Ergon Energy Corporation Limited v The Commissioner of Taxation of the Commonwealth of Australia

sundberg and kenny jj: 1 In 1999 and 2000, Ergon Energy Corporation Ltd ("EECL") applied to the Commissioner of Taxation ("the Commissioner") for rebates of excise and customs duties in respect of its purchases of diesel fuel used in the generation of electricity for communities on islands in the Torres Strait. The Commissioner refused the rebates. As a result, EECL applied to the Administrative Appeals Tribunal ("the AAT") for review of the Commissioner's decisions. The AAT set aside the Commissioner's decisions and remitted the matters for further determination. The Commissioner appealed to the Federal Court of Australia pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"). A judge of the Court set aside the AAT's decision and ordered that the applications to the AAT for review be dismissed. His Honour's judgment is the subject of this appeal. Statutory framework 2 EECL has claimed that it was entitled to rebates of duty pursuant to the former s 78A(1) of the Excise Act 1901 (Cth) ("the Excise Act") and the former s 164(1) of the Customs Act 1901 (Cth) ("the Customs Act") upon the basis that it purchased the diesel fuel for use by it at residential premises to generate electricity for domestic purposes and at hospitals, nursing homes and aged persons homes. 3 At the material times, s 78A(1) of the Excise Act and s 164(1) of the Customs Act provided for a rebate payable to a person who purchased diesel fuel for certain specified uses. The Customs Actprovided for a rebate in respect of imported fuel. The Excise Act provided for a rebate in respect of domestically produced fuel.As the relevant provisions in both Acts are virtually the same, nothing turns on whether the fuel was imported or locally produced. 4 At all relevant times, s 78A(1) of the Excise Act provided: "A rebate is . . . payable to a person who purchases diesel fuel for use by him or her: … (b) at residential premises to generate electricity for use in: (i) providing food and drink for; (ii) providing lighting, heating, air-conditioning, hot water or similar amenities for; or (iii) meeting other domestic requirements of; residents of the premises; (c) at a hospital or nursing home or at any other institution providing medical or nursing care; or (d) at a home for aged persons." Section 78A(2) provided, in part, as follows: "A person is not entitled to be paid diesel fuel rebate … in respect of diesel fuel purchased by the person for use by the person in a manner referred to in subsection (1) that is specified in the application for that rebate if, in fact, the person: (a) uses the fuel otherwise than in that manner; or (b) sells or otherwise disposes of the fuel; or (c) loses the fuel (whether because of accident, theft or any other reason)." Section 78A(7) of the Excise Act picked up the definition of "residential premises" contained in s 164(7) of the Customs Act. Section 164(7) providedas follows: "residential premises means: (a) premises used as a house; or (b) other premises at which at least one person resides; but does not include: (c) premises used in the business of a hotel, motel or boarding house or a similar business; (d) premises used as a hospital or nursing home or as any other institution providing medical or nursing care; (e) premises used as a home for aged persons; or (f) premises used as a boarding school."

Factual findings of the AAT 5 The findings of fact made by the AAT are central to the outcome of this appeal. They concerned the EECL and its use of diesel fuel in the generation of electricity on the islands of Gununa (Mornington Island), Mabuiag, Mer (Murray Islands) and Waiben (Thursday Island). 6 EECL is owned by Queensland Government Ministers on behalf of the State of Queensland. EECL (and its predecessors) generated and supplied electricity to residents and others on these islands in the periods relevant to this appeal. EECL supplied electricity to all consumers on the islands including residences, businesses, hospitals and aged care facilities. EECL generated its electricity with diesel powered generators installed on each island. 7 Pursuant to s 49 of the Electricity Act 1994 (Qld) ("the Electricity Act"), EECL is obliged to supply electricity to its customers on each of the islands at rates fixed by the Queensland Government. The rates for the islands are the same as the rates applicable throughout Queensland. The Queensland Government subsidises EECL in respect of the supply of electricity to the islands because supply to the islands at these standard rates is unprofitable. 8 EECL's customers pay for electricity by purchasing pre-paid cards and inserting them in a meter. Local stores on the islands sell these cards. Customers can receive a limited supply of electricity after their card's credit runs out. The charge for that energy will be deducted from the next card that is inserted in the meter. EECL's residential customers use the electricity for lighting, refrigeration and other household purposes. EECL owns the diesel generators referred to below on each of the islands. 9 Gununa (Mornington Island) has a population of approximately 1,300 people. There are 165 residential premises, one community hospital and one aged care facility on the island. Residential premises consumed 41.25% of the electricity generated on Gununa. The community hospital consumed 12.98% of this electricity, and the aged care facility consumed 6.8%. 10 EECL supplies power on Gununa with three diesel generators. These generators are situated together at a single powerhouse. The powerhouse is located near the centre of the island's town opposite a supermarket and surrounded on three sides by residential housing. The nearest residence is 30 metres from the generators and the farthest is approximately 1.26 kilometres from the powerhouse. The hospital and aged care facility, both of which are within the residential area, are 210 metres and 750 metres from the generators respectively. 11 Mer (Murray Islands) has a population of about 400 people. On Mer, EECL operates another power station with three diesel generators. These are located contiguous with a residential area. The nearest residence is only 10 metres from the power station while the farthest is 1.6 kilometres from the generators. EECL provides power to 93 residential premises on Mer as well as to other installations. 12 Waiben (Thursday Island) has a population of approximately 3,500 people. EECL has a power station with five diesel powered generators. Of the power generated there, 36.5% is consumed by residential users at 340 residential premises, while 9.8% and 1.7% is consumed by a community hospital and an aged care facility respectively. The power station on Waiben is located in a light industrial area well away from residential areas. The nearest residence is over 300 metres from the station and the most distant residence is over 1 kilometre from the station. The distance between the power station and the hospital and between the power station and the aged care facility is 1.6 kilometres and at least 1.2 kilometres respectively. 13 EECL also generates electricity on Mabuiag Island, which has a population of about 210 people. There are 51 residences. The power station, which is contiguous to the main residential area, is located 20 metres from the nearest residence and 660 metres from the farthest. There is a medical and nursing care centre on the island located approximately 80 to 100 metres from the generators. 14 EECL owns the land on which the power station on Waiben is located. On Mabuiag the power station is located on land held by the island council. Similarly, on Mer the power station is located on land negotiated with the islanders who do not recognise non-islander ownership. In relation to Mer, the AAT referred to the judgment of Brennan J in Mabo v Queensland (No 2) (1992) 175 CLR 1 ("Mabo") at 16 and 22. The AAT did not make any finding concerning the ownership of the land at the Gunana power station.

The AAT's Reasons for Decision 15 In its reasons for decision, the AAT made reference to other relevant decisions, including the earlier AAT decision in Re Warmun Community (Turkey Creek) Inc v Chief Executive Officer of Customs (2000) 58 ALD 797 ("Warmun Community"). It discussed the authorities in some detail, referring to the decisions of Full Courts of this Court in Collector of Customs, Tasmania v Flinders Island Community Association (1985) 7 FCR 205 ("Flinders Island"), Collector of Customs v Perkins Shipping Pty Ltd (1989) 24 FCR 520 ("Perkins"), Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177 ("Rottnest Island") and Cowell Electric Supply Company Ltd v Collector of Customs (1995) 54 FCR 1 ("Cowell"), as well as passages from the judgment of Brennan J in Mabo, at 17, which summarised the findings of fact made by the trial judge in that case concerning the history of communal life on Mer. The AAT apparently considered that these factual findings were not only presently applicable to Mer but were also generally applicable to Mabuiag and Gunana. It stated that "there may be some doubt" as to whether such findings applied to Waiben "because the exhibited material suggests a less village-style environment". 16 The AAT's decision very largely turned on its assessment of the significance of Rottnest Island. In this connection, the AAT said: "The Rottnest Island Authority was a statutory body responsible for the management and control of the island. The claim related to the supply of electricity to all residents of the island but the tribunal only allowed so much of the claim as was attributable to electricity supplied to the employees of the authority at their residences on the island. The appeal was allowed and the Collector's decision restored. While the Court accepted that the purposive test was satisfied it found that the location test was not satisfied so that it was not open to find that the use of the fuel was at residential premises." 17 The AAT concluded that: "The basic distinction between the Rottnest Island case and the present cases is that in these cases [EECL] undertakes generation of electricity for specific purposes which include purposes of supply to residential, hospital and aged care facilities in communal situations that are discrete, physically compressed, cohesive and geographically isolated. Those are the dominant purposes on each island except [Waiben]. That there are specific purposes and not just a purpose of supply of electricity to anybody is exemplified by the heavily subsidised charges for supply. I accept that [EECL's] obligation is to supply at standard charges and those charges are met by consumers when they insert their prepaid cards into [EECL's] meter at each point of supply. It is my understanding that [EECL] is subsidised by the Queensland Government in circumstances where it supplies electricity at standard charges to island communities. Section 164 is beneficial legislation. However, because the island communities pay standard charges well below actual cost, the grant of a rebate in respect of electricity supplied to those communities in rebateable circumstances will not benefit those communities as it apparently did in the Flinders Island case or the Warmun Community case. However, I am satisfied, on the basis of the authorities, that both the purposive and location tests are satisfied in these cases. In relation to [Waiben], I have hesitated in coming to the same conclusion but am satisfied that case cannot be distinguished from the circumstances of the other islands." Accordingly, the AAT set aside the decisions under review, remitting the matters to the Commissioner for redetermination. The Commissioner sought to appeal to this Court.

The appeal from the AAT 18 Section 44(1) of the AAT Act provides that "[a] party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding". 19 The Commissioner's notice of appeal stated that the three questions of law raised on the appeal pursuant to s 44(1) of the AAT Act were: "(a) the application of the purposive and location tests set out in section 78A(1) of the Excise Act 1901 and section 164(1) of the Customs Act 1901 on the basis of the authorities; (b) the extent to which the Tribunal is obliged to demonstrate by the reasons the application of the relevant principles to the facts as found; (c) whether it was permissible for the Tribunal to treat findings of fact made in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 17 as being evidence having present day application with respect to Mer, Mabuiang and Mornington Islands." 20 The notice of appeal identified six grounds, including the following: "(a) The Tribunal erred in law in deciding that the purposive and location tests set out in section 78A(1) of the Excise Act 1901 and section 164(1) of the Customs Act 1901 were, on the basis of the authorities and the findings of fact, satisfied (b) The Tribunal erred in law in distinguishing the decision of the Full Court in [Rottnest Island] on the basis that the Respondent undertakes generation of electricity for specific purposes which include purposes of supply to residential, hospital and aged care facilities in communal situations that are discrete, physically compressed, cohesive and geographically isolated (c) The Tribunal erred in taking into consideration the subsidisation of electricity charges in deciding whether the purposive test was met (d) The Tribunal erred in law in deciding that the claim relating to [Waiben] could not be distinguished from the claims relating [to] the other islands …." 21 Both at first instance and on appeal, EECL contended that the Commissioner had failed to identify any question of law that would support an appeal under s 44(1) of the AAT Act. This contention is discussed further below.

The Primary Judge's decision 22 As we have seen, the learned primary judge allowed the appeal, holding that the AAT erred in law and that EECL did not fall within the rebate provisions of the Excise Act: see Commissioner of Taxation v Ergon Energy Corporation Ltd [2005] FCA 1918 ("Ergon Energy"). His Honour first held that the only question of law raised by the Commissioner's notice of appeal was question (a) set out at [19] above: Ergon Energy at [58]. In reaching this conclusion, his Honour observed, at [58]: "As framed it is open to the criticism that it raises a legal topic as much as a question of law. Nevertheless, in my opinion, it can be read as raising a question of law of the kind identified in the fifth Pozzolanic proposition." 23 The 'fifth Pozzolanic proposition' is a reference to the statement in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 ("Pozzolanic") at 287 that "[t]he question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law": see Pozzolanic at 287 per Neaves, French and Cooper JJ. 24 The primary judge went on to hold that the qualification to this proposition, which was also recognised in Pozzolanic,at 288, did not apply. In so doing, his Honour followed the reasoning of Pozzolanic itself with regard to the words 'connected with'. His Honour reasoned that, just as the words 'connected with' can "describe a spectrum of relationships ranging from the direct and immediate to the tenuous and remote", so too can the words 'at residential premises' in contention in the present case: see Ergon Energy at [56]. 25 The primary judge also held that a failure in a notice of appeal to formulate adequately the question of law that was the subject of the appeal would not deprive the court of jurisdiction "if the matter in which the Court's jurisdiction is invoked is able to be identified as a question of law upon a proper reading of the notice as a whole": see Ergon Energy at [59]. His Honour added that "[t]he application of [O 53 r 3(2) of the Federal Court Rules] should not overlook the difficulty of characterisation in this area" and that it was "best to consider the first question raised in the notice of appeal by reference to the grounds of appeal to which it relates": see Ergon Energy at [60]referring to grounds (a) to (d) at [20] above. This led his Honour to conclude that, properly understood, the first question was a "question of law about the application of the rebate provisions to facts which were undisputed": see Ergon Energy at [61]. 26 Having found that the appeal raised a question of law, his Honour turned to what he referred to as "the constructional question". This is the question whether the facts as found fell within the terms of s 78A(1)(b), (c) or (d) of the Excise Act (or the equivalent provision in the Customs Act). We interpolate here that, at the hearing of this appeal, there was debate about whether his Honour considered only the purpose test (i.e. whether EECL could be said to have purchased the fuel "for use" by it "to generate electricity for use in" meeting the domestic requirements of residents of residential premises) or whether he also considered the location test (i.e. whether EECL could be said to have purchased the fuel "for use" by it "at" residential premises, a hospital, a home for the aged, etc). In part of his reasons for judgment, his Honour appears to have made the more limited holding that, on the facts found by the AAT, the purpose test was not satisfied. As will be seen, however, when his Honour's reasons are read as a whole, it is plain enough that he held that, on the facts found, neither the purpose test nor the location test was satisfied. 27 In this regard, it should be borne steadily in mind that the primary judge commenced his discussion of s 78A(1) of the Excise Act by noting that an entitlement to a diesel fuel rebate depended on a number of factors, which were "not to be treated in isolation from each other for they reflect a collocation of interdependent elements of the exemption": see Ergon Energy at [62]. His Honour remarked (at [63]) that "[a] clear case of entitlement" arises when diesel fuel is purchased by an occupier for use by the occupier "in running a generator physically located adjacent to the premises or on their curtilage to generate electricity for domestic uses in the premises". So too there is a clear case of entitlement "when the occupier or operator of a hospital or aged persons home purchases diesel for fuelling a generator physically located at that institution". These clear cases were described by him as the "core application" of the provision (at [64]). Nothing turns on his Honour's use of the expressions "core application" or "core meaning". 28 The primary judge went on to observe that the rebate provision has been applied to circumstances beyond these clear cases (i.e., "beyond those circumstances falling within its core meaning"): see Ergon Energy at [65]. His Honour said: "An extended interpretation of 'use by the person' who has purchased the fuel encompasses a range of relationships between purchaser and end users. The interpretation of 'at residential premises' encompasses a range of spatial relationships between the point at which fuel is used, ie the location of the generator, and that of the residences where the electricity generated is used. A similar extended concept of 'at' applies to the relationship between the location of a generator at a hospital, nursing institution or an aged persons home. The application of rebate provisions to a particular fact situation involves a purposive judgment. It is a value judgment about the range of the Act as was pointed out in the passage cited earlier from Pozzolanic." 29 After stating that "one evaluative question … is whether the relevant purchases of diesel fuel by EECL were purchases for 'use by' EECL at residential premises and other places", his Honour referred to Flinders Island, noting that the Full Court there held the rebate provision was satisfied in circumstances where an incorporated community association purchased fuel to power a generator to provide electricity to eight homes located nearby on land owned by the association. His Honour commented, "[t]here must have been an implicit acceptance that the community association which purchased the fuel did so for 'use' by itself at the relevant premises" ([67]). The primary judge noted that a rebate was denied in Re Queensland Electricity Commission v Collector of Customs (1990) 13 AAR 119 ("QEC"), where "the purchasers were Boards who provided electricity under an arms length arrangement to residences inter alia" ([68]). This aspect of the latter decision was, so his Honour noted, approved by Hill J in Coober Pedy v Collector of Customs (1993) 42 FCR 127 at 142 ("Coober Pedy"). 30 After referring to a passage in Rottnest Island at 191, the primary judge concluded (at [71]) that Rottnest Islandwas authority for the following: "[W]here fuel is purchased by some entity for purposes which include supply at residential premises, the fuel so purchased is capable of being characterised as 'for use' by that entity. If the purchaser is a retailer selling electricity to a variety of end users, the purchase will not answer the description of purchase by 'use' by it." His Honour stated (at [72]) that the AAT had not expressly addressed the issue of the purpose for which EECL purchased the fuel and "may be taken to have proceeded on the basis that the question before it was whether the use of the fuel was use by EECL 'at' the residential premises and other places concerned". His Honour also said that it would be wrong to "isolate" the question of whether the fuel was used "at residential premises" from the question of the purpose for which the fuel was purchased. 31 In considering "the construction of the collocation 'at residential premises'", his Honour again referred to Flinders Island and concluded that this decision was authority for the proposition that whether a sufficiently close connection was shown between the use of the fuel and the residential premises would depend on the circumstances of the particular case. In the course of discussing Flinders Island, his Honour referred (at [74]) to the "multi dimensional nature of the exercise involved in the application of the rebate provision". 32 Further, his Honour held (at [76]) that Rottnest Island was authority for the proposition that "the fact that diesel fuel is purchased for a number of purposes including the supply of electricity to residential premises, does not prevent apportionment of its cost to rebate-attracting uses." He added, however, that, under Rottnest Island, the relevant purposive use would not be established if a generating authority provides electrical power to "all and sundry" at a commercial rate. In addition, his Honour noted (at [78]) that, in Rottnest Island, "the Court held that there was nothing … to indicate that the generating plant even when using diesel fuel to generate electricity to be supplied to employees' residences, could properly be described as operating 'at' those residences". 33 The primary judge then turned to the AAT's decision, concluding (at [79]) that the AAT "evidently placed great weight on the so-called 'specific purposes' of the purchases, the geographical proximity of the residences and other buildings to the generators on the islands (other than Thursday Island) and the subsidy provided by the Queensland Government". His Honour held, however, that the Tribunal's earlier factual findings did not permit the conclusion that the EECL had purchased the fuel for the "specific purposes" of "supply to residential, hospital and aged care facilities in communal situations that are discrete, physically compressed, cohesive and geographically isolated". Since there was debate at the hearing about the nature of the primary judge's holding, it may be useful to set out the following passages of his Honour's reasons. His Honour wrote: "80. In my opinion however, despite the reference to 'specific purposes' the facts earlier found by the Tribunal are, as the Commissioner submitted, consistent only with EECL having purchased the fuel for the purpose of supplying electricity to 'all and sundry' pursuant to its statutory obligations. 81. EECL was a public owned electricity retailer, carrying out a public function in North Queensland. It is an accident of the geography and demographic features of the island communities it served that there is a high proportion of residences to other buildings, that they were geographically compressed and that they were not far from the generators. The nature of the service provided by EECL is essentially the same whether to an isolated community living within on [sic] a small island, such a community on the mainland or some less confined community such as that on Thursday Island. The purpose of its purchases is not to be assessed for the purposes of the rebate by reference to whether the supply of electricity to consumers in particular communities is subsidised or otherwise. The question of communal ownership which was relied upon by the Tribunal, does not seem to have any relevance in this case. It may have relevance as in the Flinders Island case where the purchaser of fuel is part of or controlled by the particular community which it serves. That is not this case. 82. The present case bears no resemblance to Flinders Island. The Rottnest Island Authority case involved an authority specifically created to serve the island community. In a sense it was a stronger case for the rebate than the present. In my opinion, having regard to the nature of EECL as effectively a public utility operating in a particular region of Queensland and its supply obligations, the rebate did not apply to its purchases of fuel for its generators on the subject islands. That is to say it did not purchase fuel for use by it at residential premises to generate electricity for use in them or for use by it at hospitals or other like establishments. The identity that the Tribunal drew between Thursday Island and the other islands rather highlights the error in its approach in this case. 83. This was a case involving the application of the provisions of the statute to undisputed facts. That application involved an evaluation about the range of relationships caught by the collocation 'use by the person … at residential premises' and the like collocation of which pars (c) and (d) formed a part. The Tribunal, in my opinion, made a wrong evaluation stretching the rebate provisions beyond the limits of their legislative purpose and existing authority and in so doing erred in law." 34 In these passages, the primary judge reaches conclusions concerning both the purpose and the location tests. Although the focus of this discussion is on purpose, his Honour has earlier indicated (at [72]) that the tests should be applied together. It is apparent that this is what he has done.

Submissions EECL's submissions 35 EECL submitted that the primary judge was wrong to hold that the notice of appeal contesting the decision of the AAT raised any question of law. It contended that, in an appeal to this Court under s 44(1) of the AAT Act, the existence of a question of law is not merely a qualifying condition for an appeal. A precise question of law is, so it said, the subject of the appeal, without which the Court has no jurisdiction. The primary judge failed, so EECL submitted, to have due regard for the fact that questions of fact are for the AAT alone. 36 In EECL's submission, the following propositions were findings of fact by the AAT: (1) EECL purchased diesel fuel for use by it at residential premises to generate electricity for meeting domestic requirements of the residents of the premises; (2) EECL purchased diesel fuel for use by it at a hospital; and (3) EECL purchased diesel fuel for use by it at a home for aged persons. EECL contended that the Commissioner's appeal challenged these factual findings without raising any question of law. 37 EECL submitted that, contrary to the reasoning of the primary judge, the Full Court's decision in Pozzolanic supported the conclusion that the appeal did not raise a question of law. Specifically, it disagreed with his Honour's statement that terms like "at residential premises" were analogous to the phrase "connected with". EECL argued that "connected with" were words of extension that, by necessity, extended eligibility beyond a core application (which, in Pozzolanic, was agricultural activity) to applications connected with the core application. In contrast, argued the appellant, the words "at residential premises" are ordinary English words that outline an eligibility criterion. 38 EECL contended that the words used in the rebate provision, including "at residential premises", were used in their ordinary sense, and that the AAT made a factual finding that the facts in the case fell within these words. EECL highlighted the discussion in Pozzolanic of the phrase "cultivation or gathering in of crops", in the course of which the Full Court found (at 288) that these words were used in their ordinary meaning and, thus, the question whether the relevant facts fell within their range was also a question of fact. 39 EECL submitted that the primary judge misapplied Pozzolanic because his Honour introduced a false dichotomy between "core" and "non-core" applications of the statute. This was erroneous, so it contended, because there was nothing in the statute that suggested that the words were to extend beyond their ordinary meaning. Therefore, so EECL argued, there was no principled basis for drawing a distinction between core and non-core applications of the statutory terms. Rather, the terms should be applied in their ordinary sense. 40 Further, EECL submitted that, provided there was some material before the AAT capable of supporting its findings of fact, this Court cannot disturb those findings. It was reasonably open to the AAT in this case to hold, on the material before it, that the facts fell within the rebate provision. It was, therefore, not open to the primary judge to interfere with the AAT's conclusion. 41 In essence, EECL's case was that the primary judge had erred because his Honour had simply replaced the factual findings of the AAT with his own findings. EECL contended that, in Ergon Energy at [81], his Honour made his own evaluative judgment as to its purpose in purchasing the diesel fuel. 42 Further, EECL submitted that the primary judge's approach was inconsistent with the Full Court's decision in Cowell. In its submission, his Honour relied too heavily on EECL's status as an electricity retailer. According to EECL, the primary judge effectively held (at [81]) that, as a retailer, EECL could not satisfy the purposive requirement in the rebate provision. This was, so EECL submitted, inconsistent with Cowell, where the Full Court held that the rebate provision could apply to a retailer. EECL also contended that Cowell precluded the primary judge from applying dicta in the earlier case of Rottnest Island (which did not in any event concern the sale of electricity) to the effect that, where a retailer generated electricity for sale to "all and sundry", the rebate would not apply even though some of the retailer's customers were residential users since the retailer would be producing electricity for sale, with the result that the purpose test in the rebate provision could not be satisfied. The Commissioner's submissions 43 The Commissioner contended that Cowell was not of much assistance in the present case, because Cowell concerned the applicability of a different part of the rebate provision and the sufficiency of the connection between the use of the diesel fuel and the rural operation performed. Cowell did not raise any question about the location of the use of fuel. The Commissioner argued that Rottnest Island was especially helpful because, in that case, the Full Court specifically considered the expression "at residential premises". Whilst the Commissioner acknowledged that Rottnest Island did not exclude an electricity generating authority from rebate eligibility, the Commissioner submitted that the Court's statement, at 191, tended against such eligibility when the authority provided "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". 44 The Commissioner contended that the primary judge correctly held that the appeal to this Court raised a question of law. The Commissioner said that the appeal raised the question of whether the facts, as found, fell within the relevant rebate provisions, as properly construed. The Commissioner relied on Pozzolanic at 287; Cowell at 4 per Burchett J, 10 per Hill J and 21 per Carr J; Commissioner of Taxation v Roberts (1992) 37 FCR 246 ("Roberts") at 252; and Commissioner of Taxation v Cooper (1991) 29 FCR 177 ("Cooper") at 194 for the proposition that the subject of the appeal was, therefore, a question of law. The Commissioner further submitted that whilst the relevant rebate provision "gives rise to a test that is 'cumulatively locational and purposive'", there remains the question as to the degree of locational connection necessary to meet the word "at"; and this was a question of law. In referring to "core" applications of the rebate provision, his Honour properly "emphasize[d] the range of relationships envisaged by an extended interpretation of the terms in the Act". 45 The Commissioner submitted that the primary judge correctly found that the Tribunal's conclusion that the rebate provisions were satisfied was not open to it on the facts as found, when he said that the Tribunal "made a wrong evaluation stretching the rebate provisions beyond the limits of their legislative purpose and existing authority and in so doing erred in law". The Commissioner argued that this was because, on the facts as found, EECL "did not purchase the fuel for use by it at residential premises to generate for use in them or for use by it at hospitals or other like establishments". According to the Commissioner, on the facts as found, EECL purchased fuel for the purpose of supplying electricity to 'all and sundry' pursuant to its statutory obligation. As such, "the rebate did not apply to its purchases of fuel for its generators on the subject islands".

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.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

REASONS FOR JUDGMENT GYLES J: 75 The jurisdiction exercised by the primary judge was to decide 'an appeal on a question of law' within the meaning of s 44 of the Administrative Appeals Tribunal Act 1976 (Cth) (the Act). In my respectful opinion, no such question of law was posed for decision and no such question of law was decided by the primary judgment. 76 The factual and legal setting in which the issue arises, as well as the decisions of the Administrative Appeals Tribunal and the primary judge, are explained in the reasons of Sundberg and Kenny JJ, which I have had the advantage of reading in draft. I will not repeat that exercise, except insofar as it is necessary to explain my own reasons for favouring success of the appeal.

Procedural problem 77 The relevant question of law raised in the notice of appeal was said to be: '(a) The application of the purposive and location tests set out in s 78A(1) of the Excise Act 1901 and s 164(1) of the Customs Act 1901 on the basis of the authorities;' 78 The grounds of appeal said to relate to that question of law were as follows: '(a) The Tribunal erred in law in deciding that the purposive and location tests set out in s 78A(1) of the Excise Act 1901 and s 164(1) of the Customs Act 1901 were, on the basis of the authorities and the findings of fact, satisfied.

(b) The Tribunal erred in law in distinguishing the decision of the Full Court of the Federal Court in Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177 on the basis that the respondent undertakes generation of electricity for specific purposes which include purposes of supply to residential, hospital and aged care facilities in communal situations that are discrete, physically compressed, cohesive and geographically isolated.

(c) The Tribunal erred in law in taking into consideration the subsidisation of electricity charges in deciding whether the purposive test was met.

(d) The Tribunal erred in law in deciding that the claim relating to Thursday Island could not be distinguished from the claims relating to the other islands.' 79 Ergon Energy Corporation Limited contended at first instance that no question of law was raised. No application was made by the Commissioner to amend the notice of appeal. The primary judge dealt with the question as to whether the appeal was brought on a question of law in his reasons as follows (at [58]): 'The only question raised in the notice of appeal as a question of law relevant to the construction and/or application of s 78A(1) of the Excise Act and s 164(1) of the Customs Act is the first question. As framed it is open to the criticism that it raises a legal topic as much as a question of law. Nevertheless, in my opinion, it can be read as raising a question of law of the kind identified in the fifth Pozzolanicproposition.' After referring to O 53 r 3(2) of the Federal Court Rules and authorities, his Honour said (at [60]): 'In light of the difficulties in characterisation it is best to consider the first question raised in the notice of appeal by reference to the grounds of appeal to which it relates. These are grounds (a) to (d) inclusive.' 80 In my opinion, the suggested question is not a question of law within the meaning of s 44 of the Act. 'A broad enquiry as to the construction and operation of statutory provisions is not a question of law within the meaning of s 44(1) of the AAT Act.' (Comcare v Etheridge (2006) 149 FCR 522 at [19] per Branson J, agreed to generally by Spender J and Nicholson J). The grounds of appeal cannot be utilised to construct a question of law. 'It is not possible … to extend the subject matter of the appeal beyond the specified questions of law by itemising, under the heading "Grounds", a series of alleged errors (some being errors of law, some being errors of fact and some being errors of mixed law and fact) in the reasons for decision of the Tribunal.' (per Spender, Branson and Siopis JJ in HBF Health Funds Inc v Minister for Health and Ageing (2006) 149 FCR 291 at [6]. See also Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 at [18] per Branson and Stone JJ and Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290 at [42]-[47] per Branson J). 81 The point having been taken, the appeal should have been dismissed absent any curing of the deficiency.

Substantive problem 82 The primary judge described the case as 'involving the application of the provisions of the statute to undisputed facts' in the final paragraph of his reasons on the relevant point. The conclusion was that (at [83]): 'The Tribunal … made a wrong evaluation stretching the rebate provisions beyond the limits of their legislative purpose and existing authority and in so doing erred in law.' The conclusion expressed in the introduction to the reasons (at [4]) was: 'I am satisfied that the Tribunal erred in law and that EECL as a supplier of electricity to communities in North Queensland, did not fall within the rebate provisions of the Excise Act 1901 (Cth).' 83 It will be recalled that his Honour had earlier described the question as being of the kind identified in the fifth Pozzolanicproposition (a reference to Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287). The fifth Pozzolanic proposition states: '5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law:…' 84 If a question of law had been proposed to raise that question, it would be similar to the framing of a stated case, for example: 'Whether, upon the following facts [to be set out], Ergon Energy purchased diesel fuel for use by it at residential premises to generate electricity for use in:

(ii) providing lighting, heating, air conditioning, hot water or similar amenities for; or

residents of the premises within the meaning of s 78A(1) of the Excise Act 1901 (Cth) so as to be entitled to a rebate of excise on the said purchases?' 85 That, of course, was the ultimate question to be determined initially by the Commissioner of Taxation, and then by the Administrative Appeals Tribunal standing in the shoes of the Commissioner. The Administrative Appeals Tribunal only has jurisdiction pursuant to statute and it follows that the ultimate question as to the application of statutory criteria to facts would arise in every case. It would follow that there could be an appeal to the Federal Court pursuant to s 44 against the ultimate finding of the Tribunal in every case. That is an unlikely result. 86 It is well established that where a statute uses words according to their common understanding and the question is whether the facts fall within those words, then the question is a question of fact not a question of law, at least where it is possible to reasonably arrive at different conclusions, the question thus being one of degree upon which different minds may take different views (Hope v The Council of the City of Bathurst (1980) 144 CLR 1 per Mason J (with whom Gibbs, Stephen, Murphy and Aickin JJ agreed) at 7-9; Vetter v Lake Macquarie City Council (2001) 202 CLR 439 per Gleeson CJ, Gummow and Callinan JJ at 450-451; Re Minister for Immigration and Multicultural Affairs; Ex parte Cohen (2001) 177 ALR 473 at [35]; and Cakmak v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 135 FCR 183 at [51]-[55]). 87 In my opinion, the same reasoning applies where any doubtful question of construction of a statute has been settled by prior authority and the task is to decide whether the facts found satisfy the statute as so construed. In the present case, both the Administrative Appeals Tribunal and the primary judge considered prior authority and neither purported to construe the provisions otherwise than in accordance with the authorities as they were understood. 88 Although not expressed, it is possible that the primary judge intended to say that there was only one possible answer to the question in this case, ie that it was not open for the Tribunal to have found as it did. If so, I respectfully disagree. Consideration of the authorities referred to by the Administrative Appeals Tribunal and by the primary judge reveals, firstly, a very expansive application of the statutory provision by reason of it being regarded as beneficial legislation and, secondly, a variety of different applications of the provision by various Tribunal members and judges. The answer to the question is one of degree upon which minds have differed and will differ. 89 The primary judge appears to have regarded it as decisive that Ergon Energy had a statutory obligation of supplying electricity to 'all and sundry' (at [80]-[82]). In my opinion, counsel for Ergon Energy is on sound ground in submitting that that position is not reconcilable with the decision of the Full Court in Cowell Electric Supply Co Ltd v Collector of Customs (1995) 54 FCR 1. We were not asked to overrule Cowell or, indeed, any of the prior authorities. 90 The result in the present case may appear surprising to those uninstructed by the pre-existing line of authority. The primary judge was not in a position to approach the issue afresh. In my opinion, if the rebate provisions have been stretched, as his Honour thought, that stretching had been done by prior Full Court decisions not by the Tribunal's decision in this case. 91 The appeal should be allowed; the orders of 23 December 2005 should be set aside; in lieu thereof it should be ordered that the appeal to the Court should be dismissed. The Commissioner of Taxation should pay the costs of Ergon Energy of the appeal and of the proceedings at first instance. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Counsel for the Appellant: Mr John Logan SC with Mr Craig Coulsen

Counsel for the Respondent: Mr David Boddice SC with Mr Frank Redmond

Solicitors for the Respondent: Australian Government Solicitor