Sea Shepherd Australia (ACN 123 339 499) and Commissioner Of Taxation Of the Commonwealth Of Australia and Administrative Appeals Tribunal

[2013] HCATrans 271

[2013] HCATrans 271

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne       No M87 of 2013

B e t w e e n -

SEA SHEPHERD AUSTRALIA (ACN 123 339 499)

Applicant

and

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

First Respondent

ADMINISTRATIVE APPEALS TRIBUNAL

Second Respondent

Application for special leave to appeal

CRENNAN J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 8 NOVEMBER 2013, AT 11.37 AM

Copyright in the High Court of Australia

MR J.G. KORMAN:   Your Honours, I appear on behalf of the applicant.  (instructed by McMullan Solicitors)

MR M.T. FLYNN:   May it please the Court, I appear on behalf of the respondent.  (instructed by Australian Taxation Office – Legal Services Branch)

MR KORMAN:   Your Honours, this is a case where it is submitted that there should be a grant of special leave because of the general or public importance of the issue.  The case concerns ‑ ‑ ‑

CRENNAN J:   The issue is an issue of statutory construction?

MR KORMAN:   Yes, your Honour.  The specific provision states that the provision of “short‑term care direct care to animals (but not only native” animals “that are . . . without owners” – that is the provision that is to be interpreted.  Now, it is accepted that ordinarily this type of case would not be likely to attract a grant of special leave but this is more than just another dispute about the construction of a statute.  It is submitted that two aspects of this case involve questions of law of public importance.

The first issue is the question of whether the principle that beneficial legislation should be construed so as to give the fullest relief which the fair meaning of its language will allow is applicable to the provision in question.  This issue has a broad application.  Should a court’s first task when choosing between a broad and narrow construction of a tax relief provision be to ascertain whether the broader construction is “unreasonable or unnatural”, to use the words of Justice Brennan in IW Applicant v The City of Perth, and then, if that is not the case, should the court prefer the more liberal and beneficial construction?

The area of law affected by this special leave question obviously includes the deductible gift recipient provisions of the 1997 Act but is much broader than that.  It is submitted that the issue is relevant to the interpretation of most tax relief provisions where it would appear that Parliament is seeking thereby to encourage, reward or protect some class of activity.

BELL J:   Mr Korman, can I just raise this with you?  If you turn to the reasons of Justice Gordon at application book 51 and 52, her Honour notes the submissions that were made in the Full Court respecting the approach to remedial or beneficial legislation and then on page 52, paragraph 45, says it is unnecessary to determine those submissions in circumstances in which there is no choice to be made between a “generous” construction and a “more confined” one when the application of orthodox principles results in a conclusion against you.  Now, that makes this a not ideal vehicle to consider the approach in the context of revenue legislation to the principle.

MR KORMAN:   Your Honour, it is submitted that that finding of her Honour, that it was unnecessary to decide the question because the application of orthodox principles ruled out the construction sought by the applicant, was erroneous and it was erroneous for this reason, your Honour.  As part of the submissions that I will be seeking to develop before this Court is the proposition that the fact that legislation is beneficial is part of the context that should be considered in the application of orthodox principles of construction.

CRENNAN J:   But the real point here was, was it not, whether or not Sea Shepherd provided short‑term direct care to animals?  That is the issue.

MR KORMAN:   Yes, but anterior to that issue was the question of what does “short‑term direct care” mean and that is the issue, that is the question that is up for appeal.  The majority decision below was that short‑term direct care effectively encompasses what could be called nurturing care.  What was rejected was that protection from injury or harm constitutes part of the concept of care.

CRENNAN J:   You mean proleptic protection.  Is that what you were intending?

MR KORMAN:   Prophylactic?

CRENNAN J:   Proleptic.

MR KORMAN:   No, your Honour, what ‑ ‑ ‑

CRENNAN J:   You are contending, as I understand it, that short‑term direct care to animals encompasses taking a protective attitude to those animals.

MR KORMAN:   Yes, your Honour.  Yes, your Honour, and it is contended that part of the everyday meaning of “care” encompasses protection from harm or proleptic care, so that what her Honour did not do in applying the orthodox principles of construction was take account of the fact that this was beneficial legislation and the reason that this principle is not some special or particular rule of construction which is applied to particular statutes but forms part of the orthodox principles of construction is because it is merely a question of taking all the issues that should be taken in respect of the context of the litigation – of the question at hand.

Justice Kirby described this as really a question of the purpose of the legislature, whereas in Alcan - and I will take the Court to this a little later – it was seen more as a contextual issue, but either way the fact that it is beneficial legislation ought to have been taken into account by her Honour in coming to the decision that she did. 

Your Honours, I was going to say that a particular reason recommending this decision to the High Court for consideration on appeal is the lack of High Court authority as to whether this principle applies in the context of revenue statutes.  There is abundant authority in a wide range of other areas but the only authority which the applicant managed to find was that of Justice Kirby in Federal Commissioner of Taxation v Murry where the concept of goodwill was applied in a broad fashion after application of this principle.  However, that was a lone dissenting judgment and there is no other authority in the question of revenue statutes.  Your Honours, further to ‑ ‑ ‑

CRENNAN J:   I think in Alcan this Court decided that there were no special principles to be particularly applied to revenue statutes.  It was the ordinary principles of statutory construction which applied.

MR KORMAN:   Yes, and your Honour, that was in paragraph 57 and that was referred to by the Tribunal, that particular point, but the Court made two points in that paragraph.  The first was that no particular provisions should apply.  However, the second was that:

the fact that a statute is a taxing Act, or contains penal provisions –

and, in my submission, it would make no difference if the words “beneficial provisions” were included there as well, the fact that a statute contains those kind of provisions –

is part of the context -

That is what the Court went on to say.

CRENNAN J:   What do you mean by “beneficial”, do you mean permits a deduction?

MR KORMAN:   Well, by “beneficial” I would refer to the words that Justice French had used in the Diethelm Case, and they are specifically “encourage, reward or protect” some class of activity.  That is how his Honour defined a beneficial provision.  So that where Parliament has an intent to encourage an activity that is an important part of the context of the case.

BELL J:   Accepting that premise, Parliament has by the provisions of the 1997 Act evinced an intention to encourage the activity of providing short‑term direct care to animals.  The construction for which you contend deprives that statutory expression of force with respect to the words “short‑term” and “direct”, does it not?

MR KORMAN:   No, your Honour.  The contention is not just that the applicant provides protection from harm and injury, but that the protection is both short‑term and direct.  It is short‑term in terms of the fact that the protection is provided only in the immediate time that the whaling ship is in the vicinity of whales.  That protection is provided for a short period of time.  Where the whaling ship is on the move and Sea Shepherd is tailing that whaling ship, protection is provided only at any given point in time to those whales that would be within the range of the ship should the pursuit be called off.  The protection that is provided is short‑term.

The protection that is provided is direct as well, and that was a matter that her Honour Justice Dodds‑Streeton discussed in her judgment.  It is direct because the action of blocking the whaling processing ship acts directly on the mind, the guiding mind of the fleet.  The guiding mind of that whaling fleet decides not to kill whales when its factory ship is blocked and it is unable to do so.  So, it is the composite expression, your Honour, that is being referred to here. 

Your Honours, the argument that would be advanced on appeal would begin with Justice Kirby’s exposition at paragraphs 1 to 10 of the NSW Aboriginal Council Case.  In a nutshell, that exposition provided that the principle of generous interpretation of beneficial legislation is no unique or special principle of construction.  It is merely an application of the purposive approach to construction of legislation.

CRENNAN J:   I think in your outline of argument you have referred to it as a sympathetic and imaginative approach to construction.

MR KORMAN:   Yes, your Honour, to the word “care”.  Yes, your Honour, but the word “imaginative” was paraphrased from a US court judgment and it is not the submission of the applicant that any imagination is required in order to understand the word “care” as comprehending protection from harm or injury.  Your Honours, the argument would begin with Justice Kirby’s exposition which effectively provides that when legislation is beneficial, that forms the purpose in his exposition of the legislation and must be taken into account in interpreting the content of it.

As I have submitted to the Court, the argument would then move to the second part of paragraph 57 of the Alcan Case which effectively captures the essence of Justice Kirby’s position.  A proposition that can be distilled from the passage in Alcan is that the fact that a legislative provision is beneficial must be taken into account when construing that provision.  The way that this Court has generally taken that fact into account, over the last century at least, has been by seeking where possible to select the most generous available interpretation.

Bull, Khoury and IW of the cases included in the applicant’s submissions all stand for the proposition that when construing beneficial legislation, narrow interpretation should be rejected where possible in favour of more comprehensive ones and, applying this approach to the current case, the applicant would argue on appeal that an important part of the context in which the provision in question must be construed is the fact that it encourages or rewards charitable institutions in the activity of provision of short‑term direct care to animals without owners.

The legislation should be construed with a view to promoting rather than hindering that legislative intent.  No narrow view should be taken of the composite phrase “short‑term direct care” or of the composite phrase “animals without owners”.  Rather, short‑direct care should not have its protective or proleptic – as I am grateful to your Honour – aspect excised and the expression “animals without owners” should not be interpreted so as to mean - to exclude the meaning of animals in the wild.

Finally, your Honours, in relation to this first special leave question, it is submitted that this case does in fact provide a very suitable vehicle for this Court to clarify the law relating to the approach to be taken to construing tax relief provisions.  The facts are undisputed, simple and straightforward.  The question of law is discrete, short and clear; the interpretation of those two expressions.

But there is one other aspect of this case which renders it particularly useful for examination of the principle in question and that is this:  what is meant by the term “a fair, large and liberal interpretation” which was used in IW v The City of Perth and AB v State of Western Australia.  When, it may be asked, does such an interpretation strain or exceed, in Justice Isaacs’ words, the true signification of a provision.  The cases fall into two categories.  There are those which seek to place an unusual interpretation on a word, and a typical one of that was IW v The City of Perth where what was sought to be done was to argue that services include the approval of a planning permit by the council.

In the other camp are cases where the competing provisions are the narrow one being the general usage of the word with part of that usage excised, the so‑called generous one merely being the everyday general understanding of the word.  So it is submitted that in this case it is clearly the latter.  What we have opposed is the question does care comprehend

protection from harm and injury?  Animals without owners, does that category comprehend animals in the wild?  It is submitted that the ordinary person in the street would answer yes to both those questions.

The second reason, your Honours, that the proceedings appealed from involve a question of law of public importance stems from Sea Shepherd Australia’s high profile and controversial activities and their effective campaigns.  Sea Shepherd could fairly be described as an important player in the Australian public arena.  Its actions have the potential to affect Australia’s international relations.

CRENNAN J:   “Public importance”, as that phrase is used in the context of applications for special leave, is not directed to the sort of thing you are talking about now, Mr Korman.  It is directed to an evaluation of the special leave questions and whether or not for argument’s sake there is a matter in respect of legal principle which falls for examination by this Court.  “Public importance” is not – it is a legal expression directed to the merits of special leave applications.  It is not directed to the worthiness of an instrumentality which may appear before the Court.

MR KORMAN:   I accept your Honour’s comments.  I would just point out, your Honour, that this approach was taken with reference to extrajudicial writings of Justice Kirby in which he refers to that as being a question of – in other words, that a question can be a question of law of public importance where the ramifications such as amounts of money and players involved are of public importance.  It is submitted ‑ ‑ ‑

CRENNAN J:   Well, it sounds like his Honour was talking about the application of matter as a principle to a particular set of facts.

MR KORMAN:   Yes, your Honour, and it is submitted here that the question of whether Sea Shepherd is eligible for tax deductibility directly impinges on the extent and scope of Sea Shepherd’s activities.  Those activities, whether approved or opposed, are of great importance to a large number of Australians and it is appropriate that the last word on the question of whether Sea Shepherd ought or ought not to receive part of its funding indirectly from the public pocket should be had by this Court.

CRENNAN J:   Thank you, Mr Korman.  We need not trouble you, Mr Flynn.

This application concerns a refusal by the Commissioner of Taxation of the Commonwealth of Australia (“the Commissioner”) to endorse the applicant as a deductible gift recipient under s 30-15 of the Income Tax Assessment Act 1997 (Cth).  The Full Court of the Federal Court of Australia by a majority dismissed an appeal from the decision of the Administrative Appeals Tribunal affirming the Commissioner’s decision.  The majority applied well‑established principles to the particular facts.  We are not persuaded that there are sufficient prospects of success to warrant a grant of special leave to appeal.  Accordingly, special leave to appeal is refused with costs. 

AT 11.58 AM THE MATTER WAS CONCLUDED