C A T C H W O R D S ADMINISTRATIVE LAW - Export market development grants - expenses of agent for overseas market research, advertising or publicity - whether such expenses must be for claimant's present business - "eligible services" - "management consultancy services" - "know- how" - "eligible know-how" - whether provision of management consultancy services may also constitute disposal of eligible know-how - expenditure incurred to fulfil contractual obligations under agreement for services - whether expenditure was incurred primarily and principally to increase return on such disposal - ownership of "know-how" - whether mere contractual right to require person owning such know-how to supply it to a third person constitutes ownership of the know-how. Export Market Development Grants Act 1974 (Cth) ss.3(1), 11A, 11C(1),(2), 11Z(5), (8),(9),(10), 11ZE Parker Pen (Aust) Pty Ltd v. Export Development Grants Board (1983) 46 ALR 612 Export Development Grants Board v. Geoffrey Thompson & Growers Co-operative Co Pty Ltd (1985) 6 AAR 276 Kuswardana v. Minister for Immigration & Ethnic Affairs (1981) 35 ALR 186 Hospital Benefit Fund of Western Australia Inc v. Minister for Health, Housing and Community Services (1992) 111 ALR 1 Minister for Immigration v. Wu Shan Liang (1996) 136 ALR 481 AUSTRALIAN TRADE COMMISSION v. F & F ASIA PTY LTD No. WAG 70 of 1996 CARR J PERTH 29 AUGUST 1996 IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 70 of 1996 GENERAL DIVISION ) B E T W E E N : AUSTRALIAN TRADE COMMISSION Applicant - and - F & F ASIA PTY LTD Respondent - and - F & F ASIA PTY LTD Cross-Applicant - and - AUSTRALIAN TRADE COMMISSION Cross-Respondent CORAM: CARR J. PLACE: PERTH DATE: 29 AUGUST 1996 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The decision of the Administrative Appeals Tribunal of 3 May 1996 setting aside the applicant's decision of 4 October 1995, be set aside. 2. The matter be remitted to the Administrative Appeals Tribunal to be decided again either with or without the hearing of further evidence as the Tribunal may determine. 3. There be no order as to costs of the appeal or the cross-appeal. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 70 of 1996 GENERAL DIVISION ) B E T W E E N : AUSTRALIAN TRADE COMMISSION Applicant - and - F & F ASIA PTY LTD Respondent - and - F & F ASIA PTY LTD Cross-Applicant - and - AUSTRALIAN TRADE COMMISSION Cross-Respondent CORAM: CARR J. PLACE: PERTH DATE: 29 AUGUST 1996 REASONS FOR JUDGMENT Introduction This is an appeal from a decision of the Administrative Appeals Tribunal, given on 3 May 1996. That decision set aside a decision by the applicant, the Australian Trade Commission ("the Commission") made on 13 June 1995 (and affirmed on review on 4 October 1995), that the respondent, F & F Asia Pty Ltd ("F&F Asia") was not entitled to certain grants under the Export Market Development Grants Act 1974 (Cth) ("the Act"). F&F Asia had claimed that payments amounting to $222,629 were "eligible expenditure" (within the meaning given by the Act to that term), in the year ended 30 June 1994. The Tribunal, in setting aside the decision under review, remitted the matter to the Commission with a direction that F&F Asia had incurred eligible expenditure (identified by reference to certain schedules forming part of the evidence before it) in that year. The total amount of such eligible expenditure was not quantified, but it would appear to be about $137,800. The facts of this case reveal what appears to be a most commendable export success story. Whether F&F Asia is entitled to grants under the Act is, perhaps sadly, another matter. The somewhat complex and stringent conditions applying to such grants may owe their genesis to Australia's obligations under those international agreements which regulate world trade and limit export enhancement programmes - see, for example, Article 1 of the Uruguay Round Agreement on Subsidies and Countervailing Measures. Factual Background The following narrative is based largely on the findings of fact expressed in the Tribunal's reasons. For some years prior to 1994 two Western Australian families, the Ferrara family and the Fiaschi family carried on business in Australia and overseas, principally in the construction industry. That business was carried on by a company named F&F Constructions Pty Ltd ("F&F Constructions") in its capacity as trustee for the F&F Unit Trust. The units in that trust were held equally by members of the two families which were headed by Mr George Ferrara and Mr Antonio Fiaschi respectively. F&F Constructions had business dealings in Malaysia. In about September 1992 its directors saw an opportunity to begin a new business in Malaysia, namely, the manufacture and marketing of steel door and window frames. At that time all locally- manufactured frames were made from timber. The directors of F&F Constructions perceived competitive and technical advantages in steel-framed doors over the wooden-framed ones. F&F Constructions arranged with an unrelated company, Ashridge Holdings Pty Ltd ("Ashridge") to carry out investigations into obtaining a suitable machine to be installed in Malaysia with which to manufacture steel door and window frames. Ashridge's employee, Mr Gino Vasile, undertook this task and eventually made recommendations which were acceptable to F&F Constructions. In the meantime, F&F Constructions found a local Malaysian partner and entered into an arrangement to have a machine, which had been manufactured in Australia by Colrol Pty Ltd ("the Colrol machine") installed in a factory warehouse owned by a Malaysian resident. F&F Constructions intended to form a business alliance with the Malaysian enterprise, but that never eventuated. Instead, F&F Constructions acquired a Malaysian resident company, Universal Building Products Sdn Bhd ("UBP") which had been incorporated under another name. All of the shares in UBP were held by F&F Asia. In turn, UBP was the trustee of another unit trust in which the units were held by the same family interests. Those concerned with this enterprise were advised that it would facilitate the repatriation of funds from UBP to Australia if that were done by means of a management fee payable to an Australian company. Accordingly, Messrs G Ferrara and A Fiaschi each acquired an equal number of shares in a shelf company incorporated in Western Australia, changed its name to F&F Asia Pty Ltd and appointed it as trustee of a unit trust called "the Asia Unit Trust". The units in the Asia Unit Trust were, initially, beneficially held by the same family members as referred to above. Ownership of the Colrol machine was transferred to F&F Asia but then, soon after, (the date is not apparent from the evidence) was acquired by UBP (funded by a loan from F&F Constructions) and installed in the Malaysian factory warehouse. In about mid 1993, a Mr Darryl Ferrara was employed as managing director of F&F Asia. It is relevant to note that Mr Darryl Ferrara, although a nephew of Mr George Ferrara, had no direct or indirect beneficial interest in the F&F Unit Trust nor any shareholding or directorship in its trustee, F&F Constructions. Mr Darryl Ferrara had been appointed general manager of F&F Constructions in August 1992. On 31 August 1993 a document was executed in the form of an agreement ("the UBP Agreement") ostensibly between F&F Constructions and UBP. I use the word "ostensibly" because the Tribunal found that the inclusion of F&F Constructions as a party to the agreement was an error. The Tribunal found that it was the intention of F&F Asia and UBP to enter into an agreement in August 1993 to carry out certain activities which in fact were carried out. Mr Darryl Ferrara (henceforth "Mr Ferrara"), in addition to being managing director of F&F Asia was also managing director of UBP. Mr Ferrara's evidence was that he made an error in drawing up the UBP Agreement. The Tribunal believed Mr Ferrara. It specifically found him to be a credible and honest witness and made the findings of fact to which I refer above. This included the circumstance that when the error was discovered, by auditors in Malaysia, a new agreement ("the new UBP Agreement") was executed between F&F Asia and UBP. The Tribunal was obviously impressed (see paragraph 20 of its reasons) by the fact that there was no attempt on Mr Ferrara's part to backdate the new UBP Agreement. It bears the date 1 June 1994. The UBP Agreement purportedly required F&F Constructions to provide "Management and Technical advice" and certain other specified services through the agencies of Mr Ferrara and, via Ashridge, a full time general manager, the abovementioned Mr Gino Vasile. The new UBP Agreement was in identical terms to the UBP Agreement save that F&F Asia was named as the party contracting with UBP. Except for a couple of minor and presently irrelevant changes (referred to in the Tribunal's reasons), the only other change was that the management fee was increased from (Malaysian Ringgits) $24,000 per month to RM$37,000 per month. It is common ground that all payments made by UBP under the UBP Agreement and the new UBP Agreement were made to F&F Asia and all payments in respect of which grants in this matter were claimed under the Act, were made by F&F Asia. Furthermore, there was no dispute about the amount of any payments. The Tribunal found that during the year ended 30 June 1994 (the Claim Year) Mr Ferrara travelled from Perth to Malaysia fourteen times. It will be recalled that, at all material times, he was the managing director of F&F Asia. F&F Asia paid his fares. A transcript of his diary notes was adduced in evidence. There was no issue about the veracity of those notes. The notes indicated Mr Ferrara's principal activities and made several references to F&F Asia. Mr Ferrara's activities in Malaysia included consulting a Mr Bill Crafter, a local business consultant, who provided information and introductions for both Mr Ferrara and Mr Vasile to negotiate business on behalf of UBP. Mr Crafter provided those services through his company, Shengli Investments Ltd, a Hong Kong company. Mr Ferrara, so the Tribunal found, also spent considerable time promoting the products of UBP, supervising and overseeing the activities of Mr Vasile in relation to his management of UBP and engaging a local business partner for UBP. Mr Ferrara's notes show that most contacts concerned marketing strategies for and promotion of, UBP's products and management of UBP's banking and finance arrangements. Almost every potential purchaser "of size" expressed an interest in investing in the business of UBP. The Tribunal found that if UBP were to be accepted in Malaysia, a 40% share in its business had to be sold to a local company. This happened in May 1994 when 40% of the issued share capital of UBP was sold by F&F Asia to a local company, Island and Peninsular Sdn Bhd. At the same time, the management fee payable by UBP to F&F Asia was increased to RM$37,000 as mentioned above. During his visits to Malaysia, Mr Ferrara called upon many potential purchasers of UBP's products. He took with him sample steel frames, a video of UBP's production and products and a promotional brochure. The promotional brochure became an exhibit in the proceedings before the Tribunal. Mr Ferrara's promotional activities included distinguishing UBP's zincanneal steel metal frames from those metal frames produced by competitors which had recently entered the Malaysian market and which, in Mr Ferrara's opinion, were inferior to UBP's products. The expenditure claimed as eligible expenditure by F&F Asia in the Claim Year fell into five separate categories, namely: . To Ashridge for payments made in respect of the services provided by Ashridge's employee (Mr Vasile) to UBP as its full time general manager. [In addition, UBP paid Mr Vasile RM$5,000 per month salary]; . To MJB&B Advertising & Marketing ("MJB&B") for marketing and advertising services, including developing advertising brochures and materials, arranging the promotional launch of UBP's products in Malaysia, producing advertising copy and arranging advertising in Malaysian publications; . To Shengli Investments Ltd for the information and introductory services provided by Mr Bill Crafter and described above; . Telecommunications and entertainment expenses; and . Travelling (to Malaysia and return) expenses for Messrs G and D Ferrara, and Messrs Callaghan and Finlay [in the case of the latter two gentlemen to demonstrate certain products manufactured by UBP and the installation of those products]. None of the salary costs associated with F&F Asia's employment of Mr Ferrara were the subject of any claim for a grant. The Statutory Framework It will be necessary, in due course, to set out the text of the relevant statutory and regulatory provisions. It is convenient to do that in the context of considering each of the respective grounds of appeal, cross-appeal and the respondent's notice of contention. Initially, a summary should provide an adequate introduction to the legislative scheme. The long title to the Act reads: "An Act relating to Grants for the purpose of providing Incentives for the Development of Export Markets." Section 14 of the Act relevantly provides that a claimant is eligible for a grant in respect of a claim period if (among other things) the claimant has incurred "eligible expenditure" in the claim period. Section 11A(1) relevantly provides that expenditure is eligible expenditure of a person only if it is incurred by the person, is "claimable expenditure" and is "qualifying export development expenditure for the particular person". Division 2 of Part 1A (comprising ss.11C to 11M) of the Act sets out the kinds of expenditure that are claimable. Division 3 of Part 1A sets out expenditure that is not claimable. Division 4 of Part 1A sets out the purposes for which expenditure must be incurred to be "qualifying export development expenditure". The definition section [s.3(1)] defines terms relevant to this matter, such as "disposal", "eligible expenditure" and "eligible know-how". The definition of "eligible services" requires regard to be had to regulations made under s.43(2) or (2A). The eligible services relevant to the present matter are those described in paragraph 6 of Schedule 4 to the Export Market Development Grants Regulations 1974 (Cth) ("the Regulations") as "management consultancy services", which are among the services declared by regulation 6 of the Regulations to be "eligible services". The Tribunal's Decision In summary, the Tribunal decided that the error which gave rise to the UBP Agreement did not preclude F&F Asia from claiming under the Act. However, the expenditure on: . entertainment, communications, fees paid to Mr D Callaghan, expenses for literature and advertising (other than those paid to MJB & B Advertising referred to below); and . the airfares of Messrs G Ferrara, D Ferrara, J Callaghan and B Finlay were not "claimable expenditure" within the meaning of s.11C(1) of the Act because none of those particular payments were expenses of an agent of F&F Asia. In respect of the payments made to Shengli Investments Ltd for Mr Bill Crafter's services, the Tribunal held that Mr Crafter and his company were contracted to provide consultancy services to enable UBP to negotiate sales. It held: "There is no evidence that Shengli Investments Ltd was an agent for the applicant in that it could bind the applicant by its actions." However, the Tribunal found that Ashridge was acting as F&F Asia's agent. The Tribunal referred to various pieces of evidence as indicating that Mr Vasile, as the general manager of UBP was answerable to F&F Asia and entered into various contracts binding it in respect of liabilities which were met by F&F Asia. In relation to the payments made to MJB&B, the Tribunal found that this expenditure was properly incurred by F&F Asia, that MJB&B were acting as its agent in producing promotional material, arranging an official launch of UBP's products in Malaysia and producing trade and media advertising copy. The Tribunal then turned to the further requirements of s.11C which have to be satisfied before expenditure incurred by an agent is "claimable expenditure". In particular it had regard to sub-paragraphs 11C(1)(a)(i) and (ii), which read: "Expenses of agent 11C. (1) Expenditure is claimable expenditure if: (a) it is incurred by way of expenses of, contribution towards expenses of or payments made to, an agent for the purpose of: (i) the carrying out of market research or the obtaining of market information; or (ii) the advertising or other means of securing publicity or soliciting business." The Tribunal found that it was not the agent's nor UBP's businesses which were the object of these conditions, but rather the business of F&F Asia. It found that F&F Asia had one purpose only - "... to use its best endeavours to establish UBP as a viable productive unit producing zincanneal steel door and later, window frames, to be marketed primarily in Malaysia and elsewhere in South East Asia. ... Its business was providing managerial and technical assistance including know-how ... exclusively to UBP." The Tribunal concluded its findings in this regard in the following terms: "There is no evidence that it [F&F Asia] attempted or even intended to provide its expertise in this respect to any other business. The market research in which it actually engaged, the market information which it undoubtedly gathered (and which evidently was of considerable value), the advertising and other means of securing publicity or soliciting business in which it undoubtedly engaged and the provision of technical advice in relation to production, were all activities undertaken to fulfil its obligations under the agreement which (it thought) it had with UBP. That was their objective purpose. The indirect effect of or motive for these activities was undoubtedly to establish and promote the business of UBP." Section 11C(2) of the Act provides that expenditure is claimable expenditure only to the extent to which it relates (relevantly to this matter) to one or more of "eligible services" or "eligible know-how". Accordingly, the Tribunal then turned to the question whether the moneys which F&F Asia had paid Ashridge and MJB&B were "eligible services". As mentioned above, paragraph 6 of Schedule 4 to the Regulations provides a relevant definition of one type of "eligible services". Paragraph 6 reads: "6. Management consultancy services, being services supplied to a person, government or international organization in relation to activities carried on or intended to be carried on by the person, government or international organization, as the case may be, to improve managerial, operating and economic performance by means of identifying and investigating problems concerned with policy, organization, procedures and methods and recommending solutions to those problems, including the implementing of those solutions." The Tribunal noted that the services must relate to activities carried on or intended to be carried on by, in this case, UBP. Its conclusions on this matter are subject to attack by the Commission. They were expressed in the following terms: "34. The evidence is that UBP commenced operations just prior to the commencement of the claim year and was entirely dependant upon the applicant in setting up its management, its production facility and its funding facilities (T6 and Mr D Ferrara's evidence-in-chief). There is no evidence that the conditions or activities required by paragraph 6 of Schedule 4 of the Regulations were not met. Insofar as the applicant's arrangement with UBP and the applicant's arrangement with Ashridge and MJB&B, its agents, were concerned, it was providing the requisite management consultancy services." Next the Tribunal considered whether F&F Asia's expenses in providing management consultancy services through Ashridge and MJB&B, its agents, met the test of "qualifying export development expenditure" set by Division 4 of Part 1A of the Act and in particular s.11Z the relevant provisions of which are as follows: "11Z. (1) This section applies to persons other than an approved body, approved trading house, approved joint venture or approved consortium. . . . (5) Expenditure is qualifying export development expenditure of a person to whom this section applies if: (a) in the Commission's opinion, it is incurred primarily and principally for the purpose of: (i) creating or seeking opportunities for; or (ii) creating or increasing demand for; the supply, by that person, of eligible services outside Australia; and (b) the supply by that person is for reward and in the course of carrying on business in Australia. . . . (8) Expenditure is qualifying export development expenditure of a person to whom this section applies if: (a) in the Commission's opinion, it is incurred primarily and principally for the purpose of: (i) creating or seeking opportunities for; or (ii) creating or increasing demand for; the disposal, by that person, to persons resident outside Australia for use and enjoyment outside Australia of: (iii) eligible industrial property rights owned by that person; or (iv) eligible know-how owned by that person; and (b) the disposal by that person is for reward and in the course of carrying on business in Australia. (9) If: (a) a person to whom this section applies disposes of: (i) eligible industrial property rights owned by the person; or (ii) eligible know-how owned by the person; and (b) the disposal by that person is for reward and in the course of carrying on business in Australia; and (c) the disposal is to a person resident outside Australia for use and enjoyment outside Australia; and (d) the person incurs expenditure which, in the Commission's opinion, is incurred primarily and principally for the purpose of increasing the person's return on the disposal; that expenditure is qualifying export development expenditure. (10) The return referred to in subsection (9), may be a return receivable at or after the time of disposal and may be a return by way of royalty or licence fee or in any other form." The Tribunal referred to and expressed its approval of another Tribunal decision, namely Re MH Group Pty Ltd v. Australian Trade Commission (unreported AAT Decision No. 9660; 8 August 1994). In that case the Tribunal held that expenses incurred pursuant to a contract and not for the purpose of creating or seeking opportunities for, or creating or increasing demand for the supply of the applicant's eligible services did not constitute qualifying export development expenditure. However, so the Tribunal in this matter held, s.11Z(10) served to extend the purpose of incurring the expenditure beyond "fixed contractual returns". The Tribunal said that "But for s.11Z(10) the principle in the MH Group case would apply in this case and the decision under review would be affirmed." On this aspect the Tribunal concluded: "38. The evidence is that the agreement with UBP provided for a fixed remuneration, regardless of the efforts or effectiveness of the applicant, up to 31 December 1993. Beyond that date the agreement provided for a minimum monthly return with the possibility of receiving more should production (or sales) exceed a specified level. The evidence of Mr D Ferrara is that subsequent to the claim year the business of UBP has grown. His evidence leads the Tribunal to the conclusion that the applicant is assiduous in its duties under the contract and has expectations of increasing the return over time (he spoke of the need to provide advice to speed up production to meet outstanding and growing orders). In this light then it is necessary to consider the application of s.11Z(9) to the applicant." The Tribunal found that no "eligible industrial property rights" were involved but that the relevant activities should be classified as the supply of "eligible know-how". "Eligible know-how" and "know-how" are defined by s.3(1) of the Act in the following terms: "3.(1) "eligible know-how" means know-how that, in the opinion of the Commission, has to a substantial extent resulted from research or other work performed in Australia; "know-how" means knowledge or information in relation to industrial or other operations, and includes drawings, models or other material things, or services, supplied for the purpose of enabling or facilitating the use or enjoyment of such knowledge or information, of rights in relation to inventions or trade marks or of copyright in relation to works, designs or other things." The Tribunal's conclusions were expressed in the following terms: "The evidence is that is was primarily the knowledge of Mr Vasile which established UBP's factory and trained its local workforce while Mr D Ferrara was the driving force behind marketing activities, assisted by Mr Vasile. MJB&B provided specialist support in the promotion of UBP's products. These several operations comprised the enterprise of UBP and the knowledge imparted to UBP by the applicant. The evidence is that the relevant knowledge which Mr D Ferrara, Mr Vasile and MJB&B had, to a substantial extent, resulted from research or other work performed in Australia. This is sufficient to classify the activities of Ashridge and MJB&B as supply of "eligible know-how"." The Tribunal continued: "It follows from those reasons that the requirements of s.11Z(9)(a) are satisfied. So too, on the evidence, are the requirements of s.11Z(9)(b) and (c). This obtains because UBP received the services of the applicant (through its agents) in the course of carrying on the applicant's business in Australia (the applicant is a company incorporated in Australia whose directors and employees are Australian residents), under contract which rewarded the applicant and, the disposal was to UBP, a company incorporated in, and carrying on business in, Malaysia and, by May 1994, having 40% of its shares held by persons residing outside Australia." Finally, the Tribunal turned to the question whether the relevant expenditure was incurred primarily and principally for the purpose of increasing F&F Asia's return on the disposal [s.11Z(9)(d)], including the return from UBP after the time of providing those services [s.11Z(10)]. After referring to some authorities on the question of purpose and the expression "primarily and principally" the Tribunal concluded: "48. The evidence is that the objective purpose of the applicant in incurring the expenditures to Ashridge and MJB&B was to meet part of its ongoing obligations under the agreement which it believed it had with UBP, albeit that in a technical sense that agreement was initially flawed. In Ashridge carrying out its managerial and promotional duties and MJB&B undertaking its promotional activities in relation to the business of UBP, they were contributing in a significant manner, indirectly as agents, to the applicant's obligations to UBP. It is not unreasonable to conclude on the evidence (refer in particular to T17, p.101, Profit and Loss Statement, in relation to the magnitude of the Advertising and Consultancy fees) that the roles of Ashridge and MJB&B were significant in the scheme of the applicant fulfilling its obligations under the (assumed) agreement with UBP. Therefore, the applicant's objective purpose of the expenditures to Ashridge and MJB&B must be viewed as incurred primarily and principally for the purpose of meeting its contractual obligations and, in the course of time, increasing the return from UBP, notwithstanding that the whole arrangement was orchestrated by Constructions [a reference to F&F Constructions] motivated by a desire to ensure the commercial success of UBP." The Grounds of Appeal The Commission initially put forward ten grounds of appeal but abandoned one ground at the hearing. It is convenient to group the remaining nine grounds under four headings. F&F Asia cross-appealed on three grounds. Two of those grounds can be dealt with simultaneously with the Commission's first ground of appeal. The third ground put forward by F&F Asia will be dealt with separately. The respondent has also filed a Notice of Contention which sets out some twelve grounds. They will be dealt with either in conjunction with the individual grounds of appeal or separately, where appropriate. I now proceed to consider the grounds of appeal. Ground (i) Agency In its Notice of Appeal the Commission contended, initially, that the Tribunal erred in law in concluding that Ashridge and MJB&B were agents of F&F Asia within the meaning of paragraph 11C(1)(a) of the Act. This was the ground of appeal which the Commission abandoned at the hearing. In the cross-appeal F&F Asia claimed (as its first and second grounds of the cross-appeal) that the Tribunal erred in law in finding that Messrs D Ferrara, D Callaghan, G Ferrara, B Finlay, W Crafter and Shengli Investments Ltd were not its agents or in failing to find that they were its agents. The Commission conceded the error referred to in the first and second grounds of the cross-appeal. In my view, this concession was appropriately made. There is nothing in s.11C which (as the Tribunal held) requires the reference to an agent to be limited to an agent having the legal ability to bind the claimant contractually. Rather, in my opinion, the expression "agent" takes its meaning from the context i.e. an agent for the purpose of carrying out market research, obtaining market information or advertising or other means of securing publication or soliciting business. The section, when read with s.3(2), is intended to refer to these activities when carried out on behalf of the claimant. Section 3(2) of the Act provides that for the purposes of the Act, where an act is done by an agent on behalf of his principal, it shall be deemed to be done by the principal and not by the agent. The result of the Commission's concession is that, to this extent at least, the cross-appeal must be allowed and the matter remitted to the Tribunal for further consideration. Ground (ii) The Tribunal's finding that F&F Asia was providing "management consultancy services" This ground of appeal was expressed in the following terms: "The Tribunal erred in law in finding that the Respondent was providing management consultancy services within the meaning of paragraph 6 of Schedule 4 of the EMDG Regulations because there was no evidence that the conditions or activities required by the Regulations were not met." This ground is expressed somewhat elliptically. The Commission's submission was that by reference to paragraph 34 of the Tribunal's reasons it could be seen that it had found that the relevant expenditure fell within the definition of "management consultancy services" on the basis that there was no evidence that the requirements of the Regulations were not met. I do not consider that this is an entirely accurate characterisation of what the Tribunal found. I refer to paragraph 34 of its reasons set out above. The first sentence of that paragraph summarises the evidence of the degree of UBP's dependence upon F&F Asia. The second sentence can, on one view, be taken as a finding that there was no evidence to rebut that evidence. It is followed by the Tribunal's conclusion that F&F Asia, in its arrangements with UBP, Ashridge and MJB&B, was providing the requisite management consultancy services. For reasons which will emerge below, it is not necessary for me to construe the sentence in paragraph 34 of the Tribunal's reasons upon which this ground is based. There is, in my opinion, a more fundamental error of law in those reasons relating to the definition of management consultancy services. Ground (iii) Whether the purposes specified in s.11C(1)(a)(i) and (ii) must be those of the claimant's business The Commission submitted that the Tribunal had correctly held that the object of the conditions specified in s.11C(1)(a) of the Act must be the business of the claimant and not the business of the agent or some other party. Mr P R Macliver, counsel for the Commission, acknowledged that s.11C(1) did not contain any express provision to that effect. He contended that there was such an implication in the subsection and that the activities which it describes should be in respect of the claimant's business. Again, it is not necessary for me to decide this point. However I disagree with the Tribunal's construction to the extent that it places such a limit on the operation of the section. Why should such an unexpressed limitation be implied? The language is clear and unambiguous. Nor is the omission giving rise to the claimed implication so obvious as to fall into the category of that described in, for example, Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation (1981) 147 CLR 297. One can easily envisage situations in which a claimant carries on one type of business but, before entering into another type of business, wishes to carry out market research or any of the other activities described in the subsection, through an agent overseas. While I agree with the Tribunal that, as a matter of law, the subsection includes the activities for the specified purposes carried on for the claimant's business, it is not, in my opinion, confined to that business. Nevertheless, s.11C(2) makes it clear that the expenditure is only claimable expenditure to the extent to which it relates to one or more of (so far as is relevant to this case): "(b) eligible services; ... (f) eligible know-how." In my view the Tribunal should have asked the question - to what extent did the expenditure relate to one or more of "eligible services" or "eligible know-how"? In paragraph 34 of its reasons the Tribunal appears to have based its conclusion that F&F Asia was providing "the requisite management consultancy services" upon its finding that UBP "was entirely dependant upon the applicant in setting up its management, its production facility and its funding facilities". In so doing it erred in law, in my view, by not asking itself the right question. The right question was - to what extent did the money paid relate to eligible services? The only relevant eligible services were "management consultancy services". Management consultancy services are very carefully defined by paragraph 6 of Schedule 4 to the Regulations (set out above). The Tribunal seems to have equated the provision of executive management with management consultancy services. The former may (depending upon the circumstances) sometimes include the latter, but the Tribunal made no attempt to apportion the moneys paid to Ashridge. The evidence was that Mr Vasile's duties were to be the general manager of UBP. This may well have included some management consultancy services but, in failing to distinguish between the provision of actual management and management consultancy services (as so defined) there was, in my opinion, an error of law in the construction and application of paragraph 6 of the fourth schedule to the Regulations. Again, in relation to the payments made to MJB&B, it is not possible to discern from paragraphs 33 and 34 of the Tribunal's reasons, any reasoning process whereby the advertising and promotional services rendered by MJB&B related to "management consultancy services". Some (if not all) of the services rendered by MJB&B (described in their letter which appears at p.64 of the application book) are what may be described as traditional advertising services. The Tribunal made no attempt to identify what, if any, of those services fell within paragraph 6 of the fourth schedule to the Regulations. Again, in my view this was an error of law. The respondent [see its contention (iv)] contends that, in the alternative, the Tribunal should have determined that the payments to Ashridge and MJB&B related to eligible know-how and thus amounted to claimable expenditure under s.11C(2)(f) in addition to or alternatively to s.11C(2)(b). I do not consider that it is necessary for me to embark on that analysis. I have identified what I consider to be errors of law in the tribunal's application of s.11C(2). In my view, the interests of fair and efficient administrative decision-making will be best served if the matter is remitted on the basis that when considering the application of s.11C(2)(f) the Tribunal will pose to itself the above questions in relation to one or more of "eligible services" and "eligible know-how" in respect of each of the claims made under those headings. In view of the conclusions which I have reached above, it is not necessary for me to consider the Commission's submission that this expenditure did not have as its object the business of F&F Asia. One of the bases for that submission was that F&F Asia did not require the assistance of any agent to increase its business as UBP was its wholly owned subsidiary. Another point put forward was that none of the expenditure claimed by F&F Asia was for the purpose of securing other business for it in Malaysia. Those are factual matters which should be left for the determination of the Tribunal. Grounds (iv) to (ix) Whether the Expenditure was Qualifying Export Development Expenditure The Commission put forward what it said were six matters in respect of which the Tribunal erred in law in holding that the moneys paid to Ashridge and MJB&B constituted "qualifying export development expenditure". The relevant section is s.11Z extracts from which are set out above. The errors were identified, in summary, as: . holding that the services provided by Ashridge and MJB&B to UBP and alleged by F&F Asia to be "eligible services" constituted at the same time the supply of eligible know-how by F&F Asia; . implicitly finding that knowledge supplied by Ashridge and MJB&B to UBP constituted eligible know-how owned by F&F Asia within the meaning of s.11Z(9)(a)(ii) of the Act (emphasis added); . finding that the services provided by MJB&B to UBP constituted eligible know-how within the meaning of s.11Z(9)(a)(ii) of the Act; . finding, by implication, that all of the services provided by Ashridge through Mr Vasile constituted a disposal of eligible know-how within the meaning of s.11Z(9)(a)(ii) of the Act; . finding that F&F Asia's payments to Ashridge and MJB&B were incurred primarily and principally for the purpose of increasing its return on the disposal of eligible know-how owned by it. The Commission submitted that the Tribunal, having found that F&F Asia's objective purpose in incurring these expenses was to meet part of its on-going obligations to UBP, should have found that such expenditure was not incurred primarily and principally for the purpose of increasing F&F Asia's return on the disposal of eligible know-how owned by it. Accordingly the expenditure was not "qualifying export development expenditure" within the meaning of s.11Z(9) of the Act; and . treating F&F Asia's payments to Ashridge and MJB&B as being expenditure in relation to eligible services and thus "claimable expenditure" within s.11C(1) and then subsequently treating that expenditure as having been incurred in relation to the disposal of eligible know-how for the purpose of deciding whether that expenditure constituted "qualifying export development expenditure" within the meaning of s.11Z(9) of the Act. I do not accept the Commission's submission that the provision of services cannot at the same time relate to eligible services and the supply of eligible know-how. For example, the provision of management consultancy services could include the supply of know-how. A management consultant might well deliver a report which, in summary, said "We have identified these procedural problems which, in our view are hindering your operating and economic performance. We have developed the following methods for solving those problems. We recommend that you use them". As a matter of law, identifying and investigating those problems and recommending solutions to them would fall within paragraph 6 of Schedule 4 to the Regulations. If the knowledge or information which constituted the methods recommended, resulted from research or other work performed in Australia, that would be "eligible know-how". Section 11C(2) is expressed in terms which would accommodate such a situation. The issue will turn very much on the facts and thus lies within the province of the Tribunal, not this Court. However, I can see no reason in principle why expenditure could not relate to both eligible services and the supply of eligible know-how for the purposes of s.11C(2) but be incurred "primarily and principally" for one or the other when it becomes necessary to apply s.11Z of the Act. However, I agree with the submissions made on behalf of the Commission (and at the same time thereby reject the contentions put forward on behalf of F&F Asia) that the Tribunal erred in law in its application of s.11Z. The respondent relies on s.11Z(5) and (8) in addition to supporting the Tribunal's reliance on s.11Z(9). Accordingly, it will be convenient to consider the application of each of those three sub-sections in turn. Does the expenditure fall within s.11Z(5) as expenditure which in the Commission's opinion was incurred primarily and principally for the purpose of creating or seeking opportunities or creating or increasing demand for the supply by F&F Asia of eligible services outside Australia? The expression "primarily and principally for the purpose of" was held by Lockhart J in Parker Pen (Aust) Pty Ltd v. Export Development Grants Board (1983) 46 ALR 612 at p.620 as meaning that expenditure has been incurred mainly or chiefly for the required purpose. A similar approach was taken by the Full Court of this Court in Export Development Grants Board v. Geoffrey Thompson & Growers Co-operative Co Pty Ltd (1985) 6 AAR 276 at p.280-281. In my view, there would be considerable difficulty in characterising the moneys paid to Ashridge and MJB&B as being expenditure incurred primarily and principally for the purpose of creating or seeking opportunities for, or creating or increasing demand for, the supply by F&F Asia of eligible services. However, it is not for me to carry out this task. That would be to usurp the Tribunal's function. I have a similar doubt in relation to the application of s.11Z(8), but there is a more basic hurdle to the application of that subsection. The subsection is concerned with the "disposal" [as defined in s.3(1)] of eligible know-how. It requires the eligible know-how to be owned by the claimant. Mr A J Aristei, counsel for F&F Asia, submitted that where "know-how" was concerned it was necessary to give a broad interpretation to the word "own". I agree. Mr Aristei submitted that his client should be regarded as having owned the relevant know-how by reason of its contract with Ashridge and MJB&B to have them supply the know-how to UBP. I disagree. In my view, assuming for the time being that eligible know-how was involved, it was not owned by F&F Asia. It was owned by Ashridge and MJB&B. A contractual arrangement whereby a party who owns know-how merely agrees with another contracting party to supply that know-how to a third party does not, in my view, confer ownership of that know-how on the other contracting party within the meaning of the Act. The same reasoning prevents the expenditure from qualifying under s.11Z(9). Furthermore, it is questionable whether s.11Z(9)(d) was satisfied. The word "disposal" includes "supply". There is no problem in that regard. However, even if F&F Asia had owned the know-how, it is difficult to see how it could be said to have incurred the expenditure primarily and principally for the purpose of increasing its return on that disposal. F&F Asia may have been "assiduous" (see paragraph 38 of the Tribunal's reasons) in carrying out its duties under the contract with UBP. There may have been the prospect of additional revenue under the agreement if UBP's production or sales generated a royalty higher than the monthly minimum payment, a matter to which the Tribunal referred in the same paragraph. But that would not, in my opinion, as a matter of law, automatically bring the expenditure within s.11Z(9)(d). To adopt some of the language used by Beaumont J (with whom Smithers and Everett JJ agreed) in Thompson at p.280-281 the expenditure here might be seen as something done primarily, if not wholly, for the purpose of the due performance of F&F Asia's contract with UBP, even if consequentially there was the prospect of a larger consideration being received under that contract. I would not go so far as to hold that the Tribunal's conclusion in respect of s.11Z(9)(d) amounted to an error of law. First, the application of that sub-paragraph is expressed in terms of the Commission's opinion (and thus the Tribunal's opinion). Secondly, in such a situation the Tribunal's reasons are not to be over-zealously scrutinised: Minister for Immigration & Ethnic Affairs v. Wu Shan Liang (1996) 136 ALR 481. The error of law which I have identified relates to the fact that F&F Asia did not own the relevant eligible know-how. Ground (x) Reimbursement The Commission contended that the Tribunal erred in law by "failing to ignore" F&F Asia's payments to Ashridge and MJB&B. The Commission contended that the Tribunal should have done this, pursuant to s.11ZE(1) of the Act, on the basis that such expenditure was reimbursed to F&F Asia within the meaning of s.11ZE(1)(a)(i). Section 11ZE relevantly provides that where qualifying export development expenditure, incurred by a person ("the claimant") has been or is to be paid or reimbursed to the claimant by another person, such qualifying export development expenditure is to be ignored. The policy so reflected appears to be that even expenditure which otherwise would qualify for a grant under the Act, is to be ignored if the claimant had obtained reimbursement. The Commission acknowledged that the potential application of s.11ZE had not been raised when the matter was before the Tribunal. The respondent argued that, in those circumstances, this Court should not consider the matter as raising an error of law. In the alternative, Mr Aristei submitted that this question could "become a live issue" before the Tribunal "the next time around". The contractual arrangements between F&F Asia and UBP concerning reimbursement or payment to F&F Asia for the services rendered by it, which included the services of its various agents, amounted in my view to material and evidence before the Tribunal sufficient to raise the issue of the potential application of s.11ZE. That section expresses Parliament's intention that even if expenditure would otherwise qualify as "qualifying export development expenditure" it is to be ignored in at least two relevant situations. The first is where the claimant has been or is to be paid or reimbursed by another person. The respondent argues that expressions to that effect in the UBP Agreement and the new UBP Agreement are not to be construed in a technical or legal sense. The respondent says that it might receive more or less than its expenses in any particular month. It says further that so far as recoupment of "other costs reasonably incurred" under the last clause in each of these agreements is concerned, there was no evidence of those expenses having been submitted for approval or approved as required by those clauses. In my view, those are all matters to be agitated before the Tribunal. However, there is what I consider to be a more compelling reason why the matter of s.11ZE should be remitted to the Tribunal. The second case in which qualifying export development expenditure is to be ignored is provided for in s.11ZE(1)(b). This concerns expenditure incurred in respect of a qualifying export development activity for which the claimant has been or is to be paid by another person. In my opinion these are both central issues. An error of law may be committed by the Tribunal through ignoring a central issue, even if no submission at all is directed to it on the point: Kuswardana v. Minister for Immigration & Ethnic Affairs (1981) 35 ALR 186; Hospital Benefit Fund of Western Australia Inc v. Minister for Health, Housing and Community Services (1992) 111 ALR 1 (both being decisions of the Full Court of this Court). The Third Ground of Cross-Appeal - s.11D and s.11L In its third ground of cross-appeal, F&F Asia contends that the Tribunal erred in law in failing to find that the moneys which it outlaid in respect of the services provided by Messrs D Ferrara, D Callaghan, G Ferrara, B Finlay, W Crafter and Shengli Investments Ltd amounted to claimable expenditure pursuant to s.11D or s.11L of the Act. Section 11D relevantly provides that expenditure is claimable expenditure if it is incurred by way of expenses that, in the Commission's opinion, are directly attributable to providing, without charge, samples or technical information to a person outside Australia. Section 11L makes provision for a $200 per day allowance as claimable expenditure in respect of certain overseas visits undertaken primarily and principally for the purpose of undertaking qualifying export development activities. This is an incomplete summary of what these sections provide, but it will suffice for present purposes. The Commission argued that neither s.11D or s.11L of the Act applied because any technical information supplied was not in relation to F&F Asia's business but in relation to that of UBP. Any visits to Malaysia were not, so it was put, undertaken primarily and principally for the purpose of undertaking qualifying export development activities of F&F Asia. I do not think that it is appropriate for me to deal with these submissions because: . these matters were not agitated before the Tribunal; . it is common ground between the parties that, at least to some extent, the matter has to be remitted to the Tribunal due to the errors of law already identified above; and . the issues depend to a considerable extent on findings of fact. I should add that some of the grounds of contention put forward by the respondent, in my view, misconceive the role of this Court under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth). For example paragraph (viii) asserts that: "... the learned Tribunal should alternatively have determined that the cross-respondent is estopped from denying that the services provided ... constituted eligible know-how ... by reason of its statement at page 13 column 2 paragraph 1 of its guide to the said Act ..." Even if this matter were an appeal in the true sense, it would be necessary to have a factual foundation for such a contention, including evidence of reliance, detriment or the like. The respondent did not point to any such evidence. In any event, all those evidentiary matters are for the Tribunal. Conclusion For the above reasons the appeal and cross-appeal will be allowed, the decision of the Administrative Appeals Tribunal made on 3 May 1996 will be set aside and the whole matter will be remitted to the Tribunal to be decided again, either with or without the hearing of further evidence as the Tribunal may determine. I will hear counsel on the question of costs. I certify that this and the preceding thirty-one (31) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Date: 29 August 1996 Counsel for the Applicant: Mr P R Macliver Solicitors for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr A J N Aristei Solicitor for the Respondent: Mr A F Carles Date of Hearing: 15 August 1996 Date of Judgment: 29 August 1996