Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation

REASONS FOR JUDGMENT 1 The applicant Tasmanian Electronic Commerce Centre Pty Ltd (TECC) sought review before the Administrative Appeals Tribunal of an objection decision by a delegate of the respondent the Commissioner of Taxation in respect of assessments for the 1998, 1999 and 2000 tax years. The delegate had decided that TECC was not a "charitable institution" within the meaning of item 1.1 of s 50-5 of the Income Tax Assessment Act 1997(Cth) (the Act) and so not exempt from income tax under subdiv 50-A of the Act. 2 The Tribunal affirmed that decision: Re Tasmanian Electronic Commerce Centre Pty Ltd and Commissioner of Taxation [2004] AATA 521. TECC now appeals to this Court. A question of law? 3 Counsel for the Commissioner submitted that there is no question of law arising so as to confer jurisdiction on this Court: Administrative Appeals Tribunal Act 1975 (Cth) s 44(1). He said the Tribunal applied the statutory expression "charitable institution" to primary facts in circumstances where reasonable minds may have differed as to the conclusion. It was open to the Tribunal to come to the decision it did. 4 The leading authority is Hope v Bathurst City Council (1980) 144 CLR 1. Recently in Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at [25] Gleeson CJ, Gummow and Callinan JJ quoted the following passage from the judgment of Mason J in Hope (at 7) as "comprehensively … stat(ing) the law on this topic in this country" (citations omitted): "Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J in Hayes v Federal Commissioner of Taxation, where his Honour quoted the comment of Lord Parker of Waddington in Farmer v Cotton's Trustees, which was adopted by Latham CJ in Commissioner of Taxation v Miller, that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J then said: '... this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The "facts" referred to by Lord Parker ... are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law.' However, special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words. Brutus v Cozens was just such a case. The only question raised was whether the appellant's behaviour was 'insulting'. As it was not unreasonable to hold that his behaviour was insulting, the question was one of fact." 5 Immediately after the passage in Hope referred to in Vetter, Mason J goes on to say (citations omitted): "The judgment of Kitto J. in N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation is illuminating. Kitto J. observed that the question whether certain operations answered the description 'mining operations upon a mining property' within the meaning of s. 122 of the Income Tax Assessment Act 1936, as amended, was a mixed question of law and fact. He went on to explain why this was so: 'First it is necessary to decide as a matter of law whether the Act uses the expressions 'mining operations' and 'mining property' in any other sense than that which they have in ordinary speech.' Having answered this question in the negative, he noted that the 'common understanding of the words has . . . to be determined' as 'a question of fact'. He continued: 'The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the appellant's operations fall within the ordinary meaning of the words as so determined; and that is a question of law: see also per Isaacs and Rich JJ. in Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation. If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact: see per Williams J. in the Broken Hill South Case." 6 In the present case it is common ground that the expression "charitable institution" is used in the Act in a technical legal sense and not as the word "charitable" is understood in ordinary speech. Therefore we do not travel down the road trodden by Kitto J in Associated Blue-Metal or by the House of Lords in Brutus. Whether on the facts found by the Tribunal (being facts fully found; see Williams v Bill Williams Pty Ltd [1971] 1 NSWLR 547 at 557) the Tribunal was correct in holding that TECC was not a "charitable institution" in the statutory sense is a question of law. 7 The English Court of Appeal reached a like conclusion in Royal Choral Society v Inland Revenue Commissioners [1943] 2 All ER 101. The Special Commissioners found that the society was not a body "established for charitable purposes". The society appealed successfully to Macnaghten J. Upon an appeal to the Court of Appeal the Solicitor-General argued that the finding of the Special Commissioners was a finding of fact which was binding on the court. Lord Greene MR, with whom the other members of the Court of Appeal agreed, said (at 103): "It is the business of the Commissioners to find facts. It is a question of law whether, upon the facts so found, the particular body in question is a body established for charitable purposes. That is a question of law; and in no circumstances can it be turned into a matter of fact." This statement was cited with approval by Williams J in Royal Australasian College of Surgeons v Federal Commissioner of Taxation (1943) 68 CLR 436 at 451. 8 The present case is thus to be distinguished from those where an appellate court was concerned with a finding as to a statutory criterion expressed in ordinary language, like the word "journey" in Vetter (see per Hayne J at [108]), or the expression "mining operations" in Federal Commissioner of Taxation v Broken Hill South Ltd (1941) 65 CLR 150 at 155, or the word "business' in Hope (at 8) or the word "insulting" in Brutus. In these cases the question whether more than one meaning was reasonably open (a question of law) only arose because of the anterior affirmative answer to the question of law whether the word or phrase was used in the sense conveyed in ordinary speech. The Tribunal's findings of fact 9 The primary facts before the Tribunal were not relevantly in dispute. The Tribunal made detailed findings as follows. Regional Telecommunications Infrastructure Fund 10 As a result of the first partial sale of Telstra, the Federal Government established a Regional Telecommunications Infrastructure Fund (RTIF), comprising $250 million, called "Networking the Nation". RTIF was administered by the Regional Telecommunications Infrastructure Fund Board (RTIF Board). It was intended to provide "... funding for regional, rural and remote communities to identify their communications needs and develop projects that meet those needs". The objectives of Networking the Nation were: "... to assist the economic and social development of regional, rural and remote Australia by funding projects which: · enhance telecommunications infrastructure and services in regional, rural and remote areas; · increase access to, and promote use of, services available through telecommunications networks in regional, rural and remote areas; or · reduce disparities in access to such services and facilities between Australians in regional, rural or remote areas and those in urban areas."