Federal Commissioner of Taxation v. Peachy.Judges:
Supreme Court of New South Wales
Waddell J.: The questions to be determined in this appeal are whether the decision of the Board of Review that the respondent taxpayer was a resident of the Territory of Cocos (Keeling) Islands for the period 2nd July to 30th July 1971, and thus entitled to the exemption provided by sec. 7 of the Income Tax Assessment Act, 1936 as amended, for the salary earned by him during that period is open to appeal and, if so, whether it should be sustained.
Before the Board the parties tendered a statement of agreed facts and certain documentary evidence. The same evidence is before this Court. There was an issue before the Board as to the source of the taxpayer's income during the period in question. The decision of the Board that this source was within the Territory is not challenged in this appeal.
The facts relevant to the question of residence may be summarised shortly. The taxpayer joined the Australian Public Service in about March 1967 and served as an officer of the Department of External Territories until about August 1973. On the 15th June 1971 the Minister for External Territories, acting in accordance with sec. 5(1) of the Official Representative Ordinance, 1955-1961 of the Territory of Cocos (Keeling) Islands, officially appointed the taxpayer to act as Official Representative for the Territory as from the 2nd July 1971, during the absence on leave of the permanent Official Representative. At the time of appointment it was expected that the
ATC 4085taxpayer would act as Official Representative for a period approximating four weeks. A fixed date for the cessation of his so acting was not included in the notice of appointment in order to prevent any difficulty arising should the date of the resumption of duty by the permanent Official Representative not coincide exactly with a date so fixed. The taxpayer acted as Official Representative for the Territory for the period 2nd July 1971 to 30th July 1971, his gross salary for that period being $758.88. During this period he acted as well as a Justice of the Peace within and for the Territory, Registrar of the District Court, Registrar of the Supreme Court of the Territory and as Coroner within and for the Territory. He also acted as agent within the Territory for the Postmaster-General's Department, the Department of Immigration and the Perth Branch of the Commonwealth Savings Bank. During the period in which the taxpayer acted as Official Representative he received a higher salary than he was usually paid.
The taxpayer's ordinary place of residence was at Mawson in the Australian Capital Territory. He was not accompanied by any member of his family during the period of his stay in the Territory. He was not entitled to have the fares of any family member for travel to the Territory paid by the Department of External Territories for this period. His wife had access to his bank account in Canberra at all material times.
Section 7(1) of the Act provides as follows -
``This Act shall extend to the Territories of Papua and New Guinea, Norfolk Island, Cocos (Keeling) Islands and Christmas Island, but shall not apply to any income derived by a resident of those Territories from sources within those Territories.''
It is convenient first to turn to a number of decisions relevant to the meaning to be given to the expression ``a resident'' as used in sec. 7(1). In
Gregory v. D.F.C. of T. (W.A.) (1937) 57 C.L.R. 774 at 777 Dixon J., as he then was, said -
``A question of much importance in the present case is whether the word `resident' in sec. 5A (which in terms corresponded to the present sec. 7) should be interpreted in the same way as similar expressions are interpreted in the British Income Tax Acts. I think that the answer is that the word should receive the same meaning and application as `person residing' and `ordinary resident' have been given in England. No technical or artificial meaning has been placed upon these expressions and parallel expressions under the British income tax law. But certain principles have been laid down by judicial decision for interpreting and applying the expressions.''
His Honour then referred to several English decisions and finally to those of the House of Lords in
Levene v. I.R. Commrs. (1928) A.C. 217, and in Lysaght's case, (1928) A.C. 234. Each case was an appeal by way of stated case from a decision of the Commissioners for the Special Purposes of the Income Tax Acts on the question whether the taxpayer was ``resident'' or ``ordinarily resident'' in England for the purposes of income tax legislation.
In Levene Viscount Kay L.C. said -
``My Lords, the word `reside' is a familiar English word and is defined in the Oxford English Dictionary as meaning `to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place.' No doubt this definition must for present purposes be taken subject to any modification which may result from the terms of the Income Tax Act and Schedules; but, subject to that observation, it may be accepted as an accurate indication of the meaning of the word `reside'.''
``So understood the expression (i.e. `ordinarily resided') differs little in meaning from the word `residence' as used in the Acts; and I find it difficult to imagine a case in which a man while not resident here is yet ordinarily resident here.''
Lord Atkinson expressed agreement with the Lord Chancellor. Lord Warrington said -
``I do not attempt to give any definition of the word `resident'. In my opinion it has no technical or special meaning for the purposes of the Income Tax Act. `Ordinarily resident' also seems to me to have no such technical or special meaning. In particular it is in my opinion impossible to restrict its connotation to its duration. A member of this House may well be said to be ordinarily resident in London during the Parliamentary session and in the country during the recess. If it has any definite meaning I should say it means according to the way in which a man's life is usually ordered.''
Viscount Sumner found it unnecessary to express any opinion on the question of the tests of residence. However, in Lysaght's case he said -
``Grammatically the word `resident' indicates a quality of the person charged and is not descriptive of his property, real or personal. To ask where he has his residence is often a convenient form of inquiry but only as leading to the question `then where is he resident himself?' I think this distinction, though often pointed out, has too often been overlooked in the arguments in the reported cases.''
In the same case Lord Buckmaster pointed out that the fact that a person had a free choice in going to live at a particular place or was compelled to go there by the exigencies of his business or employment is not of consequence in determining whether he was resident there (248).
It is clear from the above expressions of opinion that before a person can be said to have been resident at a particular place it must be possible to say that he had a settled or usual abode there or lived there for a considerable time. A person may have a settled or usual abode in a particular place even if he only lives there for occasional or intermittent short periods of time. Thus, in Lysaght's case, the taxpayer's visits to England from his home in Ireland were each short, but they were regular, and provided evidence upon which the decision of the Commissioners that he was resident also in England was held properly to have been based. Lord Warrington's reference to a member of the House of Lords being ordinarily resident in London during the parliamentary session and in the country during the recess quoted above has a similar basis. In this connection it is to be noted that one of the meanings given to the word ``resident'' by the Shorter Oxford Dictionary is ``the fact of living or staying regularly at or in some place for the discharge of special duties, or to comply with some regulation''.
I now turn to the question whether the decision of the Board of Review is open to appeal. The appeal is brought under sec. 196 of the Act. Subsection (1) provides: ``The Commissioner or the taxpayer may appeal to the Supreme Court of a State from any decision of the Board which involves a question of law.'' The Commissioner submits that the decision of the Board involved a question of law, namely, whether there was evidence to support a finding that the taxpayer was resident in the Territory or, alternatively, whether only one conclusion was possible on the evidence and that was that the taxpayer was not resident in the Territory. If this submission is correct the consequence is that the whole decision of the Board, and not merely the question of law, is open to review: see
Ruhamah Property Company Limited v. F.C. of T. (1928) 41 C.L.R. 148 at p. 151. It is submitted for the respondent that the decision of the Board does not in truth involve a question of law but that such a question is only colourably involved.
The basis of this submission is that the residence of a person is a question of fact.
F.C. of T. v. Miller (1946) 73 C.L.R. 93 was an appeal against a decision of a Board of Review that the taxpayer was a person ``resident'' within the Territories of Papua and New Guinea within the meaning of sec. 7 of the Act as it then stood. In his reasons for judgment Dixon J., as he then was, said -
``The two cases of Levene (1928) A.C. 217 and of Lysaght (1928) A.C. 234 are as striking as they are decisive in illustrating the way in which the question of `resident' or `not resident' has become a `question of degree and therefore of fact' (1928) A.C., at p. 249. Lord Buckmaster said (1928) A.C., at p. 247: - `It may be true that the word `reside' or `residence' in other Acts may have special meanings, but in the Income Tax Acts it is, I think, used in its common sense and it is essentially a question of fact whether a man does or does not comply with its meaning. It is, of course, true that if the circumstances found by the Commissioners in the special case are incapable of constituting residence their conclusion cannot be protected by saying that it is a conclusion of fact since there are no materials upon which that conclusion could depend.'
Lord Warrington said (1928) A.C., at pp. 249, 250: `I have reluctantly come to the conclusion that it is now settled by authority that the question of residence or ordinary residence is one of degree, that there is no technical or special meaning attached to either expression for the purposes of the Income Tax Act, and accordingly a decision of the Commissioners on the question is a finding of fact and cannot be reviewed unless it is made out to be based on some error in law,
ATC 4087including the absence of evidence on which such a decision could properly be founded.'''
The other members of the Court, Latham C.J. and Rich J., also expressed the view that the question of residence was one of fact. It is clear that in the present case the question of residence is likewise essentially a question of fact.
But can a decision on such a question of fact involve a point of law? Clearly it can. Thus in Miller's case Dixon C.J. said -
``As the Board of Review is an administrative body it may be doubted whether a decision by it can be said to involve a question of law because it is based on insufficient evidence. But, no doubt, if the facts coming before the Board were incapable of the legal complexion placed upon them, that would involve a question of law and the difference is not great.''
In the same case Rich J. said -
``The question is ordinarily one of degree, and therefore of fact. There are, however, cases (in litigation, exceptional) in which, upon the facts deduced from the evidence of the tribunal no other conclusion is possible than that the propositus is within or without the field, as the case may be, ill-defined though it is. In these cases, the question whether propositus is necessarily within or necessarily without the field is regarded as one of law: Cf.
Noble v. Southern Railway Co. (1940) A.C. 583, at pp. 599, 600. It is not necessary to multiply authorities on the point, because they have recently been collected by the Supreme Court of New South Wales in the cases of
Australian Gas Light Co. v. Valuer-General (1940) 40 S.R. (N.S.W.) 126, at pp. 137, 138; 57 W.N. 53, at p. 55 and
Dennis v. Watt (1942) 43 S.R. (N.S.W.) 32; 60 W.N. 7.''
In Krew v. F.C. of T. 71 ATC 4213 a decision of Walsh J. on appeal from a Board of Review, the principal contest between the parties was as to a question of fact. His Honour said -
``What is there being claimed is that upon the evidence only one conclusion was possible and that seems to have been claimed also before the Board. That is not the same as a claim that there is no evidence to support an affirmative conclusion to which one party asks a tribunal to come. But it is, I think, a contention that can be regarded as raising a question of law. I have, therefore, come to the conclusion, not without a good deal of doubt, that I can entertain the appeal.''
These expressions of opinion are consistent with the decisions in Levene and Lysaght where it was held that on appeal by way of stated case a decision as to residence could be upset if there were no evidence to support it.
In a sense, of course, any decision on a question of fact involves the question of law whether there is evidence to support that conclusion. However, this question of law may not have been a real question in the proceedings before the Board. In such a case the question may be said to be only colourably involved and sec. 196 does not ground an appeal. Thus, in Miller's case Rich J. said -
``There is nothing in the present case to suggest that any question was raised before the Board as to whether it necessarily followed from such of the evidence as the Board accepted that Miller was or was not resident in the relevant locus. True, it was argued before us that there was no evidence upon which it could be found that he was so resident; and this is in form a question of law. But it is, in my opinion, necessary, in order to bring a case within sec. 196, that a question of law should be really, and not merely colourably, involved: Cf.
Hopper v. Egg & Egg Pulp Marketing Board (Vict.) (1939) 61 C.L.R. 665, at pp. 673, 677.''
Fisher v. D.F.C. of T. (1966) 40 A.L.J.R. 328 the taxpayer appealed against the decision of a Board of Review that certain land purchased by him and sold by him at a profit was acquired for the purpose of profit-making by sale. The competence of the appeal was supported upon the ground that there was no evidence to support the Board's decision, but Owen J. was of the view that the question before the Board was a plain question of fact and the case had been fought before the Board on that issue, it was never suggested that the Board's finding was not open to it on the evidence, and accordingly he was not satisfied that the Board's decision involved any question of law.
It is submitted for the respondent that the reasons for decision given by the members of the Board do not indicate that any point was taken before the Board that there was no evidence upon which they could find that the taxpayer was resident as claimed or that on the facts there was no other conclusion open to
ATC 4088them but that he was not resident. It is further said that the reasons indicate a correct appreciation of the factors relevant to a decision on the question of residence. Therefore, there was no question of law really involved in the decision. The decision of the Board was by a majority comprising Mr. Burke, the Chairman, and Mr. Fairleigh. Mr. O'Neill dissented. Mr. Burke said -
``The taxpayer's stay in the Territory was not of long duration and because of its nature it was temporary but `duration' is only one of the factors to be taken into account in determining `residence' and paraphrasing Viscount Sumner in
I.R. Commrs. v. Lysaght (1928) A.C. 234 at p. 245 there is no such fundamental antithesis between `residence' and `temporary visit' as would prevent the taxpayer's visit from constituting him a resident for the purposes of sec. 7(1) of the Act.''
Mr. Fairleigh noted that ``A person may have an ordinary residence and also an occasional or temporary residence'' and cited Lysaght's case and Gregory's case for this. He went on to refer to the dictionary meaning - ``To dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place''. He then said -
``In Levene v. I.R. Commrs. (1928) A.C. 217 at p.222 Cave L.C. said: `In most cases there is no difficulty in determining where a man has his settled or usual abode, and if that is ascertained he is not the less resident there because from time to time he leaves it for the purpose of business or pleasure'. That is the converse of the present case and it is not determinative of the issue which arises here.''
Mr. O'Neill, on the other hand, concluded that the stay of the taxpayer in the Territory had ``neither such duration of time nor fixity of decision as to weave about the person of the taxpayer that quality or attribute which impliedly attaches to a person of whom one says he is a `resident of' a place or country''.
It is, I think, clear from the reasons of the majority that they were of the opinion that the decisions to which they referred supported the view that it was open to them, notwithstanding that the taxpayer's stay in the Territory was short and temporary, to find that he was a resident because of the official and continuous nature of the duties which he had to perform. In my view this opinion reflects a misunderstanding of the ordinary meaning of the word ``resident'' and of the relevant authorities. I consider that the reasons given by the majority and by the dissenting member establish that there was involved in each of their decisions a real question of law, namely, whether in view of the short and temporary nature of the taxpayer's stay in the Territory it was open to the Board to decide that he had been a resident of the Territory.
As I have said, there being a question of law involved in the decision, the whole decision is open to review in this appeal. In my view the short and temporary nature of the taxpayer's stay in the Territory was such that he could not be said to be resident there during his stay within the meaning of sec. 7 of the Act. Indeed, I would go further and say that there was no evidence upon which it could be concluded that he was so resident or, alternatively, that on the material before the Board no other conclusion was open but that he was not resident.
For the foregoing reasons, the appeal is allowed.