Michell Carbonised Wool Exports Pty Ltd v Export Development Grants Board

[1984] FCA 74

Re: MICHELL CARBONISED WOOL EXPORTS PTY. LIMITED; MICHELL WOOL EXPORTS
(CANADA) PTY. LIMITED; MICHELL LEATHER EXPORTS PTY. LIMITED; MICHELL WOOL TOP
EXPORTS PTY. LIMITED; MICHELL SHEEPSKINS PTY. LIMITED; MICHELLEX WOOL PTY.
LIMITED; G.H. MICHELL & SONS (S.A.) PTY. LIMITED and MICHELL SCOURED WOOL
EXPORTS PTY. LIMITED
And: EXPORT DEVELOPMENT GRANTS BOARD
Nos. G295 - G302 of 1983
Administrative Law - Statutes
52 ALR 609/2 FCR 93

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Toohey(1), McGregor(2) and Morling(1) JJ.

CATCHWORDS

Administrative Law - appeal from Administrative Appeals Tribunal - export expansion grants - meaning and operation of s.16 of Export Expansion Grants Act 1978 - whether sub-s.16(1) subject to implied limitation - meaning of "act or thing done" in sub-s.16(1) - relevancy of purpose with which act or thing done - meaning of "corresponding increase" in sub-s.16(1) - whether sub-s.16(1) may only operate at the end of the grant years - exercise of discretion by Export Grants Board - meaning of "necessary" in sub-s.16(1)

Export Expansion Grants Act 1978 ss. 6, 13, 16

Export Market Development Grants Act 1974 s. 38

Statutes - Interpretation - "corresponding increase" - "Act or thing which would result" - Whether purposive act required - Necessity of two years for comparison to be made - Export Development Grants Act 1977 (Cth), s. 16.

HEADNOTE

The Export Development Grants Act 1977, (Cth) provides for incentive grants to be made to exporters, and for an increment in the grant to be made in a year in which there has been an increment in the export earnings of a person. The increment is on a scale which shows a relative decline with increasing value of exports. The Act therefore confers on the Export Development Grants Board power by s. 16 where the Board is of opinion that "an act or thing . . . would result in an increase in the total of the amounts paid as grants without there being a corresponding increase in the total of the amounts of export earnings" to make certain adjustments to avoid such a result.

Held (Per Toohey, McGregor and Morling JJ.): 1. The act or thing referred to in s. 16 need not have been done with the object of obtaining an increased grant.

(Per Toohey and Morling JJ., McGregor J. dissenting.)

2. Section 16 predicates a comparison between two grant years and is therefore not available in the first grant year.

3. The expression "corresponding increase" in s. 16 requires the increased export grant to be compared with and possess some proportionality with the increased export earnings so that it should not be possible conformably with s. 16 to maintain the same level of expenditure as before while attracting an increased level of grant.

(Per Toohey and Morling JJ.):

4. The discretion conferred by s. 16(1) is only to enable the Board to make those adjustments which are appropriate to achieve the result of which the section speaks.

HEARING

Darwin, 1984, February 28; April 6. #DATE 6:4:1984

APPEALS.

Appeals against decisions of the Administrative Appeals Tribunal affirming decisions of the Export Developments Grants Board.

D. A. Staff Q.C. and B. W. Collins, for the appellants.

B. J. Tamberlin Q. C. and P. Fleming, for the respondents.

Cur. adv. vult.

Solicitors for the appellants: Clayton Utz & Co.

Solicitor for the respondent: Acting Commonwealth Crown Solicitor.

G.F.V.

ORDER

1. Each of the appeals is allowed.

2. The decision of the Administrative Appeals Tribunal dated 9 September 1983 confirming decisions of the Export Development Grants Board made on 21-22 February 1980 and varied on 25-26 November 1981 be set aside.

3. The matters the subject of the decisions of the Export Development Grants Board be remitted to the Board to be dealt with in accordance with the reasons for judgment of this honourable court.

4. The respondent pay the applicants' costs of this appeal.

Appeal allowed with costs. Decisions of the Administrative Appeals Tribunal set aside.

JUDGE1

These appeals concern the operation of the Export Expansion Grants Act 1978 ("the Act"). The Act, as its long title indicates, relates to "grants for the purpose of providing incentives for the expansion of exports".

The appeals are against decisions of the Administrative Appeals Tribunal that in turn affirmed decisions of the respondent, the Export Development Grants Board. Those decisions determined grants to be made to the applicants pursuant to s.11 of the Act in respect of the grant year commencing on 1 July 1977.

One of the applicants, G.H. Michell & Sons (S.A.) Pty. Ltd., was incorporated in 1947 as an exporter of greasy wool and processed products. Early in 1978, G.H. Michell & Sons Pty. Ltd., the holding company for subsidiaries of the Michell Group, was concerned at what Mr. J.A. Michell, the marketing manager of the group, described as "a serious and sharp decline in profitable sales". To meet this situation, a decision was made to incorporate a number of specialist exporting companies which would assume the exporting functions of G.H. Michell & Sons (S.A.) Pty. Ltd. in respect of processed products and certain export markets. The other applicants, with the exception of Michell Sheepskins Pty. Ltd., were incorporated on 7 March 1978. That company was incorporated on 19 May 1978. The name of each company is a sufficient indication of the activity it was formed to carry out.

The scheme of the Act is to provide an incentive grant entitlement to an exporter in a grant year where there has been an increment in the export earnings of that person. Sub-section 11(1) obliges the Board to "consider every claim duly made and determine whether the claimant has an incentive grant entitlement and, if so, the amount of that incentive grant entitlement".

The Act is replete with words and phrases that are given a particular meaning by s.3, the definition section. The outcome of these appeals turns in large measure upon the interpretation and application of some of those words and phrases.

Although the Act was not assented to until 28 November 1978, it is deemed to have come into operation on 1 July 1977 (s.2). The term "grant year" is a reference to the year commencing on 1 July 1977 and, at the relevant time, included any of the 4 next succeeding years. In 1981 the Act was amended to include any of the 5 next succeeding years.

The export earnings increment of a person, in relation to a grant year, is determined by a formula contained in s.6. The formula has regard to where the person had export earnings in each of the 3 immediately preceding years, in only 2 of the 3 immediately preceding years, in only 1 of the 3 immediately preceding years and where there were no export earnings during the 3 immediately preceding years. The export earnings increment is the amount by which the person's export earnings in the grant year exceeds an amount equal to:

"(a) where the person had export earnings in each of the 3 immediately preceding years - one-third of the sum of his export earnings in those 3 years;

(b) where the person had export earnings in only 2 of the 3 immediately preceding years - one-half of the sum of his export earnings in those 2 years;

(c) where the person had export earnings in only one of the 3 immediately preceding years - one-half of the sum of -

(i) his export earnings in that one year; and

(ii) 67 per centum of his export earnings in the relevant grant year; or

(d) where the person did not have any export earnings during the 3 immediately preceding years - 67 per centum of his export earnings in the relevant grant year."

It may be seen that the export earnings increment depends very much upon the duration of a person's export earnings as at the time a grant is sought.

The incentive grant entitlement of a claimant, in relation to a grant year, is determined according to a formula contained in s.13. At the relevant time the entitlement was an amount equal to:

"(a) where his export earnings increment for that year does not exceed $500,000 - 15 per centum of that increment;

(b) where his export earnings increment for that year exceeds $500,000 but does not exceed $5,000,000 - the sum of $75,000 and an amount equal to 10 per centum of the difference between that increment and $500,000;

(c) where his export earnings increment for that year exceeds $5,000,000 but does not exceed $10,000,000 - the sum of $525,000 and an amount equal to 5 per centum of the difference between that increment and $5,000,000; or

(d) where his export earnings increment for that year exceeds $10,000,000 - the sum of $775,000 and an amount equal to 2.5 per centum of the difference between that increment and $10,000,000."

It may be seen that s.13 prescribes differential rates, with a percentage advantage where the export earnings increment does not exceed $500,000.

The differential bases in ss. 6 and 13 offer some scope for manipulation. To meet this, the Act confers on the Board certain powers in ss. 9 and 16. It is unnecessary to refer to the earlier section; it did form part of the Board's initial determination but was later regarded by the Board as having no application to the claims before it. That subsequent view was not the subject of any challenge before the Tribunal or before the Court. But s.16 lies at the very heart of these appeals. As almost every element of sub-s.(1) of that section was the subject of debate, it is necessary to set it out in its entirety.

"16.(1) Where the Board is of the opinion that an act or thing (including the making of an agreement, arrangement or payment, the forming of a corporation or partnership or the distribution of income or activities as between different persons or different years) has been done that, if the powers of the Board under this section were not exercised, would result in an increase in the total of the amounts paid as grants without there being a corresponding increase in the total of the amounts of the export earnings of persons in the grant years, the Board, to the extent that it thinks it necessary to do so to prevent or limit that result, may, for the purposes of this Act, disregard or adjust all or any of the following amounts, that is to say, the amount of the export earnings, the amount of the export earnings increment, or the amount of the incentive grant entitlement, of a claimant for a year, being an amount that, in the opinion of the Board, has been affected by, or is an amount of anything resulting from, that act or thing."

In effect the Board applied sub-s. 16(1) to determine the incentive grant entitlements of the applicants by reference to the amount to which G.H. Michell & Sons (S.A.) Pty. Ltd. would have been entitled in the grant year beginning 1 July 1977 if it had been the only exporter. By reason of the differential bases in ss. 6 and 13, the amount of the entitlement was held to be $894,216, rather than the $1,010,644 to which the applicants would have been entitled had the Board not applied sub-s.16(1). The difference is $116,428, a difference which the Court was told grew over succeeding years.

The reasons for decision of the Tribunal contain a schedule of export earnings and grant calculations. It is unnecessary to refer to this schedule as the applicants accepted the accuracy of the calculations, while challenging the basis upon which they had been made.

Sub-section 16(1) contains a number of elements, some of which look to the circumstances in which the Board may exercise its powers under the section, and some of which are concerned with the exercise of discretion that then arises.

As to the former, it is important not to lose sight of the fact that the sub-section is operative where the Board "is of the opinion that an act or thing . . . has been done that, if the powers of the Board under this section were not exercised, would result in an increase in the total of the amounts paid as grants without there being a corresponding increase in the total of the amounts of the export earnings of the persons in the grant years . . ." (emphasis added).

It is not the function of this Court to substitute its own opinion on matters which the legislature has left to the judgment of the Board and to the Tribunal on review; it is to decide whether the Tribunal, in reaching its decision, acted in accordance with the statute. Elliott v. Southwark London Borough Council (1976) 1 WLR 499 at p. 507, Sean Investments Pty. Ltd. v. MacKellar (1981) 38 ALR 363 at p.375. See also Australasian Jam Co. Pty. Ltd. v. Federal Commissioner of Taxation (1953) 88 CLR 23 at p.27. Of course, if the applicants can show that the Tribunal proceeded on a misunderstanding of sub-s.16(1) and that in the circumstances it was not open to the Board to apply s.16, this Court is bound to set aside the decision of the Tribunal. Again it must be borne in mind that if sub-s.16(1) is held to apply, there is a discretion vested in the Board in preventing or limiting the result that would enure if the sub-section were not applied. The precise scope of that discretion will arise for consideration only if the Tribunal was right in affirming the decision of the Board to apply the sub-section.

It is convenient to dispose first of a submission made on behalf of the applicants and made by way of an alternative argument. The submission was that sub-s.16(1) should be construed as subject to an implied limitation, either:

"(i) that the act or thing be one done with the object of obtaining an increased total grant; or

(ii) that the act or thing be not done for the bona fide commercial object or purpose of promoting and obtaining increased export earnings".

In our view that submission cannot succeed. Sub-section 16(1) is quite silent as to object or purpose. It looks to a situation in which the Board is of the opinion that something has been done that, save for the operation of the sub-section, would have a certain result. Nor can the applicants derive any comfort from s.15AA of the Acts Interpretation Act 1901. That section requires that preference be given to a construction of a provision of an Act "that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not). . .". The purpose or object underlying the Act may be gleaned in its long title, to which reference has already been made. The Act is concerned with providing incentives for the expansion of exports. But part of that concern is to prevent an act or thing being done that would result in an increase in the amounts of the grants where there has been no corresponding increase in the amounts of the export earnings. Even if the purpose or object of the Act is to be found only in the long title, a construction of s.16 that excludes the implied limitation contended for is entirely consistent with that purpose or object.

Counsel for the respondent drew the Court's attention to s.38 of the Export Market Development Grants Act 1974 in its original form. That legislation is comparable to the Export Expansion Grants Act and s.38, as it presently stands, is almost identical with s.16 of the Export Expansion Grants Act. But, in its original form, s.38 required the Board to be satisfied that an act or thing had been done "with a view to the obtaining of, or to effecting the amount of, a grant . . ." and that it was "of such a nature that it constitutes an attempt to abuse this Act". The legislature might readily have chosen some such language for sub-s.16(1) if it had regarded the purpose with which an act or thing had been done as relevant.

To say that the object or purpose with which the Act or thing was done has no relevance to the coming into operation of sub-s.16(1) is not to say that, in the exercise of its discretion under the sub-section, the Board may not have regard to that object or purpose. That is a matter on which we need not express a concluded view. In Ausmet Pty. Ltd. v. Export Development Grants Board (unreported decision of Administrative Appeals Tribunal, delivered 3 February 1983) the Tribunal asked:

"But even if it be accepted that an act or thing was done in the base period that had the specified result, why is it necessary or desirable to limit that result which flowed from a sensible commercial decision obviously taken for the purpose of increasing exports and in the best interests of the steel exporting group?".

As to the expression "an act or thing", it was not argued that the formation of the companies in 1978 could be said of itself to have resulted in an increase in the total of the amounts paid as grants. It was common ground that it was the formation of the companies and their carrying on of export businesses that resulted in the increase in question.

The central issue between the parties was as to the interpretation and application of the words "without there being a corresponding increase in the total of the amounts of the export earnings of persons in the grant years".

The Tribunal dealt with these words in this way:

"Section 16(1), in our opinion, turns its attention not to whether or not there is likely to be an increase in export earnings, but rather to whether the increase in the total amounts paid as grants corresponds or will correspond to the increase in the total of the amounts of the export earnings of persons. Lack of correspondence can result in a number of ways, one of which may be that the act or thing done gives rise to favourable grant rights by virtue of the operation of s.13 and another may result from the fact that the proprietors of the business in one or more of the grant years do not have actual base period exports. The word 'corresponding' encompasses these two factors amongst others".

With respect to the Tribunal, that view of sub-s.16(1) tends to beg the question as to what is meant by "corresponding". The question must still be asked - with what is the increase in the total of the amounts of the export earnings of persons in the grant years to be compared and what measure of correspondence (if any) is required?

In the applicants' submission, "corresponding" means consequential or responsive so that it is enough if the act or thing done results in an increase in the total of the amounts paid as grants and a consequential increase in the total of the amounts of the export earnings. The applicants argue that there cannot be a correspondence in any other sense because like is not being compared with like. It is a further part of their submission that the reference to "grant years" contemplates one adjustment in respect of any relevant act or thing, to be made in the light of the effect of that act or thing on the total grants made in all the grant years. This argument would preclude any adjustment pursuant to s.16, except at the end of the period of grant years specified by the Act (now 6 years as from 1 July 1977).

The applicants find additional support for this submission in sub-s.16(2) which extends the power of the Board under the preceding sub-section "to adjusting the amount of the incentive grant entitlement of the person notwithstanding that a grant in respect of the amount has been paid . . .". The sub-section creates an indebtedness to the Commonwealth in respect of any difference emerging and provides that the indebtedness may be deducted from monies payable to the person under the Act or recovered from him in a court of competent jurisdiction.

In the respondent's submission, "corresponding" carries the notion of being conformable to or congruous with. The respondent challenges the proposition that s.16 contemplates an adjustment at the end of a period of years. In its submission, the words "in the grant years" are no more than a convenient way of referring to each of the relevant grant years. It points to s.12 which contemplates that claims are made within 5 months after the end of a grant year and, once made, must be determined by the Board. The pattern of the Act generally (see in particular ss. 5, 6 and 13) is to look at what has happened in a particular grant year.

The applicants' case is that it was not appropriate for the Board to consider the operation of s.16 by reference only to the grant year beginning 1 July 1977 and that an examination of the relevant years would disclose an increase in the total of the amounts of the export earnings of the applicants, being an increase which was responsive to or consequential on their incorporation and entry into the export business. They point to the evidence of Mr. J.A. Michell that:

"Michell's export sales have increased substantially since the 1977/78 financial year . . . I believe that the incorporation of the specialist companies has contributed significantly to that increase".

That evidence was referred to by the Tribunal without demur. At the same time, the Tribunal expressed itself as follows:

"The evidence does not show the extent to which such success as the Michell group has had has been due to the incorporation of the separate companies rather than the other steps such as the personnel changes and the changes in responsibilities which were introduced at the same time".

The difficulty that arises from confining the operation of s.16 to a particular grant year is that there is nothing against which the export earnings may be measured to determine whether there has been "a corresponding increase". That is not to say that "corresponding increase" requires some proportionality; it is enough, in our view, that there be some relationship between an increase in grants and an increase in earnings. But, whatever view is taken of "corresponding", there must be some reference to earlier export earnings in order to determine whether or not there has been an increase.

Within the ambit of one year it may readily be said that an act or thing done has resulted in an increase in the amount paid as grants, that is an increase measured against the amount payable if the act or thing had not been done. But the amount of the export earnings in any grant year is constant whether the earnings have been derived by 1 or 8 companies. How is it possible to speak of "an increase" in those earnings, let alone "a corresponding increase"?

It might be thought that the use of the word "prevent" in sub-s.16(1) evidences a legislative intention that the Board's power of adjustment extends to refusing or reducing a grant in the first grant year, since the ordinary meaning of "prevent" carries with it the notion of acting in anticipation of a future event. On this approach the sub-section would authorise the Board to act in anticipation of a grant being paid in the first grant year and to reduce or refuse the grant which otherwise might be payable. We see the force of this argument but we do not think it answers the difficulty to which we have referred. The Board is given power to act so as to prevent a result which can only be seen to have eventuated when a comparison is made between export earnings in two different years. It may take the preventative action referred to in the sub-section when considering a second or subsequent application for a grant. If it then determines that a grant that has already been paid should be reduced, sub-s.16(2) is available to facilitate recovery of any overpayment.

This approach to sub-s.16(1) accords, we think, with the views expressed by the Administrative Appeals Tribunal in R.J. Gilbertson Pty. Ltd. & Others v. Export Development Grants Board, delivered on 1 February 1984. That decision was concerned with s.38 of the Export Market Development Grants Act, a section which as already noted follows closely the language of s.16 of the Export Expansion Grants Act. The main difference is that the correspondence there referred to is in "the total of the amounts of the eligible expenditure of persons during the grant years". The Tribunal referred to the decision in Ausmet Pty. Ltd. v. Export Development Grants Board, mentioned earlier, but unfortunately it does not seem to have been referred to the decision of the Tribunal presently under review though that decision was delivered on 9 September 1983.

In Gilbertson the Tribunal took the view that the phrase "the grant years" indicated that more than one grant year was to be involved and that:

"The notion of 'increase', referred to twice in correlative terms, combined with the reference to 'years' in the plural in the phrase 'grant years' indicates to us that a comparison of one year with another must be requisite".

In speaking of the phrase "corresponding increase", the Tribunal continued:

"If it be correct, as we consider it is, that the section bespeaks a comparison between different years, the requirement of correspondence must be directed to a relationship between eligible expenditure and grant. Many factors may cause an increase or decrease in eligible expenditure. Increases in expenditure caused by factors irrelevant to such act or thing are not relevant for this purpose. What was presumably intended to be fundamental was that it should not be possible to maintain the same level of expenditure as before while attracting an increased level of grant by commission of an 'act or thing' of the prescribed kind. To so state emphasises of course that it is critical, if a basis is to be found for the operation of s.38, that one year be compared with another. How else can an assessment be made of whether there has been an increase 'in the total of the amounts paid as grants' and of whether there has been a 'corresponding increase in the total of the amounts of . . . eligible expenditure'? It might have been possible to construct the provision so as to make a comparison between a grant that would otherwise have been payable with a grant payable, or able to be claimed, because of the commission of an act or thing. This would have permitted an analysis of events occurring within a single year . . .".

We have referred to the reasons of the Tribunal at some length because, in our respectful view, they address the problems of construction raised by sub-s.16(1) and provide the answer.

It is, we think, significant that s.16 finds its place in Part IV - Miscellaneous. If the legislature had intended that the section was to play its part in the year by year determination of grants, it would have been appropriate to place it in Part II - Grants. The fact that it is in Part IV suggests some overriding operation.

We do not think it is right to treat the words "the total of the amounts of the export earnings of persons in the grant years" as merely a compendious way of referring to the export earnings in each of the grant years. Sub-section 16(1) is concerned with totality, both as to grants and as to earnings. However it does not follow that there can be no application of sub-s.16(1) until the period of the grant years provided by the Act has expired. Once the year commencing on 1 July 1977 has come to an end there is a grant year against which it is possible to determine whether there has been "a corresponding increase". Adjustments may then be made from year to year if appropriate though in many cases it will not be appropriate or even practicable. But in our view there can be no application of sub-s.16(1) in the first grant year because an element essential to the operation of the sub-section is lacking. There is no amount of export earnings against which the claim of a "corresponding increase" may be measured. For this reason the appeals must succeed; the Board should not have applied sub-s.16(1) in respect of the grant year commencing on 1 July 1977 and the Tribunal erred in affirming the decision of the Board to apply the provision in that year.

Because of the view we have taken of the operation of sub-s.16(1), it is unnecessary to consider whether the Board should exercise its discretion if it is called upon to do so. However there are passages in the Tribunal's reasons for decision which call for some comment in this respect. Whether or not the Board is called upon to exercise its powers of disregarding or adjusting under sub-s.16(1) depends solely upon it being satisfied that an act or thing has been done that, if the powers were not exercised, would result in an increase in grants without a corresponding increase in export earnings. It does not depend upon notions of fairness or unfair advantage as some passages in the Tribunal's reasons might be thought to suggest. Once the exercise of the Board's powers under sub-s.16(1) has arisen, the power to disregard or adjust is a power exercisable by the Board "to the extent that it thinks it necessary to do so to prevent or limit that result", the result in question being the increase in the total of the amounts paid as grants.

Sub-section 16(1) does not confer on the Board a wide discretion; it empowers the Board to do certain things to the extent that it thinks it necessary to do so "to prevent or limit that result" (emphasis added). In our view "necessary" is not synonymous with "desirable". It is, we think, synonymous with "appropriate" in the sense of proper to prevent or limit the result of which the sub-section speaks. To achieve that result, the Board is empowered to disregard or adjust all or any of the amounts there mentioned:

". . . that is to say, the amount of the export earnings, the amount of the export earnings increment, or the amount of the incentive grant entitlement, of a claimant for a year, being an amount that, in the opinion of the Board, has been affected by, or is an amount of anything resulting from, that act or thing".

The powers of the Board are amplified by sub-s.(2) which permits it to adjust the amount of an incentive grant entitlement notwithstanding that a grant has already been paid and it provides the machinery by which any overpayment may be recovered.

The appeals will be allowed and the decision of the Tribunal in respect of each determination of the Board set aside. The matters will be remitted to the Board to be dealt with in accordance with these reasons.

JUDGE2

MICHELL CARBONISED WOOL EXPORTS PTY. LIMITED, MICHELL WOOL EXPORTS (CANADA) PTY. LIMITED, MICHELL LEATHER EXPORTS PTY. LIMITED, MICHELL WOOL TOP EXPORTS PTY. LIMITED, MICHELL SHEEPSKINS PTY. LIMITED, MICHELLEX (WOOL) PTY. LIMITED, G.H. MICHELL & SONS (S.A.) PTY. LIMITED and MICHELL SCOURED WOOL EXPORTS PTY. LIMITED (referred to hereafter as the applicants in order to conform with the terminology of the Tribunal) have appealed against the decision given by the Administrative Appeals Tribunal (the Tribunal) after review of decisions of the EXPORT DEVELOPMENT GRANTS BOARD (the Board) made at its meeting on 21-22 February 1980 and varied at a later meeting on 25-26 November 1981.

The Board at the said meetings determined the grants to be made to the applicants under s.11 of the Export Expansion Grants Act 1978 (Cth.)(the Act) in respect of the grant year commencing 1 July 1977.

Sections of the Act which are relevant include -

3. (1) In this Act, unless the contrary intention appears -

. . . .

"Board" means the Export Development Grants Board established by the Export Market Development Grants Act 1974;

. . . .

"grant" means a grant under this Act; "grant year" means the year commencing on 1 July 1977 or any of the 4 next succeeding years;

. . . .

6. Subject to this Act, a reference in this Act to the export earnings increment of a person, in relation to a grant year, shall be read as a reference to the amount by which the export earnings of that person in that year exceeds an amount equal to -

(a) where the person had export earnings in each of the 3 immediately preceding years - one-third of the sum of his export earnings in those 3 years;

(b) where the person had export earnings in only 2 of the 3 immediately preceding years - one-half of the sum of his export earnings in those 2 years;

(c) where the person had export earnings in only one of the 3 immediately preceding years - one-half of the sum of -

(i) his export earnings in that one year; and

(ii) 67 per centum of his export earnings in the relevant grant year; or

(d) where the person did not have any export earnings during the 3 immediately preceding years - 67 per centum of his export earnings in the relevant grant year.

. . . .

1. (1) The Board shall consider every claim duly made and determine whether the claimant has an incentive grant entitlement and, if so, the amount of that incentive grant entitlement.

(2) Where the Board determines that a claimant has an incentive grant entitlement, there is payable to the claimant a grant equal to the amount of the incentive grant entitlement so determined.

. . . .

1. Subject to this Act, the incentive grant entitlement of a claimant in relation to a grant year is an amount equal to -

(a) where his export earnings increment for that year does not exceed $500,000 - 15 per centum of that increment;

(b) where his export earnings increment for that year exceeds $500,000 but does not exceed $5,000,000 - the sum of $75,000 and an amount equal to 10 per centum of the difference between that increment and $500,000;

(c) where his export earnings increment for that year exceeds $5,000,000 but does not exceed $10,000,000 - the sum of $525,000 and an amount equal to 5 per centum of the difference between that increment and $5,000,000; or

(d) where his export earnings increment for that year exceeds $10,000,000 - the sum of $775,000 and an amount equal to 2.5 per centum of the difference between that increment and $10,000,000.

. . . .

1. (1) Where the Board is of the opinion that an act or thing (including the making of an agreement, arrangement or payment, the forming of a corporation or partnership or the distribution of income or activities as between different persons or different years) has been done that, if the powers of the Board under this section were not exercised, would result in an increase in the total of the amounts paid as grants without there being a corresponding increase in the total of the amounts of the export earnings of persons in the grant years, the Board, to the extent that it thinks it necessary to do so to prevent or limit that result, may, for the purposes of this Act, disregard or adjust all or any of the following amounts, that is to say, the amount of the export earnings, the amount of the export earnings increment, or the amount of the incentive grant entitlement, of a claimant for a year, being an amount that, in the opinion of the Board, has been affected by, or is an amount of anything resulting from, that act or thing.

(2) The Power of the Board under sub-section (1) extends to adjusting the amount of the incentive grant entitlement of a person notwithstanding that a grant in respect of the amount has been paid, and where the amount of the incentive grant entitlement of a person is reduced by such an adjustment after the payment of a grant in respect of it, that person shall be indebted to the Commonwealth in an amount equal to the difference between the grant paid and the adjusted amount of the entitlement, and the amount of that indebtedness may be -

(a) deducted from moneys payable to that person under this Act; or

(b) recovered from that person by the Commonwealth in a court of competent jurisdiction.

1. (1) . . . .

(2) A claimant affected by a decision of the Board and dissatisfied with the decision may, by notice in writing given to the Board within a period of 30 days after the date on which the decision first comes to the notice of the claimant, or within such further period as the Board allows, request the Board to reconsider the decision.

(3) . . . .

(4) Upon receipt of the request, the Board shall reconsider the decision and may either confirm the decision or vary the decision in such manner as it thinks fit.

(5) . . . .

(6) Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Board that, on or after a date to be fixed by Proclamation, have been confirmed or varied under sub-section (4)."

By Act No. 74 of 1981 s.179, the definition of "grant year" in s.3(1) of the Act was amended by omitting "4" and substituting "5". Act No. 74 of 1981 s. 180(1) repealed s.13 of the Act and substituted a new s.13. The latter differs from the repealed section as follows:-

(i) Para.(a) - the percentage of the increment is decreased to 7.5%.

(ii) Para.(b) - the sum of $37,500 is substituted for the sum of $75,000 and the percentage is decreased to 5%.

(iii) Para.(c) - the sum of $262,500 is substituted for the sum of $525,000 and the percentage is decreased to 2.5%.

(iv) Para.(d) - the sum of $387,500 is substituted for the sum of $775,000 and the percentage is decreased to 1.25%.

Facts which appear to be undisputed include that until March 1978 a considerable export trade was carried out by the Michell group of companies including a holding company, G.H. Michell & Sons Pty. Limited and G.H. Michell & Sons (S.A.) Pty. Limited (the S.A. company), which had been incorporated in 1947 as the exporting arm of the Michell group and other companies.

In March 1978, following an investigation which showed there had been a deterioration in the export business of the group, it was decided that its various activities might be more successfully carried on by companies separately incorporated to undertake individually the separate businesses of th group. These were incorporated in that month, except one or perhaps two which were incorporated in May 1978. Their shares were held as to 50% by the holding company, G.H. Michell & Sons Pty. Limited, and as to 50% by Merfund Nominees Pty. Limited, the trustee of the Superannuation Fund maintained for the benefit of employees of the Michell group. Thereafter those seven companies, the applicants with the S.A. company in this appeal, undertook most of the export activities of the group. Each of the new companies undertook business of a specialised character and none of the companies carried on the same or substantially the same business as had previously been carried on by the S.A.company, which business was divided between them. The management of each new company was the same, and many orders directed to the old S.A. company were fulfilled by the new companies.

In addition to the introduction of so called "specialist companies", a number of other changes were made e.g. appointment of new agents, establishment of new offices and re-arrangement of the responsibilities of various officers. The new companies commenced their operation in March or May 1978; and though separate, were the subject of group management. Stationery and letterhead amongst the new companies other than Michell Sheepskins Pty. Limited and Michell Leather Exports Pty. Limited continued to have much in common. The postal address, telephone and telex numbers and advice as to where cables and telegrams were to be sent, were the same. The sales contracts displayed what is described as the "Michell logo". The two companies specifically referred to above whose premises were at a different address, had their own common post office box, telephone and telex numbers and cable and telegram address.

In April 1979, after the formation of, and the commencement of trading by, the new companies, Expansion Grant Claims were made to the Board setting out, inter alia, dates on which these companies had commenced business. The claims were investigated by the Board. In a statement furnished by the Board pursuant to s.37 of the Administrative Appeals Tribunal Act 1975, its decisions on these applications were referred to thus -

"After noting the origin, structures and operations of the companies, the Board resolved that the operations of the applicants and Michell Meats Pty Ltd from their dates of incorporation were deemed to be essentially continuations of the business of G.H. Michell & Sons (S.A.) Pty Ltd under section 9 of the Act and, exercising its discretion under section 16 of the Act, the Board determined the 1977/78 grant entitlements of these nine companies based on the proportions of the total assessed eligible earnings of the companies attributed to the individual companies in the grant year."

The applicants were dissatisfied with these decisions. The procedures of s.17 of the Act were invoked. The Board reconsidered its decision. It expressed the result of its reconsideration thus -

"10. At its meeting of 25-26 November 1981 the Board considered a submission . . . . in relation to the applicants' appeals against the 1977/78 Export Expansion Grant determinations. After considering this submission and its attachments, the Board resolved . . . . . inter alia to rescind its decision regarding the applicability of section 9 in respect of the claims by the applicants . . . . ; to confirm its decision regarding the application of section 16 in relation to the applicants' claims; to redetermine the 1977/78 grant entitlements of the applicants in line with revised assessments of export earnings; and to respond to the applicants' grounds of appeals as set out in Document 24(b)."

The applicants were advised of these decisions. They applied to the Tribunal for a review. The Tribunal affirmed the Board's decisions. It stated the problem thus:-

The question in issue is whether the provisions of s.16(1) should be applied in the calculation of the grants. The application of this sub-section must be considered because, until March 1978, most of the exports of the Michell group of companies were undertaken by G.H. Michell & Sons (SA) Pty Limited which had been incorporated in 1947 as the exporting arm of the Michell group. In March 1978, seven companies were incorporated, the shares being held as to 50% by the holding company G.H. Michell & Sons Pty Limited and as to 50% by Merfund Nominees Pty Limited, the trustee of the Superannuation Fund maintained for the benefit of employees of the Michell group. Those seven companies thereafter undertook most of the export activities of the group."

It made what might be described as findings in part earlier referred to including -

Each of the new companies undertook business of a specialised character.

The new companies did not jointly carry on the business of or substantially the same business as the S.A. company which business had been divided into a number of separate businesses.

A second expansion grant benefit which flowed from the new structure was that the seven new companies obtained more benefit from the differential rates provided by s.13 of the Act than did the one company, G.H. Michell & Sons (S.A.) Pty. Limited.

In argument it was agreed that the phrase -

". . . . than did the one company"

should have read as if it were worded "than would have the one company".

These findings were not challenged in argument before us.

It was accepted in evidence and in submissions to this Court, that there was an increase in business by the Michell group after the incorporation of the new companies and their commencement of trading. However, the Tribunal found that the evidence did not show the extent to which this increase was due to the incorporation of the separate companies rather than other steps such as changes of personnel, appointment of new agents and a variation in responsibilities of agents, all of which were introduced at the same time.

In the Reasons for Decision appealed and apparently as having some significance, there was reference to the production of a brochure entitled "Michell" which described the activities of the group, referring to "the Michell group", "the Company's wool activities" and "the Group". There was mentioned availability of finance from one member of the group, viz. Michell Finance Pty. Limited. The Tribunal found that acts were done, being the formation of seven new subsidiary companies and the transfer to them of part of the activities previously carried on by the S.A. company, which would result in an increase in the total of the monies paid as grants pursuant to the Act without there being a corresponding increase in export earnings in the grant years if the power conferred by s.16(1) of the Act were not exercised.

The Tribunal further found that the Michell group of companies continued to trade as an identifiable group; that the intent of s.16(1) of the Act was that the expansion grants claims of the group should not depend upon the circumstance whether it chose to incorporate further companies or to trade through separate divisions of the one company; that the intent of the sub-section was that a mere change of structure of the type mentioned should not affect the expansion grant; further, that it was not a case where a new business was developed or acquired but rather one where there was a change in the structure of the enterprise which carried on a long established business; that the group would gain an "unfair" advantage if by reason of the incorporation of the companies referred to, those companies were able to make claims on the basis that their grant entitlements were to be determined as for a company which had not traded in the base years; and that the Michell management continued the Michell business interests through a different structure.

The Reasons for Decision of the Tribunal included a reference to the "act or thing" (s.16(1)) thus -

"We are satisfied that acts were done, being the formation of the seven new subsidiary companies and the transfer to them of part of the activities previously carried on by G.H. Michell & Sons (SA) Pty Limited, which would result in an increase in the total of the amounts paid as grants without there being a corresponding increase in the total of the amounts of export earnings of persons in the grant years if the power conferred by s.16(1) were not exercised."

Later, adopting the same approach as was taken by the Board to the exercise of discretion, the Tribunal said:-

"We are therefore of the opinion that this is a case where it is appropriate to limit the expansion grant benefit which the change in structure would otherwise bring about. We think that the Board properly exercised its discretion under s.16. This result is not unfair to the Michell group. The change in structure was intended to promote export sales. The steps which were taken in 1978 appear to have been successful in that regard. The Michell group will still gain the whole of the appropriate benefit from that result. The increase in the total sales will result in a corresponding increase in the total of the export grants made to companies in the group. The benefit to the Michell group from its sales is in no way reduced. Its grants are simply made to correspond with the extent of the increases in export sales which the group has achieved."

In the result, the Tribunal found that this was an appropriate case for the application of s.16 and the exercise of the discretion and, so it seems to me, in the way it had been worked out by the Board.

Much of the argument in this appeal has been directed to the construction of s.16(1).

Senior counsel for the applicants told the Court that the effect of the decisions of the Board and the Tribunal was that the grants had been calculated at the same amount as if the seven companies had not been formed and the S.A. company had continued to trade alone. He referred to s.13; the percentage of the increment diminished as the amount of the export earnings increased i.e. from 15% to 2-1/2%; had the S.A. company continued to trade in the 1977-1978 year the percentage to which it would have been entitled under s.13 was 2-1/2%; the bulk of its export earnings would attract only this 2-1/2% rate, whereas the seven companies with, as I understood him, lower incomes because the S.A. company's income was divided between them, became entitled to a higher percentage rate on the portion of the S.A. company's income they earned. He submitted that s.16(1) requires the identification of a relevant "act or thing"; that few of what he described as the "statutory examples" (a reference to the bracketed portion of s.16(1)) by themselvess could produce the result that there would be an increase in the total of the amounts paid as grants, rather it was the carrying on of the business following the "act or thing" which gave that result. He submitted that the word "corresponding" was used in the sense of "responsive" or "consequential"; that the Tribunal treated the phrase "without there being a corresponding increase" as having no meaning, substituting therefor a notion of "fairness". He submitted that the reference in s.16(1) is to "grant years" and not one of the grant years; the relevant criteria are the totals, he emphasised, of each of the amounts paid as grants and the amounts of the export earnings in those years. He submitted that s.16 contemplated one adjustment in respect of any relevant act or thing to be made in the light of the effects of it on the total grants made in all the grant years; that it was not contemplated that an adjustment should be made in each grant year. Alternatively, he submitted that s.16 should be construed as subject to an implied limitation; it would not apply unless either the "act or thing" was done with the object of obtaining an increased grant or it was not done for the bona fide commercial object of promoting increased export earnings. He referred to s.15AA(1) of the Acts Interpretation Act 1901. He submitted, further, that the Tribunal had exercised its discretion upon a wrong principle; that it should have refused so to exercise it against the applicants because it had found that the relevant "act or thing" had been done for a bona fide commercial object which had been successful; and that the approach based on "unfairness" was irrelevnt.

Senior counsel for the respondent submitted that the Act was concerned to achieve an actual increase in export earnings and not merely to provide grants. He submitted that the implementation of s.16 depended upon the Board's opinion as to whether a certain objective situation existed, and not as to a motive or reasons which gave rise to it. Thus, he said, the fact that the "act or thing" was done for a bona fide commercial reason other than the obtaining of increased grants did not preclude the application of the section. However, he said, the motive which prompted the carrying out of the "act or thing" was a matter which could be taken into account by the Board in exercising its discretion, e.g. in favour of the applicants if it were thought that the restructuring had not been carried out to obtain increased grants. He noted that s.16 made no reference to the object or purpose of the claimant for a grant. He submitted that in deciding the way in which the Board should exercise its discretionary power, there was no limit (other than as indicated by the purpose and intendment of the Act) as to the basis on which it could exercise its discretion, so long as what was taken into account could reasonably be considered relevant. If the matters taken into account here could be so considered, then, he submitted, the Court should not interfere. He cited Sean Investments Pty. Ltd. v. MacKellar 38 ALR 363at p.374-375; the weight to be attributed to considerations which might have affected the exercise of the discretion was a matter for the Board. He submitted that the Act contemplated that in general claims should be made within five months after the end of each grant year (s.12(3)); that thereafter the Board had a duty to consider every claim duly made (s.11(1)). He argued that the pattern of the Act was that annual grant claims were made and dealt with; that when dealing with export earnings, increments and grant entitlements, the Act referred to such matters in relation to a grant year. He referred to ss. 5, 6 and 13 of the Act. He submitted that the words of s.16(1) "in the grant years" did not require or indicate that the Board should wait until the end of the five or six year period; that the phrase meant "in each of the grant years". He submitted that it was not correct to say that s.16(1) could not operate until the end of the five or six year period. By that time the sub-section would have no work to do: all grants would have been paid; s.16(2) would (then) be the only provision through which to make adjustments. He submitted that the Board, in considering what were the total grants and total export earnings, referred to in s.16 had to make its decision in relation to the grant year in respect of which the claim was made.

I have not attempted to restate all the arguments of Counsel.

The approach taken in the Reasons for Decision of the Tribunal and in the arguments before this Court was to examine s.16(1) as if its components or essential ingredients were to be separated out, then to ascertain if evidence supporting those elements had been accepted; and thereafter to see if the section had been properly construed. The findings or conclusions of fact, that the Tribunal made, have not been challenged. The matter may be considered initially assuming that the above approach is correct though, in my view, appropriate emphasis may not have been given to the overall structure of the section. I set out below my understanding of what s.16(1) provides. It consists of a statement of certain preconditions for its operation. Then it provides for an exercise of a discretion in the making of the determination, which the Board is required to do by s.11, in appropriate circumstances. However, the preconditions are not necessarily to be established as facts; they are elements which, in the opinion of the Board, are present. In the instant case, the failure to recognise that the only requirement was that the Board should form an opinion may not matter. I return to this subject later. Section 16 is concerned to achieve that grants, whilst still payable according to the formula outlined in ss.6 and 13 and for any of the grant years commencing on 1 July 1977, may be adjusted. This can be done if by reason of an act or thing (or any acts or things), fortuitous or intended, an amount of earnings attracts an increase in grants greater than would have been payable in respect of those same earnings if the "act or thing" had not been "done". The quotation from Ausmet Pty. Ltd. v. Export Development Grants Board in R. J. Gilbertson Pty. Ltd. v. Export Development Grants Board, a decision of the Tribunal (unreported, 1 February 1984), expresses, I suggest, the overall function of s.16 -

"It is sufficient for the operation of s.16(1) that acts by way of the distribution of activities between different persons were done such that, if the powers of the Board were not exercised, there would result an increase in the total amounts paid as grants without there being a corresponding increase in the total of the amounts of the export earnings of persons in the grant year. The Board may make an adjustment to prevent an unfair benefit to the claimant or claimants. The distribution of activities between companies for tax recoupment purposes is one of the circumstances with which s.16(1) is concerned. It is not necessary that the distribution of activities be done with a view to increasing the grant otherwise available. It is sufficient that there were activities of the type described by s.16(1), that an increase in the grant payable, apart from the operation of s.16(1), would result and that it is, in the circumstances of the case, appropriate that the section be applied to prevent that result."

I note that senior counsel for the applicants conceded that ss.6 and 13 operated to increase the total grant entitlement of all the relevant companies over that which would be payable to a single company if the relevant business had been carried on by, for instance, that single company e.g. the S.A. company. In my view, in such a circumstance the policy of the Act which is to increase export earnings by creating an incentive would not be achieved; in fact an amount of export earnings would thus attract a larger grant than the Parliament intended. This may, in my opinion, be described as "unfair" without any misuse of that word; it could just as readily be called "inappropriate".

Mention may be made of phrases or words in s.16(1). "Result in" in this section does not insist that it is necessary for the act or thing directly to cause an increase in an entitlement to a grant; but only that the increase is one, or part of, the consequences following from the act or thing. Discussing different legislation viz. s.26 of the Income Tax Assessment Act 1936-1973 in the context of whether lump sums were paid by the employer to the taxpayer in consequence of the termination of employment, Gibbs J. (as he then was) said, in Reseck v. Federal Commissioner of Taxation (1974-1975) 133 C.L.R. 45 at p.51 -

"The question that then arises is whether the allowance was paid in consequence of the termination of the employment of the taxpayer. Within the ordinary meaning of the words a sum is paid in consequence of the termination of employment when the payment follows as an effect or result of the termination. In the present case the payment did follow as a result of the termination of the taxpayer's services. It is not in my opinion necessary that the termination of the services should be the dominant cause of the payment."

Jacobs J. said at p.56 -

"It was submitted that the words "in consequence of" import a concept that the termination of the employment was the dominant cause of the payment. This cannot be so. A consequence in this context is not the same as a result. It does not import causation but rather a "following on"."

cf. Ballentine's Law Dictionary 3rd ed., at pp.250, 1109. There need not, I suggest, be any such clearer chain of causation. "Corresponding", as senior counsel for the applicants put it, may mean "responsive" or "consequential". However, he seemed to put the factors in the wrong order: an increase in earnings comes first; the increase in grant is consequential upon or following that increased earning. Perhaps "matching" or "responsive" may be a better substitute for "corresponding" than "consequential". But nothing turns upon the selection of any one of those words rather than another. "In the grant years" ought to be read as expanded by the definition of "grant year" in s.3, i.e. as "in any of the 4 (or 5) next succeeding years" after 1 July 1977. Other sections, viz. ss.6, 11, 12 and 13, I suggest, do not support the contention that there should be one adjustment of the total grants in all the grant years; or that there may not be an application of s.16(1) in a first year of earnings. I note that by s.12(3) claims relating to a grant year are to be submitted within 5 months of the end of that year. Section 11(1) requires the Board to consider every claim, and determine whether the claimant has an entitlement and, if so, the amount of "that incentive grant entitlement". In doing this it will have given due regard to s.16. The Claim for Grant form, submitted by the applicants, is headed "Claim for Grant: 1977-78". It concludes with a section, apparently to be filled in by the staff of the Board, wherein a grant of $x is recommended, and a further section for a signature recording approval. This no doubt is the act of determination and for that year. Moreover, the matters referred to in s.16 are subordinate to the real function of this Act which is worked out in Part 11. It is unlikely that following a determination made pursuant to s.11 the ultimate or final settlement of a claim may be postponed or regulated by the operation of a Part of the Act headed "Miscellaneous". But on the construction I favour grants adjusted where it has been thought necessary will be paid for each year of trading. Otherwise what turns out to be an overpayment, because the Board considers it necessary to make an adjustment after the grant has been paid, may not be recoverable; or not be recoverable from a later grant. After the first year an exporter may already be in straitened circumstances; or it may evade repayment or, for whatever reason, not be entitled to a further grant. I consider s.16(2) is consistent with this approach. The use of the words "extends to" shows a contemplation that in the ordinary course of events later adjustment will not be necessary; but if it is, the power of adjustment extends to or is available for use in the period after a grant has been paid. So "extend" can mean "expound", "enlarge", "widen". See Black's Law Dictionary 5th ed. p.523.

The above approach is, I suggest, consistent with what was said by Mason and Wilson JJ. in Cooper Brookes (Wollongong) Pty. Limited. v. Federal Commissioner of Taxation (1981) A.T.C. 4,292 (Cooper Brookes) at p.4, 304-4, 305. See also Acts Interpretation Act 1901 s.15AA(1).

Leaving aside a discussion of whether the Board's opinion as to certain elements being present would have been sufficient, there was, I consider, evidence of each element in the section so as to entitle the Board to decide (and therefore form an opinion) that the preconditions for the exercise of its discretion were present. The findings of the Tribunal to which I have referred, also supported that the preconditions had been established.

Senior counsel for the applicants also argued that s.16 should be construed subject to the implied limitation set out earlier that s.16(1) applied only where the "act or thing" was done with the object of obtaining an increased grant or not for the bona fide purpose of promoting increased export earnings. I do not accept this argument. The policy of the Act is to provide that as exports increase and thus export earnings, so do grants. Subsidiary thereto is that some act or thing, fortuitous or otherwise, shall not necessarily be allowed to give rise to an increase in grants unless there is a matching increase in earnings. The public purse should not have to meet a higher grant claim unless the purpose of the Act has been achieved. It is no light matter to read implied terms into an Act. "Words plainly should not be added by implication into the language of a statute unless it is necessary to do so to give the paragraph sense and meaning in its context" - Tinkham v. Perry (1951) 1 T.L.R.91 at p.92. This is not a situation where the suggested limitation sought to be applied would be justifiable to avoid an "unjust or capricious result" - see Tickle Industries Pty. Ltd. v. Hann (1973-1974) 130 C.L.R. 321 per Barwick C.J. at p.331. I am satisfied the incorporation of the suggested implied term could not be so justified here. Authorities of assistance in this field are to be found in the judgment of Mason and Wilson JJ. in Cooper Brookes at p.4,305. See also per Aickin J., ibid, at p.4,315. I note the terms of similar legislation, viz. of (an earlier version of) s.38 of the Export Market Development Grants Act 1974 where the intention of the exporter in respect of the "act or thing" was clearly envisaged, but a 1978 amendment seems to remove from that section any consideration of a subjective intention.

On the view it took, the Board then was entitled to exercise the discretion in s.16(1); it did so by reducing the grant entitlement to approximately what it would have been if there had been no "act or thing". In my opinion it was entitled in a proper exercise of its discretion to do so. This seems to accord with the philosophy of the Act. The Tribunal by s.43(1) of the Administrative Appeals Tribunal Act 1975 was itself empowered to exercise the discretion if it thought fit, or to affirm the decision in its entirety, as it did.

No reason has been advanced which satisfies me that there was any error in the exercise of the discretion.

What I have referred to as the preconditions in s.16(1) for an exercise of discretion are -

an act or thing done

resulting in an increase in grant

no corresponding increase in export income.

These are all matters in respect of which the Board and, it seems, the Tribunal have reached an affirmative opinion. In my view it would have been sufficient for the Board to have decided whether it could and should form the opinion referred to in s.16(1) rather than to have satisfied itself affirmatively of the elements in that sub-section. Of the authorities bearing upon this subject it is sufficient perhaps to refer to Australasian Jam Co. Pty. Ltd. v. Federal Commissioner of Taxation (1953-1954) 88 C.L.R. 23. It was concerned with the operation of s.170 of the Income Tax Assessment Act 1936-1947 whereby if the Commissioner was of the opinion that avoidance of tax was due e.g. to fraud, he might amend an assessment to prevent the avoidance. Fullagar J. said at p.37 -

"In order that the appeals should succeed, it is necessary that I should hold that the opinion was not in fact entertained, or that it was based upon a misconception of the meaning of the word "evasion", or that it was arrived at "capriciously, or fancifully, or upon irrelevant or inadmissible grounds."" (authority cited).

See also Parramatta City Council v. Pestell (1972-1973) 128 C.L.R. 305 at p.323 per Menzies J. The decision of the Tribunal perhaps went further than was necessary. It need have done no more than, applying the test set out by Fullagar J., decided that the Board could reasonably have formed the opinion required by s.16(1) of the Act. But no error of law requiring interference by this Court has thus been demonstrated.

I would dismiss these appeals with costs.