AB v Commissioner of Taxation

[1998] FCA 1116

A.B. v COMMISSIONER OF TAXATION
No. NG 999 of 1996
FED No. 1116/98
Number of pages - 11
Constitutional Law - Practice and Procedure - Administrative Law

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

FOSTER J

Constitutional Law - invalidity - characterisation of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") - whether s 44(5), insofar as it provides for the Federal Court to remit a matter to the Administrative Appeals Tribunal, is invalid under ss 75, 76 and 77 of the Constitution - relevant "matter" under s 44 of the AAT Act.

Practice and Procedure - application to set aside or vary an order of the Court pursuant to O 35 r 7(1) of the Federal Court Rules - scope of the discretion to re-open a judgment which has not yet been entered - whether sufficient possibility of injustice if refusal to allow re-opening.

Practice and Procedure - application to set aside or vary an order of the Court pursuant to O 35 r 7(1) of the Federal Court Rules - order to remit to Administrative Appeals Tribunal for determination in accordance with the reasons of the Court - whether to vary order so as to direct decision of Tribunal - whether further findings of fact to be made by Tribunal.

Administrative Law - administrative appeals - remitter to Administrative Appeals Tribunal - whether only one decision reasonably open to Tribunal.

The Constitution - Ch III, s 75, s 76, s 77

Income Tax Assessment Act 1936 (Cth) - s 25(1), s 25A(1), s 26(e), Part IIIA

Administrative Appeals Tribunal Act 1975 (Cth) - s 44, s 44(5)

Federal Court Rules - O 35 r 7

Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209 - cited

TNT Skypak International (Aust) Pty Limited v Federal Commissioner of Taxation (1988) 82 ALR 175 - considered

O'Toole v Charles David Pty Limited (1989) 90 ALR 112 - considered

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 - considered and followed

Wati v Minister for Immigration (1997) 148 ALR 578 - considered and followed

Jolley v FCT (1989-90) 20 ATR 335 - followed

Australian Trade Commission v Richard Shrapnel Consulting Services Pty Limited (1988-89) 85 ALR 287 - followed

Statham & Anor v Federal Commissioner of Taxation (1989) ATC 4,070 - followed

SYDNEY, 18 May 1998 (hearing), 9 September 1998 (decision)

#DATE 9:9:1998

Appearances

Counsel for the Applicant: Mr D.E. Grieve QC with Mr A.J.P. Reynolds

Solicitor for the Applicant: J.G. Chegwidden

Counsel for the Respondent: Mr D.B. McGovern

Solicitor for the Respondent: Australian Government Solicitor

THE COURT ORDERS THAT:

1. The motion be allowed in part.

   2. The order of the Court made on 17 October 1997 remitting the matter to the Tribunal for determination in accordance with the reasons given on that date be varied such that the Tribunal is directed to find that the receipt in question was not taxable under ss 25(1) or 25A(1) of the Income Tax Assessment Act 1936 (Cth).

   3. The applicant pay the respondent's costs of this motion in relation to the argument in respect of constitutional invalidity.

   4. The respondent pay the applicant's costs of this motion in relation to the variation of the previous order of remittal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

FOSTER J

This is a notice of motion brought by the applicant, A.B., in relation to a judgment given by me in these proceedings on 17 October 1997. By that judgment I set aside a decision of the Administrative Appeals Tribunal ("the Tribunal") given on 8 November 1996, which had affirmed an objection decision of the respondent ("the Commissioner") given on 29 January 1996 in respect of the applicant's liability to income tax for the year ended 30 June 1988. The judgment deals with a number of matters which I do not propose to advert to in these reasons. I upheld the applicant's appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the Act") in a number of respects and, in a limited area, made an order "that the matter be remitted to the Tribunal for determination in accordance with these reasons". By this notice of motion, the applicant seeks that I rescind that order and substitute for it an order that the amount in dispute was not taxable. In other words, he seeks that I make a final decision in his favour rather than remit the matter to the Tribunal for its further consideration. The notice of motion is based upon O 35 r 7(1) of the Federal Court Rules. The rule, obviously, provides the Court with a discretion. Indeed, it would appear that it is only the absence of formal entry of the judgment, which has provided the opportunity for bringing a motion of this width. Had judgment been entered, any notice of motion would have needed to be brought pursuant to O 35 r 7(2), which rule significantly restricts the grounds upon which such an application may be made. I shall refer, later in these reasons, to the scope of the discretion under O 35 r 7(1). It is convenient at this stage to consider some submissions which were not made on behalf of the applicant in the previous hearing.

A number of constitutional arguments were raised by the applicant. It was, for instance, submitted that the Act was an invalid exercise of legislative power, in that it sought to confer judicial power upon a body which was not a Court within Ch III of the Constitution. This argument was abandoned. A submission was made, however, that the portion of s 44(5) empowering this Court to make an order remitting the case to the Tribunal to be heard and decided again was constitutionally invalid, with the result that the Court could not order any such remitter but was required to determine itself the whole of the proceedings before the Tribunal, once relevant error of law had been found. This case was not sought to be made at the original hearing. Moreover, it was conceded that it was a wholly novel proposition so far as the operation of s 44 was concerned. I have considerable doubt as to whether, as a matter of discretion, I should even entertain this submission on a notice of motion of this kind. However, as I am satisfied that there is no substance in it, I shall deal with it briefly.

The submission accepts that this Court has power to correct error of law in the operation of the Tribunal and that to make orders in respect of such correction is an exercise of the judicial power of the Commonwealth (Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209). However, it is submitted that such judicial power can be exercised only in respect of a "matter" within the meaning of ss 75, 76 and 77 of the Constitution. A "matter", it is contended, connotes the whole of the controversy between the parties. Consequently, this Court, when exercising jurisdiction under s 44 of the Act, can deal only with the whole of the controversy between the parties, this being the only "matter" in respect of which it can , in conformity with the Constitution, exercise jurisdiction. It follows, so the argument runs, that once this Court has entered upon a consideration of the appeal under s 44, it cannot remit the matter to the Tribunal. It is obliged to deal with the whole controversy itself. Accordingly, that portion of s 44(5) which provides the power to remit is invalid. The result, in the present case, is that I should have heard and disposed of the whole of the "matter" before the Tribunal.

This submission is based, primarily, upon a passage from the judgment of Gummow J in TNT Skypak International (Aust) Pty Limited v Federal Commissioner of Taxation (1988) 82 ALR 175 at 180-181. In the circumstances I think it desirable to set out the whole of the passage in question. It reads as follows:-

"Section 44 is ambulatory in its operation, and picks up proceedings arising under a miscellany of federal laws. In the present case, the controversy between the parties arose from the dissatisfaction of the taxpayer with the assessment and the decision of the Commissioner to disallow the taxpayer's objection. The taxpayer then exercised the rights given it by s 187 of the Tax Act, and the decision of the Commissioner was then referred to the tribunal. The controversy between the parties thus arises under federal law: Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 476; 31 ALR 161 at 169-70, per Stephen, Mason, Aickin and Wilson JJ. There arises no claim under non-federal law as a footing for invoking `accrued' or `pendent' jurisdiction; cf O'Neil v Wratten (1986) 65 ALR 451. Nor is there any distinct but `associated' federal matter to attract s 32 of the Federal Court of Australia Act 1976 (Cth).

It may be that in a given case, of which in my view (as I shortly shall indicate) the present is one, the factual controversy between the parties has been quelled before the tribunal, so that all that remains outstanding between the parties are questions of law. There is no difficulty in such a case with the application of s 44 because s 44 will be coterminous with the matter submitted by the Parliament for resolution by the exercise of the judicial power of the Commonwealth. However, after the exhaustion of the administrative processes before the tribunal, the parties may still be in controversy as to questions both of law and of fact. In such a case it might appear that the jurisdiction of this court was, on the face of s 44, limited to less than the whole of the controversy and thus less than the whole of the matter arising under federal law. This would be because the effect of the law made by the Parliament would be to excise from the matter so much of the claims made therein as did not constitute questions of law. In such cases questions may arise as to the extent of the validity of s 44 of the AAT Act. I have already indicated that such questions did not arise with the old s 196 of the Tax Act. There, given compliance with the threshold requirement of a question of law, the whole matter was before the court.

Putting to one side the appellate jurisdiction of the High Court provided for by s 73 of the Constitution, federal jurisdiction may arise under any of the heads listed in ss 75 and 76 of the Constitution. Section 44 of the AAT Act is concerned with matters that arise under laws made by the Parliament (s 76(ii) of the Constitution, as implemented for this court by s 77 of the Constitution). It may be that with respect to matters which arise under a law made by the Parliament, it is for the Parliament to create the rights or obligations in question and in so doing to determine the content of matters arising under that law. In other words, the rights and obligations, which supply the foundation for the controversy which is the `matter', would be provided by the statute. The statute itself thus would govern the content of that matter: R v Quinn; Ex parte Consolidated Foods Corp (1977) 138 CLR 1 at 5, 10; 16 ALR 569 at 570, 574. In this way, factual disputes might never be brought within the ambit of matters arising under the law in question. The only matter for the purposes of s 44 of the AAT Act which arose under laws made by the Parliament would be questions of law; questions of fact effectively would be excluded from the matter in respect of which this court was invested with jurisdiction.

That would provide, in respect of the present case, a further answer to any doubts concerning s 44 of the AAT Act, in addition to that answer already suggested (viz that the only controversy in this case concerns questions of law). It would, indeed, provide an answer generally in respect of s 44, even where the parties' controversy as to factual questions still remained outstanding. ..."

His Honour went on to consider what the situation might be where "... the source of the matter was not the circumstance that it arose under a law made by the Parliament within the meaning of s 76(ii) of the Constitution...". These considerations have no relevance to the present case.

In my opinion, this passage does not support the applicant's submission. It refutes it. The foundation for the controversy which is the "matter" has been provided by s 44. The relevant "matter" is the question or questions of law contemplated by that section. Any doubt that this was what was intended to be conveyed by this passage is set at rest by what his Honour said on the same topic in O'Toole v Charles David Pty Limited (1989) 90 ALR 112 at 158 where he described as a "well settled" proposition that:-

"... with respect to matters which `arise under a law made by the Parliament', it is for the Parliament to determine, by formulating the `law' in question, what are the rights and obligations which supply the foundation for the controversy which is the `matter' for the purposes of s 76(ii) of the Constitution: TNT Skypak International (Aust) Pty Ltd v FCT (1988) 82 ALR 175 at 181."

Clearly, there is no constitutional invalidity in the Court's being required by s 44 to consider only the existence or otherwise of errors of law in the Tribunal's reasons without, thereby, being required to determine the whole of the controversy before the Tribunal. Accordingly, the Court can, pursuant to s 44(5), validly remit portions of the case for rehearing in accordance with the rulings it has made on questions of law. It cannot, except in limited circumstances to be referred to later, itself, determine the controversy. Accordingly, I reject the submission made on behalf of the applicant that, in the original proceedings, I should have determined whether the amount in question was taxable pursuant to s 26(e) of the Income Tax Assessment Act 1936 (Cth) ("the Tax Act") or under the provisions of Part IIIA of the Tax Act relating to capital gains, these questions being part of the controversy between the parties. They had been raised before the Tribunal but not determined by it. The question of capital gains had been expressly deferred on the basis that it would arise for consideration only if the receipt in question was not held to be income according to ordinary concepts. The liability to tax under s 26(e) was referred to in the Tribunal's judgment in a manner suggestive that the section was unlikely to apply; however, no final determination was made as the Tribunal was satisfied that the amount was brought to tax under s 25(1) or s 25A(1) of the Tax Act. In these circumstances, I was of the opinion, which I adhere to, that the Tribunal having made no determinations in relation to liability in respect of s 26(e) or capital gains, there was no jurisdiction in this Court, pursuant to s 44 of the Act, to consider questions of law which might arise, in the circumstances of the case, in relation to those aspects. They remain for consideration by the Tribunal irrespective of the outcome of the proceedings in this Court.

The result of the orders that I made on 17 October 1997 was that, in addition to the questions relating to s 26(e) and Part IIIA, the Tribunal had for its further consideration a limited question, namely whether the provisions of the document referred to as the Joint Venture Agreement when viewed against the matrix of facts in which it came to be executed by the applicant produced the result that the amount paid to the applicant in accordance with its terms, being the receipt in issue, was income according to ordinary concepts, being an amount paid to the applicant for the performance of services. It is the applicant's submission, on this motion, that I should revisit the order that I made for the remitter of this question, set it aside, and myself determine the question. It is submitted that I can do so in exercise of the discretion given to me by O 35 r 7(1). It is necessary, therefore, to consider the discretion provided by that rule. In this regard, it is convenient to set out the whole of O 35 r 7. It provides as follows:-

"7 (1) The Court may vary or set aside a judgment or order before it has been entered.

(2) The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where -

(a) the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order;

(b) the order was obtained by fraud;

(c) the order is interlocutory;

(d) the order is an injunction or for the appointment of a receiver;

(e) the order does not reflect the intention of the Court; or

(f) the party in whose favour the order was made consents.

(3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court.

(4) Sub-rule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order."

I have received written submissions from counsel in relation to these provisions. It is apparent that, although O 35 r 7(1) does not contain the limitations and qualifications to be found in subrr (2) and (3), it does not provide an unfettered discretion to reopen decisions which have been made in final form and which, subject to their being properly entered, would be open to the ordinary appellate processes. The scope of the rule, or ones of similar import, has been considered in circumstances where a court of final appeal has been asked to reconsider its decision before formal entry of judgment. Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 was such a case. There the unsuccessful respondents in a complex copyright infringement appeal applied to the High Court to vacate a judgment of the court before it was entered on the ground that, without fault on their part, they had no opportunity to be heard on three issues involved in the decision. Members of the court considered the basis upon which such an application could successfully be made.

Mason CJ (at 301-303) stated the relevant principles as follows:-

"... The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant's part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v. Woollahra Municipal Council (1982) 149 C.L.R., at p. 684, that `[g]enerally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.'

But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders. So much was acknowledged by Brennan, Dawson, Toohey and Gaudron JJ. in Smith v. N.S.W. Bar Association (1992) 176 C.L.R. 256, at pp. 264-266 when their Honours said: `if reasons for judgment have been given, the power is only exercised if there is some matter calling for review.' It is sufficient to give three examples. In In re Harrison's Share under a Settlement [1955] Ch. 260, orders were set aside following a decision of the House of Lords which overruled authorities on the basis of which the orders had been made. In New South Wales Bar Association v. Smith Unreported, 4 July 1991, the New South Wales Court of Appeal reconsidered orders previously made in view of an argument that the Court had mistakenly assumed that particular evidence had not been given at earlier hearings (The Court of Appeal refused to set aside its orders but an appeal to this Court was successful.). And, in Pittalis v. Sherefettin [1986] Q.B. 868, a judge recalled orders the day after they were made upon determining that he had `erred in a material matter in his approach to the case' (ibid., at p. 880. The Court of Appeal upheld the decision to review the matter, though disagreeing with the judge's ultimate conclusion.).

These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases."

(See also per Brennan J at 308-309, per Dawson J at 317).

Gaudron J, perhaps, put the matter more widely when her Honour said (at 322):-

"... Judgment has not yet been entered and, in my view, should be set aside if the interests of justice so require (Smith v. N.S.W. Bar Association (1992) 176 C.L.R. 256). However, the circumstances in which justice requires that course are, in practice, extremely rare, particularly if there has been an opportunity for full argument (Wentworth v. Woollahra Municipal Council (1982), 149 C.L.R., 672, at p. 684; State Rail Authority of N.S.W. v Codelfa Construction Pty. Ltd. (1982), 150 C.L.R. 29, at pp. 38, 48)."

In Wati v Minister for Immigration (1997) 148 ALR 578, a Full Court of this Court gave comprehensive consideration to this question at pp 584-6. Consideration was given to a number of previous authorities including Autodesk. I cite the following passage (at 584):-

"There is considerable authority on the scope of powers analogous to those conferred on the court by FCR O 35, r 7(1) (that is, in relation to setting aside a judgment or order before it has been entered). The High Court, in a series of cases, has accepted that it has jurisdiction to entertain an application to set aside orders made by it. In State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29; 42 ALR 289, Mason and Wilson JJ expressed no doubt that the jurisdiction existed, but said (at CLR 38) that the power is to be exercised `with great caution' and that the `circumstances that will justify a rehearing must be quite exceptional'. Brennan J in the same case cited (at CLR 45-6) comments made by Lord Brougham in Rajunder Narain Rae v Bijai Govind Sing (1839) 2 Moore Ind App 181 at 220; 18 ER 269 at 284, that the `indulgence' to allow a case to be reheard:

`is mainly owing to the natural desire prevailing to prevent irremediable injustice being done by a court of the last resort, whereby some accident, without any blame, the party has not been heard, and an order has been inadvertently made as if the party had been heard.'"

It may be noted that these statements of principle relate particularly to courts of final appeal where failure to permit reopening might produce "irremediable injustice". It is doubtless the position that such injustice is less likely to be occasioned in courts of first instance or intermediate courts of appeal because of the existence of rights of appeal from their decisions. However, in my opinion, this does not mean that the jurisdiction conferred by O 35 r 7(1) must be regarded as so narrow or exceptional as to be virtually nonexistent. Obviously each case must depend, ultimately, upon its own facts. Clearly the jurisdiction is wider than that encompassed in subrr (2) and (3). The jurisdiction may be exercised in circumstances going beyond "the slip rule" and can embrace circumstances where the Court, whilst heeding the admonition that the matter should approached with all due caution, nevertheless is satisfied that a refusal to permit reopening would be unjust.

It is necessary, therefore, that I now turn to the portion of my judgment which has occasioned the present application. It is to be found at pp 34-36. I do not propose to set it out again in these reasons. It may be summarised in the following way. I found error of law on the part of the Tribunal as it had "not looked beyond the wording of the Agreement to the `whole factual matrix' of which it formed part", this error necessitating the setting aside of its finding that the receipt was for "services" and, therefore, to be characterised as income in accordance with ordinary concepts. I then considered whether the matter should be remitted to the Tribunal so that it could be "considered afresh" or whether I should deal with it myself "on the basis that the evidence mandates the conclusion that the receipt was not income of the applicant". I then referred to the submission of senior counsel for the applicant that there was, on the evidence, only one way to characterise the payment, namely that it was a "windfall gain" for the reasons there set out. I then said "In my opinion, I can accept the "windfall" characterisation only if I am satisfied that the evidence can admit of no other. I should indicate that, were I deciding the question myself, as one of fact, I would agree with this characterisation". Thereafter I set out seriatim the facts and reasons which would lead to my so agreeing. I then concluded as follows:-

"These considerations point cogently towards a finding that the receipt was no more than a windfall gain, notwithstanding the description of the payment in the Agreement. However, I must bear in mind that this area of fact has not been considered by the Tribunal because it has erroneously precluded itself from so doing. I have reluctantly come to the view that if I was to take the course submitted on behalf of the applicant I would be trespassing into the fact-finding area which the legislation reserves for the Tribunal. Despite the views that I have expressed I do not find myself able to hold that the facts inevitably point to a finding of "windfall" gain, requiring that such a finding be made as a matter of law. It is necessary that the case be returned to the Tribunal so that it can consider this fairly limited factual area and make appropriate findings."

It is this reasoning and the consequent order of remittal that I am asked to reconsider. In the first place, I must decide, whether, as a matter of discretion, I should allow this reopening.

It is important to bear in mind that the application does not relate to the basic finding of the judgment, namely that a relevant error of law was committed. There has been no appeal brought by the respondent against this finding. Reopening is sought, therefore, only in respect of the order I have made consequential upon that finding. I have been advised by the parties that the order has resulted in the respondent indicating, in a preliminary hearing in the Administrative Appeals Tribunal, that it intends to call fresh evidence and also further cross-examine the applicant, in circumstances where, in the original hearing, very considerable cross-examination had already taken place. In argument on this motion, moreover, it has been indicated that the fresh evidence would be sought to be used not only in relation to the narrow area of fact currently left open by my reasons, but also in relation to the reagitation of broader issues under ss 25(1) and 25A(1) of the Tax Act which I had determined adversely to the respondent in the proceedings before me, such determinations being founded upon the absence of any evidence of a "business deal" or "profit making scheme". I am satisfied, on a rereading of the transcript of the hearing before me and of my reasons, that it was not my intention that the remittal order should have this effect. I am satisfied that, at the very least, I gave no attention to the question raised by s 44, namely whether the Administrative Appeals Tribunal rehearing should be confined to the evidence already given or to some portion of it. It is plain that this question was not the subject of argument before me.

Furthermore, reference to the transcript satisfies me that, during the course of the hearing, I specifically deferred for further argument the question whether I should make any orders in relation to the unlitigated issues concerning s 26(e) and Part IIIA. During the period that the decision was reserved, quite clearly, I overlooked this fact. I also overlooked the fact that I had not invited any submissions on the form of orders that should be made in the event that I found relevant errors of law to have occurred in the hearing before the Tribunal. In particular, I did not invite the assistance of counsel as to what orders might appropriately be made if I took a favourable view of the "windfall" argument. I may well have left counsel with the impression that I would make no final orders until such argument had taken place. In this regard, I should add that counsel appearing on the motion was not the same counsel as appeared at the hearing. On the hearing of the motion I have had the benefit of detailed submissions directed towards my reviewing the approach I took to the question of whether I could, on the basis of the evidence before the Administrative Appeals Tribunal conclude that, as a matter of law, the receipt in question should properly be characterised as a windfall gain with the consequence that no remittal to the Administrative Appeals Tribunal would be necessary. Although I note, in my reasons, that counsel then appearing had submitted that this was the only way in which the receipt could be characterised, I can find no detailed submission to this effect in the transcript and, consequently, assume that, although it may have been referred to in a written submission, it was not the subject of full argument. I am satisfied that it did not receive such attention because the question of consequential orders had been left in abeyance, pending my decision on the existence or otherwise of relevant legal error.

I find, in these circumstances, sufficient possibility of injustice to enliven my discretion under O 35 r 7(1). I consider it appropriate that I permit this aspect of the case to be reopened with the result that I should receive and consider the detailed arguments that have been put to me as to whether I should, indeed, depart from my previous decision that I was unable to find "that the facts inevitably point to a finding of `windfall' gain, requiring that such a finding be made as a matter of law". This was a view that, as I indicated, I came to reluctantly. This was in circumstances where I indicated that, if I were deciding the question as one of fact, I would agree with the windfall characterisation. It is put on behalf of the applicant that the undisputed facts, in truth, enabled me to make that characterisation without the necessity of sending the matter back to the Tribunal. I turn to consider these arguments.

The applicant relies upon the fact that, in certain limited circumstances, this Court, having found relevant error of law pursuant to s 44 of the Act, can refrain from remitting, and determine the case itself. The principles applicable to such a situation have been variously stated in decisions of Full Courts of this Court. I have been taken to a number of them. It is convenient to make reference to the following passages.

In Jolley v FCT (1989-90) 20 ATR 335 at 347, Burchett and Lee JJ said:-

"... Section 44(4) of the Administrative Appeals Tribunal Act 1975 empowers the court to make such order as it thinks appropriate by reason of its decision. It has been pointed out that there is an implicit restriction on this power, the appeal being expressly limited to a question of law and it has been said that the question must be the sole matter before the court and the only subject matter in respect of which an order may be made by the court consequent upon the appeal (see Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209 at 220; Director-General of Social Services v Hales (1983) 47 ALR 281 at 309-10; Commissioner for Superannuation v Miller (1985) 8 FCR 153 at 165-6 and TNT Skypak International (Aust) Pty Ltd v FCT (1988) 19 ATR 1067 at 1072; 82 ALR at 181). But there are cases where the resolution of the question of law, in a setting of facts already found or beyond dispute, compels a result that the court should not shrink from itself declaring (see Statham v FCT (1988) 20 ATR 228 at 234; 89 ATC 4070 at 4075; Commonwealth of Australia v El Hassan (1985) 62 ALR 305 at 316; McBay MD v Director-General of Social Security (1985) ASSC 92-048; Scott v Comr for Superannuation, unreported, Federal Court of Australia, Full Court, 23 December 1987, per Beaumont and Gummow JJ at 19-20)."

In Australian Trade Commission v Richard Shrapnel Consulting Services Pty Limited (1988-1989) 85 ALR 287, the judgment of Burchett J (concurred in by Northrop and Keely JJ) was to the effect that the case should not be returned to the Tribunal, error of law having been found. His Honour said (at 290):-

"... Must the matter, then, be referred back to the tribunal? It alone can decide questions of fact; but there are cases where only one decision is in law open on the facts which have been found, or which are not in dispute. ..."

The principle is, perhaps, stated a little more widely by Woodward, Lockhart and Hartigan JJ in Statham & Anor v FC of T (1989) ATC 4,070 at 4,075 where their Honours said:-

"It would obviously be wasteful of time and costs, and oppressive to witnesses, to order a rehearing if that can be avoided. It would not be appropriate to ask the Deputy President who heard the matter to reconsider an opinion he has expressed so emphatically. It would clearly be far better if this Court could properly dispose of the matter finally provided such course is within this Court's powers. In our view it is permissible and right that we adopt this course in the present case. The facts are largely undisputed and the Tribunal did make some findings of fact on material matters."

It may be that this statement should be read in the context of the rather unusual Tribunal findings made in that case.

It is contended on behalf of the applicant that, having regard to these statements of principle, I should, in the unusual circumstances of the present case, reconsider the bases upon which I decided to remit for the reconsideration of the Tribunal the question whether the disputed receipt was income as being attributable to services rendered by the applicant, it being contended that, despite my earlier reservations, I should conclude that the undisputed facts required the conclusion that the receipt was not income but a windfall gain. It is clear, of course, that in my earlier reasons, I did approach closely to making such a decision, but refrained from taking the ultimate step because I considered that to do so would be to trespass into the Tribunal's exclusive fact-finding territory.

Having had the benefit of detailed submissions, for which I had previously provided no opportunity, I have come to the conclusion that this case is one of the kind contemplated by the authorities cited above. Having concluded that there was relevant error in law in that the Tribunal had not had regard to "the whole factual matrix" in which the Agreement was entered into, it was appropriate to consider whether that factual matrix as disclosed by the evidence was one in respect of which it would be properly found that there was no area of disputed fact requiring resolution by the Tribunal. The applicant had made plain his assertion both before and during the hearing that he neither performed nor was intended to perform any services under the Agreement. Indeed, it was his primary claim, that he was merely selling a capital asset, a claim that was abandoned by his counsel at the hearing before me. A reading of the transcript before the Tribunal does not suggest that the appellant's credibility was impugned in any way and, certainly, no adverse findings in this regard were made by the Tribunal. It is therefore appropriate, I am now persuaded, to approach this matter on the basis that the relevant "matrix" was established before the Tribunal with the result that no further findings of fact were necessary. For convenience, I will set out again in these reasons the considerations which I accepted as pointing "cogently towards a finding that the receipt was no more than a windfall gain..." They were as follows:-

"... At the point when the applicant entered into the Agreement, the evidence indicates that any prospect of his achieving what he originally hoped for, namely a controlling role in a credible consortium which would provide him with a future income stream, had been irretrievably lost. Relations with his intended co-venturer had irrevocably broken down. He had never recognised Wargon Chapman as a co-venturer, although that entity was included as an "Initiator" in the Agreement that was presented to him. According to his undisputed evidence he would not have contemplated Transfield as a member of the consortium. He had no role in selecting either of the construction companies who, in remote circumstances, could have an obligation to pay him an amount calculated in accordance with the Agreement. That amount bore no obvious relation to the value to the companies of any services he might render. Indeed, his undisputed evidence was that no further services were expected of him and there were in fact none that he could then provide. He in fact provided none. The first payment of $35,000 was described as having been made in respect of services. This description was incorrect. Clearly he had rendered no services to the construction companies as all the work he had previously performed was done in circumstances where those companies were not even in contemplation as contracting parties. It was a capital payment. The description in the Agreement of that payment as being in consideration of services is strongly suggestive that likewise no subsequent payment that might be made under the Agreement was truly intended to be for the rendering of services."

I am now of the view that I should accept that the evidence before the Tribunal established, beyond reasonable dispute, this factual material adduced on behalf of the applicant. There was no countervailing material. There was, accordingly, no need for the matter to be returned to the Tribunal. My concerns as to my dealing with the matter myself were not properly founded. I am satisfied that I should depart from my finding that the facts did not point inevitably to a finding of windfall gain and, hold, instead, that the facts reasonably admitted of that finding and no other. In these circumstances, it is appropriate that I recall the order that I previously made remitting the matter to the Tribunal for rehearing and substitute therefor an order directing the Tribunal to find that the receipt in question was not taxable under ss 25(1) or 25A(1) of the Tax Act. This will leave for the Tribunal's consideration the questions whether the amount is taxable under s 26(e) or Part IIIA of the Act. It may well be that, having regard to what the Tribunal said in its original decision in relation to the application of s 26(e) and to what I have said in these reasons as to the receipt being a windfall gain, that the Tribunal may form the view that s 26(e) has no application. It is, of course, a question for the Tribunal, it having made no previous decision. As, for this reason, neither the s 26(e) nor the capital gains tax question was before me, I have, in my view, no jurisdiction to make any orders as to whether fresh evidence may be called before the Tribunal. The Tribunal may well consider that, in light of the extensive canvassing of factual matters at the first hearing, it would be oppressive to allow further evidence to be called, but that, again, is a matter for the Tribunal.

In the unusual circumstances of this case, I think it appropriate that the applicant should have the costs of so much of the motion as is related to the argument in respect of the variation of the previous order of remittal, but should pay the respondent's costs in relation to the argument in respect of constitutional invalidity.