Lombardo v Federal Commissioner of Taxation

LOMBARDO v. FEDERAL COMMISSIONER OF TAXATION (1979) 40 FLR 208
Income Tax

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
Bowen C.J.(1), Franki(2), Toohey(3) JJ.

CATCHWORDS

Income Tax - Appeals from Board of Review - Board's decisions must involve questions of law - When questions of law are involved - Nature of questions of law - Income Tax Assessment Act 1936 (Cth.), ss. 26 (a), 196 (1).

HEADNOTE

The taxpayer appealed from a decision of Wickham J. of the Supreme Court of Western Australia dismissing his appeal from a decision of Board of Review No. 2 on the basis that the decision of the Board involved no question of law, but only questions of fact. The original Board of Review case had concerned an assessment under s. 26 (a) of the Income Tax Assessment Act 1936. In question before the Board was the taxpayer's purpose in buying and selling certain land.

Held, appeal dismissed, that no question of law was involved in the decision of the Board. Section 196 (1) of the Income Tax Assessment Act required a question of law be involved before an appeal could lie.

Discussion of when questions of law are involved in decisions.

HEARING

Perth, 1979, May 9-10; October 17. #DATE 17:10:1979

APPEAL.

Appeal from a decision of Wickham J. of the Supreme Court of Western Australia dismissing the taxpayer's appeal from the decision of Board of Review No. 2 which had dismissed the taxpayer's appeal against the disallowance by the Commissioner of his objections to assessments in respect of the years of income ended 30th June, 1968, 1969 and 1973.

The facts appear from the judgments.

T. E. O'Connor Q.C. and R. K. O'Connor, for the appellant.

E. M. Franklyn Q.C. and N. L. Roberts, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Stone James & Co.

Solicitor for the respondent: Alan R. Neaves (Commonwealth Crown Solicitor).

J.H. TELFER

JUDGE1

October 17.

The following written judgments were delivered.

BOWEN C.J. This is an appeal from a decision of the Supreme Court of Western Australia given on 26th October, 1978. The matter came before the Supreme Court by way of appeal from Board of Review No. 2. The taxpayer's reference to the Board concerned assessments to income tax for the years of income ended 30th June, 1968, 1969 and 1973 in respect of profits arising from the sale of land. By consent his reference to the Board was heard jointly with references by his brother and father, who had also objected to assessments to tax in respect of profit arising from the sale of land in the same income years. The Board upheld the decisions of the Commissioner in respect of each reference and confirmed the assessments. (at p209)

One set of reasons was delivered by the Board. The Board were of the opinion that on the balance of probabilities the land concerned in the references was acquired for the purpose of profit-making by sale. They concluded the profit was in each case properly included in the assessable incomes of the taxpayer, his brother and his father under the first limb of s. 26 (a) of the Income Tax Assessment Act 1936 (hereafter referred to as "the Act"). (at p209)
The taxpayer appealed separately to the Supreme Court. Such an appeal lies "from any decision of the Board which involves a question of law" (s. 196). The Supreme Court dismissed the taxpayer's appeal upon the ground that there was no question of law involved in the Board's decision. (at p209)
Before this Court counsel for the taxpayer sought to attack the decision of the Supreme Court upon three grounds: 1. a decision of the Board that s. 26 (a) of the Act applies to the facts of the case is always a decision involving a question of law; 2. the Board's decision involved a question of law in that it concluded that Dante Lombardo had the requisite intention under s. 26 (a) by having adopted the intention and activities of his brother Vince; 3. there were submissions of law made to the Board which were not adverted to in the reasons of the Board but which were "involved" so as to provide the basis of an appeal. (at p209)
I do not consider that the taxpayer's first broad proposition can be sustained. The decision-making process of the Board involves the ascertaining of primary facts - the facta probantia, which are then used to adduce the ultimate fact in issue - the factum probandum (Hayes v. Federal Commissioner of Taxation per Fullagar J. (1956) 96 CLR 47, at p 51 ). The ultimate fact depends upon the application of the Act to the primary facts but except where a question of construction is involved, the conclusion from the primary facts will generally be a question of fact. (at p209)
In Edwards v. Bairstow (1956) AC 14, at p 33 Lord Radcliffe in the House of Lords approved what had been said by Lord Sterndale in the Court of Appeal in Currie v. Inland Revenue Commissioners (1921) 2 KB 332 where the question was whether a person was carrying on a "profession" within the meaning of s. 39 (c) of the Finance (No. 2) Act, 1915. There, Lord Sterndale made it clear that in cases where a statute is involved its application need not be a question of law. His Lordship said: "There may be circumstances in which nobody could arrive at any other conclusion than that what the man was doing was carrying on a profession; and therefore, looking at the matter from the point of view of a judge directing a jury, the judge would be bound to direct them that on the facts they could only find that he was carrying on a profession. That reduces it to a question of law. On the other hand, there may be facts on which the direction would have to be given the other way. But between those two extremes there is a very large tract of country in which the matter becomes a question of degree; and where that is the case the question is undoubtedly, in my opinion, one of fact; and if the Commissioners came to a conclusion of fact without having applied any wrong principle, then their decision is final upon the matter" (1921) 2 KB, at p 336 . (at p210)
The position where a statute uses words which are not technical was elaborated by Jordan C.J. in Australian Gas Light Co. v. Valuer-General follows: "(1) The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact not of law . . . This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence . . . , although evidence is receivable as to the meaning of technical terms . . . , and the meaning of a technical legal term is a question of law . . .

"(2) The question whether a particular set of facts comes within

the description of such a word or phrase is one of fact . . ."

(1940) 40 SR (NSW) 126, at p 137

(see also Federal Commissioner of Taxation v. Broken Hill South

Ltd.

(1941) 65 CLR 150, at p 160

and Brutus v. Cozens

(1973) AC 854, at p 861

). (at p210)

In the above situation where application of the statute is clearly a question of fact, a question of law will only arise if there was no evidence to support the conclusion of fact or it is obvious from the transcript of the case that the Board has misunderstood the law in some relevant particular (Edwards v. Bairstow per Lord Radcliffe (1956) AC, at p 33 ). (at p210)
On the other hand a question of law will be involved where technical legal words must be construed before the statute can be applied to the found facts. Also, as stated previously, where the facts must fall clearly within or without the statute. (at p210)
Counsel for the taxpayer relied upon the judgment of Fullagar J. in Hayes v. Federal Commissioner of Taxation (1956) 96 CLR 47 for his first submission. He specifically relied on the passage in his Honour's judgment: "Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law" (1956) 96 CLR, at p 51 . However, this statement is in the context of whether a receipt of shares amounted to a receipt of income: "The taxpayer had to prove that what he received was not income, and the board determined that he had failed in his proof. But that determination involved a consideration of what constitutes income, and that is a question of law" (1956) 96 CLR, at p 51 . Thus in Hayes' case there was a question of construction of a technical word and therefore a question of law. (at p211)
Counsel for the taxpayer also relied upon Farmer v. Cotton's Trustees (1915) AC 922 especially the judgment of Lord Parker, from which Fullagar J. quoted in Hayes' case. It becomes obvious on close reading that when Lord Parker says: ". . . in my humble judgment where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only" (1915) AC, at p 932 , the operative words are "provisions properly construed". (at p211)
The issue clearly raised in Farmer v. Cotton's Trustees was whether the premises were "divided into and let in different tenements" within the meaning of the Customs and Inland Revenue Act, 1878. Lord Parker said the question could only be determined by "putting a construction on the subsection in question", and thus a question of law was involved. (at p211)
Similarly, in the case of XCO Pty. Ltd. v. Federal Commissioner of Taxation per Gibbs J. (1971) 124 CLR 343, at p 348 , the decision of the Board involved questions as to what constituted income and as to the construction of s. 26 (a) of the Act which were questions of law. (at p211)
In Fisher v. Deputy Federal Commissioner of Taxation (1966) 40 ALJR 328 , another case involving s. 26 (a), Owen J. considered the question whether land was bought for the purpose of resale at a profit to be a plain question of fact. No party had introduced a specific question of construction upon which the case had turned and the phrase was given its ordinary meaning so that no question of law was involved. (at p211)
In Federal Commissioner of Taxation v. Broken Hill South Ltd. (1941) 65 CLR 150 the majority of the High Court considered that in relation to taxation deductions claimed on calls on shares in a mining company carrying on "mining operations", the term "mining operations" was not a term of art, not technical but popular and its meaning was therefore a question of fact. Rich J. differed on this point, considering that "the proper legal effect of a proved fact is essentially a question of law". The application of the section "involves an appreciation of its meaning and some conclusion as to the extent of its operation" (1941) 65 CLR, at p 154 . He considered that the statute, in the words of Lord Parker in Farmer v. Cotton's Trustees (1915) AC 922 , had to be "properly construed". (at p211)
However, in the latter case of Commissioner of Taxation v. Miller (1946) 73 CLR 93, at p 101 , Rich J. indicated that a stricter line should be taken as to the involvement of questions of law for the purpose of appeals. In that case he considered that whether a person is a "resident" for the purposes of the relevant section of the taxing statute was a question of degree and therefore of fact. He was also of the opinion on the basis of what the legislature obviously intended, that for the future in cases where appeals lie on questions of law only, it would be wise to insist that the question of law suggested to be involved should be distinctly taken before the Board and the ruling of the Board obtained on it. This certainly would be a wise course to follow. However, it is not one that can be rigidly insisted upon as the Act stands. Though a point of law is not distinctly taken it may still appear from the reasons of the Board that it was involved in their decision. In such a case if an appellant wishes to contest the correctness of the point of law involved in the decision he cannot, in view of the terms of s. 196, be shut out from appealing. (at p212)
A question of law is involved in a decision where there was no evidence upon which the Board could have reached its decision, the implication being that the Board must have misdirected itself as to the correct legal interpretation of the statute or made a perverse finding. A submission of "no evidence", however, involves the difficulty that unless some restrictions are applied, an appeal is open to any aggrieved appellant who chooses to make such a submission. Rich J. considered that it was manifestly the intention of the legislature that this be not so. He considered that "a question of law should be really, and not merely colourably, involved" (1946) 73 CLR, at p 101 . (at p212)
Without attempting an exhaustive summary, it may be said that a "question of law" will be involved in a decision in the following circumstances: 1. If it was expressly raised and the Board made a ruling on it as a relevant factor in its decision; 2. If it is obvious from the decision or transcript of the case that the Board in arriving at its decision has misunderstood the law in some relevant particular; 3. Technical words had necessarily to be construed before the statute could be applied; 4. Where a particular set of facts had of necessity to be within or without the statute; 5. Where, in a submission of "no evidence" there is a real possibility of success. (at p212)
Turning to the present case, it is my opinion that the first submission of counsel for the taxpayer must fail. Counsel did not submit that there was "no evidence"; it was not a case where on the facts deduced from the evidence there could be no other conclusion than that the taxpayer had or had not the relevant purpose; and, "acquired by him for the purpose of profit-making by sale" was not submitted by the parties or considered by the Board to have any other than its ordinary meaning. (at p213)
The second submission was that the Board had been wrong in law when it found Dante Lombardo's purpose to be the same as that of his brother Vince. Counsel for the taxpayer submitted that the Board found that Vince had the intention to purchase the land for resale at a profit but that it had nowhere specifically said that the taxpayer had this purpose. Rather, he submitted, the Board could only find that the taxpayer's intention was to adopt the unexpressed purpose of Vince, whatever that may have been. In other words, his intention was simply to go along with Vince without knowing the actual plan. This, it was contended, was not a purpose relevant under the Act. (at p213)
However, the Board specifically found on the facts "that on the balance of probabilities" the taxpayer "adopted as his purpose of acquisition the purpose or purposes which was or were formed by Vince". The Board rejected evidence of the taxpayer's independent purpose. However, the Board were careful to stress in their reasons that they did not impute Vince's intention to the taxpayer nor did they approach the situation as one of principal and agent; rather it seems they found as a fact that some time prior to the acquisition of the land, the taxpayer adopted Vince's purpose of purchase which was profit-making by sale. (at p213)
Counsel referred finally to the question of onus of proof and whether the taxpayer had in fact received the land as a gift, both of which had been raised before the Board and dismissed by them. (at p213)
For an appeal to this Court the question of law must have been "involved" in the decision of the Board. "Involvement" indicates that the question of law must have been an integral part of the decision of the Board, adopted or rejected as a step in arriving at the final conclusion. Even if a question were raised before the Board and they gave a ruling on it in the course of the proceedings before them, it could only be "involved" in the final decision if it were relevant in it (Krew v. Federal Commissioner of Taxation (1971) 45 ALJR 324 ). (at p213)
It is my opinion that the appellant's third submission also fails because neither of the above submissions of law were "involved" in the decision of the Board. (at p213)
In my view the appeal should be dismissed with costs, including reserved costs. (at p213)

JUDGE2

FRANKI J. This is an appeal by leave from a judgment of a single judge of the Supreme Court of Western Australia. (at p213)

I do not consider that it is necessary to set out the facts in detail but, in broad outline, sales of four properties by three taxpayers, members of the same Italian family, were treated by the Commissioner of Taxation as giving rise to taxable income under the first arm of s. 26 (a) of the Income Tax Assessment Act 1936 ("the Act") which provides that "profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit-making by sale" shall be taxable income. The three taxpayers involved were the appellant Dante Lombardo, Catino Gino Lombardo and Domenico Mariano Lombardo and the three tax years involved were the years ended 30th June, 1968, 1969 and 1973. The three taxpayers objected to the inclusion of the profit arising from the sale of the relevant properties but the Commissioner rejected the objections and the taxpayers then sought reference of the matters to the Board of Review. The appeals of all three taxpayers in relation to each of the three years were heard together by the Board by consent and the Board dismissed the appeals and confirmed the assessments. (at p214)
Dante Lombardo then appealed pursuant to s. 196 (1) of the Act in respect of the years ended 30th June, 1968, 1969 and 1973 to the Supreme Court of Western Australia. The learned Supreme Court judge held that he had no jurisdiction because the decision of the Board did not involve a question of law. (at p214)
The question before us was whether the decision of the Board involved a question of law within the meaning of s. 196 (1) of the Act. (at p214)
In the Supreme Court the appellant objected to the tender of the transcript before the Board and therefore the question has to be decided by a perusal of the reasons for the joint decision given by the members of the Board. The appellant had a brother Vince, who had been an estate agent, and the Board made certain relevant findings of fact, to which I will refer later, in relation to the purchase of the subject properties. (at p214)
It is necessary to identify any question of law which was involved in the decision of the Board. The main arguments of the appellant were that any determination whether the facts found by the Board came within the provisions of s. 26 (a) of the Act was a question of law and, secondly, as a subsidiary question, whether in determining if the taxpayer was assessable under s. 26 (a), the intention of his brother Vince, who was substantially involved in the property dealings out of which the assessments arose, could be taken into account in the way that the Board did. This subsidiary point was put more precisely by the appellant in the following form: "Is it possible for a taxpayer to have the requisite intention, the intention required by s. 26 (a), merely by specifically adopting the unexpressed intention of his agent; in other words, merely by deciding to do whatever his agent wanted him to do." The appellant also mentioned certain other arguments, but in my opinion, they were not of any substance: they were based upon the onus of proof and upon a suggestion that the relevant land had, in fact, been received as a gift. (at p214)
Various judgments have dealt with what is a question of law in relation to s. 196 of the Act but I think it is convenient to commence by referring to what was said by Rich J. in Commissioner of Taxation v. Miller (1946) 73 CLR 93 when he said on this question: "It is not necessary to multiply authorities on the point, because they have recently been collected by the Supreme Court of New South Wales in the cases of Australian Gas Light Co. v. Valuer-General (1940) 40 SR (NSW), at pp 137-138 and Dennis v. Watt (1942) 43 SR (NSW) 32 " (1946) 73 CLR, at p 101 . (at p215)

The passage referred to in Australian Gas Light Co. v. Valuer-General is in the judgment of Jordan C.J. and it has received approval in a number of other cases, for example, by Williams J. in Federal Commissioner of Taxation v. Broken Hill South Ltd. (1941) 65 CLR, at p 160 , by Windeyer J. in Buckland v. Federal Commissioner of Taxation (1960) 34 ALJR 60, at p 61 , by Jacobs J. in Re Neil; Ex parte Cinema International Corporation Pty. Ltd. (1976) 50 ALJR 499, at p 502 , and it has been referred to by several Supreme Court judges. In Australian Gas Light Co. v. Valuer-General Jordan C.J. pointed out, inter alia, that the authorities appeared to establish that the question of what is the meaning of an ordinary English word or phrase as used in a statute is one of fact and not of law but that the meaning of a technical legal term, as for example the words "charitable purposes", is a question of law and that the question whether a particular set of facts comes within the description of an ordinary English word is one of fact. If one bears this approach in mind it becomes clear that the key words in the passage quoted in the judgment of Fullagar J. in Hayes v. Federal Commissioner of Taxation (1956) 96 CLR, at p 51 are "properly construed". Counsel for the appellant relied upon this judgment, but it is because a question of construction arises that a question of law is involved. (at p215)
In the appeal before us it has not been put, nor does it appear, that any question of the proper interpretation of s. 26 (a) of the Act was involved before the Board nor was it suggested that there was no evidence from which the Board could reach the conclusion to which it came. It is necessary that a question of law should be really, and not merely colourably, involved (Fisher v. Deputy Federal Commissioner of Taxation (1966) 40 ALJR 328 ). Our task has been made more difficult by the fact that the appellant chose to exclude the transcript before the Board in the proceedings before the learned trial judge. It also seems relevant to bear in mind that under s. 190 of the Act the burden of proving that the assessment is excessive lies upon the taxpayer. In addition the appellant must satisfy the court, on the balance of probabilities, that the decision of the Board involves a question of law. (at p215)
I am satisfied that the first submission of the appellant should be rejected. I am satisfied that a question of law is not involved merely because it is necessary to decide whether the facts found by the Board come within the provisions of s. 26 (a) where there is no question of the proper interpretation of any words in that section involved. In the proceedings before the Board, and indeed before us, it has not been argued that the meaning of any technical legal term in the first arm of s. 26 (a) was in issue. (at p216)
It is next necessary to consider what the appellant called its subsidiary argument. This has given me considerable concern but I have reached the conclusion, not without some hesitation, that the decision of the Board includes the following findings of fact: (a) Vince's intentions when he brought about the purchases of the relevant properties "were concerned with the clear purpose of profit-making by their sale". (b) Neither the appellant nor his two brothers who were involved in the decision of the Board "were devoid of any relevant purposes" when the properties were purchased. (c) The purpose of the appellant was the purpose formed by Vince and adopted by the appellant. (d) In deciding that the appellant adopted Vince's purposes the Board had not sought to "impute" Vince's intentions to the appellant nor had they treated the case as one of imputing the intention of an agent to a principal. (at p216)
Because of these findings I feel compelled to conclude that the Board made a finding of fact that the appellant had the purpose of profit-making by sale at the time of the acquisition of the relevant property. (at p216)
It may be that a question of law would have been involved if the finding of the Board had been based on a determination that the taxpayer "specifically adopted the unexpressed intention of his agent", as it was put by the appellant in his argument, but there is nothing in the material before us which I consider sufficient to establish on the balance of probabilities that the intention of the agent, in this case, Vince, was unexpressed or that the appellant simply took the view at the relevant time that he would do whatever Vince wanted with the property. As I have said the onus lies upon the appellant to establish on the balance of probabilities that the decision of the Board involves a question of law and in my opinion he has not succeeded. (at p216)
I would dismiss the appeal and order that the appellant pay the respondent's costs of this appeal. (at p216)

JUDGE3

TOOHEY J. Section 196 (1) of the Income Tax Assessment Act 1936 provides for an appeal to a Supreme Court "from any decision of the Board that involves a question of law". (at p216)

The taxpayer, by leave, appealed to this Court against a decision of the Supreme Court of Western Australia (Wickham J.) that, on an appeal to the Supreme Court from a decision of a Board of Review confirming the assessment of income tax raised against the taxpayer, the appeal was not competent, the decision of the Board involving no question of law. (at p217)
A brief reference to the facts is necessary to provide the context in which the question of jurisdiction arose. The taxpayer, together with his brother and father, was assessed to tax in respect of profit arising from the sale of lane in the years ended 30th June,1968, 1969 and 1973. All objected to the assessments and all objections were disallowed. The three taxpayers asked the Commissioner to refer his decisions to a Board of Review and that was done. For reasons given, the Board upheld the decisions of the Commissioner and confirmed the assessments. (at p217)
By consent, all references before the Board were heard jointly. Before the Supreme Court the taxpayer asked that his appeal be heard separately. That was done; the appeals of the other members of the family are still pending. (at p217)
In the opinion of the Board the land, the sale of which produced the profit the subject of the assessments, was acquired for the purpose of profit-making by sale. (at p217)
When the matter came before the Supreme Court, the questions of law said to be involved in the decision of the Board were expressed in the notice of appeal as follows: "1. The proper construction of s. 26 (a) of the Income Tax Assessment Act 1936. 2. Whether the appellant acquired his interest in the properties referred to in the decision of the Board of Review as 'Helm Street' and 'Clay Lands' for the purpose of profit-making by sale." (at p217)
Before this Court the question of law was expressed more broadly. "3. The learned judge was wrong in law in that he should have held that a decision of the Board involving s. 26 (a) of the Act is a decision involving a question of law." (at p217)
The meaning and operation of s. 196 (1) of the Act have been considered in a number of cases, especially when an appeal from a Board lay to the High Court. None precisely answers the problem raised in the present case but it is possible to extract from them some principles that are helpful in arriving at an answer. (at p217)
The jurisdiction of a Supreme Court arises when and only when a decision of a Board involves a question of law. A proposition that there was no evidence by which a Board could have reached its decision or made a material finding would, no doubt, raise a question of law. It may be said that, by implication, the decision itself must then have involved such a question. When such a proposition is urged to support jurisdiction, procedural questions may arise. If an appellant need do no more than assert that there was no evidence to support a Board's conclusion, it would seem that any party dissatisfied with a decision of a Board may appeal to the Supreme Court. Perhaps it was with a concern for such a result that in some cases the courts have spoken of the need that a question of law "should be really, and not merely colourably, involved" (Commissioner of Taxation v. Miller per Rich J., quoted by Owen J. in Fisher v. Deputy Federal Commissioner of Taxation (1966) 40 ALJR 328 ). See also Buckland v. Federal Commissioner of Taxation per Windeyer J. (1960) 34 ALJR, at p 62 . (at p218)
It would be difficult to test even the existence of such a question without resort to the evidence heard by the Board. In some cases (the present appeal is such a one), the Supreme Court has no access to that material. It may be that where such a question is asserted, the court should have regard to the transcript of that evidence for the purpose only of deciding whether the decision of the Board truly involves the question of law. This was done by Owen J. in Fisher v. Deputy Federal Commissioner of Taxation. (at p218)
However, the present appeal does not take us into that area of inquiry. Neither before Wickham J. nor before this Court did the appellant assert that the decision of the Board or any part of it had no evidence to support it. (at p218)
Counsel referred to a number of English decisions as a guide to the meaning of s. 196 (1) of the Act. While in some of those decisions there are statements of principle that are helpful, it must be remembered that under s. 149 of the Income Tax Act of the United Kingdom a right of appeal to the High Court from a determination by the general commissioners or by the special commissioners is conferred upon an appellant who is "dissatisfied with the determination, as being erroneous in point of law". Thus locus standi exists when an appellant asserts dissatisfaction with a determination on the ground that it is erroneous in point of law. That being asserted, the High Court has jurisdiction but the decision appealed from will stand unless the court decides that it is wrong in law. (at p218)
The provisions of s. 196 (1) are narrower and require a different approach to that taken under the English legislation. (at p218)
In the Australian decisions these general principles have been established: 1. The proper construction of s. 26 (a) of the Act is a question of law. XCO Pty. Ltd. v. Federal Commissioner of Taxation (1971) 124 CLR, at p 348 ; Tilley v. Federal Commissioner of Taxation (1977) 17 SASR 291 . 2. A question as to what constitutes income is a question of law. XCO Pty. Ltd. v. Federal Commissioner of Taxation (1971) 124 CLR, at p 348 . 3. Once a decision of the Board involves a question of law, the whole decision of the Board and not merely that question is open to review. Ruhamah Property Co. Ltd. v. Federal Commissioner of Taxation (1928) 41 CLR 148, at p 151 ; XCO Pty. Ltd. v. Federal Commissioner of Taxation (1971) 124 CLR, at p 348 . 4. For purposes of jurisdiction it is immaterial whether the question of law involved was rightly or wrongly decided by the Board. Krew v. Federal Commissioner of Taxation (1971) 45 ALJR 324 ; XCO Pty. Ltd. v. Federal Commissioner of Taxation (1971) 124 CLR, at p 348 . (at p219)
What does it mean to say that a decision of a Board involves a question of law? When the question is itself expressly stated, there will be no difficulty in saying that the question was involved in the Board's decision. But the fact that a question is not expressly referred to does not mean that it is not so involved. The Concise Oxford Dictionary's definition of "involve" includes "imply" and "entail". If a perusal of a Board's decision shows that some step, although not expressly referred to, must have been taken by the Board in arriving at its conclusion, that matter was involved in the decision. And if the matter, on examination, is shown to be a question of law, then a question of law will have been involved. (at p219)
It may be that during the course of a hearing a Board determines some question of law, for instance the admissibility of evidence, but that determination neither expressly nor impliedly plays any part in the actual decision of the Board. An argument as to the correctness of that ruling would not, I think, be involved in the Board's decision. (at p219)
The application of these principles is bound to produce some difficulty from time to time, not least in the present appeal. (at p219)
The question of law posed to this Court proved, in discussion with the appellant's counsel, to be as follows. Once facts are found by or are agreed before a Board, the question whether those facts fall within or without s. 26 (a) of the Act is a question of law. The appellant refined that proposition somewhat by saying that at least, when a Board decides that s. 26 (a) applies to the facts as found or agreed, that conclusion will always involve a question of law. (at p219)
The appellant did not say that such a question only arises when it is contended that there was no evidence to justify the Board's decision. It arises, said the appellant, in the broad form in which I have expressed it. In that broad form, the proposition cannot be sustained. In my view, an appellant must identify in the decision of a Board a particular question of law involved, expressly or by implication. This the appellant failed to do. (at p219)
To support that broad proposition, the appellant relied primarily upon the judgment of Fullagar J. in Hayes v. Federal Commissioner of Taxation (1956) 96 CLR 47 . It is a lengthy passage but, because of the importance attached to it by the appellant, it is as well to set it out in full: "There are decisions in taxation cases, including decisions of the House of Lords, which, to my mind, create serious difficulty in relation to the distinction, which often has to be drawn, between 'questions of fact' and 'questions of law'. For present purposes, however, I think it sufficient to refer to what was said by Lord Parker of Waddington in Farmer v. Cotton's Trustees (1915) AC, at p 932 in a passage quoted by Latham C.J. in Commissioner of Taxation v. Miller (1946) 73 CLR, at p 97 . His Lordship said: 'The views from time to time expressed in this House have been far from unanimous, but in my humble judgment where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only.' With the greatest respect, this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The 'facts' referred to by Lord Parker in the passage quoted are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law" (1956) 96 CLR, at p 51 . (at p220)
But, when analysed, neither the judgment of Fullagar J. nor that of Lord Parker is authority for the broad proposition asserted by the taxpayer. (at p220)
Farmer v. Cotton's Trustees (1915) AC 922 concerned a large building let to a number of tenants, the issue being whether the premises were "divided into and let in different tenements" within the Customs and Inland Revenue Act, 1878. In the passage quoted by Fullagar J. from the judgment of Lord Parker, the words "properly construed", qualifying "the provisions . . . of some statutory enactment", are, I think, basic. That becomes clearer when the succeeding sentences in the judgment are read. In his Lordship's view the question whether the building was divided and let in different tenements, "can only be determined by putting a construction on the sub-section in question, and, therefore, is one of law . . . " (1915) AC, at p 932 . (at p220)
In Hayes v. Federal Commissioner of Taxation (1956) 96 CLR 47 the question was whether a receipt of shares amounted to a receipt of income. The extract from the judgment of Fullagar J. quoted earlier in these reasons was preceded by this passage: "It was said that the decision of the board here was a decision on a question of fact, there being no disagreement between the parties as to the law applicable to the case. I cannot accept this view. It is true that the decision was a decision on a question of fact in the sense that there was an ultimate factum probandum: the taxpayer had to prove that what he received was not income, and the board determined that he had failed in his proof. But that determination involved a consideration of what constitutes income, and that is a question of law. The board had also to consider the construction of s. 26 (e) of the Act. The decision turned on the view taken by the board on those matters, and that decision is right or wrong according as the board's view on those matters was right or wrong" (1956) 96 CLR, at p 51 . No doubt, in many cases involving the application of s. 26 (a) of the Act a question of law will be involved. There may be a dispute as to the proper construction of the section; it may be that the meaning of particular words used in the Act is in issue. But there must be first an identification of the question itself. (at p221)
I find nothing in Hayes v. Federal Commissioner of Taxation or in Farmer v. Cotton's Trustees that supports a proposition in the broad terms expressed by the appellant. (at p221)
In Commissioner of Taxation v. Miller (1946) 73 CLR, at p 93 , referred to in the judgment of Fullagar J., there was a question whether or not a person was "resident" within the meaning of a section of the Income Tax Assessment Act. In the view of the majority, that was a question of fact. At the end of the judgment of Dixon J. appear the following words which have application to the present case. "The Board have given their reasons and no misapprehension of the meaning of the provision in question is disclosed and no misconception appears as to what amounts to 'residence' as a general proposition. No proposition of law appears to have been in contest and no contestable proposition of law appears to have been assumed. It all seems to me to come back to the so-called question of fact" (1946) 73 CLR, at p 104 . (at p221)
In opening, the appellant's counsel spoke of what he described as "a subsidiary question of law". It was formulated as a question: "Whether or nor in determining whether the taxpayer was assessable under s. 26 (a), the intention of his brother who was substantially involved in the property dealings, out of which the assessments arose, could be taken into account in the way that the Board did". (at p221)
It is arguable whether that question truly arose from the notice of appeal to this Court, but it was argued before the Supreme Court and the appellant was permitted to argue it before us. The brother referred to was Vince, the eldest of the family and the first to come from Italy to Australia. He, along with the three taxpayers, gave evidence before the Board who were of the opinion that he was "the mastermind of the family's activities in relation to the purchase of land". The Board concluded that the three taxpayers were completely in the hands of Vince who managed their affairs. There was a specific finding "that on the balance of probabilities each taxpayer adopted as his purpose of acquisition the purpose or purposes which was or were formed by Vince". Furthermore, the Board expressly rejected any evidence that the taxpayers had purposes independent of Vince's. (at p222)
The Board was at some pains to emphasize that their finding was "as a matter of belief based on the evidence, that the taxpayers adopted Vince's purposes. We have not sought to 'impute' his intentions to them . . . Nor have we approached the problem as one in which the intention of an agent is imputed to a principal". (at p222)

Wickham J. was of the view that the finding of the Board that the taxpayers adopted Vince's purposes was "a conclusion of fact and not a conclusion of law and it does not involve a question of law". (at p222)
When asked by this Court what question of law was involved in that part of the Board's decision, counsel for the appellant answered: "Is it possible for a taxpayer to have the requisite intention, the intention required by s. 26 (a), merely by specifically adopting the unexpressed intention of his agent; in other words, merely by deciding to do whatever his agent wanted him to do." While I have some difficulty with the way in which the Board formulated its approach to this aspect, I am not persuaded that a question of law is involved in its decision. The taxpayer did not assert that there was no evidence to justify the specific finding of the Board that he adopted as his purpose of acquisition the purpose which was formed by Vince. That finding must be taken in context. And the context includes findings by the Board that the taxpayer did have a purpose when he purchased and that it was not one independent of that formed by Vince which was a clear purpose of profit-making by sale. (at p222)
The Board's findings were of a purpose formed by Vince and adopted by the taxpayer before acquisition. That appears from the reasons taken as a whole and from the argument before this Court. Counsel for the taxpayer did not present the case on any other basis, counsel for the Commissioner took that view and in reply counsel for the taxpayer did not dissent from it. A finding of adoption of purpose after acquisition may well have involved a question of law but that is not the situation here. (at p222)
The Board's findings were findings of fact and the formulation by counsel of the question as one of law does not alter the true character of those findings or of their implications. I am in agreement with the view of Wickham J. that the Board's conclusion as to the adoption of purpose was one of fact, involving no question of law. (at p222)
Counsel referred to two other matters. One concerned the onus of proof, raised at the commencement of proceedings before the Board and resolved against the taxpayer by the Board. The other related to a submission that having regard to the way in which the family managed their finances, land acquired by the taxpayer was by way of gift. (at p222)
In my view, neither question can be said to have been involved in the decision of the Board and neither question was capable of being properly raised within the grounds of appeal before this Court nor, I think, before the Supreme Court. (at p223)

ORDER

The appeal should be dismissed.

[1979] FCA 105

17 OCTOBER 1979