Export Development Grant - issue whether applicant provided "technical services" - Applicant carried on business as freight forwarder - Evidence as to training necessary for persons working as freight forwarders - Meaning of "technical services".

Export Market Development Grants Act 1974, ss.3.4.

Export Market Development Grants Regulations reg.6, Sch.4.

Solicitors for the Respondent: Australian Government Solicitor

1. The decision of the respondent to disallow the application by the applicant for an Export Market Development Grant for the year 1987-1988, as notified by the respondent to the solicitors for the applicant by letter dated 9 August 1989, be set aside.

2. The said application be remitted to the respondent for further consideration in accordance with law.

3. The respondent pay to the applicant its costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This application, which comes to the Court under the Administrative Decisions (Judicial Review) Act 1977, calls in question a decision of the respondent, the Australian Trade Commission, regarding the meaning of the term "Technical Services" in a Schedule to the Regulations made under the Export Market Development Grants Act 1974.

2. The applicant, VIP Airfreight Pty Limited, is an Australian-owned company engaged in the business of international airfreight forwarding. It has its headquarters in Sydney, a branch in Singapore and a sales representative located in Auckland, New Zealand. Through its Singapore branch the applicant provides airfreight forwarding services under which freight is transported by air between Singapore and Australia, and between Singapore and other international destinations.

3. The affidavit of Malcolm John Bush discloses information as to the training of airfreight forwarders. Mr Bush has been engaged in airfreight forwarding for more than 30 years. He is a past president of the Australian Federation of Airfreight Forwarders, and is the current president of the New South Wales division of the Institute of Export. The Institute of Export, a non-profit body founded in 1956 with the objective of promoting exports from Australia through the promotion of educational training in aspects of export procedure and international trade, offers tuition to potential airfreight forwarders. The course, which entitles successful students to a Certificate of Freight Forwarding Operations consists of 42 hours tuition covering the following subjects: the role of the freight forwarder; international trade; terminology used in shipping and airfreight; transport geography; freight carriers; import procedures - air cargo and sea freight; export procedures - air cargo and sea freight; customs procedures; freight rates; marine insurance; and communications and customer service. As will be seen from the names of the subjects, the course covers a diversity of matters so that students obtain some familiarity with patterns of international trade, the rules adopted by international bodies such as the International Air Transport Association ("IATA") regarding the carriage of dangerous goods, the geography of major cities and their airports, the logistics of carrying cargo, the procedures surrounding the import and export of goods and the method of calculating freight and insurance rates. According to Mr Bush, orders issued by the Civil Aviation Authority require that any person who is engaged in the handling of dangerous goods for transport by air must have completed training in a course that includes instruction about dangerous goods.

4. The managing director of the applicant, Barry Noel Vining, has described in an affidavit the manner in which his company conducts its business in Singapore. The usual procedure is that customers place a telephone call to the applicant giving instructions for the airfreighting of cargo from Singapore. The cargo may be delivered to the applicant at its Changi Airport facility, or the applicant may collect it from the customer. When it arrives at Changi Airport a representative of the applicant checks the consignment in order to determine the nature of the goods, the number of items despatched, and the weight and measurement of the cargo. If the cargo consists of dangerous goods, the applicant identifies their nature, checks the labelling, packaging and handling of the goods, and packs and marks them correctly. The applicant contacts the chosen airline and books space on a particular flight. For this purpose, the freight forwarder must be aware of the differing capacities of various aircraft and the attitudes of airline companies to carrying particular types of goods, especially dangerous goods. The applicant is then responsible for packing the freight in appropriate containers or on pallets supplied by the airline, in accordance with IATA cargo rules. The packers are required to be people who have successfully completed an appropriate course in packing, loading and restraining. After the cargo is packed, the pallets or containers are delivered to the chosen airline's handling agent in Singapore for loading into the previously booked cargo space. To this end, the applicant buys bulk space from airlines, consolidating cargo from various customers in order to achieve economies of scale.

5. It is apparently a common occurrence for arrangements to have to be altered or remade. Sometimes, aircraft arrive late or are diverted. On other occasions, freight space is limited by unanticipated additional passenger baggage.

6. When goods are forwarded from ports other than Singapore (which is a duty free port), customs formalities have to be undertaken at the point of loading. When these goods are imported into Australia, the applicant handles the local customs formalities and arranges for delivery of the goods to the consignee.

7. According to Mr Vining, the applicant invoices its customer its quoted price for the entire operation the applicant being responsible for the payment of all expenses, including the airline's freight charge and any fees paid to agents. These expenses are paid by the applicant, regardless of whether or not the customer pays the applicant.

8. The Export Market Development Grants Act 1974 provides for the respondent to pay grants in respect of "eligible expediture" incurred by claimants in promoting Australia's export trade. The relevant expenditure must be "eligible expenditure" within the meaning of the Act. That meaning is to be found in s.4 which relevantly provides:

"4(1) Subject to the succeeding provisions of

this section, a reference in this Act to

eligible expenditure is a reference to

expenditure that, in the opinion of the

Commission, has been incurred by a person

primarily and principally for the purpose of

creating or seeking opportunities, or creating

or increasing demand, for -

(a)...

(b)...

(c)...

(d)...

(e) the supply, by that person, for

reward, in the course of carrying on

business in Australia, of eligible

services outside Australia;

(f)...

(h)...

(j)...

but does not include ..."

9. The term "eligible services" is defined by s.3 of the Act as meaning "services that are eligible services by virtue of regulations under subsection 43(2) or (2A)". Regulations have been made under those provisions defining "eligible services". The Export Market Development Grants Regulations contain reg.6 which provides that: "Services of each kind specified in Schedule 4 are declared to be eligible services".

10. Schedule 4 contains a list of services. It includes item 4, the item whose application is presently in dispute. This item reads:

"4. Technical services in the field of

transport, being services supplied in relation

to -

(a) the transport, by air or by sea, of

passengers or freight;

(b) towing operations at sea,

from a place outside Australia to a place in

Australia or another place outside Australia".

11. The applicant sought a grant under the Act in respect of the 1987-1988 financial year. This application was refused and the applicant appealed to the respondent against that refusal. By a letter dated 9 August 1989, the respondent notified its decision to confirm the original decision. The Commission said that its decision was based upon advice which it had received and a copy of that advice was enclosed with the letter. The advice was legal advice given by two counsel. The current proceeding calls in question the correctness of that advice.

12. It is common ground that the services provided by the applicant are services "in the field of transport, being services supplied in relation to ... the transport, by air ... of ... freight ... from a place outside Australia to a place in Australia or another place outside Australia". The sole issue is whether the services provided by the applicant can properly be described as "technical services". That term is not defined either by the Act or the regulations.

13. The applicant argues that, as a matter of ordinary English, the term "technical services" refers to services requiring knowledge of a discipline or field of learning and which could not be performed by an ordinary member of the public. Reference is made to two dictionary definitions. The Shorter Oxford dictionary gives, as one meaning of the word "technical", the following:

"Belonging or relating to an art or arts;

appropriate or peculiar to, or characteristic

of, a particular art, science, profession, or

occupation; also, of or pertaining to the

mechanical arts and applied sciences

generally, as in technical education,

technical school".

The Macquarie dictionary cites a number of meanings of the word "technical". They include the following:

"1. belonging or pertaining to an art,

science, or the like: technical skill.

2. peculiar to or characteristic of a

particular art, science, profession, trade,

etc.; technical details.

3. ...

4. skilled in, or familiar in a practical way

with, a particular art, trade, etc., as a

person.

5. pertaining to or connected with the

mechanical or industrial arts and the applied

sciences: a technical school."

14. Counsel points to the evidence of Mr Bush regarding the training required of freight forwarders. He refers also to some publications, which were tendered in evidence, dealing with some of the matters with which freight forwarders are required to be familiar. The applicant argues that, although the body of knowledge which a freight forwarder must master is not as extensive as that required in many other occupations, a freight forwarder nevertheless needs to be familiar with a significant body of specialised information. It is said that the task of freight forwarding could not be undertaken by an ordinary person without special training. To illustrate his contention that the word "technical" includes services such as those offered by his client, counsel refers to a decision of the Supreme Court of Oregon in Dorsey v Oregon Motor Stages (1948) 194 P.2d 967. During the course of his judgment in that case Rossman CJ was discussed the meaning of the words "local schedules", as used in a transportation context. At p 974 the he said: "Plainly, the draftsman of the instrument couched it in the technical language of transportation men ..."

15. Counsel for the respondent does not contend that the word "technical", where used in item 4 of Schedule 4, requires that the person providing the service have a formal qualification such as a degree or diploma from a university or other tertiary educational institution. He concedes that "technical services" may be furnished by a person who has simply learned about a field of knowledge through practical experience. However, he says that the word "technical" refers to scientific or mechanical knowledge; "scientific" being understood as including only physical sciences such as physics and chemistry. The services provided by the applicant, says counsel, are not technical services because they are not based on "scientific" - so understood - or engineering skills. Counsel points out that item 4 is limited to "technical services", in contrast to some other items in the Schedule which cover both "technical" and "advisory" services.

16. I see no reason to limit the term "technical services" in the manner urged on behalf of the respondent. I think that it is illuminating to look at the other services listed in the Schedule. Many of them are services which would normally be performed by a person with tertiary educational qualifications; but some are not. Some of the listed services are based upon sciences such as physics or chemistry, or mechanical knowledge; but, once again, some are not. For example, item 1(c) refers to technical or advisory services supplied in relation to a development project being carried on outside Australia and being "services in the field of economic evaluation". Such services may be rendered by a person with tertiary educational qualifications. But, conceivably, they may be performed by persons who have no such qualifications. More importantly, in the light of counsel's argument, the relevant expertise of the person providing those services would not be in the areas of science suggested by counsel. Similarly, item 2(e) refers to technical or advisory services in relation to mining or processing of minerals outside Australia being "services in respect of mining or quarrying operations". Such services may be furnished by a person drawing primarily, if not exclusively, upon practical experience. It may cover matters extending well beyond the field limited by counsel's submission.

17. I find the dictionary definitions compelling. They indicate that the word "technical" is appropriately applied to a trade or occupation which depends upon a body of knowledge, without further limitation. There is no suggestion in either dictionary of the narrow denotation of the word suggested by counsel.

18. The evidence indicates that freight forwarders are required to undertake a course of training, albeit a fairly short one, and be aware of a body of information which is not known to ordinary members of the public. Under these circumstances, I see no reason to deny to their activities the description "technical services".

19. The respondent's decision, as notified to the applicant on 9 August 1989, should be set aside. The applicant's application for an Export Market Development Grant in respect of the 1987-1988 year should be remitted to the respondent for further consideration according to law. The respondent must pay the costs of the applicant.