Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia

1. The appeal be allowed.
2. The respondent pay the appellant's costs.
3. The matter be remitted to the Administrative Appeals Tribunal, differently constituted, to be heard according to law. Note: Order 3 was inserted on 6 March 2023 pursuant to rule 39.05(h) of the Federal Court Rules 2011 (Cth).

THE COURT: 1 The appellant appeals from orders made by the primary judge dismissing its "appeal" under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act): Ultimate Vision Inventions Pty Ltd v Innovation and Science Australia [2022] FCA 606 ("J"). It is unnecessary to repeat the factual background. It is clearly and thoroughly set out by the primary judge in his reasons. 2 The appellant relied on nine grounds of appeal before this court. At the centre of its case was a contention that the Administrative Appeals Tribunal failed properly to exercise its jurisdiction to conduct a "review" of the kind it was required to conduct. It was common ground that, if this contention was made out, the matter would need to be remitted to the Tribunal to be heard according to law and it would be unnecessary to decide the remaining issues in the appeal. 3 The contention that the Tribunal failed properly to exercise its jurisdiction was based on the fact that the Tribunal's reasons reproduced, without attribution and almost entirely verbatim, 64 of the 67 paragraphs of the respondent's submissions as its own reasons. The reasons comprised 100 paragraphs. 4 The primary judge recorded at [99] to [101] (emphasis in original): [99] … [O]f the 100 paragraphs, about 65 paragraphs and their footnotes comprise unattributed copying of the respondent's written submissions. Those paragraphs that were not copied from the respondent's written submissions included - (a) [3] to [20] setting out uncontroversial matters such as the identification of the applicant's registered activities, and the relevant statutory provisions; (b) a framing of the issues at [47]; (c) identification of the witnesses who gave evidence at [50]; (d) summaries of the applicant's submissions at [52] to [59], including observations by the Tribunal at [52], [53], [57] and [59] in response to the submissions that were put; (e) references to and summary of the applicant's submissions in reply at [60] and [61]; (f) identification of the Tribunal's conclusion at [62]; and (g) a comment about the oral testimony of the applicant's witnesses at [70]. [100] Otherwise, the Tribunal's consideration of the evidence comprising [63] to [69], and [71] to [97] were copied essentially verbatim from the respondent's submissions, although as I have stated there was some re-ordering of things. The copying included the footnotes in the respondent's submissions, most of which were reproduced as footnotes in the Tribunal's statement of reasons. The footnotes included detailed references to authorities, and to the documentary evidence and transcript. The copying extended to the reproduction of the following typographical errors that were contained in the respondent's written submissions - (a) at [37], which was copied from [22] of the respondent's submissions, "field" was misspelled as "filed" in a quotation from [2.13] of the explanatory memorandum to the Tax Laws Amendment (Research and Development) Bill 2010 (Cth); and (b) at [71], which was copied from [39] of the respondent's submissions, "ZAP contact mobile app", which was referred to on a number of occasions in the evidence before the Tribunal, was misspelled as "ZAP contract mobile app" (underlining added). [101] However, balanced against the above are other typographical errors in the respondent's submissions that the Tribunal did not adopt - (a) footnotes (62), (76), and (89) of the Tribunal's reasons contain corrected references to documents before the Tribunal that were cited in footnotes (51), (65), and (78) of the respondent's submissions; and (b) at [81], the Tribunal corrected the date on which the report of an expert, Dr Kerr, had been filed with the Tribunal. 5 The primary judge stated at [133] (emphasis in original): In my view, it was not ideal for the Tribunal to express its reasons for decision by reproducing mostly verbatim the respondent's submissions to it, without acknowledging expressly that this was the course that it took. Although it might be apparent what was done, for the Tribunal to produce reasons in this way without attribution is liable to fuel perceptions on the part of applicants for review and others that the Tribunal has not given independent consideration to the matters under review, and does little to meet the exhortation in s 2A(d) of the AAT Act that the Tribunal is to pursue a mechanism of review that promotes public trust and confidence in its decision-making. However, these observations do not address whether there were any legal consequences of the course that the Tribunal took, to which I will now turn. 6 The primary judge's observations should be emphasised. The problem with copying one side's submissions verbatim, and not revealing any real engagement with the case put by the losing party, is that the losing party is left with a real and often justified sense that the party has not been heard and that the party was not afforded the review which the party had a right to receive. It leaves parties before the Tribunal with a sense that they have been dealt with unjustly and unfairly. Irrespective of the legal consequence of such copying, it should not happen. It is damaging to public confidence in the Tribunal. 7 The primary judge considered various cases in which similar issues had arisen. At [143], his Honour referred to the decision of MZZZW v Minister for Immigration and Border Protection [2015] FCAFC 133; 234 FCR 154 at [59], in which the Full Court (Tracey, Murphy and Mortimer JJ) stated in relation to review by the Tribunal under Part 7 of the Migration Act 1958 (Cth), or any merits review scheme having similar features: … the member constituted to the review will bring her own mind to bear on the issues arising in the review, freed not only from infections such as prejudgment or other bias but from the inevitable constraints on thought, consideration and reflection which flow from the adoption of not only the conclusions of others, but the way those conclusions have been formulated and framed in language. 8 The primary judge stated at [167] that he was "not persuaded that the adoption without attribution of the respondent's submissions leads to an inference that the Tribunal failed to bring an independent mind to bear upon its review of the respondent's decisions". His Honour's "main" reasons for not being so persuaded were: (1) the paragraphs of the Tribunal's reasons to which his Honour had referred at J[99], which "were not copied from the respondent's written submissions" and included summaries of the legal principles, reference to the applicant's submissions with some comments upon them by the Tribunal, the framing of issues that arose on the review, and some conclusions; (2) "the fact that there was some material re-ordering of the paragraphs that were reproduced from the respondent's submissions which further supports the application of independent consideration"; and (3) "the Tribunal's express statement at [62] of its reasons that it had undertaken a thorough analysis of the documentary evidence and had considered the oral testimony". 9 The Tribunal's role is to review decisions: s 25 of the AAT Act. The Tribunal is empowered by s 43 of the AAT Act to exercise all the powers and discretions conferred on the person who made the decision. The Tribunal makes its decision in writing. As the primary judge observed at [141], the Tribunal's role is to determine the correct or preferable decision based on the materials before it: Drake v Minister for Immigration and Ethnic Affairs [1979] FCA 39; 24 ALR 577 at 589 (Bowen CJ and Deane J); the Tribunal's role is to "do over again" what was done by the original decision-maker: Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation [1963] HCA 41; 113 CLR 475 at 502 (Kitto J), cited in Shi v Migration Agents Registration Authority [2008] HCA 31; 235 CLR 286 at [100] (Hayne and Heydon JJ) and at [134] (Kiefel J). 10 The Tribunal should consider the issues for itself as though it were performing the function of the relevant administrator. The Tribunal is required to make its own findings of material facts and apply its own process of reasoning. 11 A "review" contemplates a consideration and evaluation of the evidence and material before the Tribunal and of the arguments and issues which arise - see, albeit in a Migration Act context: Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184; 236 FCR 593 at [45]; Minister for Immigration and Border Protection v MZYTS (2013) 230 FCR 431. As the Full Court explained in MZZZW at [60], merits review involves considering an application for review and the arguments and claims made "afresh". What is meant by this is that, within the limits of the applicable law, a new decision-maker should bring his or her own perspective, approach and reasoning to the claims made by an applicant for review. This is the essence of the Tribunal's statutory task. 12 The question is whether the Tribunal conducted the review which it was authorised and required to conduct. The answer is supplied by all of the relevant circumstances. Here, the Tribunal copied 64 of 67 paragraphs of the respondent's submissions, without attribution. It did not state it agreed with what the respondent had submitted much less give any reasons for any such agreement. Whilst it referred to some of the submissions which had been made by the appellant it did not engage with those submissions in any meaningful way. Whilst it stated that it had undertaken a "thorough analysis" of the documentary evidence and had considered the oral testimony, the product of that "thorough analysis" was not apparent from the reasons given. 13 As mentioned the primary judge stated at [167] that he was "unpersuaded that that the Tribunal failed to bring an independent mind to bear upon its review" for three main reasons. 14 As to the first reason, the aspects of the Tribunal's reasons to which the primary judge had referred at [99] as being "not copied form the respondent's submissions" were: (a) [3] to [20] setting out uncontroversial matters such as the identification of the applicant's registered activities, and the relevant statutory provisions; (b) a framing of the issues at [47]; (c) identification of the witnesses who gave evidence at [50]; (d) summaries of the applicant's submissions at [52] to [59], including observations by the Tribunal at [52], [53], [57] and [59] in response to the submissions that were put; (e) references to and summary of the applicant's submissions in reply at [60] and [61]; (f) identification of the Tribunal's conclusion at [62]; and (g) a comment about the oral testimony of the applicant's witnesses at [70]. 15 The following observations should be made about these paragraphs: (a) The summaries of the legal principles set out by the Tribunal at [5] to [20] were a largely verbatim copy of an overview of the legislative scheme given by Forgie DP in Moreton Resources Ltd and Innovation and Science Australia (Taxation) [2018] AATA 3378 at [4]-[19], which the Tribunal cited. (b) At [47], the Tribunal articulated the issues that were required to be determined, consistently with the respondents' submissions. The paragraph does not lend any real support to an inference that the Tribunal brought an independent mind to bear in answering those issues. (c) The same point must be made of the Tribunal's listing at [50] of the names of the witnesses who gave oral testimony in the hearing. The paragraph does not engage with the content of the oral testimony and it is not otherwise dealt with otherwise than to the extent the Tribunal copied the respondent's submissions elsewhere in the reasons. (d) The summaries of the appellant's submissions at [52] to [59], do no more than identify some of the submissions which had been made. The minor comments made in relation to some of the submissions do not lend any real support to a conclusion that the Tribunal engaged with the submissions. For example: • At [52] the Tribunal stated: "[as] discussed above, far more than an idea or concept is required to meet the criteria in s 355-25 ITAA 1997." The reference to the discussion "above" is a reference to [48] which was simply a copy of the respondent's submissions. • The Tribunal added a sentence at [53], stating that it was for the appellant "to put before the Tribunal the necessary material required to support a finding by the Tribunal in its favour". This reveals that the Tribunal was aware that the appellant bore the onus of proof, but does not reveal an engagement with the substance of the appellant's case or an engagement with whether the respondent's case should be accepted. • At [57], the Tribunal referred to a criticism made by the appellant of the expertise of the respondent's expert. The Tribunal addressed that submission by referring to evidence which was irrelevant to the criticism the appellant had made. The comment by the Tribunal does not suggest any real engagement with the appellant's case. • At [59] the Tribunal stated: By reason of s 27J of the IR&D Act, it is necessary for the Tribunal to focus upon the registered activities as opposed to the generality of ideas and determine what if any relevant research and development work, in compliance with the IR&D Act, as analysed above, has been completed by the Applicant during the Relevant Years. The sentence was not directed to any particular submission made by the appellant and was a summary of [48] of the Tribunal's reasons, which was copied from the respondent's submissions. It was not an observation which was by way of engagement with the submissions that were put by the appellant. (e) The Tribunal at [60] and [61] references and summarises the appellant's submissions in reply but does not engage with those submissions. (f) At [62], the Tribunal stated: However, on balance, after a thorough analysis of the documentary evidence in this matter together with consideration of the oral testimony, the Tribunal finds that insufficient evidence exists to indicate that any of the registered core R&D activities were conducted as discussed below. For the reasons set out at [12] above, it is difficult to draw from this paragraph a conclusion that the Tribunal engaged in a review of the kind contemplated, when it is assessed in the context of the reasons as a whole. The wholesale and uncritical adoption of the respondent's submissions tells against an inference that there was a "thorough analysis" or independent consideration of the documentary evidence, oral testimony or submissions of the appellant. (g) The comment made by the Tribunal at [70] was as follows: "The oral testimony of the Applicant's witnesses did not add any of the requisite detail to the unsatisfactory state of the documentary evidence relied upon by it". In context, this sweeping statement is unpersuasive as a basis for inferring a real engagement with the case. 16 The primary judge's second reason for being unpersuaded that the Tribunal failed to bring an independent mind to bear on the review was that there was some "material re-ordering of the paragraphs" copied from the respondent's submissions. The re-ordering of paragraphs does not reveal "independent consideration" of the issues which arose on the review or of the evidence. All it reveals is a consideration of the order in which the copied submissions should be put. It is unclear why the primary judge considered the re-ordering to be "material". 17 The primary judge's third reason was the Tribunal's statement at [62] that it had undertaken a "thorough analysis" of the documentary evidence and had considered the oral testimony. This statement needs to be assessed in context. The context includes: first, an absence of any reasons setting out of the product of its "thorough analysis"; secondly, the fact that the Tribunal copied, almost entirely verbatim, 64 of the 67 paragraphs of the respondent's submissions; and thirdly, an absence of any statement that it accepted the respondent's submissions or any independent reasons why it accepted those submissions. The Tribunal's statement at [62], read in the context of the reasons as a whole, has the air of formulaic incantation. As the Full Court stated in Chetcuti v Minister for Immigration and Border Protection [2019] FCAFC 112; 270 FCR 335 at [70], in the context of an administrative decision by a Minister under the Migration Act, "statements of a formulaic kind, or sweeping statements that matters have been considered, will not shield from scrutiny whether in fact they have been considered". The Full Court referred to Hands v Minister for Immigration and Border Protection [2018] FCAFC 225; 267 FCR 628 at [38]. 18 Helpfully, the primary judge had ordered the respondent to file before the hearing a copy of the Tribunal's reasons that highlighted in yellow those passages of the reasons that the respondent accepted had been copied verbatim, or at least substantially, from the respondent's submissions. When this document is examined, it is difficult to accept that the appellant received the review to which it was entitled. One is left positively persuaded that the Tribunal member simply accepted the respondent's case uncritically and without bringing its mind to bear on the various issues raised. 19 By adopting the respondent's submissions verbatim, the Tribunal adopted the respondent's reasoning, perspective and conclusions, both quantitatively and qualitatively. The submissions which were adopted included conclusions to be drawn as to the credibility of witnesses and the evaluation and weighing of evidence. Adding phrases such as "on balance, the Tribunal finds" to text otherwise copied from the respondent's submissions does not provide any real support for a finding that the Tribunal engaged with and considered the matter afresh. 20 We are unable to draw comfort, as the primary judge did at [167], from the obligation of the respondent under s 33(1AA) of the AAT Act to assist the Tribunal. It was the respondent's decision which was the subject of review. The obligation of the respondent was to assist the Tribunal to make the Tribunal's decision and the respondent had a right to be heard, but it was for the Tribunal to make its own assessment of the material before it. The Tribunal could not rely upon the respondent to undertake that assessment for it. 21 In its written submissions before this court, the respondent submitted that, if the appeal were allowed and the matter remitted to the Tribunal, it should be on terms that the review be reheard on the material which was before the Tribunal. During the course of the hearing, the respondent accepted that, if the matter were to be remitted, then the matter should be reheard together with an application concerning the 2016 year which is presently before the Tribunal, albeit temporarily stayed. That was the course advocated by the appellant before the Tribunal. These questions are for the Tribunal to decide. The Tribunal should be differently constituted. The result is that it is likely to be appropriate for the issues concerning the 2014, 2015 and 2016 years to be heard together and that the evidence should not be limited to what was before the Tribunal in the present case. 22 The appeal should be allowed with costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Thawley, McElwaine and Hespe.