Cromer Golf Club Ltd v Downs

Federal Court of Australia|1996-07-25|Before: Finn JJ

The precise terms of the direction noted above are of some importance. As we have noted the respondent was successful before the Tribunal on both grounds of exemption it advanced. The present applicant, the Commissioner of Taxation, has challenged one only of the Tribunal's decisions. This is that the respondent was conducting a "school" for the purposes of Item 109. The apparently inevitable consequence of this would seem to be that the respondent would be entitled to the benefit of the Item 59 "ship" exemption in respect of the rope the subject of the assessment dispute, irrespective of the outcome of this appeal. Such concern as we may have had about being asked to decide a hypothetical question has, though, been dispelled by the terms of the direction given by the Tribunal. We would note specifically that in directing an assessment on the basis that the rope purchased is exempt by operation of Item 109 "and/or" Item 59, the Tribunal gave a discretion to the Deputy Commissioner (in amending the assessment) to choose to apply one only of the two Items. While the appellant does not dispute that Item 59 alone would provide lawful justification for that amended assessment, it objects to the possible use of Item 109 alone for that purpose. It is this possibility - a possibility left open by the terms of the direction made - which removes this appeal from the realm of the hypothetical question. There is, then, a live question raised by the Tribunal's decision. Whether or not the appeal to this Court raises "a question of law" for the purposes of the Administrative Appeals Tribunal Act 1975, s44(1) is altogether another matter. The Statutory Setting The Sales Tax Assessment Act 1992, s24 exempts assessable dealings from taxation if the goods in question were, at the time of the dealing, covered by an exemption Item and if all the requirements of that Item were then satisfied. The Exemptions Act contains a schedule of exemption Items one of which, Item 109, provides: "ITEM 109: [Non-profit university or school] Goods for use by a university, or school, that is conducted by a non-profit body." It is conceded that the respondent is a non-profit body. The Tribunal, as we have noted, found it to be conducting a "school". What the appellant challenges in this appeal is the meaning the Tribunal gave the term "school" in determining that the activities conducted by the respondent with respect to the Leeuwin constituted a school within the meaning of that word in Item 109.

The Factual Setting A considerable body of evidence was placed before the Tribunal so as to illuminate both the purposes of the respondent and the nature and purpose of the activities conducted on, and through the use of, the Leeuwin. This in the main took the form of agreed facts the essence of which is contained in paras 4-21 of the Tribunal's Reasons for Decision. We will provide a short precis of this below. This evidence was supplemented by a body of expert evidence the purpose of which, it would seem, was to assist the Tribunal in determining what is a school for the purpose of Item 109. The Tribunal did not find the "expert witnesses [to] have been of much assistance". No particular reliance was placed upon this body of evidence in the hearing before us. We do not consider it necessary either to outline that evidence here or, for that matter, to comment upon the propriety of its reception by the Tribunal. The respondent is a company limited by guarantee. Its principal objects are:

"(1)To promote the education of young men and women by the provision of an adventure sail training scheme utilising a traditional sailing ship. (2) To provide opportunities for young men and young women to develop qualities of leadership, independence, initiative and self-discipline. (3) To assist young men and young women to develop good character and to foster a community spirit and to develop their responsibilities as junior citizens." Though formed initially for the purpose of raising funds to construct the Leeuwin, the respondent took over its management in 1987 and has retained this function. It employs five full-time ship's crew and four full-time shore personnel, and relies on trained and experienced volunteers to assist in its sailing activities. The respondent Foundation uses the Leeuwin - which is the largest sailing ship operating in Australia - in the following training programmes: (a) Personal development; (b) Corporate team building; (c) Disabled youth; (d) School Maritime Studies; and (e) Eco Adventure. These programmes accounted for ninety per cent of the operational use of the ship in the fourteen and a half month period from January 1994 to March 1995 when its activities were surveyed. The Tribunal in its Reasons described in some detail each of the above programmes. Here, simply to convey a sense of them we set out the Tribunal's description of the personal development programme which in any event would seem to account for about seventy per cent by time of the training activities involving the ship:

"12.Participants in the Personal Development Programmes are provided with a training manual and pre-voyage preparatory material prior to the voyage. The duration of the voyage is 10 days which, depending on weather and other exigencies, the ship sails across 750 to 1,000 nautical miles. During the voyage participants receive instruction in basic seamanship, catering, marine engineering, maritime history, meteorology, navigation, pilotage, oceanography and oceanology. Participants live in cramped conditions on board. 13. The Leeuwin's complex rig facilitates instruction in teamwork and requires participants to climb the rigging. 14. Instruction is provided mainly by volunteer crew called watch officers, the purser and watch leaders. Volunteers are experienced and have been purposely trained at a two day ship familiarisation and personal development programme. 15. Before the Leeuwin goes to sea participants are instructed in the rudiments of rope handling, bridge work, bracing the yards and going aloft. At this stage participants are involved in a joint session and set personal goals to be achieved by the conclusion of the voyage. The emphasis, whilst at sea, is to engender teamwork and responsibility. On-board activities are structured and disciplined. They range from watch duty (i.e. actually sailing the vessel), emergency drills, cleaning, scrubbing and galley duty, all conducted according to merchant navy standards. Participants are assigned to teams of 8, each of which rotates the 4 hour on-off "watch duty". Each watch team is involved in "trust initiation activities" to help develop personal relationships. Participants take part in structured problem solving and learning activities. Activities are planned in such a way that participants have minimal spare time apart from scheduled sleeping periods. Midway through the voyage participants are debriefed in relation to their performance so far and personal goals previously set may be reassessed, based on their experience so far. Watch leaders then withdraw from each team which elects its own leader, the former watch leader acting as an observer to oversee safe handling procedures. Teams then combine to sail the vessel back to port. Before leaving the vessel, participants engage in a structured debriefing session where their overall performance is analysed by the permanent crew and watch leaders. Each participant is assessed on the following attributes: reliability, tact and cooperation, approach to tasks, adaptability, innovative skill, responsibility, new skill knowledge, leadership, organising ability, response to direction, reaction to physical stress and team spirit. Those participants adjudged successful are given a Certificate of Achievement. Participants who, in the crew's opinion, have not achieved the goals of the training voyage - usually, only a small minority - are not awarded such a Certificate." We earlier referred to the principal objects of the respondent Foundation. We would note that the Tribunal concluded that the evidence before it supported a finding that the "Leeuwin achieves its objectives". The Tribunal's Decision In the absence of a statutory definition of a "school" the Tribunal turned to dictionary definitions. From these it extracted the "ordinary meaning" which indicated that "the features which identify a school are that it be an institution which educates or gives instruction". The Tribunal went on to conclude that "[g]oing by the dictionary definition of 'school' alone, it seems open to the Tribunal to find that the Leeuwin may well qualify as a school". Faced, though, with the definition of "efficient school" within the Education Act 1928, s3(1) (WA) - a more restrictive definition with which the Tribunal concluded the Leeuwin could not comply - the Tribunal considered it necessary to turn to judicial decision to assist it in reaching its decision. That which it found most germane to its task was the decision of the High Court in Cromer Golf Club Ltd v Downs (1973) 47 ALJR 219. In that case, in considering whether the resumption of land for a "national fitness camp" was a resumption for a "school site", Barwick CJ (with whom the other members of the Court agreed) indicated (at 221) that: "the word 'school' in [the relevant section of the resumption legislation] is not limited in its meaning to that of a school as in and under the Public Instruction Act; in particular, that it is not a public school under the Public Instruction Act which is necessarily in contemplation in that paragraph. ... It seems to me that a 'school' is a place where people, whether young, adolescent or adult, assemble for the purpose of being instructed in some area of knowledge or of activity. Thus there are drama schools, ballet schools, technical schools, trade schools, agricultural schools and so on." In quoting the above the Tribunal highlighted the definition propounded by the Chief Justice. That definition, it observed, was wider than the dictionary definitions referred to by counsel. Nonetheless the word "school" was being given its "ordinary meaning" by the High Court. It concluded that the respondent's "training activities designed for children and adolescents and, to a lesser extent, adults, are such as would qualify the applicant as a school by reference to the judgment in Cromer Golf Club". In the event, given the Tribunal's conclusions both on the dictionary meaning of the term and on Cromer Golf Club, it reached the unsurprising decision that the respondent Foundation was entitled to the benefit of Item 109.

The Appeal to this Court The question of law said to be raised by the Tribunal's decision is whether the respondent conducts a "school" for the purposes of Item 109. The applicant and respondent alike have agreed in their submissions that the word "school" is to be given its ordinary natural meaning. Where they diverge is on what that meaning might be - at least given the context in which the word is used in Item 109. We would note of this in passing that, because of the view we take of this appeal, it is unnecessary to delay over the question whether the issue so raised is simply one of fact: see e.g. Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 286-288; Hope v Bathurst City Council (1980) 144 CLR 1 at 7-8 and the answer to question 1 at 11; but cf the comments of Gummow J in Agfa-Gavaert Ltd v Collector of Customs (1994) 124 ALR 645 at 648-649 which are particularly apposite to the circumstances of this appeal. The appellant's primary submission as we understood it was that, when juxtaposed with the word "university" (a term which connotes a particular type of educational institution, i.e. one conducting teaching and research at undergraduate and postgraduate level), the word "school" likewise signifies a particular type of educational institution in the broader universe of educational institutions. Its common meaning in this context is an institution which promotes learning through a set curriculum taught by a professional body of teachers and subject to formal assessment. This meaning was also said to encompass the notion of regular attendance over a substantial period of time so as to ensure that students are provided with educational opportunities to equip them for living in today's society. The examples given of a "school" having this ordinary meaning were institutions which provided primary and/or secondary education to children only. Put shortly, the submission was that the collocation of the words "university" and "school" in Item 109 suggested that the meaning of the latter was what, in Lawrence v South County Freeholds Ltd [1939] Ch 656 at 671, was called "its primary and natural meaning - namely a place where boys and girls receive instruction and discipline". Counsel for the applicant acknowledged that the common meaning he propounded was one which excluded from its compass one particularly common usage of the term. That was the use of the word "school" in association with a particular discipline, field of knowledge or activity in which institutional instruction was provided - e.g. "school of music", "ballet school", "Sunday school", etc. The Cromer Golf Club case was said to be distinguishable from the present on the basis that the High Court was there not concerned with the ordinary meaning of the term but rather with a specific and contextually confined statutory meaning. The respondent's submissions as we have noted started with the same premise as those of the applicant: "school" here bore its ordinary natural meaning. The principal definitions given in the second edition of the Oxford English Dictionary ("the OED"), it was said, were themselves consistent with a conclusion that Leeuwin was conducted as a school. Those definitions relied upon were: "1. Place or establishment for instruction. 1.a. An establishment in which boys or girls, or both, receive instruction. ... 3.a. An institution in which instruction of any kind is given (whether to children or adults). Often with defining word indicating the special subject taught, as dancing, music, riding school. ... 4.a. A place, environment, etc, where one gains instruction or training in virtue, accomplishments, or the like ..." It was then submitted, (i) that the judgment in Cromer Golf Club was concerned with the ordinary meaning of the word - a meaning, moreover, consistent with the OED definitions 1 and 3.a. noted above: see also Australian Airlines Limited v Federal Commission of Taxation (1996) 32 ATR 261 at 264-265; (ii) that if a broad and a narrow construction of the word are open, the Item 109 exemption itself having a beneficial purpose for schools and universities conducted by non-profit bodies should be given a construction which promotes that purpose in a realistic way: Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 at 457; and (iii) that the juxtaposition of the words "school" and "university" does not indicate that the former should bear a narrow meaning. The point of departure of these respective submissions is, essentially, as to the effect (if any) to be given to the collocation of the words "university" and "school". Unless this in some way contrives and narrows the meaning to be attributed to "school", there is not in our view any answer to the respondent's submissions. We put the matter this way because (a) the dictionary definitions we have noted would clearly encompass the instruction provided by the respondent; and (b) it is not open to serious argument that the definition given by Barwick CJ in the Cromer Golf Club case was intended to be other than its ordinary meaning and has been so regarded subsequently: see Australian Airlines Ltd v Federal Commissioner of Taxation, above, at 265. We would add, in light of the Cromer Golf Club definition, the so-called "primary meaning" of "school" divined by Simonds J in Lawrence v South County Freeholds Ltd, above, and referred to earlier in these reasons, does not provide any particular illumination of the issue before us. In any event the observations of Simonds J were made in the context of construing an exception to a restrictive covenant where, as the judge himself noted, the "words ... must be strictly construed": [1939] Ch at 672. We turn now to the effect of the collocation of the words "university" and "school". Even if the word "university" is suggestive of one particular type of educational institution performing a relatively accepted core function in the educational arena (i.e. the provision of a range of tertiary qualifications to students and the conduct of research), we are unable to accept that the consequence should follow that in construing Item 109 we should strive to isolate an activity or function more narrow than is suggested by the dictionary/Cromer Golf Club definitions to which we have referred for no more obvious purpose, it would seem to us, than to give a meaning to the two words which overall would describe little if anything more than the traditional primary, secondary and tertiary institutions of educational instruction in this country. It has not been suggested to us that there is something inherent in the purpose of this particular exemption from sales tax which should incline us to such a view. It is not at all apparent why in any event we should seek to dissect in an arbitrary way the types and forms of educational instruction provided by what are "schools" in the sense in which that term is used in the OED and Cromer Golf Club. If parliament had intended that the beneficiaries of the Item 109 exemption in the educational sector were to be constituted only by universities and by schools having particular attributes, it could have said so. It has not. We see no reason why we should give the term a meaning here which truncates what we - and the Tribunal - consider to be the ordinary and, in this context, the appropriate meaning of "school". It has not seriously been argued before us that, if the Item has the meaning relied upon by the Tribunal, the facts as found by it did not fall within the Item. Whether they do so fall is, of course, a question of law: Collector of Customs v Pozzolanic Enterprises Pty Ltd, above, at 287-288. We would merely note that we can discern no error in the decision arrived at by the Tribunal in attributing to the respondent's activity the character of a school given the findings it made on the nature and purpose of that activity and to which we have earlier referred. We would dismiss the appeal with costs. I certify that this and the preceding 14 pages are a true copy of the Reasons for Judgment of the Honourable Justices Northrop and Finn. Associate Dated: 24 July 1996 Counsel for the applicant : Mr S Owen-Conway QC (with him Mr T J Carey) Solicitors for the applicant: Australian Government Solicitor Counsel for the respondent : Mr M J Buss QC (with him Mr S R Nalder) Solicitors for the respondent : Parker and Parker Date of hearing : 15 July 1996 Date of judgment : 25 July 1996

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 17 of 1996 GENERAL DIVISION ) B E T W E E N : COMMISSIONER OF TAXATION Applicant and THE LEEUWIN SAIL TRAINING FOUNDATION LIMITED Respondent CORAM: NORTHROP, CARR & FINN JJ. PLACE: PERTH DATE: 25 JULY 1996 CARR J REASONS FOR JUDGMENT Introduction Item 109 of Schedule 1 to the Sales Tax (Exemptions & Classifications) Act 1992 (Cth) ("the Act") exempts from sales tax "Goods for use by a university, or school, that is conducted by a non-profit body." The question in these proceedings is whether rope, which the respondent used in operating a square-rigged traditional sailing ship known as the "STS Leeuwin", falls within Item 109. The letters "STS" stand for "Sail Training Ship". If the activities which the respondent conducts on "STS Leeuwin" constitute the conduct of a "school" the answer to that question will be in the affirmative. The Administrative Appeals Tribunal has held that the rope is exempt under this Item and/or Item 59 of Schedule 1. In summary, Item 59 exempts from sales tax ships for use by a person mainly for purposes other than pleasure, sport, recreation, private transport or accommodation. The Commissioner of Taxation now appeals from the Tribunal's determination that the rope is exempt under Item 109. The Commissioner does not appeal from the Tribunal's determination that the rope is exempt under Item 59. This means that, regardless of the outcome of the appeal, the rope will remain exempt from sales tax. At the hearing of the appeal, the question arose whether, in those circumstances, the Court was being asked to decide a hypothetical question. The respondent wishes to have the point decided because if it is held to be conducting a "school" this will have significance on an ongoing basis in relation to goods which it buys for conducting its operations, but which do not form part of "STS Leeuwin". It does not wish to re-litigate the question. It is common ground that the respondent is a non-profit body. The applicant is content to amend his assessment on the basis that the rope is exempt under Item 59 but not on the basis that such exemption also arises under Item 109. In either event, the result will be a "nil" assessment. I agree that, in the circumstances of this matter, it is appropriate for this Court to decide the question. There is a real issue which the parties wish to have resolved. That issue was one of the two issues decided by the Tribunal. The respondent will obviously continue to buy goods and is entitled to have its obligations under the Act determined without instituting another set of proceedings. It is, perhaps, unfortunate that rope was selected as the goods in question for the purposes of this case which appears to be in the nature of a test case. However, there is a contradictor before the Court and a live issue to be decided, when one has regard to the practicalities: see Ainsworth v. Criminal Justice Commission (1992) 175 CLR 564, Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 A.C. 438 and the review of the relevant principles by Northrop J in Aussie Airlines Pty Ltd & Ors v. Australian Airlines Ltd (not yet reported, 25 June 1996, Federal Court of Australia Judgment No. 506 of 96). The facts of the matter are not in dispute. I set out below (from the Tribunal's reasons for decision) the facts which were agreed before the Tribunal: "The applicant operates a square rigged purpose-built ship known as the "STS Leeuwin" ("the Leeuwin"). In 1984 a company, "The Sail Training Association of Western Australia" ("the Association") was incorporated under the Associations Incorporation Act 1895 (W.A.) as a non-profit organisation whose principal objects are (i) to help young people to mature and develop in areas of self-esteem, discipline, team work, leadership and good citizenship; and (ii) to educate young men and women through an adventure sail training scheme utilising a traditional sailing ship. That company, pursuant to its Constitution and Rules caused the formation of "The Leeuwin Sail Training Foundation Limited", the applicant (sometimes also referred to as "the Foundation"), whose affairs are conducted and managed by a Board of Governors. The Foundation was formed for the purpose of raising funds to construct the Leeuwin. It initially raised $3,390,000 to build the Leeuwin to a specific design and, after an initial period of sailing under charter to one of its benefactors during the 1986-87 Americas Cup challenge off the coast of Fremantle, it was refitted to its present specifications with 40 berths and entered service as a sail training ship in March 1987. One of the benefactors was the Australian Bicentennial Authority (Commonwealth and States) which donated $700,000 on condition that the ship partake in the Australian Bicentennial Tall Ships Race from Hobart to Sydney and the Parade of Sail on Sydney Harbour on Australia Day in 1988, which it did. Management of the Leeuwin was initially under the Association but in July 1987 was vested in the applicant which employs five full-time ship's crew and four full-time shore personnel, and relies on trained and experienced volunteers to assist in its sailing activities. The applicant's principal objects (as distinct from, but clearly compatible with, those of the Association) are: (a) to promote the education of young men and women by the provision of an adventure sail training scheme utilising a traditional sailing ship; (b) to provide opportunities for young men and women to develop qualities of leadership, independence, initiative and self-discipline; and (c) to assist young men and women to develop good character and to foster a community spirit and to develop their responsibilities as junior citizens. The applicant's Mission Statement, consistent with its objects, provides, inter alia, that the Leeuwin was designed and built specifically to help young people mature and develop in areas of self-esteem, discipline, teamwork and good citizenship. The Leeuwin is the largest sailing ship operating in Australia. It is a 294 tonne, three masted barquentine, 40 metres of deck and a 15 metre bowsprit. It carries 16 square rigged sails measuring 810 square metres. It is designed with a moderate draft so that it has access to Western Australia's ports, harbours and other anchorages. The crew have varying backgrounds and responsibilities. Watch leaders are volunteers who have experience in shipboard safety and procedures including sail handling. They also have completed a short training course to equip them to carry out their duties and responsibilities which include leadership, facilitation of team work, encouragement and support of team members. Specific tertiary qualifications are not a prerequisite. The applicant operates the following programmes: (1) Personal development; (2) Corporate team building; (3) Disabled youth; (4) School Maritime Studies; and (5) Eco Adventure. During the period 1 January 1994 to 15 March 1995 the ship was used in the following ways: Type of voyage Number Days % of use PERSONAL DEVELOPMENT Dedicated to school students 10 111 32 Dedicated to university students 4 44 13 Dedicated to long term unemployed (DEET) 3 34 10 General public 5 55 16 CORPORATE TEAM BUILDING 2 6 2 DISABLED YOUTH 1 5 1 SCHOOL MARITIME STUDIES 1 4 1 ECO ADVENTURE 3 33 10 SPECIAL Defence Force Training 1 5 1 Scout Jamboree Charter 1 8 2 Guide Ranger Charter 1 6 2 TOTAL TRAINING ACTIVITIES 32 311 90 NON-TRAINING ACTIVITY 47 35 10 TOTAL USE 79 346 100 Maintenance and non-operating occupied an additional 93 days, being 21% of the overall duration (i.e. 439 days) for the fourteen and a half month period surveyed. This compared with 71% (311 out of 439 days) on training activities. Participants in the Personal Development Programmes are provided with a training manual and pre-voyage preparatory material prior to the voyage. The duration of the voyage is 10 days which, depending on weather and other exigencies, the ship sails across 750 to 1,000 nautical miles. During the voyage participants receive instruction in basic seamanship, catering, marine engineering, maritime history, meteorology, navigation, pilotage, oceanography and oceanology. Participants live in cramped conditions on board. The Leeuwin's complex rig facilitates instruction in teamwork and requires participants to climb the rigging. Instruction is provided mainly by volunteer crew called watch officers, the purser and watch leaders. Volunteers are experienced and have been purposely trained at a two day ship familiarisation and personal development programme.

Before the Leeuwin goes to sea participants are instructed in the rudiments of rope handling, bridge work, bracing the yards and going aloft. At this stage participants are involved in a joint session and set personal goals to be achieved by the conclusion of the voyage. The emphasis, whilst at sea, is to engender teamwork and responsibility. On-board activities are structured and disciplined. They range from watch duty (i.e. actually sailing the vessel), emergency drills, cleaning, scrubbing and galley duty, all conducted according to merchant navy standards. Participants are assigned to teams of 8, each of which rotates the 4 hour on-off "watch duty". Each watch team is involved in "trust initiation activities" to help develop personal relationships. Participants take part in structured problem solving and learning activities. Activities are planned in such a way that participants have minimal spare time apart from scheduled sleeping periods. Midway through the voyage participants are debriefed in relation to their performance so far and personal goals previously set may be reassessed, based on their experience so far. Watch leaders then withdraw from each team which elects its own leader, the former watch leader acting as an observer to oversee safe handling procedures. Teams then combine to sail the vessel back to port. Before leaving the vessel, participants engage in a structured debriefing session where their overall performance is analysed by the permanent crew and watch leaders. Each participant is assessed on the following attributes: reliability, tact and cooperation, approach to tasks, adaptability, innovative skill, responsibility, new skill knowledge, leadership, organising ability, response to direction, reaction to physical stress and team spirit. Those participants adjudged successful are given a Certificate of Achievement. Participants who, in the crew's opinion, have not achieved the goals of the training voyage - usually, only a small minority - are not awarded such a Certificate. The Corporate Team Building voyage lasts 3 days. Participants are selected by their employer and are provided with pre-reading material and a manual. The object of these voyages is basically the same as that for the 10 day personal development voyages except that, due to the limited time available, the teams do not actually sail the vessel unaided. The major emphasis is a structured programme designed to develop team skills such as goal setting, work planning, role classification, leadership, conflict resolution, active listening, providing feedback, clear communication and coaching others. It is a learning and experiential self-development programme, achieved by a combination of lectures, readings and activities. The programme concludes with a structured review session and feedback provided by the instructors resulting in an evaluation report which is sent to the participants' organisation. The Disabled Youth voyages are of 5 days' duration and are designed to offer participants experience in the challenges of sailing, having regard to their particular disabilities and special needs. The basic programme is similar to that offered in the other training voyages but at a much slower pace and personalised to take account of the particular needs of participants. The programme was designed in 1989 following a $10,000 Queen Elizabeth Silver Jubilee Fund grant and a 5 day pilot voyage in conjunction with the Spastic Welfare Association. Its aim is to assist participants in their physical and intellectual development. The School Maritime Studies voyages are of 4 days' duration and are designed to provide students with practical experience that complements their classroom activities, the curriculum for each voyage being formulated in conjunction with the participants' teachers. The voyage focuses on practical marine studies and involves all participants in normal ship board duties. The Eco Adventure voyages are designed to provide participants with instruction in environmental awareness rather than personal development. Although the participants are involved in sailing the ship these duties are minimised so that they have most time to study the flora and fauna of the region being explored. Participants are provided with a specially prepared manual for these voyages which includes recommended pre-reading material. Participants assist officers of the Department of Conservation and Land Management in the collection of research material. In 1993 independent research and evaluation of the applicant's programmes was undertaken by the Australian Outward Bound Foundation ("AOBF") which concluded that the programmes have a significant and high developmental impact on a broad range of 11 key skill requirements for participants (measured at 1.18 times average), which compares favourably with other outdoor education programmes evaluated by AOBF. ... the Leeuwin is not registered with any sailing club although it has participated in three races - the Hobart-Sydney Tall Ships race in 1988 (supra); the Fremantle to Bali race in May 1990 in fulfilment of a $150,000 sponsorship obligation to Challenge Bank; and the Fremantle to Exmouth race in May 1991, also in fulfilment of a sponsorship obligation to Challenge bank. It is not the intention of the applicant to race." Does the Respondent Conduct a "School"? In his notice of appeal, the Commissioner contends that the Tribunal erred in law in: . failing to take any or any sufficient account of the context in which the word "school" is found in Item 109, being juxtaposed with the word "university"; . relying on authority for the meaning of "school" where the word was used in a different context; . finding that the respondent's activities are such as would qualify it to be operating a school by reference to the judgment of Barwick CJ in Cromer Golf Club Ltd v. Downes (1973) 47 ALJR 219; . failing to find, arising from the context in which the word "school" is found, that "school" is confined to those institutions recognised by relevant Education Acts specifically "efficient schools" registered under the Education Act (W.A.) 1928; and . failing to find, in the alternative, that the applicable meaning of "school" is the meaning according to common concepts, requiring that there be satisfaction of all or some of the learning areas referred to in the Hobart Declaration [being a reference to the Hobart Declaration on Schooling made by the State, Territory and Commonwealth Ministers of Education meeting as the 60th Australian Education Council in Hobart between 14 and 16 April 1989]. Section 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) permits a party to a proceeding before the Tribunal to appeal to this Court "on a question of law" from any decision of the Tribunal in that proceeding. It is common ground in this matter that the word "school" appearing in Item 109, is to be given its ordinary meaning. No question of law as to whether "school" is to be given its ordinary meaning or some technical or other meaning arises. The ordinary meaning of a word is a question of fact: Collector of Customs v. Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at p.287 and cases there cited. The current state of the law appears to be that when a statute uses words according to their ordinary meaning and the question (in the context of an appeal from the Administrative Appeals Tribunal) is whether the facts as found fall within those words one then asks:

Was it reasonably open to the Tribunal to hold that the facts as found by it caused the operations to fall within the ordinary meaning of (in this case) "school"?
If so, then the question whether they do or not is one of fact: Pozzolanic at p.288 and the cases there cited.
However, this principle is further qualified by the proposition that where the material before the Court reasonably admits of different conclusions about whether the respondent's operations fall within the ordinary meaning of the word "school", as so determined, then that question is a question of law: Collector of Customs v. Sharp Corporation of Australia Pty Ltd (1993) 20 AAR 186 (per Burchett J), Pozzolanic at p.288, Collector of Customs (Tas) v. Davis (1989) 23 FCR 378 at p.382 (per Beaumont J) and NSW Associated Blue-Metal Quarries Ltd v. Commissioner of Taxation (1956) 94 CLR 509 at p.512 (per Kitto J). A caveat may be appropriate in respect of the third numbered proposition above, for two reasons. First, because Gummow J in Agfa Gevaert Ltd v Collector of Customs (1994) 124 ALR 645 at pp.648-649 observed:

"... but there may be a number of ordinary senses and it is then necessary to select that which is appropriate, and because whilst the word may have but one ordinary meaning that is imprecise, the word will take its colour from the context and that will require construction of the law, a lawyer's task. The result in such cases will be more than the matching of a set of facts with plain words." Secondly, the High Court of Australia has heard the appeal in Agfa Gevaert and its judgment has been reserved. The Administrative Review Council is considering whether to recommend amendment of s.44 (see the Council's Discussion Paper, May 1995). Its report is anticipated after the High Court's judgment in Agfa Gevaert is delivered. The Tribunal (see paragraph 33) held that to the extent that lexicographical definitions provide the ordinary meaning of the word "school": "... the features which identify a school are that it be an institution which educates or gives instruction. The noun "institution" means an "organised body for the promotion of public object, its building". The Tribunal felt constrained to refer to authority as part of its task to define the meaning of the word "school". In particular, the Tribunal relied heavily on the decision in Cromer Golf Club. However, it is apparent from paragraph 50 of its reasons that the Tribunal regarded the Cromer Golf Club, in turn, as being concerned with the ordinary meaning of the word "school". In that case Barwick CJ (at p.221) observed: "It seems to me that a `school' is a place where people, whether young, adolescent or adult, assemble for the purpose of being instructed in some area of knowledge or of activity. Thus there are drama schools, ballet schools, technical schools, trade schools, agricultural schools and so on."

In my opinion, the Tribunal having found as a fact that the above expression comprises the ordinary meaning of the word "school" as used in Item 109, the only question of law remaining is whether the activities of the respondent (as outlined above) fall within that definition. I accept that the material before the Court reasonably admits of different conclusions about whether the respondent operates a school on board "STS Leeuwin". The result is that a question of law arises. But that question is not "what is the legal definition of "school" as used in Item 109?" Consistent with the above authorities, (and subject to the caveat just mentioned) it seems to me that we must, for the purposes of disposing of this "appeal" take the ordinary meaning of the word "school" as that which the Tribunal found it to be, as a matter of fact. The question is whether or not the respondent's operations fall within the ordinary meaning of the word "school" as so determined. This is not the occasion to express my view on what "school" means in Item 109. However, if I am wrong in my assessment of the position, then, in my opinion, the result will be the same. I shall state my reasons briefly. When Barwick CJ in Cromer Golf Club considered the meaning of the word "school" I think it is clear that his Honour was having regard to the ordinary meaning of that term. "School", like many words, has several ordinary meanings. One of the meanings set out in the Oxford English Dictionary (2 ed) 1989 p.632 is: "an institution in which instruction of any kind is given (whether to children or adults). Often with defining word indicating the special subject taught, as dancing, music, riding school."

It may be, as the Tribunal suggested, that the definition accepted in Cromer Golf Club was wider than the dictionary definitions referred to it by counsel. It would appear that they did not include those found in the Oxford English Dictionary. But to my mind, there is a marked coincidence between Barwick CJ's definition and the definition set out immediately above. Mr S. Owen-Conway QC who (with Mr T.J. Carey) appeared for the Commissioner, argued that the context of "university or school" was quite different from the context in which the words "... for school sites or for sites for public offices or public buildings ..." appeared in the legislation considered in Cromer Golf Club. Mr Owen-Conway submitted that the legislation in that case had a "purpose and prescription" quite different from the instant case. He submitted further that a drama school or a ballet school would generally not be a school in common concepts. I do not think that the meaning of the word "school" as explained in Cromer Golf Club should be restricted to the particular statutory context of that case. As I have mentioned, the High Court (each of the other two judges agreed with the Chief Justice's conclusions and reasons) dealt with the ordinary meaning of the word "school". The additional reference in Item 109 to "university" does not, in my opinion, amount to a sufficient change in context to justify reading down the word "school" in the manner contended. It is not necessary, for present purposes, to decide whether the word "university" is used in its original sense of a corporation of teachers and students formed for the purpose of giving and receiving instruction in a fixed range of subjects at a level beyond that provided at a school (see the New Shorter Oxford English Dictionary at p.3493) or in a wider, more modern, sense. I agree with the applicant's submission that the Act has a different purpose to the legislation involved in Cromer Golf Club. But I do not think that this advances the Commissioner's case, indeed quite the opposite. The purpose of the provision in Cromer Golf Club was to authorise compulsory acquisition for certain specified purposes. Thirty years ago one would not generally have expected such a provision to be given a liberal construction. On the other hand, the provision with which we are concerned in this matter should be widely construed. As French J. observed in Diethelm Manufacturing Pty Ltd v. Commissioner of Taxation (1993) 44 FCR 450 at p.457: "... an exemption which exists for the purpose of encouraging, rewarding or protecting some class of activity is not to be given a narrow application." In Australian Airlines Ltd v. Federal Commissioner of Taxation (1996) 32 ATR 261 Jenkinson J had to consider whether an in-house flight crew training centre conducted by the applicant was a "school" within the meaning of Item 63A of the First Schedule to the Sales Tax Exemptions & Classifications Act 1935. Item 63A was in relevantly identical terms to Item 109. At pp.264-265 his Honour considered Barwick CJ's definition in Cromer Golf Club and (at p.265) said: "I accept that in its ordinary meaning in this country the word "school" comprehends an institution in which instruction in some area or areas of knowledge or activity is imparted, whether to children or adults, by persons professing the capacity to give that instruction, the institution having as its reason for existence the imparting of that instruction."

In my view, for the purposes of Item 109, the relevant definition of the term "school" in common usage is that set out in the reasons for judgment of his Honour the Chief Justice in Cromer Golf Club, as adopted by the Tribunal in this matter. On behalf of the Commissioner it was submitted that: "It is not enough that an institution educates or gives instruction for it to be identified as a school in common concepts. A school in common concepts is an institution which promotes learning through a set curriculum taught by a professional body of teachers and subject to formal assessment. The common notion also includes regular attendance over a substantial period of time so as to ensure that students are provided with adequate educational opportunities to equip them for living in today's society." The facts in Cromer Golf Club and Australian Airlines Ltd were to be distinguished, so it was put, from the facts in the present matter. In his supplementary notice of appeal the Commissioner went so far as to assert that the Tribunal should have found that the word "school" in the present context was confined to those institutions recognised by relevant Education Acts, specifically, "efficient schools" registered under the Education Act (W.A.) 1928. In the alternative the meaning of "school" was to be confined to institutions which satisfied all or some of the learning areas referred to in the Hobart Declaration. This was an approach specifically rejected by Barwick CJ in the Cromer Golf Club case. In my view the same approach should be taken to the present matter. Whether the respondent was registered under the Education Act or whether it satisfied all or some of the learning areas referred to in the Hobart Declaration should not decide whether it is a "school" for the purposes of the Act, being a Commonwealth Act designed to encourage, reward or protect a particular class of activity. Having regard to the following factors: . the fact that the first principal object, set out above, of the respondent is to promote the education of young men and women by the provision of an adventure sail training scheme using a traditional sailing ship; . the provision of a training manual and pre-voyage preparatory material prior to each voyage; . the selection and training of the crew and the nature of their duties as instructors; . the giving of instruction in basic seamanship, catering, marine engineering, maritime history, meteorology, navigation, pilotage, oceanography and oceanology; . participation in structured problem solving and learning activities; and . the assessment of each participant for the purposes of deciding whether they should be awarded a "Certificate of Achievement" I consider that the evidence establishes that "STS Leeuwin" was a ship where people, whether young, adolescent or adult, assembled for the purpose of being instructed in areas of knowledge which included in particular seamanship and the like, and personal development in general. A sailing ship is a logical place in which to give instruction in such maritime and other studies. Over seventy per cent of the time is devoted to supervised training. A lot of the education takes place out-of-doors. But it retains its character of education. The Australian Outward Bound Foundation has assessed the respondent's programmes in favourable terms. In my view, the activities conducted by the respondent are strongly analogous to the activities conducted at the National Fitness Camp as described in Cromer Golf Club by Hope J at first instance ([1971] 1 NSWLR 963 at pp.966-968) and referred to by Barwick CJ on appeal. The applicant relied upon the decision of Simonds J in Lawrence v. South County Freeholds Ltd [1939] 1 Ch. 656 to the effect, in essence, that a music school was not a "school" for the purposes of the particular restrictive covenant involved in that case. I prefer, with respect, the reasoning of Barwick CJ in Cromer Golf Club to that of Simonds J in Lawrence with which it is inconsistent. Furthermore the context of the construction of a restrictive covenant in 1939 is very different to that of a beneficially-motivated exemption in 1996. If the matter is one of law, then of course this Court is bound to follow Cromer Golf Club. For the above reasons I would dismiss the appeal with costs. I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Date: 25 July 1996 Counsel for the Applicant: Mr S. Owen-Conway QC (with him Mr T.J. Carey) Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr M.J. Buss QC (with him Mr S.R. Nalder) Solicitors for the Respondent:Parker and Parker Date of Hearing: 15 July 1996 Date of Judgment: 25 July 1996

Sales Tax (Exemptions & Classifications) Act 1992(Cth)

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Judgment (11 paragraphs)

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Legislation Cited (2)

Cases Cited (8)

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