Consideration
Question of law raised
46 The question of whether the facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. So far as regards the law in Australia, Mason J, with whom Gibbs, Stephen, Murphy and Aickin JJ agreed, gave the classic explanation for this proposition in Hope v Bathurst City Council (1980) 144 CLR 1 ("Hope") at 7, where his Honour said:
"Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J in Hayes v Federal Commissioner of Taxation, where his Honour quoted the comment of Lord Parker of Waddington in Farmer v Cotton's Trustees, which was adopted by Latham CJ in Commissioner of Taxation v Miller, that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J then said:
'... this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The "facts" referred to by Lord Parker ... are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law.'
However, special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words. Brutus v Cozens was just such a case. The only question raised was whether the appellant's behaviour was 'insulting'. As it was not unreasonable to hold that his behaviour was insulting, the question was one of fact."
(Citations omitted)
In Vetter v Lake Macquarie City Council (2001) 202 CLR 439 ("Vetter") at 450, Gleeson CJ, Gummow and Callinan JJ specifically adopted Mason J's discussion and statement of the law on this subject.
47 There is, therefore, strong authority for the proposition that, where the facts have been found and the only question is whether they fall within a statutory provision, the question is one of law: see Vetter at 450; Hope at 7; and Pozzolanic at 287; also Roberts at 252 per Hill J and the authorities there cited; Lombardo v Commissioner of Taxation (Cth) (1979) 40 FLR 208 at 212 per Bowen CJ; Cooper at 194 per Hill J; and Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 ("Australian National Railways") at 277 per Sheppard and Burchett JJ.
48 The principal question that the Commissioner sought to agitate before the primary judge was whether or not, on the facts as found by the AAT, EECL was entitled to a diesel fuel rebate by reason of s 78A(1)(b), (c) and (d) of the Excise Act, as properly construed. Plainly enough, this is a question of law: compare Cowell at 10 per Hill J. This is so, even where as in this case the criteria fixed by these provisions made their application to the facts a matter of degree: see, for example, TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 at 182 per Gummow J; also Pozzolanic at 288-9. The authorities on these rebate provisions amply demonstrate that, as the primary judge held, the application of the words "purchases … for use by [the purchaser]", "at residential premises", "at a hospital …" and "at a home for aged persons" necessarily involves a selection process about a range of relationships. In the present case, even if the material before the AAT did reasonably admit of more than one conclusion as to whether or not the statutory criteria were satisfied, the question of whether the material did so admit was necessarily a question of law.
49 The construction and application of the relevant rebate provisions is not akin to the construction and application of the expression "cultivation or gathering in of crops", also discussed in Pozzolanic. In that instance, the Court was concerned with the question of whether the facts came within that expression as a matter of ordinary English. This was said to be a question of fact.
50 Whether or not the notice of appeal challenging the AAT's decision sufficiently formulated the question of law that the Commissioner desired to agitate is a separate question. Order 53 rule 3(2) of the Federal Court Rules requires that the question of law to be raised by the appeal and the grounds relied on in support of the order sought on the appeal be stated separately: compare Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 at 325 per Branson and Stone JJ, with whom Marshall J relevantly agreed at 332; Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 202 ALR 450 at 459 per Branson J; and Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 at 524 per Ryan J. EECL referred to these authorities in the course of its submission that the appeal from the AAT was incompetent because it did not raise a question of law. These cases are, however, different from the present in that the notices of appeal under discussion in them described, as "questions of law", questions that plainly did not raise any questions of law at all. That is not this case.
51 The drafting of the first question in the Commissioner's notice of appeal was inelegant. It did not expressly state any question at all. Its purport was, however, tolerably clear, having regard to the rebate provisions themselves, the relevant authorities (which referred to "locational" and "purposive" tests), the language of the AAT's reasons, as well as the grounds as stated in the notice of appeal. The Commissioner plainly intended to raise the question of whether, on the facts as found by the AAT, the ("locational" and "purposive") criteria fixed by the relevant rebate provisions were satisfied.
Was it open to the AAT to find that the rebate provisions applied?
52 In Rottnest Island, the Full Court (constituted by Beaumont, French and Foster JJ) said, at 182, that:
"[I]t is reasonable to observe that a reading of the section without resort to [the decided cases], conveys a fairly clear impression that thelegislature is seeking to provide a rebate to a purchaser of diesel fuel who uses that fuel at a dwelling for the provision of power for the domestic use of the residents of the dwelling. The use of the fuel to power a private domestic generator providing electricity to the dwelling would no doubt be a use clearly covered by the section. Decisions on the section have, however, given it a wider operation."
53 This highlights a significant difficulty with the rebate provisions (which have now been repealed). There is an apparent disconformity between the impression of its operation that one gains on a first reading and the operation that has been accorded the provision by the decided cases. This difficulty permeates the present appeal. As will be seen, the answer to the principal question raised by the appeal turns very largely on the precise effect of prior Full Court authorities. To explain this, it is necessary to embark on a brief review beginning with Flinders Island.
54 In Flinders Island, a Full Court(constituted by Sheppard, Wilcox and Everett JJ) held, at 213, that the word "at" in the phrase "at residential premises" in s 164(1)(b) of the Customs Act (which is the same as s 78A(1)(b) of the Excise Act) "should be taken to require a close connection between the use and the residential premises but not use within the residential premises". In that case, the respondent Association used diesel fuel to power a generator to supply electricity to eight houses on a housing estate. The residents took responsibility for shutting down the generator, which was located outside the curtilage of the supplied homes, at weekends. The cost of the diesel fuel was paid for by the residents. The Court said, also at 213:
"What is a sufficiently close connection must depend upon the circumstances of the particular case … applied to the policy evinced by the legislation. In this regard it appears that the Parliament intended to give a rebate in respect of use of diesel fuel for what might be called home generation of electricity for domestic purposes; as contrasted, for example, with the generation of electricity by a commercial or local government supplier. It is consistent with that policy that, and the use of the word 'at', that the generation takes place in physical proximity to the supplied houses and that the resultant electricity be used only at premises falling within the definition of 'residential premises'."
55 The respondent relied on a number of factors, which supported the proposition that the generator was "at" each of the eight residential premises, including, the proximity of each house to the generator, the existence of relationships between the respondent and the residents, the supply of the electricity at cost, the communality of the operation of the generator, and the appropriateness of the generator to fulfil the purpose of supplying the domestic needs of the houses. The Court commented, at 214:
"It may be that it is not necessary for all of the factors nominated … to be present to constitute a case in which it may be said that diesel fuel consumed at a generator located outside the limits of a given parcel of residential land is used "at" those premises. However, in a case where those factors appear, it will almost certainly be correct to say that the use is "at" the premises."
56 Of this case, the Court in Rottnest Island said, at 183:
"The Court accepted that the legislation provided for a double test in relation to the use of the diesel fuel, namely, whether it was used "at" residential premises and "in" providing etc. The test was described as being "cumulatively locational and purposive"."
57 A Full Court of this Court also considered the rebate provision in Perkins when it held that the definition of "residential premises" in s 78A covered the crew's living quarters on a ship. Electricity was supplied to these quarters by the ship's diesel powered engines. When the vessel was in port, one engine ran continuously to provide power for the ship's services, including air-conditioning, cooking, washing, and lighting. The power was almost entirely consumed in respect of accommodation areas. The Court rejected the contention that the fuel was not purchased for use at "residential premises" because it was purchased for the general purpose of operating the vessel.
58 As the Court in Rottnest Island said, at 185-186, Perkins affirms the proposition that a rebate of duty will not be denied simply because the fuel is used to power a generator which is itself not situated within the "residential premises" in which the amenities dependent on that power are to be provided. It is sufficient that the generator is sufficiently proximate to those premises to allow the fuel used in it to be regarded as being used "at" the premises. Further, the fact that the generator (and hence the fuel) provides power for uses other than those contemplated by the rebate provision does not prevent the provision from applying in respect of fuel used for the purposes contemplated by the provision.
59 Pozzolanic, referred to earlier in a different context, also concerned the rebate provision, although the claim in that case concerned s 78A(1)(aa) of the Excise Act, it being said that the diesel fuel was used in primary production. In Pozzolanic, at 289-290, the Full Court reiterated that:
"The requirement that fuel be purchased by the person claiming the rebate "for use by him …in primary production" is a requirement that must be satisfied at the point of purchase. It is a requirement which can only be met if the fuel for which rebate is claimed is purchased with the purpose of applying it to one of the exempted uses. The actual use to which the fuel is put subsequently can be evidence of the purpose for which it was purchased. But that does not exclude inquiry of the consignor or consignee about their objective intentions ... ."
60 Almost ten years after Flinders Island, the Full Court gave judgment in Rottnest Island, on the question whether, on the facts of the case, it was open to the AAT to decide that the respondent Authority was entitled to a diesel fuel rebate under the residential premises head of s 78A(1)(b) of the Excise Act. The Court in Rottnest Island specifically rejected the Collector's contention that, as a matter of law, a claim for a rebate must fail if it were the case that fuel was purchased for the purpose of use in the generation of electricity by the respondent Authority. The Court said, at 191:
"In our opinion, there is nothing in the section which precludes an electricity generating authority, private or governmental, from having in mind that a proportion of the fuel purchased by it will be used in the generation of electricity to be supplied to domestic residences for the provision of the amenities contemplated in s 78(1)(b)(i), (ii) and (iii). In such circumstances there would be no impediment to a finding that the authority purchased the amount of fuel to be used by it for those purposes. We agree, with respect, with Hill J that the authority as a purchaser must also engage in "the purposive use". However, the use of the fuel in providing electricity to the relevant residences so that it is then available as a source of power to the residents for the provision of the amenities contemplated by the section constitutes, in our view, a sufficient "purposive use" of the diesel fuel purchased for the generation of that electricity. It may well be, however, that where a generating authority provides electrical power to "all and sundry" in circumstances where it sells it at a commercial rate to a variety of customers including those who buy it at such a rate for purely domestic purposes, that authority would be found to be purchasing fuel merely for the purpose of producing electricity for commercial sale. In those circumstances the relevant purposive use would not be established. That, however, is not this case."
61 Regarding Flinders Island, the Court in Rottnest Island specifically added:
"[W]e should also observe that we would not regard certain statements made in the judgment in the Flinders Island case as requiring that an entity purchasing diesel fuel for the purpose of generating electricity for supply to customers of various kinds, not only to occupants of residential premises, would, ipso facto, as a matter of law, be ineligible for rebate. Whilst it is true that in that case the Court made a comparison between the mere domestic generator and the local government supplier, it was not, in our opinion, with the intention of indicating that the local government-type supplier could never be eligible. It was to underline the essentially domestic nature of the generation and supply situation in the Flinders Island community. Conversely, it must also be recognised that the Flinders Island case is not authority for a proposition that a person or entity who uses diesel fuel purchased by him or it for the purpose of generating electricity and supplies a portion of the electricity so generated to the residents of residential premises is, ipso facto, as a matter of law, using the fuel for the purpose of meeting the domestic requirements of the residents falling within the categories specified in s 78A(1)(b). This matter was conceded in the Flinders Island case, the only matter for decision being the question whether the fuel had been used by the claimant "at" the relevant residential premises."
62 The Court in Rottnest Island ultimately held, at 192, in favour of the Collector upon the basis that, on the facts of the case, it was not open to the AAT to find that the use of diesel fuel was relevantly a use by the Authority at residential premises. The Court explained, at 193, that:
"We consider that the section requires that, because the existence of some appropriate heating or generating plant is clearly contemplated, the location of such a plant be in sufficient proximity to the premises as to enable it reasonably to be identified with the premises. It must be appurtenant to the premises and coherent with them. It must be able to be said of the plant using the fuel that it belongs to the premises even though it be not a part of them. As already indicated it is not necessarily destructive of this relationship that the plant should also use fuel in providing power for other purposes, although questions of degree of use might well come into consideration if such other purposes tended to predominate."
On the facts as found, the Court could see no connection between the Authority's generating plant and the relevant residences to enable it to be said that the plant was appurtenant to, or at, these premises. The generator's use of diesel fuel purchased by the Authority to provide power to the residences was "merely incidental to its overall purpose of providing power for all the requirements of the island": Rottnest Island at 194.
63 The later decision of the Full Court in Cowell did not concern the "residential premises" provision or, indeed, any location criterion. At issue was whether the appellant supplier was entitled to a rebate on diesel fuel used in generating electricity for a number of rural towns and districts, on the ground that the appellant purchased the fuel for use by it "in primary production". Burchett and Carr JJ found that it was; and, save for two districts, so did Hill J. The Court was thus principally concerned with the scope of the purposive criterion "for use by [the purchaser]" unaffected by the location criterion inhering in the word "at": see Cowell at 4 per Burchett J.
64 As it happens, EECL specifically relied on Burchett J's analysis, at 4, that, "[i]t is the nature of the activity envisaged rather than the nature of the process of envisaging it with which the legislature is concerned"; and accordingly "the notion of purpose intent or object implicit in the word 'for' can be seen as looking to a purchase of fuel to be used in a way that in fact involves primary production", rather than "looking to a purchase of fuel to be used in a way that is consciously directed to such an involvement". Plainly enough, this analysis is better suited to that part of the rebate provision with which his Honour was concerned. It is ill-suited to those parts of the rebate provision involving a location criterion.
65 In any case, Hill J adopted a different approach and, as we have seen, reached a slightly different result than Burchett and Carr JJ. Referring to Pozzolanic, Hill J noted, at 11, that: (1) the relevant purpose must be shown at the point of purchase by the purchaser; (2) the actual use to which the fuel was put can be evidence of purpose at the time of its acquisition; and (3) where diesel fuel is purchased for multiple uses, apportionment is permitted. After referring to Pozzolanic, his Honour continued (at 12):
"Where diesel fuel is purchased for use in the generation of electricity, in my view the mere fact that one or more users of that electricity use it for a relevant purpose, will not require the conclusion that the diesel oil was purchased in part for use in connection with the relevant activity. Likewise the mere fact that persons use electricity other than for a relevant purpose will not disqualify the diesel purchase from the rebate where apportionment is possible as, for example, by reference to meter readings."
66 Regarding the passages from the judgment of the Full Court in Rottnest Island set out at [60] above, Hill J said, at 13:
"These passages should not be taken to mean that … there was a dichotomy between a case where diesel fuel was purchased for a relevant purpose and that where diesel fuel was purchased for the purpose of generating electricity for distribution through the grid. In one sense that will always be the purpose of any purchaser of diesel fuel for the generation of electricity. The question that must be asked is whether accepting that the oil is to be used in the production of electricity, the purchase can nevertheless be said to be for use in connection with the relevant activity … ."
67 Carr J took a different view of the facts from Hill J but otherwise adopted a similar approach to him (at 23-24). It must be accepted, however, that Cowell is, as the Commissioner submitted, of limited guidance in this case because it concerned a different part of the rebate provision, which involved the use of fuel "in" an activity and not "at" any particular location.
68 The propositions that the authorities establish include:
· The parts of the rebate provision with which this appeal is concerned provide for purpose and location tests.
· The requirement that fuel be purchased by the person claiming the rebate "for use by him" in respect of an exempted activity must be satisfied at the point of purchase.
· The actual use to which the fuel is put subsequently can be evidence of the purpose for which it was purchased.
· Where diesel fuel is purchased for multiple uses, apportionment is permitted.
· The word "at" in these parts of the rebate provision does not require a use within any boundary of a relevant premises but it does requires that the location of the use be appurtenant, or in close proximity, to such premises.
69 As we have seen, the AAT concluded that EECL undertook the generation of electricity on the islands for specific purposes including the supply of electricity to residential premises, hospitals and homes for the aged; and that these were the dominant purposes of supply on all but Waiben. In so doing, it did not address the correct question. This was whether or not, at the time of purchase, EECL purchased diesel fuel for use by it at residential premises in meeting domestic requirements of residents, or at a hospital or home for the aged. Let it be accepted that EECL undertook the generation of electricity on the islands for these purposes. It does not follow from this that an affirmative answer should be given to the statutory question.
70 Further, when the facts as found by the AAT are examined, it is apparent that, as the primary judge held, it was not open to the AAT to give an affirmative answer to the statutory question. The AAT found that EECL was a government-owned entity that, under an Act of the State of Queensland, had an obligation to supply electricity to its customers in North Queensland at standard rates applicable throughout the State. As the primary judge noted, EECL's supply obligations to its customers within the region served by it were the same, irrespective of whether its customers were on islands in the Torres Strait or on the mainland, or purchased electricity to meet residential, commercial or other needs. The location of the generators on the islands themselves reflected the fact that EECL was setting out to supply electricity to all its island customers, as it was statutorily required to do, whatever their electricity needs. We return to this aspect below.
71 The facts as found permitted the conclusion that, at the time of purchase, EECL purchased diesel fuel for use by it in generating electricity to discharge its statutory obligations. These facts also permitted the conclusion that, at the time of purchase, EECL purchased the fuel for use by it in generating electricity on the islands to meet the needs of its customers there. On the facts as found, it was not, however, open to the AAT to find that, at the time of purchase, EECL purchased the fuel for use by it for the specific purpose(s) contemplated by s 78A(1)(b), (c) and (d), including for use by it "at" residential premises in meeting domestic requirements or at a hospital or home for the aged. At most, the facts as found permitted the conclusion that EECL used the diesel fuel purchased by it to generate electricity for sale to, amongst others, residential customers for use in meeting their domestic needs and to hospitals and aged persons' homes. Although the actual use to which the diesel fuel was ultimately put can provide evidence of the relevant purpose for which the fuel was purchased, this cannot cure the deficiencies in the facts as found, as EECL would have it.
72 The locational and purposive tests, as they have been called, are clearly to be read cumulatively and considered by reference to all the circumstances of the case. As Rottnest Island (at 183) shows, it is wrong to consider separately whether the fuel was used "at" the relevant premises from the question of the purpose(s) contemplated by the rebate provision. The facts as found were to the effect that some relevant premises were in excess of a kilometre away from the generator powered by the diesel fuel to produce the electricity. It was not open to the AAT to hold that, in these circumstances, the generator (where the fuel was being used) had such a close connection with the relevant residential premises, hospital or aged persons home that it was "at" such premises.
73 The present case was factually quite different from Flinders Island, where the Association used the diesel fuel to power the generators to supply electricity at cost solely for eight houses on a housing estate, the residents of which assisted in its operation. Further, as the primary judge observed, Rottnest Island was a stronger case for rebate eligibility because the Rottnest Island Authority was specifically established to meet the Island's needs.
74 For the reasons stated, we agree with his Honour that the AAT stretched the relevant parts of the rebate provision beyond their permissible limits. Accordingly, we would dismiss the appeal, with costs.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Sundberg and Kenny.