Cameron v Commissioner of Taxation

REASONS FOR JUDGMENT THE COURT: Introduction 1 This is an appeal and cross-appeal from orders of the Court made on 8 December 2011: Cameron v Commissioner of Taxation [2011] FCA 1378. Those orders were made in an appeal on a question of law from the decision of the Administrative Appeals Tribunal (the Tribunal) given on 6 June 2011: Cameron and Commissioner of Taxation [2011] AATA 386. 2 The subject-matter is the operation of Part 2-42 of the Income Tax Assessment Act 1997 (Cth) (the ITAA 1997). The history of Part 2-42 is set out in Commissioner of Taxation v Metaskills Pty Ltd (2003) 130 FCR 248 and IRG Technical Services Pty Ltd v Deputy Commissioner of Taxation (2007) 165 FCR 57. Part 2-42, which deals with personal services income, consists of Divisions 84 to 87. The dispute in the proceeding is concerned specifically with Division 87, which deals with "personal services businesses". 3 By s 84-5(2) only individuals can have "personal services income". "Personal services income" is defined in s 84-5(1) as income that is mainly a reward for the personal efforts or skills of that individual, or would mainly be such a reward, if it were the income of that individual. Under Division 86, income from the rendering of an individual's personal services is treated as assessable income of that individual if it is the income of another entity and is not promptly paid to the individual as salary. However, that provision does not apply if the other entity is conducting a personal services business. The object of Division 87 is to define the term personal services businesses in a way that ensures that it covers genuine businesses but not situations that are merely arrangements for dealing with the personal services income of individuals. 4 Under s 86-15(2), a personal services entity includes a company whose income includes the personal services income of one or more individuals. Under s 87-15(1)(c), a personal services entity conducts a personal services business if the entity meets at least one of the four personal services business tests in the relevant income year. Under s 87-15(2) the four personal services business tests are: the results test under s 87-18; the unrelated clients test under s 87-20; the employment test under s 87-25; the business premises test under s 87-30. Only the unrelated clients test and the business premises test are presently relevant. 5 There were three relevant years, being the tax years ending 30 June 2004, 30 June 2005, and 30 June 2006 (the relevant years). 6 The primary judge summarised the overall context as follows: [2] The assessments under challenge in each of the relevant years of income concern income which constitutes personal service income ("PSI") for the purpose of Pt 2-42 of the Income Tax Assessment Act 1997 (Cth) . . . . So much is common ground. Specifically, the issue before the Tribunal was, and before the Court on appeal is, whether Div 86 of Pt 2-42 applies to treat the PSI as income of the applicant rather than income of a company, Aus-Phil Pacific Pty Ltd ("Aus-Phil"), owned and controlled by the applicant and his wife, or whether Div 87 of Pt 2-42 applies to deny that result. 7 Thus before the Tribunal and in this Court, the question was whether, as the appellant Mr Michael Cameron contended, Division 87 prevented the application of Division 86 on the basis that: the unrelated clients test in s 87-20 was met in each of the relevant years, the business premises test in s 87-30 was met in the year ended 30 June 2004. 8 In broad terms, Mr Cameron was a draftsman who supplied drafting services through Aus-Phil Pacific Pty Ltd ("Aus-Phil"). Mr Cameron and his wife were the shareholders and directors of Aus-Phil. That company's income from drafting services was, since at least 1997, produced through the personal services of Mr Cameron. Thus, the company was a personal services entity and the income of the company was Mr Cameron's income unless the company conducted a personal services business. The returns of Mr Cameron and the company were lodged on the basis that the income was not Mr Cameron's income. Aus-Phil was also deriving income from ship "provedoring" activities. Although the Tribunal frequently referred to these activities as "stevedoring" nothing turns on this and we have used the neologism "provedoring" in place of "stevedoring". 9 The Tribunal's decision was: Excepting only that the rate of penalty referable to travel expenses in the 2005 year is, as conceded by the Respondent, reduced to 25% the objection decision under review is affirmed. 10 The primary judge found that the Tribunal had erred in law in respect of the unrelated clients test but that that part of the matter should not be remitted to the Tribunal. This was because if the Tribunal had not so erred it would nevertheless have come to the conclusion it did. This is the subject matter of the appeal. In respect of the business premises test for the 2004 year, the primary judge held that the Tribunal had erred in law and remitted that aspect of the matter to the Tribunal. This is the subject matter of the cross-appeal. Thus, the Commissioner was successful in relation to the application of the unrelated clients test and Mr Cameron was successful in relation to the application of the business premises test. In those circumstances, each party was ordered to pay its own costs of the proceeding.

The legislation 11 Section 87-15 of the ITAA 1997 relevantly provided: 87-15 (1) An individual or *personal services entity conducts a personal services business if: (a) …; (b) …; (c) in any case - the individual or entity meets at least one of the 4 *personal services business tests in the income year for which the question whether the individual or entity is conducting a personal services business is in issue. Note 1: For personal services business determinations, see Subdivision 87-B. Note 2: Under subsection (3), the personal services business tests, apart from the results test under section 87-18, do not apply if 80% or more of your personal services income is from one source (but they can still be used in deciding whether to make a personal services business determination). (2) The 4 personal services business tests are: (a) the results test under section 87-18; and (b) the unrelated clients test under section 87-20; and (c) the employment test under section 87-25; and (d) the business premises test under section 87-30. For the unrelated clients test, s 87-20 provided: (1) An individual or a *personal services entity meets the unrelated clients test in an income year if: (a) during the year, the individual or personal services entity gains or produces income from providing services to 2 or more entities that are not *associates of each other, and are not associates of the individual or of the personal services entity; and (b) the services are provided as a direct result of the individual or personal services entity making offers or invitations (for example, by advertising), to the public at large or to a section of the public, to provide the services. Note: Sections 87-35 and 87-40 affect the operation of paragraph (1)(a) in relation to Australian government agencies and certain agents. (2) The individual or *personal services entity is not treated, for the purposes of paragraph (1)(b), as having made offers or invitations to provide services merely by being available to provide the services through an entity that conducts a *business of arranging for persons to provide services directly for clients of the entity. In this connection, before the Tribunal Mr Cameron "relied to a very considerable extent" on Federal Commissioner of Taxation v Yalos Engineering Pty Ltd (2009) 77 ATR 542; [2009] FCA 1569 (Yalos). 12 Before the Tribunal, it was common ground that in each of the relevant years of income, the requirements of para (a) of s 87-20(1) were satisfied, and the only issue was whether the requirements of para (b) were satisfied. 13 For the business premises test, s 87-30 relevantly provided: 87-30(1) An individual or a *personal services entity meets the business premises test in an income year if, at all times during the income year, the individual or entity maintains and uses business premises: (a) at which the individual or entity mainly conducts activities from which *personal services income is gained or produced; and (b) …; and (c) …; and (d) … (2) The individual or entity need not maintain and use the same business premises throughout the income year. Before the Tribunal, in respect of the 2004 year only, Mr Cameron contended that the premises leased by Aus-Phil were used mainly for the purposes of drafting.

Grounds of appeal 14 The grounds of appeal and cross-appeal before the Full Court were as follows. Grounds of appeal 1. The primary judge erred in law in dismissing that part of the Appellant's appeal concerning the unrelated clients test under s 87-20 of the Income Tax Assessment Act 1997 (ITAA 1997) on the basis that if the Tribunal had, or should have, considered, and made findings of fact on, the nature or character of the offers or invitations in determining whether they were made to the public at large or to a section of the public, the Tribunal would nevertheless have come to the conclusion it did (Judgment paras [54] and [59]). 2. Although the primary judge correctly concluded that the Tribunal had itself erred in law in failing to have regard to the nature or character of the Appellant's or Aus-Phil's invitations or offers to provide drafting services in determining whether the services were provided as a direct result of offers or invitations to a section of the public, he himself erred in law in failing to set aside the decision of the Tribunal and ordering the matter be remitted to the Tribunal for further determination. (cf Judgment para [54]). 3. The primary judge erred in law in failing to consider and decide the questions of law (and grounds relied upon in support thereof) in paragraphs 3 and 4 of the Appellant's notice of appeal dated 4 July 2011. Grounds of cross-appeal 1. The learned primary Judge erred in finding at [66] and [69] that the Tribunal failed to exercise jurisdiction in not considering the amount of time spent on the stevedoring and sales activities at the premises. 2. The learned primary Judge erred in finding at [66] that the Tribunal "did not consider at all the temporal aspect of the issue". 3. The learned primary Judge erred in finding at [67] that the Tribunal "proceeded on some comparison of the income produced from drafting services and the income produced from stevedoring and sales in the 2004 year of income to a 'must conclusion' (at [54]) 'that the premises were not used for drafting purposes either predominantly or even to any significant extent in the 2004 year'". 4. The learned primary Judge erred in finding at [68] that the Tribunal "made a quantum leap in reaching its conclusion at [54] which is not supported by the findings of fact". 15 The cross-appeal related only to the business premises test for the 2004 year. 16 Notwithstanding the terms of the notices of appeal and cross-appeal and the absence of a notice of contention on the part of the respondent Commissioner, at the instigation of the Court at the hearing of the appeal, the parties also made submissions on the question whether the primary judge had been correct to find that the Tribunal had erred in law in respect of the unrelated clients test. 17 The appeal and cross-appeal need to be approached with the limits on judicial review clearly in mind. It is not for this Court to decide the issues on the merits or to approach judicial review by reference to what it would have decided if the Parliament had reposed in it the fact finding task. Subject to judicial review, the task of fact finding is for the Tribunal alone. 18 It is also to be recalled that in the proceedings in the Tribunal Mr Cameron had the burden of proof: Taxation Administration Act 1953 (Cth) s 14ZZK(b).

The findings of the Tribunal 19 In respect of the unrelated clients test, Mr Cameron contended before the Tribunal that the requirements of s 87-20(1)(b) were satisfied because his drafting services were provided as a direct result of offers to the public at large or to a section of the public. 20 The Tribunal found that the drafting services were provided either: (a) in consequence of a phone call or an email message to a particular individual known to Mr Cameron; those communications were made to Frank Soto and later Jason Williams in the 2004 year, Mark Edmonds in the 2005 year and Taz Bhatti in the 2006 year; or (b) in consequence of a recommendation by a particular individual who knew Mr Cameron; those persons were Joe Fernandez in the 2005 and 2006 years and Bill Perrie in the 2005 year. 21 Mr Cameron said in his oral evidence before the Tribunal that he obtained the relevant work in consequence of his contacting or being contacted by the individuals referred to. 22 Mr Cameron agreed that there were about six or seven individuals whom he contacted directly or who recommended him for a job, and as a result of those six or seven individuals he got the contracts in question. 23 Mr Cameron admitted that none of the relevant contacts arose from advertisements in any publication or on any website or through any other similar means. He said also that there was not any notification or advertisement in the Yellow Pages, or any other publication. Mr Cameron said that there was a website in 2006 but none of the contacts relevant for the purposes of this matter arose from that website. 24 The Tribunal endorsed the Commissioner's submissions as follows: 20. Obtaining work as a direct result of making one-off approaches to, or being approached by, a total of six individual contacts in the industry does not involve making "offers or invitations to the public at large or a section of the public" within the meaning of s 87-20. 21. The applicant contends that the particular individual who he contacted in each case, while not the public at large, represents a "section of the public" for the purposes of the test. But one person is clearly not a section of the public, nor is a handful of people each of whom were individually contacted. The "section of the public" proviso in s 87-20 contemplates, for example, marketing to a group of potential clients or advertising in trade publication (sic) (which would not be read by "the public at large"). 22. To make an offer or invitation to the general public (or a section thereof) is to hold oneself out as ready, willing and able to perform services if any of those members of the public requests them. Any interested member of the public must be capable of accepting the offer. Making one-on-one offers is not the same as this. 25 Mr Cameron said that he had broad skills suitable to a variety of potential clients and tasks. He said in particular in evidence in chief that: I did an engineering/drafting certificate and then just went and worked for companies until I become [sic] experienced and then I have learned how to do four different areas of my profession, which is structural drafting, mechanical drafting, civil drafting and a little bit of pipe drafting. and that: I targeted those people because I knew they had long contracts that I could provide the drafting for, and coincidentally, because there was a shortage of people with my skills, I could charge a better rate, because I had the four skills. Most draftsmen only have one skill. I had the four. 26 The Tribunal said Mr Cameron's pool of prospective clients was large. He had worked for mining, infrastructure, manufacturing and construction companies amongst other industries. 27 The Tribunal considered Yalos and said that the judgment required careful consideration. The Tribunal set out paragraphs [23]-[25] of that judgment, dealing with the question of offers to the public or a section of the public, and then said that the evidence before the Tribunal indicated that Mr Cameron obtained the relevant work by relying on a small number of personal contacts and relationships in the industry. The Tribunal did not accept that the contracts were obtained through offers or invitations to the public at large or to any section of the public within the meaning of s 87-20(1)(b). 28 The Tribunal said the extensive range of large industries for which Mr Cameron had performed work had to be contrasted with the highly specific niche industry in Yalos. The decision in Yalos related to the offshore undersea gas pipeline industry. In that case, the Court acknowledged the Tribunal's earlier finding that a niche industry may have a "limited number of players". 29 In this matter, however, Mr Cameron could, according to his evidence, provide drafting services to companies within large industries in Australia and in particular mining, manufacturing, infrastructure and construction. The few individuals for whom Mr Cameron's services were obtained were not the only "players" in those large and diverse industries. 30 The Tribunal said it was clear that Yalos turned on its own particular facts, being the "narrow area of industrial activity" involved in the offshore undersea gas pipeline industry. Neither the Tribunal nor the Court in Yalos sought to determine any general proposition whereby a word-of-mouth referral will invariably satisfy the offer or the invitation to the public test in the relevant section. The Tribunal therefore distinguished Yalos. 31 The Tribunal said Mr Cameron contended that he did not want to advertise because advertisements would result in his receiving unwanted communications. Whether or not that is so, it would not obviate the need for a mandatory provision of the unrelated clients test (s 87-20(1)(b)) to be met. 32 The Tribunal said that in all three years the evidence demonstrated that work was obtained through contacts with individuals; thus the claim as to the public or a section of the public was never tenable and Yalos was distinguishable. 33 It followed that the unrelated client test was not satisfied in respect of any of the relevant years.

The reasoning of the primary judge 34 The primary judge said the reasons of the Tribunal were notable for their absence of findings on what his Honour considered to be material questions of fact. 35 On this issue the primary judge first said that s 87-20(1)(b) referred to making offers or invitations to the public at large on the one hand, or to a section of the public on the other. The Tribunal's reasons, however, made no relevant distinction between the two, apart from endorsing the Commissioner's submissions at [17] of its reasons, which submissions correctly recorded the applicant's position as being one of reliance only on the second requirement - an offer or invitation to a section of the public - having been met. The balance of the Tribunal's reasoning from [21] of its reasons, seemed to be predicated on the premise that there was no distinction between the two; hence its conclusion: The evidence before the Tribunal indicates that the Applicant obtained the relevant work by relying on a small number of personal contacts and relationships in the industry. The Tribunal does not accept that the contracts were obtained through offers or invitations to the public at large or to any section of the public within the meaning of section 87-20(1)(b) of ITAA 1997. 36 The primary judge said that the distinction between an offer or invitation to the public at large on the one hand or to a section of the public on the other was supported by authorities. 37 The authorities the primary judge referred to were, first, Lee v Evans (1964) 112 CLR 276 which concerned whether the appellant had made an invitation to the public, in contravention of Registration of Business Names legislation in South Australia, when he invited a father and son to invest money in a company to set up a timber business. 38 Second, in Corporate Affairs Commissioner (SA) v Australian Central Credit Union (1985) 157 CLR 201 (Australian Central Credit Union) at 208, Mason ACJ, Wilson, Deane and Dawson JJ said: The question whether a particular group of persons constitutes a section of the public for the purposes of s 5(4) of the Code cannot be answered in the abstract. For some purposes and in some circumstances, each citizen is a member of the public and any group of persons can constitute a section of the public. For other purposes and in other circumstances, the same person or the same group can be seen as identified by some special characteristic which isolates him or them in a private capacity and places him or them in a position of contrast with a member or section of the public. In a case where an offer is made by a stranger and there is no rational connexion between the characteristic which sets the members of a group apart and the nature of the offer made to them, the group will, at least ordinarily, constitute a section of the public for the purposes of the offer. If, however, there is some subsisting special relationship between offeror and members of a group or some rational connexion between the common characteristic of members of a group and the offer made to them, the question whether the group constitutes a section of the public for the purposes of the offer will fall to be determined by reference to a variety of factors of which the most important will ordinarily be: the number of persons comprising the group, the subsisting relationship between the offeror and the members of the group, the nature and content of the offer, the significance of any particular characteristic which identifies the members of the group and any connexion between that characteristic and the offer: cf, generally, Lee v Evans. 39 It is to be borne in mind that the unrelated clients test was not argued before the Tribunal on the basis that it should make findings of fact on all or any of the matters referred to by the High Court in Australian Central Credit Union. Indeed, the Full Court was told that the parties did not refer the Tribunal to that decision. 40 In the present case, the primary judge said the Tribunal did not address the nature or character of Mr Cameron's or Aus-Phil's invitations or offers to provide drafting services; it merely had regard to the manner of their communication - "one-off approaches to or from six individuals in a large industry", "a phone call or an email message to a particular individual known to the Applicant", or "a recommendation by a particular individual who knew the Applicant". His Honour considered that the Tribunal erred in failing to have regard to the nature or character of Mr Cameron's or Aus-Phil's invitations or offers to provide drafting services in determining whether the services were provided as a direct result of offers or invitations to a section of the public. But on the basis of the material before the Tribunal, his Honour was not convinced that had the Tribunal done so and made relevant findings, those findings would have led the Tribunal to a different conclusion. 41 In the present circumstances, the primary judge said, the question whether the group from whom Mr Cameron solicited work constituted a section of the public for the purposes of the offer or invitation fell to be determined by reference to a variety of factors of which the most important would ordinarily be: (1) The number of persons comprising the group - here six; (2) The subsisting relationship between the offeror and the members of the group - here the members are known by the offeror or by persons recommending the offeror; (3) the nature and content of the offer - here the offer of drafting services to the particular client; (4) the significance of any particular characteristic which identifies the members of the group - here persons with long-term contracts requiring drafting services; and (5) any connection between that characteristic and the offer - here a direct connection with the offer. 42 For those reasons, the primary judge was of the view that on the basis of the material before the Tribunal, even if it had, as it should have, considered, and made findings of fact on, the nature or character of the offers or invitations in determining whether they were made to the public at large or to a section of the public, the Tribunal would nevertheless have come to the conclusion it did. His Honour acted on the line of cases which included Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560 per Sackville J.

Submissions on the appeal 43 In relation to the error or errors of law which the primary judge identified in the Tribunal's reasons the parties made the following submissions. 44 Mr Cameron submitted that the primary judge determined that the Tribunal had erred in law in three respects. The primary judge (at [44]) identified the first legal error. That is, because offers or invitations were word-of-mouth offers or invitations, the manner of communication of the offers or invitations alone, and without further consideration of the facts or law, mandated that the offers or invitations in question could not fall within the statutory provision. The second error was identified at [54] where his Honour said, in effect, the Tribunal did not take into account and make findings about the nature and character of Mr Cameron's, or Aus-Phil's, offers or invitations to provide drafting services. The primary judge also held that the Tribunal had not distinguished between the public at large and a section of the public. 45 Mr Cameron submitted that the error of the Tribunal was to stop short at the point where it looked at the fact that there was a manner of making offers or invitations, which was word of mouth, but it was to individuals. The mere fact that the offers or invitations were made to individuals did not, it was submitted, answer the statutory question concerning the section of the public, because the individuals in the case in point were a gateway or the instrument by which one can access the section of the public that one was aiming at, namely, the companies in the mining industry or infrastructure industry which had substantial or long-term contracts. An offer or an invitation can be made to a section of the public by way of using personal connections to access that section of the public. The Tribunal did not deal with the proposition that a section of the public could still exist, even though there was an antecedent subsisting relationship, that is, knowing people who were associated with the companies which had the criteria that were intended to be targeted. There was never any analysis as to whether there were, on the facts, offers to a section of the public by way of personal connection, that is, by the medium of the individuals who were known to Mr Cameron. 46 Mr Cameron relied on Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 408-409 which was said to capture or exemplify the point that the fact that a friendship or an acquaintance is a means or a gateway or a mechanism by which one can then access entities which themselves have certain criteria associated with them, in this case the mining companies and long-term contracts, did not detract from those entities being a section of the public. 47 Mr Cameron also submitted that the primary judge failed to provide any findings and reasons at all to enable a proper understanding of the basis on which he dismissed Mr Cameron's application with respect to paragraphs 3 and 4 of the Notice of Appeal, that is, whether the Tribunal should have followed the decision in Yalos and whether the Commissioner was bound by his own Taxation Ruling TR 2001/8. 48 The Commissioner submitted it was clear the Tribunal was concerned with addressing the issue of the making of offers to a section of the public. The Tribunal reproduced the statutory formula: offers or invitations to the public or a section of the public. In expressing its views at some length with respect to the applicability of the decision in the Yalos case, it was clear that the Tribunal was at that point addressing whether, on the facts before it, there had been an offer to a section of the public. 49 As to the other error or errors identified by the primary judge, the Commissioner submitted that the Tribunal did have regard to such evidence as there was about the character of the invitations. The criteria in Australian Central Credit Union were not enshrined in legislation. They provided a guide. Since the primary judge held that the ultimate decision of the Tribunal was correct there was no error in failing to apply those criteria. It was not necessary that the construction of that part of the statute specifically address the application of those criteria. Although, in a particular case, a failure to have regard to that guidance might have the consequence that a court or tribunal would arrive at an incorrect conclusion, that was not what had occurred here. 50 As to the submission that the primary judge failed to give reasons in relation to the Yalos argument, the Commissioner submitted that that case was clearly distinguishable on its facts as well as on the basis that it was obiter dictum and the Tribunal correctly distinguished it. The primary judge did not err in failing to find that decision applicable to the facts in the present case. 51 As to the TR 2001/8 argument, the Commissioner submitted that there was nothing in that ruling that was inconsistent with the reasoning of the primary judge or the Tribunal in relation to the unrelated clients test and the primary judge made no error in relation to it.

Consideration 52 In our view the appropriate starting point is whether there was an error of law by the Tribunal. If there was no such error then it will not be necessary to consider the exercise by the primary judge of the discretion under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) as to whether or not to remit the matter to the Tribunal. 53 Contrary to the submission of the Commissioner, it may be to mask any error to involve in that analysis the conclusion of the primary judge in the exercise of the discretion conferred by s 44. 54 We have set out above the terms of s 87-20(1). Generally, the section would involve: (i) an identification of each income year; (ii) an identification of the income in question; (iii) whether that income was gained or produced from providing services to 2 or more unrelated entities and the identification of those unrelated entities; (iv) whether the individual or personal services entity made any offers or invitations to the public at large or to a section of the public to provide those services; (v) if so, whether the services provided to the unrelated entities were so provided as a direct result of the individual or personal services entity making those offers or invitations. 55 In the present case there was an elision before the Tribunal of what we have identified as (iv) and (v) above, in that it appears that Mr Cameron's case was there presented on the basis that it was evident from the manner of obtaining the contracts with the limited number of unrelated entities that those offers or invitations were to the public at large or to a section of the public to provide those services. This may, depending on the facts, be sufficient but it is unlikely to be sufficient where the number of communications is small. 56 We agree with the observation of the Court of Appeal of the Supreme Court of Victoria in Campbell's Cash & Carry Pty Ltd v Director of Public Prosecutions (Commonwealth) [1998] 4 VR 208 at 212-213 that the phrase "the public, or a section of the public" is to be construed according to its context. Reference was there made to Australian Central Credit Union at 208 and 211. The context of the prospectus cases is an evident policy to protect members of the public by requiring prior disclosure of information relevant to their investment decision: see Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 286 ALR 12 at [22]. The relevant policy or purpose is expressly referred to in Hurst v Vestcorp Ltd (above) at 402 per Kirby P, 421 per Mahoney JA and 439 per McHugh JA, as their Honours then were. In contrast, there is no such protective purpose in s 87-20(1). 57 Even in the prospectus context the courts have paid particular attention to the inherent nature and terms of the offer itself, especially its width, and the manner and width of its communication to the audience said to be the public. The clearest case of an offer to the public is one where the terms of the offer indicate that it is addressed to members of the public generally such that any member of the public may accept the offer; Hurst v Vestcorp Ltd (above) at 422. An offer made to a particular individual which, if rejected, will be repeated to other specified individuals until an acceptor is finally found has been held not to be an offer to the public: Lee v Evans (above) at 287 per Kitto J. 58 It is important to consider what was decided in Australian Central Credit Union. The question was whether the proposal by the credit union to offer a proportion of the units in a unit trust to its 23,000 members (and only to its members) for purchase was, within the meaning of s 5(4) of the Companies (South Australia) Code, the making of an offer to any section of the public, whether selected as clients of the person making the offer or in any other manner and notwithstanding that the offer was capable of acceptance only by each person to whom it was made or that an offer might be made pursuant to the invitation only by a person to whom the invitation was issued. Thus s 5(4) depended upon the offer being made to a "section of the public" as defined. 59 It was in this context that the statement from the plurality judgment in Australian Central Credit Union, set out above in the reasons of the primary judge, was made. The High Court held that the offer to the members of the credit union was not an offer to any section of the public within the meaning of s 5(4) of the Companies (South Australia) Code. But as McHugh JA observed in Hurst v Vestcorp Ltd (above) at 439 since a grouping of any size was also likely to constitute a section of the public, a literal application of provisions such as s 5(6) of the Companies Act 1961 (NSW) might apply the provisions of that Act relating to shares and prospectuses to many offers which were outside the intended scope of the legislation. Section 5(6) deemed any offer of shares or debentures "to any section of the public" to be an offer to the public. Consequently, provisions such as s 5(6) had received an interpretation which depended more on the relationship between the nature of the offer and the group than on whether the group was per se a section of the public. 60 In our view, a fair reading of the Tribunal's reasons indicates that the Tribunal held, on the facts before it, that there was no public element to the offers or invitations. Not only did the offers or invitations not extend beyond a limited number but also there was no practical possibility of the offer or invitation being taken up by any member of the public or section of the public. The "subsisting relationship" was not of any significance in identifying the group for the purposes of the "section of the public" question. Neither did the nature and content of each offer or invitation or its general circumstances assist in that regard. 61 Hurst v Vestcorp Ltd (above) at 408-409, relied on by the appellant, does not establish legal error on the part of the Tribunal. In that case, Kirby P held, although the offer was in the first instance made to those with a pre-existing relationship, that offer was open to those members of the investing public who came into possession of the second circular letter. That letter was open to the public and represented an offer to investors, not as friends or past associates, but as members of the public. In the present case the nature and content of each offer or invitation did not have that character and the Tribunal did not err in law in failing so to conclude. Although it is possible for an offer or invitation to be made to the public at large or to a section of the public even though made to one person (see the facts in Nash v Lynde [1928] AC 158) or to a limited number of persons, that is a question of fact and if the facts as found do not give rise to that characterisation no error of law is established. 62 We disagree, with respect, with the conclusion of the primary judge that the Tribunal excluded from its consideration the "section of the public" part of s 87-20(1). The mere reference to the whole of the statutory language does not found that conclusion. Such a nice distinction was not maintained in the submissions of the present appellant to the Tribunal, to which we were taken. Further, the Tribunal's consideration of the submission founded on Yalos necessarily involved addressing the issue of whether the individual or personal services entity made offers or invitations to a section of the public to provide those services. The Tribunal did not regard the mere manner of communication of the offers or invitations as a disqualifying element: so to read the Tribunal's reasons would be to take particular expressions out of context and would be contrary to the approach required by Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259. 63 In Yalos, the Court allowed the application and remitted the matter to the Tribunal under s 44 of the AAT Act on the basis that the Tribunal reached the conclusion that a personal services business determination should be made without addressing one of the required statutory criteria. The Court then referred briefly to other grounds on which the Commissioner attacked the Tribunal's reasons. The Court said the Commissioner's submissions were based upon an assumed factual scenario whereby the contracts engaged in by the respondent for the provision of the services to a third party arose from the "personal contacts" of the individual himself. It was submitted that these personal contacts, or the businesses which were put in touch with the respondent by reason of them, could not be regarded as "a section of the public" within the meaning of s 87-20(1)(b). It was submitted that the section should be construed as though "public" were the opposite of "private", and with a particular view to achieving the objectives referred to in s 87-10. 64 Of these submissions the Court said, at [24], the reasons of the Tribunal did not disclose any specific attention being given to the construction of s 87-20(1)(b). It was apparent that the Tribunal approached the provision as though "a section of the public" was apt to include, within the context of an industry which had a "limited number of players", those players. While recognising the objects of Div 87 of the 1997 Act set out in s 87-10, it was unlikely that the legislature would have intended that s 87-20(1)(b) would be unavailable to an entity which had offered the services of its employee to the major corporations operating within the narrow area of industrial activity for which that employee's skills and experience were suited. This was amply within the connotation of "section of the public" in the provision. Such a view of the legal position appeared to have been implicit in the reasoning of the Tribunal. The Court was not persuaded that the Tribunal in that case erred in law in these respects. 65 In our opinion these obiter dicta were not binding on the Tribunal in the sense that any departure from them would constitute an error of law. The substantial reliance on it by Mr Cameron before the Tribunal for the proposition that that decision showed that he would or must succeed in his case was misconceived. The ground relied on by the Tribunal for distinguishing that case, being that in the present case the relevant skills and industries were broad and general, was correct. As the Tribunal said, Mr Cameron's pool of potential clients was large, and he worked for mining, infrastructure, manufacturing and construction companies amongst other industries. 66 It has not been established that the Tribunal erred in failing to have regard to the nature or character of Mr Cameron's or Aus-Phil's invitations or offers to provide drafting services in determining whether the services were provided as a direct result of offers or invitations to a section of the public. The nature or character of those invitations or offers was, in our opinion, self-evident; the Tribunal was not asked to proceed by reference to the matters enumerated in Australian Central Credit Union and we do not regard as going to the Tribunal's jurisdiction a failure explicitly to advert to those matters in its reasons. 67 We do not regard those matters as mandatory relevant considerations or considerations which, by implication, the Tribunal failed to take into account: see Commissioner of Taxation v Raptis (1989) 89 ATC 4994 at 4999, referred to by a Full Court in Secretary, Department of Social Security v Cooper (1990) 26 FCR 13 at 18, that is: There must be some difficulty … in finding an "error of law" in the failure in the Tribunal to make a finding first urged in this court. For the reasons we have given, flowing from the construction of the section, these were not matters which the Tribunal was bound to take into account independently of the parties' submissions. 68 Our analysis is that the Tribunal did not err in law. In light of our conclusion, we do not find it necessary to consider whether or not his Honour was correct not to remit the matter to the Tribunal, in the exercise of the discretion conferred by s 44 of the AAT Act. 69 As to the other alleged errors contended for by Mr Cameron in relation to the judgment of the primary judge, in our opinion they are without substance. 70 We have dealt with the Yalos ground above. 71 As to the Public Ruling point, there is nothing in the relevant parts of that document which is inconsistent with the law or the reasons of the Tribunal. It did not dictate a particular result in this case. It offered guidance only on factors which may be relevant. There was no error of law in the Tribunal's decision arising from the Ruling. 72 As to the alleged failure by the primary judge to give reasons, that ground was directed to that part of the decision of the primary judge in which his Honour exercised the discretion not to remit that part of the case to the Tribunal. That ground is not of present relevance. In so saying we should not be taken to be expressing the view that the primary judge did not give reasons for that exercise of discretion. 73 For these reasons the appeal should be dismissed.

The findings of the Tribunal 74 Before the Tribunal Mr Cameron contended that in 2004 he or Aus-Phil mainly conducted drafting activities at the premises (initially 22A Maitland Road, Islington and then 18 Maitland Road, Islington, New South Wales). 75 The Tribunal found that, in the 2004 year, drafting services provided by Mr Cameron were performed most usually at the premises of the clients. The Tribunal accepted that some drafting services may in the 2004 year have been provided at the premises, but considered that this would have occurred by way of exception and not as a rule. Even more to the point was the fact that in the 2004 year another business (ship provedoring and sales) was conducted from the premises. The evidence by Mr Cameron as to the nature and extent of that business was in many respects confused and contradictory. 76 During the 2004 year, Mr Cameron's major client was Frank Soto and Associates. Mr Cameron spoke at length of taking work from Frank Soto and then carrying it out at the premises. However the evidence indicated that, in the 2004 year, Mr Cameron performed work for Frank Soto for only about six weeks, with time off for Christmas. 77 During all of the remainder of the 2004 year, Mr Cameron's drafting work was effected at the places of business of the clients and not at the premises. In that year, and apart from Frank Soto, Mr Cameron performed work for UGL Rail (formerly known as United Goninen) and ADI (Australian Defence Industry). 78 Excluding the brief work for Frank Soto, the other drafting activities performed by Mr Cameron in the 2004 year at the premises constituted rectification work relating to a prior contract. Mr Cameron said the majority of this work was performed in the 2003 year. Mr Cameron said also that this work was done after hours and on weekends, because he was working full time at clients' sites for the vast majority of the 2004 year. 79 The Tribunal agreed with the submission of the Commissioner that any drafting work which was performed at the premises in the 2004 year was ancillary in nature, and could be compared to the situation of an employee taking home work to be done of an evening or during a weekend. It was not, however, sufficient to convert the premises into "business premises" for the purposes of s 87-30 of the ITAA 1997. 80 The Tribunal also said it was moreover probable that Mr Cameron's oral evidence as to the rectification work was exaggerated. He emphasised that activity in his oral evidence. However, he did not make any mention of it in the relevant objections or in either of his written statements. 81 The Tribunal had before it considerable evidence as to the use of the premises in the 2004 year for the purpose of a ship provedoring business conducted by Mr Cameron and his wife (although there was no such disclosure in the relevant objections). 82 Mr Cameron contended that 52 per cent of the floor space was utilised in respect of drafting and the remainder in respect of other activities. A PwC report indicated that this calculation was made on the basis of an exclusion of part of the premises. The Tribunal found that 48 per cent of the floor space of the premises in question was utilised in respect of drafting and the remainder in respect of other activities. The Tribunal considered, however, that the relative floor space was not determinative as to the predominant activity in the premises in question. It could at most be a factor which was relevant. 83 The Tribunal found that, based on income and turnover, the provedoring business was clearly predominant. The Tribunal found that the income of the provedoring business was greatly in excess of the aggregate income from drafting services for the 2004 year. It found that the income from the provedoring business was much greater still in relation to the Frank Soto drafting income relating to the drafting activity conducted on the premises during the 2004 year. The Tribunal said it was to be remembered that work for Frank Soto may have been performed on the premises for only about six weeks in the 2004 year. 84 The Tribunal then reproduced a trading account of the company for the 2004 year. 85 The Tribunal found Mr Cameron's evidence as to the provedoring business was inconsistent and confusing. He contended that it involved the sale of "meat, soft drinks, rice" and souvenirs to ships. Later, in cross-examination, he stated that liquor was also sold to the ships. A consideration of the trading account indicated that the largest single item in it was $62,124.74 included as "cost of goods sold - liquor"; information as to the liquor aspect, (so clearly important, constituting as it did the largest single amount in the account) had not been furnished previously. 86 Mr Curry, the accountant for Mr Cameron, informed the Australian Taxation Office that the company was conducting a commercial retail shop from the premises. This was consistent with an exhibit which was an application by the company for the business name "Kabayan Newcastle" as a "Ship Provider & Souvenir Shop" with its principal place of business at "18 Maitland Road Islington NSW 2296", which was the premises. 87 Aus-Phil's activities in relation to the ship provedoring business were never explained. What was meant by the Kabayan income and ship sales was not clarified. Mr Curry said that Kabayan income could relate to retail sales from the premises but he was not sure if that was so. 88 Mr Cameron's son in his evidence said that he did not notice and would not have known what customers came to the premises. Other persons who had direct knowledge of the relevant accounts, and in particular Beverley Holden and Matthew Pietraszek, may have known about the business, but they did not give evidence. Mr Cameron's wife was a partner in the business but she too did not give evidence. 89 The Tribunal said that Mr Curry, who prepared the financial statements of Aus-Phil, was present on the first hearing day during nearly all of the period during which Mr Cameron gave evidence. The Tribunal set out a substantial part of the transcript which it said indicated the unsatisfactory nature of Mr Curry's evidence in this context. 90 The Tribunal said that the evidence before it as to the provedoring business (and including in respect of retail sales), and taking into account the fact that for the most part the drafting work in the 2004 year was performed outside the premises and at the premises of the clients, must give rise to a conclusion that the premises were not used for drafting purposes either predominantly or even to any significant extent in the 2004 year. 91 The Tribunal said that the evidence of Mr Cameron as to the trading account of the company for the 2004 year was particularly confused and inconsistent. The evidence of Mr Curry as to this aspect was also not helpful. 92 The Tribunal said that Mr Cameron failed in respect of the business premises test because on the evidence before it for the 2004 year it was clear that the premises were not used predominantly, or even to any significant extent, in respect of the drafting services. On the contrary, the evidence suggested that they were used in respect of drafting to an insignificant extent only. The Tribunal referred again to what it regarded as the unsatisfactory nature of the evidence given both by Mr Cameron and Mr Curry in respect of the 2004 year. 93 The Tribunal said the evidence of Mr Cameron was in its view unreliable and in particular in relation to the business activities of the company in the 2004 year. Neither Mr Cameron nor Mr Curry was able or willing to answer questions about the provedoring/retail business in any manner which made sense. 94 The trading account of the company for the 2004 year indicated in clear terms that the company ran a provedoring and/or retail business which was at least as important as the drafting service which was in any event carried out for the most part in the premises of clients and not in the premises themselves. That trading account demonstrated how unsatisfactory the evidence given on behalf of the applicant was. Apart from any other considerations, and even assuming that there was at times drafting activity taking place in the premises, that activity would not have taken either the whole or even the major part of the premises; moreover drafting took place in the premises to some extent only for a part of the 2004 year only.

The reasoning of the primary judge 95 The primary judge said, correctly, that satisfaction of this test relevantly required Mr Cameron or Aus-Phil, at all times during the 2004 year of income, to have maintained and used business premises at which Mr Cameron or Aus-Phil mainly conducted activities from which personal services income was gained or produced. 96 It was common ground that at all times during the 2004 year of income, Aus-Phil maintained and used premises as business premises. The only issue before the Tribunal was whether these were premises at which the applicant or Aus-Phil mainly conducted activities from which personal services income was gained or produced. 97 The primary judge said this required the Tribunal to focus upon and consider the use to which the premises had been put during the 2004 year of income to enable the Tribunal to determine whether that use involved mainly activities from which personal services income was gained or produced. As the only activity from which personal services income was gained or produced during the 2004 year of income was drafting, it required the Tribunal to determine whether the premises were mainly used for drafting during that year. 98 The primary judge said that the way in which the Tribunal went about this task was difficult to understand. First, the Tribunal found that, on the evidence before the Tribunal, in the 2004 year of income drafting services provided by the applicant were performed most usually at the premises of clients. That finding did not shed any light on the use to which the premises were put, in particular whether they were used mainly for drafting activities. A barrister, in a particular year of income, may spend 60% of his working time in court and 40% in chambers; that statistic sheds no light on the question of whether his chambers are used mainly for providing legal services. 99 Second, the Tribunal found that another business (ship provedoring and sales) was conducted from the premises in the 2004 year of income. Having made that finding, it was incumbent on the Tribunal to go on and find whether, during that year, the premises were used mainly for gaining or producing drafting income or provedoring and sales income. This required the Tribunal to consider and make findings with respect to: (1) in physical terms, the area of the premises that has been used for providing drafting services and the area of the premises that has been used for the conduct of the provedoring and sales business; and (2) in temporal terms, the time that the applicant had used the premises for providing drafting services and the time that the applicant had used the premises for the conduct of the provedoring and sales business. 100 The Tribunal found that 48% of the floor space of the premises was utilised in respect of providing drafting services and the remainder in respect of "other activities". It was not clear the extent to which those "other activities" encompassed only one activity, such as provedoring and sales, requiring more than 48% of the floor space of the premises; the Tribunal made no finding in this regard, comforting itself in the statement that it "cannot perceive any basis on which it can be said that in accordance with the legislation such a test is in any way determinative. It can at most be a factor which is relevant". 101 The Tribunal did not consider at all the temporal aspect of the issue, namely the time that Mr Cameron had used the premises for providing drafting services as against the time he had used the premises for "other activities" and, in particular, provedoring and sales. Rather, the Tribunal proceeded on some comparison of the income produced from drafting services and the income produced from provedoring and sales in the 2004 year of income to a "must conclusion" (see [90] above) that the premises were not used for drafting purposes either predominantly or even to any significant extent in the 2004 year. 102 His Honour said that the conclusion was flawed. An activity may produce more income than another activity where both are carried on from the same premises for any number of reasons; the difference was not necessarily sourced in the greater time spent on the former activity; on the other hand, it may be the reason or one of the reasons for the difference. His Honour found that the Tribunal had made a quantum leap in reaching its conclusion at [54] which was not supported by the findings of fact. 103 His Honour concluded that the Tribunal had failed to exercise jurisdiction with respect to that issue and the matter had to go back, but to a differently constituted Tribunal.

Submissions on the cross-appeal 104 The Commissioner submitted that the primary judge erred in finding that the Tribunal made an error of law in failing to consider at all the temporal aspect of the issue, it being submitted that that was a matter in respect of which Mr Cameron had not put any evidence before the Tribunal. 105 The Commissioner also submitted that the primary judge erred in finding that the Tribunal considered only a comparison of the income of the two different activities and did not consider other matters. The Commissioner submitted that the Tribunal considered a number of matters, being the evidence that was before it, in concluding that the company did not satisfy the business premises test in the 2004 year. 106 The Commissioner accepted that the Tribunal did not make an express finding about how much time Mr Cameron spent on the ship provedoring and sales activities at the premises but submitted this was because Mr Cameron did not put any such evidence before the Tribunal. The Tribunal did not make an error of law in failing to make a factual finding about matters not put to it: Glennan v Commissioner of Taxation (1999) 90 FCR 538 at [80]-[83] and Commissioner of Taxation v Raptis (above) at 4999. 107 The Commissioner submitted that the Tribunal considered the fact that the drafting activities at the premises were after hours and on weekends, the likelihood that the extent of drafting use was exaggerated, the floor space used for each activity, the income and turnover of the respective businesses, and the evidence that the premises were used for retail sales in relation to the ship provedoring and sales business. Thus, the Tribunal did not arrive at its conclusion based only on the relative incomes of the two businesses and on a "quantum leap" therefrom, but on the various different factors presented in the evidence. The Tribunal also expressed its dissatisfaction with aspects of the evidence and its unreliability. 108 Mr Cameron submitted first that the Tribunal erred in comparing drafting activities at the premises, on the one hand, and drafting activities elsewhere, on the other. Second, the Tribunal failed to make any finding in relation to the floor space of the premises occupied for drafting activities. Third, the Tribunal resolved the issue as to which activity predominated by two erroneous comparisons being drafting activities at the premises, on the one hand, and drafting activities elsewhere, and a further erroneous comparison, namely, a comparison of the quantum of gross turnover produced from provedoring activities with the drafting activities, irrespective of where the activities took place, and without regard to the time the premises were used for providing drafting services as against the time the premises were used for other purposes. It was submitted that, as the Tribunal failed to address and consider the correct statutory question and to make relevant findings in relation thereto concerning physical and temporal use of the premises, the primary judge was correct to remit the matter to the Tribunal for redetermination of the business premises issue. Much of the balance of Mr Cameron's submissions went to what the Tribunal could have found.

Consideration 109 The statutory test in s 87-30(1) is cast in relatively simple terms. The question is whether at all times during the income year the individual or personal services entity maintained and used business premises at which the individual or entity mainly conducted activities from which personal services income was gained or produced. 110 In our opinion the steps in the reasoning of the Tribunal were as follows. First the Tribunal set out the statutory provision and observed that it was only in respect of the 2004 year that Mr Cameron contended that the premises were used mainly for the purposes of drafting. The Tribunal then made a finding of fact that drafting services provided by Mr Cameron were performed most usually at the premises of the clients. The Tribunal accepted that some drafting services may have been provided at the premises but that this would have occurred by way of exception and not as a rule. More to the point was the fact that another business was in the 2004 year conducted from the premises. The evidence as to the nature and extent of that business was, said the Tribunal, in many respects confused and contradictory. The Tribunal then considered the evidence in relation to Frank Soto and said that this was for only about six weeks, with time for Christmas. During the remainder of the 2004 year the drafting work of Mr Cameron was effected at the places of business of the client. Having considered the work for clients in the 2004 year the Tribunal considered the other drafting activities were rectification work relating to a prior contract. The majority of this work was performed in the 2003 year and the balance after hours and on weekends because Mr Cameron was working full-time at clients' sites for the vast majority of the 2004 year. Indeed, the Tribunal considered it probable that Mr Cameron's oral evidence as to the rectification work was exaggerated: there was no mention of it in the relevant objections or in either of his written statements although that activity was emphasised in his oral evidence. 111 The Tribunal found that any drafting work which was performed at the premises in the 2004 year was ancillary in nature. We understand this to mean that it was minor in comparison to the drafting work done at the places of business of the clients in 2004 and with reference to the other business (ship provedoring and sales) which was in the 2004 year conducted from the premises. 112 The Tribunal also took into account the considerable evidence as to the use of the premises in the 2004 year for the purpose of a ship provedoring business. It looked at the question of relative floor space and concluded (if the calculation was based on income and turnover) that the provedoring business was clearly predominant. The Tribunal then analysed critically Mr Cameron's evidence as to the provedoring business. The Tribunal took into account that Mr Curry told the Australian Taxation Office that Aus-Phil was conducting a commercial retail shop from the premises. The Tribunal also took into account that Aus-Phil described the principal place of business of the ship provider business as the premises. The Tribunal took into account as well that a number of persons who had direct knowledge of the relevant accounts and who may have known about the business did not give evidence. 113 It is important to concentrate on the specific issue for the Tribunal's consideration. That issue was whether there were business premises maintained and used at all times during the income year as premises at which the individual or entity mainly conducted activities from which personal services income was gained or produced. In our opinion the Tribunal addressed this issue, in particular the issue of whether the relevant activities were mainly conducted from those premises. In the present case, contrary to the conclusion of the primary judge, we do not consider that the "temporal" aspect of the issue was not considered at all. 114 In our view the statutory provision does not require simply a quantitative exercise but a qualitative assessment of whether the individual or entity maintained and used business premises at which it mainly conducted activities at the requisite time. This involves an assessment of what activities were mainly conducted at the premises. Where, as here, there was another activity, then the finding that the requisite activity was very largely conducted away from the premises is a relevant factor because it assists in establishing the substance of one of the comparators. The area of the premises and the time allocated to different activities, where more than one was conducted at the premises, must also be relevant. 115 Paragraph (a) requires that the relevant entities mainly conduct the activities from which personal services income was gained or produced at the relevant business premises. That requirement could be satisfied even if the entity conducted such activities, in part, from some other premises. It is relevant to consider where else the activities were conducted, from which personal services income was gained or produced. 116 Once it is accepted that the Tribunal did consider the temporal aspect of the issue and did not limit itself to a comparison of the income produced, it follows that the cross-appeal should be allowed. It was open to the Tribunal to come to the conclusion to which it came. 117 We reject the submissions of Mr Cameron that the Tribunal limited itself, in its fact finding or in its assessment of those facts, to the matters of which Mr Cameron complains. Instead the Tribunal took those matters into account in addressing the statutory question. Those matters, being a comparison of drafting activities at the premises, on the one hand, and drafting activities elsewhere, on the other, the relative floor space used by the two activities, and a comparison of the gross turnovers, were not irrelevant to the Tribunal's qualitative task. 118 In paragraph [54] of its reasons, the Tribunal stated its conclusion as to the evidence before it. It posed, by way of conclusion, the relevant comparison in circumstances where more than one class of activity was conducted at the premises in the relevant period and where the Tribunal had already found that the drafting activity was conducted at the premises by way of exception and was ancillary in nature. 119 In the context of judicial review the use of the expression by the Tribunal "must give rise to a conclusion" does not, in our opinion, and with respect to the primary judge, bespeak legal error: in context it was no more than an emphatic turn of phrase: see Minister for Immigration and Ethnic Affairs v Wu Shan Liang (above).

Conclusion 120 The appeal should be dismissed and the cross-appeal should be allowed. Mr Cameron should pay the Commissioner's costs of the appeal and the cross-appeal. While the Commissioner's success in the appeal has been on a point that was not the subject of a notice of contention on his part or written submissions but on a point raised by the Court in the course of argument, Mr Cameron maintained his contention that there was an error of law on the part of the Tribunal. I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Middleton and Robertson.