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Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 (31 January 2011)

Last Updated: 1 February 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 39


ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2009/5568

GENERAL ADMINISTRATIVE DIVISION )

Re Beyond Productions Pty Ltd

Applicant

And Screen Australia

Respondent

DECISION

Tribunal Mr RP Handley, Deputy President

Ms JF Toohey, Senior Member

Date 31 January 2011

Place Sydney

Decision The decision under review is affirmed.

......................[sgd]...................
Mr RP Handley
Deputy President

CATCHWORDS

TAXATION AND REVENUE- producer offset certificate – significant Australian content – new creative concept

RELEVANT ACTS

Income Tax Assessment Act 1997 (Cth): ss 376-1, 376-55, 376-60, 376-65, 376-70, 376-170, 995-1,

Income Tax Assessment Act 1936 (Cth): s 124ZAD

Screen Australia Act 2008 (Cth): s 5

CITATIONS

McVeigh v Willara Pty Ltd [1984] FCA 379; (1984) 6 FCR 587; (1984) 6 ALN N313; (1984) 57 ALR 344

Willara Pty Ltd v McVeigh (1984) 54 ALR 65

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Commissioner of Taxation v Sleight (2004) 206 ALR 511, [2004] FCAFC 94

OTHER AUTHORITIES

Screen Australia Producer Offset: Guidance on Significant Australian Content (SAC) September 2009

REASONS FOR DECISION

31 January 2011
Mr RP Handley, Deputy President
Ms JF Toohey, Senior Member
  1. Beyond Productions Pty Ltd (Beyond Productions) has applied for the review of a decision of Screen Australia to refuse to issue it with a ‘producer offset certificate’ in respect of series 5 of a television series entitled ‘Taboo’. Such a certificate would entitle Beyond Productions to a tax offset for production expenditure in calculating income tax payable by Beyond Productions in the income year in which the television series was completed.
  2. Screen Australia refused the certificate on the grounds that, in its view, Taboo series 5 lacked the significant Australian content and new creative concept necessary for the issue of a producer offset certificate.

BACKGROUND

  1. Beyond Productions is incorporated in NSW and is a wholly owned subsidiary of Beyond International Ltd (Beyond International), an Australian public listed company. Beyond Productions’ headquarters are in Sydney but it also has production offices in Los Angeles, San Francisco and Washington DC. It produces television and digital content for both the domestic and international market. Another wholly owned subsidiary of Beyond International, Beyond Entertainment Holdings Ltd (Beyond Entertainment), which operates as the international distribution division of Beyond International, is incorporated in the Republic of Ireland with headquarters in Dublin and sales offices in Sydney and London.
  2. The Beyond group of companies has approximately 140 employees and uses a large number of contractors worldwide. Beyond Productions has produced many successful television programs as well as a number of feature films. Beyond International derives approximately 59% of its annual revenue from the production and sale of programs to overseas networks, primarily those located in the US.
  3. The Tribunal was provided with affidavits from Mikael Borglund, the Chief Executive Officer of Beyond International, dated 21 April 2010 and 26 November 2010, and an affidavit from John Luscombe, the General Manager and Senior Vice President of Beyond Productions, dated 21 April 2010. Both Mr Borglund and Mr Luscombe gave oral evidence at the hearing. The Tribunal was also provided with an affidavit dated 20 April 2010 from Raymond Gross, a US attorney who specialises in entertainment law, including copyright law. Mr Gross gave evidence by videolink from Los Angeles.
  4. According to Mr Luscombe:
Taboo is a television series which explores the traditions, rituals and social mores of different cultures all over the world. In particular, Taboo explores those traditions, rituals or social mores which are secret, sacred, or eccentric and may be considered by other cultures or societies to be “taboo”.

  1. The first three series of the television series Taboo were developed and produced by National Geographic Television, the internal production arm of the National Geographic Channel (National Geographic). Each of the three series comprised 13 episodes, and the copyright dates are, respectively, 2002, 2004 and 2004/2005.
  2. On 26 October 2005, Mr Luscombe’s contact at National Geographic invited Beyond Productions and four other US-based production companies to submit proposals for the production of a fourth series of Taboo. The “RFP” (request for proposal) document, comprising one page, states, under the heading “Concept”:
Taboo thrusts you into the hidden worlds you would never have explored on your own. It is a world whose people and places are exotic, sometimes dangerous and always unexpected. To get there we’ll travel from the most remote tribal villages to the darkest shadows of your home town, always looking for the planet’s most shocking, unique and visually arresting cultures and rituals. Taboo hours typically revolve around a theme, for example body markings, extreme cuisine, exotic entertainers.

Taboo is not hosted and does not play as a typical magazine format. The narration leads the action with dynamic, emotion-driven first person stories providing the color. The style is in your face, but smart; a coupling of sensational visuals and intelligent, contextualized narration. It’s human culture and human nature, unpolished and unapologetic.

  1. Invitees were asked to provide a one-page overview, four episode “blurbs”, one single episode outline, a description of unique visual techniques and style, a budget and a production schedule. On 12 November 2005, Beyond Entertainment submitted a tender. On 12 April 2006, National Geographic announced that Beyond Entertainment was the successful tenderer and, on 5 July 2006, entered into an agreement with Beyond Entertainment for the development, production and delivery of Taboo series 4, comprising 13 sixty-minute episodes.
  2. The agreement provided that National Geographic would contribute 81% of the production budget and Beyond Entertainment 19%. Any “overages” would be the responsibility of Beyond Entertainment. The parties agreed that National Geographic would own the copyright in the series and would have the right to exploit the series in North America, while Beyond Entertainment would have the right to exploit the series for a period of seven years in all other territories outside North America. The parties also agreed that National Geographic should have an option to engage Beyond Entertainment to produce additional seasons of the series.
  3. On 28 September 2007, Beyond Entertainment entered into a further agreement with National Geographic for the development, production and delivery of Taboo series 5, comprising 15 sixty-minute episodes. The terms of the agreement were similar to those of the series 4 agreement except that clause VII “Essential Element” required the executive producers of the series to be Ben Ulm and Geoff Fitzpatrick rather than, as in series 4, just Ben Ulm. Further, in clause VIB, National Geographic agreed that Beyond Entertainment could, “in its sole discretion, change the title” for the series.

LEGISLATIVE FRAMEWORK

  1. Division 376 of the Income Tax Assessment Act 1997 (Cth) (the ITAA) provides for tax offsets for Australian expenditure in making films. The word ‘film’ is broadly defined in s 995-1(1) as meaning “an aggregate of images, or of images and sounds, embodied in any material”. Section 376-1 states that the tax offsets “are designed to support and develop the Australian screen media industry by providing concessional tax treatment for Australian expenditure”.
  2. Screen Australia is a body corporate established by s 5(1) of the Screen Australia Act 2008 (Cth). Pursuant to s 376-55(3) of the ITAA, Screen Australia is the ‘film authority’ which must issue certificates (producer offset certificates) under s 376-65(1) if the conditions in s 376-65(2) to (6) are satisfied. A company to which such a producer offset certificate is issued is entitled to a tax offset (‘producer offset’) under s 376-55(1) for the income year in which the film was completed.
  3. Section 376-60 states that the amount of the tax offset is 40% in the case of a feature film, or 20% if the film is not a feature film, of the total of the company’s qualifying Australian production expenditure on the film.
  4. Among the conditions required to be satisfied for the issue of a producer offset certificate under s 376-65 is a requirement under s 376-65(2) that the film “has a significant Australian content”. If the film is for a ‘series’ or for a ‘season of a series’, then a further issue may be relevant, namely whether the series “has a new creative concept” (s 376-65(5)), as explained below.
  5. Section 376-70 sets out a number of matters to which regard must be had in determining these issues:
Determination of content of film
(1)  In determining for the purposes of section 376-65 (certificate for the producer offset) whether a film has a significant Australian content, the film authority must have regard to the following:
(a)  the subject matter of the film;
(b)  the place where the film was made;
(c)  the nationalities and places of residence of the persons who took part in the making of the film;
(d)  the details of the production expenditure incurred in respect of the film;
(e)  any other matters that the film authority considers to be relevant.
(2)  In determining for the purposes of section 376-65 (certificate for the producer offset) whether a film that is a series has a new creative concept, the film authority must have regard to the following:
(a)  the title of the series;
(b)  whether the series has substantially different characters, settings, production locations and individuals involved in the making of the series than any other series;
(c)  any other matters that the film authority considers to be relevant.

  1. Section 376-170 sets out when expenditure on a film is qualifying Australian production expenditure for the purposes of the producer offset. Section 376-170(4)(c) states that expenditure is not qualifying Australian production expenditure on a film for a series or a season of a series if the expenditure is for an episode beyond the 65th episode of the series.

BEYOND PRODUCTIONS’ APPLICATION FOR A PRODUCER OFFSET CERTIFICATE

  1. Beyond Productions applied to Screen Australia for a producer offset certificate for qualifying Australian production expenditure of $4,365,006 for the period ending on 19 June 2009 in respect of a season of a television series, namely Taboo series 5, a film that is not a feature film. Screen Australia prepared an internal assessment report for its Board with reference to guidelines published by Screen Australia: “Producer Offset: Guidance on Significant Australian Content (SAC)” (the Guidelines), dated September 2009. The Guidelines explain how Screen Australia interprets the matters to which regard must be had in determining whether a film has a significant Australian content. The Guidelines state:
Screen Australia interprets ‘subject matter of the film’ as requiring it to determine if the ‘look and feel of the film’ is sufficiently Australian or the film has a significant creative connection with Australia. For example:
Screen Australia anticipates that it would need to consider some or all of the
following factors:
  1. The internal assessment report prepared by Screen Australia recommended that Taboo series 5 not be approved for certification for a producer offset, a recommendation that was approved by the Board of Screen Australia. On 28 October 2009, Screen Australia notified Beyond Productions that it had decided not to issue a certificate because it was not satisfied that the series had a significant level of Australian content. On 23 November 2009, Beyond Productions applied to the Tribunal for a review of this decision.
  2. On 23 February 2010, Beyond Productions lodged submissions with Screen Australia contending that Taboo series 4 had a ‘new creative concept’ within the meaning of s 376-70(2). By letter dated 19 March 2010, Screen Australia confirmed that it was satisfied that all the other criteria prescribed by s 376-65 had been met in respect of Taboo series 5 but that it was not satisfied that either Taboo series 4 or 5 had a new creative concept relative to Taboo series 1, 2 and 3.
  3. The Tribunal notes that a sixth series of Taboo, comprising six episodes, has also been developed and produced by Beyond Productions. Series 6 is not in contention in these proceedings.
  4. Screen Australia has provided an affidavit dated 31 May 2010 from Mary-Ellen Mullane, an investment and development manager with Screen Australia who is also an experienced documentary producer. Ms Mullane gave evidence at the hearing.

THE ISSUES

  1. The issues for the Tribunal to determine are, first, whether Taboo series 5 is a film that has a ‘significant Australian content’ (s 376-65(2)(a)(i)) having had regard to the matters referred to in s 376-170(1), and, second, whether Taboo series 5 is a season of a new series that commenced with Taboo series 4. For Taboo series 4 to constitute a new series requires a finding that it had “a new creative concept” relative to Taboo series 1 to 3 (s 376-65(5)), having had regard to the matters referred to in s 376-70(2). If Taboo series 4 and 5 do not constitute a new series or season of a series, s 376-170(4)(c) excludes any claim for expenditure on episodes beyond the 65th episode. (Taboo series 1 to 3 each comprised 13 episodes, series 4 comprised 13 episodes and series 5 comprised 15 episodes. Thus, expenditure on the last two episodes of series 5 would be excluded.)

DOES TABOO SERIES 5 HAVE A SIGNIFICANT AUSTRALIAN CONTENT?

  1. The Tribunal must first consider what the words ‘significant Australian content’ mean in the context of s 376-70 of the ITAA. The principal authority to which both parties referred in their submissions is the decision of the Full Federal Court in McVeigh v Willara Pty Ltd [1984] FCA 379; (1984) 6 FCR 587 (the Captain Invincible case). This was an appeal from the decision of McGregor J in Willara Pty Ltd v McVeigh (1984) 54 ALR 65, where, at 108, his Honour said, in the context of a similar provision (the now repealed s 124ZAD of the Income Tax Assessment Act 1936 (Cth) (“the 1936 Act”)):
‘Significant’ is an ordinary English word used ... according its common understanding. I take its meaning to be ‘important’, ‘notable’, or ‘of consequence’.

  1. On appeal, at 596, the Full Federal Court, referred to McGregor J’s observation with approval and said ‘significant Australian content’ refers to “aspects of the film which give it a content which is significantly Australian”. Like s 376-70(2) of the ITAA, s 124ZAD of the 1936 Act required the Minister, in making his determination, to have regard to certain matters including “(f) any other matters that the Minister considers relevant”. The Court said the weight to be accorded to the matters to which the Minister was required to have regard was a matter for the Minister to decide. (We note that under s 124ZAD, the Minister was required to have regard to the nationalities and places of residence of persons who were beneficial owners of shares in the company and the copyright of the film. These factors do not appear in s 376-70 of the ITAA but the remainder of the section is virtually identical.)
  2. However, the Full Court said, at 597:
In our opinion the Minister did not approach the matter of a final certificate with a correct appreciation of what was involved in determining whether the film had a significant Australian content. The Minister's letters of 17 November and 9 December 1982 and his statement of reasons of 13 January 1983 placed undue emphasis on what the Minister saw as the non-Australian elements of the film and failed to examine the Australian elements with a view to determining whether, in the light of those elements, the film had a significant Australian content. The error was not merely one of emphasis; it arose from a misunderstanding of what s.124ZAD required.
There are questions of interpretation and construction arising out of s.124ZAD, some of which are relevant to the determination of this appeal.
The words in para. (a) of s.124ZAD, "the subject matter of the film" are ordinary English words. They have no technical connotation and entitle, indeed require, the Minister to have regard to such matters as the setting of the film, whether it purports to tell a story about Australians, whether there is some quality about the film that marks it out as an Australian film. This does not mean that only a film such as Jedda or Gallipoli may be said to have a significant Australian content. The Minister may well determine, in a particular case, that the subject matter of the film is universal but that it reflects a cultural background peculiar to Australia. He may well determine that the other components of s.124ZAD warrant a decision that the film has a significant Australian content, notwithstanding that its subject matter has no particularly Australian quality.

  1. Thus, the Court found error in the Minister’s decision because he placed undue emphasis on what he saw as the non-Australian elements of the film, and failed properly to examine its Australian elements with a view to determining whether, in the light of those elements, the film had significant Australian content. (These comments may be particularly pertinent with a film such as Taboo in which the visual content is so apparently ‘international’.)
  2. We also note the Guidelines on ‘significant Australian content’ set out above. Decision-makers should generally apply policy such as the Guidelines unless the policy is unlawful or its application produces an unjust result in the circumstances of a particular case: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In this instance, it is, of course, to the matters to which s 376-70(1) requires us to have regard that we must first turn. We will refer to the Guidelines where relevant to assist us in that task.
  3. In turning to each of the matters in s 376-70, it is important to bear in mind that the purpose of considering them, individually and cumulatively, is to determine whether they demonstrate significant Australian content. We should, however, also note that there is a significant overlap between the evidence and submissions about significant Australian content, and the evidence and submissions concerning the second issue as to whether series 4 had a new creative concept relative to Taboo series 1 to 3, which is discussed later.

(a) Subject matter


  1. Beyond Productions contends that Taboo series 5 has significant Australian content because:
(a) 5 of the 43 stories within the 15 episodes in series 5 deal directly with Australians.
(b) The script, perspectives and themes comprise an Australian cultural perspective as they were researched, written, photographed and post-produced by Australians.
(c) All of the researchers and writers of series 5 are Australian.
(d) The majority of the producers and editors of series 5 are Australian: 11 of 15 episodes were produced solely by Australians and, where overseas field producers were used, they operated entirely under the direction of the senior (Australian) producers; 9 of the 15 episodes were edited entirely by Australians, 4 episodes by a combination of Australian and overseas editors, and 2 by an Australian/Canadian who is resident in Australia.
(e) Series 5 is about Australian characters and is set in Australia: 5 of 43 stories deal directly with Australians, and all filming that was not required to be undertaken overseas was undertaken in Australia: filming of all but one interviewee took place in Australia and while series 1-3 had no Australian experts, 4 and 5 had 33 Australian experts
(f) The core origination took place in Australia or under Australian control – as seen by the substantially different content and feel of series 4 and 5 (refer ASFC 37 for broad changes – eg. more in depth, less Western centric etc)
(g) Australian citizens or residents had extensive involvement in the development of series 5.

  1. Beyond Productions argues that all of the matters to which the decision-maker must have regard in s 376-70(1) go to the “subject matter”. In part, Beyond Productions relies on the reference in the Captain Invincible case to the Minister being required to have regard to such matters as “the setting of the film”. (At the time of that decision, “the place or places where the film was, or the proposed film will be made” was one of the matters to which the decision-maker was obliged to have regard.) Mr Dick, for Beyond Productions, also sought to rely on Commissioner of Taxation v Sleight (2004) 206 ALR 511, [2004] FCAFC 94 (Sleight), where, at [67], Hill J noted that where there are factors to be considered, they can be considered “alone or in combination”. Thus, Mr Dick contended, the matters referred to in subparagraphs (b) to (d) can also be considered in relation to subparagraph (a) subject matter.
  2. Mr Cobden, for Screen Australia, submitted that the decision in Sleight does not indicate there is some principle of construction that says particular paragraphs may or will overlap. He said it will depend on the statutory wording in the particular case; in this case, the Federal Court decision in the Captain Invincible case gives the factors separate and distinct work to do.
  3. First, in the Tribunal’s view, there seems to be some confusion about the meaning of the words ‘subject matter’ in subparagraph (a). The Full Federal Court, in the Captain Invincible case, at 597, emphasised that these are ordinary English words. When the Court referred to such matters as the “setting of the film”, it is clear from the context in which the Court used this phrase that it was not referring to the location of the production or the behind the scenes work. Rather, the Court was referring to something characteristically and recognisably Australian, such as the visual setting – the ‘Australian bush’, or the ‘Aussie’ accents of the characters, that “marks it [the film] out as an Australian film” even if the content is not otherwise specifically Australian.
  4. We note the Guidelines prepared by Screen Australia, quoted above at paragraph 18, interpret the ‘subject matter of the film’ as requiring it to determine the ‘look and feel of the film’ and whether it is sufficiently Australian or has a significant creative connection with Australia. In our view, this is a reasonable interpretation of to what the Federal Court was referring. The Guidelines give as examples whether the film is about Australia or Australians, whether it reflects a particular Australian cultural background or reveals some aspect of that background, and whether the project originated in Australia and/or was developed by Australians.
  5. Secondly, in our view, the approach suggested by Beyond Productions conflates the other factors in s 376-70(1) into subject matter when the plain wording of s 376-70(1) indicates that regard must be had to all the factors referred to in the subsection in their own right.
  6. Turning then to the subject matter of the film (s 376-70(1)(a)), in his affidavit dated 21 April 2010, Mr Luscombe said Beyond Productions “substantially changed the content of Taboo Series 4 and 5 compared to the 3 earlier series”. There was an increased focus on the Asia Pacific region including Australia. Five of the 43 stories in the 15 episodes of series 5 were Australian (ie physically set in Australia and about Australians) as opposed to none in series 1 to 3. He described the style of series 1 to 3 as “shock ethnography ... characterised by stories which are intended to shock, challenge and disgust the viewer” (at [64(b)]). By contrast, series 4 “moved away from this style of storytelling and replaced it with a more considered, deep theme approach. Our objective was to move away from the tabloid style shock documentary series, to a more thoughtful, informative and educational documentary series” (at [64(c)]). However, in cross-examination, Mr Luscombe agreed that as with the first three series, Taboo series 4 and 5 shocked and challenged viewers, might disgust people, was sometimes graphic and gruesome, and dealt with grotesque practices (transcript p 106).
  7. Mr Luscombe was asked about the difference between Taboo series 1 to 3 and Taboo series 4 and 5 and, in particular, about the difference between the ‘Food’ episode in series 1 and the ‘Gross Food’ episode in series 4. He described the difference as one of “genre” (transcript p 85). The series 1 episode was a “magazine-style show” using “vox pops” (in this instance, Western popular reactions/opinions to ‘alien’ cultural practices) with self-contained stories, light in content, sometimes with music underscoring comical aspects, and superficial in terms of detail. By contrast, Mr Luscombe described the series 4 episode as reflecting “a deep-themed approach with multiple participants and a much greater understanding of the fact[s] and the cultural tradition” (transcript p 86), including scientific and, in the case of one story, “the specific physiological effects” of a toxin on the body. An Australian composer was employed to compose a film score to evoke the mood of the particular story, approaching the story with greater reverence and in greater depth than the series 1 episode which featured “comedic music”. The composer has a classical music background and features Indigenous instruments in her work. The music featured in series 1 to 3 was sourced from a music library. The series 4 episode also employed more sophisticated graphics than those used in the series 1 episode produced by National Geographic.
  8. Mr Luscombe also acknowledged that while Beyond Productions employed an Australian narrator, Mr Brand, for Taboo series 4 and 5, Mr Brand did the original voiceover in an American accent because Beyond Production’s distribution company “finds it easier to sell and screen programs with an American accented voice” (transcript p 116). However, National Geographic exercised their contractual right to replace Mr Brand’s narration with that of an American, Lance Newman. Mr Luscombe said, similarly, if a series is taken by a country with another language, Mr Brand’s narration will be replaced with that of a native language speaker. With regard to the expert commentary included in some episodes, experts were selected for their expert knowledge. Some of the experts used were Australian for practical reasons but all experts had to be approved by National Geographic and this meant on some occasions using experts selected by National Geographic (transcript p 120).
  9. Screen Australia provided an affidavit from Mary-Ellen Mullane dated 31 May 2010 in which she said she had been asked to provide an opinion on two issues: whether Taboo series 5 has a ‘significant Australian content’, and whether there is a ‘new creative concept’ in series 4 and/or 5 relative to series 1, 2 or 3. However, her affidavit deals predominantly with the second issue and this was the focus of her cross-examination and evidence at the hearing. In general terms, she said that in her opinion there are more similarities than differences in the content and style between series 1 and series 4 and 5 (affidavit at [25]).
  10. During the course of the hearing, the Tribunal viewed stories from episodes in series 1, 4 and 5 chosen by the parties. Mr Dick used particular extracts to illustrate what he contended was a greater use of vox pops (clips in which people in the street react to the particular activity) in series 1 and, generally, a shallower treatment of material and less character development in series 1 than in series 4 and 5. He contended that stories in series 4 and 5 have a greater depth of treatment including the cultural background to a particular taboo activity, insights into the motivation of the participants, and scientific, anthropological and historical explanation. Mr Dick claimed there is also a greater focus on taboo practices in Western cultures and greater use of expert commentary. Furthermore, unlike series 1, series 4 and 5 are filmed in high definition, widescreen format, avoiding the multi split screen format sometimes used in series 1, for example for expert commentary. In cross-examination, Mr Luscombe acknowledged, however, that at the time series 4 and 5 were being produced, television broadcasters were moving into high definition and needed high definition programming.
  11. The Tribunal also viewed further material from series 1 and 4 in the course of Mr Luscombe giving evidence. He referred to series 1 as being more tabloid or magazine style, including the use of vox pops, light in content and low on detail. One of the stories used (in series 1, episode 3 ‘Food’), which focused on a Californian restaurant that specialised in menus including cooked bugs, was played for humour and without any cultural reference. Similarly, the story in the same episode on eating cobra in Thailand was “relatively sensational” and had no cultural content.
  12. Mr Luscombe said the graphics used in series 4 were also more sophisticated than those in series 1, for example the story in series 4, episode 12 (‘Gross Food’) on ‘fugu’ which explored the specific physiological effects of poisoning on the body. He said the fugu story in series 4 was twice as long as the fugu story in series 1 and explored in greater depth the cultural practices associated with eating food in Eastern and Western cultures. Mr Luscombe also noted that series 4 and 5 used scored music to evoke mood and often a greater sense of reverence.
  13. After the conclusion of the hearing and for the purpose of making our decision in this matter, the Tribunal viewed the following material:
  14. All the series 5 stories viewed were narrated by a person with an American accent. (It would seem we viewed stories where National Geographic had exercised its contractual right to substitute narration by an American, Mr Newman, for that by Mr Brand, an Australian employed by Beyond Productions, using an American accent.) In the case of the story about urine therapy in Melbourne, Mr Newman mispronounced Melbourne according to Australian usage, assuming the typical English pronunciation as in the English city ‘Eastbourne’. The use of such an American accented narrator immediately gave us the impression that this was a program made by an American company. Presumably, National Geographic needed to be confident that the series produced by Beyond Productions would appeal to an American audience. By contrast, the series 1 stories that we viewed were narrated by a person with an English accent, but where characters in the stories spoke in their own languages, an American accented interpreter was used.
  15. The series 5 stories appeared to include more expert commentary than those in series 1 and in some instances US commentators recognised from series 1 were used. Whereas we did not see any Australian experts used in series 1, a number of Australian experts were employed in the stories set in Australia in series 5, albeit that one of them, used in two different stories in different episodes, spoke with an American inflection We note that some stories lend themselves to more expert commentary than others, for example, in the story on urine therapy on the claimed benefits of drinking urine.
  16. We did not notice any significant difference in the degree of focus on individual characters in series 1 and series 5. However, there are more stories with an Asian/Pacific and Western focus in series 4 and 5 and less African stories in series 5. In series 4, four of the 45 stories are set or partly set in Australia, and in series 5, five of the 45 stories are set in Australia. (One of the series 5, episode 8 ‘Drugs’ stories listed as being set in Australia is in fact set in Holland.)
  17. In terms of the three Australian stories that we viewed, none of them contained any material that we considered characteristically Australian or made specific reference to Australian cultural practices. All three stories could equally have been set in other Western cities. We also noted that, in the ‘freegans’ story set in Sydney, the characters focused on appeared to have North American and English accents.
  18. We noted that the series 5 stories did not employ use of split screen images. We noted greater cutting from one cultural context to another to illustrate particular points and, contrary to what Mr Dick suggested, what we considered excessive reliance on particular images which had the effect of sensationalising the activity, presumably with the intention of shocking the viewer: for example, in episode 8 ‘Drugs’, in the story ‘Shiva Natri’ on the use of marijuana in Nepal, there was repeated use of the image of a Sadhu inhaling from a marijuana pipe, and in the story on ‘ecstasy’ in Holland, there was repeated use of the image of a tablet being placed on a person’s tongue prior to swallowing. For the most part, we did not notice any discernible difference in the music employed in the two series, although we did notice, on occasion, that the series 5 music was used for more dramatic effect.
  19. Our overall impression was that the material we viewed from the two series contained similar challenging, shocking and gruesome material. We note that the recitals to the agreements between National Geographic and Beyond Entertainment for the production and delivery of Taboo series 4 and 5 refer to “ancient and evolving customs around the world that shock, pain, confuse or delight us”. While series 4 and 5 were produced largely by Australian personnel, and we note that the behind the scenes work on series 4 and 5 – the research, writing, production, filming, editing etc – was undertaken principally by Australians, we did not detect anything characteristically Australian about these series and we doubt that the ordinary person viewing series 4 and 5 would have noticed anything different from series 1. While 5 of the 45 stories in series 5 are set in Australia, series 5 purports to be international in focus, and deals with taboo practices around the world.
  20. In terms of the format, narration, photography and use of music, our view is that while the approach to the subject matter adopted by Beyond Productions may have been subtly different from that in series 1 to 3, we did not detect anything characteristically Australian about it. The similarities were greater than any differences. In terms of what the Federal Court said in the Captain Invincible case, from what we saw, there was nothing that marked out series 4 and 5 as Australian films.
  21. With regard to the Guidelines and the factors identified as being relevant to determining whether the ‘look and feel of the film’ is characteristically Australian, we note that Taboo series 5 does not have significant Australian content in terms of the number of Australian stories (5 out of 45 stories in 15 episodes), or Australian characters or settings in Australia. The core origination of Taboo series 1 to 3 took place in the United States, albeit that there was some further development in series 4 and 5 in Australia although still subject to overall control by National Geographic. Our view is that the fact of Australian executive producers being employed for series 4 and 5 (with their names being included in the agreements between National Geographic and Beyond Entertainment) does not necessarily indicate core origination by Beyond Productions.
  22. Our conclusion therefore is that the subject matter is not significantly Australian.

(b) The place where the film was made


  1. Beyond Productions state that 57% of total production for series 5 occurred in Australia and 43% overseas and, of the total production budget, 86.04% was spent in Australia. Furthermore, 88.64% of the total salaries budget was spent on wages for Australian staff. All of the pre-production and post-production of series 5 took place in Australia. Screen Australia accepts these figures. Mr Luscombe stated, at [58], that of 101 weeks of crew time, 58 weeks of production occurred in Australia (including shooting weeks) and 43 shooting weeks occurred overseas.
  2. Mr Luscombe stated that it was Beyond Production’s practice to send crew from Australia to undertake international filming for series 5. Where a foreign field producer was used in a remote location or on a short term basis where it was not cost effective to send an Australian crew, he or she was always supervised by an Australian series producer: Luscombe affidavit at [94].

(c) The nationalities and places of residence of the persons who took part in the making of the film


  1. The information provided by Beyond Productions referred to above indicates that most of those involved in the making of series 5 – the researchers, scriptwriters, camera operators, composer, sound recordists, producers and editors - were Australian. Beyond Productions also states that the original narrator for series 5 was Australian, although we note that he spoke with an American accent and, for broadcasting in North America, National Geographic substituted narration by an American.
  2. The Tribunal notes that the Executive Producers specified in clause VII “Essential Element” of the series 5 agreement between National Geographic and Beyond Entertainment made on 28 September 2007 were Australian: Ben Ulm and Geoff Fitzpatrick.

(d) The details of the production expenditure incurred in respect of the film


  1. Mr Luscombe stated, at [58], that 86% of the total production budget was spent in Australia and 88% of the total salaries budget was spent on wages for Australian staff.

(e) any other matters that the film authority considers relevant


  1. The Guidelines published by Screen Australia give examples of other matters that may, in the particular circumstances, be considered relevant and taken into account. These include the impact of the project on creating a sustainable Australian film and television production industry, where copyright ownership resides, with whom creative control rests, and the extent of recoupment and profit participation among Australians.
  2. Impact of the project on the industry. Mr Luscombe’s evidence, at [97-98], as to the production expenditure and as to the employment provided by Beyond Productions “for hundreds of Australians”, indicates that ongoing projects such as this series are important for the future of the industry. In his affidavit dated 21 April 2010, at [16], Mr Borglund, the Chief Executive Officer of Beyond International, stated that Beyond International employs 140 full-time staff and many hundreds of contractors engaged in the production of television programs on a program by program basis. He spoke of the strong competitive environment in which Beyond International operates, noting, in his first affidavit, at [64], that the producer offset plays “a critical element” in its pricing when selling programs to broadcasters and networks. Mr Borglund noted that this was the first time an application for a producer offset had been unsuccessful and said this appears to be inconsistent with Screen Australia’s decisions in other matters.
  3. The Tribunal notes Beyond Productions’ submission that the outcomes of other applications for a producer offset, which, it states, have consistently been approved, create an expectation for participants in the local industry. Screen Australia submits that the treatment of other applications is irrelevant. In our view, while consistency in administrative decision-making is an important general principle, s 376-70 requires that each application must be individually assessed with reference to the specified criteria. The outcome of other applications is not, therefore, a relevant matter in making this determination.
  4. Copyright. With regard to copyright, which Mr Cobden told the Tribunal is a relevant matter but not an important one (transcript p 204), we note that under the terms of the series 5 agreement between National Geographic and Beyond Entertainment dated 28 September 2007, copyright is 100% owned by National Geographic. However, National Geographic grants an exclusive licence to Beyond Entertainment to distribute (and therefore exploit) the (television) rights to the series outside North America for a period of seven years commencing immediately following the earlier of the world premiere of the series in North America or 30 September 2008, with an option to extend this licence for an additional three years. We also note the Production Agreement between Beyond Entertainment and Beyond Productions dated 31 October 2007 in which Beyond Entertainment appoints Beyond Productions to produce series 5 and in which Beyond Productions assigns to Beyond Entertainment all present and future rights used and created in the development and production of the series.
  5. The Tribunal heard evidence from Mr Gross, a US Attorney, who has provided an affidavit dated 20 April 2010 in which he analyses the series 5 agreement. However, since there proved to be no real dispute about ownership of the copyright in series 5, his evidence was not of any real assistance in making our decision.
  6. Creative Control. Under the terms of the series 5 agreement, National Geographic had ultimate control over all aspects of the production as, Mr Luscombe stated at [102], is usual in such agreements. However, day-to-day creative control rested with Beyond Productions subject to input from National Geographic and its approval of the topics featured in the stories and the series treatment.
  7. The fact that Beyond Productions used an Australian narrator employing an American accent and, notwithstanding this, the fact that National Geographic subsequently substituted narration by an American, Mr Newman, seems to us symptomatic of the preparedness of National Geographic to exercise control where it considered this necessary to ensure that the series would appeal to a North American audience. National Geographic’s approval was required for the topics selected and the experts used, and we note that at least some of the footage used in the first three series reappears in edited form in series 4 and 5.
  8. Recoupment and profit participation. Pursuant to the terms of the series 5 agreement, National Geographic contributed 81% of the cost of production of the series and Beyond Entertainment contributed 19%. As stated above, National Geographic granted Beyond Entertainment an exclusive licence for the television rights in the series arising from its distribution outside North America for a period of seven years. Mr Luscombe stated, at [108], that, in his experience, the majority of recoupment for such a documentary series will occur within the first three years of its release.

Conclusion


  1. In the Captain Invincible case, at 601, the Full Federal Court made clear that it was for the Minister to decide what weight should be accorded to the matters to which the Minister was required to have regard. In the present case, where the power to review Screen Australia’s decision is vested in the Tribunal, it is for the Tribunal to decide what weight should be given to the matters discussed above. However, it is important not to lose sight of the focus of s 376-70(1), which is whether a film has a significant Australian content. The Tribunal must be satisfied, having had regard to the matters specified in paragraphs (a) to (e), “whether there are aspects of the film which give it a content which is significantly Australian”: the Captain Invincible case at 596.
  2. In our view, this question must be answered in the negative. In terms of the subject matter of Taboo series 5, as stated above, we are not satisfied that its subject matter marks it out as an Australian film. In our view, this is a particularly weighty consideration.
  3. It is true that a number of episodes in series 5 deal with Australians in Australia (five out of 45 stories in 15 episodes), but a series purporting to examine practices around the world could be expected to do so. However, in relative terms, there are not a significant number of episodes about Australia or Australians, and there is no discernible Australian point of view or sensibility that the ordinary viewer would recognise as Australian. In our view, it is quite telling that in a series that purports to examine a range of cultural practices, including the practices of indigenous peoples, there is nothing about Australian indigenous people. While, none of these factors are a necessary feature of significant Australian content, they underline the absence of what the Guidelines describe as the “look or feel of the film” being sufficiently Australian.
  4. We accept that series 5 has a substantial creative connection to Australia. However, while the film was produced by an Australian company which spent approximately 86% of the production budget in Australia employing largely Australian personnel, and while 57% of the total production took place in Australia, nevertheless, National Geographic retained ultimate creative control. The impression we gained from viewing some of the stories was that series 4 and 5 were very similar in content to series 1. While in series 4 and 5, there may have been subtle differences in approach from that in series 1, we were unable to detect anything characteristically Australian about series 5.
  5. Having had regard to the matters in s 376-70(1), we conclude that for the purposes of s 376-65, we are not satisfied that series 5 has a significant Australian content. Thus, Beyond Productions is not entitled to a tax offset for production expenditure for Taboo series 5. Having so determined, it is not necessary for us to go on to consider the second issue, whether series 4 and 5 had a ‘new creative concept’ relative to series 1 to 3. However, in case our decision on the first issue is found to be incorrect, we will proceed with our consideration of the second issue.

DOES TABOO SERIES 5 HAVE A NEW CREATIVE CONCEPT?

  1. As with ‘significant Australian content’, the Tribunal must first consider what the words ‘new creative concept’ mean in the context of s 376-70 of the ITAA. Again, these are ordinary English words. Relevantly, according to the Macquarie Dictionary (4th edition), a concept is “1 a thought, idea or notion ...”, “2 a theoretical construct ...”, “5 a design in which all aspects of the product are linked to a central idea, function, theory, etc”. The word ‘creative’ means, relevantly, “resulting from originality of thought or expression”. Thus, in the context of the ITAA, the words ‘a new creative concept’ imply more than mere difference and, in our view, more than a different treatment of the subject matter, even if the treatment of a subject is an important matter. The words suggest an idea or design for the film in question that involves some originality in how the subject matter is addressed.
  2. Mr Cobden noted that National Geographic had set out the concept for Taboo series 4 in its “RFP” (request for proposal) document to which Beyond Productions responded on 12 November 2005. This is quoted at paragraph 7, above. Mr Cobden submitted that this concept statement plainly sets out a ‘creative concept’ for series 4 and he noted Mr Luscombe had acknowledged in evidence that the concept for Taboo series 1 to 3 was the same as that for series 4 and 5: transcript pp 92-94. Mr Cobden contended that the totality of the concept came from National Geographic and pointed to the very great number of similarities between series 1 to 3 and series 4 and 5 both in terms of stories and the treatment of the material, despite, he acknowledged, there also being some differences.
  3. In making its decision about whether series 4 and 5 has a new creative concept, the Tribunal must have regard to the matters specified in s 376-70(2). Mr Dick said the factors in s 376-70(2)(a) and (b) are objective in nature and contended that a consideration of these factors favours Beyond Productions. Other matters such as content and style, which may be considered relevant pursuant to s 376-70(2)(c), are subjective.
  4. With regard to the title (s 376-70(2)(a)), Mr Cobden noted that the Taboo title had been used for series 4 and 5 even though under clause VIB of the series 5 agreement with National Geographic, Beyond Entertainment had the right to change the title. In his affidavit dated 21 April 2010, at [110], Mr Luscombe stated that Beyond Entertainment negotiated this right because it might wish to rebrand series 5 for international distribution. However, they did not do so ([111]):
because the word ‘taboo’ is particularly apt to describe the substance and objective of the production and is able to encompass a wide range of titles. No obviously better title was available.

Mr Cobden suggested there were good commercial reasons for not changing the name, namely that the audience would recognise series 5 as a continuation of the Taboo series.

  1. Section 376-70(2)(b) requires that we also have regard to “whether the series has substantially different characters, settings, production locations and individuals involved in the making of the series than any other series”. Beyond Productions contends that series 4 and 5 have:
  2. Mr Luscombe (affidavit 21 April 2010, at [112]) stated that Beyond Productions increased the number of expert interviews undertaken in series 4 and 5: in series 4, nine of the 39 interviewees were Australian and, in series 5, of 106 interviewees 37 were Australian. In series 5, Australian experts appeared in 67 of the 113 onscreen interview grabs. Mr Luscombe also noted that in series 4 and 5 most stories were more character-based with one main character, and that the use of vox pops, frequently used in series 1 to 3, was discontinued.
  3. The Tribunal notes Ms Mullane’s evidence (affidavit at [25]), referred to above, that in her view, “there are more similarities than differences in the content and style of Taboo Series 1 on the one hand and Taboo Series 4 and Taboo Series 5 on the other.” Each:
seeks to shock and in many instances repulse the viewer by portraying practices which violate Western societal or cultural taboos. These practices very frequently involve self-harm, injury, suffering and/or risk.

  1. In evidence at the hearing, when asked to compare the stories about eating snakes in series 1 (set in Thailand) and series 4 (set in Vietnam), Ms Mullane said (transcript p 160):
... they were very similar stories in terms of content; cutting out the gall bladder, drinking the blood, all things that would repulse your average western viewer. Although the restaurant was different and the characters were different, I don’t believe that they were substantially different stories.

While recognising that there were new characters and settings, she said the stories “were more similar than different” (transcript p 161).

  1. In the stories from series 5 viewed by the Tribunal, we noticed some differences: for example, an increase in the use of expert commentaries, a general absence of vox pops (we noted one instance of vox pops being used in episode 4, ‘Body Extremes’ in the story on urine therapy), an avoidance of the use of split screen imagery but greater cutting from one cultural context to another, and what appeared to us to be minor differences in the graphics employed. While Beyond Productions contended there was a greater depth of treatment in series 4 and 5, we formed the impression that in some instances a more sensationalist approach was taken: for example, in series 5, episode 8, ‘Drugs’, the repeated use of the same or similar shots of those taking drugs, or in series 5, episode 4, ‘Body Extremes’, of those drinking urine.
  2. Our general view accords with that of Ms Mullane that there were more similarities than differences, especially bearing in mind that the concept for series 4 and 5 was one which National Geographic dictated should be a continuation of that for series 1 to 3. We acknowledge that there were some differences but there appeared to be many more similarities and such differences as there were could not, in our view, be said to amount to a new creative concept in terms of the ordinary meaning of those words for the purposes of s 376-65(5) and s 376-70(2) of the ITAA. Thus, we find that Taboo series 5 is not a season of a new series that commenced with series 4. Rather, it is a season of a series that commenced with series 1.

DECISION

  1. The decision under review is affirmed.

I certify that the 81 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President.


Signed: .............[sgd].............................................................

A Veness, Associate


Dates of Hearing: 30 November, 1 and 2 December 2010

Date of Decision: 31 January 2011

Applicant representative: Holding Redlich

Applicant counsel: Mr R Dick SC with Ms R Higgins

Respondent representative: Screen Australia

Respondent counsel: Mr R Cobden SC with Mr S Free

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