United Energy Ltd v Com of Tax & Anor

[2000] HCATrans 406

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M110 of 1999

B e t w e e n -

UNITED ENERGY LIMITED

Applicant

and

THE COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

First Respondent

STATE ELECTRICITY COMMISSION OF VICTORIA

Second Respondent

Application for special leave to appeal

McHUGH J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 8 SEPTEMBER 2000, AT 10.02 AM

Copyright in the High Court of Australia

MR J.M. EMMERSON, QC:   If the Court pleases, I appear with my learned friend, MR T.P. MURPHY, for the applicant.  (instructed by Mallesons Stephen Jaques)

MR B.J. SHAW, QC:   If the Court pleases, I appear with my learned friend, MS J. DAVIES, for the Commissioner.  (instructed by the Australian Government Solicitor)

McHUGH J:   The Deputy Registrar has given me a certificate in which she says she has been informed by Freehills, formerly Freehill Hollingdale & Page, solicitors for the second respondent, that the second respondent does not wish to take an active part in this matter.  Yes, Dr Emmerson.

MR EMMERSON:   If the Court pleases, it is convenient to start with reference to page 42 of the application book which is the page at which we say the error of the majority below commences.

HAYNE J:   Let it be assumed for the purposes of debate that an arguable case of error is shown, why should we take this on when the legislation has gone?

MR EMMERSON:   Your Honour, the legislation has gone but its effect lives after it because ‑ ‑ ‑

HAYNE J:   There is a lot of money at stake between these parties, I am sure, but why should this Court take on the question of classification of transformation of electricity under the sales tax exemption provisions?

MR EMMERSON:   We say it goes further than that, if the Court pleases.  We say that there is here an error of reasoning demonstrated which purports to follow two decisions of this Court and we say that that raises an issue of principle as to ‑ ‑ ‑

McHUGH J:   I appreciate you say it raises a question of principle but, after all, the expression is “other goods”.  Why was the majority of the Full Court wrong in applying the principles which you say should not have been applied?

MR EMMERSON:   The Full Court was wrong because the expression “other goods” includes the word “goods” which has a special definition under the Act.  What the Full Court essentially did was accept that the word “goods” includes electrical power, which is the subject of dispute in this case.  But having accepted that, the majority went wrong in saying, “When we look to see whether we have other goods, we don’t actually ask whether the electrical power coming out of the transformer is other than the electrical power going into the transformer.  We simply say power is power and that’s what you pay for”.  In reaching their conclusion, the majority seems to have relied on the principle that you revert simply to a matter of common sense.

McHUGH J:   That is not quite accurate, is it?  What they said was that the terms are used in a statutory context and, subject to that context, they are to be interpreted as a matter of general impression according to the common usage of ordinary language.  What is wrong with that?

MR EMMERSON:   That is the principle that they derive from this Court, but the way they apply it shows that they are not giving to it the meaning which we say that principle should have.

McHUGH J:   That only means that they misapplied a point of principle.  That is hardly a special leave point.

MR EMMERSON:   It is more than that, your Honour.  We say that in purporting to apply a stated principle, they in fact applied a different principle.  They seem to have treated the notion of construction by reference to ordinary usage of terms as going much too widely, in our submission.  You can have ordinary usage of terms where you have a word or a phrase or a sentence which uses ordinary words but, once you get to the point at which you accept that the meaning of “goods” includes electrical power, then you have to carry the thing through thoroughly, in our submission.  In construing the statute, you have to construe it with regard to the meaning that is being given.  To simply shrug it off and say power is power and that is all there is to it, in our submission, is to misapply that principle.

McHUGH J:   But that is the point.  The workload of this Court has almost doubled since 1980.  It would quickly quadruple if we started to grant special leave to appeal when it was alleged that an intermediate court of appeal had misapplied some statutory term or formula.

HAYNE J:   In an Act since repealed.

MR EMMERSON:   Again, it goes beyond that, in our submission, your Honour.  This is also a case in which the Act provides examples as an aid to interpretation.  In our submission, the approach that is taken by the majority of the Full Court simply pushes to one side those examples.  The Court will recall that as an example of a manufacture‑related activity, making goods into other goods, there is given the example of taking plastic, which is goods, making it into plastic doorknobs, which is “other goods”.  These are different in a commercial sense.  They still have of course the same plastic in them, yet the court seems to proceed on the footing that if something starts off as power and ends up as power, that is all you need to

know.  By parity of reasoning, if you were concerned with plastic, it would be said you start off with plastic and you end up with plastic and that is all you need to know.  The example, we say, teaches you against this and that is not a matter which the court has properly dealt with.

Further than that, in isolating a commodity of commerce, again, in our submission, the court has proceeded incorrectly.  It takes the notion of commodity of commerce from M.P. Metals but it treats that as telling you simply that you need do no more than ask by reference to what charges are made to customers.  Therefore, the commodity of commerce becomes, we would say, entirely artificial.  On the view that the Full Court takes, there is no difference between electric power at 66,000 volts, which if collected to one’s house would cause it to burn down, and electrical power at 240 volts where you could actually use it.

They get there simply by saying, “Oh well, you are charged for electrical energy”, but that is, we would say, entirely to miss the point.  So, if you are to carry through the reasoning that has developed in this area of the law, then, in our submission, you have to carry it through fully.  We say that this Court ought to grant leave and hear the matter in order to clarify for the future what use you can make of terms which are defined to have a special meaning which is not simply the common usage of ordinary language, so to what extent you could use that.  We say that the Court should also consider here what use can be properly made of examples which are stated in statutory enactments as illustrating the effect of those enactments.

We also say that this raises issues about the use of analogy here because the court seems to have proceeded by way of a wrongful analogy.  In our submission, the majority concentrates on form rather than substance in this particular case and in so doing it casts adrift the position that you should have in a carefully constructed statutory scheme which proceeds by way of definitions and examples but which takes you outside the common usage of ordinary language.  Therefore, to treat the notion of common usage of ordinary language as being the dominant notion, as the court seemed to do in this case, we say the court went wrong.  The qualification subject to that context we say clearly requires some clarification by this Court, with respect, because that context seems to have dealt with no more than a bare acceptance that the word “goods” here incorporates electrical power.  If the Court pleases.

McHUGH J:   Thank you, Dr Emmerson.  We need not hear you, Mr Shaw.

This application concerns the construction of statutory provisions since repealed and their application to particular and unusual facts and circumstances.  No point of general principle would fall for decision if leave were granted.  In those circumstances special leave is refused.

MR SHAW:   I ask for costs, if the Court pleases.

McHUGH J:   You cannot oppose that, Dr Emmerson?

MR EMMERSON:   I cannot oppose that, your Honour.

McHUGH J:   Special leave is refused with costs.

AT 10.16 AM THE MATTER WAS CONCLUDED