Sea Shepherd Australia Limited v Commissioner of Taxation [2013] FCAFC 68 | Case summary

Sea Shepherd Australia Limited v Commissioner of Taxation [2013] FCAFC 68 | Case summary | Zoe

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besanko J: 1 I have had the advantage of reading the reasons for judgment of Gordon J. I agree that the appeal should be dismissed with costs and I agree with her Honour's reasons. I wish to add some brief comments on the use of examples in an explanatory memorandum. 2 The explanatory memorandum for, among other matters, item 4.1.6 in the table in s 30-45(1) of the Income Tax Assessment Act 1997 (Cth) was put before the Tribunal and also before this Court. Both parties sought to use what are called examples in the memorandum to supplement its or his construction of the words in item 4.1.6. 3 The relevant part of the explanatory memorandum is in the following terms: Animal welfare 11.32 A charitable institution is eligible to be endorsed by the Commissioner as a DGR where its principal activity is one or both of: • providing short-term direct care to animals (but not only native wildlife) that have been lost, mistreated or are without owners; and/or • rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost, mistreated or are without owners. [Schedule 11, item 4, item 4.1.6 in the table in subsection 30-45(1)] Example 11.14 Furry Friends is a charitable institution whose principal activity is to provide short-term care for lost and injured cats, dogs and horses. Furry Friends' intent is to find new homes for all of the animals it shelters. While some animals take longer than others to find new homes, the majority are eventually given new homes. However, Furry Friends has difficulty in finding homes for some of its horses and these are cared for by Furry Friends for the rest of their lives. As Furry Friends' main activity is to provide short-term direct care to injured and lost animals, it is eligible for endorsement under this category. The long-term care that Furry Friends provides to a small portion of its animals does not affect its eligibility for endorsement. Example 11.15 Animal Care is a charitable institution which rehabilitates injured wildlife that have been brought in by the public and also operates a shelter for lost and unowned pets. Animal Care releases the majority of the wildlife back into their natural environment. Animal Care also aims to find new homes for all the pets it cares for. However, due to the large volume of pets coming to Animal Care, many are put down because they cannot be given new homes. Animal Care is eligible for endorsement under this category because it rehabilitates injured animals and provides short-term care to animals without owners. 11.33 The animal welfare DGR category will not extend to the endorsement of organisations which are established solely to protect native animals. Public funds which are established solely to protect native animals may be eligible for DGR endorsement under the existing general category of environmental organisations (section 30-55 of the ITAA 1997). [Schedule 11, item 4, item 4.1.6 in the table in subsection 30-45(1)] Example 11.16 Zulu Animals operates a fleet of vehicles which rescue native animals that have been injured by natural disasters or cars. Zulu Animals does not rescue or rehabilitate any non-native animals. Zulu Animals rehabilitates the native animals until they return to full health. As Zulu Animals only cares for native animals, it is not eligible for endorsement under this category. It should instead apply for endorsement under the environmental organisations DGR category. 11.34 Charitable institutions which are endorsed under this category may undertake other minor activities which further their charitable purpose, such as providing veterinary services and promoting the prevention of cruelty to animals. However, the principal activity of the organisation must be to provide one or both of short-term direct care to animals that have been lost, mistreated or are without owners or the rehabilitation of those animals that are sick or injured. Example 11.17 Ardnas Inc is a charitable animal rescue institution which rehabilitates native and non-native animals that have been hit by cars or injured by natural disasters. Ardnas Inc also operates a shelter for unwanted animals and provides an animal hospital service to members of the public. This animal hospital service only accounts for a small portion of Ardnas Inc's activities. As the principal activity of Ardnas Inc is rehabilitating injured animals, it is eligible for endorsement under this general category. Example 11.18 Alix's Animals is a charitable institution which has a principal activity of providing short-term direct care, through its pet shelter, to pets that no longer have owners. To help fund the pet shelter, Alix's Animals also operates a boarding kennel and an opportunity shop which sells second hand animal accessories. Both of these activities are minor activities and therefore do not affect Alix's Animals' eligibility for endorsement under this category. 11.35 Institutions which have a principal purpose of advocating a political party or cause, attempting to change the law or government policy, or promoting a particular point of view are not charitable, and are therefore not eligible for endorsement under the animal welfare general category. However, if an entity's activities are otherwise charitable, the presence of political, lobbying or promotional activity that is only incidental to the dominant charitable purpose, will not prevent the institution from being a charity. 4 The applicant referred to examples 11.15, 11.16 and 11.17. The respondent referred to examples 11.14, 11.15 and 11.18. 5 None of these examples provide any real assistance in relation to the ground upon which Gordon J decides this case, and with which I agree. In any event, in the circumstances they constitute a distraction from the task of construction which the Court must undertake. Unless the example matches exactly the facts before the Court (a circumstance which is likely to be very rare) examples should be approached with caution. I say that because of the temptation to reason by analogy from an example to the facts before the Court and in the process to bypass the actual words to be construed by the Court. To make this observation is perhaps to do no more than reiterate the point made generally about the use of extrinsic material by Heydon J in SAEED v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 277 - 278 [74]. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

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INTRODUCTION 6 A charitable institution whose principal activity is "providing short-term direct care to animals (but not only native wildlife) that have been lost or mistreated or are without owners" is entitled to endorsement as a deductible gift recipient under s 30-125(1) of the Income Tax Assessment Act 1997 (Cth) (the 1997 Act): para (a) of Item 4.1.6 in s 30-45 of the 1997 Act. 7 The Appellant, Sea Shepherd Australia Limited (Sea Shepherd), conducts "campaigns" to protect marine wildlife from being harmed or killed by humans. The "campaigns" seek to protect whales by intercepting whaling fleets and obstructing whalers to prevent them injuring and killing whales. Was Sea Shepherd entitled to endorsement as a deductible gift recipient? 8 The First Respondent (the Commissioner) determined that Sea Shepherd's activities did not satisfy para (a) of Item 4.1.6 in s 30-45 of the 1997 Act and that, therefore, Sea Shepherd was not entitled to be endorsed as a deductible gift recipient. The Second Respondent, the Administrative Appeals Tribunal (the Tribunal), affirmed the Commissioner's decision. The Tribunal filed a Submitting Notice pursuant to r 12.01(1) of the Federal Court Rules 2011 (Cth). 9 Sea Shepherd appealed to this Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The single question of law, as stated in the Amended Notice of Appeal filed by Sea Shepherd, was: Whether, upon its proper construction, item 4.1.6(a) of the table in section 30-45(1) of the [1997 Act] extends to the case of a charitable institution whose principal activity is the protection of marine animals living in their natural environment from being harmed or killed by humans. 10 Two appeal grounds were listed. Those grounds were: 1. The … Tribunal erred in law in its interpretation of item 4.1.6(a) of the table in section 30-45(1) of the [1997 Act]. 2. The Tribunal ought to have held that, upon its proper construction, item 4.1.6(a) extends to the case of a charitable institution whose principal activity is the protection of marine animals living in their natural environment from being harmed or killed by humans. I would dismiss the appeal with costs. 11 These reasons for judgment will deal with the relevant legislative framework, the procedural history, what transpired before the Tribunal, the Tribunal's decision and then turn to consider the two principal issues on appeal - is there a question of law under s 44 of the AAT Act and what is the proper construction of Item 4.1.6 of the table in s 30-45 of the 1997 Act?

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The issue and material before the Tribunal and the parties' contentions 19 The principal issue before the Tribunal was the proper construction of para (a) of Item 4.1.6 and the application of that provision to the facts. 20 Item 4.1.6 directs attention to the "principal activity" of the institution. The Tribunal found that Sea Shepherd's principal activities were "campaigns" designed to protect marine wildlife from being harmed or killed by humans. The principal focus of these campaigns has been the protection of whales by intercepting whaling fleets and obstructing whalers to prevent them injuring and killing whales. Mr Jeffrey Edward Hansen, a director and the chief executive officer of Sea Shepherd, filed a supplementary witness statement in the Tribunal that described the "campaigns" in the following terms: 23. Given we can be up against up to nine vessels of the whaling fleet, we have found that the most effective tactic over the years is to focus on finding the factory vessel, the Nisshin Maru. This is the vessel with the slipway that loads the dead whales on the deck for cutting into smaller chunks that are taken below to be diced into boxes for the market in Japan. 24. We simply locate our vessels right on the stern (rear) of the factory ship and thereby block the whalers from being able to transfer dead whales for processing. If they can't load dead whales, they can't kill live ones and generally they just run in an attempt to run us out of fuel. If they are running, they are not whaling and in the past running us out of fuel has worked for them, however we … now have the Bob Barker vessel which, due to its large fuel capacity, can last the entire whaling season (December to March). This means that as soon as we find the factory ship, no more whales will be killed for the remainder of the season. In resolving the question before the Tribunal, it was common ground that Sea Shepherd's campaigns extended beyond whales to the protection of other marine life. 21 Sea Shepherd contended that those activities constituted "short-term direct care" to animals within the meaning of para (a) of Item 4.1.6. Sea Shepherd focussed on the word "care". Sea Shepherd referred to various dictionary definitions of the word "care" and submitted that the ordinary meaning of the word encompasses protection from harm or death and therefore its campaigns provided "care". Next, Sea Shepherd submitted that the care was both "direct" and "short-term". Finally, for the purposes of para (a) of Item 4.1.6, Sea Shepherd submitted that the whales and other marine life protected by its campaigns were "animals without owners" because the phrase encompasses both wildlife and abandoned animals. 22 The Commissioner contended that Item 4.1.6 was to be construed as a whole and, properly construed, Sea Shepherd's activities did not satisfy para (a) of Item 4.1.6. The Commissioner contended that the phrase "short-term direct care" was a composite phrase that meant some form of direct physical assistance such as shelter or medical care. Finally, the Commissioner submitted that the phrase "animals without owners" was concerned with animals requiring care as a result of some event or misfortune rather than unowned animals (whether or not wild) that might suffer some misfortune in the future.

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Question of law? 27 The Commissioner submitted that Sea Shepherd's challenge to the Tribunal's construction of para (a) of Item 4.1.6 was a question of fact and no appeal lies under s 44 of the AAT Act. I reject that submission. 28 The question whether facts fully found fall within the proper construction of a statutory provision is generally a question of law: Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 397. Where, as here, the meaning attributed to individual words in a phrase dictates the effect or construction of a phrase in a provision when taken as a whole, it is inappropriate to classify the first task (the identification of meaning) as separate from the proper construction of the statute. "[M]eaning and construction are interdependent": Agfa-Gevaert at 397. 29 In Agfa-Gevaert at 396-7, the High Court questioned the distinction between the ordinary meaning of words, which is said to raise a question of fact, and the construction of a term or provision, which is said to raise a question of law. The Court said the distinction seemed artificial, if not illusory. The Court stated: If the notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction that is currently absent from the law. 30 The distinction between questions of fact and questions of law was addressed by Burchett J in Baxter Healthcare Pty Limited v Comptroller-General of Customs (1997) 72 FCR 467 at 471-2 in terms which I would gratefully adopt: A preliminary point should be mentioned, since it is important, although little attention was paid to it in argument. Where there is a question whether something falls within a verbal description in a statute (as in a case raising the application of a tariff item), the answer may depend simply on findings of fact as to the meaning of the words constituting the description and as to the nature of the thing itself. With regard to the words, '[t]he question what is the meaning of an ordinary English word or phrase as used in [a] Statute is one of fact not of law': Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 137 per Jordan CJ. Nevertheless, once the nature of the thing has been found as a fact, whether it falls within the verbal description will, in many cases, be a question of law. For, in the first place, it may not be a matter of applying merely the ordinary English meaning of words or phrases, but of applying a meaning derived from the statute by a process of construction, which is a process of law: Hope v Bathurst City Council (1980) 144 CLR 1 at 10 per Mason J, with whose reasons Gibbs, Stephen and Aickin JJ stated their agreement. The principle that construction is a process of law has never been doubted, although the completeness of the proposition derived from it that '[t]he effect or construction of a term once its meaning or interpretation is established is a matter of law': Agfa-Gevaert Ltd v Collector of Customs (1994) 124 ALR 645 at 648 per Gummow J; Collector of Customs v Pozzolanic Enterprises Pty Ltd (at 287), and the relationship between that proposition and the proposition that the meaning of an ordinary word or phrase is a matter of fact, were left in some doubt when Agfa-Gevaert v Collector of Customs was reversed on appeal by the High Court: see Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395-397. Gummow J, in Agfa-Gevaert Ltd v Collector of Customs, also held (ibid) that it is a question of law 'whether the facts as found fall within the terms of the law as properly construed; to this there is the qualification that, where the statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts as found fall within those words, the decision as to whether they do so fall generally is a matter of fact'. His Honour added that the limitation 'generally' was required, even in this last case, 'because the law may use a word in an ordinary sense, but there may be a number of ordinary senses and it then is necessary to select that which is appropriate, and because whilst the word may have but one ordinary meaning that is imprecise, the word will take its colour from the context and that will require construction of the law, a lawyer's task. The result in such cases will be more than the matching of a set of facts with plain words'. The proposition that 'whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law' was stated to be sustained by '[m]any authorities' in the judgment of Mason J in Hope v Bathurst City Council (at 7). The same proposition was subsequently applied by Full Courts of this Court to cases where what was in issue was whether facts as found fell within the provision of a tariff item: Peacock v Zyfert (1983) 48 ALR 549; Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 293 and 306. … 31 As a result of these complexities, Burchett J made two further points. First, where a statute uses a word whose meaning is clear but the word is inherently capable of more than one application or outcome in the circumstances of the case, the question whether the statutory description is satisfied will often be simply a question of fact: Hope v Bathurst City Council (1980) 144 CLR 1 at 7-8 and Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at 14-5. Second, where there is uncertainty as to the meaning of a statutory word or expression, whether that uncertainty can be resolved by construing the word according to its context is a question of law. 32 The second point was explained by Burchett J at 473-4: In such a case, a court or tribunal does not choose between different possible applications of the one equivocal or inexact statutory concept (for example, 'insulting') to an evaluation or an appreciation (in the French sense - see 69 ALJ 984) of the facts, but chooses upon the principles of construction between possible concepts conveyed by the statutory expression. Of course, it is conceivable that a particular provision in an enactment will raise both kinds of problem. But Gummow J's remarks in Agfa-Gevaert Ltd v Collector of Customs seem to me to involve that, where the susceptibility of words and expressions to different meanings or shades of meaning is to be resolved by a process of construction of the statutory language in order to determine whether it embraces the facts found, the ultimate question is one of law. This accords with the view of Fullagar J in Hayes v Commissioner of Taxation (Cth), with Hope at 10, and with the joint judgment of Sheppard and Burchett JJ in Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 at 277. In Collector of Customs v Agfa-Gevaert Ltd at 397, the joint judgment of the High Court refers to the principle 'that the determination of whether an "Act uses [an] expression … in any other sense than that which they have [scilicet, it has] in ordinary speech" is always a question of law'. On that basis, logically it must also be a question of law, in a case where a statutory expression has several ordinary senses, whether it is used in a particular one of them. And as the joint judgment of Neaves, French and Cooper JJ in Pozzolanic Enterprises points out (at 288-289), uncertainties may require to be resolved by reference to a value judgment about the range of the Act, rather than a matching of the facts to the, or an, ordinary meaning of the words. … 33 The question presented in this appeal is of the kind described by Burchett J in the passage just set out. That is, the proper construction of para (a) of Item 4.1.6 in s 30-45 of the 1997 Act is a question of law: Baxter Healthcare Pty Limited at 473-4.

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The relevant principles 34 The general principles of construction of a statute were not in dispute. For present purposes, it is sufficient to record that they were identified by the Tribunal and may be summarised as follows: 1. The task is to construe the language of the statute, not individual words: St George Bank Ltd v Federal Commissioner of Taxation (2009) 176 FCR 424 at [28]; see also XYZ v Commonwealth (2006) 227 CLR 532 at [102]; R v Brown [1996] 1 AC 543 at 561 quoted in Agfa-Gevaert at 397 and Metropolitan Gas Co v Federated Gas Employees' Industrial Union (1924) 35 CLR 449 at 455. 2. The task is not to pull apart a provision, or composite phrase within a provision, into its constituent words, select one meaning, divorced from the context in which it appears, and then reassemble the provision: Lorimer v Smail (1911) 12 CLR 504 at 508-10; R v Carter; Ex parte Kisch (1934) 52 CLR 221; Biga Nominees Pty Ltd v Commissioner of Taxation (1991) 104 FLR 74 at 85-6. Indeed, it is rare that resort to a dictionary will be of assistance in searching for the legal meaning of a provision in a statute: R v Campbell (2008) 73 NSWLR 272 at [49]. 3. As Gleeson CJ said in XYZ v Commonwealth at [19]: There are many instances where it is misleading to construe a composite phrase simply by combining the dictionary meanings of its component parts. See also General Accident Fire & Life Assurance Corporation Ltd v Commissioner of Pay-roll Tax [1982] 2 NSWLR 52 referred to by Gleeson CJ where Lord Wilberforce remarked, in the course of argument, that an Australian who looked up the words "commission" and "agent" in a dictionary would probably be surprised to be told that, in England, a commission agent is a bookmaker. 4. The text of the provision is to be construed according to the context "by reference to the language of the instrument viewed as a whole": Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] (citations omitted). In the present case, the word "care" is to be construed in the context of the composite phrase of which it forms part, being "short-term direct care", in the context of the rest of the specific paragraph and in the context of para (b) of Item 4.1.6. Similarly, the phrase "animals without owners" is to be construed in context.

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Argument and analysis 35 Sea Shepherd's argument depended upon an atomised analysis of Item 4.1.6. Its submission depended upon taking separate words of the provision (particularly the word "care") and, contrary to the principles of statutory construction, applying to each word one particular aspect of a dictionary definition. Sea Shepherd then sought to add the various definitions together and produce what it submitted was a meaning for the relevant provisions that accorded with its case. 36 This approach to construction of the relevant provisions was rightly rejected by the Tribunal. Construction of a statute cannot be undertaken with no more than the words of the provision in one hand and a dictionary in the other. Judge Learned Hand rightly cautioned against the mechanical examination of words in isolation. As his Honour said in Cabell v Markham, Allen Property Custodian 148 F2d 737 (2d Cir 1945) at 739: … it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning. 37 What is meant by "providing short-term direct care to animals (but not only native wildlife) that have been lost or mistreated or are without owners"? Read as a whole, the expression directs attention to activities and services ("short-term direct care") provided in respect of a class of animals (that cannot be restricted to "native wildlife") identified as animals "that have been lost or mistreated or are without owners". Obviously, domesticated pets that have been lost or mistreated or abandoned by owners fall within the class of animals identified in the provision. And wildlife that has been mistreated would likewise fall within that class (but the organisation concerned must direct its activities to a wider class of animals than just native wildlife). Animals of the kinds identified are all in need of direct, short-term care. 38 The activities in which Sea Shepherd engages do not constitute the provision of "short-term direct care to animals" (emphasis added). Read in the context of the whole provision, the expression connotes the direct provision by the organisation concerned of treatment or accommodation to animals. It is animals that must be the object of the care. Taking steps to interrupt or prevent others harming animals in the wild, as Sea Shepherd does, is not the provision of "short-term direct care to animals" (emphasis added). What Sea Shepherd attempts to do is to prevent the killing of whales. The object of its campaigns is the Japanese whaling fleet. It does not provide care to any animal. 39 After the hearing, Sea Shepherd filed further submissions which addressed the Commissioner's contention that, if Sea Shepherd did provide any care to animals, it was not "direct care" in the context of para (a) of Item 4.1.6. Sea Shepherd submitted the Commissioner should not be permitted to raise this question at such a late stage particularly where it submitted that the Commissioner had conceded the directness of Sea Shepherd's activities before the Tribunal. Sea Shepherd further submitted that the matter was a question of fact and degree upon which it had been deprived of the opportunity to lead evidence before the Tribunal. I reject those contentions. The question of whether the Sea Shepherd's activities satisfied para (a) of Item 4.1.6 was a principal issue before the Tribunal. However, in the circumstances of the present appeal where Sea Shepherd does not provide "care" to any animal, the question of whether Sea Shepherd provides "direct care" cannot and does not arise. 40 Finally, it is neither necessary nor desirable to enter upon any debate about what is meant by "animals without owners". In terms, the phrase is one which tends to suggest that the animals in question could have an owner. Hence, as already explained, domesticated pets (either lost or abandoned) are a central concern of the provision. But, as the reference to "native wildlife" makes plain, the organisation concerned can have objects wider than caring for domesticated animals and its objects may extend to (but must not be limited to) caring (in the relevant sense) for native wildlife. In these circumstances, it is not necessary to deal with the issues considered by the High Court in Yanner v Eaton (1999) 201 CLR 351 at [17]-[30] and [85]-[86] about how concepts of "ownership" and "property" can be applied to wild animals. It is enough to say that, even if "animals without owners" is a phrase which can encompass whales before reduction to possession by capture, Sea Shepherd's interception of attempts to capture and kill whales is not the provision of "short-term direct care" to the particular whales or whales more generally.

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Remedial or beneficial legislation 41 Sea Shepherd submitted that Item 4.1.6 should be construed liberally because the provision, or the broader scheme of which it formed a part, was "remedial" or "beneficial". That submission is rejected. 42 There has been, and remains, doubt whether courts interpret statutes described as "remedial" or "beneficial" by reference to different principles of construction: see, for example, Master Retailers' Association of New South Wales v Shop Assistants Union of New South Wales (1905) 2 CLR 94 at 106. 43 If there can be identified some different principles of construction that are to be applied to "remedial" or "beneficial" legislation it would be necessary to identify what is meant by these terms. Do they describe only a provision which gives some benefit to a person, such as provisions dealing with pensions, social welfare and workers' compensation? Or do these terms extend to a provision that alters the law in favour of an individual or a section of the public? 44 Sea Shepherd relied upon a definition of "remedial" or "beneficial" legislation as being "any legislation that … adopt[s] new provisions that are advantageous to an individual or the public": Pearce, DC and Geddes, RS, Statutory Interpretation in Australia (7th ed, LexisNexis Butterworths, 2011) at [9.2]. Sea Shepherd therefore contended that Item 4.1.6 "clearly … exists for the purpose of encouraging or rewarding the activities of those who donate to charities falling within its ambit and, indirectly, the activities of the charities themselves". 45 In the present case, it is not necessary to decide whether Item 4.1.6 is properly described as "remedial" or "beneficial" legislation. As these reasons have demonstrated, it is unnecessary to decide that question because when construed according to orthodox principles of statutory construction Item 4.1.6 cannot be given the meaning which Sea Shepherd gives it. And because that is so, there is no choice to be made between some "generous" construction of the relevant provision and a more confined meaning for it. In this case, the appeal to notions of "remedial" and "beneficial" legislation distracts from the relevant task; the application of the general principles of construction to the text of the statute: Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 638 and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [47]. 46 The appeal should be dismissed with costs. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

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introduction 47 In my opinion, the appeal should be allowed. 48 I have had the advantage of reading in draft the reasons for judgment of Besanko and Gordon JJ. For the reasons set out below, I have reached a different conclusion on the construction of paragraph (a) of Item 4.1.6 in the table in s 30-45 of the Income Tax Assessment Act 1997 (Cth) ("the Act"). 49 The background to the appeal, including the legislative framework, procedural history and the issues and materials before the Administrative Appeals Tribunal ("the Tribunal") are set out in detail in the reasons of Gordon J. 50 The appellant, Sea Shepherd Australia Limited ("Sea Shepherd") is an Australian unlisted non-profit public company and a charitable institution. Its principal activity is the conduct of "campaigns" that are designed to protect marine wildlife from being harmed or killed by human beings. Sea Shepherd's campaigns to date have focused principally on the interception of whaling fleets and the obstruction of their activities in order to prevent the death and injury of whales. Sea Shepherd also conducts activities aimed at protecting other marine wildlife, including sharks and seals. 51 On 5 February 2010, Sea Shepherd applied to the respondent, the Commissioner of Taxation of the Commonwealth of Australia ("the Commissioner") to be endorsed as a deductible gift recipient pursuant to s 30-125(1) of the Act on the basis that it was covered by Item 4.1.6, paragraph (a) of the table in s 30-45 (located in Subdivision 30-B of the Act). 52 Item 4.1.6 of the table in s 30-45 of the Act describes a qualifying institution thus: Item Fund, authority or institution Special conditions - fund, authority or institution Special conditions - gift 4.1.6 an institution whose principal activity is one or both of the following: the institution must be a *registered charity none (a) providing short-term direct care to animals (but not only native wildlife) that have been lost or mistreated or are without owners; (b) rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost or mistreated or are without owners

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application to tribunal 55 Before the Tribunal, Sea Shepherd relied on the evidence of three deponents, including its director and chief executive officer, Jeffrey Hansen, who made two witness statements and was cross-examined. 56 In his supplementary witness statement dated 11 May 2012, Mr Hansen stated that the Japanese whaling fleet comprised a factory ship, a refuelling ship, three harpoon ships, two spotter vessels and, at times, security vessels. He described a process of killing whales in which the spotter vessels first locate large concentrations of whales. Harpoon vessels then chase pods of whales. The harpoon vessels single out a whale, chase it until it tires and rises to the surface to breathe and then strike the whale with an explosive tipped harpoon which releases shrapnel. The hunted whale, once dead, is tied alongside one of the railings of the harpoon ship and transferred to the factory ship for butchering and processing. 57 Mr Hansen described Sea Shepherd's method of protecting the whales as follows: Given we can be up against up to nine vessels of the whaling fleet, we have found that the most effective tactic over the years is to focus on finding the factory vessel, the Nisshin Maru. This is the vessel with the slipway that loads the dead whales onto the deck for cutting into smaller chunks that are taken below to be diced into boxes for the market in Japan. We simply locate our vessels right on the stern (rear) of the factory ship and thereby block the whalers from being able to transfer dead whales for processing. If they can't load dead whales, they can't kill live ones and generally they just run in an attempt to run us out of fuel … This means that as soon we as [sic] find the factory ship, no more whales will be killed for the remainder of the season. 58 Mr Hansen's evidence was apparently uncontroversial and the Tribunal observed that his cross-examination became largely immaterial, as common ground was reached. 59 Before the Tribunal, Sea Shepherd submitted that it provided "short-term direct care" to "animals … that … are without owners" within the meaning of paragraph (a) of Item 4.1.6 as "care", according to its ordinary meaning, encompassed protection from harm or death; and "animals … that … are without owners", according to its literal meaning and tense, included wild animals such as whales. Sea Shepherd submitted that "animals … that … are without owners" should be construed disjunctively from the two preceding subcategories of animals in paragraph (a). Sea Shepherd further submitted that as paragraph (b) of Item 4.1.6 dealt with sick or injured animals requiring rehabilitation, it fortified the conclusion that paragraph (a), in contradistinction, extended to the protection of animals in good health. 60 Before the Tribunal, the Commissioner submitted that action to protect wild animals from being killed or injured by humans did not satisfy the terms of paragraph (a). The Commissioner submitted that such action could not constitute "short-term direct care" and whales were not comprehended in the subcategory of "animals … that … are without owners" on which Sea Shepherd relied. 61 The Commissioner submitted that "short-term direct care" construed in context as a composite phrase did not include protection from anticipated harm but rather was limited to a form of direct physical assistance. Further, paragraph (a) was concerned only with animals that had already suffered a misfortune prior to the provision of the relevant care. Accordingly, "animals … that … are without owners" should not be literally construed to mean simply unowned animals (whether wild or otherwise) but meant animals requiring care as a result of an event that had occurred.

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The Tribunal's reasoning 62 The Tribunal, in construing paragraph (a) of Item 4.1.6, emphasised that each word in a statutory provision must be construed in context. The Tribunal accepted that one meaning of "care" encompassed protection from harm or death. It found, however, that in paragraph (a) that meaning was excluded by the context, which not only confined "short-term direct care" to physical assistance such as food, shelter or veterinary care but also required it to be directed exclusively to animals that had suffered a misfortune prior to and necessitating its provision. 63 The Tribunal observed that the first two subcategories of "animals (but not only native wildlife)" specified in paragraph (a) as objects of "short-term direct care" comprised those that "have been lost or mistreated". They had thus suffered a misfortune prior to, and requiring, the provision of care. 64 The Tribunal reasoned that consonance with the first two subcategories of animals therefore imported an analogous limitation on the third subcategory of "animals … that … are without owners" despite its broader literal meaning and present continuous tense. The Tribunal, in applying the limitation, concluded that the third subcategory is: … concerned with animals which would ordinarily be expected to have an owner, not merely animals that literally do not have one. They are animals that have been deprived of owners at some time prior to the provision of care and are therefore unable to fend for themselves in some respect. 65 The Tribunal stated that the word "without" in the phrase "animals … that … are without owners" denoted deprivation rather than the "mere absence of something". It concluded that the third subcategory of animals in paragraph (a) was largely concerned with stray animals and as such "naturally comprehends domestic animals". 66 The Tribunal stated: We reject [Sea Shepherd's] submission that the animals it protects are "without owners" for the purposes of Item 4.1.6. In our view, the legislature did not intend the third class to encompass whales and other marine wildlife. One would not naturally refer to such animals as being "without owners", because they would not ordinarily be expected to have owners. 67 The Tribunal affirmed the Commissioner's decision to refuse Sea Shepherd's endorsement as a deductible gift recipient.

[38]

Construction of paragraph (a) of Item 4.1.6 72 On appeal, the parties largely reiterated the submissions set out above in support of their competing constructions of paragraph (a) of Item 4.1.6. 73 Gordon J (with whom Besanko J agreed), while not fully endorsing the reasoning of the Tribunal, rejected Sea Shepherd's construction of paragraph (a) of Item 4.1.6 which in her view depended on the impermissible disaggregation of individual words from composite phrases or their abstraction from a wider context. 74 Her Honour found that paragraph (a) covered domesticated pets that have been lost, mistreated or abandoned and wildlife that has been mistreated (provided that the organisation directs its activities more broadly than only native wildlife). 75 Her Honour concluded that the expression "short-term direct care to animals" "connotes the direct provision by the organisation concerned of treatment or accommodation to animals" and did not encompass taking steps to prevent harm to animals. While the Tribunal found that Sea Shepherd's principal activity is the protection of whales and other marine life by means of "campaigns" designed to prevent those animals from being harmed or killed by humans, her Honour considered that the object of Sea Shepherd's activities was the Japanese whaling fleet rather than the animals. 76 Her Honour did not consider it appropriate to enter into a debate about the meaning of "animals without owners" save to observe at [40]: In terms, the phrase is one which tends to suggest that the animals in question could have an owner. Hence, as already explained domestic pets (either lost or abandoned) are a central concern of the provision. But, as the reference to "native wildlife" makes plain, the organisation concerned can have objects wider than caring for domesticated animals and its objects may extend to (but must not be limited to) caring (in the relevant sense) for native wildlife. 77 In my opinion, when paragraph (a) of Item 4.1.6 is construed in context and according to the uncontroversial general principles of statutory construction summarised by Gordon J, Sea Shepherd's construction is to be preferred. It gives effect to the plain meaning of the language and the intention to include wild animals as legitimate objects of the care. It also accords a substantive, mutually coherent application to each of the three specified subcategories of animals in paragraph (a).

[40]

Objects of "short-term direct care" 83 On the Tribunal's construction, there were two bases to refuse Sea Shepherd's endorsement. First, it failed to provide care within the meaning of paragraph (a). Secondly, it failed to provide care to any animals within paragraph (a)'s scope. 84 While the Tribunal did not expressly so state, its restrictive construction of short-term direct care was dictated by its construction of the objects of the care. In concluding that all animals to which the care is provided must have suffered antecedent misfortune the consequences of which require the care, the Tribunal imposed a temporal limitation on the application of paragraph (a) which inexorably excluded coverage of preventative action. 85 In my opinion, contrary to the Tribunal's construction, "animals (but not only native wildlife) that … are … without owners" in paragraph (a) should not be confined to animals that would ordinarily be expected to have owners yet have suffered the misfortune of having been deprived of them. 86 The language and present continuous tense of the third subcategory express no such restriction. Rather, they indicate animals in a current state of being ownerless for whatever reason, albeit, as Gordon J observed, the expression "without owners" may suggest a capacity to be owned. 87 The Tribunal recognised that the first two subcategories of "animals (but not only native wildlife)" are defined by reference to circumstances that amount to past misfortunes giving rise to the need for care (having been lost or having been mistreated). In my view, however, nothing in the context or subject matter of paragraph (a) requires the third subcategory to be read other than disjunctively. There is no sound basis to import into the third subcategory an inferred characteristic of the two preceding subcategories which limits its general words and restricts its ambit. 88 The three subcategories in paragraph (a) are of animals which may be wildlife (although not exclusively native wildlife). The first subcategory of "lost" animals is likely to include mainly if not exclusively, animals that had owners. As such, it would rarely if ever apply to wildlife living in its native habitat without an owner. In contrast, the second subcategory of animals that have been mistreated could include both wildlife and other animals whether or not they had an owner. Both the first and second subcategories assume the occurrence of a species of prior "misfortune", but it is not, in my view, a dominant common feature requiring, for consonance, the imposition of an analogous limitation on the general words of the succeeding third subcategory. 89 It was at points unclear whether the Tribunal limited the third subcategory to animals that would ordinarily be expected to have and did in fact have owners of which they had been deprived or rather, to animals that would ordinarily be expected to have, but currently lacked, owners. 90 The Tribunal did not, in any event, define or advance a basis for identifying the class of "animals which would ordinarily be expected to have an owner" but appeared to equate it with domesticated animals. The Tribunal concluded that the third subcategory was concerned "largely" with strays. 91 While some doubt attends the precise scope of the Tribunal's limitation, on any view it affords the third subcategory a very narrow reach. 92 An animal that would ordinarily be expected to have and has been deprived of its owner could frequently be classified as lost. If the third subcategory be confined to stray or abandoned animals that have been deprived of their owners, its distinction from the first subcategory of animals that have been lost may in practice be illusory and depend on a potentially elusive distinction between, on the one hand, having had an owner but having been lost, and, on the other hand, being of a class ordinarily expected to have, and having been abandoned by, an owner. On that basis, the third sub-category would have little, if any, independent work to do. 93 Further, the subcategory of "animals … that … are without owners" appears in the wider context of paragraph (a) which, by the bracketed phrase "(but not only native wildlife)", recognises wildlife (provided that it is not only native) as an object of the care. 94 "Wildlife" is not defined in the legislation or other relevant material, but as the Tribunal uncontroversially assumed, it would encompass "wild animals" such as whales. "Wildlife" would on any view include individual animals that live in their natural state and belong to species which customarily live wild and are not ordinarily domesticated or farmed. 95 "Wildlife" is thus likely to overlap substantially with animals which have never had and (even if not incapable of being owned) are not ordinarily expected (at least prior to being hunted) to have owners. 96 Besanko J has observed that in this case, the parties' reliance on particular examples in the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 3) Act 2006 (Cth) (which introduced Item 4.1.6) ("Explanatory Memorandum") did not "provide any real assistance in relation to the ground upon which Gordon J decides this case, and with which [he] agree[s]". His Honour referred to SAEED v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 277 278 at [74] where Heydon J stated (in relation to the Migration Act 1958 (Cth)) that: the Explanatory Memorandum … is much less helpful than reading the legislation itself. … the ultimate question is not what the Parliament intended to do, but what it actually did. 97 Nevertheless, in this case the Explanatory Memorandum assists construction in so far as it indicates that Item 4.1.6 concerns an "animal welfare general category" (paragraph 11.35) that covers wildlife and excludes protection of "only native wildlife" because it may be covered by other provisions (paragraph 11.33). The statement in example 11.15 also makes clear that organisations that rehabilitate injured wildlife would fall within paragraph (b). Injured wildlife is unlikely to be lost. If injured other than through mistreatment it would not be covered by paragraph (b) unless the subcategory of "animals … that … are without owners" (which also appears in paragraph (b)) was intended to include wildlife. 98 The Tribunal's construction of paragraph (a) would not afford the substantive coverage of wildlife as objects of "short-term direct care" which in my view was intended. While mistreated wildlife would be included in the second sub-category, the third subcategory (despite its potentially broad application to wildlife based on its literal meaning and tense) would instead cover wildlife only rarely, such as when it strayed or was abandoned after having been kept in a zoo or as a pet (but was not, however, "lost"). 99 Paragraph (b) is concerned with the rehabilitation of "orphaned, sick or injured animals (but not only native wildlife) that have been lost or mistreated or are without owners". In contrast to paragraph (a), paragraph (b) specifies the "misfortunes" of being orphaned, sick or injured, but the expression of the three subcategories of animals is identical with that in paragraph (a). Paragraph (b) does not require the rehabilitation to be short-term and direct. 100 Before the Tribunal, the proponents of each competing construction of paragraph (a) relied on paragraph (b). Sea Shepherd submitted that paragraph (b)'s coverage of animals that had suffered harm or injury requiring rehabilitation fortified the conclusion that paragraph (a) could apply to healthy animals. The Commissioner submitted, and the Tribunal accepted, that paragraph (b) supported the contrary view. 101 In my opinion, paragraph (b) throws little light on whether "short-term direct care" in the preceding paragraph is limited to addressing the consequence of harm or injury already sustained. However, as observed above, because paragraph (b) is directed at the rehabilitation of orphaned, sick and injured animals (but not only native wildlife) that have been lost, mistreated or are without owners, the Tribunal's construction would greatly reduce its potential application to "wildlife". 102 In my opinion, "short-term direct care" in paragraph (a) can include (but is not limited to) action to avert threatened injury, death or other harm to wildlife (including whales). Although such wild animals have never had and may not ordinarily be expected to have owners, in my view they constitute "animals … that … are without owners" within the meaning of paragraph (a).

[41]

Whether direct short-term care? 103 "Care" within the ambit of Item 4.1.6, must nevertheless be both short-term and direct. Given the Tribunal's finding that Sea Shepherd did not provide "care" to relevant animals, it was unnecessary for the Tribunal to consider whether Sea Shepherd's activities were short term and direct. On appeal, it was not suggested that Sea Shepherd's activities were other than "short-term", but as explained in the reasons of Gordon J, the Commissioner submitted that any care Sea Shepherd provided could not be direct. While Sea Shepherd complained that no challenge on that ground was raised before the Tribunal and sought to lead further evidence, as Gordon J found, it had the opportunity to do so before the Tribunal. 104 I am persuaded, however, that, as Sea Shepherd contended, whether care is short-term and direct is a question of fact and degree, which, in the context of care constituted by action to prevent threatened harm, is necessarily informed by the circumstances (including the nature, extent, duration and immediacy of the threat) and the probable effectiveness of the responsive action and its relationship to the threat (including whether there are intervening steps between the action taken and the achievement of the protection). 105 Mr Hansen's evidence before the Tribunal indicates that whales within the range of the whaling fleet's harpoon ships are the immediate objects of hunting and are at imminent threat of being harpooned, injured, killed and loaded onto the factory ship for processing. In the circumstances to which Mr Hansen deposed, directness does not require physical interposition between the harpoon ship or the harpoon and an individual whale. The blockading of the loading slipway of the factory ship suspends or averts, without any significant intermediate stage or process, the imminent threat of injury and death that would otherwise confront the whales within range. It is thus in my view an effective, short-term and sufficiently direct provision of care.

Sea Shepherd Australia Limited v Commissioner of Taxation

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Judgment (42 paragraphs)

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