding 1982 did not occur. The phrase "double dipping" was used during argument and in ny view with justification. In the third place if the result contended for by the appellant is intended it would be necessary to imply additional words such as those suggested by the Tribunal - "'...,and may treat the first-mentioned person as not having carried on the first-mentioned business or undertaking at the earlier time and as not having had any export earnings resulting from the carrying on of that business or undertaking at that time.'" 9. « There seems to be no warrant to imply such words. Had the legislature intended to do so it could have easily have added these words or other words to similar effect. In my opinion the Tribunal was perfectly correct in the conclusion to which it came as to the interpretation of 5.9 and also in the reasons it expressed for coming to that conclusion. The appeal should be dismissed with costs. I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Mr Justice Forster. Associate: s mane aa\t0 |Yo IN THE FEDERAL COURT OF AUSTRALIA ) SOUTH AUSTRALIAN DISTRICT REGISTRY ) NO. G76 of 1985 GENERAL DIVISION } On Appeal from the General Administrative Division of the Administrative Appeals Tribunal constituted by Mr. Justice F.R. Fisher, Mr. G.D. Grant and Mr. G.R. Taylor BETWEEN: A. RAPTIS & SONS Applicants AND: EXPORT DEVELOPMENT GRANTS BOARD Respondent CORAM: Forster, Jenkinson and Spender Jd. PLACE: Adelaide DATE: 22 October 1986 REASONS FOR JUDGMENT JENKINSON J. Appeal against a decision of the Administrative Appeals Tribunal upon a review of a decision of the Export Development Grants Hoard. The latter decision was the refusal by the Board of a request by the applicants that the Board treat, for the purpose of determining the incentive grant entitlement of the applicants under the Export Expansion Grants Act 1978 in respect of the year ended 30 June 1982, certain export earnings of the applicants as not having been derived by them. The Board's decision was affirmed by the Tribunal. The legislative scheme of that Act has been described in recent decisions of this Court and the High Court : Michell Carbonised Wool Exports Pty. Ltd. v. Export Development Grants Board (1984) 52 A.L.R. 609; Export Development Grants Board v. Michell Carbonised Wool Exports Pty. Ltd. (1985) 59 A.L.R. 729. The grant for which the Act makes provision 1S measured as a percentage of the amount by which a person's export earnings in the particular year in respect of which the grant 15 made exceed an amount derived from past export earnings of that person. Section 6 prescribes the means of ascertaining the amount of that excess, which is called "the export earnings increment of a person", in these terms: "Subject to this Act, a reference in this Act to the export earnings increment of a person, an relation to a grant year, shall be read as a reference to the amount by which the export earnings of that person in that year exceeds an amount equal to - (a) where the person had export earnings in each of the 3 immediately preceding years - one-third of the sum of his export earnings in those 3 years; (b) where the person had export earnings in only 2 of the 3 immediately preceding years ~ one-half of the sum of his export earnings in those 2 years; (c) where the person had export earnings in only one of the 3 immediately preceding years ~- one-half of the sum of - (i) his export earnings in that one year; and (ii) 67 per centum of his export earnings in the relevant grant year; or (d) where the person did not have any export earnings during the 3 immediately 3. preceding years - 67 per centum of his export earnings in the relevant grant year." Section 13 quantifies the amount of the grant as a proportion of the export earnings increment which diminishes as the increment exceeds $500,000, $5,000,000 and $10,000,000. Section 9 of the Act provided, at relevant times: "Where the Board is satisfied that - (a) at any time, including a time before 1 July 1977, a business or undertaking is or was carried on by a person or persons; and (b) at a later time, by reason of the formation or termination or a pertnership or corporation, a change in the membership of a partnership, the acquisition of shares in the capital of a corporation or any other business arrangement, the same business or undertaking or a business or undertaking that, in the opinion of the Board, is or was substantially the same, 15 or was carried on by a different person or different persons, the Board may treat the last-mentioned person or persons, and not the first-mentioned person or persons, as having carried on the first-mentioned business or undertaking at the earlier time and as having had any export earnings resulting from the carrying on of that business or undertaking at that time." The Export Development Grants Board, to which reference was made in the Act as "the Board", formerly exercised the functions now committed to the respondent Commission. The appellants, which are 51x companies constituting a partnership, carried on what were found by the Administrative Appeals Tribunal to have been two distinct businesses : a business of acquiring, processing and 4. exporting prawns, carried on principally an the Gulf of Carpentaria; and a business of acquiring, processing and exporting lobster, carried on principally at Port MacDonnell in South Australia. In October 1980 the applicants sold the South Australian business to the South Australian Fishermen's Co-operative Ltd. ("Safcol"). Until the sale the applicants had claimed a grant for each of the years in relation to which the Export Expansion Grants Act 1978 made provision for a grant and in respect of each year had aggregated as the export earnings of the one person - that is, the partnership - the earnings from the two businesses. The word "person" is in the Act defined to include a partnership. In relation to the applicants' claim for a grant under the Act for the year ended 30 June 1982 they requested that the Board exercise the power they submitted - to the Board, the Tribunal and this court - that s.9 conferred on the Board to treat the applicants as not having carried on the lobster business during the three years preceding 1 July 1981 and as not having had any export earnings resulting from the carrying on of that business during those three years. The relevant export earnings were found to have been : 1981/82 1980/81 1979/80 1978/79 Prawns $22,626,581 $17,331,599 618,328,186 $13,454,900 Lobster $ 417,109 § 624,285 $ 1,218,168 Total $22,626,581 $17,748,708 $18,952,471 $14,673,068 Earnings If the applicants' request had been granted, the applicants' "export earnings in each of the 3 immediately preceding years" for the purposes of 5s.6(a) would have been reduced by $2,259,562 ait 5. ($417,109 + $624,285 + $1,218,168) and one-third of the sum of their export earnings 1n those three years would have been reduced by $753,187 and their export earnings increment in relation to the year ended 30 June 1982 would have been increased by that sum. The consequent increase in the amount of the grant would have been $37,659. But the Board refused to accede to the request and the Tribunal confirmed that decision. The ground of the Tribunal's decision was that s.9, on 1ts proper construction, did not authorise the Board to treat "the first-mentioned person or persons" as not having carried on "the first-mentioned business or undertaking at the earlier time" or as not having had any export earnings resulting from the carrying on of that business or undertaking at that time. The Administrative Appeals Tribunal concluded, and the respondent did not on the hearing of this appeal attack the conclusion, that the subject of the sale by the applicants to Safcol was a business substantially the same when carried on by the applicants as when carried on by Safcol. Before the Tribunal counsel for the Board had submitted that the subject of the sale was not a "business or undertaking", within the meaning of that expression 1n s.9, but merely an element of a larger business which the applicants maintained both in and beyond Port MacDonnell. The Tribunal expressed its conclusion thus : "It 1s not a fair assessment of the business activities of the applicant at Port MacDonnell to label them as comprising a "fish processing business" and not a "fish exporting business". 6. The Tribunal also concluded, in contradiction of a submission advanced to 1t on behalf of the Board, that the sale by the applicants to Safcol fell within the meaning of the expression, "any other business arrangement", 1n 5.9. Accordingly the Tribunal was prepared to assume that the Board might, in exercise of the power conferred on it by that section, have treated Safcol as having carried on at times before October 195980 the business it bought in that month and as having had the export earnings which had resulted from the carrying on of that business by the applicants at those times. The request of the applicants which the Tribunal concluded that neither it nor the Board couid grant was that the applicants be treated, after the sale to Safcol, as not having carried on that business at times before October 1980 and as not having had any export earnings resulting from the carrying on of that business by the applicants before October 1980. And the only question which the parties to this appeal raised was whether s.9 authorised, in a case which satisfied the conditions specified in paragraphs (a) and (b) thereof, adoption by the Board of the fiction that "the first-mentioned person or persons" had not carried on "the first-mentioned business or undertaking at the earlier time". The phrase "or any other business arrangement" might he thought to suggest a genus of which the preceding phrases of s.9(b) afford examples, and in which a sale of a business between strangers at arms length would not be included. The transaction between the applicants and Safcol was sucha sale. But the definition of any such a genus is hardly to be imagined, and the better course seems to be to allow the phrase "business 7. arrangement" a meaning confined only by the requirements that what it comprehends should he an affair of business rather than philanthropy or caprice and that the arrangement should have for a consequence the change of persons who carry on the business which the section postulates. 50 understood the phrase comprehends this sale. The strength of the applicants' submission, that s.9 authorises the adoption of a fiction that "the first-mentioned person or persons" did not derive the export earnings which in fact he or they did derive, lies in the circumstance that, unless the submission be accepted, the phrase, "and not the first-mentioned person or persons", must be read as nothing more than the idiom of emphasis. Such flourishes are rarely found in statutory language. The learned Deputy President and members who constituted the Administrative Appeals Tribunal regarded the addition of that phrase as an acknowledgment, expressed by the draftsman as a matter of caution, that the fiction expressly authorised to be adopted by the Board 1s contrary to fact. They pointed out also that the phrase does not suffice, literally, to authorise the adoption of the converse fiction for which the applicants contend. So many omitted words must be supplied if the applicants' submission were to he accepted, that it 15 as easily supposed the draftsman indulged in rhetorical emphasis as that he permitted himself so gross an ellipsis. The other ground of the applicants' submission was that fairness to those persons who earn export income by the conduct of two or more businesses requires that the administrative authority 8. *- formerly the Board and now the respondent Commission - should have the power to disregard, for the purposes of the application to those persons of ss. 6(a), 6(b) and 6(c)(1), export earnings of one of those businesses after it has been sold or has' otherwise passed into the control of another person. Unless that power were available, the applicants and other earners of export income in like case would, in order to gain a grant, have to achieve an export earnings increment upon a comparison of the current export income from one business and the aggregate of the past export incomes of two businesses. But it 1s not inconsistent with any legislative purpose which the Export Expansion Grants Act 1978 discloses that those who divest themselves of one of more of several export income earning businesses should threafter have to bear the burden of achieving an export earnings increment over the past earnings of all those businesses. It as the incremental export achievement of a "person" (as that word is defined in the Act), not of a business, which it is the general legislative purpose of the Act to reward. There is no clear indication that the enactment of 5.9 was intended to facilitate incremental achievement. Rather the reverse, it might be thought. Mason J. thought the section "has a part to play when the Board gives consideration to exercising the power conferred by s.16(1)", a provision affording the means of reducing the total of the amounts payable as grants : Export Development Grants Board v. Michell Carbonised Wool Exports Pty. Ltd. (1985) 59 A.L.R. at 733. And a claim that a conception of fairness to earners of export income should influence the interpretation of 5.9 15 not easily to be admitted when 1t is borne in mind that the Act 1s concerned, for the public good, to induce self-serving economic activity by ae " 9. rewarding individuals engaging in that activity. No sufficient reason grounded in legislative policy or in a due regard to the interests of export income Garners haS in my opinion appeared for giving 5.9 the expanded meaning for which the applicants I think that the appeal should be dismissed with costs. not ya the | neg Toye { ° , Cranes 1 | gegsvitteted Sas EANRINSON | t . shSsucldte " ' Darsts 22-10-86 | , = ! Fane a . a ome | een ee ee tee contend. IN THE FEDERAL COURT OF AUSTRALIA ) SOUTH AUSTRALIA DISTRICT REGISTRY ) NO. G76 of 1985 GENERAL DIVISION ) On Appeal from the General Administrative Division of the Administrative Appeals Tribunal constituted by Mr. Justice F.R. Fisher, Mr. G.D. Grant and Mr. G.R. Taylor BETWEEN : A, RAPTIS & SONS Applicants AND: EXPORT DEVELOPMENT GRANTS BOARD Respondent CORAM: Forster, Jenkinson and Spender JJ. PLACE: Adelaide DATE: 22 October 1986 REASONS FOR JUDGMENT SPENDER J. I have had the opportunity of reading in draft form the Reasons for Judgment of Forster J., and of Jenkinson J.. I agree with those reasons. Any observations of my own would be Mere repetition. Ss -n lin L corte flare puct - depp Vs i cl. parc ere 7 ser tet Sait to se ghGgre tbe ero Jfoauie "ERy Assockt