Warmun Community (Turkey Creek) Inc and Chief Executive Officer of Customs

[2000] AATA 177

DECISION AND REASONS FOR DECISION [2000] AATA 177

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No.  D99/5

GENERAL ADMINISTRATIVE  DIVISION       )      
           Re      WARMUN COMMUNITY  (TURKEY CREEK) INC    
  Applicant

And    CHIEF EXECUTIVE OFFICER OF CUSTOMS            
  Respondent

DECISION

Tribunal       Deputy President DP Breen, Presidential Member      

Date8 March 2000            

PlaceBrisbane

Decision      The Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that the diesel fuel is used "at" the residential premises in question and the applicant does satisfy subsection 164(1)(b) of the Customs Act 1901.   

(Sgd)          DP BREEN
  PRESIDENTIAL MEMBER
CATCHWORDS
CUSTOMS - diesel fuel rebate - subsection 164(1)(b) Customs Act 1901 - usage at residential premises - factors to be taken into account - communality - floodgates argument.
Customs Act 1901ss 164(1)(b)
Collector of Customs, Tasmanian v Flinders Island Community Association (1985) 7 FCR 205
Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177
Re District Council of Coober Pedy and Cowell Electric Supply Company and Collector of Customs, Nos. N93/422 and N93/420 delivered 17 March 1994

REASONS FOR DECISION

8 March 2000       Deputy President DP Breen, Presidential Member                  

1. The applicant in these proceedings is Warmun Communtiy (Turkey Creek) Incorporated, a body corporate established to support the development of the Warmun Community in all ways.

2. The Warmun Community is a settlement for Aboriginal people predominantly of the Gidga language group and their relatives who re-settled into a reserve area along Turkey Creek around 1975.  It is located in the Kimberley region approximately 200 kilometres south of Kununurra on the Great Northern Highway in north-east Western Australia.

3. The applicant appeals a decision by an Excise Officer on 13 January 1999 to refuse to pay a diesel fuel rebate under subsection 273(GA)(1)(hb) of the Customs Act 1901 or subsection 162C(1)(f) of the Excise Act 1901 for the period 12 July 1995 to 30 October 1996. This decision was based on the respondent's contention that the township of Warmun does not fall within the provisions of subsection 164(1)(b) of the Customs Act.

4. The parties agreed for this case to be decided on the basis of the documentation with written submissions provided by Counsel for the Tribunal's assistance.  Ms Zoe Ludbrook of Messrs Mony De Kerloy, Solicitors and Barristers, represented the applicant while Mr Roger Northcote of the Australian Government Solicitor's Office represented the respondent.

5. The relevant legislation is subsection 164(1)(b) of the Customs Act.  It is in the following terms:

   "A rebate is …. payable to a person who purchases diesel fuel for use by him:
   ….
   (b)       at residential premises to generate electricity for use in:

   (i)         providing food and drink for;

   (ii)providing lighting, heating, air-conditioning, hot water or similar amenities for; or

   (iii)meeting other domestic requirements of;

   residents of the premises."

6. The agreed facts are as follows.

7. The Warmun Community purchased diesel fuel for the generation of power for use by the community.  They claimed a rebate for 52% of the diesel fuel which was used for residential purposes.

8. The Warmun Community had an average population of approximately 400 people in about 60 residential premises during the relevant claim period.  The nearest of these residential premises to the powerhouse is about 200 metres away, while the most distant is about 700 metres away.

9. There are a number of facilities located near the residences which are used by the community and are supplied with electricity by the power station.  These include:  an arts centre, school, health clinic, child care clinic, gym, community store, women's centre, mechanics workshop, Warmun offices, a cultural centre, a chapel, Murrilingki Spiritual Centre and the Walumba Aged Care facility.  Electricity is also used for street lighting and flood lights for the basketball courts.

10. Located over a kilometre away from the power station are additional facilities which have developed as the community grew to service passing tourists, including a roadhouse, backpacker's quarters, a caravan park, heliworks, Balangarri offices and a Main Roads building.  These also use electricity generated from the power station.

11. Both parties agreed that the diesel fuel was purchased for domestic purposes;  however, the respondent contended that the fuel was used "at" the town of Warmun, not "at" the residential premises as required by the Act.  The Tribunal was referred to a number of Federal Court decisions on this issue including Collector of Customs, Tasmania v Flinders Island Community Association (1985) 7 FCR 205 and Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177. Reference was also made to the unreported decision of the Tribunal Re District Council of Coober Pedy and Cowell Electric Supply Company and Collector of Customs, Nos. N93/422 and N93/420 delivered 17 March 1994.

12. The respondent contends that the present case is along the same lines as Cowell (supra) where the rebate was refused, while the applicant submits that the case is more similar to Flinders Island (supra) where the rebate was allowed.

13. In Rottnest Island the Federal Court held at page 193:

    "We consider that the section requires that, because the existence of some appropriate heating or generating plant is clearly contemplated, the location of such a plant be in sufficient proximity to the premises as to enable it reasonably to be identified with the premises.  It must be appurtenant to the premises and coherent with them.  It must be able to be said of the plant using the fuel that it belongs to the premises even though it is not part of them."

14. In the earlier Flinders Island case, the Federal Court listed a number of considerations to be taken into account when assessing whether the fuel was used "at" the residential premises.  These considerations were:

• common ownership of the premises;

• proximity of each house to the generator;

• the existence of relationships, other than merely contractual relationships, between the association and each of the residents;

• the supply to each residence of electricity at cost rather than as a commercial transaction;

• the communality of operation of the generator;

• the appropriateness of size and design to fulfil the purpose of supplying the domestic needs of the houses.

1. In the present case, all of the premises are owned by the Warmun Community and leased to the members.  This was also the case in Flinders Island, but not in Cowell's case where the residents owned their own land.

2. The houses in Warmun are all about 200 metres to 700 metres away from the power generator.  This is further than in the Flinders Island case where the 8 houses were only 20 to 200 metres away from the generator.  However, it is considerably closer than in the Rottnest Island case where the houses were up to three kilometres away and the Cowell case where the houses were several hundred metres to a number of kilometres away.  Although the present case may be nearing the furthest distance which would be classed within the term "proximate", it is possible that this still fits within that definition.

3. In Cowell's case, the purchaser of the electricity was a "for profit" organisation who had a contractual relationship with the residents of a number of towns to produce power for them.  The purchasers of the fuel were not the customers.  In the present case, Warmun Community is a representative body which supports the development of the community itself, in all ways, not just the provision of power.  The residents themselves all have bonds stronger than mere coincidence of residence and are all members of Warmun Community Inc.  As such, the residents purchase the fuel in their collective capacity as Warmun Community Inc but use it in their individual capacity.  Thus, Cowell's case should be distinguished on this point.

4. In the Flinders Island case, the residents simply divided the bill between themselves, thus the electricity was supplied at cost.  In this case the residents of Warmun pay a flat rate as a part of their lease with respect to the costs of electricity.  This, however, does not even cover the cost of the electricity actually used by these residents.  The premises used by people who are not members of the community, including the roadhouse and teacher's residences, as well as communal buildings such as the school and health clinic, are metered, and those premises charged at a rate of 30c per kw.  In Cowell'' case, every residence was metered and charged according to their use, another point of distinction.

5. In Cowell's case, independent contractors took care of the generators while in the Flinders Island case and the present one, the residents took turns at being responsible for the maintenance and working of the generator.

6. Finally, the generators are appropriate in size to the usage for the community's domestic needs with one generator of the three being kept as a reserve for periods of maintenance.

7. One other point of distinction between Cowell's case and the present one, is the purpose for which the towns were erected.  In Cowell's case the towns arose for the purposes of agriculture and/or as service towns for the adjoining railway and the highway.  The towns were ancillary to these services.  The people who provided them simply needed somewhere to live.  This was also the case in Rottnest Island where the residences were ancillary to the tourist operations.  In the present case, the community developed first and the services provided developed at a later date as a natural progression of community development.  These activities are carried out some distance away from the residences and can be said to be ancillary to the existence of the community.

8. Coming back then to the overarching principle contained in the Rottnest Island case, taking everything into consideration, can it be said that the power generating plant belongs to the premises even though it is not a part of them?  It is the Tribunal's view that it can.  If the applicant had been seeking a determination that the generator was "at" the roadhouse complex it might have failed, but all the residences are within one kilometre of the power generator.  The fuel is clearly bought by the people for their own domestic use, with the provision of the power not being on a commercial basis.  It would be quite untenable to suggest that separate generators had to be installed in order to claim the rebate.

9. The respondent submitted that if this application were to succeed, the floodgates would be opened and there would be nothing to stop any small town in rural Australia claiming the rebate.  This is clearly not a realistic submission.  Very few towns will have the necessary element of "communality" found here and will in fact be more in the position of the towns under consideration in Cowell's case and their ability to obtain the rebate is determinatively governed by that case.  In any event, a Court or Tribunal must determine the outcome of every case upon the basis of a fair and balanced fact-finding process, and the application to the facts so found of relevant and governing law.  Any "floodgate" or other consequence of the proper outcome of a case is a matter for the Parliament.  It would be quite wrong to allow a perceived consequence to play any role in determining the outcome.

10. The applicant advanced an alternative argument that the electricity is used "at" each of the residential premises and at the time of purchase the diesel fuel was intended to be used in this manner.  This argument is contrary to the position of the Federal Court on this matter which interprets the section as requiring the diesel fuel itself to be used "at" the premises.

11. Although acknowledging that this may be a case approaching the border-line, the Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that the diesel fuel is used "at" the residential premises in question and that the applicant does satisfy subsection 164(1)(b) of the Customs Act 1901.

    I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member

    Signed:         Emma Oettinger
      Associate

    Matter heard on papers –
    Written submissions received  15.2.00
    Date of Decision  8.3.00      
    Solicitor for the Applicant         Ms Z Ludbrook, Messrs Mony De Kerloy

    Solicitor for the Respondent    Mr R Northcote, Australian Government Solicitor's Office