Case: Travel Vision International Pty Ltd and Australian Trade Commission AAT No 12540 [1988] AATA 11
Outcome: considered
The Australian Trade Commission refused the application for the grant. The Commission decision was overturned by the Administrative Appeals Tribunal: Travel Vision International Pty Ltd and Australian Trade Commission AAT No 12540 [1988] AATA 11. An appeal by the Commission to a single Judge of this Court on a question of law was dismissed: Australian Trade Commission v Disktravel [1999] FCA 48. On a further appeal by the Commission to the Full Court, the appeal was allowed. The three principal issues in the appeal were as follows: 1. Whether the expenditure was incurred "primarily and principally" for the purpose of the possible disposition of any intellectual property rights, as s 11Z(8) requires; 2. Whether intellectual property rights if any in the software and disks passed to the applicants under the licence agreements; and 3. Whether the provisions of s 38 of the Act applied. As to the first issue, the Tribunal made the following findings: "135. The objective purpose of these applicants in incurring the expenditure to Plutora was to provide Plutora with sufficient funds to acquit its obligations to the applicants pursuant to the agreements. That is, to promote the disposal of the licences by way of granting sub-licences. That is what the expenditure was intended to achieve .... The investment or outlay of each applicant was motivated by an expectation that in achieving the objective purpose, it would generate income, in the form of royalties. And more remotely, there was the hope that, in due course sufficient income would be generated to repay the limited recourse loans and provide a return on the original investment. Those were the objectives and motives of the applicants. As a result of entering into the agreements with Plutora the six applicants had a reasonable expectation, on the basis of the information provided to them by Mr Snow, and in Mr Fiocco's case, on the basis of advice from his accountant, that they would receive income tax relief and an export market development grant. 136. The evidence is that the directors of TVI, the consultants and Mr Martinson, at the time of their overseas promotions trips and the incurring of the expenditures in question, believed they would succeed in 'selling' sub-licences. Mr Fiocco's evidence is that he too thought that was a possibility but not without considerable risk. He saw the prospect of the financial effect of enhanced income tax deductions and an export market development grant as the incentive. That is subjectively, it was those possible consequences of making the investment which induced the applicants to enter into the arrangement. But the purpose of their investment was as stated. If the arrangement offered by TVI lacked commercial realism then it would be open to a tribunal of fact to conclude that the subjective purpose, of obtaining financial gains, through exploitation of the income tax and export market development grants laws, was dominant. On that basis the requisite purpose would not be met. However, this Tribunal finds, on the evidence, that the arrangement entered into between TVI and the applicants and Plutora and the applicants, at the time, was sufficiently commercially plausible to be considered, objectively, as a reasonable investment, the risk of which had been considerably reduced by the prospect of income tax and export grant financial benefits."