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High Court of Australia |
WATSON v. FEDERAL COMMISSIONER OF TAXATION [1953] HCA 98; (1953) 87 CLR 353
Taxation
High Court of Australia
Webb J.(1)
Dixon C.J.(2), McTiernan(2), Williams(2), Fullagar(2) and Kitto(2) JJ.
CATCHWORDS
Taxation - Income tax - Sale of business - Goodwill - Inclusion in assessable income - Objection by taxpayer - Upheld by Board of Review - Appeal to High Court - Heard by single Justice - Decision - "Final and conclusive" - Appeal to Full Court of High Court - Competency - Income Tax and Social Services Contribution Assessment Act 1936-1952, (No. 27 of 1936 - No. 4 of 1952), ss. 83, 84, 196 - Judiciary Act 1903-1950, (No. 6 of 1903 - No. 80 of 1950), ss. 18, 20, 34 - High Court Rules, Order LIA, r. 13.
HEARING
Sydney, 1952, April 28; May 12. 12:5:1952DECISION
May 12.2. The appellant commissioner treated the 1,644 pounds as a premium for or in connection with goodwill attached to or connected with land, and included 280 pounds of the 1,644 pounds in the assessable income of the respondent for the year ended 30th June 1943 (based on the income derived for the previous year), arrived at by deducting from 1,644 pounds the sum of 1,364 pounds made up of two amounts which the respondent had paid for the goodwill of the premises when he acquired it as the result of two transactions at different dates. In so doing the appellant commissioner relied on ss. 83 and 84(1) of the Income Tax Assessment Act 1936-1942. The respondent objected on the ground that the 1,644 pounds was not a premium paid for goodwill attached to the land. If it was such a premium the assessment was correct. The Board of Review, to whom the objection was referred by the commissioner, upheld the objection, and the commissioner now appeals to this Court. (at p362)
3. The evidence before the Board of Review was tendered here; but no further evidence was given. This evidence discloses that the purchaser was approved and the sale price fixed by a board representing the newspaper proprietors concerned, who, in accordance with their practice, had made that procedure a condition of the grant by them of the franchise consisting of the exclusive right to the respondent to purchase wholesale and to sell in the Campbelltown area the newspapers and periodicals produced by those proprietors. The sale price was fixed on the basis of units of circulation arrived at by taking into account not only the number of newspapers and periodicals sold but their respective prices. The price factor of this formula was controlled by the newspaper proprietors; but the sales and circulation factor was in fairness left by them to the newsagent, and its quantity depended in each case on his activities, including the wisdom of his choice of a shop, which would promote sales of the newspapers and periodicals if located in a busy section of the area, say near a railway station or post office. In this respect there is no difference between newspapers and periodicals and other commodities: in all cases there is the attractive force that brings in custom: Inland Revenue Commissioners v. Muller & Co.'s Margarine Ltd. (1901) AC 217, at p 224 , that is to say, goodwill attaches to land. The sale of other commodities in the shop ordinarily intensifies this attractive force and so increases the sales of each commodity. (at p362)
4. Now the 1,644 pounds for goodwill was based solely on the total number of units of circulation of the newspapers and periodicals in the Campbelltown area at the time of the sale of the business in November 1941, without any dissection of that total. No other consideration was entertained by the proprietors' board or their valuers. But, in fact, out of a total of 11,000 odd units of circulation, 6,000 were sold in the respondent's shop, 3,500 were delivered to his customers at their addresses, and 1,500 were sold by his sub-agents and by newsboys in the streets. However these details were wholly disregarded in arriving at the 1,644 pounds for goodwill. It follows that the existence of the shop and its particular location within the area, whether favourable for news-vending or otherwise, the existence of the lease and its assignment, and the sales of other goods in the shop were all completely disregarded, and in fact there was positive evidence to that effect. (at p363)
5. In view of this method of valuation of the goodwill, the respondent contends that the 1,644 pounds could not have been a premium paid for goodwill attached to land. But I think the evidence falls short of what is required to establish that contention. Not only were 6,000 units of circulation sold in the shop, but the sales of part of the remaining 5,000 to sub-agents and to customers to whom deliveries were made at their addresses could also have been negotiated at the shop. Further the shop and its location could have accounted for the circulation reaching 11,000 odd units. Without the shop the total circulation might have been less. In the absence of proof to the contrary it must, I think, be assumed that the shop played a part in securing sales of the newspapers and periodicals. In any event the onus of proof was on the respondent (s. 190(b)) and not on the commissioner. It was for the respondent to show that the total sales would have been as high without the shop, or if the shop contributed to the sales, then that this contribution was not to the extent of 11,000 odd units of circulation, but to a lesser, and to what, extent. This onus the respondent failed to discharge. Giving the evidence the fullest credence and its maximum effect, it does not preclude the probability or counter the assumption that the shop possessed an attractive force which brought in custom as regards newspapers and periodicals, that is to say, that goodwill attached to it in relation to newsvending: see Inland Revenue Commissioners v. Muller & Co's Margarine Ltd. (1901) AC, at p 224 ; Federal Commissioner of Taxation v. Williamson [1943] HCA 24; (1943) 67 CLR 561, at p 564 . (at p363)
6. I have not found it necessary to quote the evidence at length, or to make detailed findings. But I may say that I agree with the very comprehensive and clear statement in the first twenty-five paragraphs of the reasons of the Board of Review, and with the very full findings of fact in par. 26; but that I differ from the opinions expressed in pars. 27 to 29 inclusive. (at p363)
7. The appeal is allowed, the decision of the Board of Review set aside, and the assessment restored and confirmed. The respondent will pay the appellant his costs of this appeal. (at p363)
8. The taxpayer appealed to the High Court in its appellate jurisdiction against that decision. (at p363)
9. The relevant statutory provisions are sufficiently set forth in the judgment hereunder. (at p363)
10. G. E. Barwick Q.C. (with him J. D. O'Meally), for the appellant. There was nothing before Webb J. which could be the subject of an appeal. There was not any question of law involved. The Board of Review determined on the facts that the goodwill, that is of the agency, was not attached to the land and therefore, having in mind, inter alia, Phillips v. Federal Commissioner of Taxation [1947] HCA 50; (1947) 75 CLR 332 , found for the taxpayer, but his Honour found on the facts before the board that the taxpayer had not discharged the onus, which was upon him, of negativing the possibility that some part of the goodwill was attached to the land. Box v. Federal Commissioner of Taxation [1952] HCA 61; (1952) 86 CLR 387 does not decide that the question whether the goodwill is attached to the land is a question of law, nor does it deny that that question is one of fact. The inference from a given set of admitted or found facts that the goodwill is attached to the land, is one of fact and is not in any sense a question of law. There was not any question that the transaction as written by the parties was colourable or a sham or that it was cloaking some other real transaction. The documents evidenced the actual transaction. The board found accurately in relation to the facts that the money was actually paid by the purchaser for the exclusive agency. The terms of that agency precluded him from paying for anything else. The terms of the agency negative the possibility of paying any sum for any other advantage of the business beyond the exclusive agency to sell newspapers. The amount payable can only be calculated in relation to the newspapers. No sum was paid for premium. The question of fact is: what was the sum of money in reality paid for? As to whether the goodwill was personal or local is a question of fact. The goodwill of the agency is attached to the area and not to the particular premises (Phillips v. Federal Commissioner of Taxation (1947) 75 CLR, at p 338 ). It is impossible to have any part of the goodwill attached to the site in the case of a newsagency conducted under these arrangements which control the prices. The goodwill is the goodwill of the agency - the agreement - not attached to the land. A test is: how much more could the owner of the land get for the land because there was a newsagency run on it if he did not own the newsagent's agreement? Precisely nothing. The price all flows out of the fact that there is a newspaper agency. (at p364)
11. (DIXON C.J. Does s. 196(3) of the Income Tax Assessment Act apply to the decision of Webb J., or does that mean the Full Court?) (at p364)
12. It means the Full Court. Difficulties arise because if s. 196(1) was not satisfied there was not any point of law; there would be an incompetent appeal. (at p364)
13. (DIXON C.J. referred to Shell Co. of Australia Ltd. v. Federal Commissioner of Taxation [1930] UKPCHCA 1; (1931) AC 275; (1930) 44 CLR 530 .) (at p365)
14. Perhaps I may be permitted to deal with that matter after I have disposed of the other question on the appeal, which is that if one had to treat the question not as one of fact but as an open question then the only conclusion to which one could come would be that no part of the goodwill of the newsagent's agreement, which is the thing that was really sold, was attached to the land or any part of it. Neither the land on which the shop is erected nor the lease of that land has any more value because of the newsagency. That is so because the goodwill is not attached to it. Section 196 of the Act corresponds to s. 51 of the former Act. The Court has purported to delegate, as it were, the initial hearing to a single justice. Section 34 of the Judiciary Act 1903-1950 must work on the situation because the Court still retained jurisdiction. The reference in s. 160 to the High Court means the Full Court and precludes any delegation, in which case the matter now before this Court would be an appeal from a justice who had wrongly entertained the matter. In those circumstances the hearing before that justice was not authorized and the Court can deal with it under s. 34 of the Judiciary Act 1903-1950. An appeal to the High Court, particularly where the Court has its own rule-making power, does not prevent the Court from doing what it has done - making a rule that a single justice may hear it as in the original jurisdiction and then that there be an appeal. This Court can review all the activities of a single justice under s. 34 of the Judiciary Act 1903-1950, and the appellant would complain of the activity of his Honour on the footing that there was nothing there in the way of a point of law. Section 15 of the Act does not adversely affect these submissions in any way; this appeal is quite a competent appeal. (at p365)
15. L.C. Badham Q.C. (with him G.P. Donovan), for the respondent. The finding of the Board of Review in par. 26(b) of its reasons, that the "goodwill was paid solely for the transfer of the exclusive agency for newspapers and periodicals in the prescribed town area" is not correct and cannot be supported in any way. Nor is there any evidence to support the finding in par. 26(c)(i) that the unit value of goodwill was determined by third parties without any regard whatsoever to the number of sales made in the shop itself. The words "involve a question of law" in s. 196 of the Income Tax Assessment Act mean that where there is any question of law, whether it be an administrative tribunal or otherwise, if in fact the conclusion which has been arrived at is not supportable as a matter of law, then an appeal will lie; and if the tribunal finds some fact on which it bases its decision, which fact is quite outside the possible deductions to be drawn from the evidence then a question of law is created. In order to come to the conclusion referred to in par. 27 of the board's reasons the members thereof had before them a number of facts, not facts varying in degree or which admitted of any question of degree, nor facts which could themselves necessarily suggest different things, but the question was whether or not the facts as found brought the case within s. 196. A conclusion is drawn in pars. 27-29 of those reasons from the view of the members of the board of the result of the evidence before them, as set out in par. 27, and then the result of their opinion as to the meaning of the term "premium" as used in s. 83 of the relevant Act, both or either of which involves a question of law. This case, so far as that broad test is concerned, comes within the dictum of Lord Parker in Farmer v. Cotton's Trustees (1915) AC 922, at p 932 . Taking that as being a correct test of what is a question of law, it is clear that the board could not have come to the conclusion they did. It was not a question whether some person had written something into a contract, the question arose whether that was or was not a premium within the meaning of ss. 83 and 84 of the Act. The matter was considered in Scottish Australian Mining Co. Ltd. v. Federal Commissioner of Taxation [1950] HCA 16; (1950) 81 CLR 188 . Here the facts have been found. The proper legal effect of a proved fact is essentially a question of law (Federal Commissioner of Taxation v. Broken Hill South Ltd. (1941) 65 CLR 150, at p 154 ). The findings in par. 26, other than (b) and (c) (i) are essentially findings necessarily involved in the members' appreciation of the meaning and applicability of s. 83 to the facts which they had so found, and their duty was to come to a conclusion on whether or not there was a premium paid in respect of the premises which were attached to or connected with the land. Paragraph 27 itself involves a question of law. The opinion there expressed is quite untenable on the evidence, and consequently it involves a question of law (Bean v. Doncaster Amalgamated Collieries Ltd. (1944) 2 All ER 279 ). (at p366)
16. (WILLIAMS J. referred to Doncaster Amalgamated Collieries Ltd. v. Bean (1946) 2 All ER 642 .) (at p366)
17. If the facts are found by the relevant tribunal, and a conclusion is drawn from the facts by the tribunal, and that conclusion involves the application of some legal principle or provisions of an Act, that is not a question of fact only, it is a question of at least mixed fact and law. The conclusions of the board, as stated in pars. 27 and 29 of the reasons, amount to conclusions of law. The documents and the facts do not bear out the conclusion that the item 1,644 pounds was paid for the goodwill of the agency. Clause 2 of the agreement provides that "the vendor will sell and the purchaser will buy free from encumbrance", not the right in the franchise or the goodwill of the agency in that sense as submitted on behalf of the taxpayer, but the goodwill including several other items specifically referred to in that clause. The site of the agency business was a very material matter. If in fact, as was said, the greater part of the sales were made in the shop, it is an inescapable conclusion that a large proportion of those sales must have been due to the situation of the shop. The restrictive covenant in cl. 20 of the agreement would not be necessary if, as suggested on behalf of the taxpayer, there were a right and franchise. It is not a right or a franchise, but a business, with all the indicia that a business contains. On the documents of sale it is impossible to limit the sale. The newspaper business or newspaper agency comprised a comparatively small part of the business done at the shop. The commissioner's view that this was attached to or connected with the land is correct. It is a matter in respect of which no evidence whatever is required if regard be had to the nature of the building. Phillips v. Federal Commissioner of Taxation (1947) 75 CLR, at pp 334, 336 does not impinge on this case, and takes it right outside the ambit of this case altogether. This is a clear example, by reason of the nature of the business, of a site goodwill (Box v. Federal Commissioner of Taxation [1952] HCA 61; (1952) 86 CLR 387 ). (at p367)
18. (DIXON C.J. The question does arise whether Webb J. was right in placing the burden on the taxpayer and, if he was wrong, whether you can get even as far as that on the material which you chose to place before him.) (at p367)
19. His Honour came to the conclusion that, prima facie, the location of the business had an influence which was advantageous to the conduct of the business. The evidence shows that that was the position. The commissioner is entitled to maintain a conclusion on any ground at all. There was not merely a failure on the part of the taxpayer to discharge the onus upon him but the evidence was such that the tribunal could not come to any other conclusion. Nearly all businesses are, to an extent, dependent on locality (Inland Revenue Commissioners v. Muller & Co.'s Margarine Ltd. (1901) AC 217, at pp 223, 231 ). The subject goodwill was "to an extent dependent on locality" (at p368)
20. G.E. Barwick Q.C., in reply. The question is: did the taxpayer receive any consideration for any goodwill or licence attached to land for which a lease was granted - for or in connection with any goodwill. It cannot be said with complete legal accuracy that the whole consideration was a consideration for the whole goodwill of the business. The effect of cll. 2 and 6 of the agreement for sale, and having regard to the use of the word "thereto" in cl. 6, is that cl. 2 is quite silent on any question of price for goodwill, and cl. 6 clearly applies to the price of the goodwill of the agency agreement only. Clause 6 supports the view that the correct conclusion is that the amount fixed by the accountants was paid for the exclusive right, and for nothing else. It is then inevitable that the consideration paid for that goodwill was not paid for a goodwill which was annexed to the land. Under this contract the price which was paid for the goodwill cannot be considered the price of the goodwill of the whole business. To assert to the contrary would conflict with Phillips v. Federal Commissioner of Taxation [1947] HCA 50; (1947) 75 CLR 332 . The contract in that case contained exactly the same terms as the contract in this case. There is neither any finding nor any evidence that the whole goodwill was attached to the land. There is not any evidence to show that there was any site goodwill. The meaning of a site goodwill in relation to s. 83(1) of the Income Tax Assessment Act 1936, as amended, was considered in Box v. Federal Commissioner of Taxation [1952] HCA 61; (1952) 86 CLR 387 . The site does not "form a real element in the value of the business". In this matter there is not any point of law which is made the ground of an appeal. The observations of Lord Parker in Farmer v. Cotton's Trustees (1915) AC, at p 932 were not meant to be universally true. In many instances the finding of a fact in express terms in a statute does not amount to a finding of law, but merely a finding of fact (Usher's Wiltshire Brewery Ltd. v. Bruce (1915) AC 433, at p 466 ; Inland Revenue Commissioners v. Lysaght (1928) AC 234 ). (at p368)
21. (DIXON C.J. referred to s. 196(3) and British Imperial Oil Co. Ltd. v. Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 ; affirmed sub nom. Shell Co. of Australia Ltd. v. Federal Commissioner of Taxation [1930] UKPCHCA 1; (1931) AC 275; (1930) 44 CLR 530 .) (at p368)
22. The appeal is not to the appellate jurisdiction of the Court; it becomes the original jurisdiction. That being so the Court itself must be able to say it will be taken in the first instance by a Justice, and then s. 34 of the Judiciary Act 1903-1950 will work automatically. The statute sends the matter to the original jurisdiction of the High Court, and if a justice assumes the jurisdiction of the High Court in respect of it, an appeal will lie under s. 34 of the Judiciary Act from his judgment, unless the view be taken that s. 34 has been amended by the Income Tax Assessment Act. An appeal would lie independently of that Act, under s. 34 of the Judiciary Act if, not having jurisdiction, a justice assumed jurisdiction. (at p369)
23. L.C. Badham Q.C., by leave. In reference to ss. 187 and 190 of the Income
Tax Assessment Act, the matter in this case was referred
to a board of review.
That board decided in a certain way and the commissioner appealed to
this
Court in its original jurisdiction.
In such circumstances the object of s. 190
must be that the onus which lies upon the taxpayer
of satisfying the
particular tribunal
that the case presented by him is correct must continue
because otherwise the position would
arise that the taxpayer in the original,
that is first, hearing would have the onus cast upon him, and then that a
proceeding taken
from that proceeding is an original proceeding
and it is a
re-hearing, the onus would shift because it is called in some sections,
by
loose wording, an appeal. The onus is upon
the taxpayer. It would be an
extraordinary construction to put on s. 190 that upon
a re-hearing, the onus
of proof, simply by some
statutory provision, would shift from side to side.
On this aspect Webb J. was correct.
Cur. adv. vult.
(at
p369)
March 3, 1953.
THE COURT delivered the following written judgment:-the jurisdiction conferred on this Court by s. 196 of the Income Tax and Social Services Contribution Assessment Act 1936- 1952. The merits of the appeal depend upon the construction and application of ss. 83 and 84 of the Income Tax Assessment Act 1936-1952. The taxpayer during the year of income ended 30th June, 1942, sold a newsagent's business which he conducted at Campbelltown. Portion of the total price of the business included a consideration for or in connection with goodwill. The commissioner regarded this consideration as a premium within the definition of that word contained in s. 83(1) and accordingly included it in the taxpayer's assessable income. The taxpayer being dissatisfied in this respect with the assessment lodged with the commissioner an objection in writing in accordance with s. 185. The commissioner disallowed the objection under s. 186 and the taxpayer being dissatisfied with the decision requested the commissioner pursuant to s. 187 to refer the decision to a Board of Review for review. The Board of Review exercising the authority conferred by ss. 192 and 193 gave a decision in writing under s. 195 upholding the taxpayer's objection and reversing the decision of the commissioner. The board directed that the assessment be amended in accordance with their decision. The commissioner thereupon appealed to the High Court pursuant to s. 196(1) from the whole of the decision of the board on the footing that it involved a question of law. The appeal came before Webb J. who set aside the decision of the Board of Review and restored the assessment. The taxpayer then gave notice of appeal from the order of Webb J. to the Full Court of the High Court. The question arises whether such an appeal lies from the order of Webb J. It necessarily arises because sub-s. (3) of s. 196 provides that a decision of the High Court on an appeal from the Board of Review shall be final and conclusive. The objection that no appeal lay was not taken by the commissioner and his counsel addressed no argument to the Court upon the question. That, however, does not relieve the Court of the responsibility of applying s. 196(3). Section 196 is as follows:
This is an appeal from an order of Webb J. made in the purported exercise of
2. On behalf of the taxpayer it was submitted that sub-s. (3) of s. 196 did not prevent an appeal. The contention was that until the jurisdiction of the High Court, both original and appellate, had been exhausted, the decision of the High Court did not become final and conclusive within the meaning of the sub-section. Alternatively, it was contended that when sub-s. (3) referred to the High Court, it meant the Full Court of the High Court with the consequence that Webb J. had no jurisdiction to hear the appeal sitting as a single justice. On this view it was suggested that the High Court should, in the exercise of its appellate powers, set aside his decision as made without authority. (at p370)
3. The constitutional basis of the authority of the Board of Review lies in its character as an administrative body having the duty of reconsidering or reviewing the assessments of the commissioner but not exercising any part of the judicial power of the Commonwealth: British Imperial Oil Co. Ltd. v. Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 , affirmed sub nom. Shell Co. of Australia Ltd. v. Federal Commissioner of Taxation [1930] UKPCHCA 1; (1931) AC 275; (1930) 44 CLR 530 . The appeal, therefore, given to the commissioner or taxpayer by s. 196, must be a proceeding in the original jurisdiction of the High Court. Although called an appeal it is a proceeding which, for the first time, brings into the Court a question between the Crown represented by the commissioner and the subject called upon to pay tax, that is to say a matter arising under a law of the Commonwealth under s. 76(ii.) of the Constitution. Section 15 of the Judiciary Act 1903-1950 provides that the jurisdiction of the High Court may, subject to the provisions of this Act, be exercised by one or more justices sitting in open Court. By s. 20 of the Judiciary Act the appellate jurisdiction is, for the most part, to be exercised by the Full Court. But, except in applications under s. 74 of the Constitution, which must under s. 22 of the Judiciary Act be determined by a Full Court, it is generally true that the original jurisdiction of the High Court is exercisable by a single judge. It may, of course, be exercised by the Full Court either as a result of a reference under s. 18 of the Judiciary Act or as a result of an original proceeding coming before it by some other form of procedure. But prima facie it is exercised by a single judge. When s. 196(3) speaks of the High Court, it is difficult to understand why it should not mean the High Court properly constituted in any manner for exercising the original jurisdiction. The Judiciary Act always speaks of the High Court independently of the manner in which it is constituted and uses the Full Court to mean the Full Court of the High Court. There appears to us to be no ground for construing the High Court as meaning the Full Court of the High Court. Whether an appeal from the Board of Review is heard by the Full Court must depend upon the manner in which the Court itself decides to exercise the jurisdiction. Under Order LIA., r. 13 of the High Court Rules the appeal is to be heard subject to s. 18 of the Judiciary Act before a single justice by way of an original hearing. This rule appears to us to be quite valid. When s. 196(3) provides that the decision shall be final and conclusive, it appears to us to mean that there shall be no further appeals. If the question before the single judge merits the consideration of the Full Court, it is open for either party to request him to refer it to the Full Court and, unless he considers the matter to be one of fact or otherwise to be unsuitable for the consideration of the Full Court, doubtless he would make an order under s. 18 of the Judiciary Act. This has been a frequent practice. The suggestion that until the appellate power of the High Court is also exhausted, sub-s. (3) does not apply would, in effect, deprive it of any practical application. It would make it mean no more than that an appeal should not lie to the Privy Council except as of grace. (at p372)
4. It is true that s. 34 of the Judiciary Act provides that the High Court shall, except as provided by that Act, have jurisdiction to hear and determine appeals from all judgments whatsoever of any justice or justices, exercising the original jurisdiction of the High Court whether in Court or Chambers. The section does not add to s. 73(i.) of the Constitution. Section 73, of course, contains the words "with such exceptions and subject to such regulations as the Parliament prescribes". The real function of s. 196(3) appears to be to make such an exception in order to protect the taxpayer from further litigation and to that end to prevent an appeal from the decision of the High Court, if the matter has been treated as one proper to be referred to a Board of Review. There is a marked contrast when the taxpayer appeals to the High Court in the first instance from the commissioner under s. 187(b). In that case the order of a single judge of the High Court is made final and conclusive, except as afterwards provided in the Act, and s. 200 expressly gives an appeal to the commissioner or the taxpayer to the High Court in its appellate jurisdiction from the order made by the single judge. When s. 196(2) empowers the board to refer a question of law to the High Court there is no reason to treat the expression "High Court" as meaning the "Full Court" to the exclusion of a single judge. (at p372)
5. No real support for the conclusion that s. 196(3) applies only after an appeal has been heard from a single judge by the Full Court is given by our decision in the Minister of State for the Army v. Parbury Henty and Co. Pty. Ltd. [1945] HCA 52; (1945) 70 CLR 459 . The Court decided in that case that in s. 39(2)(a) the decision of the Supreme Court of the State there made final and conclusive, except so far as an appeal may be brought to the High Court, meant the decision of the Supreme Court after its full powers had been exercised and not a decision of the single judge of the Supreme Court. But the reasons for that conclusion began with the known purpose of the provision, which was to bring Federal questions into the High Court so that an appeal to the Privy Council would only lie from a decision of the High Court, and then subject to s. 74 and only in the exercise of the prerogative. That purpose would be completely satisfied if s. 39(2)(a) related only to the ultimate decision of the Supreme Court after processes by appeal within the Supreme Court had been exhausted and the Order in Council allowing an appeal to the Privy Council applied only to a decision of the Full Court of the Supreme Court. None of these considerations which were regarded as justifying that interpretation of s. 39(2)(a) has any application to s. 196(3). (at p373)
6. The conclusion that the decision of the single judge upon an appeal from a Board of Review is final and conclusive obtains some support from the history of the provision. That history is a curious one. What has become a Board of Review was first established by Act No. 31 of 1921, the Income Tax Assessment Act 1921 under the name of Board of Appeal. By sub-s. (8) of s. 38 inserted in the Income Tax Assessment Act 1915-1918 an appeal was given to the High Court in its appellate jurisdiction from a decision of the Board of Appeal. This provision was repeated in s. 51(8) of the Income Tax Assessment Act 1922. The provisions were, however, held invalid as attempting to give the Board of Appeal, as it was then called, part of the judicial power of the Commonwealth: British Imperial Oil Co. Ltd. v. Federal Commissioner of Taxation [1925] HCA 4; (1925) 35 CLR 422 . One of the reasons relied upon by the Court for the conclusion that the board was given part of the judicial power of the Commonwealth was that an appeal was given to the High Court in its appellate jurisdiction and not in its original jurisdiction. To overcome the effect of this decision the Board of Appeal was replaced by an administrative Board of Review and provisions much in their present form were introduced by s. 12 of the Income Tax Assessment Act 1925 No. 28. By s. 51 which was inserted in the Act of 1922 by this Act, a sub-section was included enabling the commissioner or taxpayer to appeal to the High Court from any decision of the board which, in the opinion of the High Court, involved a question of law. Nothing was said about the decision of the High Court being final and conclusive. Obviously, the provision meant the original jurisdiction of the High Court and the framers of the Act must have become very conscious of the distinction between the appellate jurisdiction and the original jurisdiction. It was, of course, common knowledge that the original jurisdiction was normally exercised by a single judge. Then by s. 22 of the Income Tax Assessment Act 1927 No. 32, words were added to the end of sub-s. (6) of s. 51. The words added were these: "and the Board shall, upon the request of the Commissioner or a taxpayer, refer to the High Court any question of law arising before the Board and the decision of the High Court thereon shall be final and conclusive". It may be conjectured that the framers of this amendment did not intend that the words "final and conclusive" should refer back to the decision of the Court on an appeal mentioned in the original provision so amended. Probably they did not do so grammatically. When however, these provisions were redrafted in the consolidation of 1936, the provision was split up and in sub-s. (3) the words "shall be final and conclusive" were expressly attached to the words "such appeal" as well as to the word "reference". The result was that while under the Act of 1922- 1935, if an appeal from the Board of Review was brought in the first instance to a single judge, an appeal would lie under s. 34 of the Judiciary Act and s. 73(i.) of the Constitution from his order to the Full Court, yet the first decision of the High Court became final and conclusive under s. 196(3). The Act of 1936 was not only a consolidation but a reconsideration of many provisions of the Income Tax Assessment Act, and it may be assumed that the framers of the Act 1936 thought it was better that the taxpayer should not be exposed to so many legal proceedings. (at p374)
7. For these reasons we are of opinion that the appeal from Webb J. is not competent. (at p374)
ORDER
Appeal struck out as incompetent. No order as to costs.
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