Treasurer of Victoria v Tabcorp Holdings Ltd
[2014] VSCA 143
•1 July 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2013 0094
| THE TREASURER OF VICTORIA | Appellant |
| v | |
| TABCORP HOLDINGS LIMITED | Respondent |
S APCI 2013 0095
| THE TREASURER OF VICTORIA | Appellant |
| v | |
| TATTS GROUP LIMITED | Respondent |
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| JUDGES: | MAXWELL P, BEACH JA and McMILLAN AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 27 March 2014 |
| DATE OF JUDGMENT: | 1 July 2014 |
| MEDIUM NEUTRAL CITATION: | [2014] VSCA 143 |
| JUDGMENT APPEALED FROM: | Tabcorp Holdings Limited & Tatts Group Limited v The Treasurer of Victoria [2013] VSC 324 (Hargrave J) |
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TAXATION – State levy – Gaming operators – Levy payable each financial year – Fixed amount payable in respect of each gaming machine in operation – Tax payable to be ‘calculated in accordance with’ arithmetical formula – Number of machines calculated as 12 month average – Treasurer to determine amount of levy on each operator – Whether Treasurer bound to apply formula – Cessation of gaming operations during 2012–13 financial year – Whether Treasurer had discretion to adjust levy to take account of cessation – Statutory language unambiguously clear – No discretion conferred – Levy payable in full – Appeals allowed – Gambling Regulation Act 2003 (Vic) s 3.6.3A.
STATUTORY INTERPRETATION – Legislative intention – Primacy of statutory text – Ordinary and natural meaning of words – Whether ordinary meaning produced arbitrary or unfair results – Whether alternative construction open – Statutory language unambiguously clear – No intention to confer discretion – Discretion would itself have operated arbitrarily – Gambling Regulation Act 2003 (Vic) s 3.6.3A.
WORDS AND PHRASES – ‘in accordance with’, ‘in consultation with’, ‘determine’, ‘calculated in accordance with the following formula’.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr S McLeish SC with Mr O Bigos | Corrs Chambers Westgarth |
| For the Respondent | Mr N Young QC with Ms C Button | Allens |
| For the Respondent (Tatts Group Limited) | Mr N Young QC with Mr N De Young | Clayton Utz |
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maxwell p
beach ja
mcmillan aja:
Summary
As so often in the work of an appellate court, these appeals concern a question of statutory interpretation. At issue is the interpretation of ordinary English words, in a provision imposing a tax. As the High Court has repeatedly emphasised, the task of statutory interpretation begins, and ends, with the words which Parliament has used.[1] For it is through the statutory text that the legislature expresses, and communicates, its intention.
[1]Thiess v Collector of Customs (2014) 306 ALR 594, 599 [22] (‘Thiess’): see [100] below. See also Baini v The Queen (2012) 246 CLR 469, 476 [14]; Legal Services Board v Gillespie-Jones (2013) 300 ALR 430, 440 [49], 442 [59].
Interpreting a particular provision requires consideration of the legislative context and — where relevant — the legislative history. But if the words are clear and unambiguous, and can be intelligibly applied to the subject-matter, the provision must be given its ordinary and grammatical meaning, even if the result may seem inconvenient or unjust.[2] These principles apply to a taxing statute as to any other.[3]
[2]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 305 (‘Cooper Brookes’).
[3]Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, 49 [57] (‘Alcan’) .
These appeals concern the ‘health benefit levy’, which was imposed on the respondents as operators of gaming machines.[4] Over the period 2000–2013, the relevant provision in the gaming legislation obliged each gaming operator to pay this levy in each financial year. The amount payable was to be ‘calculated in accordance with’ an arithmetical formula. The calculation involved a simple exercise of multiplication. A dollar figure specified by the legislation was to be multiplied by the number of gaming machines operated by the gaming operator, as determined by application of an averaging formula. The obligation imposed on the Treasurer was to determine the amount of the levy payable by each gaming operator in the financial year.
[4]In these reasons, the phrases ‘the tax’ and ‘the levy’ are used interchangeably.
In the financial year 2012–13, the gaming ‘duopoly’ involving the two respondent companies came to an end. In that year, they operated gaming machines only up to 15 August 2012. Earlier in 2012, however, Parliament had enacted a provision imposing the levy for that financial year, and had done so in language relevantly identical to that of the predecessor provisions. Read literally, the 2012–13 provision authorised, and required, a precise calculation of the amount payable in accordance with the same formula as had applied previously.
The trial judge concluded that to interpret the provision in that way would be to ‘attribute to Parliament an intention to knowingly legislate for a tax or levy which is unfair and unreasonable’.[5] The operators would be taxed as if they had operated gaming machines throughout the 2012–13 financial year, when that was not the case. His Honour concluded that an alternative and preferable construction of the provision was available, which gave the Treasurer a discretion to determine, as the amount of tax payable, some lesser amount than that arrived at by application of the arithmetical formula.
[5]Tabcorp Holdings Limited & Tatts Group Limited v The Treasurer of Victoria [2013] VSC 324, [45] (‘Reasons’).
For reasons which follow, we respectfully disagree. In our view, Parliament’s intention was expressed with unambiguous clarity in the language used. The Treasurer was bound to determine the tax payable in accordance with the prescribed formula. The statutory language permits of no other interpretation. Specifically, the language does not permit of an interpretation giving the Treasurer a discretionary power of adjustment of the tax liability.
Any unfairness which might be thought to have resulted was the inescapable consequence of the provision as enacted. Our conclusion is reinforced by the fact that, because the Treasurer’s determination had to be made well before the end of the financial year, a discretionary power of adjustment would itself have operated in a quite arbitrary and irrational fashion.
Both appeals must therefore be allowed.
Legislative history
As already mentioned, this appeal concerns the tax payable by the respondent gaming operators in the 2012–13 financial year. The tax was originally called the ‘gaming machine levy’. It came into force from 6 December 2000, when the legislature inserted into the Gaming Machine Control Act 1991 (Vic) (the ‘1991 Act’) a new s 135A,[6] which provided as follows:
[6]Gaming Acts (Gaming Machine Levy) Act 2000 (Vic) s 5.
135A Gaming machine levy
(1)A gaming operator must pay to the Director for payment into the Consolidated Fund each financial year a levy of $333.33 in respect of each gaming machine of the gaming operator that is operating at an approved venue on 30 September in that year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on 30 September in a financial year if, at any time on that day, the machine—
(a) is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system.
(3)The Treasurer, in consultation with the Authority, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after 30 September in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.[7]
Under s 135B, the full amount collected was hypothecated to the Hospitals and Charities Fund.
[7]Emphasis added.
As can be seen from the highlighted words above, the key elements of the taxing provision as first enacted were as follows:
1.The gaming operator was obliged to pay the levy each financial year.
2.The quantum of the levy payable in a particular financial year was to be calculated as the multiple of a fixed dollar amount and the number of gaming machines operated (or taken to be operated) by the gaming operator on a particular date in that year.
3.The Treasurer was obliged, in consultation with the gaming regulator,[8] to determine the amount of the levy payable by the gaming operator for that financial year, and to notify the operator.
4.The operator was obliged to pay the levy in two equal instalments, in December and June of the financial year.
[8]At that time, the regulator was the Victorian Casino and Gaming Authority. The responsibility was subsequently transferred to the Victorian Commission for Gambling Regulation and, ultimately, to the Victorian Commission for Gambling and Liquor Regulation.
As will appear, these essential elements of the taxing scheme remained unchanged up to and including the financial year 2012–13. The only change was to the calculation formula, which was first amended in June 2001. At that time, as the trial judge noted, the dollar amount and manner of calculation of the gaming machine levy were varied, and the levy was renamed the ‘health benefit levy’. (The only subsequent change was in the fixed dollar amount.)
As amended in 2001, the section read as follows:
135A Health benefit levy
(1)A gaming operator must pay to the Director for payment into the Consolidated Fund each financial year a health benefit levy calculated in accordance with the following formula—
where—
L is the levy payable by the gaming operator;
GM is the sum of the number of gaming machines of the gaming operator that are operating at an approved venue on the first Saturday in each month from and including December in the preceding financial year to and including November in the financial year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on the first Saturday in a month if, at any time on that day, the machine—
(a) is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system.
(3)The Treasurer, in consultation with the Authority, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after the first Saturday in November in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.[9]
[9]Emphasis added.
As can be seen from the highlighted words, the language imposing the operator’s obligation to pay the levy, and the Treasurer’s obligation to determine the levy, remained unchanged. The changes to the basis of calculation were as follows. First, the fixed dollar amount was increased by $1200 to $1533.33. Secondly, instead of the multiplier being the number of machines operated by the particular operator on 30 September of the relevant year, an average was to be taken. As appears from the formula (and the definition of the integer ‘GM’), what had to be calculated was the average number of gaming machines operated in the specified period of 12 months.
It is of particular relevance to these appeals that the relevant period was not the 12 months of the financial year in which the levy was payable. Instead, it was the period between 1 December of the previous financial year and 30 November of the current financial year. (We will refer to this as a ‘hybrid’ period, as it comprises months from two different financial years.) For the purposes of calculation, the first Saturday in each month of the hybrid period was specified as the date on which the number of gaming machines was to be counted. The result, so the respondents submitted, was a ‘proxy’ for the number of machines actually in operation in the tax year.
As the judge noted, the then Treasurer explained in his Second Reading Speech that the amending Bill altered
the basis for imposing liability for the levy to minimise opportunities for avoidance.
This was, it would seem, the explanation for moving from a single date for the counting of machines to 12 dates spread over a 12 month period. Plainly enough, that change reduced the scope for artificial reductions in the number of operating machines. Nothing was said in the Second Reading Speech, however, to suggest that the choice of the hybrid period was itself an anti-avoidance measure. It seems, rather, that the specification of the period reflected a decision that the levy should be determined, and paid, well before the end of the financial year in question.
The introduction in 2001 of a ‘formula’ for the calculation of the levy payable necessitated a change of language. Instead of the operator being obliged to pay a specified amount ($333.33) in respect of each gaming machine, sub-s (1) now obliged the operator to pay an amount ‘calculated in accordance with the following formula’.
The change of language did not, however, signify any change of legislative intention. This was simply the replacement of one formula with another. The averaging ‘formula’ was evidently intended to produce a calculation having the same precision and certainty of result as the original (unstated) formula, which required a simple multiplication of the fixed dollar amount and the number of machines. As before, it was intended that there be a single correct amount payable, capable of determination with precision by performing the required multiplication exercise. We return to this subject below.[10]
[10]See [53]–[55] below.
The Gambling Regulation Act 2003 (Vic) (‘GRA’) repealed the 1991 Act, and replaced the former s 135A with s 3.6.3, which was in relevantly identical language to its predecessor. The new section provided:
3.6.3 Health benefit levy
(1)A gaming operator must pay to the Commission for payment into the Consolidated Fund each financial year a health benefit levy calculated in accordance with the following formula—
where—
L is the levy payable by the gaming operator;
GM is the sum of the number of gaming machines of the gaming operator that are operating at an approved venue on the first Saturday in each month from and including December in the preceding financial year to and including November in the financial year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on the first Saturday in a month if, at any time on that day, the machine—
(a) is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system.
(3)The Treasurer, in consultation with the Commission, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after the first Saturday in November in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.[11]
[11]Emphasis added.
That section governed the calculation and payment of the health benefit levy for each of the financial years up to and including the financial year ending 30 June 2012. The only subsequent change was in the fixed dollar amount, which was increased to $4333.33 in June 2007 (to apply to the calculation of the levy for the financial year beginning on 1 July 2007 and to each subsequent financial year). In April 2012, legislation was introduced to facilitate the transition to a new structure for the gaming industry. The Minister for Gaming told the Victorian Parliament that under the new industry arrangements:
[T]he Victorian gaming industry will transition from the current duopoly gaming operator system, comprised of Tattersall’s and Tabcorp, to a venue operator structure. From 16 August 2012, venue operators will have direct control over their gaming operations.[12]
[12]Victoria, Parliamentary Debates, Legislative Assembly, 18 April 2012, 1707 (Michael O’Brien, Minister for Gaming).
The Gambling Legislation Amendment (Transition) Act 2012 (Vic) (the ‘Transition Act’) inserted a new s 3.6.3A to deal specifically with the 2012–13 financial year:
3.6.3A Health benefit levy – financial year 2012 to 2013
(1)In respect of the financial year beginning on 1 July 2012 and ending on 30 June 2013, a gaming operator must pay to the Commission a health benefit levy calculated in accordance with the formula set out in section 3.6.3(1).
(2)The Treasurer, in consultation with the Commission, is to determine the amount of the levy on each gaming operator in respect of the financial year and must notify each gaming operator of his or her determination as soon as practicable after making the determination.
(3)The levy is payable in two equal instalments within the financial year, due on dates determined by the Treasurer in consultation with the Commission.
(4)The Treasurer must notify each gaming operator of his or her determination under subsection (3) as soon as practicable after making the determination, but at least 15 business days before the first instalment is due.
(5)In this section, gaming operator includes a person who held a gaming operator’s licence or a gaming licence.[13]
[13]Emphasis added.
The Minister gave the following explanation of the new provision:
The taxation arrangements for the current gaming operator structure include the payment of a health benefit levy by the gaming operators. The levy applies on the number of gaming machines operated by the gaming operators. Venue operators, under the new industry structure, will not pay the levy.
The Gambling Regulation Act 2003 provides the formula for calculating the quantum of the levy and the dates on which payments of the levy are due to the State. The [A]ct provides that the levy is to be calculated in November each year, in reference to the average number of gaming machines in operation from December in the previous year to November in the current year, and for payments to be due at set dates.
The prescription of specific dates for calculating the quantum of the levy and due dates is inappropriate at the end of the gaming operator’s licences and creates uncertainty with respect to determining how the levy will be calculated and when it is due for the final financial year.
The bill amends the [A]ct to provide the Treasurer with flexibility as to when he or she can determine the quantum of the levy and when the levy is payable. It is important to note that this amendment is not intended to increase the quantum of the levy that would have been payable by the gaming operators for the period until 16 August 2012 if the gaming operator licences had not ceased.[14]
[14]Victoria, Parliamentary Debates, Legislative Assembly, 18 April 2012, 1709 (Michael O’Brien, Minister for Gaming) (emphasis added). The Explanatory Memorandum contained statements to the same effect: Reasons [19].
As can be seen, the structure of the taxing provision remained unchanged in its 2012–13 manifestation, as did the language imposing the respective obligations. In this particular financial year, as in each previous year, each gaming operator was obliged to pay to the Commission
a health benefit levy calculated in accordance with the formula set out in s 3.6.3(1).
Other than the necessary cross-reference to the formula, the language of s 3.6.3A(1) was identical to that of s 3.6.3(1).
Crucially, there was no change of formula. On the contrary, the calculation was to be done in accordance with exactly the same formula as had been applicable since the introduction of the averaging method in 2001. It is therefore to be assumed that Parliament intended that the calculation be done in exactly the same way, with exactly the same precision, as in each previous year. The Minister’s statement (above) that the GRA ‘provides the formula for calculating the quantum of the levy’ is entirely consistent with this analysis.
Likewise, sub-s 3.6.3A(2) used precisely the same language as that of s 3.6.3(3) — and of each of the predecessor provisions — to impose on the Treasurer the obligation to determine the amount of the levy payable. The only difference from the earlier provisions was that, under s 3.6.3A(2), the Treasurer’s obligation was to determine the amount of the levy in respect of the particular financial year, rather than an obligation to do so in each successive financial year.
In short, in imposing the obligation to pay the levy and the obligation to determine the amount of the levy, Parliament used exactly the same language in s 3.6.3A as had been used from the inception of this levy. Self-evidently, there was nothing in the language to suggest a change of legislative intent with respect to the 2012–13 year. On the contrary, the fact that the original language of the 1991 Act — which had been re-enacted in the GRA — was now replicated in the Transition Act demonstrates that Parliament’s intention had not changed.
The use of identical language in the 2012 Bill is of particular significance, in our view, given the impending expiry of the licences. At that time, as the judge noted, Parliament well knew that the respondents would cease to have any entitlement to operate gaming machines when their licences expired on 15 August 2012. That is, it was known that these operators would only be operating gaming machines for a period of 46 days in the 2013 financial year.[15] Indeed, as the Solicitor-General pointed out, the definition of ‘gaming operator’ was expressly enlarged for the purposes of s 3.6.3A to include ‘a person who held’ a licence.[16]
[15]Reasons [41].
[16]Section 3.6.3A(5).
Three matters should therefore be noted. First, the decision to maintain exactly the same basis of calculation for the 2012–13 year, and to use exactly the same statutory language, must have been a deliberate one. Parliament chose to use the same 12 month formula, and the same hybrid period, knowing that the machines would be operating for less than two months of that financial year.
Secondly, although the Second Reading Speech and the Explanatory Memorandum both referred explicitly to the impending expiry of the licences, neither made mention of any process for adjustment of the levy by reason of that circumstance. The only alterations were those which the Minister for Gaming identified, concerning the dates on which the determination was to take place and on which the levy was payable. Thirdly, the use of identical language meant, as the respondents accepted, that whatever might be said about the construction of those words in s 3.6.3A must have been true of the provision from the time of its first enactment.
As we have said, the payment obligation imposed by sub-s (1) of the successive enactments was unambiguously clear. The amount of the health levy which the gaming operator was obliged to pay was the amount arrived at by performing the multiplication exercise which the section specified. Initially, as noted earlier, what was required was simply to multiply a fixed dollar amount by the number of machines in operation on a particular day. Subsequently, an averaging formula was adopted, but the multiplication exercise otherwise remained exactly the same. That is, the fixed dollar amount was to be multiplied by the number of machines arrived at in accordance with the averaging formula.
There is no room for debate about the result of a multiplication exercise. There is one, and only one, correct answer. That was so when the levy was first introduced by the 1991 Act, and remained so when the Transition Act introduced s 3.6.3A. The amount which the gaming operator was required by sub-s (1) to pay in any given year could be ascertained with precision.
Since the amount of the levy payable could be calculated precisely, it followed necessarily that the Treasurer’s obligation ‘to determine the amount of the levy’ was an obligation to perform that arithmetical calculation. There is no basis, on the plain language of this section (and its predecessors), for a contention that the Treasurer had authority to determine a different amount by adopting some other method (or by exercising some unstated discretion). The Treasurer’s determination was in the nature of a tax assessment, requiring calculation of the amount payable by the operator pursuant to the obligation imposed by sub-s (1).
Of course, Parliament could have introduced a different computation method under which the Treasurer was given a discretion. For example, the multiplication formula might have been used simply to arrive at a base figure, which could then have been adjustable by the Treasurer on the basis of specified matters and circumstances. Plainly enough, that is not what was done.
Nor was there said to be any difficulty of application of the formula to the 2012–13 financial year. The levy payable — and the amount to be determined by the Treasurer — were to be calculated in accordance with the averaging formula. This necessitated the identification of the number of machines being operated (or taken to be operated) by the gaming operator on the first Saturday in each month from December 2011 up to November 2012. It was not suggested in argument that there was any difficulty in identifying what those numbers were, nor in taking the required average for the 12 months and then applying the specified dollar amount to that average number of machines.
As noted earlier, however, the trial judge was persuaded that sub-s (2) of s 3.6.3A — imposing the obligation to determine the amount of the levy — could be read as giving the Treasurer a discretion to determine that the amount payable was something less than the amount arrived at by applying the formula. We turn to examine the reasons which his Honour gave.
The judge’s reasons
As to the applicable principles of interpretation, the judge said:
As the High Court has repeatedly stated, the process of statutory construction involves beginning with the words of the statute and then considering those words in light of their context and the purpose of the provision to be interpreted.[17]
[17]Reasons [22].
His Honour then set out a passage from the joint judgment of French CJ, Crennan, Kiefel, Gageler and Keane JJ in Federal Commissioner of Taxation v Unit Trend Services Pty Ltd,[18] in which their Honours endorsed the following statements from previous decisions of the Court:
[T]he task of statutory construction must begin with a consideration of the [statutory] text.[19]
…
The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority, ‘[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute’ ... That is, statutory construction requires deciding what is the legal meaning of the relevant provision ‘by reference to the language of the instrument viewed as a whole’, and ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.[20]
[18](2013) 297 ALR 190, 200–1 [47].
[19]Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257, 267 [39] (citations omitted).
[20]Certain Lloyds Underwriters Subscribing to Contract No IHOOAAQS v Cross (2012) 248 CLR 378, 389 [24] (The word ‘all’ is emphasised in the joint judgment of French CJ and Hayne J. The other emphasis is that of Hargrave J. Citations omitted).
In addition to these general principles of statutory interpretation, his Honour identified the following ‘specific principles’ as being relevant to the case at hand:
First, all words in a statute must prima facie be given some meaning and effect. This principle may be more compelling if the word or phrase in question has been added by amendment.
Second, a court may depart from the literal meaning of the words in a statute if an alternative construction is reasonably open and more closely conforms to the legislative intent. This principle is often applied in circumstances where the court considers that the literal operation of the statute leads to absurd, extraordinary, capricious or irrational results, such that ‘the legislature could not have intended such an operation and that an alternative interpretation must be preferred’.
Third, while statutes imposing levies or taxes do not form a class of their own, and must be construed in accordance with general principles of statutory interpretation, the fact that a levy or tax is imposed is a relevant contextual matter. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue, the plurality referred to earlier High Court statements, to the effect that the imposition of a tax must be in plain terms, that penal statutes should be construed strictly, and that ambiguity in tax statutes should be resolved in favour of the taxpayer. Their Honours said they did not need to decide whether ‘rules’ of construction to this effect may still be relied upon. As a single judge, I must of course apply the law as stated in High Court cases supporting such principles, or ‘rules’. Although I have done so, I do not believe that it was necessary to resort to those principles in reaching the result I have. Specifically, my conclusion would be the same in the absence of such principles or rules applying.[21]
[21]Reasons [25]-[27] (citations omitted).
As already noted, it is the second of these three propositions which proved to be decisive. That is, his Honour concluded that he was entitled to depart from the literal meaning of the words in s 3.6.3A because that meaning would produce unfair results and because — crucially — an alternative construction of the words was reasonably open.
The judge noted the Treasurer’s contention that ss 3.6.3 and 3.6.3A of the Act did not provide him with a discretion to authorise him to determine the levy for the 2012–2013 financial year on any basis other than a strict arithmetical application of the formula. As the judge put it, the Treasurer contended ‘that the words of these provisions are so clear that no alternative construction is open to the Court, and questions of unreasonableness of the result do not therefore arise for consideration’.[22]
[22]Reasons [29].
In essence, the Treasurer’s contention was that the duty to determine the levy was imposed by s 3.6.3A(2) in the same terms as had applied previously. As in each previous year, performance of that duty was limited to a precise arithmetical application of the formula to the facts as found by the Treasurer, in consultation with the Commission, in relation to the integers of the formula. Parliament had made a choice, in enacting s 3.6.3A, to impose the same formula and determination procedure as had previously applied.
His Honour rejected these contentions, saying that they involved ‘a narrow approach to the words used’.[23] In his Honour’s view, the Treasurer’s contentions
would attribute to Parliament an intention to knowingly legislate for a tax or levy which is unfair and unreasonable. Such an intention should not be attributed to Parliament if there is an alternative construction, reasonably open, which gives the Treasurer discretion to adjust the levy calculated by an arithmetical application of the formula.[24]
The preferable construction of s 3.6.3A(2) of the Act was that
it conferred a discretion on the Treasurer to determine the levies for the 2013 year, by adjusting the arithmetical result of the application of the formula in s 3.6.3(1) of the Act to account for the fact that Tatts and Tabcorp did not operate any gaming machines after 15 August 2012.[25]
[23]Ibid [35].
[24]Ibid [45].
[25]Ibid [35].
His Honour was satisfied that, ‘when construed in the context of the statutory scheme, the language of s 3.6.3A [was] consistent with the Treasurer having a discretion when determining the levy for the 2013 financial year’.[26] His Honour identified a number of features of the statutory language which he considered supported that construction. Some were specific to s 3.6.3A itself, as follows:
·whereas in each previous year the Treasurer’s obligation was to be performed ‘for … each financial year’, s 3.6.3A was concerned with a particular financial year ‘when it was known that Tabcorp and Tatts would only operate gaming machines for a period of 46 days’;
·instead of the formula applying ‘for’ the relevant financial year, s 3.6.3A provided that the formula was to be applied ‘in respect of’ the 2012–13 year; and
·in his Honour’s view, this change in language was consistent with Parliament recognising ‘that it was imposing a levy in respect of a 46 day period only, and not for the full financial year’.[27]
[26]Ibid [46].
[27]Ibid [47] (emphasis in original).
Others were features of the language used consistently since the tax was first imposed in 2001, as follows:
·the word ‘determine’ might indicate a deliberative process, beyond mere arithmetical application of a formula;[28]
·to construe the determination function as merely the carrying out of an arithmetical calculation was inconsistent with other provisions of the Act which distinguished between the separate concepts of ‘calculation’ and ‘determination’;[29]
·where it was intended to provide for a determination limited by reference to specific criteria, the legislation said so explicitly;[30] and
·the obligation to determine the levy ‘in accordance’ with the specified formula did not, ‘as a matter of ordinary language, mean that the amount of the levy must be determined as equalling the arithmetical result of application of the formula’.[31]
[28]Ibid [48].
[29]Ibid [49].
[30]Ibid [50].
[31]Ibid [51].
In his Honour’s view, the statutory language was to be read as expressing the legislative intention that the Treasurer have a discretion to determine the amount of the levy otherwise than by simple application of the mathematical formula.
Did the statutory language confer a discretion?
As pointed out earlier,[32] the language imposing obligations on the gaming operator and on the Treasurer was clear and unambiguous. The amount of the levy payable by an operator under sub-s (1) was capable of calculation with precision, and the Treasurer’s obligation was to determine, in relation to each gaming operator, the amount payable by that operator in accordance with the formula.
[32]See [29]–[33] above.
We have already pointed out the necessary symmetry between the obligation to pay and the obligation to determine.[33] Clearly enough, Parliament in sub-s (1) legislated to impose on each operator an obligation to pay an amount of tax which was to be computed precisely by application of the formula. As taxpayers, they were entitled to know their tax liabilities with precision. The Treasurer’s role was to make a formal determination of the amount payable and, for that purpose, to perform the calculation for the year in question, before notifying each operator of the amount payable.
[33]See [31] above.
Laws imposing taxation conventionally comprise provisions which specify:
·the person on whom the obligation to pay is imposed;
·the basis on which the tax payable by that person in the particular year is to be calculated; and
·the person whose responsibility it is to assess (calculate) and collect the tax.
The respondents pointed out, by way of example, that at the Commonwealth level:
·income tax is imposed by the Income Tax Act 1986 (Cth);
·the rates of tax are declared by the Income Tax (Rates) Act 1986 (Cth); and
·the precise amount of tax payable by an individual is calculated (assessed) in accordance with the Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment Act 1997 (Cth).
At the State level, the Duties Act 2000 (Vic) imposes duty on transfers of dutiable property. Specifically, that Act provides that:
·the liability arises when a dutiable transaction occurs;
·duty is payable by the transferee of the property; and
·duty is charged on the dutiable value of the property, at the specified rate.
The assessment function is performed by the Commissioner of State Revenue, under the Taxation Administration Act 1997 (Vic).
The common feature of these schemes of taxation is that, in the absence of some provision to the contrary, the assessment of the amount of tax payable is strictly governed by the provision(s) which impose the tax liability on the taxpayer. The tax is payable at the rate specified as being applicable to the taxable subject-matter. The assessor has no discretion to assess the tax payable on any other basis. Counsel for the respondents conceded — correctly — that this was so.
The present scheme was of precisely that kind. The obligation to pay the tax was imposed on the gaming operator. The provision imposing the liability specified precisely how it was to be calculated. The obligation to assess the tax payable was imposed on the Treasurer. The one was the corollary of the other. In this context, accordingly, the provision imposing on the Treasurer the obligation ‘to determine’ the tax payable cannot be read as if it imposed a discretion to decide whether or not the full amount arrived at by application of the formula should be payable. On the contrary, the Treasurer was bound to apply the statutory formula in order to determine the amount of tax payable.
It follows, with respect, that his Honour erred in describing the levy as having ‘always been imposed by a two-stage process’, in which calculation was separate from determination. Under these provisions, the two were inseparable. As we have explained, the Treasurer had to make his determination by performing the prescribed calculation.
We turn to consider the arguments based on the text of the provisions. We begin with sub-s (1), which imposed the tax liability.
A ‘levy calculated in accordance with the following formula’
The phrase ‘in accordance with’ takes its colour from the context. It may, or may not, require strict compliance.[34] The trial judge referred to meanings of the word ‘according’ which use the language of ‘conformity’ or ‘harmony’ or ‘proportionality’. In his Honour’s view, it was
reasonably open to construe the phrase ‘levy calculated in accordance with’ the applicable formula as meaning a levy which is calculated ‘conformably’ with the arithmetical result of the application of the formula, including a levy calculated ‘in proportion’ to that result. A construction to this effect gives content to the determination process to be undertaken by the Treasurer, is consistent with that process involving a discretion to adjust the arithmetical result produced by the formula, and is more likely to lead to a rational result; as opposed to one which is unfair and unreasonable, and therefore unlikely to have been intended by the legislature.
[34]See Australian Capital Television Pty Ltd v Minister for Transport (1989) 86 ALR 119, 147–8; and cf Re Federated Furnishing Trade Society of Australasia (1993) 113 ALR 137, 145.
In our respectful view, that construction was not open in this statutory context. The relevant phrase — ‘calculated in accordance with the following formula’ — had to be read as a whole. The word ‘calculated’ is crucial. In its natural meaning, it requires ‘arithmetical or mathematical reckoning; computation’.[35] The amount of tax payable was to be calculated ‘in accordance with’ the formula. What was intended was the strict application of the formula. The language leaves no room for notions of calculating the levy ‘conformably’ with or ‘in proportion to’ the formula.[36] The very precision of the formula means that no meaningful content can be given to those notions.[37]
[35]Brown L (ed), The New Shorter Oxford English Dictionary (Clarendon Press, 1993) 318.
[36]Cf Walker v Wilson (1991) 172 CLR 195, 207–8.
[37]See Secretary, Department of Industry, Tourism and Resources v Spicer Axle Structural Components Australia Pty Ltd (2007) 164 FCR 301; see also Roads Corporation v Magistrates’ Court of Victoria (2005) 43 MVR 455.
There can be no doubt that, when used in this taxing provision in combination with a mathematical formula, the word ‘calculated’ was intended in its orthodox mathematical sense.[38] Straightforwardly, the section first says that the amount owing under the levy is to be worked out by mathematical means, and then provides, by the formula, those mathematical means. There is no invitation to resort to a non-arithmetical mode of inquiry, or to temper the result of the calculation with non-arithmetical considerations.
[38]Cf Custom Credit Corporation Ltd v Gray [1992] 1 VR 540, 547.
Relevantly identical language is used in s 138(3)(b) of the Accident Compensation Act 1985 (Vic), and it seems never to have been doubted that what was required was the strict application of the formula.[39] By way of contrast with the present case, s 1170 of the Social Security Act 1991 (Cth) also requires the application of a formula (for the calculation of a period in which a person is precluded from receiving social security on the basis of receiving a lump sum compensation payment.) But the legislation expressly provides for a departure from the formula if ‘special circumstances’ arise.[40]
[39]See, eg, Victorian Workcover Authority v Kenman Kandy (2002) 6 VR 666. See also Credit Act 1984 (Vic) s 38(b)(ii); Transport Accident Act 1986 (Vic) s 56(5); Accident Compensation Act 1985 (Vic) s 98C(2).
[40]Social Security Act 1991 (Cth) s 1184K provides that the Secretary can disregard compensation payments ‘if the Secretary thinks it is appropriate to do so in the special circumstances of the case’. In Haidar v Secretary, Department of Social Security (1998) 52 ALD 255, 263, Hill J commented upon the provision, writing that ‘the legislature was conscious of the possible harshness of a rule structured in an arbitrary way. Section 1184, therefore, provided the means whereby the secretary, or in the event ultimately of an appeal to the Administrative Appeals Tribunal, that tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances’. Similar comments were made by Mansfield J in Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281, 288 [28] where his Honour said that s ‘1184 may provide a release valve for such unfairness or injustice in certain circumstances’.
The respondents submitted — correctly — that the taxing provision must be read as a whole. It does not follow, however, that the phrase ‘calculated in accordance with’ must be construed in a way which ‘gives content’ to the Treasurer’s obligation to determine the amount of the levy. The true position is the reverse. That is, the determination function is governed by the terms in which Parliament imposed the tax and, in particular, by the specified method of calculation.
‘The Treasurer, in consultation with the Commission, is to determine the amount’
As his Honour noted, the word ‘determine’ may be used to signify either a mechanical exercise of computation or a process involving reasoning and judgment.[41] The same distinction has been elucidated in the field of contractual interpretation.[42] When the word is used in the first sense, there will ordinarily be only one uniquely correct result. When it is used in the second sense, there will ordinarily be more than one result reasonably open, since opinions may reasonably differ as to the outcome of such a process of determination.[43]
[41]Reasons [48].
[42]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2013] VSCA 179, [17]–[21].
[43]WMC Resources Limited v Leighton Contractors Pty Ltd (1999) 20 WAR 489, [18]–[26].
An example of the second usage is provided by s 3.6.5 of the GRA, to which the judge referred. Under s 3.6.5(1), the holder of a gaming operator’s licence was obliged to pay a ‘supervision charge’. Sub-section (2) provided:[44]
The supervision charge is such amount in respect of each financial year as the Treasurer, after consultation with the Minister, determines having regard to the reasonable costs and expenses in respect of the financial year incurred by the Commission in carrying out its functions and powers under this Act in respect of gaming.
Clearly enough, the amount of the supervision charge was intended to be a matter for the Treasurer’s judgment. The exercise of that judgment was to be informed by a consideration of the ‘reasonable’ costs and expenses of the Commission, itself a matter requiring evaluative judgment.
[44]GRA s 3.6.5(2).
A further example relied on by the respondents was s 3.4.30, under which an applicant for a gaming operator’s licence was required to pay ‘as consideration for the grant of the licence the amount determined by the Treasurer as the premium payment’.[45] The premium payment was expressly stated to be a tax[46] but — in contrast to the levy provision — nothing was said about how the amount of the tax liability was to be quantified. Again, Parliament clearly intended that the question of quantum should be decided by the Treasurer in the exercise of his judgment, in this case informed by such matters as he considered relevant having regard to the statutory scheme and the nature of the licence being granted.
[45]Ibid s 3.4.30(1).
[46]Ibid s 3.4.30(2).
As these examples illustrate, the meaning to be given to the word ‘determine’ depends on the context. It depends, in particular, on what is to be determined and what the provision says (if anything) about how the determination is to be done. It is precisely because its meaning is always context-dependent that any argument based on the presumption of consistent use of words must inevitably fail.[47] That is, the fact that ‘determines’ is used in ss 3.6.5(2) and 3.4.30 to require the making of judgment sheds no light on the meaning to be given to the same word in the quite different context of the levy provision.
[47]See D C Pearce and R S Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 7th ed, 2011) 121-2 [4.7].
The respondents placed emphasis on the requirement that the Treasurer make his determination ‘in consultation with the Commission’. It was said that the use of the word ‘consultation’ showed that Parliament intended more than the mere ascertainment from the Commission of the number of machines in operation on the specified dates. The ‘consultation’, it was said, was intended to be the occasion for the Commission to inform the Treasurer of any matter relevant to the exercise of his power of adjustment.
We do not accept this argument. Plainly, the obligation to consult was imposed in aid of the Treasurer’s performance of his obligation to determine the amount of the levy payable. The ancillary obligation to consult could not alter the character of the principal obligation. It was common ground that the Commission knew, and the Treasurer did not know, how many machines were operating on any given day. In this context, it does no violence to the phrase ‘in consultation with’ to interpret it as requiring the ascertainment of that information — and no more.
The respondents also relied on the fact that, in the case of the different tax imposed by s 3.6.6(d) of the GRA, no provision was made for a Treasurer’s determination. Instead, the provision simply imposed on the gaming operator the obligation to pay the tax, specified the calculation formula, and required that the tax be paid to the Commission.
We accept the Solicitor-General’s submission that this was simply a different form of taxation provision, imposing a different form of tax. Under that provision, the Commission was required to determine the periods in respect of which the tax was paid. That no Treasurer’s determination was there required says nothing about what Parliament intended by imposing that obligation on the Treasurer as part of the machinery of the health benefit levy.
It follows from our conclusions about the construction of the operative taxing language — the language of calculation and determination, which had been used in the levy provision from the very beginning — that the minor changes of language found elsewhere in s 3.6.3A could not by themselves have been taken to signify any change of legislative intention.
Different language required
Had Parliament intended to confer on the Treasurer a discretionary power of adjustment, very different language would have been required. The discretion would have had to be expressly provided for in two places: first, in the provision which imposed the determination obligation on the Treasurer; and, secondly, in the provision imposing on the gaming operator the obligation to pay the tax. Otherwise, the exercise of discretion would have left unaltered the statutory obligation imposed on the operator by sub-s (1), to pay the full amount of the tax calculated in accordance with the formula.
Thus, in addition to imposing on the Treasurer the obligation to determine the amount of the levy payable by each gaming operator, sub-s (3) would have had to include a specification of the method of determination, along the following lines:
After calculating the base amount of the levy payable by a gaming operator in accordance with sub-s (1), the Treasurer may determine that a lesser amount is payable, if the Treasurer is satisfied that, because of circumstances beyond the control of the operator, it would be unfair or unreasonable to require the operator to pay the full amount of the levy. In deciding whether or not to exercise that discretion, the Treasurer shall have regard to the following matters. …
In turn, sub-s (1) would have required the insertion of concluding words along the following lines:
provided that, if the Treasurer in the exercise of the discretion conferred by sub-s (3) determines that some lesser amount of tax is payable, the operator must pay the amount as so determined, instead of the amount arrived at by application of the formula.
Counsel for the respondents made their position quite clear, however. They were not contending — and had not contended below — that any words needed to be ‘read in’ to the statute. Their submission was that the statutory language was open to the interpretation placed on it by the trial judge. They did not, as a result, seek to address the stringent requirements which must be met before words can be read into a statutory provision, as recently elucidated by this Court in Director of Public Prosecutions v Leys[48] and by the High Court in Taylor v The Owners – Strata Plan No 11564.[49]
[48](2012) 296 ALR 96.
[49](2014) 306 ALR 547.
As further clarified in oral argument, the respondents were in fact advancing two alternative contentions. The first was that the interpretation adopted by the judge was the only one reasonably open on the language of the provision. That this was so was said to be reinforced by the fact that the interpretation put forward by the Treasurer produced a result which was ‘extraordinary, capricious and irrational’. Alternatively, if (contrary to that primary contention) the Treasurer’s interpretation was also open on the statutory language, the judge’s interpretation had to be preferred because of the unreasonable consequences of the alternative.
We turn to examine the argument based on unreasonableness.
The argument from unreasonableness
In the trial judge’s view, the levy provisions carried an inherent risk of unfairness:
[I]n a statute imposing a levy for a full financial year, it was always possible that something might occur which could make imposition of the full levy, resulting from the arithmetical application of the statutory formula, manifestly unfair, unreasonable or capricious. For example, adopting the initial formula under s 135A of the 1991 Act, the number of gaming machines operating on 30 September in the financial year may be significantly disproportionate to the average number of machines in operation throughout the course of that year. This could occur for a variety of reasons, including damage to a large number of machines operating at a particular venue, because of fire, flood or other circumstances; or because Tabcorp or Tatts lost or surrendered its licence during the course of the year and ceased operating gaming machines from that time. When the new formula containing averaging provisions was introduced in the next financial year, the capacity for unfairness as a result of damaged or inoperable machines was reduced, but there could still be significant periods after the first Saturday of a relevant month where gaming machines were not being operated as a matter of fact. The possibility of loss or surrender of a licence remained. In these circumstances, in order to avoid unfair or unreasonable results, there was always objective good sense in providing the Treasurer with a discretion in determining the amount of the levy for a particular financial year.[50]
[50]Reasons [38].
In support of this analysis, the respondents’ argument on the appeals involved the following steps:
1.The tax imposed on a gaming operator by these successive provisions was a tax on the operations of the operator in the financial year in which the tax was payable.
2.Because of the method of calculation specified, however, the tax was to be calculated by reference not to the actual operations of the gaming operator in that year but by reference to a ‘proxy’ for the number of machines actually in operation in the tax year.
3.The use of a proxy in this way meant that the calculation ‘could easily go astray’, and lead to unfairness, if the actual operations in the financial year in question were different from the operations in the hybrid period — specifically, if fewer machines were in operation in the financial year than in the hybrid period.
4.Parliament must have intended, therefore, that the Treasurer have power to depart from the calculation produced by the formula, in order to avoid ‘any unfairness or incongruity’ resulting from a divergence between the operations in the hybrid period and the actual operations in the financial year in question.
The characterisation of the tax
As can be seen, the foundation of the respondents’ argument was their contention that the levy was a tax on the operators’ gaming operations in the financial year in which it was payable. In this sense, the number of machines calculated as an average over the hybrid period was said to be a ‘proxy’ for the actual operations in the relevant financial year.
With respect, we do not think that this is an accurate characterisation of the tax. When first introduced in the 2000–01 year, it was described by the then Treasurer as a ‘flat rate levy’. What was proposed, the Treasurer said, was
to impose a levy of $333.33 per gaming machine on each of the gaming machines operated by the gaming operators … on 30 September each year.[51]
[51]Victoria, Parliamentary Debates, Legislative Assembly, 26 October 2000, 1205 (John Brumby, Treasurer).
This was not a tax on revenues, nor a tax on gaming operations. It was a tax on gaming machines. That is precisely what s 135A(1) provided: ‘A gaming operator must pay a levy in respect of each gaming machine of the gaming operator …’.[52] The larger the number of machines, the larger the amount of tax payable. It was, in other words, a tax on the capital equipment from which the operator derived its income. Although the number of machines in operation would naturally provide some indication of the revenue likely to be derived by the operator over a year, the revenue actually generated from the machines in the financial year was irrelevant to the tax calculation.
[52]Section 135A(1) of the 1991 Act (emphasis added).
The move to an averaging formula in 2001 did not alter the character of the tax. It remained a flat rate tax on gaming machines. The only difference was that the number of machines to which the flat rate applied was calculated as an average over a 12 month period, rather than on a single day. Operating revenues remained completely irrelevant.
On this view, the liability to pay the tax was simply an incident of the holding of a gaming licence in the financial year in which the tax was payable. Payment of the tax was — in effect — a condition of being a licence-holder in that year. The quantum of the tax was determined by the scale of the licensee’s physical gaming infrastructure, calculated in accordance with the formula. On this view, neither the duration, nor the success, of the gaming operations in that financial year had any bearing on the liability to pay the tax or — most importantly — on its quantum (except that a cessation of operations before 30 November would be likely to affect the calculation of the average number of machines under the formula). Nor, contrary to the judge’s view, did these provisions contain an ‘implicit assumption’ that the respondents would operate gaming machines during the whole of the financial year.
As the Solicitor-General submitted, rejection of the respondents’ characterisation of the levy — as a tax on gaming operations in the financial year in which the tax was payable — would inevitably weaken their argument about unfairness. Since each operator held a gaming licence in the 2012–13 financial year, and conducted gaming operations in that year under that licence, there was no unfairness in their being required to pay the full levy. In the end, however, this matter of characterisation need not finally be resolved. We proceed to explain why, even on the basis of the respondents’ own characterisation of the tax, the unreasonableness argument must be rejected.
‘Unfair or unreasonable results'
The respondents emphasised the following consequences of the method of calculation (based on the number of machines in operation on a particular day of each month) and of the adoption of the hybrid period. In the absence of a relieving discretion, it was said, no account could be taken of a cessation of operation of machines:
(a) during so much of a month as remained after the first Saturday; or
(b) during the months after the end of the hybrid period, that is, from 1 December to 30 June of the taxing year.
There are, with respect, two fundamental difficulties with this analysis. First, it was of the very essence of the machinery adopted for calculation and determination of the tax that eventualities of this kind might occur. These risks were inherent in the scheme from the moment the averaging formula was implemented and the hybrid period adopted (in the 2001–02 year).
In short, the consequences identified by the respondents were obvious, and inescapable. Had Parliament intended (as the respondents contended) that the Treasurer have a discretionary power to adjust the amount of tax payable to take account of such eventualities, express provision to that effect would have been made at the time the averaging formula was introduced. As the Solicitor-General correctly submitted, it is inconceivable that the legislature would have imposed the tax using the unqualified language of obligation — ‘must pay’, ‘is to determine’ — if the true intention from the beginning was to confer a discretionary power of adjustment.
As noted earlier, the judge’s view was that the risk of a cessation of operations during the financial year was such that ‘there was always good sense in providing the Treasurer with a discretion in determining the amount of the levy’.[53] With great respect, that was a policy judgment which had to be made — if at all — by the legislature. The only question for the Court in these circumstances is what the statutory language reveals about the judgment which the legislature actually made.[54]
[53]See [72] above.
[54]See Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1, 14 [28].
The second difficulty is that the putative discretion would itself have had wholly unreasonable consequences, as follows. Of necessity, the power of adjustment would have had to be exercised when the Treasurer made his determination of the amount of tax payable. Making the adjustment would have been part of the process of determination. But the Treasurer was required to notify each gaming operator of his determination ‘as soon as practicable after the first Saturday in November in that year’.[55] In other words, the Treasurer’s determination had to be made well before the financial year in question had come to an end. It followed, as senior counsel for the respondents accepted, that the Treasurer would have been unable — in the exercise of the adjustment power — to take account of events which occurred later in the financial year.
[55]See, eg, GRA s 3.6.3(3).
The respondents gave the example of a fire, occurring in the financial year, which destroyed a venue at which a gaming operator had a number of gaming machines in operation. According to the submission, it would have been ‘irrational and unfair’ for the Treasurer to apply the formula, using the hybrid period, as if those machines had continued to operate for the balance of the financial year.
As senior counsel conceded, however, such an event could only have been taken into account for the purposes of a discretionary adjustment if it had occurred before the date of the Treasurer’s determination. If it had occurred later in the financial year, no adjustment would have been possible. At the time of the determination, it was an unknown future eventuality. The unfairness for the operator would have been exactly the same, however, irrespective of when the fire occurred. In the same way, an operator which sustained a fire in August of the financial year would have been able to have that circumstance taken into account in the making of a discretionary determination, whereas no adjustment could have been made for an operator which sustained such a fire after the determination had been made.
Temporary cessations of this kind would, of course, have been reflected in the calculation of the levy payable in the following financial year. For example, a reduction in the number of machines operating (say) between March and June would — because of the use of the hybrid period — have reduced the average number of machines (calculated in accordance with the formula) to which the fixed dollar amount would be applied in the calculation for the following year.
The same is not true, however, of the other scenario which the judge (and the respondents) put forward, that of a licence surrender. Assuming a December determination by the Treasurer, a licence surrender made the previous August could have been taken into account in the exercise of the putative power of adjustment, but a surrender made the following January could not have been. And, because the operator which surrendered its licence in January would not have held a licence in the subsequent financial year, no levy would have been payable in that year and — hence — there would have been no opportunity for the cessation of operations post–January to be reflected in the next calculation of the average number of machines in operation.
The final unsatisfactory aspect of the notional discretion is that its scope — that is, the portion of the financial year which the Treasurer could have taken into consideration — would have varied according to the particular date on which the Treasurer made the determination. The legislation did not specify a date. It provided only that the operators had to be notified of the determination ‘as soon as practicable after the first Saturday in November’, and that the first instalment of the tax was due on 15 December.
Counsel for the respondents were pressed to explain why the legislature would be thought to have conferred a discretion whose exercise would — necessarily — have been inconsistent, uncertain and arbitrary. In response, it was submitted that a power to adjust for events which were known at the time of determination served a useful purpose, notwithstanding that post-determination events of the same character could not be taken into account. Despite that limitation, it was said, it still made ‘good sense’ for the Treasurer to have the power.
This submission must be rejected. As has been shown, the putative discretionary power of adjustment would have operated in a wholly arbitrary fashion. Whether an adjustment could be made would have depended solely on when the determination was made and when the particular cessation of operations occurred. It could never have been Parliament’s intention that two identical events, each having the same claim on the exercise of discretion, should be treated so differently without there being any rational basis for distinguishing between them.
Had Parliament indeed intended to give the Treasurer such a power, it must inevitably have been conferred in terms which ensured that the Treasurer could take account of all relevant cessation events in the financial year, whenever they occurred. Almost certainly, Parliament would have provided for the adjusting discretion to be exercisable after the end of the financial year in question. By that time, the Treasurer would have been aware of all events of this nature, affecting either or both operators, and could have made adjustments in a rational and equitable fashion.
Double taxation
In his Honour’s view, the interpretation advanced by the Treasurer had a further unreasonable consequence, in that it would lead
to a doubling-up of tax on the same gaming machines. This is because, from 15 August 2012, the same gaming machines which were previously the subject of the licences held by Tabcorp and Tatts have been operated by venue operators with gaming entitlements, and those operators are being taxed by reference to their operation of those machines. On the Treasurer’s interpretation, the Government would also be receiving levies from Tabcorp and Tatts attributable to the period from 16 August 2012 to 30 June 2013. That is another unfair and unreasonable result which ought not be attributed to Parliament.[56]
[56]Reasons [55].
On the appeals, counsel for the respondents laid particular emphasis on this aspect of the matter. Counsel pointed out that the tax regime applicable to the gaming operators up to August 2012 comprised three separate taxes, as follows:
·the health benefit levy;[57]
·a tax calculated as a fixed percentage of ‘the total daily net cash balances during the period of all gaming machines of the gaming operator at approved venues’;[58] and
·an ‘additional tax’, also calculated as a fixed percentage ‘of the daily net cash balances during the period of all gaming machines of the licence holder at approved venues’.[59]
[57]Ibid s 3.6.3.
[58]Ibid s 3.6.6(2)(d).
[59]Ibid s 3.6.7.
Under the new gaming arrangements, those three taxes were replaced by a single tax. That tax was imposed by companion provisions — ss 3.6.6A and 3.6.6B — which applied to gaming operations in pubs and clubs respectively. In each case, the tax was to be calculated on the basis of the actual revenues of the new licensee, which held both the venue operator’s licence and the gaming machine entitlements. (That tax, when paid, is hypothecated to the Hospitals and Charities Fund and the Mental Health Fund.[60])
[60]Ibid s 3.6.11.
The contention for the respondents was that
there is double tax. Quite simply and plainly, the same gaming machine revenue has been taxed twice: once in the hands of the former licensee whose licence expired on the 15th August, and then in the hands of the new licensee from the 16th August.
According to the submission, this was ‘an unreasonable and arbitrary outcome’ of the construction for which the Treasurer contended.
This submission must be rejected, in our view. First, as we have pointed out, the health benefit levy was not a tax on revenue. It was a tax on gaming machines. Secondly, the tax on revenues imposed by the new provisions was the direct successor of the equivalent taxes on revenues under the former regime, imposed by ss 3.6.6 and 3.6.7. Because the former taxes were calculated on the basis of actual revenues, the gaming operators paid those taxes in respect only of their operations up to 15 August 2012. As from 16 August 2012, the new licensees were liable for the successor tax, levied on the actual gaming revenues from that day forward. In the relevant sense, therefore, there was no double taxation. The outgoing licensees paid the tax up to 15 August 2012 and the incoming licensees paid the tax on the operations thereafter.
Thirdly, as the Treasurer pointed out in his submissions, the new regime included no equivalent to the health benefit levy. In the 2012–13 year, therefore, the health benefit levy was imposed once, and once only. It was imposed by s 3.6.3A and was payable by the outgoing licensees. No such tax was payable by the incoming licensees in respect of that financial year (or at all).
Conclusion
In Alcan,[61] the High Court plurality said:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.[62]
[61](2009) 239 CLR 27, 46–7 [47].
[62]Citations omitted, emphasis added.
More recently, in Thiess,[63] the joint judgment of French CJ, Hayne, Kiefel, Gageler and Keane JJ endorsed the following statement from an earlier decision of the Court:[64]
‘This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text’. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text.
[63](2014) 306 ALR 594, 599 [22].
[64]Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257, 268 [39] (citations omitted).
As the High Court has pointed out, there are powerful reasons of principle for giving primacy to the statutory text. First, the separation of powers requires nothing less. Axiomatically, it is for the Parliament to legislate and for the courts to interpret. Close adherence to the text, and to the natural and ordinary meaning of the words used, avoids the twin dangers of a court ‘constructing its own idea of a desirable policy’,[65] or making ‘some a priori assumption about its purpose’.[66]
[65]Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1, 14 [28].
[66]Certain Lloyds Underwriters v Cross (2012) 248 CLR 378, 390 [26].
Secondly, giving the text its natural and ordinary meaning maximises the comprehensibility and accessibility of statute law, and the accountability of the legislature. As French CJ said in International Finance Trust Co Limited v New South Wales Crime Commission:[67]
[67](2009) 240 CLR 319, 349 [42].
[T]hose who are required to apply or administer the law, those who are to be bound by it and those who advise upon it are generally entitled to rely upon the ordinary sense of the words that Parliament has chosen. To the extent that a statutory provision has to be read subject to a counterintuitive judicial gloss, the accessibility of the law to the public and the accountability of Parliament to the electorate are diminished.
We would also respectfully adopt what his Honour said in NAAV v Minister for Immigration (when a member of the Federal Court), as follows:
In a representative democracy those who are subject to the law, those who invoke it and those who apply it are entitled to expect that it means what it says. That proposition informs the approach of courts to the interpretation of laws in taking as their starting point the ordinary and grammatical sense of the words.[68]
[68](2002) 123 FCR 298, 410 [430].
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