Virgin Australia Airlines Pty Ltd v Commissioner of Taxation

Federal Court of Australia|2021-05-18|Before: Griffiths J

The appeal be allowed.
On or before 31 May 2021, the parties are to file an agreed minute of orders to give effect to these reasons and as to costs or, if agreement cannot be reached, competing minutes together with written submissions, not exceeding three pages in length, as to why orders should be made in the terms proposed by the party. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GRIFFITHS J: 1 These two proceedings, which were heard together, relate to the liability of the applicant airlines (collectively Virgin) to pay fringe benefits tax for car parking facilities located near airport terminals in Sydney, Brisbane and Perth. The car parking facilities were provided by Virgin to Flight Crew and Cabin Crew (collectively Flight and Cabin Crew) employees. 2 Division 10A of the Fringe Benefits Tax Assessment Act 1986 (Cth) (Act) provides that the value of car parking facilities provided by an employer to its employees is subject to fringe benefits tax if certain criteria are met. For the purposes of these proceedings, only the following two criteria in s 39A of the Act are relevant: (a) the requirement that the employee have a "primary place of employment" on the relevant day (s 39A(1)(e)); and (b) the employee's car must be "parked at, or in the vicinity of [the employee's] primary place of employment" (ss 39A(1)(f)). 3 Virgin was assessed to fringe benefits taxation for car parking fringe benefits provided to Flight and Cabin Crew employees operating from these three capital city locations for the fringe benefits tax years ended 31 March 2013 to 31 March 2016 inclusive (Relevant Years). The assessments were arrived at on the basis that the Flight and Cabin Crew employees' "primary place of employment" was their home base airport terminal in Sydney, Brisbane or Perth. The applicants' objections to the assessments were disallowed and the applicants now appeal under s 14ZZ of the Taxation Administration Act 1953 (Cth). 4 It is sufficient to accept the Commissioner's description of the following three issues which arise for determination: First issue: On each relevant working day did Virgin's Flight and Cabin Crew have a "primary place of employment"? Second issue: If the answer to the first issue is "yes", where was that "primary place of employment"? Third issue: If the answer to the first issue is "yes", on each working day was the employee's car "parked at, or in the vicinity of [the employee's] primary place of employment"? 5 It was common ground that if Virgin's Flight and Cabin Crew did not have a "primary place of employment" on the relevant days, the appeals should be allowed. It was also common ground that if the Court found that those employees' "primary place of employment" was the aircraft on which they flew on a relevant day, the appeals should also be allowed.

Facts 6 At the commencement of the hearing the parties handed up a Statement of Agreed Facts, relating to the period 1 April 2012 to 30 March 2016, which sets out the following undisputed facts (noting that some of the facts relate to Melbourne Airport, which is not the subject of the appeals). 7 Virgin Australia Holdings Limited was the ultimate Australian holding company of, inter alia: (a) Virgin Australia Airlines Pty Ltd (VAA) and the applicant in proceedings numbered NSD1051/2020; and (b) Virgin Australia Regional Airlines Pty Ltd (VARA) and the applicant in proceedings numbered NSD1049/2020. 8 VAA is the operating entity for an Australian based airline enterprise conducted under the Virgin brand. It was headquartered in Bowen Hills, Queensland. 9 VAA's principal business activity was the transportation of passengers on aircraft. 10 VAA provides air transport services to various destinations from the following hubs: (a) Sydney Airport; (b) Brisbane Airport; (c) Melbourne Airport; and (d) Perth Airport. 11 VARA operated an Australian regional airline based at Perth Airport. 12 VAA and VARA owned or leased all aircraft they operated. 13 VAA entered into contracts with: (a) Sydney Airport Corporation Limited; (b) Brisbane Airport Corporation Limited; and (c) Perth Airport Pty Limited, as the owners of car parking adjacent to the airport terminals at Sydney, Brisbane and Perth airports respectively, to provide VAA with car parking spaces. VAA provides car parking benefits to its Flight and Cabin Crew by giving them access cards to the car parks. The car parking is: (a) in the case of Sydney Airport: (i) 138 metres as the crow flies to the airport terminal; and (ii) 550 metres on foot from the entrance to the airport terminal; (b) in the case of Brisbane Airport: (i) 2.13 kilometres as the crow flies from the entrance to the airport terminal; and (ii) 2.2 kilometres on foot from the entrance to the airport terminal; (c) in the case of Perth Airport: (i) 1.46 kilometres as the crow flies from the entrance to the airport terminal; and (ii) 1.8 kilometres on foot from the entrance to the airport terminal. 14 Similarly, VARA entered into a contract with Perth Airport Pty Limited in order to provide car parking benefits to its employees, including Flight and Cabin Crew, adjacent to the airport terminal at Perth Airport. 15 Car parking facilities provided to employees by VAA at Melrose Carpark at Melbourne Airport and the "Blu Emu" car park on Ross Street Ave, Mascot NSW 2020, are: (a) in the case of the Melrose Carpark at Melbourne Airport: (i) 2.65 kilometres as the crow flies from the entrance to the airport terminal; and (ii) 3.2 kilometres on foot from the entrance to the airport terminal; and (b) in the case of the "Blu Emu" car park at Sydney Airport: (i) 957.69 metres as the crow flies from the entrance to the airport terminal; and (ii) 2.5 kilometres on foot from the entrance to the airport terminal; and the taxable value of the car parking fringe benefits (if any) of the Melrose Carpark and the Blue Emu car park do not form part of the Commissioner's objection decisions dated 22 July 2020. 16 If the primary place of employment of the Flight and Cabin Crew is the aircraft or the Flight and Cabin Crew have no primary place of employment, then the taxable value of the car parking fringe benefits provided by each of VAA and VARA to its employees in the FBT years ended 31 March 2013 to 31 March 2016 (inclusive) are as follows: 17 Based on the evidence, I make the following additional findings of fact. 18 During the Relevant Years, Virgin operated passenger airline services in Australia. In order to operate commercial flights, Flight and Cabin Crew were required on-board each aircraft. 19 During the Relevant Years, Virgin carried on its business at multiple premises, including the airport terminals at Sydney, Brisbane and Perth from which the aircraft on which it transported its passengers arrived and departed. 20 At the airport terminals, Virgin's ground operations included passenger check-in and other guest services, operation of the Virgin Lounges, baggage handling and aircraft re-fuelling. 21 On the aircraft, Flight Crew operated the aircraft and Cabin Crew provided food and beverage service, other general customer service, safety and emergency procedural checks and first aid as required on-board the aircraft. 22 Virgin entered into contracts with the commercial car park operators of the car parks at Sydney, Brisbane and Perth airports to provide Virgin with car parking spaces. Virgin provides those car parking facilities to its Flight and Cabin Crew by giving them access cards to the car park at the airport nearest to the location where the Crew members live (origin airport). 23 During their rostered shifts, the Flight and Cabin Crew performed their duties at both airport terminals and on the aircraft. In the Commissioner's reasons for disallowing the objections to each of the relevant assessments, the Commissioner stated that it was understood that "the Crew Members spend most of their time on the aircraft and are rostered for various routes and differing time schedules" (at [5]). 24 In calculating its fringe benefits tax liability for the Relevant Years, Virgin treated the provision of all car parking spaces at the origin airport to the Flight and Cabin Crew as a car parking fringe benefit pursuant to s 39A of the Act.

Flight Crew duties 25 The duties performed by Flight Crew at the airport terminals included: signing on at the crew room within the terminal at least 60 minutes prior to their first scheduled domestic flight or 90 minutes prior to their first scheduled international flight; reviewing the crew briefing report; reviewing flight crew operational notices and checking the weather conditions which could affect the flight; and reviewing Notice to Airmen notifications and aircraft maintenance updates. After completing these tasks, which take approximately 15-20 minutes, the Flight Crew proceed to the aircraft. Flight Crew are required to be at the aircraft no later than 45 minutes or 30 minutes prior to departure (depending respectively on whether or not the aircraft is "powered down" or when the incoming aircraft becomes available after passengers have disembarked). 26 Once on-board the aircraft, the Flight Crew perform a number of pre-flight procedures that take approximately 30 minutes. They include an external inspection of the aircraft, reviewing the flight plan and notifying the aerodrome controller of fuel requirements. Once those tasks are completed and the passengers have boarded the aircraft, the Flight Crew review documentation, such as the load sheet, passenger manifest and notification to Captain. The aircraft leaves the gate and the Captain taxis to the allocated runway for take-off. The pilots then fly the plane to its scheduled destination. Flying time depends upon the destination. 27 After the aircraft lands at a domestic destination, the Flight Crew generally stay on-board to prepare for the next flight (if they are not required to change aircraft and the turnaround is less than 40-60 minutes). They complete the post-flight administrative check list. If the crew needs to change aircraft they wait in the terminal until the aircraft arrives. There was no evidence before the Court which indicated how frequently Flight Crew need to change aircraft during the course of a single day. 28 After the Flight Crew's last scheduled flight of the day, they perform post-flight checks that take approximately 15 minutes. They will then leave the aircraft, walk to the crew room and sign off. If the last flight does not land at a Flight Crew member's home airport, they are provided with hotel accommodation until they are rostered on to their next shift (being a maximum of 4 days). 29 Flight Crew domestic rosters are determined having regard to the maximum flying duty period which varies depending on the number of sectors (i.e. flights) and where the pilot is acclimatised (i.e. where a pilot has spent three consecutive local nights on the ground within a time zone which is two hours' wide and is able to take uninterrupted night sleep). These maximums are set out in the Virgin Australia Short Haul Pilots' Agreement 2013 and is reproduced as follows: 30 The times set out in the tables above are inclusive of the pre-flight duties (i.e. the duties performed between sign-on and departure for which 60 minutes is allotted). 31 Under the Virgin Australia Long Haul International Pilots' Agreement 2011, the "Flight Duty Period" (essentially the time between sign-on and a time not less than 30 minutes after the final flight) would vary depending on the relevant start time and the total sectors flown. The maximum Flight Duty Periods are set out below:

Cabin Crew duties 32 Cabin Crew sign on at the crew room at the airport terminal, print relevant documentation required for the flight and attend a pre-flight briefing that takes approximately 8 minutes. They then proceed to the departure gate to arrive at the aircraft no later than 40 minutes prior to departure (for domestic flights). The Cabin Crew then perform pre-flight checks on the aircraft, including checking the operating condition of safety and other equipment, as well as checking that the aircraft has adequate catering, which takes approximately 15 minutes. 33 Following the pre-flight checks, the Cabin Crew proceed to board the passengers, a process that takes about 20 minutes. Once all passengers are on-board and the aircraft leaves the gate, the Cabin Crew perform further duties including the safety demonstration. After take-off, the Cabin Crew provide all the hospitality services on-board the aircraft and later prepare the aircraft for landing. 34 Once the aircraft lands, the Cabin Crew disembark the passengers, attend to the cleaning of the aircraft, and account for the proceeds of on-flight purchases made by passengers. These duties take no more than 30 minutes. 35 Cabin Crew that are rostered on for another flight on the same aircraft remain on-board as the turnaround is approximately 35 minutes. The crew then repeat the pre-flight checks and boarding of the aircraft described above. Otherwise the Cabin Crew leave the aircraft and wait for the next aircraft either in the crew room or at the gate (depending on the length of the wait), ensuring they are at the gate at least 40 minutes before departure. If a member of the Cabin Crew has reached the end of the rostered duty, he or she proceeds to the crew room and signs off. As is the case with respect to Flight Crew, there was no evidence which indicated how frequently Cabin Crew changed aircraft during any particular day. 36 Under the Virgin Australia Short Haul Cabin Crew Agreement 2015 (Short Haul Cabin Crew Agreement), the "Cabin Crew Roster Period" consists of 28 consecutive days and the personalised roster is determined having regard to the following maximums. 37 The time spent between sign-on and sign-off is a "Duty" and is inclusive of all work performed as a Cabin Crew member in this time (i.e. including meetings and training). The maximum hours that any Cabin Crew member can undertake will depend on the type of flight (domestic or international) and aircraft (wide or narrow body). These maximums are set out below: 38 The Short Haul Cabin Crew Agreement sets out the following minimum sign-on times: 39 Under the Virgin Australia Long Haul International Cabin Crew Agreement 2016 (Long Haul Cabin Crew Agreement), the maximum rostered "Flight Duty Period" (essentially the time between sign-on and sign-off) for Long Haul International Flying Duties (an international flight that requires continuous duties of 8 or more hours) is 18 hours and 25 minutes subject to an event of disruption, in which case the maximum may be extended by two hours. The number of sectors will generally be limited depending on the length of time rostered. For example, where a Flight Duty Period exceeds 16 hours, only one Operating Sector would be rostered. 40 Cabin Crew employees who are governed by the Long Haul Cabin Crew Agreement may also be rostered for other types of flight duties. In those circumstances, such employees may only be rostered in accordance with the following limits: 41 In the event of disruption after sign-on, these limits may be extended by 2 hours.

The relevant statutory provisions and extrinsic materials 42 The Act assesses employers to fringe benefits tax (FBT) on the "fringe benefits taxable amount" of the "fringe benefits" provided by the employer (or associate) to their employees: ss 5B-5C. 43 The history of the provisions that brought certain car parking benefits into the FBT net was described by the Full Court in Virgin Blue Airlines Pty Ltd v Federal Commissioner of Taxation [2010] FCAFC 137; 190 FCR 150 at [3]-[12]. It may be summarised as follows. At the time of its introduction, the Act provided that car parking facilities provided to employees were either expense payment fringe benefits (s 20) or residual fringe benefits (s 45). Shortly after its enactment, the Act was amended by the introduction of s 58G to provide an express exemption for all car parking benefits: Taxation Laws Amendment (Fringe Benefits and Substantiation) Act 1987 (Cth). 44 The exemption afforded by s 58G was then partially reversed in 1992 by amendments to s 58G and the introduction of Div 10A by the Taxation Laws Amendment (Car Parking) Act 1992 (Cth). This created a "carve out" from the existing exemption. 45 Section 58G(1) relevantly provides that an exempt benefit includes: (a) an expense payment benefit, where: (i) the recipients expenditure is in respect of the provision of motor vehicle parking facilities; and (ii) the benefit is not an eligible car parking expense payment benefit; (b) a residual benefit where the recipients benefit consists of motor vehicle parking facilities. 46 An "expense payment benefit" is provided for in s 20 (emphasis in original and denotes a defined expression): Where a person (in this section referred to as the provider): (a) makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the recipient) to pay an amount to a third person in respect of expenditure incurred by the recipient; or (b) reimburses another person (in this section also referred to as the recipient), in whole or in part, in respect of an amount of expenditure incurred by the recipient; the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient. 47 The expression "eligible car parking expense payment benefit" is defined in s 136(1) to mean: … an expense payment benefit where: (a) the recipient is an employee or an associate of an employee; and (b) the recipients expenditure is in respect of the provision of car parking facilities for a car on one or more days; and (c) the following conditions are satisfied in relation to any of those days: (i) on that day, the employee has a primary place of employment; (ii) on that day, the car was parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; (iii) the whole or a part of the recipients expenditure is in respect of the provision of the parking facilities to which that parking relates; (iv) on that day, the car was used in connection with travel by the employee between the place of residence of the employee and that primary place of employment; (v) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this definition; (vi) the day is on or after 1 July 1993. 48 As Virgin contracts directly with the operators of the relevant car parking facilities where their employees parked their cars, it is not an "expense payment benefit" pursuant to s 20 and thus not an "eligible car parking expense payment benefit". Virgin's provision of car parking facilities to its employees will therefore be exempt unless s 39A in Div 10A applies. 49 Section 39A specifies multiple conditions that must be satisfied in order for the provision of car parking facilities to be a fringe benefit. The detailed and prescriptive nature of those conditions is self-evident (emphasis in original and denotes a defined expression): 39A Car parking benefits (1) If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day: (a) during the period or periods, a car is parked on one or more premises of a person (the provider), where: (i) the premises, or each of the premises, on which the car is parked are business premises, or associated premises, of the provider; and (ii) a commercial parking station is located within a 1 km radius of the premises, or each of the premises, on which the car is parked; and (iii) the lowest fee charged by the operator of any such commercial parking station in the ordinary course of business to members of the public for all‑day parking on the first business day of the FBT year is more than the car parking threshold; (b) the total duration of the period or periods exceeds 4 hours; (c) any of the following applies: (i) a car benefit relating to the car is provided on that day to an employee or an associate of an employee in respect of the employment of the employee; (ii) the car is owned by, or leased to, an employee or an associate of an employee at any time during the period or periods; (iii) the car is made available to an employee or an associate of an employee at any time during the period or periods by another person, where: (A) the other person is neither the employer of the employee nor an associate of the employer of the employee; and (B) the other person did not make the car available under an arrangement to which the employer of the employee, or an associate of the employer of the employee, is a party; (d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee; (e) on that day, the employee has a primary place of employment; (f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment; (g) on that day, the car is used in connection with travel by the employee between: (i) the place of residence of the employee; and (ii) that primary place of employment; (h) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; (i) the day is on or after 1 July 1993; the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provider to the employee or the associate of the employee in respect of the employment of the employee. 50 Pursuant to s 39A(1)(e), the employee must have a "primary place of employment" and pursuant to s 39A(1)(f), the employee's car must be parked "at, or in the vicinity of, that primary place of employment". 51 There is no contest that in the present appeals, apart from s 39A(1)(e)-(f), the other conditions were satisfied. Consequently, the car parking facilities provided to the Flight and Cabin Crew employees of Virgin will only be a "fringe benefit" as defined in s 136 if the conditions in s 39A(1)(e)-(f) are both satisfied. 52 The expression "primary place of employment", which is important in the context of these appeals, is defined in s 136(1) (emphasis in original): primary place of employment, in relation to an employee in relation to a day, means business premises, or associated premises, of the employer of the employee, or of an associate of the employer, where: (a) if the employee performed duties of his or her employment on that day - on that day; or (b) in any other case - on the most recent day before that day on which the employee performed duties of his or her employment; those premises are or were: (c) the sole or primary place of employment of the employee; or (d) otherwise the sole or primary place from which or at which the employee performs duties of his or her employment. 53 The expression "business premises", which is referred to in the definition of "primary place of employment", is also defined in s 136(1), which relevantly is as follows (emphasis in original): business premises, in relation to a person, means premises, or a part of premises, of the person used, in whole or in part, for the purposes of business operations of the person, but does not include: … (c) boats or planes used primarily for the purpose of providing entertainment unless the boat or plane is used in the person's business of providing entertainment; … 54 It is important to note that the definition of "business premises" in s 136(1) also has to take into account s 136(2). Sub-section 136(2) provides that "in the definition of business premises in subsection (1), premises includes a ship, vessel, floating structure, aircraft or train". As will emerge, Virgin places particular emphasis on the fact that s 136(2) includes aircraft as a kind of premises for the purposes of the definition of "business premises" in s 136(1). This has the effect of altering the ordinary meaning of the word "premises", which normally would not include aircraft. The extended definition of "premises" in the context of the definition of "business premises" opens the door to the possibility that an employee's "primary place of employment" could include an aircraft and not be confined to a fixed structure, such as an aircraft terminal. 55 As it may be appropriate to have regard to some of the extrinsic material relating to the statutory provisions, it is convenient to set out some relevant parts of that material. First, in the second reading speech to the Taxation Laws Amendment (Car Parking) Bill 1992 (Cth) (which introduced the "carve out" from the total exemption of car parking benefits), the Minister Assisting the Treasurer said: This Bill will give effect to the Budget measure announced on 18 August 1992 to tax certain car parking benefits. The Government finds it inequitable that some employees receive these car parking benefits in a tax exempt form while other employees, most of whom will not get a tax deduction for their car parking costs, must pay for equivalent facilities out of their after tax income. (Commonwealth, Parliamentary Debates, House of Representatives, 4 November 1992, 2624 (Hon Peter Baldwin MP).) 56 The Explanatory Memorandum to the same Bill said that the purpose of the amendments was to impose fringe benefits tax on certain car parking benefits provided to employees and to deny income tax deductibility to employees who incur certain car parking expenses. 57 With respect to the "carve out", page 5 of the Explanatory Memorandum stated: The Bill will exclude from the motor vehicle parking exemption in paragraph 58G(a) of the [Act], expense payment benefits provided by an employer for an employee's car parking costs. Those car parking costs must be in respect of parking a car for a period of more than four hours between 7.00am and 7.00pm at or in the vicinity of the employee's primary place of employment. That car must also be used on that day for travel between the employee's place of residence and the employee's primary place of employment. 58 With particular reference to the definition of "primary place of employment" in s 136, the Explanatory Memorandum said the following at page 7: The term "primary place of employment" is defined to mean the employer's business premises, or associated premises, on which the employee would normally carry out his or her employment duties. Where an employee carries out employment duties on more than one of the employer's business premises in a particular day, the primary place of employment on that day is the place where, in consideration of the time spent and the substance of the duties carried out, a reasonable person would conclude that place to be the primary place of employment. 59 The Explanatory Memorandum included five express examples of the effect of the proposed amendments on car parking benefit arrangements, none of which is particularly relevant to the facts and circumstances of these appeals.

Virgin's submissions summarised 60 To avoid adding unnecessarily to the length of these reasons, I will not summarise Virgin's submissions in support of the appeals. They are substantially reflected in my reasons for upholding the appeals.

The Commissioner's position summarised 61 With respect to each of the issues set out at [4] above, the Commissioner's contentions may be summarised as follows. 62 As to the First issue, the Commissioner submits that on each working day the Flight and Cabin Crew did have a "primary place of employment". 63 As to the Second issue, the Commissioner's primary case is that the "primary place of employment" of the Flight and Cabin Crew was the "home base" airport terminal at which each employee commonly signed-on for a "shift". In the Commissioner's submission, that was the "primary place of employment of the employee" within the meaning of paragraph (c) of the definition in s 136(1) or, alternatively, "the sole or primary place from which .... the employee performs duties of his or her employment" within the meaning of paragraph (d) of the definition. Thus the Commissioner's position is that the primary place of employment for Flight and Cabin Crew was not an aircraft on which the employee was working at any particular time. This is because an individual aircraft is no more than a temporary and transient workplace for an employee, and consequently did not constitute a "primary place of employment". 64 Alternatively, on the Second issue, the Commissioner contends that an employee's primary place of employment was the airport at which the employee commenced his or her shift on a particular day - which may have been somewhere other than the "home base". 65 The Commissioner acknowledged that if the Court found that Virgin is correct in contending either that the employees have no primary place of employment, or that the primary place of employment was the aircraft, either one or both of paragraphs (e) and (f) of s 39A(1) would not be satisfied. 66 As to the Third issue, the Commissioner contended that the employee's car was "parked at, or in the vicinity of [the employee's] primary place of employment": (a) on each day the employee used the car park at their home base, if the Commissioner's primary case on the second issue is accepted, in which case it is common ground that the appeals should be dismissed; and (b) on each day the employee used the car park at the airport where he or she commenced his or her shift, if the Commissioner's alternative submission on the second issue is accepted.

(a) The First issue: On each working day did the Flight Crew and Cabin Crew have a "primary place of employment"? 67 The Commissioner contends that Virgin's position fails to address the breadth of the definition of "primary place of employment" in paragraph (d), which provides that the "primary place of employment" may be business premises of the employer "from which or at which the employee performs duties" (emphasis added). The Commissioner submits that the emphasised words are not synonymous and he claims that Virgin addressed the question too narrowly by focussing only on whether there are premises "at which" the employee performs most of his or her duties. This fails to address the concept of "from which". 68 With regard to the premises "from which" the employee performs his or her duties of employment, the Commissioner submits that the preposition "from" is "a particle specifying a starting point, and hence used to express: 1. a. removal or separation in space: a train running west from Sydney" (Macquarie Dictionary). The term "contemplates a starting point from which something moves away or is situated away from in space": Dalagold Pty Ltd v Director-General, Department of Tourism, Small Business and Industry [1999] 2 Qd R 126 at 130. 69 In the Commissioner's submission, the language of the definition of "primary place of employment" makes it necessary, particularly in the case of employees who are mobile and performing their employment duties in a variety of places, to give consideration to the place where the employees report for work and from which they are despatched to perform duties in other locations. The language "from which" shows that the legislature gave consideration to the possibility of mobile employees and adopted language designed to prevent the identification of a "primary place of employment" being frustrated by that mobility. 70 The Commissioner also relies upon what Edmonds and Gilmour JJ said in Virgin Blue at [54], namely that the primary place of employment "will ordinarily be capable of precise identification". However, this statement was made in the context of rejecting submissions by the Commissioner (and the primary judge's approach) that consideration of whether a car park was "in the vicinity of" a primary place of employment required the total size or "functional space" of Melbourne Airport to be taken into account (see [47] ff). The Commissioner in the present appeal correctly points out that it was an agreed fact in Virgin Blue that the primary place of employment of Flight Crew was Terminal 3 at Melbourne Airport, where the crew checked in (of course that agreed fact does not bind the parties here). On that basis, Edmonds and Gilmour JJ held that the relevant "question is whether the parking provided is in the vicinity of Terminal 3 … not Melbourne Airport at large" (at [54]). Reliance on the above statement concerning "precise identification" is therefore misplaced, as it was made in a different context from the current threshold issue, namely whether there is indeed a primary place of employment at all.

(b) The Second issue: The employee's "primary place of employment"

(i) Paragraph (c) of the definition in s 136(1) 71 The Commissioner submits that within the meaning of paragraph (c) of the definition in s 136(1), the "primary place of employment" of the Flight and Cabin Crew was the "home base" airport of each employee, as the taxpayer previously acknowledged in Virgin Blue at [28]. It was the "primary place of employment" within the ordinary meaning of that expression ("first or highest in rank or importance; chief; principal": Macquarie Dictionary definition of "primary") because as the "home base" it was the place at which the employees usually and repeatedly reported for work. The Commissioner submits that, in contrast, any given aircraft on which relevant crew are located while performing duties of employment was a temporary and transient workplace, and consequently not such as to constitute a "primary place of employment" as a matter of ordinary meaning.

(ii) Paragraph (d) of the definition in s 136 72 Alternatively if, as Virgin submits, there was no "sole or primary place of employment" within the meaning of paragraph (c), the Commissioner contends that paragraph (d) operated so as to select "the sole or primary place from which ... the employee performs duties of his or her employment". The Commissioner contends that that place was the employee's "home base". 73 The Commissioner contends that the aircraft terminals are the primary place from which the Flight and Cabin Crew perform their duties because those terminals are: (a) the places from which Virgin operates and the places to which the employees report for the performance of their work duties; (b) the places from which the Flight and Cabin Crew receive directions in relation to the performance of their duties at the commencement of their shifts; (c) the places at which the employees regularly attend to sign-on, sign-off, receive instructions, and perform other key employment duties; and (d) the places by reference to which several important aspects of the employee's conditions of employment are regulated, including Virgin's obligation to ensure that employees are rostered to commence and finish shifts at that airport on a regular basis. 74 While the terms of s 39A(1) and the definition of "primary place of employment" require the identification of the primary place of employment on a daily basis, the Commissioner submits that the significance of the "home base" airport to an employee's employment has the result that, for the employees involved in these appeals, their primary place of employment will not change on a day-to-day basis simply because they may be moving from place to place in the course of performing their duties. Notwithstanding that employees may in performing their duties move from one place of business of Virgin to another, the place "from which" they perform their duties of employment will remain where they sign-on at their home base airport, so submits the Commissioner.

(iii) Commissioner's alternative case 75 In the alternative to his primary position, the Commissioner submits that having regard to the duties performed at the airport at which an employee commences a shift, and the statutory inquiry directing attention to the place "from which or at which" the employee performs duties of his or her employment (i.e. commences the shift), then the appropriate conclusion is that the employee's primary place of employment on a particular day will be the airport terminal at which the employee signs on to commence a shift. 76 The Commissioner submits that the particular aircraft on which relevant crew performed duties on a particular day, of which there may have been more than one, being merely temporary and transient places of work were not such as to constitute the "primary place of employment" on any day. No individual aircraft will be the "first or highest in rank or importance; chief; principal" place of employment (referring to the Macquarie Dictionary definition of "primary").

(c) The Third issue: Is the employee's car "parked at, or in the vicinity of [the employee's] primary place of employment"? 77 With reference to the requirement that the employee's car is "parked at, or in the vicinity of [the employee's] primary place of employment", the Commissioner contends that: (a) on each day the employee used the car park, if the Commissioner's primary case on the second issue is accepted, then it is common ground that the appeals should be dismissed; (b) if the Commissioner's alternative case on the second issue is accepted, the appeals should be allowed but only for each day the employee commenced his or her shift at an airport terminal other than their home base.

Consideration and determination 78 It is desirable first to outline the relevant principles of statutory construction, before applying them to the particular circumstances of these appeals.

(a) The task of statutory construction 79 Recently, in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Bay Street Appeal) [2020] FCAFC 192, Allsop CJ, with reference to caselaw, summarised the central principle of statutory construction at [4]: … The principle is clear: Meaning is to be ascribed to the text of the statute, read in its context. The context, general purpose and policy of the provision and its consistency and fairness are surer guides to meaning than the logic of the construction of the provision. The purpose and policy of the provision are to be deduced and understood from the text and structure of the Act and legitimate and relevant considerations of context, including secondary material: [caselaw cited]. 80 The Chief Justice warned of the danger and inappropriateness of over-emphasising the form of expression by individual judges and treating them as though those expressions were themselves the text of a statute. 81 With specific reference to context and legitimate extrinsic materials, the Chief Justice said at [5]: There can be no doubt that the search for principle in the High Court reveals a settled approach of some clarity: R v A2 [2019] HCA 35; 373 ALR 214 at 223-225 [31]-[37]. The notion that context and legitimate secondary material such as a second reading speech or an Explanatory Memorandum cannot be looked at until some ambiguity is drawn out of the text itself cannot withstand the weight and clarity of High Court authority since 1985: see Jayasinghe 247 FCR (sic) at 42-44 [3]-[12]; and CPB Contractors Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCAFC 70 at [8], [50]-[60]. 82 Accordingly, in The Bay Street Appeal, which turned on the meaning of s 347 of the Fair Work Act 2009 (Cth), the Chief Justice described the task of statutory construction in the following terms at [6]: The meaning, including the scope, of s 347 is to be ascertained by applying the above principles. The content of meaning of s 347 is taken from its terms, read and understood from its context and purpose, an understanding of which is gained from the terms of the legislation and its enactment history, including the Explanatory Memorandum. 83 Nothing said there by the Chief Justice is inconsistent with what the plurality said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ (footnotes omitted): "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text". So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself. 84 For the purpose of the present appeals, reference should also be made to the appropriate approach in interpreting and applying statutory definitions, as described by McHugh J in Kelly v R [2004] HCA 12; 218 CLR 216 at [103]: … [t]he function of a definition is not to enact substantive law. It is to provide aid in construing the statute. Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment. There is, of course, always a question whether the definition is expressly or impliedly excluded. But once it is clear that the definition applies, the better - I think the only proper - course is to read the words of the definition into the substantive enactment and then construe the substantive enactment - in its extended or confined sense - in its context and bearing in mind its purpose and the mischief that it was designed to overcome. To construe the definition before its text has been inserted into the fabric of the substantive enactment invites error as to the meaning of the substantive enactment. In so far as the judgment of Megarry J in No 20 Cannon St Ltd v Singer & Friedlander Ltd suggests his Lordship thought that an interpretation or definition clause should be construed independently of the substantive enactment, I think his Lordship erred. The long title to the first Interpretation Act 1850 (UK) (13 & 14 Vict c 21) was "An Act for shortening the Language used in Acts of Parliament". The long title to the Acts Interpretation Act 1931 (Tas), is "An Act to provide certain rules for the interpretation of Acts of Parliament; to define certain terms commonly used therein; and to facilitate the shortening of their phraseology". These titles convey the true purpose of an interpretation or definition clause. It shortens, but is part of, the text of the substantive enactment to which it applies.

(b) Resolution of the appeals 85 In addressing the First issue it is important not to lose sight of the fact that the legislative scheme is not based on the assumption that every employee always has a "primary place of employment". 86 The next matter to bear in mind is that the effect of s 136(2) is to make clear that aircraft can be "business premises" and thus a primary place of employment for the purposes of the Act. I accept Virgin's submission that an aircraft will be a primary place of employment if it is either "the sole or primary place of employment" (i.e. paragraph (c) of the definition in s 136(1)) or "the sole or primary place from which or at which the employee performs duties of his or her employment" (i.e. paragraph (d) of the definition in s 136(1)). 87 I also find that, in the circumstances of these appeals, Virgin's "business premises" include not only the aircraft used in its business but also those parts of the three airport terminals which it uses for its business. This includes the crew rooms. 88 With the apparent objective of enhancing the significance of the terminals in assessing the relevant employees' primary place of employment, the Commissioner contended that it was also relevant to include in that assessment the time when the relevant employees were performing duties on the aircraft when it was physically connected to the terminal. He submitted that, during that time, duties performed on the aircraft should be regarded as duties performed at the terminal because the aircraft was part of the terminal for the purposes of the definition of "business premises". This would mean that the aircraft was to be treated as part of the terminal up until the point of push back. I reject these contentions. Merely because there is a transient physical connection between an aircraft and the terminal does not mean that the aircraft should be treated as part of the terminal when addressing the issue of "business premises". The Commissioner's argument also has a degree of practical unreality about it, not the least because it fails to take into account that some aircraft do not park at a terminal gate and passengers are embarked or disembarked on the tarmac and away from the terminal. They may then either walk or be bussed to the terminal. Furthermore, even where the aircraft is parked at a terminal gate, it is common knowledge that Virgin often board and disembark passengers who are seated at the rear of the plane via steps at the rear of the aircraft which are accessed by foot outside the terminal. 89 Against that background, the questions then arise under the First and Second issues whether the Flight and Cabin Crew have a "primary place of employment", and if so, what is that "primary place of employment". 90 The evidence is clear that Flight and Cabin Crew perform their duties of employment for Virgin in several places. That includes the airport terminal where they commence duty and attend to matters relating to signing-on and other related pre-flight duties as outlined above. The duties of employment are also performed at other places, including the one or more aircraft on which the Flight and Cabin Crew are located for the particular day, and the destination airport terminal or terminals where the aircraft land. Places where the duties are performed includes the airport terminal where the Flight and Cabin Crew finish their duty (which may not be their origin airport or the terminal where they commenced duty). Having regard to the findings above, it is not the case that the relevant employees have a "sole place of employment". 91 Having regard to the ordinary meaning of the word "primary", as set out at [71] above, this invites attention to be given to which place of employment is the first or highest in rank or importance. I consider that this involves a qualitative and quantitative exercise in comparing the duties which are performed by the relevant employees at their different places of employment during the course of a particular day. This approach is consistent with the passage from the Explanatory Memorandum set out at [58] above. 92 In the case of domestic flights, where the Flight and Cabin Crew operate on only one aircraft during the particular day, I find that their primary place of employment on that day is that aircraft. In such a case, most of the relevant employees' time is spent performing their duties on-board the aircraft and while it is in flight. They also perform some duties on the aircraft while it is not in flight but is connected to a gate at a terminal, whether at the beginning of the flight or after it has arrived at its destination. The quantitative and qualitative importance of those duties are described above, in the case of Flight Crew at [26]-[28], and in the case of Cabin Crew at [32]-[34]. The position is even stronger in the case of an international flight, where the time spent on-board is likely to be longer than is the case with a domestic flight and where similar duties are performed by relevant employees on the aircraft both before take-off, during flight, and after the aircraft has reached its destination. 93 I accept Virgin's contention that the duties performed by Flight and Cabin Crew at terminals are appropriately described as ancillary to the principal duties which are performed on-board the aircraft. In a quantitative sense, such duties are of a short duration and do not exceed one hour in the case of a single sector shift of 13 hours. The duties performed by both Flight and Cabin Crew at terminals, such as attending pre-flight briefings, are, of course, important in a qualitative sense, but the evidence establishes that they are necessarily ancillary to the duties performed on-board the aircraft. As pointed out above, the Commissioner correctly acknowledged in the reasons for disallowing the objections that "Crew Members spend most of their time on the aircraft …". 94 As highlighted above, the evidence is unclear as to the frequency with which Flight Crew or Cabin Crew have a domestic flight roster which involves multiple sectors using different aircraft during a particular day. That does not mean, however, that the "home base" airport, nor the terminal where the Flight and Cabin Crew sign on for a shift (as contended by the Commissioner in his alternative argument) is the primary place of employment. The amount of time spent performing duties at that terminal (or, indeed, any other terminal which is visited by the Flight and Cabin Crew on a particular day) is far outweighed by the time spent performing duties on the aircraft or aircrafts during a daily roster. Accordingly, for these reasons, I reject the Commissioner's primary and alternative contentions on the Second issue. 95 I reject the Commissioner's submission that Virgin's approach gives too little attention to the expression "from which" in the phrase "sole or primary place from which or at which the employee performs duties of his or her employment" in paragraph (d). Contrary to the Commissioner's submission in oral address, Virgin did not suggest that the phrase constitutes a composite expression. Rather, Virgin's position was that Commissioner's approach divorced the expression "from which" from the actions to which the wider phrase in paragraph (d) relates. Those actions are the performance of the relevant employees' duties. As Virgin submitted, the statutory question posed by the definition in paragraph (d) does not direct attention to the place from which the relevant employee goes out, nor the place at which they sign on or report for duty. Rather, it is the sole or, in this case, primary business premises from which or at which the employee performs his or her duties. As emphasised above, those business premises can include an aircraft. Many of the duties of both Flight and Cabin Crew are performed on the aircraft, but other duties are also performed "from" the aircraft. In the case of Flight Crew, such duties would include communicating with air traffic control or ordering fuel from the aerodrome controller, as described at [26] above. Similarly, when an aircraft is docked at a terminal gate, Cabin Crew interact with ground staff and accordingly also perform some duties "from" the aircraft. 96 Having regard to my findings in relation to the First and Second issues, I did not understand there to be any contest that the Third issue should also be answered favourably to Virgin. That is because where the Flight and Cabin Crew operate on only one aircraft throughout a particular day, that is their primary place of employment. That place of employment is plainly not within the vicinity of any of the car parks. Where more than one aircraft is involved on a particular day, there is no primary place of employment and s 39A(1)(f) does not arise.

Conclusion 97 For all these reasons, both appeals should be allowed. The parties will be given an opportunity to agree orders that give effect to these reasons, including as to costs. I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Griffiths.

Taxation Laws Amendment (Car Parking) Act 1992(Cth)

Taxation Laws Amendment (Fringe Benefits and Substantiation) Act 1987(Cth)

Fringe Benefits Tax Assessment Act 1986(Cth)ss 5B-5C, 20, 39A(1)(e)-(f), 45, 58G, 136, Div

At a glance

Court

Decision date

Before

Source

Judgment (18 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (6)

Cited By (1)