Dalton v Commissioner of Taxation [1986] FCA 636 | Case summary

Federal Court of Australia|1986-12-17|Before: Gummow J

ADMINISTRATIVE LAW - Claim of entitlement by industrial organization to request statement of reasons under s.13 ADJR Act in respect of decision of respondent to issue manning notice to shipowner under s.57AM Income Tax Assessment Act - organization a "person aggrieved" - Schedule 1 of ADJR Act not applicable to decision - respondent not bound by s.16 Income Tax Assessment Act to deny entitlement to statement of reasons under s.13 ADJR Act.

Administrative Decisions (Judicial Review) Act 1977, 5s. 5, 13 Income Tax Assessment Act 1936 ss. 16, 57AM

Dalton v Commissioner of Taxation (1985) 7 FCR 382 cons

Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 cons

Tooheys Ltd v Minister for Business & Consumer Affairs (1981) 54 FLR 421 cons

Deputy Commissioner of Taxation v Clarke and Kann (1984) 52 ALR 603 foll.

Mercantile Credits Ltd v Federal Commissioner of Taxation (1985) 61 ALR 331 CONS.

Federal Commissioner of Taxation v Swiss Aluminium Australia Ltd (1986) 66 ALR 159 cons

Canadian Pacific Tobacco Co Ltd v Stapelton (1952) 86 CLR 1 cons

Commissioner of Taxation v Nestle Australia Ltd (Full Federal Court, 5/11/86, unreported) cons

AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS v THE SECRETARY, DEPARTMENT OF TRANSPORT

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISTON

BETWEEN : AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS Applicant AND: THE SECRETARY,

the applicant was entitled to make the request it made

under s.13(1) of the Administrative Decisions (Judicial

Review) Act in respect of the decision of the respondent to issue a manning notice pursuant to

s.57AM (22) of the Income Tax Assessment Act 1936 for

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

NEW SOUTH WALES DISTRICT REGISTRY No. NSW G 231 of 1986

In these proceedings the applicant by its amended application seeks to challenge the refusal by the respondent to furnish a statement requested of it purportedly pursuant to

13(1) of the Administrative Decisions (Judicial Review) Act

1977 ("the ADJR Act"). The statement was sought in respect of a decision of the respondent to give a "manning notice" under s. 57AM(22) of the Income Tax Assessment Act 1936 ("the Tax Act"). The respondent denies that the applicant was entitled to request a statement of his reasons for the decision in

The refusal was by letter from the respondent to the applicant's solicitors dated 9 May 1986. The amended

application treats the letter as notice of the respondent's

opinion within the meaning of s. 13(3){a) of the ADJR Act and,

in my view, this is the correct way of characterizing it.

The respondent filed a notice of objection to competency which in effect raises the substantive issues

between the parties as to the adequacy of the reasons advanced by the respondent for denying the applicant's entitlement to request a statement of reasons. An agreed statement of facts was filed together with affidavits upon which there was limited

registered organization pursuant to the provisions of the

Conciliation and Arbitration Act 1904, Among the objects of

"(i) {Tjo foster the science and art of engineering.

(ii) To advance the interests of the profession of engineering and those engaged therein, and to safeguard their status and character. To

foster fraternal sympathy, discuss sound principles affecting the mutual good of its members, to use its influence to increase the confidence of the mercantile community in the employment of recognized engineers, and to procure that all Maritime and other laws for the public safety be improved and carried out in their entirety.

(iii) To endeavour to obtain and to maintain reason- able conditions of employment and fair rates of

remuneration for its members, and to negotiate awards and agreements."

The controversy between the parties has its origin in the request by the owner of a vessel presently known as the "BP Endeavour Replacement" for the giving of a "manning notice" within the meaning of s. 57AM of the Tax Act. The ship is expected to be commissioned early in 1987. The manning notice that was given under s. 57AM(22) was not in evidence, but it appears to have been issued in November 1985 and to have stipulated a ship's complement of twenty-nine. It was in respect of the Respondent's decision to give this notice that the applicant unsuccessfully sought a statement under s. 13 of the

The applicant is one of some five industrial organiz- ations with members engaged in crews of ships comparable to the "BP Endeavour Replacement". The members of the applicant that are involved are classified as "marine engineers and electrical engineers at sea". Section 57AM was inserted into the Tax Act by Act No.14 of 1984. In the second reading speech upon what became the Income Tax Amendment Act No. 4 of 1984 (by s. 7(1) of which s. 57AM(22) assumed its present form), the Minister said - Hansard, House of Representatives, 13 September 1984,

"Honourable members will recall that these concessions were introduced earlier this year in order to provide greater incentives for the Australian shipping industry. These concessions are intended to promote greater efficiency in the manning of Australian

ships. The amendments will modify the requirements that are imposed upon the Secretary to the Department ef Transport in determining the maximum complement of officers and crew which in his opinion is appropriate for the safe and efficient manning of ships eligible for the tax concessions. Primarily, the amendments are to remove any suggestion that industrial relations considerations are a dominant or overriding factor to be taken into account when determining manning levels. They will make clear that industrial relations considerations, where relevant, are but one of the factors to be considered."

The provisions of s.57AM are lengthy, but for present purposes

the principal elements of the regime which it establishes are as

"(7) The depreciation allowable to a taxpayer under this Act in respect of an eligible Australian ship in respect of the year of income in which the

eligible date in relation to the ship occurred or in respect of a subsequent year of income is -

(a) in the case of a new ship ... the eligible date in relation to which the commissioning

(b) in any other case - 20% of the depreciated value of the ship at the beginning of the year of income in which the eligible date in relation to the ship occurred."

In subsection (1) there is a number of definitions . "Eligible date" means, so far as is applicable here, in the case of a "new

(i) aif the ship becomes an "eligible Australian ship" before the expiration of 90 days

after the commissioning date of the ship - the commissioning date of the ship, or

(ii) in any other case - the day on which the ship becomes an eligible Australian ship.

The expression "manning notice" is defined as meaning a notice given by the Secretary under subsection (22) in relation to a ship, "new ship" is defined as meaning a "trading ship" the commissioning date of which occurs after the commencement of the section, and "trading ship" (subject to qualifications not here relevant) is defined as meaning a ship that is used or is held in reserve for use for or in connection with any business or

commercial activity and includes a ship that is used or is held

in reserve for use wholly or principally for the carriage of

The expression "eligible Australian ship" takes its

meaning from subsection (4) which is in the following terms:

"(4) For the purposes of this section, a pre-July 1982 ship, a post-July 1982 ship or a new ship owned by a taxpayer shall be taken to be an eligible Australian ship if -

(b) the ship was constructed by or acquired new by, the taxpayer andis for use by the taxpayer wholly and exclusively for the

(d) the ship, when manned, is manned by persons each of whom is either a resident or a person in relation to whoma certificate

issued under subsection (26) is in force; (e) in the case of a pre-July 1982 ship... .;

(f) in the case of a post-July 19982 ship or a new ship, the ship -

(1) was, on the commissioning date of the ship, registered under the

Shipping Registration Act 1981 and that registration has, at all times

date, been registered ina country other than Australia; and

(iii) has, at all times since that date, been owned by the taxpayer;

(ii) the ship is for use by the other person wholly and exclusively for the purpose of producing assessable income; and

Ch) the ship is used, or is held in reserve for use, in operations of a kind specified ina manning notice in force in relation to the ship and is not, when manned, manned at a

level that exceeds the level specified in the notice for operations of that kind."

The other provisions in s. 57AM to which I should refer

are subsections (20), (21) and (22). These read as follows:

"(20) A person who is, or is to be, the owner of a ship (including a ship in the course of construction or a ship the construction of which has not yet commenced), or a person authorized for the purpose by the first-mentioned person may, by notice in writing given to the Secretary, request the Secretary to give a manning notice in relation to the ship.

(21) A request pursuant to sub-section (20) or (23) in relation to a ship shall include a_ statement setting out -

(a) the specifications of the ship (including a plan of the accommodation layout of the ship);

{b) details of the kinds of operations in which the ship is, or is to be, engaged; and

(c) the number of officers of specified designations and the number of members of the crew of specified designations with which the ship is being, or is proposed to be, manned while engaged in each of the kinds of operations referred to in paragraph (b).

(22) The Secretary shall, after receiving a request made pursuant to sub-section (20) in relation to a ship, give a notice in writing by post to the person who made the request setting out, in relation to each kind of operations in which the ship is, or

is to be, engaged, the number of officers and members of the crew with which the ship should, in the

opinion of the Secretary, be manned to enable the ship to be operated ina safe and efficient manner while engaged in operations of that kind." Some seventeen manning notices have been issued in respect of ships comparable to the "BP Endeavour Replacement". Three of the ships are not manned in accordance with the relevant

notice but these are ships commissioned prior to the commencement

Mr Thorpe, an officer of the Department of Transport, deposed that the manning notices issued in respect of these ships reduced the manning level from that sought in the applications by the shipowners. Mr Christiansen, an officer of the applicant, gave evidence that an existing manning level set an "industrial precedent" which the shipowner would find extremely difficult to reduce. In addition to the above manning notices, "preliminary" manning notices in relation to four other ships also commissioned

before 1984 were withdrawn and never came into effect.

Upon the receipt of the notice in writing to the Secretary under s. 57AM, an administrative procedure was followed in this as in other cases of this kind. The procedure has no statutory force. It is described in paragraph 4 of the agreed statement of facts and in annexure B thereto. Paragraph 4 is as

"(4) The process leading to a determination by the Secretary under the provisions of the ITAA (Cmeaning the Tax Act] is as follows:

(a) On receipt by the Department of an Applic- ation containing the information required by Section 57AM(21) of the [Tax Act] the assessment process commences with ... a series of meetings of a committee compris- ing representatives of the Ship Owner and Maritime Unions concerned under the chairmanship of the departmental officer. This committee is known as a Manning Committee. The principal purpose of the Manning Committee is to provide a_ consult- ative process to examine the manning considerations relevant to the operation of the ship concerned.

(b) Following the initial manning committee process, the Chairman evaluates the issues and prepares a report which particularly addresses the technical aspects relating to the safe and efficient manning of the ship.

(c) The Chairman's report is then viewed by policy areas of the Department at which stage non-technical considerations are addressed. These considerations may lead to a revision of the manning figure contained in the Chairman's report. The resulting figure is then released to ali parties concerned as the preliminary assessment. The preliminary assessment is the Department's initial view, as distinct from the Secretary's final determination, as to the manning appropriate for the safe and efficient operation of the ship in the kinds of operation the ship is, or will be

engaged in, as specified in the application for manning.

(d) The preliminary assessment deals with ali ship-board functions and with all categories of crew numbers but is issued in the form of a single number representing a

(e) If the preliminary assessment figure is disputed by one or more of the parties, an opportunity is provided for further material to be considered by the Chairman and, where appropriate, by one or more further meetings of the manning committee or a manning sub-committee.

(f) The ship-owner's application, the prelimin- - ary assessment and material used in reaching it, the manning committee's reports, any sub-committee reports and any additional relevant material are then

forwarded to the Secretary for his determination of the ship manning level."

The applicant was one of the maritime unions that participated in the administrative procedures I have described in respect of the present case. The figure in the manning notice issued in this case was an "all-in figure" which is the figure proposed by the shipowner. The applicant contends that the figure is two or three less in number than other "precedents" and

the shortfall must be borne in some fashion between the five

Mr Christiansen deposed that a reduction of the total engineering component, this being the subject of the concern of his organization, from six to five, would hbe "extremely significant" to it. The respondent urged that the issue of the manning notice does not prevent the applicant bringing the matter

as an industrial dispute before the Conciliation and Arbitration

Commission. The applicant in response pointed to what it said was an as yet undecided contested application before the Concili- ation and Arbitration Commission over manning levels on another ship in which the Commonwealth Steamship Owners Association has put submissions that the Conciliation and Arbitration Commission should not deal with the matter because a manning notice was in

The applicant also contends and the respondent also denies that manning of the new ship as provided in the manning

notice will impair safe and efficient operation of the vessel.

The legal issues between the parties which were debated

Was the applicant a "person aggrieved" within the meaning of s.5 of the ADJR Act as referred to in 5.13 thereof?

Even if it were such a person, was the decision of the Secretary to issue the manning notice not "a decision to which Cthe ADJRI Act applies" because either or both -

(a) the decision fell within Schedule 1 of the ADJR Act; and

(b) it was not of an administrative character within the definition of "decision to which this Act applies" in s. 3(1) of the ADJR Act? and

Does s. 16(2) of the Tax Act so operate as to disentitle the applicant to make the request under s.13(1) of the ADJR Act?

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matter may tend perhaps to get into some confusion. The position of relator or prosecutor in the case of prerogative writs and of informations is anomalous.

The relator or prosecutor has a locus standi to obtain relief, but the relief or remedy runs in the

name of the Crown. In form it is a proceeding by the

Crown taken in the public interest. The relator or prosecutor cannot be said to have the ordinary

private right to a remedy for the enforcement of the duties owing to him or for the vindication of his own personal rights. The remedy goes in the interests of the public and the relator is in the position of a person who informs the court of an occasion why the public remedy should go."

The other great field for judicial review of administrative decisions lay in equity, and, in particular, in the remedies of injunction and declaration. Hence, perhaps, the reference by Ellicott J. in Toohey's Case, supra, to the ADJR Act procedures being directed partially to the common law procedures. In equity attention was in the nineteenth century directed to use of equitable remedies to protect legal and equitable rights in the strict sense and, in particular, to protect such rights as were proprietary in nature. Hence the treatment of equitable remedies in public law, in cases where the claimant lacked the fiat of the Attorney-General, became emmeshed in the so-called rules in Boyce's Case £19031 1 Ch 109. These had their own complexities which, in Australia, have but recently been diminished by a series of High Court decisions. The

complexities are discussed by Dr. Finn in "A Road Not Taken: The

Boyce Plaintiff and Lord Cairns' Act" (1983) 57 ALJ 493 at

498-509, 571-5. The result is that standing here does not now require special damage in the traditional sense, and that whilst

a mere belief or concern is not sufficient, a "special interest"

over and above that enjoyed by the public will suffice: Australian Conservation Foundation v The Commonwealth (1980) 146

CLR 493; Wentworth v Woollahra Municipal Council (1984) 154 CLR 518 at 525.

The result is that there is a measure of broad agreement as to locus standi both for legal and equitable remedies in public law and in that situation it would be a strange result if the ADJR Act posited, by use of the concept of grievance, some narrower criterion. It also has to be borne in mind that' the ADJR Act is ambulatory in its operation and draws within its scope a diverse and extensive collection of decision making processes, truly an unclosed class. Too rigid a criterion of locus standi will threaten to stultify the utility of the

Hence the force of the observations (frequently adopted in this Court) by Ellicott J. in Toohey's Case (1981) 54 FLR 421 at 437-8 to the effect that the meaning of "a person aggrieved" is not encased in any technical rules and that much depends upon the nature of the particular decision and the extent to which the interest of the applicant rises above that of an ordinary member

In the present case the direct legal effect of the issue

of the manning notice is upon the shipowner because the giving of

such a notice is an essential step in compliance with paragraph (h) of the intricate definition of "eligible Australian ship" in Section 57 AM(4) of the Tax Act and only an eligible Australian ship may be the subject of the special depreciation provided for in Section 57AM. Further, the "parties", in an immediate sense, to the decision of the Secretary to give the notice are the

Secretary and the shipowner or other person who requested the Secretary under Section 57AM (20) to give the notice. But that does not mean that the applicant is not a person aggrieved in the

First, the applicant has among its interests or objects

the obtaining and maintenance of reasonable conditions of

employment of its members and the negotiation of awards and agreements with employers including the owner. Secondly, it was invited to participate in the Manning Committee in respect of the ship in question and made submissions in regard to the proposed manning notice. Having done so, it seeks the reasons (if any) as to why the ultimate decision of the Secretary as to the contents of the manning notice was at variance with its submissions to the Manning Committee. Thirdly, the respondent contends that the crew level fixed for the "BP Endeavour Replacement" is sufficient to ensure safe operation of the _ ship. This the applicant disputes, and it would be quite inappropriate to enter upon the merits of that debate. Nevertheless, the applicant's complaint is not said to be made frivolously and it plainly has a_ real

interest in the matter. And one can think of no more fertile

ground for an industrial dispute. Fourthly, as a matter of practicality, the manning scale provided for in the manning notice may be a determinant of the number of members of the applicant that will be engaged. If the owner wishes to obtain the special depreciation concession it must meet a number of criteria, including compliance with the manning notice. Should the owner wish to comply, and if that notice remains in its present form, an adjustment of what otherwise would be expected to be the manning levels will be necessary, with a shortfall to be divided in some fashion between the five industrial

organizations involved, one of which is the applicant.

In my view, whilst no single one of the above matters might be adequate, looking to the picture they build up, the applicant does have a_ sufficient interest to constitute it a person aggrieved by the decision of the Secretary. It is true that the shipowner might not comply with the manning notice and that even if it did the applicant might manage to obtain what it says should be its full component of the crew. However, in my view (and in the circumstances of the case) there flows from the decision of the Secretary a danger and peril to the interests of the applicant that is clear and imminent rather than remote, indirect or fanciful, and the applicant has an interest in the

matter of an intensity and degree well above that of an ordinary

The principal issue here is whether the decision of the Secretary was a decision included in any of the classes of decision set out in Schedule 1 to the ADJR Act, viz: decisions making, or forming part of the process of making, or leading up

to the making of, assessments or calculations of tax under the

Each of these categories provides some extension of the

former, but, as the Full Court of this Court said in Deputy

Commissioner of Taxation v Clarke and Kann (1984) 52 ALR 603 at

607, the overall effect is to emphasise the essential need for a connection between the decision andan assessment. The Full

"CAI decision does not lead to the making of an assessment merely because it precedes the making of an assessment or because its purpose is to enable or facilitate the making of any aSsessment which may be made. A decision is not a decision leading up to the making of an assessment unless the making of an assessment has followed or will follow from the decision."

The same is true, in my view, of the expression "calculations of tax" in the heading in the Schedule. The authorities were further considered by Morling J. in Mercantile Credits Ltd v Federal Commissioner of Taxation (1985) 61 ALR 331. It was there decided that the decision to refuse a taxpayer a

withholding tax exemption certificate in respect of a loan from

an overseas creditor did not fall within the Schedule. This was because, although in the absence of an appropriate certificate withholding tax would be payable, a decision does not lead to the making of an assessment or calculation in the necessary sense for the Schedule merely because it precedes the making of an assessment or calculation, and the question of whether or not a

certificate will issue has nothing to do with the actual

In the present case, the legislation obliges the taxpayer seeking the special depreciation to satisfy a network of requirements. These include (in the case of the ship involved here) the requirement that the ship be an eligible Australian ship in respect of the year of income in which the eligible date in relation to the ship occurred: Section 57AM (7) of the Tax Act. The ship will only be "an eligible Australian ship" if the conditions of s. 57AM (4) are met. These include paragraph (h) which I have set out above. The taxpayer is of course not obliged to comply with the manning notice that has been given, although, if the taxpayer does so one of a number of essential steps will have been taken towards entitlement to the special depreciation. The giving of the manning notice is thus one of the matters which the taxpayer has to establish to claim the special depreciation, but that does not, on the authorities I have discussed, mean that the decision to give the certificate was within the class of decisions referred to in para (e) of

Schedule 1 of the ADJR Act. The decision precedes the making of

a calculation and assessment but that does not mean that it leads to the making of an assessment or calculation in the necessary sense. Accordingly, the Schedule did not render the decision not

As an independent matter, the respondent also submitted (but rather as a subsidiary argument) that the decision was not one to which the ADJR Act applied because it was not "a decision of an administrative character". In my view the decision plainly was of such a character. Section 57AM (22) of the Tax Act states that in the circumstances there described the Secretary "shall ... give anotice in writing..." and the definition of "decision to which this Act applies" in s. 3 (1) of the ADJR Act in terms includes a decision required to be made under an enactment. The distinction between legislative and administrative decision making and the wide import of the term

"administrative decision" are discussed in Hamblin v Duffy (1981)

50 FLR 325 at 331-334, Minister for Industry and Commerce v

Tooheys Ltd (1982) 60 FLR 325 at 331-4, and ACT Health Authority v Berkeley (1985) 60 ALR 284 at 286. Here the Secretary was

required to make, and did make, an administrative decision within

the sense of that term as explained in those authorities.

Finally, it was submitted by the respondent that he has an obligation to comply with s.16(2) of the Tax Act and that

because he would disobey this obligation by furnishing to the applicant (pursuant to s.13 of the ADJR Act) a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision, the

applicant was not entitled under s.13(1) of the ADJR Act to

The Secretary had received by notice in writing a request to give a manning notice in relation to the ship, which request had to include a statement setting out the information described in s.57AM (21) of the Tax Act. That information would, in my view, "respect the affairs of any other person" and would be "disclosed or obtained" under the provisions of the Tax Act, go as to attract to the Secretary the definition of "officer" in s.16(1) of the Tax Act. That brings one to s.16(2) which is as

"Subject to this section, an officer shall not either directly or indirectly, except in the performance of

any duty as an officer, .. . make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of

"officer" in sub-section (1)." In Federal Commissioner of Taxation v Swiss Aluminium Australia

Ltd (1986) 66 ALR 159 at 168, in the course of his judgment in the Full Court, Jackson Jd. said:

"Read by themselves, the terms of 5 16(2) prohibit an officer from: -

(1) making a record of any information respecting the affairs of another person; or

(2) divulging to any person any information respecting the affairs of another person; or

(3) communicating to any person any information respecting the affairs of another person.

The expression 'another person' in s 16(2) would thus apply to the affairs of all persons other than the officer in so far as it constituted a prohibition upon making records, and would apply to the affairs of all persons other than the officer and the person to whom the information was divulged or communicated in the case of the other prohibitions ins 16(2). It is true to say that sub-s (1) of s 16 in referring to information 'respecting the affairs of any other person' is clearly enough referring to any person other than the officer, but there is no reason why a similar approach should necessarily apply to all aspects of the prohibitions contained in sub-s (2). The wider approach applies without difficulty to the prohibition against making a record of information, but the addition of the words 'to any person' after the words 'divulge or communicate' suggests that a narrower meaning should be regarded as applying in those instances."

The debate in this case has concerned principally the

meaning of the exception "in the performance of any duty as an officer". It may be observed that the exception to the obligation imposed by s. 16(3) in respect of production and disclosure to courts is more specifically drawn, being limited to

cases where "it is necessary to do so for the purpose of carrying

into effect" the provisions of particular statutes or classes of statutes. The other provisions of s. 16 include elaborate

releases from the prohibition upon communicating information, but

Dalton v Commissioner of Taxation

At a glance

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Judgment (223 paragraphs)

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Cases Cited (15)

Cited By (2)