Axicom Inbuilding Solutions Pty Ltd v Australian Communications and Media Authority

[2023] FCA 1069

FEDERAL COURT OF AUSTRALIA

Axicom Inbuilding Solutions Pty Ltd v Australian Communications and Media Authority [2023] FCA 1069

File number(s):

NSD 1171 of 2021

Judgment of:

PERRY J

Date of judgment:

8 September 2023

Catchwords:

STATUTORY INTERPRETATION – judicial review of assessment of a “participating person’s eligible revenue for an eligible revenue period” under the Telecommunications Act and Telecommunications (Eligible Revenue) Determination (ER Determination) – where assessment of eligible revenue of the participating person included revenue of related entity – question as to whether “decisions” made at different stages in the process of decision-making are separate “decisions” as defined in s 3(1) of the Administrative Decisions (Judicial Review) Act – construction of revenue “earned from an activity outside the telecommunications industry” under s 9(1) of the ER Determination – consideration of ordinary meaning and statutory meaning in the Telecommunications Act of the term “telecommunications industry” – construction of term “facility” – whether revenue earned from providing infrastructure to carriers for the deployment of communications services throughout Australia is revenue earned from an activity outside the telecommunications industry – whether purpose-built wireless communication sites are a facility for the purposes of the Telecommunications Act

ADMINISTRATIVE LAW – where no statutory requirement to give reasons – whether it should be inferred from the failure to refer to a consideration in reasons given in correspondence that the consideration was not considered

ADMINISTRATIVE LAW – exercise of discretion under s 9(2) of the Determination – principles concerning implied limitations on statutory discretions – whether decision-maker had adopted a policy that was inconsistent with the statute – whether tax avoidance is a mandatory relevant consideration in the exercise of the discretion – where purpose of discretion in s 9(2) is to clarify ambiguous legal terms – no error in reasoning

ADMINISTRATIVE LAW – exercise of broad discretion under s 33 of the Determination – whether implied relevant considerations condition the exercise of discretion – where respondent expressly considered, but gave no weight to, submissions put by applicant – whether decision-maker could make reference to applicant’s competitors – where there was no requirement to give reasons

Legislation:

Acts Interpretation Act 1901 (Cth) s 15AA

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 3, 5, 6

Australia Communications and Media Authority Act 2005 (Cth)

Judiciary Act 1903 (Cth) s 39B

Legislation Act 2003 (Cth) s 13(1)

Telecommunications (Consumer Protection and Service Standards) Act (1999) (Cth) ss 4, 5, 8, 43–45, 47–51

Telecommunications (Industry Levy) Act 2012 (Cth) s 4C

Telecommunications Act 1997 (Cth) ss 7, 16, 56, 110, 113

Telecommunications Universal Service Management Agency Act 2012 (Cth) ss 91, 93

Telecommunications (Eligible Revenue) Determination 2015 (Cth) ss 5, 9, 14–34, 37

Telecommunications (Participating Persons) Determination 2015 (Cth) s 4(3)

Telecommunications Universal Service Management Agency (Eligible Revenue) Determination 2013 (Cth)

Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998 (Cth)

Cases cited:

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 337

Berenguel v Minister for Immigration and Citizenship [2010] HCA 8; (2010) 84 ALJR 251

Certain Lloyd’s Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56; (2012) 248 CLR 378

Commissioner of Taxation v Primary Health CareLtd [2017] FCAFC 131; (2017) 252 FCR 496

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2020] FCAFC 192; (2020) 282 FCR 1

Drake v Minister for Immigration and Ethnic Affairs [1979] FCA 39; (1979) 2 ALD 60

East Melbourne Group Inc v Minister for Planning [2008] VSCA 217; (2008) 23 VR 605

Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503

Gibb v Federal Commissioner of Taxation [1966] HCA 74; (1966) 118 CLR 628

Hurstville City Council v Hutchinson 3G Australia Pty Ltd [2003] NSWCA 179; (2003) 200 ALR 308

Hutchison 3G Australia Pty Ltd v City of Mitcham [2006] HCA 12; (2006) 80 ALJR 711

Jabbour v Secretary of the Department of Home Affairs [2019] FCA 452; (2019) 269 FCR 438

Martincevic v Commonwealth [2007] FCAFC 164; (2007) 164 FCR 45

Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 236 CLR 101

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24

Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323

Minister for Immigration and Multicultural and Indigenous Affairs v Huynh [2004] FCAFC 256; (2004) 139 FCR 505

Minister for Local Government v Blue Mountains City Council [2018] NSWCA 113; (2018) 97 NSWLR 1132

Plaintiff M1/2021 v Minister for Home Affairs [2022] HCA 17; (2022) 96 ALJR 497

Plaintiff M64/2015 v Minister for Immigration and Border Protection [2015] HCA 50; (2015) 258 CLR 173

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Public Service Board of NSW v Osmond [1986] HCA 7; (1986) 159 CLR 656

Randwick Municipality Council v Rutledge [1959] HCA 63; (1959) 102 CLR 54

Re Drake and the Minister for Immigration and Ethnic Affairs (No. 2) [1979] AATA 179; (1979) 2 ALD 634

Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252

SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362

Tasker v Fullwood [1978] 1 NSWLR 20

Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority [2020] FCAFC 163; (2020) 280 FCR 397

Wingfoot Australia Partners Pty Ltd v Kocak [2013] HCA 43; (2013) 252 CLR 480

Division:

General Division

Registry:

New South Wales

National Practice Area:

Administrative and Constitutional Law and Human Rights

Number of paragraphs:

206

Date of hearing:

27 July 2022

Counsel for the Applicant

Mr S Free SC with Ms M Parker

Solicitor for the Applicant

Clayton Utz

Counsel for the Respondent

Mr P Herzfeld SC with Ms M Caristo

Solicitor for the Respondent

Australian Government Solicitor

 

ORDERS

NSD 1171 of 2021

BETWEEN:

AXICOM INBUILDING SOLUTIONS PTY LTD

Applicant

AND:

AUSTRALIAN COMMUNICATIONS AND MEDIA AUTHORITY

Respondent

ORDER MADE BY:	PERRY J
DATE OF ORDER:	8 SEPTEMBER 2023

THE COURT ORDERS THAT:

1.The application for judicial review is dismissed.

2.The applicant is to pay the respondent’s costs of the application as agreed or taxed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRY J

1......... INTRODUCTION	[1]
2......... THE LEGISLATIVE AND REGULATORY SCHEME	[12]
2.1...... The legislative scheme established by Part 2 of the TCPSS Act for imposing a levy on carriers	[13]
2.1.1..... Purpose of the scheme	[13]
2.1.2..... Participating person	[15]
2.1.3..... Assessment of eligible revenue of participating persons	[16]
2.2...... The Eligible Revenue Determination	[23]
2.2.1..... Overview	[23]
2.2.2..... Step 1: calculation of “gross telecommunications sales revenue” (Part 3 of the ER Determination)	[26]
2.2.2.1........ . Calculating initial sales revenue	[27]
2.2.2.2........ . Deducting non-telecommunications sales revenue	[30]
2.2.3..... Step 2: calculation of “net telecommunications sale revenue” (Part 4 of the ER Determination)	[33]
2.2.4..... Step 3: final calculation of eligible revenue (Part 5 of the ER Determination)	[35]
3......... FACTUAL BACKGROUND	[37]
3.1...... Axicom Land’s statutory declaration on 30 October 2020 of its eligible revenue	[37]
3.2...... The ACMA’s preliminary view in its letter dated 11 November 2020	[41]
3.3...... The ACMA’s notice under s 48(2) on 30 July 2021 of its proposal to make an assessment based on the ACMA’s estimate	[45]
3.4...... Axicom Land’s response on 16 August 2021 and a request for a declaration	[49]
3.5...... The ACMA’s “decision” not to make a declaration on 23 September 2021 and provision of “reasons” in its letter dated 8 October 2021 (October letter)	[54]
3.6...... The ACMA’s Eligible Revenue Decision on 13 October 2021	[64]
4......... THRESHOLD ISSUES	[68]
4.1...... The issues	[68]
4.2...... What is the relevant decision under challenge?	[74]
4.3...... Do the reasons for the Eligible Revenue Decision include the ACMA’s July letter?	[85]
5......... CONSIDERATION OF THE GROUNDS OF REVIEW	[93]
5.1...... Relevant principles of statutory interpretation	[93]
5.2...... Ground one: Did the ACMA make an error of law/jurisdictional error in not characterising APL’s sales revenue as “non-telecommunications sales revenue”?	[98]
5.2.1..... Construction of the phrase “an activity outside the telecommunications industry”	[98]
5.2.2..... Construction of s 7(f) of the Telecommunications Act	[126]
5.2.2.1........ . The issue	[126]
5.2.2.2........ . The decisions in Hurstville and Mitcham	[130]
5.2.2.3........ . Axicom Land’s construction must be rejected	[143]
5.3...... Ground two: Error in the exercise of the discretion conferred by s 9(2) of the ER Determination	[149]
5.3.1..... The issues raised by ground 2	[149]
5.3.2..... Relevant principles	[155]
5.3.3..... Disposition of ground 2	[158]
5.4...... Ground three: Error in the exercise of the discretion conferred by s 33 of the ER Determination	[173]
5.4.1..... The issues	[173]
5.4.2..... Disposition of ground 3	[178]
6......... CONCLUSION	[206]

1.                 INTRODUCTION

1. The applicant, known at the relevant times as Axicom Land Pty Ltd ACN 605 800 511, is a provider of wireless infrastructure.  Subsequently, Axicom Land changed its name to Axicom Inbuilding Solutions Pty Ltd. 

2. The respondent, the Australian Communications and Media Authority (the ACMA), is a statutory authority established by the Australia Communications and Media Authority Act 2005 (Cth). 

3. Axicom Land, and its related party, Axicom Pty Ltd (APL), share the same ultimate Australian parent company, Axicom HoldCo Pty Ltd ACN 605 798 829, and form part of the Axicom Group.  APL is an independent owner of shared wireless communications infrastructure within Australia, and has been a provider of tower capacity in the Australian market since 2000.

4. Before 2019, no company within the Axicom Group held a carrier licence under the Telecommunications Act 1997 (Cth). In its application to the ACMA on 6 May 2019 for a carrier licence (carrier licence application), Axicom Land advised that the core business of the Axicom Group is to provide “essential telecommunications infrastructure … to carriers and co-users for the environmentally and economically efficient deployment of communications services throughout Australia”:  Annexure SK-2 to the affidavit of Stefan Kennedy, General Counsel for Axicom Land, sworn 11 November 2021 (Kennedy affidavit).  Axicom Land explained that the Axicom Group commenced operations in Australia in 2000 with the acquisition of 716 telecommunications sites from Optus, and shortly thereafter acquired 668 telecommunications sites from Vodafone in 2001.  It also advised that the Axicom Group is the largest independent owner of shared wireless communications infrastructure with approximately 20% of the Australian wireless telecommunications shareable tower infrastructure market, and identified the key customers leasing space on its tower infrastructure as Optus, Telstra, Vodafone, and NBN Co (Kennedy affidavit, Annexure SK-2, at pp. 35-36). 

5. On 8 July 2019, the ACMA granted Axicom Land a carrier licence.  That licence was surrendered on 30 June 2020. 

6. Pursuant to s 47(1) of the Telecommunications (Consumer Protection and Service Standards) Act (1999) (Cth) (TCPSS Act), the ACMA is charged with making a written assessment of a “participating person’s eligible revenue for an eligible revenue period” for the purpose of determining the liability of telecommunication carriers to pay the Telecommunications Industry Levy (TIL or Levy).  The means by which a participating person’s eligible revenue is assessed by the ACMA is prescribed by the Telecommunications (Eligible Revenue) Determination 2015 (Cth) (ER Determination).

7. Axicom Land accepted that its status as a licensed carrier at all relevant times made it a “participating person” for the 2019-2020 eligible revenue period (1 July 2019 to 30 June 2020) for the purposes of calculating eligible revenue under the TCPSS Act and ER Determination. However, during the eligible revenue period, Axicom Land did not earn any revenue as a carrier, because its “carrier licence was sought in anticipation of Axicom Land engaging in the supply, installation and provision of fibre optic cable, and this has not yet commenced”. Axicom Land also submitted to the ACMA that the revenue earned by APL was not eligible revenue, or ought not, in the exercise of the ACMA’s discretion under ss 9(2) or 33 of the ER Determination, to be treated as eligible revenue. As a result, Axicom Land submitted to the ACMA that its eligible revenue for the purposes of the Levy was, or ought to be assessed as, nil.

8. On 13 October 2021, the ACMA made the Eligible Revenue Assessment 2019-20 pursuant to s 47 of the TCPSS Act with respect to the eligible revenue period for all participating persons, including Axicom Land (the Eligible Revenue Decision).  Axicom Land was advised of the Eligible Revenue Decision by letter from the ACMA dated 14 October 2021 that its eligible revenue had been assessed in the sum of $200,576,000.00.  This assessment was used as the basis for calculating Axicom Land’s 2020-21 Levy for which Axicom Land was subsequently invoiced in the amount of $1,860,019.95. 

9. Axicom Land seeks judicial review of the Eligible Revenue Decision pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) and s 39B of the Judiciary Act 1903 (Cth). Axicom Land contends that the calculation of its eligible revenue was in error on three grounds. These grounds focus on the inclusion of revenue earned by APL, which did not hold a carrier licence, in the assessment of Axicom Land’s eligible revenue. Specifically, Axicom Land contends that the ACMA erred in the following respects:

   (1)the ACMA failed to characterise APL’s sales revenue for the eligible revenue period as “non-telecommunications sales revenue” for the purposes of s 9 of the ER Determination and to deduct such revenue from Axicom Land’s initial sales revenue pursuant to s 16 of the ER Determination (Ground 1);

   (2)in declining to exercise its discretion in s 9(2) of the ER Determination to declare that the entirety of APL’s sales revenue is “non-telecommunications sales revenue”, the ACMA erred in construing the scope of its statutory discretion, took into account irrelevant considerations, and failed to take into account relevant considerations (Ground 2); and

   (3)in declining to exercise its discretion in s 33 of the ER Determination to declare that the entirety of APL’s telecommunications sales revenue be deducted from Axicom Land’s initial sales revenue, the ACMA erred in construing the scope of its statutory discretion, took into account irrelevant considerations, and failed to take into account relevant considerations (Ground 3).

10. Accordingly, Axicom Land seeks an order either quashing or setting aside the Eligible Revenue Decision, or declaring that the Eligible Revenue Decision is void and of no effect and/or was made unlawfully.  The ACMA accepts that if the applicant succeeded on any of the three grounds, a declaration that the Eligible Revenue Decision is of no effect would be appropriate.

11. For the reasons that follow, the Eligible Revenue Decision discloses no reviewable error of law or jurisdictional error, and the application for judicial review is therefore dismissed with costs.  Ultimately, with respect, Axicom Land’s complaint reduces to strong disagreement with the statutory scheme and with the merits of the ACMA’s decision, neither of which are reviewable by the Court.

    2.                 THE LEGISLATIVE AND REGULATORY SCHEME

12. The judicial review application principally concerns the construction of certain provisions within the ER Determination. As the ER Determination is made under the TCPSS Act, it is helpful first to set out the relevant legislative scheme under the TCPSS Act before turning to the salient provisions of the ER Determination.

    2.1               The legislative scheme established by Part 2 of the TCPSS Act for imposing a levy on carriers

    2.1.1Purpose of the scheme

13. Part 2 of the TCPSS Act ­­­­establishes a “universal service regime” with the main object of ensuring that “all people in Australia, wherever they reside or carry on business, should have reasonable access, on an equitable basis” to standard telephone services and payphones: s 4 of the TCPSS Act.  The “universal service regime” is funded using the proceeds of a levy imposed on carriers by the TCPSS Act: ss 4 and 8 of the TCPSS Act.  That levy is imposed on carriers based on the assessed “eligible revenue” of that “participating person”: ss 45 and 50 of the TCPSS Act; see also s 4C of the Telecommunications (Industry Levy) Act 2012 (Cth).

14. The universal service regime and levy to cover the costs of the regime funded by participating carriers have been a feature of the Telecommunications Act since its enactment. In turn, the concept of “eligible revenue” and the stepped approach to its calculation have been central elements of the regime since its inception.  Those steps (which I relevantly outline below) comprise the basis for calculating the amount that each participating person must contribute to what was originally called the Net Universal Service Cost, as established by the (now repealed) Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998 (Cth) (the 1998 ER Regulations).  The definition of “eligible revenue” originally enacted in the 1998 ER Regulations followed extensive consultation with the industry and the wider public, with various options being canvassed, and its implementation was closely monitored:  Explanatory Statement to the1998 ER Regulations (1998 Explanatory Statement) at pp. 9-10.           

    2.1.2Participating person

15. Section 44(1)(a) of the TCPSS Act provides that a person is a “participating person” if that person “was a carrier at any time during the eligible period”.  A carrier is a person who is the “holder of a carrier licence” granted under s 56 of the Telecommunications Act: s 7 of the Telecommunications Act and s 5(1) of the TCPSS Act. The owner of a network unit used to supply carriage services to the public must hold a carrier licence unless certain exemptions (not presently relevant) apply: Part 3 of the Telecommunications Act. There was no dispute that Axicom Land was a “participating person” at all relevant times because, on 8 July 2019, it was granted a carrier licence.

    2.1.3Assessment of eligible revenue of participating persons

16. Section 43(1) of the TCPSS Act imposes an obligation on a participating person to give the ACMA a written return of their eligible revenue for an eligible revenue period by a specified date.  That return must set out both the participating person’s eligible revenue, and the details of how that eligible return was worked out:  s 43(4) of the TCPSS Act. 

1. Where, however, a participating person fails to provide an eligible revenue return for an eligible revenue period, under s 48(1) the ACMA may estimate that person’s eligible revenue of the period, and make a written assessment under s 47 of the person’s eligible revenue for that period based on that estimate (see also s 48(4)).  Before doing so, s 48(2) of the TCPSS Act requires (as occurred in the present case) the ACMA to give the person at least 14 days’ notice of:

   (1)the amount of eligible revenue proposed to be assessed; and

   (2)the ACMA’s proposal to make the assessment based on the estimate.

2. The process of determining a person’s “eligible revenue” is stipulated by s 45 of the TCPSS Act.  That provision confers a power on the ACMA to make a written determination which prescribes the method for working out how a participating person’s eligible revenue will be calculated.  That section relevantly provides:

   Eligible Revenue

   (1)For the purposes of this Act, eligible revenue of a person for an eligible revenue period (other than the first eligible revenue period) is the amount ascertained in accordance with a written determination made by the ACMA for the purposes of this subsection.

   (2)Subsection (1) has effect subject to subsection (3).

   (3)The eligible revenue of a participating person for an eligible revenue period (other than the first eligible revenue period):

   (a) is taken to be zero if the person’s eligible revenue is less than the amount (the threshold amount) determined in writing by the Minister for the purposes of this subsection; or

   (b)       in any other case—must be reduced by the threshold amount.

   (Emphasis in original.)

3. The “threshold amount” is set by s 4(3) of the Telecommunications (Participating Persons) Determination 2015 (Cth) (Participating Persons Determination), as I shortly explain. 

4. Section 47(1) of the TCPSS Act imposes an obligation on the ACMA to assess the eligible revenue of persons, subject to s 48 of the TCPSS Act. Section 47 relevantly provides:

   (1)The ACMA must make a written assessment of each participating person’s eligible revenue for an eligible revenue period (other than the first eligible revenue period). …

   (2)The assessment must be based on:

   (a)    the person’s eligible revenue return; and

   (b)    the information and documents obtained by the ACMA because of its inquiries into the correctness of the return; and

   (c)    any other information or documents that the ACMA has and that it thinks relevant to making the assessment.

   (Emphasis added.)

5. The consequences of assessing the eligible revenue of a participating person are prescribed by ss 49 and 50 of the TCPSS Act, and s 4C of the Telecommunications (Industry Levy) Act, and can be summarised as follows.

   (1)Section 49 of the TCPSS Act provides, in effect, that where the ACMA has assessed the eligible revenue of participating persons for an eligible revenue period, the ACMA must work out a “levy contribution factor” for each participating person (s 49(1) and (2)).  The “levy contribution factor” is calculated using a formula and depends on the “assessed eligible revenue of the person” (s 49(3) of the TCPSS Act).

   (2)Section 50 of the TCPSS Act specifies a formula for calculating the “levy amount of a participating person”, which is partially determined by the “levy contribution factor” calculated in s 49.

   (3)Section 4C of the Telecommunications (Industry Levy) Act provides that “[i]f a person has a levy amount for an eligible levy period because of section 50 of the Telecommunications (Consumer Protection and Service Standards) Act 1999, [a] levy is imposed on that amount”.

6. Finally, s 51 of the TCPSS Act provides that for each eligible levy period, the ACMA must make a written assessment setting out the person’s levy amount under s 50 for the eligible levy period, and the levy payable by the person on that amount.  Notably, there is no requirement under the Act for a statement of reasons for the written assessment.

   2.2               The Eligible Revenue Determination

   2.2.1Overview

7. On 11 June 2015, pursuant to the TCPSS Act, the ACMA made the ER Determination which specifies how the “eligible revenue of a person for an eligible revenue period” is to be calculated for the purposes of s 45(1) of the TCPSS Act. 

8. The Explanatory Statement to the ER Determination explained that “[c]ontributions are, in general, proportional to each participating person’s share of total eligible revenue for a relevant eligible revenue period”. 

9. As earlier foreshadowed, the ER Determination, in line with its predecessors, adopts a three-step process for calculating a person’s eligible revenue for an eligible revenue period, namely:

   (1)the calculation of a participating person’s “gross telecommunications sales revenue” as specified in Part 3 (ss 14-21) of the ER Determination (see Part 2.2.2 below);

   (2)the calculation of that person’s “net telecommunications revenue” as specified in Part 4 (ss 22-34) of the ER Determination (see Part 2.2.3 below); and

   (3)the calculation of eligible revenue, which is (for present purposes) “the participating person’s net telecommunications sales revenue”: s 37(1)(a) (see Part 2.2.4 below).

   2.2.2Step 1:  calculation of “gross telecommunications sales revenue” (Part 3 of the ER Determination)

10. In accordance with the three-step process, Part 3 of the ER Determination first requires the calculation of a participating person’s “gross telecommunications sales revenue” for the eligible revenue period.  Relevantly, as I explain further below, s 21 of Part 3 identifies that “gross telecommunications sales revenue” is determined by: 

    (1)calculating a person’s “initial sales revenue” under s 15, including adding any amounts declared by the ACMA to be “telecommunications sales revenue” or “gross telecommunications sales revenue” under ss 17 or 20 respectively; and

    (2)subtracting any “non-telecommunications sales revenue” under ss 16, 18 and 19, including any revenue declared by the ACMA to be “non-telecommunications sales revenue” under s 9(2).

    2.2.2.1Calculating initial sales revenue

11. Section 15 stipulates the presently relevant method of calculating a participating person’s “initial sales revenue” as follows:

    Initial Sales Revenue

    (1)For the participating person, and each consolidated related party of the participating person (if any), work out the entity’s sales revenue for the eligible revenue period using the sources mentioned in section 12.

    …

    (4)Subject to subsection (5) [which is not presently relevant], the result is the participating person’s initial sales revenue.

    (Emphasis added.)

12. The phrase “consolidated related party of a participating person” referred to in s 15(1) is defined in s 5 of the ER Determination as meaning an entity that is not the participating person, but the “revenue of which is included in the annual consolidated financial statements of the participating person’s ultimate Australian parent entity”.  In this regard, s 45(4) of the TCPSS expressly provided that to avoid doubt, a determination under sub-s (1) of the eligible revenue of a participating person “may … refer to revenue of other persons.”  As such, the TCPSS Act expressly contemplated the inclusion of third party revenue in the calculation of the eligible revenue of a participating person.

13. It is common ground that APL is a “consolidated related party of a participating person”, namely, Axicom Land, for the purposes of the ER Determination.

    2.2.2.2Deducting non-telecommunications sales revenue

14. Once initial sales revenue has been calculated, s 16 of the ER Determination then provides that “non-telecommunications sales revenue of the participating person or a consolidated related party of the participating person” is to be deducted from the initial sales revenue. Section 9(1) of the ER Determination defines “non-telecommunications sales revenue” as follows:

    Meaning of non-telecommunications sales revenue

    (1)An amount of revenue is non-telecommunications sales revenue if the revenue is earned from an activity outside the telecommunications industry.

    Note:           Examples of non-telecommunications sales revenue include:

    (a)     revenue from providing electricity, gas or water connections; and

    (b)    revenue from selling electricity, gas or water.

15. The construction of the phrase “activity outside the telecommunications industry” is raised by ground 1 of the application for judicial review.

16. Section 9(2)-(4) of the ER Determination also confers power on the ACMA to make a declaration that a specified amount, or the value of a benefit or service, is non-telecommunications revenue. The construction and exercise of this discretion is directly raised by ground 2 of the application for judicial review.

    2.2.3Step 2:  calculation of “net telecommunications sale revenue” (Part 4 of the ER Determination)

17. The second step in calculating a person’s eligible revenue is to calculate the person’s “net telecommunications sales revenue” for an eligible revenue period, as specified in Part 4 of the ER Determination. Specifically, s 22 of Part 4 provides that the “net telecommunications sale revenue” is calculated by deducting from the “gross telecommunications sales revenue” any relevant amounts identified in ss 23 to 30 (such as for customer equipment, content services, and construction or management of infrastructure of a telecommunications network), and/or a specified amount declared by the ACMA under s 33. Of these provisions, the only provision presently relevant is s 33, which provides that the ACMA may declare that a specified amount of gross telecommunications sales revenue of a specified participating person (but not all participating persons) may be deducted.

18. The construction and exercise of the s 33 discretion is directly raised by ground 3 of the application for judicial review.

    2.2.4Step 3: final calculation of eligible revenue (Part 5 of the ER Determination)

19. Section 37 of Part 5 of the ER Determination provides for the final step in the process of calculating a participating person’s eligible revenue as relevantly follows:

    Eligible Revenue

    (1)A participating person’s eligible revenue for an eligible revenue period is equal to the participating person’s net telecommunications sales revenue if:

    …

    (b)    The participating person’s net telecommunications sales revenue is zero or more.

    (2)A participating person’s eligible revenue for an eligible revenue period is taken to be zero if:

    …

    (b)    … the participating person’s net telecommunications sales revenue is less than zero.

    (Emphasis in original.)

20. Section 5 of the Participating Persons Determination provides that “[i]f a person is a non-participating person for an eligible revenue period, the person is exempt from section 44 of the [TCPSS] Act [ie. the provision pertaining to participating persons] for that eligible revenue period”. Section 4(3) of the Participating Persons Determination in turn provides that a person is a “non-participating person for an eligible revenue period” if (relevantly) the person’s initial sales revenue, gross telecommunications sales revenue, or eligible revenue for the period is less than $25 million.  This calculation is subject to s 4(4) of the Participating Persons Determination, which is not presently relevant.

    3.                 FACTUAL BACKGROUND

    3.1               Axicom Land’s statutory declaration on 30 October 2020 of its eligible revenue

21. On 30 October 2020, and following communication with the ACMA, Stefan Kennedy, General Counsel and Company Secretary of Axicon Land, provided a statutory declaration declaring that, for the purposes of s 4(3)(b)(i) of the ER Determination, the eligible revenue for Axicom Land was less than AUD$25 million for the eligible revenue period.

22. Shortly thereafter, on 2 November 2020, Axicom Land sent an email to the ACMA confirming it had submitted Axicom Land’s eligible revenue return on 30 October 2020 with eligible revenue of zero.  The email stated that Axicom Land had earned zero revenue since receiving its carrier licence in July 2019 as “[t]he carrier licence was sought in anticipation of Axicom Land engaging in the supply, installation and provision of fibre optic cable, and this has not yet commenced”.

23. The email further claimed that Axicom Land’s consolidated related parties, including APL, did not earn any telecommunications revenue.  This was because, in Axicom Land’s view, APL’s revenue did not constitute telecommunications sales revenue, and therefore it did not need to be declared as part of Axicom Land’s eligible revenue return, for the following reasons:

    Axicom Pty Ltd’s business is leasing and licensing access to passive infrastructure, land and buildings in common with power, land access and other similar inputs, and as such, is not properly considered to be part of the telecommunications industry.  We believe that the inclusion of such revenue in the calculation of Axicom Land’s eligible revenue would be inconsistent with both the letter and the intention of the TIL and the [ER] Determination.

    …

    Axicom Pty Ltd does not require a carrier licence to own or provide access to its facilities, and neither is Axicom deemed to be a carriage service provider.  Only carriers and (in some circumstances) carriage service providers can be required to contribute to the TIL.  Accordingly it would be a perverse outcome if the revenue of an entity which is neither a carrier nor a carriage service provider were to be included in the TIL.

    …

    We understand from the Determination’s Explanatory Statement that the concept of “consolidated related party” and “declared related party” was included to “discourage, and ultimately deal with, persons trying to minimise their revenue, and thus levy payments, by diverting revenue to associates that are not participating persons.” Axicom Land is not attempting to avoid paying the TIL by diverting funds to Axicom Pty Ltd.

    Firstly, Axicom Land has not earned any revenue since it received its carrier licence last July, so has no funds to divert.

    Secondly, Axicom Pty Ltd has been engaged in the business of providing access to passive infrastructure since 2000 and this business is not related to the operation of the business sought to be established by Axicom Land.  Axicom Land is a separate and distinct business from the passive infrastructure business owned and operated by Axicom Pty Ltd.  Axicom Land is designed to invest in the development of new fibre telecommunications infrastructure which will be made available to carriers on an open-access, wholesale-only basis.

24. However, Axicom Land also indicated that if the ACMA did not agree with its assessment, it would seek a declaration from the ACMA that the proportion of Axicom Land’s gross telecommunications revenue which is generated from Axicom’s existing passive facilities be deducted from the calculation of its eligible revenue for the purposes of the Levy, pursuant to s 33 of the ER Determination. Axicom Land considered that if the ACMA did not grant the declaration, “Axicom would face a unique and disproportionate disincentive to invest in the new Axicom Land business and such a decision may well result in preventing precisely the type of investment which the telecommunications regulatory regime is explicitly established to promote”.

    3.2               The ACMA’s preliminary view in its letter dated 11 November 2020

25. On 11 November 2020, the ACMA responded by email to Axicom Land, stating that Axicom Land had not provided sufficient information to enable the ACMA to undertake analysis of the revenue earned and to determine whether the revenue earned by APL from its activities in “leasing and licensing access to passive infrastructure” was, as Axicom Land contended, not “telecommunications sales revenue”.  The ACMA stated that it could not, therefore, express a concluded view, and indicated that Axicom Land would have to complete an eligible revenue return providing adequate information to support any deductions or claims of non-telecommunications revenue.

26. That notwithstanding, the ACMA indicated its preliminary view that:

    The definition of telecommunications sales revenue in section 5 of the ER Determination is very broad, including all sales revenue earned from activities in the telecommunications industry. Telecommunications industry has the meaning given by section 7 of the Telecommunications Act 1997 and relevantly includes an industry that involves installing, maintaining, operating or providing access to a telecommunications network or facility that is used to supply a listed carriage service.

    The ACMA’s view is that any revenue earned from the ownership, management and operation of telecommunications infrastructure is generally revenue earned from an activity in the telecommunications industry and should therefore be included in the carriers ‘gross telecommunications sales revenue’ under Part 3 of the ER Determination.

27. Axicom Land responded in detail by letter on 9 December 2020 explaining why, in its view, there were “substantive and compelling reasons consistent with the intention of the Determination” why APL’s sales revenue should not be included in determining the eligible revenue of Axicom Land.  Among other things, Axicom Land contended that its business of providing “neutral third party access to passive infrastructure” served two primary functions:

    3.3.1it enables carriers to avoid having the assets, such as towers on their balance sheet, therefore converting what would otherwise be a capital expense into an operating expense – similar to a sale and lease back or similar finance arrangement; and

    3.3.2facilitates greater sharing of infrastructure between carriers by operating on a wholesale only open access basis thereby increasing economic efficiency and reducing the cost of telecommunications services.

28. Axicom Land further submitted that, as APL “is not a direct beneficiary of the universal telecommunications services and it primarily operates in the commercial property market” and its “competitors are not subject to the levy”, its sales revenue ought to be deducted under s 16 of the ER Determination. It also acknowledged that if this submission were accepted, this may impact on the ability of some of APL’s customers to deduct their rental payments to APL from their eligible revenue. However, Axicom Land argued that this result would be more consistent with the overall intention of the ER Determination in terms of imposing the levy on major telecommunications network operators rather than transferring the liability to APL.

    3.3               The ACMA’s notice under s 48(2) on 30 July 2021 of its proposal to make an assessment based on the ACMA’s estimate

29. By letter dated 30 July 2021 (the July letter) Matthew Geysen, a delegate of the ACMA, gave notice in accordance with s 48(2) of the TCPSS Act, stating that the ACMA proposed to issue a written assessment under s 47 of the TCPSS Act based on his estimate of Axicom Land’s eligible revenue, subject to s 48(4) of the TCPSS Act.  Specifically, based on financial information provided by Axicom Land and the publicly available special purpose financial statements of the ultimate parent company, Axicom HoldCo, the delegate calculated the ACMA’s estimate as follows:

    Initial sales revenue   $231,739,000 

    Less deductions

    Section 16  $1,020,000

    Section 28  $30,143,000

    Estimated eligible revenue   $200,576,000.

30. As such, the delegate was not reasonably satisfied that Axicom Land’s eligible revenue for the eligible revenue period was less than the $25 million required for it to be a non‑participating person under s 44 of the TCPSS Act, and considered that Axicom Land was therefore a participating person for that period. 

31. In reaching this view, the delegate noted that Axicom Land had not given the ACMA a written return of its eligible revenue for the eligible revenue period.

1. Furthermore, the delegate did “not agree that the entire amount of Axicom Pty Ltd’s sales revenue may reasonably be described as non-telecommunications sales revenue that can be deducted in calculating Axicom Land’s eligible revenue”, as Axicom Land contended.  In reaching this view, the ACMA considered that:

   (1)“Axicom Land, in correspondence with the ACMA, indicates that Axicom Pty Ltd’s business is as the owner of passive infrastructure (including towers, land and rooftops) and leasing or licensing access to such assets to third parties, primarily carriers.  Furthermore, Axicom Pty Ltd’s website indicates that its core business is owning, operating and leasing Australia-wide tower and rooftop sites for wireless communication and that most of its sites have been built to support mobile networks”.

   (2)“Based on this information, most of Axicom Pty Ltd’s sales revenue appears to have been earned from an activity in the ‘telecommunications industry’.  The activity of owning and operating wireless communications sites (most of which have been built to support mobile networks) and making those sites available to customers (primarily carriers) is something that appears to be within the ‘telecommunications industry’ (based on the ordinary meaning of the expression)” (emphasis added).

   (3)Axicom Land’s sales revenue also appears to have been earned from an activity within the definition of “telecommunications industry” in s 7(f) of the Telecommunications Act, to the extent that the sales revenue generating activity involves “providing access to ... a telecommunications network ... or a facility ... used to supply a listed carriage service”.

   3.4               Axicom Land’s response on 16 August 2021 and a request for a declaration

2. On 16 August 2021, Axicom Land wrote to the ACMA relevantly expressing its disagreement with the ACMA’s view that the entire amount of APL’s sales revenue cannot reasonably be described as non-telecommunications sales revenue, and reserving Axicom Land’s right to place further submissions before the ACMA on the issue. 

3. Axicom Land also stated that, in earlier correspondence, it had requested that the ACMA exercise its discretion relevantly under ss 9(2)(a) or 33 of the ER Determination if it formed the view stated above. However, Axicom Land noted that its request did not appear to have been considered.

4. As noted above, s 9(2) of the ER Determination confers power on the ACMA to declare that a specified amount, or the value of a benefit or service, is “non-telecommunications sales revenue”. Section 33 of the ER Determination confers power on the ACMA to declare that a specified amount of gross telecommunications sales revenue of one or more participation persons may be deducted. Axicom Land submitted that there were various reasons as to why the APL’s tower revenue should be declared as a deduction, namely:

   •Axicom’s tower business does not require a carrier licence, and the revenue it earns is analogous to that of any landlord whose tenants include telecommunications carriers;

   •Axicom’s [sic] has operated its tower business for many years without a carrier licence and without any obligation to contribute to the TIL;

   •The proposed venture to be established by Axicom Land, which does not require a carrier licence has not, to date, generated any revenue;

   •Axicom’s tower business would face unfair competitive disadvantage if its existing revenue was subject to the TIL given its current business does not require a carrier licence and it faces actual and potential competition from competitors which are not carriers and are not subject to the TIL;

   •Axicom Land would be placed at an overwhelming competitive disadvantage to its potential competitors (which would not be required to contribute to the TAL until they achieved $25 million in revenue) whereas the Axicom group is potentially required to make a large contribution to the TIL prior to earning any revenue; and

   •As a result of the threat of this unjust application of the TIL, Axicom Land has already surrendered its carrier licence and abandoned its plans to introduce a highly efficient and economically beneficial wholesale only, open access, neutrally hosted small cell business into the Australian market.

   (Emphasis in original.)

5. The letter concluded that:

   We ask that these applications be re-examined by the ACMA and that the ACMA give appropriate consideration to the relevant factors outlined above and further detailed in Axicom’s previous correspondence.  Our client also expects to receive a statement of reasons outlining the basis on which a decision on the exercise of these powers was reached.  Please also confirm as soon as possible that the ACMA will not exercise its powers to make an assessment of Axicom Land’s eligible revenue pursuant to section 48 of the TCPSS Act until this process is completed and response provided to Axicom.  

   (Emphasis added.)

6. Importantly, for reasons which I later explain, it is apparent the purpose of this letter was to request that the ACMA consider exercising one of the relevant statutory discretions and that the ACMA give a statement of reasons outlining the basis of its decision on the exercise of those powers.  Apart from that request, Axicom Land merely sought, by the letter, to reserve its position with respect to the question of whether APL’s sales revenue constituted non‑telecommunications sales revenue.

   3.5               The ACMA’s “decision” not to make a declaration on 23 September 2021 and provision of “reasons” in its letter dated 8 October 2021 (October letter)

7. On 23 September 2021, officers of the ACMA prepared a detailed submission to the ACMA with respect to Axicom Land’s request to make a declaration under (relevantly) ss 9(2) or 33 of the ER Determination, the effect of which would exempt Axicom Land from having to contribute to the Levy. The submission attached (among other things) the correspondence from Axicom Land dated 9 December 2020, the ACMA 30 July letter, and the letter from Axicom Land’s solicitors to the ACMA’s delegate dated 16 August 2021. The submission recommended that the ACMA agree not to make a declaration.

8. With respect to the application of s 9(2) of the ER Determination, the submission advised that (at [42]–[43]):

   A telecommunications tower is the physical structure that hosts the antennas and other equipment necessary for the supply of mobile and other wireless services.  Tower infrastructure is mainly used for mobile telecommunications, television broadcasting and wireless radio transmission.  Access to tower infrastructure is usually required in areas where it is uneconomical to duplicate tower infrastructure, particularly regional areas.  In Australia, tower infrastructure has largely been established by the Mobile Network Operators (MNOs), who have built a large number of their own towers and have co-location arrangements on other MNOs’ towers and shared infrastructure assets (for example, land or roof-tops sites).

   There are around 12,000 macro towers in Australia and [a]round 75 per cent are owned by vertically integrated operators.  In its application for a carrier licence, Axicom (formerly known as Crown Towers) identified itself as the largest non-carrier telecommunications tower infrastructure operator with 20% ownership of the market and over 1700 sites, most of which were acquired from MNOs since 2000.

9. After referring to its view that the revenue earned from APL can properly be characterised as telecommunications sales revenue (referring to s 7(f)(ii) of the Telecommunications Act), the recommendation set out a number of arguments against making a declaration for Axicom Land:

   (1)Axicom Land was advised of its obligations and conditions of holding a carrier licence when it applied for the licence, including the liability to contribute to the levy;

   (2)taking out the carrier licence was a strategic commercial decision made by Axicom Land;

   (3)the conditions and powers gained from owning a carrier licence immediately provided Axicom Land with commercial value as an entity planning to expand its telecommunications infrastructure business, and may have afforded it a reputational advantage; and

   (4)making a declaration for Axicom Land:

   (a)was likely to be considered inequitable by other carriers, as the sources of revenue used to determine the eligible revenue for Axicom Land are the same as those for other participating persons.  In particular, it may be considered unfair for carriers with similar revenue streams that have included all telecommunications sales revenue in their eligible revenue returns;

   (b)would have a direct impact on Uniti and Vodafone who would no longer be permitted to claim an inter-person-input payment deduction under s 29 of the ER Determination, thereby increasing the amount the Levy they were required to contribute (as acknowledged by Axicom Land in its submission to the ACMA on 9 December 2020); and

   (c)may lead to further requests for deductions in relation to revenue that had traditionally been caught in the ACMA’s assessment of the Levy.

10. The minutes of a meeting of the ACMA held on 23 September 2021 recorded that the ACMA:

    A) noted the correspondence from Axicom Land Pty Ltd (Axicom Land) and its representatives to the ACMA asking the ACMA to make a declaration under subsection 9(2), subsection 15(5) or section 33 of the Telecommunications (Eligible Revenue) Determination 2015;

    B)       agreed not to make a declaration;

    C)noted that a delegate of the ACMA will make an eligible revenue assessment for Axicom Land; and

    D)noted that Authority Member Chris Jose is to work with staff on developing the statement of reasons in respect of the decision.

    (Emphasis added.)

11. On 8 October 2021, the Executive Manager of the ACMA’s Finance, Reporting and Operations Branch, Matthew Geysen, wrote to Axicom Land to advise that the ACMA had decided not to make a declaration under ss 9(2)(a) or 33 of the ER Determination, and provided (as Axicom Land had requested) detailed reasons for the ACMA’s decision not to exercise its discretion. It is to be inferred that these reasons were provided in accordance with item (D) of resolution 200/2021 passed by the ACMA at its meeting on 23 September 2021.

12. After referring to the difference of views as to whether the entire amount of APL’s sales revenue is non-telecommunications sales revenue, the letter relevantly stated that:

    I understand that, as the ACMA has formed those views, it is your client’s request that the ACMA exercise its power pursuant to paragraph 9(2)(a), … or section 33 of the Telecommunications (Eligible Revenue) Determination 2015 (the ER Determination) to declare that the revenue of Axicom [Pty Ltd] may be deducted.  I also note you have advised that your client expects to receive a statement of reasons outlining the basis upon which a decision on the exercise of the ACMA’s power was reached.

    The ACMA has considered your client’s request and, in doing so, has noted the matters you have submitted in support of that request. …

    For the reasons set out below, the ACMA has decided not to make a declaration under subsection 9(2) or section 33 of the ER Determination.

    (Emphasis in original.)

13. As such, it is completely clear that, as the ACMA submits, the October letter is intended to provide reasons only for the ACMA’s decision not to exercise its statutory discretions. 

14. Turning then to those reasons, first, under the heading “Subsection 9(2) of the ER Determination”, the ACMA found that:

    (1)as explained in the July letter:

    Axicom’s sales revenue from its business of managing and operating wireless communications sites, including towers, where it leases space on these sites to customers for the operation of wireless communication equipment (Axicom tower revenue) is telecommunications sales revenue. This is because the revenue is derived from an activity in the telecommunications industry, namely operating or providing access to a facility used to supply a listed carriage service. A facility includes any line, equipment, apparatus, tower, mast, antenna, tunnel, duct, pit, pole or other structure of thing used, or for use, in or in connection with a telecommunications network (see section 7 of the Telecommunications Act 1997 and subsection 5(1) of the TCPSS Act).

    (2)the current circumstances did not support the exercise of its discretion under s 9(2), given that:

    (a)“the power in subsection 9(2) is one that [the ACMA] would ordinarily exercise in very rare circumstances”, such as to provide certainty where there is doubt as to the characterisation of the sales revenue of a particular participating person, and the ACMA had in fact “never exercised the discretion”;

    (b)it was “inappropriate to exercise the discretion in circumstances where there is no need to clarify whether revenue is telecommunications or non-telecommunications revenue”; 

    (c)tower revenue of a similar kind to APL’s revenue had “consistently” been treated by the ACMA as sales revenue earned from an activity in the telecommunications industry, and a declaration in Axicom Land’s favour pursuant to s 9(2) would create undesirable “uncertainty and complexity”; and

    (d)APL’s tower revenue was calculated in Axicom Land’s eligible revenue because Axicom Land is a carrier, and the decision to obtain that carrier licence was a “commercial decision to support its proposed business venture”.

15. Secondly, the ACMA stated that it also did not consider that the current circumstances supported the exercise of its s 33 discretion, for the following reasons:

    (1)the fact that APL’s tower business did not require a carrier licence to operate did not weigh in favour of exercising the discretion, because “in circumstances where Axicom Land is a carrier, it is the character of the Axicom tower revenue that brings that revenue into the calculation of Axicom Land’s eligible revenue”;

    (2)the ACMA’s calculation of Axicom Land’s eligible revenue was consistent with the method of determining the eligible revenue for other carriers;

    (3)contrary to its submissions, APL’s tower business was not “analogous to the providers of other inputs to carriers, for example, electricity suppliers, landlords, providers of data centre space, etc”, because those providers “do not constitute telecommunications sales revenue”, whereas  “a tower business is an activity in the telecommunications industry”;

    (4)the fact that APL had operated its tower business for many years without a carrier licence or any obligation to contribute to the industry levy was not relevant, because that circumstance changed when Axicom Land became a carrier in July 2019;

    (5)the fact that Axicom Land did not generate revenue in the eligible revenue period did not support the making of a declaration, because Axicom Land obtained a carrier licence to pursue its business venture for which such a venture was required, and the holding of that carrier licence still provided “certain benefits, powers and privileges which Axicom Land had during the eligible revenue period”;

    (6)a refusal to exercise the discretion would not place Axicom Land at a competitive disadvantage, because revenue generated from other entities who provide access to towers is also included in the eligible revenue of other carriers.  Contrary to Axicom Land’s argument, therefore, to permit Axicom Land to deduct tower revenue would instead discriminate in Axicom Land’s favour;

    (7)the Axicom Group’s competitors are other telecommunications infrastructure providers who are likely to be already contributing to the Levy, rather than other entities engaged in property development who may pursue an activity outside of the telecommunications industry; and

    (8)to deduct Axicon Pty Ltd’s tower revenue from Axicom Land’s eligible revenue would undermine the policy intent of the ER Determination to equitably distribute the Levy across carriers earning revenue from the telecommunications industry.

16. As such, the ACMA’s reasons essentially encapsulate the arguments against the exercise of the statutory discretions contained in the recommendation adopted by the ACMA.

    3.6               The ACMA’s Eligible Revenue Decision on 13 October 2021

17. On 13 October 2021, Helen Owens, the General Manager of the Corporate and Research Division, in her capacity as the ACMA’s delegate, agreed with the recommendation also dated 13 October 2021 to make a written assessment of eligible revenue of each participating person for the eligible revenue period in accordance with s 47(1) of the TCPSS Act. Significantly, the 13 October 2021 recommendation repeated the delegate’s views stated in the July letter that the majority of Axicom Land’s sales revenue appeared to have been earned from an activity in the “telecommunications industry” both on the basis of the ordinary meaning of that expression and for the reason that it fell within paragraph (f) of the definition of “telecommunications industry” in s 7 of the Telecommunications Act.

18. The ACMA subsequently made the Eligible Revenue Assessment 2019-2020 with the eligible revenue amounts of all participating persons. Amongst the entities assessed was Axicom Land, whose eligible revenue was assessed in the amount of $200,576,000.00.  That figure was consistent with the estimate of which notice had previously been given (as explained above) as Axicom Land had not in the meantime submitted an eligible revenue return.

19. On 14 October 2021, the ACMA advised Axicom Land that it had made the Eligible Revenue Decision pursuant to s 47 of the TCPSS Act, and attached a copy of the Eligible Revenue Assessment 2019-2020. 

20. Finally, on 10 November 2021, the ACMA sent Axicom Land an invoice in the sum of $1,860,019.95 for payment of the Levy.

    4.                 THRESHOLD ISSUES

    4.1               The issues

21. The ACMA raises two threshold issues:

    (1)whether Axicom Land’s challenge to the Eligible Revenue Decision made on 13 October 2021 is, in fact, a challenge to various “antecedent decision[s]”; and

    (2)whether the ACMA’s reasons for the Eligible Revenue Decision are limited to the October letter as Axicom Land submitted, or included the ACMA’s earlier correspondence of the July letter. 

22. The significance of the first issue was explained by the ACMA as follows:

    Those [antecedent] decisions were made on 8 October 2021 … which means that challenges to those decisions are outside the 28-day period prescribed by the [ADJR Act]: see ss 11(1)(c) and 11(3) of the ADJR Act and r 1.39 of the Federal Court Rules 2011 (Cth).

23. However, as the ACMA accepts, whichever characterisation of the antecedent “decisions” is adopted, the judicial review application could be brought under s 39B of the Judiciary Act and little therefore ultimately turns on the issue.

24. In any event, for the reasons set out below, I do not accept the ACMA’s contention that this proceeding is a challenge to antecedent decisions. The operative decision challenged is, as Axicom Land submits, the Eligible Revenue Decision made on 13 October 2021 under s 47 of the TCPSS Act. Given that Axicom Land was notified of the Eligible Revenue Decision on 14 October 2021, and lodged the originating application on 11 November 2021, it follows that the proceedings were brought within the 28 days required by ss 11(1)(c) and 11(3) of the ADJR Act.

25. The second threshold issue affects the characterisation of what constitutes the ACMA’s reasons for its decision.  Axicom Land submitted that this was relevant because where an authority voluntarily gives reasons for a discretionary exercise of power, “the court may act upon them if they demonstrate an erroneous approach to an exercise of power”:  East Melbourne Group Inc v Minister for Planning [2008] VSCA 217; (2008) 23 VR 605 at [228] (Ashley and Redlich JJA). Furthermore, as their Honours also emphasised, reasons should not be overzealously scrutinised whether they are provided pursuant to a statutory obligation or voluntarily provided: East Melbourne Group at [228] (Ashley and Redlich JJA).

1. In the present case, the question of which letters comprise the ACMA’s reasons has particular significance in relation to ground 1.  This is because the October letter referred only to the definition of that phrase “telecommunications industry” in paragraph (f) of the Telecommunications Act. It did not repeat the view expressed in the earlier letter that APL’s activities fell within the ordinary meaning of that phrase. As such, based on its view that the October letter contains the ACMA’s sole reasons for the Eligible Revenue Decision, Axicom Land contends that the ACMA cannot now argue that its decision is valid in any event on the basis that APL’s activities fell within the ordinary meaning of “telecommunications industry” as the ACMA foreshadowed in the July letter.

   4.2               What is the relevant decision under challenge?

2. As to the first threshold issue, the ACMA submits that:

   The Applicant identifies three grounds. In truth, ground 1 is a challenge to the ACMA’s antecedent decision concerning s 16 of the Telecommunications (Eligible Revenue) Determination 2015 (ER Determination). Similarly, grounds 2 and 3 are in fact challenges to the ACMA’s decisions not to make declarations under ss 9(2) and 33 of the ER Determination, rather than “grounds of review” for the Decision.

   (Emphasis in original; references omitted.)

3. Axicom Land contests the ACMA’s characterisation.  In its submission, the ACMA did not make any relevant anterior decision.  Rather, Axicom Land submits that the ACMA’s reasoning as set out in the July letter was but a “step along the way in a course of reasoning leading to an ultimate decision”:  Australian Broadcasting Tribunal v Bond[1990] HCA 33; (1990) 170 CLR 321 at 337 (Mason CJ). In the applicant’s submission, the only relevant decision, for the purposes of the ADJR Act, is the ACMA’s assessment of Axicom Land’s eligible revenue for the eligible revenue period pursuant to s 47 of the TCPSS Act which incorporated the consideration of the exercise of discretions.

4. Relevantly for present purposes, the ADJR Act provides for judicial review of a “decision to which this Act applies”, which is defined in s 3(1) of the ADJR Act as “a decision of an administrative character made ... (whether in the exercise of a discretion or not …) under an enactment”. 

5. The term “decision” is not defined in the ADJR Act but has been elucidated in the authorities. Mason CJ in Bond, for example, explained that (at 337):

   a reviewable “decision” is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.

6. It follows that a distinction can be drawn between, on the one hand, a decision which is made under a statute and, on the other hand, a conclusion which is merely reached as a step along the way in reaching that decision. The former is generally subject to judicial review under the ADJR Act; the latter is generally not.

7. Finally, I note for completeness that s 6 of the ADJR Act makes provision for applications for review of conduct engaged in for the purpose of making a decision. By operation of s 3(5), such conduct “includes a reference to the doing of any act or thing preparatory to the making of the decision”. However, no relief is sought by Axicom Land under s 6 in the originating application. It seeks relief only under s 5 of the ADJR Act.

8. I agree with the applicant’s submission that the relevant “decision” under s 5(1) of the ADJR Act is the ACMA’s written assessment under s 47 the TCPSS Act of Axicom Land’s eligible revenue for the eligible revenue period which was made on 13 October 2021 and sent to Axicom Land on 14 October 2021. This is because it is that decision which triggers the obligation on the ACMA under s 49 of the TCPSS Act to work out the levy contribution factor for Axicom Land and “is final or operative and determinative, at least in a practical sense” of Axicom Land’s status as “participating person”:  Bond at 337 (Mason CJ). As such, I agree with Axicom Land’s submission that it is not accurate to characterise grounds one, two and three as challenges to “antecedent decision[s]”.  Rather, those prior communications between Axicom Land and the ACMA are best understood as “step[s] along the way in a course of reasoning leading to an ultimate decision”:  Bond at 337 (Mason CJ).

9. This construction is supported by the following considerations.

10. First, as explained earlier, the July letter constituted written notice by the delegate in accordance with s 48(2) of the TCPSS Act that the ACMA proposed to issue a written assessment under s 47, gave reasons why it proposed to do so, and set out the delegate’s “proposed assessment of Axicom Land’s eligible revenue”.  As such, the July letter was given in compliance with the ACMA’s obligations of procedural fairness before making the proposed and operative decision. 

11. Secondly, I agree with Axicom Land that the ACMA did not make a relevant anterior decision for judicial review purposes under s 16 of the ER Determination with respect to the deducting of non-telecommunications revenue from the initial sales revenue and, as an aspect of that, in deciding not to exercise its discretion under s 9 of the ER Determination. The assessment of initial sales revenue under s 16 is merely an answer to Step 1 of the three steps prescribed by the ER Determination. That assessment is thus merely “a step along the way in the course of reasoning leading to” the ultimate decision, being the assessment of Axicom Land’s eligible revenue for the eligible revenue period under s 47 of the TCPSS Act. That ultimate decision, in other words, incorporated ACMA’s consideration of the discretion in s 9(2), as well as the discretion in s 33, of the ER Determination. Consistently with this characterisation, there is no provision in the ER Determination for a formal application to be made by a participating person or possible participating person for the ACMA to exercise either discretion, or for separate notice to be given of the ACMA’s “decision” on whether the discretions are to be exercised.

12. Accordingly I do not accept the respondent’s submission that grounds 1, 2 and 3 are “in truth” a challenge to various “antecedent decision[s]” made under the ER Determination. Those grounds are accurately framed as grounds on which the ACMA’s eligible revenue decision is challenged.

    4.3               Do the reasons for the Eligible Revenue Decision include the ACMA’s July letter?

13. The second threshold issue concerns which communications are to be regarded as the ACMA’s reasons for the Eligible Revenue Decision. This issue arises because there is no requirement for reasons to be given under the relevant legislation or the ER Determination, and no obligation arises at common law: Public Service Board of NSW v Osmond [1986] HCA 7; (1986) 159 CLR 656; see also Wingfoot Australia Partners Pty Ltd v Kocak [2013] HCA 43; (2013) 252 CLR 480 at [43] (the Court). Nor were reasons requested under the ADJR Act. The issue is therefore not (contrary to the way the applicant appears to have approached it) whether there is a single document which contains the reasons for the decision. Rather, the task is to determine what constitutes reliable evidence of the reasons of the various decision-makers involved with respect to the different steps of the decision-making process which culminated in the Eligible Revenue Decision: see further the discussion in Administrative Review Council, Federal Judicial Review in Australia (Report No. 50, 2012) at [9.32]–[9.38].  Furthermore, as the reasons were not produced pursuant to a statutory obligation, there were no statutory requirements with which the reasons were required to comply.

14. There is no doubt that the October letter articulates reasons for the ACMA’s decision not to make a declaration in the exercise of its discretions under ss 9(2)(a) or 33 of the ER Determination: see above at [58]–[60].

15. The ACMA however contends that the July letter, as well as the October letter, together comprise its reasons for the Eligible Revenue Decision.  This is because, in the ACMA’s submission, that correspondence forms part of a “single chain” of correspondence which cumulatively disclosed the decision-maker’s reasoning:  Minister for Local Government v Blue Mountains City Council [2018] NSWCA 113; (2018) 97 NSWLR 1132 at [114]–[117] (Leeming JA; Bathurst CJ at [1] and McColl JA at [2] agreeing). Particular reliance is placed by the respondent upon the fact that the October letter itself refers back to explanations in the July letter for various findings made in the October letter.

16. Axicom Land does not accept this approach.  In its submission, the July letter should be understood only as a “proposed assessment”, consistently with the language in fact used by the ACMA in that letter (emphasis added).  Axicom Land contends that, in this context, the October letter articulates the reasons for the assessment, and that this correspondence reflects the sole “reasons which the decision-maker gives”:  East Melbourne Group at [308] (Ashley and Redlich JJA).

17. I agree with the ACMA that the July letter and the October letter together set out (at least in a summary form) the ACMA’s reasons for finding that APL’s revenue was earned from activities in the “telecommunications industry”.  Those letters address different issues considered at different stages of the decision-making process, which culminated in the s 47 decision under challenge.  This is apparent from the terms of the relevant documents for the following reasons. 

18. The purpose of the July letter was to give Axicom Land notice in accordance with s 48(2) of the TCPSS Act of the ACMA’s proposal to assess Axicom Land’s eligible revenue based on the ACMA’s estimate and of the reasons why the ACMA proposed to do so in accordance with the requirements of procedural fairness subject to any further submission by Axicom Land.  Understood in that context, the ACMA’s assessment was necessarily a “proposed” assessment because it was required to extend Axicom Land the opportunity to comment on that proposed position and to consider any further submission from Axicom Land before reaching a concluded view.  As Axicom Land made no further submissions aside from those already taken into account by the ACMA and the subsequent submission on statutory discretions, it can be inferred that the ACMA had no reason to depart from the views set out in its July letter, subject only to considering the exercise of those discretions, as Axicom Land requested. 

19. However, the ACMA decided not to exercise those discretions on 23 September 2021 and reasons were given for that aspect of the ACMA’s decision-making process in the October letter, as informally requested by Axicom Land (i.e. not under s 13 of the ADJR Act). It follows that the October letter did not comprehensively set out the entirety of the ACMA’s reasons; rather, it provided reasons only for the ACMA’s decision not to exercise its statutory discretions. 

20. This understanding of the correspondence is corroborated by the internal memorandum dated 13 October 2021 to Ms Owens, the delegate of the ACMA.  That memorandum recommended that the delegate make the written assessment set out in the instrument “Eligible Revenue Assessment 2019-20” attached to the recommendation. The recommendation incorporated the views expressed in the July letter and also referred to the October letter as a statement of reasons to support the ACMA’s decision with respect to Axicom Land’s request for a declaration under ss 9(2) or 33 of the ER Determination.

    5.                 CONSIDERATION OF THE GROUNDS OF REVIEW

    5.1               Relevant principles of statutory interpretation

21. Central to each of the grounds of judicial review are issues of statutory construction, the principles of which are well-settled and summarised below.

22. First, the ER Determination is a legislative instrument for the purposes of the Legislation Act 2003 (Cth): see s 45(6) of the TCPSS Act; s 8 of the Legislation Act. As such, it must be construed in accordance with the Legislation Act and the Acts Interpretation Act 1901 (Cth): Berenguel v Minister for Immigration and Citizenship [2010] HCA 8; (2010) 84 ALJR 251 at [15] (the Court); Vincentia MC Pharmacy Pty Ltd v Australian Community Pharmacy Authority [2020] FCAFC 163; (2020) 280 FCR 397 at [43] (Perry and Stewart JJ).Specifically, s 13(1) of the Legislation Act provides that:

    (1)If enabling legislation confers on a person the power to make a legislative instrument or notifiable instrument, then, unless the contrary intention appears:

    (a)the Acts Interpretation Act 1901 applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and

    (b)expressions used in any instrument so made have the same meaning as in the enabling legislation as in force from time to time; and

    (c)any instrument so made is to be read and construed subject to the enabling legislation as in force from time to time, and so as not to exceed the power of the person to make the instrument.

23. Secondly, being subordinate or delegated legislation, the ER Determination is to be construed in accordance with ordinary principles of statutory construction:  Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 236 CLR 101 at [19] (the Court); Vincentia at [44] (Perry and Stewart JJ). This requires that the ER Determination be construed in its statutory context including, relevantly, the Telecommunications Act pursuant to which it was made: s 13(1)(c) of the Legislation Act; Master Education at [19].

24. Thirdly, that being so, the relevant principles relating to the construction of statutes are well-established, and were not in dispute.  These were summarised by Perry and Stewart JJ in Vincentia at [46]–[48] as follows:

    In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (Project Blue Sky), McHugh, Gummow, Kirby and Hayne JJ explained that:

    “69.The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’. In Commissioner for Railways (NSW) v Agalianos [(1955) 92 CLR 390 at 397], Dixon CJ pointed out that ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’. Thus, the process of construction must always begin by examining the context of the provision that is being construed.”

    The importance of starting with the statutory context and text was recently emphasised by Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 in the following passage:

    “14.The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose [citing Project Blue Sky with approval]. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.”

    Context “in its widest sense”, as referred to in this passage, includes “such things as the existing state of the law and the mischief which … one may discern the statute was intended to remedy”: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ) (cited with [approval] in SZTAL at [14]). To have regard to context in this sense, as integral to the process of statutory construction irrespective of whether ambiguity or inconsistency exists in the literal text, accords with the mandate in s 15AA of the Acts Interpretation Act that the interpretation which best gives effect to the legislative purpose must be preferred to any other interpretation: Mills v Meeking (1990) 169 CLR 214 at 235 (Dawson J). As a result, as Dawson J also explained with respect to Victoria's equivalent to s 15AA, the approach required by interpretive provisions of this kind “allows a court to consider the purposes of an Act in determining whether there is more than one possible construction” (ibid); see also the discussion in Pearce D, Statutory Interpretation in Australia (9th ed, LexisNexis Butterworths, 2019) … at [2.17]-[2.20]; Herzfeld P and Prince T, Interpretation (2nd ed, LawBook, 2020) … at [7.20]-[7.30].  That said, it must also be borne steadily in mind that, as Hayne, Heydon, Crennan and Kiefel JJ cautioned in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, “[h]istorical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention”.

    (Emphasis added.)

25. Accordingly, in ascribing meaning to text, the Court must have regard from the outset to the context and purpose of the provision, including considering legitimate secondary material: see also Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] (the Court). As Allsop CJ explained in Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2020] FCAFC 192; (2020) 282 FCR 1 at [4]–[5]:

    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 provisions are to be deduced and understood from the text and structure of the Act and legitimate and relevant considerations of context, including secondary material. …

    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; (2019) 93 ALJR 1106; 373 ALR 214 at [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 …

    (Citations omitted.)

    5.2               Ground one: Did the ACMA make an error of law/jurisdictional error in not characterising APL’s sales revenue as “non-telecommunications sales revenue”?

    5.2.1Construction of the phrase “an activity outside the telecommunications industry” 

26. The first question is whether APL’s sales revenue was “earned from an activity outside the telecommunications industry” in the ordinary and natural meaning of that phrase so as to fall within the definition in s 9(1) of the ER Determination of “non-telecommunications sales revenue”.  Axicom Land’s submission, namely that the phrase “telecommunications industry” should be construed more narrowly so as to exclude revenue earning activities of the kind engaged in by APL, should be rejected for the reasons explained below.

1. Ground two is therefore dismissed.

   5.4 Ground three: Error in the exercise of the discretion conferred by s 33 of the ER Determination

   5.4.1The issues

2. Section 33 of the ER Determination confers a discretion in the following terms:

   The ACMA may declare, in writing, that a specified amount of gross telecommunications sales revenue of one or more specified participating persons (but not all participating persons) may be deducted.

3. Section 33 is located in Part 4 of the ER Determination which sets out Step 2 in the process of assessing eligible revenue, namely, the determination of “net telecommunications sales revenue”. 

4. By ground 3, the applicant contends the ACMA erred in declining to exercise the discretion in s 33 of the ER Determination on the grounds that the ACMA:

   (1)misconstrued the scope of the discretion conferred by s 33;

   (2)took into account irrelevant considerations; and

   (3)failed to take into account relevant considerations.

5. In this regard, Axicom Land accepted that s 33 “authorises the ACMA to consider any matter which is consistent with the purposes of the ER Determination and TCPSS Act” and that the purpose of the discretion, as identified in the Explanatory Statement to the ER Determination, “namely to “extend the scope of allowable deductions where appropriate”, is plainly very broad”.  However, it submitted that:

   Despite this, the ACMA did not consider the full range of matters before it bearing on that issue of appropriateness. The ACMA should have given consideration to the objective of capturing the revenue of related parties in order to address avoidance: AB 123, and the fact that Axicom Land did not itself obtain any of the benefits of acting as a carrier. The ACMA unduly constrained the exercise by again reverting to the formulaic application of defined concepts which are relevant to earlier stages of the calculation. The ACMA should also have considered that it was material to the exercise of the discretion that Axicom had operated its business for many years, without the need for a carrier licence and, without any suggestion that this revenue made it liable to any contribution to the Levy. The ACMA's approach entailed a failure to take into account these relevant considerations, in circumstances where the very reason for including the revenue of a consolidated related party such as Axicom is to address the possibility of avoidance.

   In addition, whether framed as a failure to take into account a relevant consideration or a separate error of law (see Originating Application [3], particulars (ii), (iv)(C)), the ACMA erred by engaging in a comparison with the treatment of Telstra, Optus and Vodafone on the basis that these are, according to the ACMA, “the Axicom Group’s competitors”. As the Statement makes clear, contributions are “proportional to each participating person’s share” not each corporate group’s share: AB 122. Telstra, Optus and Vodafone were carriers earning significant revenue from their status as carriers, by providing services to consumers. No member of the Axicom group earned any revenue from the carrier licence. The ACMA was therefore proceeding on a misunderstanding of the law when it reasoned that it would “undermine the policy intent of the ER Determination” to exercise the discretion.

   (Emphasis in original.)

6. As to the last of these issues, Axicom Land submitted that the suggestion that Telstra, Optus and Vodafone were “the Axicom Group’s competitors” ignored the distinction between participating persons and a consolidated related party.

   5.4.2Disposition of ground 3

7. Ground 3 has not been established for the following reasons.

8. First, as the applicant accepted, it is clear from its terms that the discretion conferred by s 33 on the ACMA is intended to be a broad one. The only express limitations upon the discretion in s 33 itself concern the subject matter of any declaration, the persons in respect of whom such a declaration may apply, and the fact that a declaration may not apply to all participating persons. The width of the apparent discretion under s 33 of the ER Determination accords with s 47(2) of the TCPSS Act. Section 47(2) requires not only that the assessment of a participating person’s eligible revenue must be based on the person’s eligible revenue return, but also on “information and documents obtained by the ACMA because of its inquiries into the correctness of the return” and “any other information or documents that the ACMA has and that it thinks relevant to making the assessment”.  There is, in other words, no express limitation imposed upon the material to which the ACMA may have regard in making an eligible revenue assessment. 

9. The intention to confer a wide discretion on the ACMA is supported by the extrinsic materials, as Axicom Land submitted. I have already referred to the intention of ensuring that the regulator, through the declaration powers, has the flexibility to adjust and fine tune what is included in eligible revenue given the novelty of the concept, the difficulties in foreseeing all of the situations which may arise in a rapidly changing industry, and practical experience accumulated by the regulator. That flexibility is particularly evident in s 33. Thus, not only is the discretion expressed in unconstrained terms, but it is evident that, as Axicom Land submitted, the discretion extended beyond merely clarifying amounts that can be deducted, to permitting amounts otherwise required to be included in eligible revenue to be deducted where the ACMA considers that appropriate.

10. Thus, as the ACMA stated in its October letter and Axicom Land accepted in its correspondence with the ACMA, the Explanatory Statement to the ER Determination explained that the discretion under s 33 “serve[s] two purposes – to clarify what can be deducted, and extend the scope of allowable deductions where appropriate”. The second of these purposes was also identified in Explanatory Statement to the 1998 ER Regulations. Specifically, the commentary to regulation 22, which was the predecessor provision to s 33, explained that the question of whether amounts should be deducted from gross telecommunications sales revenue as they were not appropriately subjected to the levy involved potentially a number of different considerations:

    Deductions from gross telecommunications sales revenue under Part 5 are designed to remove from the eligible revenue definition amounts that it would be inappropriate to subject to the USO levy. The main reason such deductions are allowed is to ensure that carriers are not disadvantaged when competing with persons not otherwise subject to the USO levy, for example, because they are non-carriers or carriers operating outside Australia. Other considerations are that revenue may be earned from activities which do not directly benefit from the USO (eg. the provision of content, operations outside Australia) or would involve a double levy (eg. levying USO payments).

11. Secondly, the fact that s 33 permits the ACMA to consider any matter consistent with the purposes of the ER Determination and the TCPSS Act, including reducing the possibility of tax avoidance, does not establish that the matters which Axicom Land says ought to have been considered were mandatory relevant considerations. Nor did Axicom Land identify any features in the text or structure of the ER Determination or the TCPSS Act which supported the proposition that the considerations to which it pointed—the objective of addressing avoidance and the fact that Axicom Land did not obtain any (financial) benefits from its carrier licence—were mandatory relevant considerations, or that other considerations to which the ACMA had regard were irrelevant considerations.

12. Thirdly, the evident intention to arm the ACMA with a broad flexible discretion to extend deductions from eligible revenue, based on its practical (and accumulating) experience in a rapidly changing industry, would not be furthered by imposing constraints upon those considerations which the ACMA may or may not take into account in the exercise of the s 33 discretion. In those circumstances, the applicant’s construction must be rejected: see s 15AA of the Acts Interpretation Act, and Vincentia at [48] (Perry and Stewart JJ) (quoted at [96] above). There is no basis on which to imply that the ACMA was required to consider, as a condition of a valid or lawful exercise of the s 33 discretion, issues of tax avoidance or whether the participating person had earned any revenue from its carrier licence.

13. Fourthly, Axicom Land focused upon a passage in the Explanatory Statement to the ER Determination as the basis on which it submitted that tax avoidance was a relevant consideration in a jurisdictional sense. In that passage, the Explanatory Statement stated that the Determination:

    addresses the possibility of avoidance by including in the calculation of eligible revenue the revenue of entities ‘related’ to a participating person (described as ‘consolidated related parties’ and ‘declared related parties’)

14. This was a purpose of the ER Determination and its predecessors and, in particular, of provisions including the revenue of related entities in the eligible revenue of participating person. As, for example, the Explanatory Statement to the 1998 ER Regulations explained (at p. 11):

    because “eligible revenue” is being used to determine USO contributions which are a tax, there is incentive for carriers to minimise their revenue and thus their contributions.  To discourage and, if necessary, address this problem, the starting point for defining eligible revenue will be the consolidated annual financial statements of the ultimate reporting entity into which the carrier is consolidated.  This means almost all relevant revenue will be captured from the start.  From this amount, inappropriate revenue will be able to be deducted[.]  This approach will also ensure reliable and comprehensive audit trails are maintained.  The ACA will also be able to declare additional revenue streams where it is necessary to deal with avoidance strategies.

15. The power to declare additional revenue streams continues to be a feature of the scheme established by the ER Determination. Specifically, s 32 provides that:

    (1) The ACMA may, in writing, declare that one or more specified participating persons (but not all participating persons) are not entitled to deduct a specified amount or payment under this Part.

    (2)       The declaration must state that the declaration is to have effect:

    (a)        for a specified eligible revenue period; or

    (b)       while the declaration is in force.

16. Nonetheless, it is trite that the ACMA is not the Australian Taxation Office.  It has neither the function nor the power of determining whether or not a particular participating person or corporate group has structured its affairs so as to engage in tax avoidance with respect to the Levy.  Rather, as the Explanatory Statement to the 1998 ER Regulations explained, the 1998 ER Regulations were intended to “address the possibility of [tax] avoidance by including in the calculation of eligible revenue the revenue of entities that are related to a carrier through accounting arrangements or because of declaration by the ACA” (at p. 2) (emphasis added) and to allow the ACA to declare additional revenue streams “where it is necessary to deal with avoidance strategies” (at p. 11). Thus it is highly unlikely that, in conferring the discretion in s 33 of the ER Determination, the intention was to mandatorily require the ACMA (and its predecessor) to consider in every case whether a particular participating person was engaging, or was likely to be engaging, in a tax avoidance strategy as a condition of a valid eligible revenue decision which included revenue from a related entity. The purpose of minimising tax avoidance could equally be addressed by taking away the incentive to divert revenue to a non-participating person who is a related entity by imposing the levy upon telecommunications sales revenue on participating person, irrespective of whether the revenue was earned by the participating person itself or a related entity. That is, in my view, precisely what the ER Determination does. It follows that the applicant’s submissions proceed, with respect, on a fundamental misapprehension of the way in which the ER Determination operates. This is not, of course, to suggest that the ACMA might not, in an appropriate case, form a view on whether or not a particular structure or strategy may have been adopted to circumvent or minimise the Levy liability and take that into account. That is, however, a different question from whether or not the ACMA is required to have regard to that consideration as a condition of a valid exercise of the discretion in s 33 of the ER Determination, as the applicant contends.

17. In any event, even if the ACMA was required to consider the objective of tax avoidance or the question of whether the participating person had benefited from the carrier licence, Axicom Land has not established that the ACMA failed to do so.

18. First, the ACMA expressly took into account the submission that Axicom Land did not itself generate revenue in the 2019-2020 eligible revenue period, but rejected that submission on the basis that:

    (1)Axicom Land obtained the carrier licence to pursue its business venture for which such a licence was required; and

    (2)as a consequence:

    (a)it obtained the benefits, powers, and privileges conferred by the licence over the eligible revenue period; and

    (b)it was subject to the obligations, including those arising from being a participating person, in circumstances where the ER Determination expressly brought the revenue of a consolidated related party into the calculation of a carrier’s eligible revenue, irrespective of whether the carrier itself generated revenue in that period.

19. There is nothing formulaic about that consideration which suggests a failure by the ACMA to consider Axicom Land’s submission according to law.  Nor does Axicom Land challenge the correctness of any of those findings.  It follows that ACMA’s challenge is ultimately based upon its disagreement with the weight which the ACMA gave to these considerations over the weight given to the fact that Axicom did not earn any revenue from its carrier licence.  However, it is well established that issues of weight are generally for the administrative decision-maker and not for the Court on judicial review:  Peko-Wallsend at 41 (Mason J); Primary Health at [21] (the Court); Plaintiff M1 at [24] (Kiefel CJ, Keane, Gordon and Steward JJ).

20. Secondly, no proper foundation has been established on the basis of which it can be inferred that the ACMA failed to consider Axicom Land’s submission that there was no intention to divert revenue which would otherwise have been subject to the Levy. 

21. Axicom Land’s submission dated 16 August 2021 providing reasons as to why the discretions should be exercised in its favour did not make any submission in terms that the ACMA should take into account the lack of any tax avoidance strategy in exercising the discretions.  At best, this might be implied from the submission that APL had operated its tower business for many years without a carrier licence (as it was entitled to do) and without any obligation to contribute to the Levy although it is fair to say that that would be a “long bow to draw”.  In any event, those submissions which were made by Axicom Land were expressly addressed by the ACMA, together with the other submissions made by Axicom Land in its August letter, namely, that:  APL’s tower business would face unfair competitive disadvantage vis-à-vis competitors which are not carriers and not subject to the Levy; and Axicom Land would face a competitive disadvantage vis-à-vis its competitors which would not be required to contribute to the Levy until they achieved more than $25m in revenue. 

22. However, Axicom Land did submit in its letter dated 9 December 2021 that APL’s sales revenue should not be included in Axicom Land’s eligible revenue because (among other things):

    the intention behind the ‘consolidated related party’ and ‘declared related party’ regime is to discourage and deal with persons trying to minimise their revenue, and thus levy payments, by diverting revenue to associates that are not participating persons.  [APL’s] decision to set up and invest in an entirely separate (but related) Australian based small cell business has not (and will not) involve diverting or minimising revenue earned from any small cell activity involving Axicom Land to other Axicom entities.  The [APL] tower infrastructure business was formed in 2000 and will continue to be [APL’s] core business.  [APL] is not directly involved in Axicom Land’s activities and the revenue of Axicom Land will not be diverted to [APL] in the future.

23. This submission was expressly referred to in the recommendation to the ACMA considering Axicom Land’s request for a declaration under the heading “Initial Engagement with Axicom Land”.  Furthermore, the letter dated 8 October 2021 providing reasons for the ACMA’s decision not to exercise its discretion explained that the ACMA had considered Axicom Land’s request, noted the matters submitted by it in support of that request, and considered the other information Axicom Land had provided.  As such, there is nothing to suggest that Axicom Land’s submission on this issue was overlooked and therefore that there was a failure by it to consider the question of tax avoidance.  This is especially so in circumstances where the 16 August 2021 letter from Axicom Land, which set out the reasons why the statutory discretions should be exercised in its favour, did not refer to the issue.  In other words, the failure by the ACMA expressly to consider the issue in its 8 October letter may well be explained by the apparent lack of weight given to it by Axicom Land in its 16 August submissions in support of the exercise of the discretions. 

24. In this regard, it is significant that the reasons for the ACMA’s resolution not to exercise its statutory discretions were provided by the ACMA in its October letter in response to the informal request for reasons by Axicom Land.  As such, there were no requirements governing the content of those reasons, such as a requirement that the ACMA set out its findings on material questions of fact.  That being so, it is difficult to draw any inferences as to what the ACMA did not consider on the basis of what was mentioned in the October letter.  As Robertson J explained in Jabbour v Secretary of the Department of Home Affairs [2019] FCA 452; (2019) 269 FCR 438 at [112] with respect to the approach to be adopted in inferring error from a statement of reasons where there is no statutory obligation to provide reasons:

    The second respondent’s document is not a statement of reasons in the familiar form, whether under statute or otherwise.  In Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at [25] French CJ, Bell, Keane and Gordon JJ said:

    It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision.  It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision, and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate.  Further, “jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power”; but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision.  Further, the Delegate's letter is “not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed”.

    (Emphasis added.)

1. This contrasts with the position where an administrative decision-maker is under an obligation to provide a statement of reasons setting out the findings on material facts and reasons for decision:  see e.g. Yusuf at [5] (Gleeson CJ).

2. That notwithstanding, in my view it is reasonable to infer from the circumstances in which the October letter was provided and the statement at the commencement of the letter, that it sets out those matters which the ACMA considered were the material factors weighing against the exercise of discretion in ss 9(2) or 33. It also expressly addressed all of the contentions which Axicom Land identified in its 16 August 2021 letter in support of the exercise of the discretions. However, as I have already explained, the ACMA was not under any obligation to address those submissions which it considered were not material or relevant. Nor, even if the ACMA was required to consider whether or not there was a tax avoidance purpose in the separate revenue streams as between Axicom Land and APL, has Axicom Land established that the ACMA failed to do so. It could equally be inferred that the ACMA did in fact consider that submission, but did not consider it to be sufficiently material to be included in the reasons it gave for refusing the exercise of the discretion.

3. Thirdly, no error of law has been established with respect to the ACMA’s approach in comparing the treatment of Telstra, Optus and Vodafone with Axicom Land on the basis that these are “the Axicom Group’s competitors”.  Specifically, the ACMA found that:

   we also note that in Axicom Land’s application for the carrier licence it noted that the Axicom group is the largest independent owner of shared wireless communication infrastructure with approximately 20% of the Australian wireless telecommunications shareable tower infrastructure market with Telstra, Optus and Vodafone identified as having a combined 70% ownership of the remaining market share.  This suggests that the Axicom group’s competitors are other telecommunications infrastructure providers currently already contributing to the levy, rather than other entities engaged in property development who may pursue an activity outside of the telecommunications industry.

4. The ACMA’s finding in this respect was a response to the contention in Axicom Land’s letter dated 16 August 2021 (which bears repeating here) that:

   Axicom’s tower business would face unfair competitive disadvantage if its existing revenue was subject to the [Levy] given its current business does not require a carrier licence and it faces actual and potential competition from competitors which are not carriers and are not subject to the [Levy].   

   Axicom Land would be placed at an overwhelming competitive disadvantage to its potential competitors (which would not be required to contribute to the [Levy] until they achieved $25M in revenue) whereas the Axicom group is potentially required to make a large contribution to the [Levy] prior to earning any revenue.

   (Emphasis in bold and italics added.)

5. As such, the ACMA was relevantly responding to and rejecting Axicom Land’s characterisation of its relevant competitors.  

6. Axicom Land contended nonetheless that this approach was in error because it ignored the distinction between participating persons (Axicom Land) and a consolidated related party (relevantly APL).  As a consequence, Axicom Land’s argument appears to be that, in considering whether the Levy was imposed in a relevantly proportionate manner as between participating persons, the ACMA should have focused solely upon the revenue earning activities of Axicom Land, as the participating person, which did not engage in the wireless telecommunications shareable tower infrastructure market and earned nil revenue as a carrier.  Thus, in its submission, regard should not have been had to the revenue earning activities of the separate entity, APL. 

7. In support of this submission, Axicom Land relied upon the general statement of purpose at the commencement of the Explanatory Statement, namely, that “[c]ontributions are, in general, proportional to each participating person’s share of total eligible revenue for a relevant eligible revenue period” (emphasis added).  However, that statement is qualified by words “in general” and is no more than a general statement of purpose at the commencement of the Explanatory Statement.  It does not purport to address the detail of the scheme, such as the inclusion of the revenue of related parties in the assessment of eligible revenue. 

8. More fundamentally, it is s 33 of the ER Determination itself which falls for construction. Axicom Land’s submission falls into the error of construing the extrinsic materials instead of the provision: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] (the Court); Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 at [31] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ). Yet, no submissions were made by Axicom Land as to how the ACMA’s approach in this respect was wrong in law by reference to the ER Determination. In my view, when regard is in fact had to the ER Determination, there is no apparent reason why the ACMA’s line of reasoning was impermissible, given that it remains the case under the ER Determination that the starting point for defining eligible revenue is the consolidated annual financial statements of the ultimate reporting entity into which the carrier is consolidated, and the question under s 33 is ultimately whether revenue from the consolidated group is inappropriately included on the basis that it should be regarded as non-telecommunications revenue.

9. Ultimately therefore, with respect, this submission reduces to a disagreement with a factual finding by the ACMA which is beyond the power of the Court to revisit.

10. Ground three must be dismissed.

    6.                 CONCLUSION

11. For the reasons set out above, the application for judicial review should be dismissed with costs.

I certify that the preceding two hundred and six (206) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perry.

Associate:

Dated:       8 September 2023