Robert Bosch (Australia) Pty Ltd v Mr Egon Fice, Member of the Administrative Appeals Tribunal

(1) A person who has or had duty credit is not entitled to the credit if the person received the credit for any of the following reasons: (a) because of the making of an error in calculating the duty credit (including during the modulation process) or a mistake of fact; (b) because information given to the Minister, the Secretary or a delegate of the Secretary was inaccurate or incomplete; (c) because of a clerical error or mistake in the ledger; (d) because the credit: (i) was entered in respect of a transaction to which the person was a party that was not at arm's length within the meaning of section 9; and (ii) is referable to a production value, sales value or investment to which the transaction relates that has not been determined as if the parties were at arm's length. Section 95 Unearned credit liability

If the Secretary determines that, because of the situation set out in section 94, a person is not entitled to certain duty credits, the person is liable to pay the Commonwealth an unearned credit liability.'

8 On 10 May 2006 a delegate of the then Secretary of DITR ("the Delegate") made a determination under s 95 of the ACIS Act that RBA was not entitled to 6,750,825 duty credits issued to it in respect of the Type E Investments claimed in its ACIS quarterly returns. (A minor claim for approximately $24,000 in plant and equipment was conceded by RBA to be ineligible.) The Delegate concluded that the research and development for which RBA received duty credits had been conducted by RBG on behalf of RBA under an agreement. Accordingly, the Delegate debited RBA's ACIS ledger with a $6,750,825 unearned duty credit liability. 9 The Delegate's Findings of Fact were as follows; '17. The "eligible investments" claimed by the Applicant in respect of each of the representative quarters … as well as all other quarters inclusive from Quarter 1 of 2001 (ending 31 March 2001) to Quarter 2 of 2005 (ending 30 June 2005) were asserted to be "type E investments" in respect of overseas research and development. These all related to certain kinds of activities claimed to have been undertaken by the German company Robert Bosch GmbH on behalf of Robert Bosch (Australia) Pty Ltd, namely the following:- (a) Robert Bosch GmbH's "Certification" or "Product Approval" of any new products to be manufactured by the Applicant; and (b) research and development by Robert Bosch GmbH of electronic software used in the manufacture of automotive components manufactured in Australia. 18. The activities referred to in sub-par 17(a) above are conducted pursuant to an arrangement or agreement in place between Robert Bosch GmbH and the Applicant whereby staff of Robert Bosch GmbH conduct "Product Approval" processes prior to the use of components in the manufacture of any of the Applicant's products. 19. The activities referred to in sub-par. 17(b) relate to the product design and development by the Applicant's "Body Electronics" division of a number of products associated with automotive vehicle comfort feature equipment such as climate control and security systems. Robert Bosch GmbH conducts certain activities relating to the development of the software for these products on behalf of the Applicant, even though the majority of product design and development is undertaken in Australia by the Applicant.' 10 The Delegate provided the following reasons for DITR's decision; 25. In order for research and development activities to be allowable research and development under par. 6A(4)(a) of the Act, they must fall within the terms of subreg. 13G(2) of the Regulations. 26. Paragraph 13G(5)(a) specifically includes in subreg. 13G(2) research and development conducted on behalf ofa participant under a contract provided it is Australian-based and certain other requirements are satisfied. On the other hand, par. 13G(5)(c) provides that overseas research and development conducted by the participantis included in subreg. 13G(2) provided that certain requirements are met. 27. Regulation 13G accordingly makes a clear distinction between research and development conducted by a participant and that which is conducted on behalf of a participant. The research and development in question here was conducted by Robert Bosch GmbH on behalf of the Applicant pursuant to an arrangement or agreement between the two companies. It was not conducted by Robert Bosch (Australia) Pty Ltd within the meaning of reg. 13G, the two companies being quite separate entities. One of the key requirements of reg. 13G in relation to overseas research and development was therefore not satisfied, which meant that the research and development in question was not allowable under subreg. 13G(1). 28. Accordingly, DITR determined under section 94(1)(a), (b) and (c) of the Act that the Applicant was not entitled to the 6,750,825 duty credits it had claimed …' (emphasis by the Delegate).

The proceeding before the Tribunal 11 On 6 June 2006 RBA applied for review by the Tribunal of the Secretary's decision in accordance with s 114(j) of the ACIS Act, on the grounds that the Secretary had erred in determining that; (a) claims made by RBA for offshore research and development did not qualify as eligible investments under reg 13G(2) of the ACIS Regulations; (b) claims made by RBA for offshore research and development were not in respect of research and development conducted by it within the meaning of reg 13G(5)(c) of the ACIS Regulations; and (c) RBA had unearned credit liability pursuant to s 94(1)(b) of the ACIS Act. 12 RBA contended that, upon a proper construction of reg 13G, the relevant offshore research and development activities for which it had claimed Type E Investments were Australian-based research for which it was responsible or, alternatively, overseas research and development conducted by RBG. Although engineers and other technical officers formally employed by RBG had provided supporting services for the customisation of software engineering, RBA maintained that the actual development, release and final approval for manufacturing and quality control of the relevant automotive products remained its responsibility. It also contended that RBA's Project Manager remained responsible for the overall direction and management of the relevant development projects, including "project timing, resource management and the escalation of issues in the event of problems and difficulties". Therefore, according to RBA, the arrangement with RBG "did not have the ingredients of a contract, but rather of an arrangement which … resulted in an accounting entry for RBG's staff's time taken up when engaged in RBA's offshore research and development projects." 13 RBA also drew the Tribunal's attention to its recent decision in Spicer Axle Structural Components Australia Pty Ltd v Secretary, Department of Industry, Tourism & Resources [2006] AATA 1004. In that decision, Forgie DP discussed, at [134]-[136], the operation of ss 94 and 95, which permit the Secretary to declare an unearned credit liability. In that case, the Secretary had sought to rely initially upon s 94(1)(b), but later invoked also s 94(1)(a) and (c), in declaring an unearned credit liability because Spicer Axle's quarterly returns contained claims for plant and equipment included purportedly as Type D Investments but ineligible as such. The Deputy President held that this type of 'error' was not the type of error to which any subsection of s 94 applied, noting at [165] that; '… Nor was it an "mistake of fact" to which s 94(1)(a) also refers. Given its context in the ACIS Act as well as its well known use in contra distinction to a mistake of law, that expression must be understood in its technical sense. The error … arose because of a mistake of law, rather than a mistake of fact. It arose either because of a misunderstanding of the interpretation of r 13C and/or because of an inappropriate application of r 13C to the facts as have always been disclosed by Spicer Axle. In either case, the error arose because of a mistake of law and not a mistake of fact.' 14 RBA argued that the Secretary's basis for raising an unearned credit liability against it turned upon an analysis of reg 13G properly construed and whether the participant had "conducted" offshore research and development within the meaning of the ACIS Act. RBA alleged that DITR was seeking to raise an unearned credit liability based upon an error of law by RBA in determining its Type E Investments for the purposes of the quarterly returns, and that, even were the Tribunal to prefer the construction of reg 13G implicitly contended for by the Delegate to that contended for by RBA, that could not have the result that the present unearned credit liability had been validly determined in accordance with ss 94 and 95. RBA argued that its interpretation of s 94 as applied to the circumstances of the present review constituted an independent basis for denying the validity of the Secretary's decision under review, regardless of the merits of the primary dispute about the meaning and effect of reg 13G. 15 For its part, DITR contended that the eligible investment claimed by RBA was, in fact, not undertaken by it but rather by RBG on its behalf. Essentially, DITR argued that an investment is an eligible investment only if the research and development was Australian-based, or, if it was offshore research and development, RBA must have conducted it and certain other conditions must have been met, which would require consideration of such matters as whether RBA had contributed to the direction and management of the offshore research and development program, and had derived a proportionate share of any intellectual property resulting from the program; see regs 13G(2)(a)(i) and 13G(5)(c) and (6). According to DITR, the engagement by RBA of RBG staff to perform research and development activities for it meant that those activities were not "conducted by" RBA for the purposes of reg 13G. 16 DITR briefly addressed the applicant's contention as to the effect of ss 94 and 95, asserting that the Secretary was empowered to raise an unearned credit liability in the present circumstances because; (a) AusIndustry had "erred in calculating the duty credit for each relevant quarter" which was an error to which s 94(1)(a) applied; (b) AusIndustry in allowing credits had made a "mistake of fact" to which s 94(1)(a) applied; and (c) AusIndustry in allowing such credits did so on the basis of "inaccurate or incomplete information" provided by RBA, so as to enliven s 94(1)(b).

The interim decision of the Tribunal 17 The interim decision of the Tribunal which is the subject of this application was made following an oral application by RBA at a directions hearing on 18 March 2008. RBA sought to have the Tribunal decide a series of preliminary questions concerning the application of ss 94 and 95 of the ACIS Act, on the basis of a limited set of facts arising from the material filed to date by RBA and the claims for eligible investments made by RBA to the Secretary. 18 In support of its application, RBA asked the Tribunal to consider two recent decisions that were said to bear upon RBA's contention as to the effect of ss 94 and 95. First, in Secretary, Department of Industry, Tourism and Resources v Spicer Axle Structural Components Australia Pty Ltd [2007] FCAFC 158, a Full Court of this Court dismissed an appeal by AusIndustry against the Tribunal's decision in Spicer Axle referred to in paragraph [13] above. The Full Court, without characterising the ACIS scheme as a self-assessment scheme, held specifically that; (a) a determination that a participant did not have an eligible investment answered a question of law and did not give rise to an unearned credit liability under s 94(1)(a); and (b) having reached this conclusion, it was unnecessary to consider whether the participant had an eligible investment (including the factual findings relevant to that question). 19 At [24] of its interim decision, the Tribunal analysed the relevant implications of the Full Court's reasons in Spicer Axle, noting in particular that the focus of the case had been on the first limb of s 94(1)(a) and that there had been no analysis of s 94(1)(b). The Tribunal observed that the Full Court had "made its decision solely on the basis that the only mistake made was one as to the legal entitlement of Spicer Axle to receive duty credits" and that it was for this reason that "the Court found it unnecessary to determine whether the relevant investment undertaken by Spicer Axle was taken to have occurred for the purposes of the ACIS Act". 20 Secondly, in Hella v Secretary, Department of Industry, Tourism and Resources [2006] AATA 1103 the Tribunal was asked, in another review of a determination to raise an unearned credit liability in connection with asserted Type E expenditure, to rule upon a contention based upon ss 94 and 95 substantially to the same effect as RBA's contention in the present case. Hella concerned facts very similar to the present case, with the Secretary arguing that those facts fell within s 94(1)(b). The Tribunal held that; (a) the information provided by the participant was neither incomplete, because it was all that was asked for by the Secretary on the relevant quarterly return form, nor inaccurate, because it was under the heading of 'claim' and was, indeed, the participant's claim; and (b) even if the information had been inaccurate or incomplete, the credits were issued "because of" the Secretary's erroneous treatment of the ACIS scheme, not "because of" the provision of inaccurate or incomplete information as described in s 94(1)(b). 21 At [25] of its interim decision, the Tribunal noted that the Tribunal in Hella had considered s 94(1)(b) and"after examining the limited material with which she was provided, the Deputy President was satisfied that the information Hella provided was neither inaccurate nor incomplete. On that basis, Deputy President Forgie found that the situation described in s 94(1)(b) did not arise." The Deputy President in Hella also found that the causal nexus between the matters to which s 94(1)(a) and (b) refer and the issue of credits had been made out on the basis of the agreement between the parties to be bound by the outcome in Spicer Axle. 22 Relying on these two decisions, RBA submitted to the Tribunal that its contention as to the effect of ss 94 and 95 constituted a discrete issue in the review proceeding which, if determined in RBA's favour, would necessarily lead to the review proceeding being finally determined without the need to explore the potentially enormous range of documentary information that might be said to bear upon whether RBA's relevant research and development activities undertaken overseas had been "conducted by" RBA or, alternatively, by RBG for RBA, for the purposes of allowable Type E Investments, and that therefore RBA's contention ought to be examined as a preliminary question. 23 In rejecting RBA's application, the Member held that; (a) 'It is only after an examination of the nature of the activities…that the Tribunal can determine, as a matter of law, whether those activities fall within Regulation 13G'; see paragraph 29; and (b) 'If it is a mistake of fact, inaccurate or incomplete information that led DITR to accept that the claimed research and development expenditure satisfied the requirements of Regulation 13G, in my view, that could establish the causal nexus required for the application of ss 94 and 95 of the ACIS Act'; see paragraph 30. 24 The Tribunal went on, at [31], to observe that RBA itself had put its case in a way which raised the factual issues in question. RBA had conceded that some of the issues in dispute were mixed questions of fact and law. Neither of the authorities relied upon by RBA precluded the potential operation of s 94(1) in such circumstances. 25 The Tribunal then said, at [32]; It should be apparent from the analysis set out above that I cannot accept the submissions of Robert Bosch [Australia] that this matter should proceed by way of determining the questions which arise out of ss 94 and 95 of the ACIS Act by reference to a limited set of facts and documents, all of which are either presently before the Tribunal or, in the case of Robert Bosch's relevant quarterly returns, by tendering those to the Tribunal. An investigation of the facts must be first undertaken and that can only be completed by examination of all relevant documents relating to the activities of Robert Bosch [Australia] and Robert Bosch Germany for which duty credits have been claimed. If it is accepted by Robert Bosch [Australia] that research and development was conducted by Robert Bosch Germany, then the facts which underpin reliance on Regulation 13G(5) must be clearly disclosed. That is, any documents relating to those activities must be disclosed to determine whether any provision of s 94(1) is enlivened. 26 At [33] the Tribunal discussed the means by which the factual inquiry could be limited to consideration of a representative project, a matter which the parties had been discussing for some time. DITR had indicated that, if RBA could demonstrate that a particular project was fairly representative of the relevant activities claimed to be overseas research and development, DITR would consent to being bound by the outcome of the inquiry into that project for the general purposes of the proceeding. However, RBA had resisted providing DITR with the material that DITR was said to require to allow it to determine whether the chosen project was fairly representative. Accordingly, the Tribunal set down the proceeding for a directions hearing, at which the parties could agree as to how the matter should proceed and the directions that the Tribunal should make for the production of further documents.

Applicant's submissions 27 In its written submissions filed on 5 August 2008, RBA outlined the details of its grounds for review. It first submitted that the Tribunal's decision involved error of law. According to RBA, upon a proper construction of ss 94 and 95 of the ACIS Act, the factual investigation by the Tribunal and disclosure of documents by the applicant, which the Tribunal ruled must be undertaken, was irrelevant to RBA's application for a review of DITR's decision of 10 May 2006 to examine whether RBA's claimed relevant expenditure satisfied the requirements of reg 13G of the ACIS Regulations. 28 Secondly, the Tribunal, it was contended, did not have jurisdiction to make the decision in that the Tribunal had not limited the proceeding to a review of the Secretary's decision, but intended to conduct the proceeding by investigating and making a decision on whether RBA's claimed relevant expenditure satisfied the requirements of reg 13G. 29 Thirdly, RBA argued that the decision entailed that the future conduct of the review by the Tribunal, including the giving of both interlocutory directions and directions for the hearing, would proceed upon the footing that; (a) the review is not to be determined by reference to ss 94 and 95 but to whether RBA's claimed relevant expenditure satisfied the requirements of regulation 13G; and (b) the Tribunal must have regard to any and all of RBA's documents relating to research and development activities which might evidence RBA's claimed expenditure, which documents must be clearly disclosed, rather than the documents already filed in the proceeding supplemented by the applicant's relevant quarterly returns. In so deciding, RBA contended, the Tribunal committed an error of law. 30 Finally, it was submitted that a breach of the rules of natural justice had occurred in connection with the making of the decision. RBA argued that, whilst, in terms, refusing RBA's application for directions to hear and determine, as a preliminary question, the issue arising under ss 94 and 95, by its decision the Tribunal effectively determined the issue for the purposes of the proceeding without giving RBA a proper opportunity to be heard. 31 Before me, Mr Uren QC, who appeared with Mr Fleming of Counsel for RBA, submitted that, properly construed, the ACIS Act contemplates a retention of duty credits by a person, even if "wrongly" given, unless the participant has received them for one or more of the reasons set out in s 94(1)(a)-(d). According to RBA, s 94 stipulates when a participant is not entitled to a particular duty credit, and s 95 enables the Secretary to decide whether one of the situations set out in s 94 has occurred and whether, because of that situation, the participant is not entitled to a certain duty credit. If the Secretary decides that one of the situations set out in s 94 has occurred, the participant is not entitled to a certain duty credit and is liable to pay the unearned credit liability to the Commonwealth. On this view, ss 94 and 95 do not give rise to a liability to pay simply because a duty credit had been given to which that participant was not entitled. Instead, it was submitted, they only impose a liability to refund if the duty credits have been received in any of the circumstances set out in s 94(1)(a)-(d). 32 Mr Uren submitted that the Secretary had based his decision on an absence of primary entitlement in RBA, which, RBA contended, was a matter for self-assessment by the participant, rather than on whether the statutory criteria in s 94(1) had been met. 33 It was further submitted that the Tribunal was bound to follow the decision in Spicer Axle, which, if properly applied to the limited facts proposed by RBA, would lead to the conclusion that the duty credits had not been granted for a reason set out in s 94(1)(a) or (c) (the two paragraphs at issue in this proceeding). Similarly, RBA contended that the decision in Hella should be followed by the Tribunal and, if applied correctly to the same limited facts, would have the result that the duty credits had not been granted for a reason set out in s 94(1)(b). 34 The Tribunal had rejected RBA's proposal because it decided that a review of the Secretary's decision would require it to examine the facts on which RBA's claim for duty credits had been based in order to determine, as a matter of law, whether the activities on which its claim relied fell within reg 13G, so as to constitute allowable research and development. The reasons for this view were that; (a) the examination might show that there was a mistake of fact, or the giving of inaccurate or incomplete information (by RBA), which had led DITR to accept that the claimed research and development expenditure satisfied the requirements of reg 13G, and that this could establish the causal nexus required for the application of ss 94 and 95; (b) if the Tribunal were to find that the claimed research and development activities had been conducted in Germany by RBG, it would be arguable that RBA had received the duty credits for a reason stipulated in s 94(1)(a) or (b) because there would then have been a factual error (by RBA) which may have led the Secretary to believe that the overseas research and development was in fact allowable because it satisfied reg 13G. 35 Counsel for RBA submitted that the limited factual enquiry proposed by RBA would not require an investigation by the Tribunal of such matters as would enable the Tribunal to determine whether the activities in respect of which the duty credits had been granted fell within reg 13G. 36 RBA referred to Spicer Axle, in which the Full Court at [33] held that, having regard to the scheme embodied in Part 9 of the ACIS Act as in force at the time, the correctness or otherwise of a claim for duty credits was not relevant to the issue arising under s 94(1). No incorrectness of the claim for duty credits had the effect that a situation or a reason referred to in s 94(1) had occurred. The Full Court had concluded at [27]-[33] that there had been no error in calculation of the duty credit and no mistake of fact made by the Secretary for the purposes of paragraph (a) because the way in which DITR had conducted the duty credit scheme meant that the grant of duty credits had been made by the Secretary relying solely upon a statement provided by the claimant of the basis, and amount, of the claim for duty credits. As to paragraph (c), the Full Court similarly held that there was no mistake or clerical error in the ledger because it merely, and accurately, reflected information given by Spicer Axle to the Department; see [32]. In any event, the Full Court held, any mistake in that case was not as to the facts but as to legal entitlement. 37 In relation to Hella, RBA submitted thata decision in favour of Hella had been made despite its implicit acceptance that the relevant expenditure had not been on allowable research and development; see [41]. Furthermore, it was contended, the limited basis of fact proposed by RBA was of the same nature as the information provided in Hella and, accordingly, the duty credits ought likewise to be found not to have been received for a reason referred to in s 94(1)(b). 38 Counsel for RBA finally contended that the Tribunal's views on the meaning and application of the decisions in Spicer Axle and Hella, as set out at [24] and [25] of its interim decision, were incorrect. Accordingly, RBA sought orders and declarations that the Tribunal's decision be set aside and the applicant's preliminary application be remitted to the Tribunal for reconsideration or, in the alternative, that the Tribunal's decision be quashed.

Respondent's submissions 39 Before me, it was submitted by Mr Hanks QC who appeared with Mr P. Gray of Counsel for DITR that the conclusions of the Full Court in Spicer Axle were of limited application in several respects. Counsel pointed, in particular, to the fact that the Full Court had noted that there had been no reliance by the Secretary on s 94(1)(b), that it did not completely endorse the Tribunal's construction of ss 94 and 95, and that it did not draw a conclusion as to whether or not the ACIS Scheme was a self-assessment scheme. 40 It was first contended on behalf of DITR that the Full Court in Spicer Axle had not concluded that "a determination that the participant did not have an eligible investment was a question of law and did not give rise to an unearned credit liability under s 94(1)(a)". In Spicer Axle, after the Tribunal and the Secretary had adduced evidence as to the circumstances in which eligible investments had been claimed, no particular alleged "error of fact" was identified beyond the misunderstanding of the legal implications of the accounting treatment accorded by Spicer Axle to the relevant investment. The Tribunal and the Full Court held this to have been a mistake of law, not of fact. Deputy President Forgie had noted that the error was one of application of the relevant regulation to the facts disclosed by Spicer Axle. Accordingly, DITR submitted, there could be no such finding in the present proceeding until a further factual inquiry had been undertaken into the circumstances of the claims of eligible investment. 41 DITR further submitted that, although the Full Court had not found it necessary to deal with a notice of contention in relation to Forgie DP's conclusions that the participant had not made eligible investments, the Full Court had not ruled that it is generally unnecessary to consider whether a participant has made an eligible investment or to make factual findings on that matter. 42 DITR maintained that, on a proper construction of s 94(1)(a), the conclusions reached by the Full Court in Spicer Axle were referable solely to points made by counsel for the participant, premised on the comprehensive factual inquiry which had been undertaken by Forgie DP before the appeal to the Full Court, including; '[26] Counsel further contended that Spicer Axle had submitted quarterly returns claiming for type D investments in specified amounts and that the Secretary had issued it with relevant duty credits corresponding to the returns. No error in calculation could have occurred on the part of the Secretary. More importantly, no evidence has been advanced tending to establish any such error [27] Counsel for Spicer Axle also submitted that no mistake of fact within the meaning of s 94(1)(a) had been made by the Secretary who had not been shown to have been under any misapprehension either personally or by his delegate as to any particular issue of fact.' 43 At [32] of its decision, the Full Court stated that; 'Part 9 constitutes a code dealing with the circumstances in which duty credits can be received. At the relevant time, duty credits could not be recovered except in the circumstances set out in s 94. None of those circumstances applied to Spicer Axle. The calculation of the duty was based on information given to the Department by Spicer Axle on the assumption of an entitlement to duty credits. There was no error in calculating the duty credits. There was no mistake of fact. There was no mistake or clerical error in the Secretary's ledger. The ledger merely reflected information given by Spicer Axle to the Department. The only mistake (if there was one) was as to the legal entitlement of Spicer Axle to receive the credits. The 2007 amendment which introduced s 94(1A) supports the view that the Act, at the relevant time, did not mean that an absence of legal entitlement to a credit entailed a liability to make a payment to the Commonwealth under s 95 of the ACIS Act …' 44 Regarding the notice of contention, the Full Court observed at [33] that; 'As the Tribunal correctly determined that Spicer Axle did not have an unearned credit liability within s 95 of the Act, it is not necessary to consider the respondent's notice of contention which took issue with the finding of the Tribunal that its relevant investment was not taken to have occurred for the purposes of the ACIS Act. 45 That statement, DITR submitted before me, should not be treated as a general proposition that it is irrelevant to consider issues concerning whether eligible investments have been made, and that, therefore, the decision in Spicer Axle did not foreclose the utility of further factual inquiry in this proceeding. 46 In respect of the Tribunal's decision in Hella, DITR submitted that, having regard to the position taken by the Secretary in that case and the absence of a full hearing or factual inquiry in the proceeding, Forgie DP's reasoning on s 94(1)(b) was of limited persuasive value and of no value as a precedent in the current proceeding. Hella was uncontested in the Tribunal and, of necessity, was decided under pressure of abnormal time constraints. At [43] of her decision in Hella, Forgie DP had made clear that her conclusion (namely, that the information provided by the participant did not fall within s 94(1)(b)) was based on "limited material". DITR submitted that, on this basis, Hella should be regarded as being confined to its particular facts. 47 It was contended on behalf of DITR that no generally applicable conclusion was available to the effect that a participant which lodged returns claiming eligible investments in relation to overseas research and development (which the participant had not itself conducted) had not provided inaccurate or incomplete information. Similarly, DITR argued, if such information were inaccurate or incomplete s 94(1)(b) would not be rendered inapplicable to it merely because the Secretary regarded the ACIS as a self-assessment scheme. In each of these respects, the reasoning of Forgie DP was said to be neither legally nor logically supportable. 48 Counsel for DITR sought to derive support for their analysis of the reasoning of Forgie DP in Hella from the approach taken by the same Deputy President when she conducted a directions hearing in RBA's application for review which has given rise to the present appeal. In the course of that hearing on 27 August 2007 the learned Deputy President intimated that she did not believe that the legal question could be decided by the Tribunal without considering the full factual context and that she considered that "further work needed to be done by the applicant before a hearing could take place". That was said to be necessary to address the concerns which had been raised by Mr Hanks QC for DITR. As well, it was indicated that RBA should specify the particular Iveco projects on which it intended to rely. In the same context, Forgie DP said that "more work needed to be done to get the case into better shape" and that an order for production of documents might be made against RBA if it failed to provide further documents in response to a notice to produce by DITR. 49 As to any general reasoning by Forgie DP concerning the operation of s 94(1)(b) and the causal nexus between the relevant inaccuracy or incompleteness and issue of credits, DITR observed that it had not made submissions on any of those points before Hella was decided, and had not received an advance draft of the reasons in that case. Accordingly, DTIR submitted that the learned Deputy President had erred in her alternative conclusion that presumptively inaccurate or incomplete information given to the Secretary could not be the reason, within the meaning of s 94(1)(b), because of which the participant had received the credits. 50 Deputy President Forgie identified the causative reason as the fact that the Secretary regarded the ACIS scheme as a self-assessment scheme and so his delegate had accepted without query the information which had been submitted by Hella and had then made the necessary ledger entries to enable Hella to receive the duty credits. "In other words", the learned Deputy President said, [at 45]; 'Hella received the duty credits because its claim for duty credits was treated by the Secretary effectively as an assessment of its expenditure on eligible investments and so of its type E investment.' 51 In response to RBA's allegation that the Tribunal should be confined in the manner in which it reviews the Secretary's decision to the matter in respect of which the Secretary has exercised his statutory powers, DITR submitted that the Tribunal is at large in exercising afresh the powers of the Secretary. Under s 43(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), the Tribunal may exercise all the powers and discretions that have been conferred on the decision-maker. It was submitted that, in the proceeding presently before the Tribunal, there are live questions of fact as to whether the ACIS credits were received because of error of fact or because of provision to the Secretary of inaccurate or incomplete information. According to DITR, the proper test for the Court to apply here is whether "matters the subject of the [potential or foreshadowed] directions were plainly irrelevant to the issues in the proceedings in the Tribunal", a test which, DITR argued, RBA was unable to satisfy. 52 Counsel for DITR further submitted that a concluded view as to the relevance of the facts to be ascertained as a result of any factual inquiry would be formed in due course in the Tribunal proceeding, and that RBA would have the right to appeal to this Court under s 44 of the AAT Act if it were to regard such a determination as legally erroneous. Mr Hanks submitted that the factual inquiry should not be curtailed prematurely without the benefit of findings as to all relevant facts, and that the Tribunal was best placed to determine whether certain issues should be resolved as preliminary questions or whether further investigation of the facts should be undertaken. 53 Finally, DITR contended that the views expressed by the Tribunal did not constitute an ultimate determination by the Tribunal of the issue arising under ss 94 and 95 but were merely by way of an interim decision. That interim decision had not been infected by any error of law and had not denied RBA any procedural fairness. Accordingly, DITR submitted, the application should be dismissed with costs.

Consideration 54 It is a trite proposition that the power of a court or tribunal to direct that a particular question be heard and determined as a preliminary issue before, and separately from the determination of any other issue in the proceeding, is inherently discretionary. In contrast with O 29 of the Rules of this Court, the AAT Act does not, in terms, confer such a power on the Tribunal. However, s 25(4A) of the AAT Act provides that; 'The Tribunal may determine the scope of the review of a decision by limiting the questions of fact, the evidence and the issues it considers.' 55 Even if that sub-section does not itself confer the relevant discretion, I consider that, by implication, it is available to the Tribunal in aid of the exercise of its primary power under s 25(4) of the AAT Act "to review any decision in respect of which application is made to it under an enactment." 56 It is generally accepted that it is undesirable to exercise the discretion to determine a separate or preliminary question when the factual basis for the determination has not been resolved by agreement between the parties or by findings made by the decision-maker on appropriate evidence. Thus, in Rocklea Spinning Mills v Anti-Dumping Authority (1995) 56 FCR 406, a Full Court of this Court observed, at 423; 'It is generally appropriate and desirable to deal completely with a case such as the present on facts fully and finally found, so that all issues can be resolved once and for all. It is important that the Court should not be asked to decide questions of law which may turn out to be hypothetical or merely advisory, in the event that the resolution of the other review grounds requires remission of the matter back to the decision-maker for further consideration on the facts. In the present case, although the matter did proceed on a preliminary question, there was a reservation by the applicant in relation to whether it would finally dispose of the whole matter, or whether it may be necessary for the matter to be remitted for reconsideration to the ADA. Preliminary questions generally should only be isolated for separate decisions in circumstances where the factual position is such as to preclude the necessity for the matter having to go back before the body whose decision is the subject of the review application whichever way the decision on the point of law is decided: cf Tilling v Whiteman [1980] AC 1 at 17-18, and 25 and Nissan v Attorney-General [1970] AC 179 at 242.

In the present matter, as it has turned out, the decision on the preliminary question of law raised has disposed of the whole matter because, in the final analysis, there was sufficient material before the trial judge to enable him to make his determination on the point of law. However, we think that caution ought to be exercised in cases of this kind before deciding to proceed with a preliminary question.'

57 In my view, it was entirely open to the Tribunal and consistent with the principles governing the exercise of the discretion mentioned above, to defer consideration of the application of s 94(1) until after an investigation of the facts said to support the claim for duty credits. A mistake of fact, as Forgie DP pointed out in the passage from Spicer Axle quoted at [13] above, is used in contradistinction to a mistake of law. A mistake of the latter kind can be constituted by attaching incorrect legal consequences to facts which have been found, agreed or are otherwise undisputed, or by improperly characterising such facts in the context of legislation or other legal prescription. 58 In the present case, it is clear that there has been no finding or agreement about the primary facts underlying RBA's claim for allowable research and development under Reg 13G of the ACIS Regulations. That regulation provides, so far as is relevant; 'Allowable research and development

(1) For paragraph 6A(4)(a) of the Act, the kind of research and development mentioned in subregulation (2) is allowable research and development under the Act. (2) For subregulation (1), the kind of research and development is research and development activities that are: (a) directly related to the design, development, engineering or production of motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling; and (b) undertaken for the purpose of: (i) acquiring new knowledge; or (ii) creating new or improved materials, products, devices, production processes or services. … … … (5) Also, for a participant, research and development of the kind mentioned in subregulation (2): … … … (c) includes offshore research and development conducted by the participant only if: (i) the requirements mentioned in subregulation (6) are met; and (ii) the participant is not required to conduct the research and development on behalf of: (A) another person under a contract with the other person; or (B) if the participant is an MVP - another participant under a contract with the other participant; and (d) includes Australian based research and development conducted by the participant only if the participant is not required to conduct the research and development on behalf of: (i) another person under a contract with the other person; or (ii) if the participant is an MVP - another participant under a contract with the other participant. (6) For subparagraph (5)(c)(i), the requirements are: (a) the offshore research and development is necessary to tailor the participant's Australian-based research and development to a particular market; or (b) all of the following: (i) the offshore research and development is necessary to lever the participant's Australian-based research and development off an offshore research and development program; (ii) the offshore research and development contributes directly to the offshore research and development program; (iii) the participant contributes to the direction and management of the offshore research and development program, and has a proportionate share in any intellectual property resulting from the program. (7) In this regulation: engine or component supplier means a supplier of: (a) engines, engine components, automotive components, automotive machine tools or automotive tooling; or (b) parts or materials for anything mentioned in paragraph (a).' 59 I accept that s 94(1) of the ACIS Act exhaustively sets out the circumstances in which a person who has received a duty credit becomes disentitled to retain that credit. I also agree with the contention advanced on behalf of RBA that a relevant person only becomes liable to pay to the Commonwealth an unearned credit liability if the Secretary determines that the person's disentitlement to the credit is "because of a situation set out in section 94". However, acknowledgement of those aspects of the legislation does not entail that the Secretary, in making a determination contemplated by s 95, is precluded from carrying out an appropriate factual investigation. The scope and nature of that investigation will depend on which of the "reasons" identified in s 94(1)(a), (b), (c) and (d) is postulated as having brought about the impugned duty credit. 60 If only one or two of the more limited "reasons" stipulated in s 94(1) are treated by the Secretary as having given rise to the impugned duty credit, the factual investigation will be circumscribed accordingly. Thus, in making a determination whether an error in calculating the duty credit had resulted in a duty credit to which the person was not entitled, the Secretary's investigation would be confined to a review of the arithmetical or mathematical calculations undertaken in quantifying the impugned credit, including calculations made in the modulation process. A similarly limited investigation would be all that would be required if the sole "reason" postulated for the impugned credit were a clerical error or mistake in the ledger. Then, the Secretary would, presumably, be confined to determining whether, as a result of some arithmetical or other error, the ledger attributed to the participant an erroneously high duty credit. 61 If one of the postulated "reasons" for the impugned receipt of a duty credit were a "mistake of fact" as contemplated by the concluding part of s 94(1)(a), the scope of the inquiry required of the Secretary would vary according to the width of the fact, or facts, presumed to have been mistaken. Similarly, if the presumptive reason for the disentitlement to the credit were that specified in s 94(1)(b), that information given to the Minister, the Secretary, or a delegate of the Secretary was inaccurate or incomplete, the width of the Secretary's inquiry would depend on the nature and extent of the suggested inaccuracy or incompleteness. 62 In the present case, as appears from [28] of DITR's reasons for decision reproduced at [10] above, the determination of disentitlement was made under all of paragraphs (a), (b) and (c) of s 94(1) of the ACIS Act. The Tribunal clearly recognised a review of that determination as involving, amongst other things, an inquiry into the completeness and accuracy of the information provided to DITR by RBA. That recognition is implicit in the Tribunal's discussion, noted at [19] above, of Spicer Axle which it declined to apply because; 'In the Spicer Axle case, the Full Court was only concerned with the meaning to be attributed to the first limb of s 94(1)(a). In other words, it was only concerned to determine whether the Tribunal had correctly interpreted the meaning of the phrase the making of an error in calculating the duty credit. The Full Court noted that the Tribunal was not invited to find that a delegate of the Secretary's decision was supported on the grounds set out in s 94(1)(b). It made its decision solely of [sic] the basis that the only mistake made was one as to the legal entitlement of Spicer Axle to receive duty credits. Therefore, the Court found it unnecessary to determine whether the relevant investment undertaken by Spicer Axle was taken to have occurred for the purposes of the ACIS Act.'; see [24] of the Tribunal's reasons for decision. 63 On the basis of that analysis, the Tribunal concluded, at [30] of its reasons; 'If a mistake of fact, inaccurate or incomplete information lead [sic] DITR to accept that the claimed research and development expenditure satisfied the requirements of Regulation 13G, in my view, that could establish the causal nexus required for the application of ss 94 and 95 of the ACIS Act.' 64 I can discern no error of law in the Tribunal's treatment of Spicer Axle. In that case, the Full Court noted the Tribunal's ruling that the situation described in s 94(1)(c) had not arisen and that s 94(1)(a) was inapplicable because no error had been made in calculating the duty credit. From that premise, the Full Court went on to observe, at [22]-[23] of its reasons; '22 At [165], the Tribunal held that the error had arisen not because of a mistake of fact but because of a mistake of law.

23 The Tribunal was not invited, by the appellant, to find that the delegate's decision could be supported by reliance on s 94(1)(b) even though it had been that provision which, alone, had been invoked when the delegate had decided that Spicer Axle was not entitled to credits.'

65 In other words, the Full Court regarded the Tribunal as having proceeded, with the acquiescence of the Secretary, on the basis that there was no occasion to inquire whether information given to the Secretary had been inaccurate or incomplete. In the present case, by contrast, there has been no agreement about the accuracy or completeness of the information supplied by RBA. It follows that it is necessary for the Tribunal to make findings of fact directed to that issue and appropriate for it to give directions, including those for the production of documents, to enable those findings to be made. The observations at the end of the Tribunal's interim decision indicate that it proposes to proceed in that way. 66 I do not consider that the decision of the Tribunal in Hella mandates that every review of a decision as to whether a duty credit has been received for a reason specified in s 94(1) must be undertaken on a similarly limited factual basis. In Hella, Forgie DP pointed out, at [3]; 'In response to an invitation by the Secretary, Hella agreed to be bound by any decision in separate proceedings in the Tribunal between Spicer Axle Structural Components Australia Pty Ltd (Spicer Axle) and the Secretary [V2003/917; decision Re Spicer Axle Structural Components Australia Pty Ltd Secretary, Department of Industry, Tourism and Resources[2006] AATA 1004] in relation to what was described as "the s 94(1) issue". That issue related to the Unearned Credit Liability notice that the Secretary issued to Hella as he had done to Spicer Axle. In both cases, the notice had been issued on the basis that information given to the Secretary or his delegate was inaccurate or incomplete but, in relation to Spicer Axle, the Secretary relied on ss 94(1)(a) and (c) ["A person who has or had duty credit is not entitled to the credit if the person received the credit for any of the following reasons: (a) because of the making of an error in calculating the duty credit (including during the modulation process) or a mistake of fact; (b) ... (c) because of a clerical error or mistake in the ledger; (d) ..." ] at the hearing rather than on s 94(1)(b).' 67 In the next paragraph of her reasons, the learned Deputy President indicated that, at the hearing of Hella, she had taken into account "the evidence in the T documents and had regard to a statement made on behalf of the Secretary who did not consent to the decision I made but did not oppose it." The statement made on behalf of the Secretary in Hella is reproduced at [37] of the Tribunal's reasons in that case and included an assertion that "the Tribunal's decision in Spicer Axle does not have precedential effect on other cases in any strict sense, however … … the Secretary considers that it applies in this case." The same statement ended with these paragraphs; '16. For these reasons, if the Tribunal were invited by the Applicant to make a decision on the review setting aside the decision, the Secretary would not oppose that course. 17. The Secretary's indication in this matter is case-specific and should not be taken by any person to indicate that the approach will be adopted in any other case.' 68 Thus, in Hella, the Tribunal was relieved of any need to conduct the inquiry described at [61] above into the accuracy or completeness of the information which had been supplied by the applicant in that case. 69 Although it was not necessary to do so, Forgie DP in Hella turned to consider what would have been the effect of s 94(1)(b) if, contrary to her finding, the information supplied by the applicant had been inaccurate or incomplete. She observed, at [45] of her reasons; 'The question can be posed by asking whether the inaccurate or incomplete material was the cause of Hella's receiving the duty credits. Equally, whether the situation described in s 94(1)(b) exists can be ascertained by asking: Why did Hella receive the duty credits? Was the reason it did so the fact that inaccurate or incomplete information was given to the Secretary? In this case, I do not need consider that it was the reason. The reason was that, as I decided in Spicer Axle, [[2006] AATA 1004 at [145]-[147]] the Secretary regarded the ACIS as a self assessment scheme. His delegate or delegates accepted the information that was submitted by Hella without query before taking the steps to enter the modulated investment credit in the ACIS ledger and so enabling Hella to receive the duty credits. In other words, Hella received the duty credits because its claim for duty credits was treated by the Secretary effectively as an assessment of its expenditure on eligible investments and so of its type E investment. His accepting the information without question led then to its being given the duty credits. It mattered not whether the information in the quarterly report was accurate or complete as the duty credits would be given to Hella regardless of either when ACIS was treated as a self-assessment scheme. Therefore, the situation set out in s 94(1)(b) does not exist and so s 95 cannot be relied upon to determine that Hella has an Unearned Credit Liability.' 70 The term "self-assessment scheme" does not appear to find expression in the ACIS Act or the Regulations. Nor did the Full Court in Spicer Axle find it necessary to express a view about its effect in the analysis to which Forgie DP referred in the passage quoted at [69] above. However, I consider that the concept is not available to preclude the inquiry contemplated by s 94(1)(b) into the accuracy or completeness of information given to the Secretary, including information given by a participant in a quarterly return. 71 Some support for the view that Hella was decided on the basis of limited facts attributable to the particular circumstances in which that case arose for decision is afforded by Forgie DP's observations during the early interlocutory processing of the present case by the Tribunal. Those observations, summarised at [48] above, make clear that the learned Deputy President considered that the review could well necessitate an examination of particular Iveco projects in the light of documents to be produced by RBA. In that sense, Forgie DP seems to have shared my impression that, at best for RBA, the present review involves the resolution of mixed questions of fact and law and could not be confined to an identification of a mistake of law as Spicer Axle was held to be confined. 72 I am not persuaded that the interim decision of the Tribunal in this case has foreclosed any argument which might otherwise have been available to RBA. Nor has it precluded RBA from adducing any evidence which it considers may bear on one or other of the situations made available by s 94(1). I therefore do not consider that any live issue in the review has been determined without affording RBA a proper opportunity to be heard.

Conclusion 73 As will appear from the reasons which I have endeavoured to explain, none of the errors of law in the making of the interim decision which RBA has imputed to the Tribunal has been made out. The application must therefore be dismissed with costs. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan .

Counsel for the Appellant: Mr A G Uren QC with Mr M Fleming

Solicitor for the Appellant: Minter Ellison

Counsel for the Second Respondent : Mr P Hanks QC with Mr P Gray

Solicitor for the Second Respondent: Australian Government Solicitor

Date of Hearing: 11 August 2008

Date of Judgment: 20 March 2009