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Colby Corporation Pty Ltd v Commissioner of Taxation (includes corrigendum dated 11 March 2008) [2008] FCAFC 10 (20 February 2008)

Last Updated: 16 June 2009

FEDERAL COURT OF AUSTRALIA

Colby Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10

CORRIGENDUM

COLBY CORPORATION PTY LTD v COMMISSIONER OF TAXATION
WAD 359 OF 2006

BRANSON, STONE & JESSUP JJ
20 FEBRUARY 2008 (CORRIGENDUM 11 MARCH 2008)
SYDNEY (HEARD IN PERTH)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 359 OF 2006

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEAL TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COLBY CORPORATION PTY LTD Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGES:	BRANSON, STONE & JESSUP JJ
DATE OF ORDER:	20 FEBRUARY 2008
WHERE MADE:	SYDNEY (HEARD IN PERTH)

CORRIGENDUM

1. On page 22 after the certification insert the following:

Solicitor for Applicant:	Solomon Brothers

Counsel for the Respondent:	E M Corboy SC and J D Allanson

Solicitor for the Respondent:	Australian Government Solicitor

Date of Hearing:	22 November 2007

Date of Judgment:	20 February 2008

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justices Branson, Stone & Jessup.

Associate:
Dated: 11 March 2008

FEDERAL COURT OF AUSTRALIA

Colby Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10

ADMINISTRATIVE LAW – Appeal from Administrative Appeals Tribunal – appeal must be on question of law

TAXATION LAW – disallowance of energy grants claimed for purchase of off-road diesel fuel – whether taxpayer "purchased" fuel

CONTRACT – fuel supplied under contract – whether supply of fuel amounted to purchase – whether consideration was provided – whether there was intention to pass proprietary interest – whether a right to consume implies a proprietary interest

CONTRACT – construction of contract – extrinsic evidence – admissibility of evidence of prior negotiations – need to consider objective intention of parties

WORDS AND PHRASES – "purchase"

Administrative Appeals Tribunal Act 1975 (Cth) s 44
Energy Grants (Credits) Scheme Act 2003 (Cth) s 53
Product Grants and Benefits Administration Act 2000 (Cth)

Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251 referred to
Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 cited
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 considered
Comptroller-General of Customs v Woodlands Enterprises Pty Lts; ex parte Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 referred to
Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 referred to
Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; (2001) 210 CLR 181 considered
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 considered
Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154; (2007) 97 ALD 593 cited
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 considered
South Sydney Council v Royal Botanic Gardens [1999] NSWSC 898; (1999) 10 BPR 18,961 referred to
Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165 considered
TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119; (1988) 82 ALR 175 referred to

Macquarie Dictionary (2^nd revised edition, 1987)
New Shorter Oxford English Dictionary (1993)
Spigelman JJ, "From text to context: Contemporary contractual interpretation" (2007) 81 ALJ 322

COLBY CORPORATION PTY LTD v COMMISSIONER OF TAXATION
WAD 359 OF 2006

BRANSON, STONE & JESSUP JJ
20 FEBRUARY 2008
SYDNEY (HEARD IN PERTH)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 359 OF 2006

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEAL TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COLBY CORPORATION PTY LTD Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGES:	BRANSON, STONE & JESSUP JJ
DATE OF ORDER:	20 FEBRUARY 2008
WHERE MADE:	SYDNEY (HEARD IN PERTH)

THE COURT ORDERS THAT:

1. The appeal be dismissed with costs.

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	WAD 359 OF 2006

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEAL TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COLBY CORPORATION PTY LTDApplicant
AND:	COMMISSIONER OF TAXATIONRespondent

JUDGES:	BRANSON, STONE & JESSUP JJ
DATE:	20 FEBRUARY 2008
PLACE:	PERTH

REASONS FOR JUDGMENT

BRANSON AND STONE JJ

1 On 24 October 2005, the respondent disallowed an objection lodged under Part IVC of the Taxation Administration Act 1953 (Cth) against Notices of Amended Assessment issued by the respondent. Those notices disallowed the applicant’s claim for energy grants for off-road credits and rejected its objection to penalty assessments imposed on it by the respondent. On 15 November 2006, the Administrative Appeals Tribunal affirmed the respondent’s decision. The applicant now appeals from the Tribunal’s decision.
2 The facts of the appeal are sufficiently set out in the judgment of the Tribunal, which summarised them from the parties’ statement and supplementary statement of agreed facts. No objection has been taken to that summary which includes the following:

The applicant performed exploration and grade control drilling activities for a joint venture carried on under the name "Robe River Iron Associates" ("Robe") in the course of its performance of various contracts ("the Contracts") entered into with Robe during the period 2003 to 2005.
The applicant supplied and used its own drilling equipment during the performance of the Contracts.
At material times, pursuant to the Contracts, Robe provided diesel fuel for use in drilling equipment by the applicant (the "Fuel").
At no material time did the applicant:

(a) receive any tax invoices from Robe in respect of the Fuel;
(b) pay any GST in respect of the Fuel; or
(c) claim any input tax credits for GST in respect of the Fuel.

3 The Tribunal also noted the following facts that were not in dispute:

The Contracts have not, at any relevant time, contained any express terms stipulating that:

(i) the applicant was purchasing Fuel from Robe;
(ii) property in the Fuel was to pass to the applicant;
(iii) the applicant had a proprietary interest in any residual Fuel remaining in the fuel tanks of the applicant’s drilling equipment on completion of any of the Contracts;
(iv) the applicant had to reimburse Robe or provide consideration for the Fuel provided;
(v) the applicant was entitled to claim energy grants on the basis that it is entitled to off-road credits pursuant to sections 53 and 56 of the [Energy Grants (Credit) Scheme Act 2003 (Cth)] in respect of the Fuel; and
(vi) the applicant would be liable for goods and services tax ("GST") in respect of the Fuel provided to it by Robe.

Legislation

4 Claims for energy grants are made under the Product Grants and Benefits Administration Act 2000 (Cth) however entitlement to those grants arises under the Energy Grants (Credits) Scheme Act 2003 (Cth). The latter Act, the Energy Grants Act, provides that persons who "purchase or import" off-road diesel fuel for a "qualified use" are entitled to an off-road credit; s 53(1). Use of the fuel in mining operations ("otherwise than for propelling any vehicle on a public road") is a qualified use; s 53(2). The respondent rejected the appellant’s claims for energy grants on the basis that the fuel supplied by Robe was not purchased (or imported) by the appellant. The respondent also issued penalty assessments in respect of the tax shortfall resulting from the amended claim assessments for the tax periods between 1 March 2004 and 30 April 2004, and between 1 May 2004 and 31 May 2004.

The Tribunal’s reasons

5 In paragraphs 5.1 and 5.2 of its reasons, the Tribunal identified the issues it had to determine as:

5.1 Whether, as evidenced by the terms of the Contracts or other admissible evidence, the applicant and Robe intended that:

(a) Robe would sell and the applicant would purchase the Fuel provided to it;
(b) the applicant would acquire a proprietary interest in that Fuel;
(c) the applicant was to provide consideration to Robe for the Fuel in the form of discounted drilling rates; and
(d) the applicant was entitled to claim energy grants for off-road credits in respect of Fuel provided to it;

in circumstances where the Contracts themselves are silent on these issues.

5.2 Whether as a matter of law:

(a) the applicant in fact purchased the Fuel as required by the [Energy Grants Act]; and
(b) the applicant is entitled to claim energy grants for off-road credits in respect of the Fuel consumed for an eligible purpose prescribed by the [Energy Grants Act].

6 Before the Tribunal the applicant asserted that it had acquired by purchase a proprietary interest in the fuel supplied by Robe and that it provided consideration for the purchase by accepting a discounted rate of payment in exchange for its exploration and drilling activities.
7 The Tribunal reviewed five contracts between the applicant and Robe. In doing so it relied on the decision of the High Court in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 in respect of the extent to which it should take account of evidence of surrounding circumstances and the negotiations between the parties prior to entering into the contracts.
8 All five contracts refer to the "supply" of fuel and to fuel being "made available". One stated that the supply of fuel would be "free of charge". A variation made to one of the contracts referred to the supply being "at no cost to the contractor".
9 The Tribunal held that a supply is not the equivalent of a purchase and pointed out (see [3] above) that there were no express terms in the contracts providing for purchase of the fuel, for the applicant to have a proprietary interest in any of the fuel including any residue remaining after completion of the contracts, or for payment to or reimbursement of Robe for the fuel. Moreover, there was no evidence of any intention that the fuel would be purchased by the applicant and there was no documentation (such as invoices or delivery notes) to support the claim that the fuel had been purchased from Robe as would be expected if the fuel had been purchased. The Tribunal also noted that although the contracts provided for GST liability for services rendered there was no mention of GST liabilities arising from the sale of fuel. The Tribunal also regarded the fact that Robe had claimed energy grants in respect of the fuel supplied to the applicant as relevant.
10 In support of its claim that property in the fuel had passed from Robe to it, the applicant cited Comptroller-General of Customs v Woodlands Enterprises Pty Ltd; ex parte Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 where the Queensland Court of Appeal found that property in fuel that Woodlands had provided to contractors engaged to rear its chickens passed to the contractors. The Tribunal distinguished this case on the basis that the contract between Woodlands and the contractors specifically provided for Woodlands to invoice the contractors for the fuel used and for the contractors to pay for that fuel. The Tribunal held that the absence of any such provision in the contracts before it was "a very strong indication that ... property in the fuel was not intended to pass".
11 The Tribunal rejected the applicant’s submission that the discounted rate for its exploration and drilling activities constituted consideration for the purchase of the fuel:

On a plain and literal interpretation of the words and numbers used by the parties, the relevant clauses are, in the Tribunal’s view, capable of meaning only that the drilling rates charged by the applicant are lower when Robe supplied diesel fuel for use in the applicant’s drilling rigs, and nothing more than that.

The Tribunal concluded:

The absence of an express, separate charge for Fuel used coupled with the GST and [Energy Grants Act] consequences for Robe if the Fuel was purchased and the fact that the volume of any leftover fuel was minimal, leads the Tribunal to conclude that there was no intention that property was to pass.
In any event as already noted, the acquisition of a proprietary interest does not of itself entitle the applicant to off-road credits and therefore a right to claim energy grants in respect of the Fuel, unless there is a purchase by the applicant of that Fuel.

The Tribunal held that the following elements of the contracts concerning Robe’s control over the use and consumption of the fuel could be drawn from the express terms of the contracts:

(a) Robe made the Fuel available for use by the applicant only for the specific purpose of enabling the applicant to perform the relevant drilling services for Robe at the specific sites and times nominated in the Contracts;
(b) the applicant was granted a license [sic] by Robe to use the Fuel;
(c) other than any residual Fuel at the end of the contracts, the applicant was not entitled to use the Fuel for any other purpose; and
(d) the applicant could only draw as much Fuel as it required to satisfactorily perform the drilling works pursuant to the Contracts and then remove its drilling rigs and no more.

12 Given these terms the Tribunal found that the applicant did not acquire a proprietary interest in the fuel. Moreover the Tribunal observed that even if the applicant had acquired a proprietary interest in the fuel it did not have an entitlement to an off-road credit because it had not purchased the fuel. The Tribunal also confirmed the tax shortfall penalties imposed on the applicant on the basis that it had failed to take reasonable care to comply with the taxation law.

The Court’s jurisdiction to review the Tribunal’s decision

13 An applicant’s right to invoke the Court’s jurisdiction to review the decision of the Tribunal arises under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) and is a right to appeal "on a question of law"; Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 per Branson and Stone JJ at [17]-[18]; Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154; (2007) 97 ALD 593 per Edmonds J at 602-603, at [35]. The right to appeal from a decision of the Tribunal is to be distinguished from a right to appeal "in relation to" a question of law or where the appeal "involves" a question of law. As Gummow J remarked in TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119; (1988) 82 ALR 175 at 178, "The existence of a question of law is ... not merely a qualifying condition to ground the appeal, but also the subject matter of the appeal itself."
14 In Birdseye Branson and Stone JJ at [17] drew attention to the fact that O 52 r 3(2) of the Federal Court Rules requires a notice of appeal from a decision of the Tribunal to state the questions of law raised by the appeal separately from the grounds relied upon in support of the order sought by the appeal. Their Honours went on at [18] to observe:

In our view, O 53 r 3(2) discloses an intention that a question of law to be raised on an appeal from the Tribunal should be stated with precision as a pure question of law. It is in the specification of the grounds relied upon in support of the orders sought that, in our view, one should expect to find the links between the question of law, the circumstances of the particular case and the orders sought on the appeal.

15 By the above passage their Honours sought to make clear that it was inappropriate to draft a notice of appeal from a decision of the Tribunal without reference to O 53 r 3(2) which reflects the special and limited nature of the right of appeal created by s 44(1). A notice of appeal under s 44(1) drawn in a form comparable, for example, to an appropriately drawn notice of appeal under s 24(1)(a) of the Federal Court of Australia Act 1976 (Cth) will not only fail to meet the requirements of O 53 r 3(2), it will almost certainly fail to identify with clarity the question or questions of law the subject matter of the appeal.
16 Nothing in Birdseye is intended to suggest that a question of law within the meaning of s 44(1) cannot contain any reference to factual matters. Whether primary facts constitute evidence of an ultimate fact is uncontroversially a question of law within the meaning of s 44(1). An example would be whether the primary facts constitute evidence of compliance with a statutory test. It is also uncontroversial that, except in the limited circumstances identified by s 44(7), the legislature intended the Tribunal to be the final arbiter of fact and the Federal Court not to be permitted to make factual findings on an appeal under s 44(1). For this reason, an appeal under s 44(1) is not a vehicle whereby a party may have the Federal Court review the Tribunal’s findings of fact. Unless the answer to the question of law, which is the subject-matter of the s 44(1) appeal, reveals that a factual finding of the Tribunal is affected by error (in which case the matter will ordinarily be remitted to the Tribunal), an appeal under s 44(1) must proceed on the basis of the findings of fact made by the Tribunal.
17 The Notice of Appeal states that the questions of law raised on the appeal are:

2.1 Is the issue of whether or not there was a purchase of off-road diesel fuel by the Applicant pursuant to s.53 of the Energy Grants (Credit) Scheme Act 2003 ... to be determined solely as a question of construction of the written contracts made between the Applicant and Robe River Iron Associates ... without taking into account relevant extrinsic evidence?
2.2 Whether the agreement by the Applicant to accept a lesser rate per metre for drilling performed if Robe supplied the Applicant diesel fuel required for the Applicant, as an independent contractor, to operate the Applicant’s drilling equipment was consideration for the purchase by the Application [sic] from Robe of that diesel fuel?
2.3 Whether the Applicant purchased off-road diesel fuel from Robe (within the meaning of s 53(1) of the Act)?
2.4 Whether the decisions of the High Court of Australia made subsequent to its decision in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 ... on the basis of what was said regarding Codelfa in Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5, are inconsistent with, or explain, Codelfa?

The subsequent decisions referred to in 2.4 were cited in that paragraph, however for ease of reference we list them separately:

• Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451;
• Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165; and
• Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; (2001) 210 CLR 181.
18 At the hearing there was some discussion as to whether the notice of appeal sufficiently identified questions of law as required by s 44(1). Mr Solomon of counsel, who appeared for the applicant, maintained that the questions were adequately formulated but accepted a suggestion from the bench that the question in 2.1 could be understood as raising the following question: in the circumstances that the applicant and Robe entered into the contracts, is the question whether there was a purchase of off-road diesel fuel by the applicant in accordance with s 53 of the Energy Grants Act to be determined solely as a question of construction of those contracts?
19 Mr Solomon also accepted that the question in 2.2 should be understood as asking whether the agreement by the applicant to accept a lesser rate per metre for drilling if Robe supplied the diesel fuel was capable of constituting consideration for the purchase of the fuel by the applicant rather than whether it did constitute consideration.
20 In relation to the question in 2.3, Mr Solomon explained that it should be understood as asking whether, on the facts as established, the applicant’s acquisition of the fuel was by purchase in accordance with s53(1) as opposed to, for instance, a licence to consume the fuel. He submitted that, given that the facts are not in contention, whether the applicant acquired the fuel by purchase or not is a question of law.
21 In relation to the question in 2.4, Mr Solomon alleged that the Tribunal applied the wrong principles in construing the contracts between the applicant and Robe River. From his submissions at the hearing it would seem that he was posing the following question: are the principles to be applied in determining what extrinsic evidence may be taken into account in construing the contracts to be determined without reference to decisions of the High Court subsequent to the decision in Codelfa? Mr Solomon submitted that these later decisions (see [14] above) were explanatory of Codelfa and should have been applied.

This appeal

22 The appeal was argued with a degree of complexity that belied the comparatively simple issues at the heart of the applicant’s case. It was not in contention that the fuel used by the applicant in its exploration and drilling activities under the contracts was supplied by Robe. Nor was it in contention that it was necessary for the applicant to establish that it acquired the fuel by purchase and that the case the applicant put to the Tribunal was directed to establishing this point. The complexity stemmed partly from the applicant moving, without acknowledgment, between mutually inconsistent positions.
23 At the hearing Mr Solomon correctly pointed out that the Tribunal’s task was not merely to construe the contracts between the applicant and Robe but to determine if the applicant had purchased the fuel under the contracts or otherwise. Having made that point, however, Mr Solomon asserted that the purchase whereby the fuel was acquired was made "under the written agreements". He specifically disclaimed any argument that the fuel was acquired other than in accordance with the contracts, for instance under a collateral contract. There was no attempt to suggest that the terms of the contracts were to be found other than in the written contracts correctly construed or that the contracts did not accurately reflect the agreement between the applicant and Robe. There was no suggestion that the applicant had any claim for rectification of the contracts. There was no suggestion that the applicant’s position before the Tribunal was different from that on appeal.
24 In the light of the applicant’s concession that the fuel was supplied under the contracts, the task of the Tribunal was to construe the written contracts and in doing so to consider such extrinsic evidence as is appropriate under the principles governing the interpretation of contracts laid down by the High Court. The applicant’s submissions to the contrary are inconsistent with Mr Solomon’s concession.
25 Section 53(1) of the Energy Grants Act uses the transitive verb, "purchase" in its ordinary, everyday sense as meaning "to acquire by the payment of money or its equivalent"; The Macquarie Dictionary (2^ndrevised edition, 1987). By using "purchase", s 53(1) distinguishes the acquisition of the off-road diesel fuel to which it applies from acquisition by, for instance, gift or theft. The requirement for "money or its equivalent" is one necessary element of a purchase. The other stems from the concept of acquisition. It is understood, and the dictionary meaning of "acquire" supports this, that it is "property" which is acquired by purchase. In the circumstances, therefore, to establish that it "purchased" the fuel, the applicant had to show:

(a) pursuant to the mutual intention of the parties expressed or implied in the contracts it acquired property in the fuel (the "intention requirement"); and
(b) that it did so by the payment of money or its equivalent or, put another way, that it gave consideration for the fuel (the "payment requirement").

The "payment requirement"

26 In relation to the payment requirement, the fact that the parties agreed that the fuel had been supplied pursuant to the contracts satisfies that requirement. There seems, however, to have been some confusion in the case before the Tribunal on this point. The Tribunal discussed in some detail the question whether there was consideration for the acquisition of the fuel in the sense of any separate payment for, or appropriation of consideration to, the acquisition of the fuel. In the main this discussion seems to have been directed to the question whether the contracts manifested an intention to give the applicant property in the fuel. That the absence of any such provision was a factor in the Tribunal’s conclusion that there was no intention to pass a proprietary interest is obvious from the Tribunal’s comment quoted at [11] above.
27 At times, however, the Tribunal’s language seems to suggest that the absence of such a provision indicates that the payment requirement was not met. For example, under the heading, "Consideration for Fuel" the Tribunal commented:

There is nothing in the Contracts to support the applicant’s contention that the discounted rate constituted valuable consideration for the Fuel.
....
The applicant’s assertion that, despite the words "no charge" or "free of charge", it purchased the Fuel is in the view of the Tribunal antithetical to the ordinary and natural meaning that arises from the use of those words.

28 If these comments indicate that the Tribunal thought the payment requirement was not met because only a payment specifically appropriated to the purchase of fuel would meet that requirement then the Tribunal would have made a legal error. We believe, however, that these comments were merely a response to the way in which the applicant’s submissions were put to the Tribunal.
29 We are supported in this view by the way in which the applicant’s submissions were put at the hearing of the appeal. Mr Solomon was concerned to explain the reference in some of the contracts (see [8] above) to the fuel being supplied at "no cost" or "free of charge" and did so by referring to antecedent negotiations, which he sometimes referred to as an antecedent agreement. The gist of these submissions was that the applicant had calculated the discounted drilling rate it would accept by taking into account that the fuel would be provided by Robe and that it would get the diesel fuel rebate.
30 When asked on what basis he submitted that evidence of antecedent negotiations was admissible, Mr Solomon said, in an example of the applicant’s conflicting positions referred to in [19]:

... where the Act requires us to show that we made a purchase, it does not direct inquiry to the rules of construction of contract ... It allows a person to answer the statutory question in any way that is a logical answer to it, so that if, in fact, our negotiations demonstrate and we gave the evidence and it wasn’t challenged, that what we did was reduce the rate we would charge, calculate it on the basis of the value of the fuel we would get, including the diesel fuel rebate ... then it was open to us, not withstanding the rules of construction of contracts, to show we made a purchase.

31 The proposition that in determining whether a supply made pursuant to a contract is a purchase, the Court should ignore the rules for the constructions of contracts is simply not tenable. Acquisition by purchase necessarily involves a contract and, in view of the applicant’s express disclaimer that there was any other relevant contract the question of purchase must be determined by construction of the exploration and drilling contracts.
32 Mr Solomon submitted that the words, "at no cost" or "free of charge" in some of the contracts should be read as, "at no additional cost" and "at no additional charge" and that it was open to the Court to find with reference to the antecedent negotiations that the applicant had given consideration for the fuel. We agree with Mr Solomon’s submission as to the construction of the above phrases, however, as we have already indicated, it is not necessary to resort to antecedent negotiations (even if permissible) or to extrinsic circumstances to find consideration for the supply of the fuel.
33 The fuel was provided pursuant to the terms of the contracts between Robe and the applicant. On the applicant’s part, it undertook to carry out exploitation, drilling and ancillary activities. On its part, Robe undertook to pay for the exploration and drilling services at a specified rate per metre and to provide the fuel required for the drilling rig. The consideration provided by the parties consisted of their mutual promises contained in the contracts. There is nothing in the material before us or before the Tribunal to suggest that there was any appropriation of a particular promise on one side to a particular obligation on the other. Similarly there is nothing to suggest that the contractual obligations assumed by the applicant were not consideration for all of the obligations assumed by Robe. The fuel was provided pursuant to the contracts and there can be no doubt that the applicant gave valuable consideration for its supply.

The "intention requirement"

34 Under the heading, "Conclusion" the Tribunal stated that the applicant did not acquire a proprietary interest in the fuel supplied by Robe for the exploration and drilling activities. Moreover the Tribunal found that it could not find either in the contracts with Robe or in the surrounding circumstances, "to the extent that surrounding circumstances are relevant", any intention between the parties for the applicant to purchase the fuel from Robe. It followed that the applicant was not entitled to an off-road credit or an energy grant in relation to the fuel.
35 The applicant claims that the Tribunal misconstrued the contracts with Robe because it failed to consider certain evidence of the circumstances, agreements and negotiations between the parties in the period leading up to them entering into the contracts. This evidence, the applicant submits, would have vindicated its claim to have purchased the fuel. The applicant submits that the Tribunal’s failure to consider this evidence resulted from its misunderstanding of the principles governing the construction of written contracts laid down in Codelfa and elaborated and explained in cases following Codelfa, specifically the cases referred to in [2.4] of its notice of appeal; see [17] above.
36 The Tribunal accepted that whether the intention requirement had been met was to be ascertained according to the contracts that the parties had made taking into account relevant evidence of surrounding circumstances. In determining what evidence of surrounding circumstances was relevant and admissible the Tribunal applied the following principles articulated by Mason J in Codelfa at 352:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract is made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties ...

The Tribunal also noted that, in accordance with Codelfa, evidence of prior negotiations is only relevant for the limited purpose of establishing "objective background facts which were known to both parties and which relate to the subject matter of the contract".

37 The Tribunal pointed out that in Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 at 301 the majority of the High Court (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) said that Codelfa was to be followed until the High Court said otherwise. This much is true, but the Tribunal neglected to point out that the High Court directed this comment to a possible inconsistency with two House of Lords decisions decided after Codelfa and without reference to it, namely, Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 and Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251. The High Court declined to determine whether those cases took a wider view of admissible "background" in construing contracts than Codelfa or, if so, whether those views should be preferred to Codelfa.
38 Since Codelfa, however, the High Court has discussed the principles of contractual construction in a number of cases including those referred to by the applicant. With the exception of the Botanic Gardens case, the Tribunal did not refer to those cases. The applicant assumes from this that the Tribunal did not consider the elaboration and arguable expansion in those cases of the Codelfa principles. It submits that in only considering the principles expressed in Codelfa the Tribunal fell into error.
39 Assuming, for the moment, that the applicant’s assumption is correct, it does not follow that the Tribunal was in error. The question to be considered is whether the Tribunal failed to consider any evidence which, under the principles developed by the High Court both before and after Codelfa it should not have excluded. Before addressing that point we shall consider the principles as they have been expounded in cases since Codelfa.
40 In Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; (2001) 210 CLR 181 at 188, the majority of the High Court (Gleeson CJ, Gummow and Hayne JJ) accepted the view of Lord Hoffmann in Investors at 912 that the interpretation of a written contract involves:

[T]he ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

41 Their Honours accepted that the relevant background knowledge may include matters of law as was the case in Maggbury where the availability of intellectual property protection was central to the commercial development of a particular product. In Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165 at 179, in a unanimous judgment, the High Court confirmed that,

The meaning of the terms of a contractual document ... normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.

42 The applicant submitted that this is a much more expansive approach than that of Mason J in Codelfa where his Honour requires an ambiguity to be identified before it is permissible to go beyond the contractual document. It is arguable that this understanding of Mason J’s approach does not take into account the context of his Honour’s remarks and, perhaps, the ambiguity of "ambiguous". When those factors are taken into account if it is apparent that Mason J’s approach is less restrictive than initially appears.
43 Language that is susceptible of more than one meaning may be described as "ambiguous" in that, without reference to context, it might be difficult or impossible to determine which of two competing clear meanings is intended. That is not, however, the only meaning of the word. The Macquarie Dictionary and the New Shorter Oxford English Dictionary (1993) give it the following meanings: "doubtful", "uncertain", "lacking clearness or definiteness" or "indistinct" and "obscure". Mason J’s disjunctive description applies to all of these possibilities. Understood in this way the scope for consideration of extrinsic circumstances is very broad.
44 Despite the breadth of the proposition, however, a word or phrase may, within the context of a particular document, be neither uncertain nor obscure and may not seriously admit of any other meaning. In context, a word or phrase may have "a" plain meaning in the sense of a clearly applicable meaning even though that meaning is not its only possible meaning. To take a trivial example, it could not seriously be suggested that the warning on a box of matches "keep away from children" is unclear or obscure or even capable of more than one meaning even though it is theoretically possible that it could mean that the reader should stay away from children. One would not need to go beyond the document to be satisfied of this and would be reluctant to do so to contradict it. In contrast, the same words in written directions by a doctor to a patient might have an entirely different but plain meaning, especially if the document indicated that the patient had a compromised immune system.
45 It is arguable that there is little if any inconsistency between the current approach of the High Court and that articulated by Mason J in Codelfa. This is consistent with the view expressed by Spigelman CJ both extra-judicially ("From text to context: Contemporary contractual interpretation", (2007) 81 ALJ 322 at 326) and in South Sydney City Council v Royal Botanic Gardens [1999] NSWSC 898; (1999) 10 BPR 18,961 at 18,966. Although the decision of the Court of Appeal was reversed by the High Court in Royal Botanic Gardens and Domain Trust, the High Court did not in any way impugn the Chief Justice’s interpretation of Mason J’s comments in Codelfa.
46 In any event the important issue for present purposes is whether the Tribunal failed to consider material that, in accordance with the principles laid down by the High Court, it should have considered. In its written submissions, the applicant referred to evidence that was before the Tribunal concerning usual industry practice, the applicant’s usual practice where fuel was supplied by the contractor and where it was not so supplied, the significant amount by which the applicant discounted its rates and the negotiations between the applicant and Robe. The applicant complains that had the Tribunal considered all this evidence and taken into account the negotiations between it and Robe preceding the contract it would have accepted that the applicant purchased the fuel.
47 The admissibility of evidence of prior negotiations raises questions beyond those pertaining to the admissibility of other surrounding circumstances. In Codelfa, having said that evidence of facts existing when the contract was made and which were known to both parties is admissible, Mason J observed at 352:

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have that tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

48 The applicant criticises the Tribunal for not taking into account evidence of prior negotiations including evidence of Robe’s request that the applicant reduce its drilling rate in return for Robe supplying the fuel, and the applicant’s agreement to that request. To the extent that this evidence would "tend to establish objective background facts which were known to both parties and the subject matter of the contract", the Tribunal did take it into account. The Tribunal accepted that the drilling rate was reduced because Robe was to supply the fuel however the Tribunal found, as a fact, that there was no intention to pass property in the fuel. In doing so it, quite properly, considered the objective intention of the parties as revealed by construction of the contracts. As Mason J observed in Codelfa at 352:

[W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting.

49 The need to consider the objective rather than subjective intention of the parties has been confirmed by the High Court in Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-2 and in Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165. The High Court’s affirmation of the principle in the unanimous judgments in both these cases put the matter beyond doubt. In the latter case the High Court said, at 179:

This Court, in Pacific Carriers Ltd v BNP Paribas has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.

50 It is worth noting that the applicant’s criticism of the Tribunal’s consideration of surrounding circumstances ultimately amounted to a complaint that the Tribunal did not come to the conclusion the applicant sought. Not only was the applicant unable to point to anything in the admissible evidence of surrounding circumstances that indicated an objective intention for the supply of fuel to be by way of purchase, it also failed to point to evidence of anything that, even had it been admissible, would have indicated such an intention.
51 Aspects of the applicant’s submissions indicated that it thought that since it had the right to consume the fuel it must have had a proprietary interest in it. The principle seemed to be that it is not possible legally to consume what is not one’s own property although Mr Solomon accepted that it was possible to do so if that which is consumed is obtained illegally. Mr Solomon had no authority for such a proposition and we do not accept it. There is no legal reason why a person may not permit another to use, even to the point of destruction or consumption, that person’s property. As senior counsel for the respondent, Mr Corboy, submitted there is no need for the law to provide the answer to a non-existent problem.
52 For the reasons given above, the applicant has not made out any of his grounds of appeal. That being the case the appeal should be dismissed with costs.

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Branson and Stone.

Associate:
Dated: 20 February 2008

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD359 OF 2006

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COLBY CORPORATION PTY LTDApplicant
AND:	COMMISSIONER OF TAXATIONRespondent

JUDGES:	BRANSON, STONE & JESSUP JJ
DATE:	20 FEBRUARY 2008
PLACE:	PERTH

REASONS FOR JUDGMENT

JESSUP J

53 I have had the benefit of reading in draft the reasons of Branson and Stone JJ in this appeal. I agree with their Honours’ conclusion and, subject to what follows, with their reasons.
54 Both the facts proved before, and the question to be determined by, the Tribunal in the present case were very simple. On the agreed facts, the applicant was contracted to Robe River Iron Associates ("Robe") to perform exploration and grade control drilling activities using its own plant and equipment. Pursuant to those contracts, Robe supplied the fuel. The question for determination by the Tribunal was whether that supply amounted to a "purchase" of the fuel by the applicant within the meaning of s 53(1) of the Energy Grants (Credits) Scheme Act 2003 (Cth) ("the Energy Grants Act"). The Tribunal identified the issues which it was required to address in terms set out in par 5 of the reasons of Branson and Stone JJ. It was not submitted on appeal that its identification of those issues involved an error of law.
55 The Tribunal’s reasons were then structured according to the following headings:

6. Construction of the contracts.
7. Evidence.
8. Applicant’s and respondent’s contentions.
9. Purchase of fuel.
10. Consideration for fuel.
11. Proprietary interest in fuel.
12. Conclusion.

Although I have some reservation with respect to heading 6, "Construction of the contracts", I consider that the Tribunal’s compartmentalisation of the matters which it had to decide was intelligible and legally sound.

56 The applicant’s first ground of appeal was that the Tribunal erred by holding that whether or not there was a purchase of fuel was to be determined solely as a question of construction of the written contracts, without taking into account relevant extrinsic evidence. It is clear from a reading of the Tribunal’s reasons that it did no such thing. It referred to, and considered, the applicant’s evidence that it had charged Robe a contract rate which was less than it would otherwise have charged had it been required to supply its own fuel. It considered whether the facts generally would sustain the conclusion that the applicant had purchased fuel from Robe. However, as counsel for the applicant made clear in his submissions on appeal, there were no transactions pursuant to which it was alleged that the applicant had purchased fuel from Robe other than those governed by the contracts referred to in the evidence. The question whether those transactions amounted to purchases was, therefore, inevitably one which involved a consideration of the operation of those contracts.
57 The applicant’s second ground of appeal was that the Tribunal erred by holding that there was no consideration for the purchase of the fuel, in circumstances where the applicant accepted a contract rate from Robe which was less than the rate which it would have accepted had it provided its own fuel. By this ground, the applicant was not suggesting that the fuel supplied by Robe was irrelevant to the consideration passing from the applicant under the contracts. Rather, it was suggesting that the Tribunal was in error in not holding that the applicant’s agreement to a lesser contract rate than would otherwise have been charged should be regarded, of itself, as consideration specifically referable to the supply of fuel by Robe, sufficient to sustain the conclusion that the fuel was thereby "purchased" by the applicant. In not accepting such a suggestion, the Tribunal did not fall into legal error. It said:

There is nothing in the Contracts to support the applicant’s contention that the discounted rate constituted valuable consideration for the Fuel. On a plain and literal interpretation of the words and numbers used by the parties, the relevant causes are, in the Tribunal’s view, capable of meaning only that the drilling rates charged by the applicant are lower when Robe supplied diesel fuel for use in the applicant’s drilling rigs, and nothing more than that.

In this passage, in my view, the Tribunal correctly characterised the nature of the contractual exchange as between the applicant and Robe.

58 The applicant’s third ground of appeal was that the Tribunal erred by holding that the applicant did not purchase fuel from Robe, and by holding that it acquired a mere licence from Robe to consume the fuel. This ground involves the nub of the applicant’s case on appeal, and refers to what was, in my view, central to the Tribunal’s decision, namely, whether property in the fuel passed to the applicant upon physical delivery into the fuel tanks of the applicant’s plant and equipment. The essence of the applicant’s case in relevant respects appears to have been that, since the fuel was physically delivered into its tanks, since the fuel was used, since nearly all the fuel was consumed and thus could never be returned to Robe, and since the very small amount of fuel remaining at the end of a job could be used by the applicant without having to account to Robe therefor, there must have been a passing of property. The Tribunal did not accept that proposition. It referred to a number of contractual and other considerations which made it unlikely. In so proceeding, the Tribunal did not, in my view, make any error of law. Further, it found that there was no bilateral intention, as between the applicant and Robe, for property in the fuel to pass. That was a finding of fact. In making it, the Tribunal took a conventional and unexceptionable approach to the ascertainment of the parties’ intentions by reference to objective, mutually known, circumstances. The Tribunal’s reasoning in relevant respects did not involve any error of law.
59 The applicant’s fourth ground of appeal was that the Tribunal had erred in failing to consider relevant and admissible material in construing the contracts in question, on the basis that judgments of the High Court subsequent to Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 were considered to be inconsistent with Codelfa itself. It is in relation to this ground that I would express a reservation as to the approach taken by the Tribunal under heading 6 of its reasons. It seems that the Tribunal referred to the Codelfa line of jurisprudence because of a submission on behalf of the applicant that it should have been held that a calculable discount on the contract rate allowed by the applicant to Robe when Robe supplied fuel under the contracts should have been recognised as payment for the fuel by the applicant. What the applicant appears to have put to the Tribunal was that, whatever the contracts themselves may have disclosed, the reality of the transactions between the applicant and Robe was that the applicant specifically reduced – or "discounted", as it was put – the contract price which it would otherwise have accepted from Robe in consideration of Robe supplying fuel. A consideration of that submission did indeed require the Tribunal to look beyond the terms of the contracts (something which it did not decline to do). However, whether or not the submission had any merit, it did not raise a question of the construction of the contracts between the applicant and Robe. Rather, the applicant’s submission raised a question of characterisation. I shall attempt to explain what I mean by that distinction.
60 No question arose as to the content of the parties’ obligations under the contracts which were before the Tribunal. Whether or not the Tribunal had been prepared to look at so-called extrinsic evidence, the result could not have been the attribution to the contracts of meanings which differed from their written terms, such that the parties’ obligations would be affected in some relevant respect. Whatever the Tribunal did in relation to extrinsic evidence, Robe was required to supply fuel under the contracts, the applicant was required to carry out work, and Robe was required to pay the contract price. The real question was whether the transactions for which the contracts provided included one which answered the description of a "purchase" within the terms of s 53(1) of the Energy Grants Act. This question was, as I have said, one which required the identification of the legal character of the transactions in question. It was not, in my view, a question of construction at all. In the circumstances, the present is not, in my respectful view, an appropriate occasion for the court to consider Codelfa and subsequent High Court authority in the same line.
61 Returning to the Tribunal’s reasons, although it did refer to the principles for which Codelfa stands, nothing much seemed to turn on that circumstance. As I have indicated above, the Tribunal did take into account facts and circumstances standing outside the written words of the contracts before it for the purposes of deciding whether the applicant had purchased fuel from Robe. I agree with Branson and Stone JJ that the mere fact that the Tribunal did not refer to cases subsequent to Codelfa does not mean that it necessarily made an error of law. However, I would prefer to base my conclusion in relevant respects upon the circumstance, which I consider to be clear, that the Tribunal did approach the issues presented by the contracts between the applicant and Robe as involving the characterisation of the transactions for which those contracts provided. That approach was, in my view, free of any error of law.
62 I agree that the appeal should be dismissed with costs.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Associate:

Dated: 20 February 2008

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6	Before the Tribunal the applicant asserted that it had acquired by purchase a proprietary interest in the fuel supplied by Robe and that it provided consideration for the purchase by accepting a discounted rate of payment in exchange for its exploration and drilling activities.
7	The Tribunal reviewed five contracts between the applicant and Robe. In doing so it relied on the decision of the High Court in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 in respect of the extent to which it should take account of evidence of surrounding circumstances and the negotiations between the parties prior to entering into the contracts.
8	All five contracts refer to the "supply" of fuel and to fuel being "made available". One stated that the supply of fuel would be "free of charge". A variation made to one of the contracts referred to the supply being "at no cost to the contractor".
9	The Tribunal held that a supply is not the equivalent of a purchase and pointed out (see [3] above) that there were no express terms in the contracts providing for purchase of the fuel, for the applicant to have a proprietary interest in any of the fuel including any residue remaining after completion of the contracts, or for payment to or reimbursement of Robe for the fuel. Moreover, there was no evidence of any intention that the fuel would be purchased by the applicant and there was no documentation (such as invoices or delivery notes) to support the claim that the fuel had been purchased from Robe as would be expected if the fuel had been purchased. The Tribunal also noted that although the contracts provided for GST liability for services rendered there was no mention of GST liabilities arising from the sale of fuel. The Tribunal also regarded the fact that Robe had claimed energy grants in respect of the fuel supplied to the applicant as relevant.
10	In support of its claim that property in the fuel had passed from Robe to it, the applicant cited Comptroller-General of Customs v Woodlands Enterprises Pty Ltd; ex parte Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 where the Queensland Court of Appeal found that property in fuel that Woodlands had provided to contractors engaged to rear its chickens passed to the contractors. The Tribunal distinguished this case on the basis that the contract between Woodlands and the contractors specifically provided for Woodlands to invoice the contractors for the fuel used and for the contractors to pay for that fuel. The Tribunal held that the absence of any such provision in the contracts before it was "a very strong indication that ... property in the fuel was not intended to pass".
11	The Tribunal rejected the applicant’s submission that the discounted rate for its exploration and drilling activities constituted consideration for the purchase of the fuel:

15	By the above passage their Honours sought to make clear that it was inappropriate to draft a notice of appeal from a decision of the Tribunal without reference to O 53 r 3(2) which reflects the special and limited nature of the right of appeal created by s 44(1). A notice of appeal under s 44(1) drawn in a form comparable, for example, to an appropriately drawn notice of appeal under s 24(1)(a) of the Federal Court of Australia Act 1976 (Cth) will not only fail to meet the requirements of O 53 r 3(2), it will almost certainly fail to identify with clarity the question or questions of law the subject matter of the appeal.
16	Nothing in Birdseye is intended to suggest that a question of law within the meaning of s 44(1) cannot contain any reference to factual matters. Whether primary facts constitute evidence of an ultimate fact is uncontroversially a question of law within the meaning of s 44(1). An example would be whether the primary facts constitute evidence of compliance with a statutory test. It is also uncontroversial that, except in the limited circumstances identified by s 44(7), the legislature intended the Tribunal to be the final arbiter of fact and the Federal Court not to be permitted to make factual findings on an appeal under s 44(1). For this reason, an appeal under s 44(1) is not a vehicle whereby a party may have the Federal Court review the Tribunal’s findings of fact. Unless the answer to the question of law, which is the subject-matter of the s 44(1) appeal, reveals that a factual finding of the Tribunal is affected by error (in which case the matter will ordinarily be remitted to the Tribunal), an appeal under s 44(1) must proceed on the basis of the findings of fact made by the Tribunal.
17	The Notice of Appeal states that the questions of law raised on the appeal are:

•	Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451;
•	Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165; and
•	Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; (2001) 210 CLR 181.
18	At the hearing there was some discussion as to whether the notice of appeal sufficiently identified questions of law as required by s 44(1). Mr Solomon of counsel, who appeared for the applicant, maintained that the questions were adequately formulated but accepted a suggestion from the bench that the question in 2.1 could be understood as raising the following question: in the circumstances that the applicant and Robe entered into the contracts, is the question whether there was a purchase of off-road diesel fuel by the applicant in accordance with s 53 of the Energy Grants Act to be determined solely as a question of construction of those contracts?
19	Mr Solomon also accepted that the question in 2.2 should be understood as asking whether the agreement by the applicant to accept a lesser rate per metre for drilling if Robe supplied the diesel fuel was capable of constituting consideration for the purchase of the fuel by the applicant rather than whether it did constitute consideration.
20	In relation to the question in 2.3, Mr Solomon explained that it should be understood as asking whether, on the facts as established, the applicant’s acquisition of the fuel was by purchase in accordance with s53(1) as opposed to, for instance, a licence to consume the fuel. He submitted that, given that the facts are not in contention, whether the applicant acquired the fuel by purchase or not is a question of law.
21	In relation to the question in 2.4, Mr Solomon alleged that the Tribunal applied the wrong principles in construing the contracts between the applicant and Robe River. From his submissions at the hearing it would seem that he was posing the following question: are the principles to be applied in determining what extrinsic evidence may be taken into account in construing the contracts to be determined without reference to decisions of the High Court subsequent to the decision in Codelfa? Mr Solomon submitted that these later decisions (see [14] above) were explanatory of Codelfa and should have been applied.

22	The appeal was argued with a degree of complexity that belied the comparatively simple issues at the heart of the applicant’s case. It was not in contention that the fuel used by the applicant in its exploration and drilling activities under the contracts was supplied by Robe. Nor was it in contention that it was necessary for the applicant to establish that it acquired the fuel by purchase and that the case the applicant put to the Tribunal was directed to establishing this point. The complexity stemmed partly from the applicant moving, without acknowledgment, between mutually inconsistent positions.
23	At the hearing Mr Solomon correctly pointed out that the Tribunal’s task was not merely to construe the contracts between the applicant and Robe but to determine if the applicant had purchased the fuel under the contracts or otherwise. Having made that point, however, Mr Solomon asserted that the purchase whereby the fuel was acquired was made "under the written agreements". He specifically disclaimed any argument that the fuel was acquired other than in accordance with the contracts, for instance under a collateral contract. There was no attempt to suggest that the terms of the contracts were to be found other than in the written contracts correctly construed or that the contracts did not accurately reflect the agreement between the applicant and Robe. There was no suggestion that the applicant had any claim for rectification of the contracts. There was no suggestion that the applicant’s position before the Tribunal was different from that on appeal.
24	In the light of the applicant’s concession that the fuel was supplied under the contracts, the task of the Tribunal was to construe the written contracts and in doing so to consider such extrinsic evidence as is appropriate under the principles governing the interpretation of contracts laid down by the High Court. The applicant’s submissions to the contrary are inconsistent with Mr Solomon’s concession.
25	Section 53(1) of the Energy Grants Act uses the transitive verb, "purchase" in its ordinary, everyday sense as meaning "to acquire by the payment of money or its equivalent"; The Macquarie Dictionary (2^ndrevised edition, 1987). By using "purchase", s 53(1) distinguishes the acquisition of the off-road diesel fuel to which it applies from acquisition by, for instance, gift or theft. The requirement for "money or its equivalent" is one necessary element of a purchase. The other stems from the concept of acquisition. It is understood, and the dictionary meaning of "acquire" supports this, that it is "property" which is acquired by purchase. In the circumstances, therefore, to establish that it "purchased" the fuel, the applicant had to show:

28	If these comments indicate that the Tribunal thought the payment requirement was not met because only a payment specifically appropriated to the purchase of fuel would meet that requirement then the Tribunal would have made a legal error. We believe, however, that these comments were merely a response to the way in which the applicant’s submissions were put to the Tribunal.
29	We are supported in this view by the way in which the applicant’s submissions were put at the hearing of the appeal. Mr Solomon was concerned to explain the reference in some of the contracts (see [8] above) to the fuel being supplied at "no cost" or "free of charge" and did so by referring to antecedent negotiations, which he sometimes referred to as an antecedent agreement. The gist of these submissions was that the applicant had calculated the discounted drilling rate it would accept by taking into account that the fuel would be provided by Robe and that it would get the diesel fuel rebate.
30	When asked on what basis he submitted that evidence of antecedent negotiations was admissible, Mr Solomon said, in an example of the applicant’s conflicting positions referred to in [19]:

31	The proposition that in determining whether a supply made pursuant to a contract is a purchase, the Court should ignore the rules for the constructions of contracts is simply not tenable. Acquisition by purchase necessarily involves a contract and, in view of the applicant’s express disclaimer that there was any other relevant contract the question of purchase must be determined by construction of the exploration and drilling contracts.
32	Mr Solomon submitted that the words, "at no cost" or "free of charge" in some of the contracts should be read as, "at no additional cost" and "at no additional charge" and that it was open to the Court to find with reference to the antecedent negotiations that the applicant had given consideration for the fuel. We agree with Mr Solomon’s submission as to the construction of the above phrases, however, as we have already indicated, it is not necessary to resort to antecedent negotiations (even if permissible) or to extrinsic circumstances to find consideration for the supply of the fuel.
33	The fuel was provided pursuant to the terms of the contracts between Robe and the applicant. On the applicant’s part, it undertook to carry out exploitation, drilling and ancillary activities. On its part, Robe undertook to pay for the exploration and drilling services at a specified rate per metre and to provide the fuel required for the drilling rig. The consideration provided by the parties consisted of their mutual promises contained in the contracts. There is nothing in the material before us or before the Tribunal to suggest that there was any appropriation of a particular promise on one side to a particular obligation on the other. Similarly there is nothing to suggest that the contractual obligations assumed by the applicant were not consideration for all of the obligations assumed by Robe. The fuel was provided pursuant to the contracts and there can be no doubt that the applicant gave valuable consideration for its supply.

34	Under the heading, "Conclusion" the Tribunal stated that the applicant did not acquire a proprietary interest in the fuel supplied by Robe for the exploration and drilling activities. Moreover the Tribunal found that it could not find either in the contracts with Robe or in the surrounding circumstances, "to the extent that surrounding circumstances are relevant", any intention between the parties for the applicant to purchase the fuel from Robe. It followed that the applicant was not entitled to an off-road credit or an energy grant in relation to the fuel.
35	The applicant claims that the Tribunal misconstrued the contracts with Robe because it failed to consider certain evidence of the circumstances, agreements and negotiations between the parties in the period leading up to them entering into the contracts. This evidence, the applicant submits, would have vindicated its claim to have purchased the fuel. The applicant submits that the Tribunal’s failure to consider this evidence resulted from its misunderstanding of the principles governing the construction of written contracts laid down in Codelfa and elaborated and explained in cases following Codelfa, specifically the cases referred to in [2.4] of its notice of appeal; see [17] above.
36	The Tribunal accepted that whether the intention requirement had been met was to be ascertained according to the contracts that the parties had made taking into account relevant evidence of surrounding circumstances. In determining what evidence of surrounding circumstances was relevant and admissible the Tribunal applied the following principles articulated by Mason J in Codelfa at 352:

37	The Tribunal pointed out that in Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 at 301 the majority of the High Court (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) said that Codelfa was to be followed until the High Court said otherwise. This much is true, but the Tribunal neglected to point out that the High Court directed this comment to a possible inconsistency with two House of Lords decisions decided after Codelfa and without reference to it, namely, Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 and Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251. The High Court declined to determine whether those cases took a wider view of admissible "background" in construing contracts than Codelfa or, if so, whether those views should be preferred to Codelfa.
38	Since Codelfa, however, the High Court has discussed the principles of contractual construction in a number of cases including those referred to by the applicant. With the exception of the Botanic Gardens case, the Tribunal did not refer to those cases. The applicant assumes from this that the Tribunal did not consider the elaboration and arguable expansion in those cases of the Codelfa principles. It submits that in only considering the principles expressed in Codelfa the Tribunal fell into error.
39	Assuming, for the moment, that the applicant’s assumption is correct, it does not follow that the Tribunal was in error. The question to be considered is whether the Tribunal failed to consider any evidence which, under the principles developed by the High Court both before and after Codelfa it should not have excluded. Before addressing that point we shall consider the principles as they have been expounded in cases since Codelfa.
40	In Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; (2001) 210 CLR 181 at 188, the majority of the High Court (Gleeson CJ, Gummow and Hayne JJ) accepted the view of Lord Hoffmann in Investors at 912 that the interpretation of a written contract involves:

42	The applicant submitted that this is a much more expansive approach than that of Mason J in Codelfa where his Honour requires an ambiguity to be identified before it is permissible to go beyond the contractual document. It is arguable that this understanding of Mason J’s approach does not take into account the context of his Honour’s remarks and, perhaps, the ambiguity of "ambiguous". When those factors are taken into account if it is apparent that Mason J’s approach is less restrictive than initially appears.
43	Language that is susceptible of more than one meaning may be described as "ambiguous" in that, without reference to context, it might be difficult or impossible to determine which of two competing clear meanings is intended. That is not, however, the only meaning of the word. The Macquarie Dictionary and the New Shorter Oxford English Dictionary (1993) give it the following meanings: "doubtful", "uncertain", "lacking clearness or definiteness" or "indistinct" and "obscure". Mason J’s disjunctive description applies to all of these possibilities. Understood in this way the scope for consideration of extrinsic circumstances is very broad.
44	Despite the breadth of the proposition, however, a word or phrase may, within the context of a particular document, be neither uncertain nor obscure and may not seriously admit of any other meaning. In context, a word or phrase may have "a" plain meaning in the sense of a clearly applicable meaning even though that meaning is not its only possible meaning. To take a trivial example, it could not seriously be suggested that the warning on a box of matches "keep away from children" is unclear or obscure or even capable of more than one meaning even though it is theoretically possible that it could mean that the reader should stay away from children. One would not need to go beyond the document to be satisfied of this and would be reluctant to do so to contradict it. In contrast, the same words in written directions by a doctor to a patient might have an entirely different but plain meaning, especially if the document indicated that the patient had a compromised immune system.
45	It is arguable that there is little if any inconsistency between the current approach of the High Court and that articulated by Mason J in Codelfa. This is consistent with the view expressed by Spigelman CJ both extra-judicially ("From text to context: Contemporary contractual interpretation", (2007) 81 ALJ 322 at 326) and in South Sydney City Council v Royal Botanic Gardens [1999] NSWSC 898; (1999) 10 BPR 18,961 at 18,966. Although the decision of the Court of Appeal was reversed by the High Court in Royal Botanic Gardens and Domain Trust, the High Court did not in any way impugn the Chief Justice’s interpretation of Mason J’s comments in Codelfa.
46	In any event the important issue for present purposes is whether the Tribunal failed to consider material that, in accordance with the principles laid down by the High Court, it should have considered. In its written submissions, the applicant referred to evidence that was before the Tribunal concerning usual industry practice, the applicant’s usual practice where fuel was supplied by the contractor and where it was not so supplied, the significant amount by which the applicant discounted its rates and the negotiations between the applicant and Robe. The applicant complains that had the Tribunal considered all this evidence and taken into account the negotiations between it and Robe preceding the contract it would have accepted that the applicant purchased the fuel.
47	The admissibility of evidence of prior negotiations raises questions beyond those pertaining to the admissibility of other surrounding circumstances. In Codelfa, having said that evidence of facts existing when the contract was made and which were known to both parties is admissible, Mason J observed at 352:

50	It is worth noting that the applicant’s criticism of the Tribunal’s consideration of surrounding circumstances ultimately amounted to a complaint that the Tribunal did not come to the conclusion the applicant sought. Not only was the applicant unable to point to anything in the admissible evidence of surrounding circumstances that indicated an objective intention for the supply of fuel to be by way of purchase, it also failed to point to evidence of anything that, even had it been admissible, would have indicated such an intention.
51	Aspects of the applicant’s submissions indicated that it thought that since it had the right to consume the fuel it must have had a proprietary interest in it. The principle seemed to be that it is not possible legally to consume what is not one’s own property although Mr Solomon accepted that it was possible to do so if that which is consumed is obtained illegally. Mr Solomon had no authority for such a proposition and we do not accept it. There is no legal reason why a person may not permit another to use, even to the point of destruction or consumption, that person’s property. As senior counsel for the respondent, Mr Corboy, submitted there is no need for the law to provide the answer to a non-existent problem.
52	For the reasons given above, the applicant has not made out any of his grounds of appeal. That being the case the appeal should be dismissed with costs.

53	I have had the benefit of reading in draft the reasons of Branson and Stone JJ in this appeal. I agree with their Honours’ conclusion and, subject to what follows, with their reasons.
54	Both the facts proved before, and the question to be determined by, the Tribunal in the present case were very simple. On the agreed facts, the applicant was contracted to Robe River Iron Associates ("Robe") to perform exploration and grade control drilling activities using its own plant and equipment. Pursuant to those contracts, Robe supplied the fuel. The question for determination by the Tribunal was whether that supply amounted to a "purchase" of the fuel by the applicant within the meaning of s 53(1) of the Energy Grants (Credits) Scheme Act 2003 (Cth) ("the Energy Grants Act"). The Tribunal identified the issues which it was required to address in terms set out in par 5 of the reasons of Branson and Stone JJ. It was not submitted on appeal that its identification of those issues involved an error of law.
55	The Tribunal’s reasons were then structured according to the following headings:

58	The applicant’s third ground of appeal was that the Tribunal erred by holding that the applicant did not purchase fuel from Robe, and by holding that it acquired a mere licence from Robe to consume the fuel. This ground involves the nub of the applicant’s case on appeal, and refers to what was, in my view, central to the Tribunal’s decision, namely, whether property in the fuel passed to the applicant upon physical delivery into the fuel tanks of the applicant’s plant and equipment. The essence of the applicant’s case in relevant respects appears to have been that, since the fuel was physically delivered into its tanks, since the fuel was used, since nearly all the fuel was consumed and thus could never be returned to Robe, and since the very small amount of fuel remaining at the end of a job could be used by the applicant without having to account to Robe therefor, there must have been a passing of property. The Tribunal did not accept that proposition. It referred to a number of contractual and other considerations which made it unlikely. In so proceeding, the Tribunal did not, in my view, make any error of law. Further, it found that there was no bilateral intention, as between the applicant and Robe, for property in the fuel to pass. That was a finding of fact. In making it, the Tribunal took a conventional and unexceptionable approach to the ascertainment of the parties’ intentions by reference to objective, mutually known, circumstances. The Tribunal’s reasoning in relevant respects did not involve any error of law.
59	The applicant’s fourth ground of appeal was that the Tribunal had erred in failing to consider relevant and admissible material in construing the contracts in question, on the basis that judgments of the High Court subsequent to Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 were considered to be inconsistent with Codelfa itself. It is in relation to this ground that I would express a reservation as to the approach taken by the Tribunal under heading 6 of its reasons. It seems that the Tribunal referred to the Codelfa line of jurisprudence because of a submission on behalf of the applicant that it should have been held that a calculable discount on the contract rate allowed by the applicant to Robe when Robe supplied fuel under the contracts should have been recognised as payment for the fuel by the applicant. What the applicant appears to have put to the Tribunal was that, whatever the contracts themselves may have disclosed, the reality of the transactions between the applicant and Robe was that the applicant specifically reduced – or "discounted", as it was put – the contract price which it would otherwise have accepted from Robe in consideration of Robe supplying fuel. A consideration of that submission did indeed require the Tribunal to look beyond the terms of the contracts (something which it did not decline to do). However, whether or not the submission had any merit, it did not raise a question of the construction of the contracts between the applicant and Robe. Rather, the applicant’s submission raised a question of characterisation. I shall attempt to explain what I mean by that distinction.
60	No question arose as to the content of the parties’ obligations under the contracts which were before the Tribunal. Whether or not the Tribunal had been prepared to look at so-called extrinsic evidence, the result could not have been the attribution to the contracts of meanings which differed from their written terms, such that the parties’ obligations would be affected in some relevant respect. Whatever the Tribunal did in relation to extrinsic evidence, Robe was required to supply fuel under the contracts, the applicant was required to carry out work, and Robe was required to pay the contract price. The real question was whether the transactions for which the contracts provided included one which answered the description of a "purchase" within the terms of s 53(1) of the Energy Grants Act. This question was, as I have said, one which required the identification of the legal character of the transactions in question. It was not, in my view, a question of construction at all. In the circumstances, the present is not, in my respectful view, an appropriate occasion for the court to consider Codelfa and subsequent High Court authority in the same line.
61	Returning to the Tribunal’s reasons, although it did refer to the principles for which Codelfa stands, nothing much seemed to turn on that circumstance. As I have indicated above, the Tribunal did take into account facts and circumstances standing outside the written words of the contracts before it for the purposes of deciding whether the applicant had purchased fuel from Robe. I agree with Branson and Stone JJ that the mere fact that the Tribunal did not refer to cases subsequent to Codelfa does not mean that it necessarily made an error of law. However, I would prefer to base my conclusion in relevant respects upon the circumstance, which I consider to be clear, that the Tribunal did approach the issues presented by the contracts between the applicant and Robe as involving the characterisation of the transactions for which those contracts provided. That approach was, in my view, free of any error of law.
62	I agree that the appeal should be dismissed with costs.