Avel Pty Ltd v Federal Commissioner of Taxation [2004] FCAFC 70 (29 March 2004)

Last Updated: 30 March 2004

FEDERAL COURT OF AUSTRALIA
Avel Pty Ltd v Federal Commissioner of Taxation [2004] FCAFC 70

SALES TAX – video games for use in amusement arcades – no reference in sale contracts to copyright licence or public exhibition right and (hence) no amount specified as payable for such licence or right – Administrative Appeals Tribunal found implied term in contracts that such licence or right was granted to purchaser – whether Tribunal erred in law in concluding that purchase price did not include an amount by way of consideration for such grant.



Sales Tax Assessment Act 1992 (Cth), ss 36(1), 36(2), 43(1), 51, 95
Taxation Administration Act 1953 (Cth), s 14ZZ
Copyright Act 1968 (Cth)


Acohs Pty Ltd v R A Bashford Consulting Pty Ltd (1997) 144 ALR 528 referred to
Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 referred to
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 referred to
Tanu v Federal Commissioner of Taxation (1998) 154 ALR 102 referred to
Tanu v Federal Commissioner of Taxation [1999] FCA 8; (1999) 160 ALR 227 referred to




AVEL PTY LTD v FEDERAL COMMISSIONER OF TAXATION
W59 of 2003

SONDO PTY LTD v FEDERAL COMMISSIONER OF TAXATION
W60 of 2003






HILL, CARR & HELY JJ
29 MARCH 2004
SYDNEY (HEARD IN PERTH)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W59 OF 2003

BETWEEN:	AVEL PTY LTD APPLICANT
AND:	FEDERAL COMMISSIONER OF TAXATION RESPONDENT
JUDGES:	HILL, CARR & HELY JJ
DATE OF ORDER:	29 MARCH 2004
WHERE MADE:	SYDNEY (HEARD IN PERTH)

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal, made on 20 February 2003, be set aside.
3. The application for review which was the subject of that decision be remitted to the Tribunal for assessment of the credits payable under the Sales Tax Assessment Act 1992 (Cth).
4. The respondent pay the applicant’s costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W60 OF 2003

BETWEEN: AND:

SONDO PTY LTD APPLICANT FEDERAL COMMISSIONER OF TAXATION RESPONDENT

JUDGES:	HILL, CARR & HELY JJ
DATE OF ORDER:	29 MARCH 2004
WHERE MADE:	SYDNEY (HEARD IN PERTH)

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal, made on 20 February 2003, be set aside.
3. The application for review which was the subject of that decision be remitted to the Tribunal for assessment of the credits payable under the Sales Tax Assessment Act 1992 (Cth).
4. The respondent pay the applicant’s costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W59 OF 2003

BETWEEN:	AVEL PTY LTD APPLICANT
AND:	FEDERAL COMMISSIONER OF TAXATION RESPONDENT W60 OF 2003
BETWEEN:	SONDO PTY LTD APPLICANT
AND:	FEDERAL COMMISSIONER OF TAXATION RESPONDENT

JUDGES:	HILL, CARR & HELY JJ
DATE:	29 MARCH 2004
PLACE:	SYDNEY (HEARD IN PERTH)

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1 The applicants are related corporations which carry on business in the entertainment industry. Avel Pty Ltd ("Avel"), the parent of Sondo Pty Ltd ("Sondo"), runs "Time Zone" amusement arcades where patrons may play coin-operated video amusement games.

2 A most important component of a video game is the printed circuit board ("PCB") which controls its functions.

3 During the relevant period, 10 October 1994 to 31 December 1997 (referred to as "the claim period"), Sondo imported component parts for video game machines, in particular PCBs, and either manufactured or assembled the video game machines and sold them to Avel or else sold PCBs (i.e. on their own) to Avel. Avel also imported video game machines which it either sold by retail or applied to its own use in its video game arcades.

4 It is common ground that the combination of visual images, sound effects and movements created by the relevant computer programme embodied in each of the video game machines and PCBs constitutes a "cinematograph film" within the meaning of the Copyright Act 1968 (Cth) and the Sales Tax Assessment Act 1992 (Cth) ("the Act") and that the owner of the copyright in each of these cinematograph films was the relevant overseas supplier.

5 Under agreements made pursuant to s 43(1) of the Act between the respective applicants and the respondent in respect of these goods, the "taxable value" of each "taxable dealing" between Sondo and Avel was Sondo’s cost of manufacture of the machine plus 5% or, in the case of the sale of a PCB, Sondo’s landed cost of the PCB plus 5%. In relation to Avel, the relevant cost upon retail sale of a video game machine was its landed cost of the machine plus 5%, and in respect of video game machines applied by Avel to its own use the relevant cost was its "into-store" cost of the machine plus 5%.

6 During the claim period Avel and Sondo purchased the video game machines or PCBs from overseas suppliers at a specified price per unit. The unit specified price was generally a single figure, although in some cases the prices of component parts of the unit "hardware" were individually specified and, in a few cases, the values of the unit "software" were specified. In none of the relevant purchase orders or invoices was any reference made to a copyright licence or a public exhibition right in respect of the relevant video game machine or PCB.

7 The evidence indicated that the same video games (but with a longer running time and without the coin operating facility) were sold to consumers far more cheaply than the prices charged to Avel or Sondo.

8 The central question in this appeal is whether the price paid by Avel or Sondo to the respective overseas supplier for each video game machine or PCB included an amount by way of consideration for the grant of a copyright licence or public exhibition licence. It is common ground that any such amount would not be assessable to sales tax.

THE STATUTORY REGIME

9 It is not necessary for the purposes of this appeal to set out the various provisions of the Act, other than s 95, which lead to the question whether that section applies. But we identify the statutory trail as follows:

Section 16 – Incorporation and application of the general rules in Table 1.

Section 5 – Definitions of, "assessable dealing", "application to own use", "taxable dealing" and "taxable value"

Section 34 – Incorporation and application of the general rules for calculating the taxable value in Table 1

Section 36 – Assessable dealing with goods that involve the payment of an associated royalty

[In general terms s 36(1) provides that if a royalty is paid in connection with a sale of goods, the taxable value of any taxable dealing with those goods includes the amount or value of the royalty. Section 36(2) has the effect of excluding from the meaning of "royalty" for the purposes of that section a royalty in relation to the public exhibition of a cinematograph film].

Section 43 – Agreements with the Commissioner about calculating taxable values of particular taxable dealings

Section 51 – Credit entitlements (incorporating Table 3)
Table 1 – Assessable dealings
Table 3 – Credit grounds

[Item CR1 in Table 3 summarises that ground as "tax overpaid" and states, by way of details of the ground, "Claimant has paid an amount as tax that was not legally payable"].

10 Each of the agreements made under s 43(1) between the applicants and the respondent (referred to at paragraph 5 above) was evidenced by a short letter from the respondent to the respective applicant. It was common ground that each of the respective costs referred to in those agreements was to be assessed consistently with s 36(1). That is, if s 95 applied, the cost assessment would exclude any amount to be allocated to a royalty.

11 Section 95 of the Act provides as follows:

‘(1) If there is a need to know the price for which particular goods were sold, but the parties have not allocated a particular amount to those goods, the price for which those goods were sold is (for the purposes of the sales tax law) the price for which the goods could reasonably be expected to have been sold if they had been sold separately.
(2) Similarly, if there is a need to know how much of a global amount relates to some other element of a transaction, but the parties have not allocated a particular amount to that element, the amount to be allocated to that element (for the purposes of the sales tax law) is the amount that could reasonably be expected to have been allocated to that element if that element had been the only subject matter of the transaction.’

12 On 13 February 1998 the applicants applied to the respondent for a refund of part of the amount of sales tax paid by them in respect of the abovementioned dealings which occurred during the claim period. Each such claim was made pursuant to s 51 of the Act in reliance upon credit ground CR1 in Table 3 in Schedule 1.

13 The applicants’ argument was, in essence, as follows:

• In each transaction whereby Avel or Sondo purchased a video game machine or a PCB from an overseas supplier, it paid a global amount to the supplier for which it received both property in the machine or PCB, and a licence of the copyright in the cinematograph film embodied in the machine or PCB;

• The grant of that copyright licence was inherent in the nature of each such transaction and was to be implied either as a matter of law or as a matter of business efficacy because each machine or PCB sold to Avel or to Sondo was for use in a video arcade. That use necessarily involved causing the embodied cinematograph film to be seen and heard in public, which would constitute an infringement of the copyright of the overseas supplier unless a copyright licence were granted by it to Avel or Sondo; and

• Because in each sale transaction a global amount was paid for both property in the video game machine or PCB and the copyright licence, s 95(2) of the Act was applicable and required the making of a judgment regarding "the amount that could reasonably be expected to have been allocated to" that element of each transaction comprising the grant of a copyright licence alone.

14 On 10 November 1998 the respondent disallowed the applicants’ claims. On 8 January 1999 the applicants objected to those decisions. On 30 September 1999 the respondent disallowed those objections. The applicants applied, under s 14ZZ of the Taxation Administration Act 1953 (Cth), to the Administrative Appeals Tribunal for review of those two decisions.

THE DECISION BY THE ADMINISTRATIVE APPEALS TRIBUNAL

15 The Tribunal accepted the applicants’ submission that it was an implied term of each transaction, whereby a video game machine or a PCB was sold by an overseas supplier to Avel or Sondo, that a copyright licence or licence publicly to exhibit the cinematograph film embodied in the machine or PCB was thereby granted by the supplier (as owner of the relevant copyright) to Avel or to Sondo. This was (as the Tribunal put it) "... at least on the basis that such an implication was necessary to give business efficacy to that transaction".

16 But the Tribunal found that the amount paid by Avel or Sondo to the relevant supplier represented the price paid solely for the acquisition of property in or title to the goods, namely, the relevant video game machine or PCB. Accordingly, so the Tribunal held, no question of apportionment arose and s 95(2) of the Act was therefore inapplicable.

17 I set out below extracts from those parts of the Tribunal’s reasoning which contain the essential reasons for its decision:

‘54. ... the documentary material before the Tribunal, in the form of Avel’s and Sondo’s purchase orders and the suppliers’ invoices, indicates merely that Avel or Sondo purchased a specified number of units of the relevant video game machine or PCB at a specified price per unit. The unit price specified is generally a single figure, although in some cases the prices of component parts of the unit "hardware" are individually specified and in a few cases the value of the unit "software" is specified. In none of the relevant purchase orders or invoices, however, is any reference made to a copyright licence or a public exhibition right in respect of the relevant video game machine or PCB, let alone a price specified for the grant of such a licence or right. On its face each purchase order and invoice purports to relate merely to the purchase/sale of a specified number of units of a particular video game machine or PCB for a specified price per unit.
55. The Tribunal heard evidence from Mr Steinberg regarding his estimates of the costs of manufacturing the relevant video game machines and PCBs together with the amount of a "reasonable profit mark-up" for the manufacturer, as compared with the (much greater) prices actually paid by Avel and Sondo for those machines and PCBs, and his suggested explanation of the substantial difference between those two amounts, namely, that the prices actually paid by Avel and Condo included payments for the rights to exhibit the video game in public. Mr Steinberg acknowledged, however, that his cost estimates did not include research and development costs and software costs. Mr Steinberg also acknowledged that another important factor in determining the sale/purchase price of a video game machine or PCB was the expected popularity of the relevant video game. He further acknowledged that in none of the negotiations for the sale/purchase of the relevant video machines and PCBs in the claim period was there any discussion between the parties regarding the grant of the right publicly to exhibit the video game, and that no reference was made to such a right, let alone consideration for the grant thereof, in the relevant purchase orders and invoices created for the purpose of those sale/purchase transactions.
56. The Tribunal also heard evidence regarding the very substantial difference between the unit cost of a coin-operated video game machine and the unit cost of the "home consumer version" of the same video game, the suggested explanation of that cost difference being the fact that the former unit cost includes an amount paid for the right publicly to exhibit the game, whereas the latter unit cost does not.
57. Having regard to all the evidence and material before it, the Tribunal is not satisfied that, in respect of any of the sale/purchase transactions between Avel or Sondo and the overseas suppliers regarding the relevant video game machines and PCBs during the claim period, Avel or Sondo was required to pay, and did pay, a specific consideration for a licence publicly to exhibit the cinematograph film embodied in each of the relevant machines or PCBs. In the Tribunal’s opinion the proper inference to be drawn from the whole of the evidence before it is that the grant of such a licence – indeed, the very existence of such a licence – was not within the contemplation of the parties involved in each such transaction. In the Tribunal’s opinion, the sale/purchase price for each video game machine and PCB which was negotiated between the supplier and Avel or Sondo, as the case might be, was simply what each party to the transaction regarded as a fair market price for the sale/purchase of the property in those goods – in other words, the price that the supplier required to be paid for the transfer of title, and the price that Avel or Sondo was prepared to pay for the acquisition of title, to those goods.
58. Mr Steinberg’s assertion, that the difference between the cost of manufacture (including a "reasonable profit mark-up") of a complete video game machine and of a PCB, on the one hand, the purchase price paid by Avel or Sondo therefor on the other – namely, approximately 50% of the purchase price in the case of a complete machine, and 80% of the purchase price in the case of a PCB – represents the amount paid by Avel or Sondo for the public exhibition right in respect of the relevant video game, is, in the Tribunal’s opinion, a somewhat crude one, being based (according to para 25 of his witness statement of 16 August 2001 (Exhibit A3)), solely on:

• a comparison with the cost of the "home consumer version" of the relevant video game;
• his estimate of the approximate manufacturing cost of a complete machine and of a PCB;
• the fact that since 1997 suppliers of complete machines and PCBs to Avel and Sondo have specified in their invoices a separate amount to be paid for the public exhibition right in respect of the relevant video game.

In the Tribunal’s opinion those bases do not establish that Mr Steinberg’s abovementioned assertion is valid. As regards the first basis, the comparison between the unit cost of a complete coin-operated video game machine and the unit cost of the "home consumer version" of the same video game is, in the Tribunal’s opinion, not a valid one for present purposes because a coin-operated machine intended for video arcade use and a "home consumer" game intended for private use are, notwithstanding that they involve the same video game, substantially different products and the market for each is substantially different (the market for the former being very much smaller than the market for the latter – see paragraph 30 of Mr Steinberg’s witness statement of 16 August 2001 (Exhibit A3)). The second abovementioned basis is, in the Tribunal’s opinion, flawed in that it focuses only on the "hardware" manufacturing costs of complete machines and PCBs and does not take account of associated research and development costs and "software" costs or the relative popularity of the video game. Finally, the fact that suppliers have, since 1997, been specifying in their invoices a separate amount to be paid for the public exhibition right in respect of the relevant video game is, quite apart from the credibility of such specification and the circumstances which led to the commencement of that particular practice (see para 38 of Mr Steinberg’s supplementary witness statement of 23 April 2002, and paragraph 32 above), simply not to the point as regards the relevant sale/purchase transactions between overseas suppliers and Avel or Sondo which took place in the claim period (which expired on 31 December 1997) and which are the subject of the present applications for review.
59. Accordingly, the Tribunal finds that, in each relevant transaction in the claim period whereby Avel or Sondo purchased video game machines or PCBs from an overseas supplier, Avel or Sondo was not required by the supplier to pay, and did not pay to the supplier, a specific consideration for a licence publicly to exhibit the cinematograph film embodied in each of those machines or PCBs. The Tribunal finds instead that, in each such transaction, the amount paid by Avel or Sondo to the relevant supplier represented the price paid by Avel or Sondo solely for the acquisition of property in, or title to, the goods the subject of that transaction, namely, the relevant video game machine(s) or PCB(s).
60. It necessarily follows from the above finding, namely, that in each transaction the whole of the amount paid by Avel or Sondo to the relevant overseas supplier related solely to the sale/purchase of the relevant goods, namely, the video game machine(s) or PCB(s), that no question of apportionment of that "global amount" arises and s 95(2) of the Assessment Act is therefore inapplicable in this case. Likewise, none of the other matters, including the quantum of refund of sales tax to which the applicants might be entitled, that were agitated by the applicants now arises.

Conclusion

61. The conclusion of the Tribunal, having regard to the whole of the evidence and material before it, is, therefore, that each of the applicants has not discharged the burden, imposed upon it by s 14ZZK(b)(iii) of the TA Act, of proving that the relevant "taxation decision ... should not have been made or should have been made differently". More specifically, Avel and Sondo have not established to the Tribunal’s reasonable satisfaction that, in respect of the relevant "assessable dealings" in the claim period, they have each paid an amount of sales tax that was not legally payable and are accordingly each entitled to a credit pursuant to s 51 of the Assessment Act, and that the reviewable objection decisions, dated 30 September 1999, are wrong.’ [Emphasis added]

THE APPEAL

18 There were four grounds of appeal. Ground 1 was that the Tribunal asked the wrong question for the purposes of s 95. This was particularised as follows:

‘It was sufficient to invoke the operation of section 95 that, as found by the Tribunal, the transaction between the applicant and its supplier was for a single consideration and involved both the sale of goods and the grant of a copyright licence. The Tribunal wrongly asked whether the applicant paid a "specific consideration" for the grant of a copyright licence. The Tribunal should have asked what the allocation would reasonably be expected to be if an allocation had been made.’

19 Ground 2 asserted that the Tribunal took into account irrelevant considerations by wrongly taking into account that the applicants did not pay a "specific consideration" for the grant of a copyright licence and that the parties did not specifically contemplate the grant of a copyright licence.

20 In Ground 3 the applicants contended that the Tribunal failed to take into account relevant considerations, namely, that the goods had commercial value only with the grant of a copyright licence and that the grant of a copyright licence was necessary to give business efficacy to the transaction.

21 In Ground 4 the applicants contended that the Tribunal reached a conclusion of fact that was not reasonably open to it on the evidence, that is, in concluding that the consideration paid by each applicant to its supplier was solely for the transfer of property in the goods, the Tribunal reached a conclusion that was so unreasonable that no reasonable person could have reached it.

22 In his amended notice of contention, the respondent contended that the decision of the Tribunal should be affirmed on grounds other than those relied upon by it. The respondent maintained that the Tribunal erred in law in implying the term referred to in paragraph 15 above. The respondent contended that the proper implication in relation to each of the transactions between the applicants and the overseas suppliers was that the applicants had an implied consent or permission publicly to exhibit each cinematograph film which was:

• ‘a positive consent or permission’, implied from the circumstances of the case, but non-contractual in character; or

• was given in consideration for each of the applicants agreeing to enter into the contract to purchase the relevant video game machine or PCB; or

• was implied by law, and not a contractual term implied to give business efficacy to the transactions.

23 As, in our view, there is no substance in the matters asserted in the respondent’s notice of contention, we do not propose to consider whether, notwithstanding the provisions of Order 53 rule 13 of the Federal Court Rules, there is any proper statutory or other basis for the course adopted by the respondent, namely, asserting error of law on the Tribunal’s part and contending that its decision should be affirmed on grounds other than those relied upon by it.

OUR REASONING

24 We think that the Tribunal was correct in holding that there was an implied term of each "transaction" (which we take to mean each contract of sale) that the respective applicant acquired, together with property in the goods, a right publicly to exhibit the cinematograph film embodied in the goods.

25 It seems reasonably clear, both from the language used by the Tribunal and the authority which it cited, that the Tribunal did not hold that this term arose by implication of law.

26 First, it did not identify any particular class of contracts into which such a term was to be implied. Secondly, the passages from the authority which it cited for its conclusion, Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528 show (by reference to many of the leading authorities in this area) that implying such a term on the basis of giving business efficacy to a contract involves implying a term unique to the particular contract under consideration. Much depends upon the express terms of that contract and the relevant surrounding circumstances – see, for example, the observations of Hope JA in Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 487.

27 In our view, the Tribunal did not err, on the facts as found by it, in reaching the conclusion that such an implied term was necessary to give business efficacy to the particular contracts entered into by the applicants. The parties to those contracts were well aware that the applicants required the goods for public exhibition. The Tribunal found that the parties had not turned their minds to the implication of a term granting such a licence (see paragraph 57 reproduced above where the Tribunal refers to this as not being within the contemplation of the parties). But that very circumstance is an important part of the basis for implying the relevant term into the contract. The term implied by the Tribunal clearly, in our view, satisfies the tests referred to by the High Court of Australia in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 and in the authorities discussed in that case.

28 Accordingly, in our opinion, once such a term is implied into each relevant contract, the transaction involved both a sale of goods "... and some other element" within the meaning of s 95(2) of the Act. That other element was the right publicly to exhibit the cinematograph film embodied in the goods. We do not think that it would make any difference if the term were implied by law (i.e. by virtue of the class of contract into which these contracts fell). The result would still be an implied term to the same effect, one transaction for a global amount involving a sale of goods and the same "other element".

29 At paragraphs 57 and 59 of its reasons, set out above, the Tribunal can be seen to have relied very heavily on the fact that neither of the applicants was required to pay or did pay a specific consideration for the licence publicly to exhibit the cinematograph film embodied in each of the machines or PCBs.

30 In doing so, in our opinion, the Tribunal fell into error by asking itself the wrong question. The application of s 95(2) does not require that there be a specific consideration for the "other element of [the] transaction". Quite to the contrary, it applies where there is a "global amount" and the parties have not allocated a particular amount to that element.

31 Once it was concluded, (a conclusion which, in our view, was required by the implication of the abovementioned term), that the subject matter of the sale was both property in the goods and the licence publicly to display the cinematograph film embodied in the goods, then s 95(2) should have been applied.

32 The respondent’s contention that the implied consent or permission of the overseas suppliers was non-contractual in character amounts to an assertion that the exhibition rights were given away to the applicants. In our opinion, that argument completely ignores the commercial reality of the transactions. More importantly, it conflicts with the Tribunal’s finding of fact that it was necessary to imply a copyright licence to give business efficacy to the transaction. The conclusion advanced by the respondent, i.e. that the licence was given away, was certainly not the only conclusion to which the Tribunal could come. We reject the contention.

33 The respondent submitted, as an alternative contention, that if there was any consideration for the exhibition licence, it comprised the agreement of each applicant to enter into the contract to purchase the relevant video game machine or PCB.

34 There are several insurmountable problems with that alternative assertion. First, the facts as found by the Tribunal do not suggest the existence of any such collateral contract and the Tribunal made no such finding. Nor was there any evidence or finding to the effect that the consideration was executory (i.e. agreeing to enter into the contract of purchase) as distinct from payment of the purchase price. Thirdly, if there had been a collateral contract, then each of the contracts would have been elements of the one transaction within the meaning of s 95 of the Act.

35 Finally, the respondent relied upon the Tribunal’s findings in paragraphs 57 to 59 of its reasons (reproduced above) as amounting to a finding that no part of the consideration paid by each applicant related to the exhibition licence. Accordingly, so the respondent contended, there was no "need to know" how much of that consideration related to the exhibition licence.

36 In our view, it can be seen quite clearly from the passages which we have emphasised (by putting into bold type) in paragraphs 57 and 59 of the Tribunal’s reasons that it was distracted in making its assessment by asking itself the wrong question about whether there was a specific consideration for the exhibition licence. As we have mentioned above, once the licence term was implied into the contract the circumstances fell squarely within s 95(2). That is, there was a global amount payable under the contract, the exhibition licence was not a gift, part of the global amount thus related to the exhibition licence, but the parties had not allocated a particular amount to that element. There was thus "a need to know" what that particular amount was, because the assessment of taxable value of the goods, consistently with s 36(2), required its exclusion – see Hill J in Tanu v Federal Commissioner of Taxation (1998) 154 ALR 102 at 114, upheld on appeal in Tanu v Federal Commissioner of Taxation [1999] FCA 8; (1999) 160 ALR 227.

37 As we understood the respondent’s submissions, they included a submission that the applicant had failed to discharge its onus of proof relating to the quantum of the amount that could reasonably be expected to have been allocated to the exhibition licence.

38 In our opinion, the Tribunal misdirected itself before it got to that stage. We refer to paragraph 60 of its reasons where it concluded that no question of apportionment arose.

39 The Tribunal’s findings, in our view, establish that the respondent’s taxation decisions (to disallow the applicant’s objections) should not have been made, or should have been made differently. On the facts as found (including the finding as to the implied term) the respondent, when making the objection decisions, should have calculated an amount to be allocated to the exhibition licence as best he could on the evidence available. The same applied to the Tribunal.

CONCLUSION

40 For the foregoing reasons we would allow the appeals and remit the matters to the Tribunal with a direction to assess the credits payable under the Act.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Dated: 29 March 2004

Counsel for the Applicants:	Mr S J Gageler SC and Mr R S Norton
Solicitors for the Applicants:	Messrs Norton & Smailes
Counsel for the Respondent:	Mr M J Buss QC and Mr D T Carlson
Solicitors for the Respondent:	Australian Government Solicitor
Date of Hearing:	16 February 2004
Date of Judgment:	29 March 2004