AUSNET TRANSMISSION GROUP PTY LTD v FC of T

Judges:
French CJ
Kiefel J
Bell J
Gageler J
Nettle J

Court:
Full High Court

MEDIA NEUTRAL CITATION: [2015] HCA 25

Judgment date: 5 August 2015

French CJ, Kiefel and Bell JJ

Introduction

1. In 1993, the State of Victoria embarked upon the privatisation of its publicly owned electricity supply industry. On 12 October 1997, a State-owned electricity transmission company, Power Net Victoria ( " PNV " ), which was incorporated under the Electricity Industry Act 1993 (Vic) ( " the Electricity Act " ), sold its assets to the appellant, then known as Australian Transmission Corporation Pty Ltd ( " ATC " ), under an " Asset Sale Agreement " . The assets included a transmission licence held by PNV under the Act ( " the Transmission Licence " ). ATC changed its name to GPU PowerNet Pty Ltd on 30 October 1997 and again changed its name to SPI PowerNet Pty Ltd ( " SPI " ) on 2 July 2000 following the acquisition of its issued capital by SPI Australia Holdings Pty Limited. SPI changed its name to AusNet Transmission Group Pty Ltd ( " AusNet " ) on 4 August 2014. The name AusNet, as used throughout these reasons, may be taken to include the company under its earlier names.

2. The central question in this appeal is whether the payments by AusNet of certain statutory charges imposed on PNV as holder of the Transmission Licence transferred to AusNet, and thereafter payable by AusNet, were deductible expenditures under s 8-1 of the Income Tax Assessment Act 1997 (Cth) ( " the ITAA " ) and in particular whether they were payments of capital or of a capital nature within the meaning of s 8-1(2)(a). Section 8-1 relevantly provides:

" (1) You can deduct from your assessable income any loss or outgoing to the extent that:

  • (a) it is incurred in gaining or producing your assessable income; or
  • (b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.

(2) However, you cannot deduct a loss or outgoing under this section to the extent that:

  • (a) it is a loss or outgoing of capital, or of a capital nature " .

As appears from subs (2) and as Dixon CJ observed of the analogous s 51(1) of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth) [1] John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation (1959) 101 CLR 30 at 34 ; [ 1959 ] HCA 4 . :

" a loss or outgoing incurred in gaining or producing the assessable income or in carrying on a business for that purpose may nevertheless be a loss or outgoing of capital " .

3. The charges were imposed by an Order in Council made pursuant to s 163AA of the Electricity Act. They amounted to $ 177,500,000 and were payable by force of the Electricity Act [2] Electricity Act, s 163AA(2). . They were also the subject of a contractual promise by AusNet under the Asset Sale Agreement to pay them to the State, in addition to a " Total Purchase Price " of $ 2,502,600,000 to be paid to PNV for its assets.

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For the reasons that follow, the primary judge and the majority in the Full Court of the Federal Court were correct to hold that the payments of the charges by AusNet were of a capital nature and therefore, pursuant to s 8-1(2)(a) of the ITAA, were not deductible. They were paid by AusNet as part of the price of acquiring the assets of PNV, including the Transmission Licence, which was an essential element of the transmission business. The licence was essential because s 159 of the Electricity Act provided that a person must not engage in the transmission of electricity unless the person was the holder of a licence authorising that activity or was exempted from the requirement to obtain a licence in respect of that activity [3] Electricity Act, s 159(1). .

4. These reasons consider the following sequence of topics:

The procedural history

5. AusNet did not claim income tax deductions for the s 163AA charges in its incarnation as ATC. After ATC became SPI, SPI self-amended its tax returns for the 1999 and 2000 income tax years, and claimed deductions for the payment of the charges in those years, and also claimed the deduction in its tax return for the 2001 tax year. Each of the 1999, 2000 and 2001 tax years was a " Loss Year " [5] A “ loss year ” for a company is an income year where it has a “ tax loss ” : ITAA, ss 165-70(5), 175-35(5). There will be a “ tax loss ” if certain deductions exceed certain incomes for the company for the income year: ITAA, ss 165-70(1) – (5), 175-35(1) – (5). . However, SPI claimed deductions in subsequent years with respect to losses referable to the Loss Years. Following the formation of the SP Australia Networks (Transmission) Ltd ( " SPANT " ) tax consolidated group, SPI recalculated its taxable income for the substituted accounting period ended 31 March 2006. In doing so, it utilised a tax loss referable to the Loss Years [6] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶ 20-416 at 15,492 [ 37 ] . .

6. The Commissioner of Taxation began an audit of the SPANT tax consolidated group on or about 15 December 2008 and issued amended assessments disallowing the deductions claimed or carried forward losses used by SPI for the 2001 to 2006 income tax years. SPI objected to the assessments but its objections were disallowed by a notice from the Commissioner dated 15 August 2012 [7] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶ 20-416 at 15,492 – 15,493 [ 38 ] – [ 39 ] . . AusNet, as SPI, subsequently filed notices of " appeal " in the original jurisdiction of the Federal Court against the Commissioner ' s objection decisions pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth) ( " the Taxation Administration Act " ).

7. On 19 September 2013, the primary judge (Gordon J) dismissed each of the applications instituted pursuant to the notices of appeal under the Taxation Administration Act and directed that AusNet pay the Commissioner ' s costs, to be taxed unless agreed. AusNet then appealed to the Full Court of the Federal Court. On 7 April 2014 the Full Court (Edmonds and McKerracher JJ, Davies J dissenting) ordered that the appeal be dismissed with costs. On 12 December 2014, this Court (Crennan, Kiefel and Bell JJ) granted special leave to AusNet to appeal from the judgment of the Full Court of the Federal Court [8] [ 2014 ] HCATrans 288 . . In the same order, the Court directed that the appellant ' s name on this Court ' s record be changed to AusNet Transmission Group Pty Ltd.

The decision of the primary judge

8. The primary judge held that the payments of the s 163AA charges were payments made by AusNet out of its profits after the calculation of its taxable income [9] 2013 ATC ¶ 20-416 at 15,500 [ 79 ] – [ 80 ] . . They were not an outgoing incurred in gaining or producing its assessable income or necessarily incurred in carrying on a business for the purpose of

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gaining or producing such assessable income. They therefore did not satisfy either limb of s 8-1(1).

9. Her Honour went on to consider whether the payments constituted a loss or outgoing of capital or of a capital nature within the meaning of s 8-1(2). Her Honour observed that the obligation to make the payments was specifically included in the Asset Sale Agreement as an element of the acquisition of the transmission business, although it was not part of the purchase price [10] 2013 ATC ¶ 20-416 at 15,502 [ 88 ] . . The fact that the payments were of charges imposed on the holder of the Transmission Licence did not confer upon them a revenue character. They were not related to the process of derivation of income after privatisation, and they were not a " working expense " [11] 2013 ATC ¶ 20-416 at 15,502 [ 92 ] . . They were an outgoing of capital or of a capital nature [12] 2013 ATC ¶ 20-416 at 15,503 [ 93 ] . .

The decision of the Full Court

10. Edmonds J disagreed with the primary judge ' s conclusion that the payments did not fall within s 8-1(1) of the ITAA. In particular, he did not accept that there was a basis for her Honour ' s finding that the payment of the imposts came out of profits after the calculation of taxable income [13] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation (2014) 220 FCR 355 at 357 – 358 [ 6 ] – [ 7 ] . . On the other hand, his Honour agreed that the outgoings were of capital or capital in nature [14] (2014) 220 FCR 355 at 359 [ 11 ] . . They were part of the cost to AusNet of acquiring the Transmission Licence, which was unarguably a capital asset [15] (2014) 220 FCR 355 at 359 [ 12 ] . .

11. McKerracher J, like Edmonds J, accepted AusNet ' s submission that the imposts would have qualified for general deduction as an outgoing necessarily incurred for the purpose of gaining assessable income [16] (2014) 220 FCR 355 at 363 [ 29 ] . . However, like Edmonds J and the primary judge, he took the view that they were capital payments incurred in order to acquire an asset.

12. Davies J dissented, taking the view that the payments were deductible under s 8-1(1) of the ITAA and that they were not of a capital nature [17] (2014) 220 FCR 355 at 372 [ 80 ] – [ 81 ] . .

The issues on the appeal

13. AusNet ' s Notice of Appeal to this Court was directed to the characterisation of the payments of the charges imposed pursuant to s 163AA as payments of capital or of a capital nature. By Notice of Contention, the Commissioner asserted that the decision of the Full Court should be affirmed on the basis that the payments did not satisfy the positive requirements of s 8-1(1) of the ITAA. The answer to the first question is determinative and the Notice of Contention is not reached.

Capital or revenue account - general principles

14. The evaluative judgment required to distinguish between expenditure on capital or revenue account is made under the guidance of approaches developed in decisions of this Court over many years. Those approaches have necessarily been expressed with a degree of generality sometimes criticised for unpredictability in the outcomes they yield [18] In Inland Revenue Commissioners v British Salmson Aero Engines Ltd [ 1938 ] 2 KB 482 at 498 Sir Wilfrid Greene MR equated the process to “ the spin of a coin ” . The late Professor Julius Stone relegated the distinction to a legal category of meaningless reference: Stone, Legal System and Lawyers ’ Reasonings , (1964) at 340. . However, as Dixon J observed in Hallstroms Pty Ltd v Federal Commissioner of Taxation [19] (1946) 72 CLR 634 at 646; [ 1946 ] HCA 34 . , the courts, having been given by the income tax law " a very general conception of accountancy, perhaps of economics " , have proceeded with the task " in the traditional way of stating what positive factor or factors in each given case led to a decision assigning the expenditure to capital or to income as the case might be " .

15. The distinction between capital and revenue expenditure is readily discerned in cases close to the core of each of those concepts. A once and for all payment for the acquisition of business premises would be treated as an outlay of capital. A rental payment under a lease of the same premises would be treated as an outgoing on revenue account. The distinction is not so readily apparent in penumbral cases. They may require a weighing of factors including the form, purpose and effect of the expenditure, the benefit derived from it and its relationship to the structure, as distinct from the conduct, of a business. Some of those factors may point in one direction and some in another [20] BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 397; [ 1966 ] AC 224 at 264. . Definitive and specific criteria are not, and never have been, in abundance in Australia, nor in the decisions of the courts of the United Kingdom in the late 19th century and the first half of the 20th century which have been referred to from time to time in this Court ' s decisions. Lord Dunedin suggested in 1910 that a distinction between a once and for all payment and a recurrent payment may be " in a rough way … not a bad criterion of what is capital expenditure … as against what is income expenditure " [21] Vallambrosa Rubber Co Ltd v Inland Revenue 1910 SC 519 at 525. .

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Viscount Cave LC in British Insulated and Helsby Cables v Atherton [22] [ 1926 ] AC 205 . cautioned that this criterion is not decisive in every case [23] [ 1926 ] AC 205 at 213. . In that case, the " once and for all " character of an expenditure was treated as an indicator that it was in the nature of a capital outlay, a fortiori, when made " with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade " [24] [ 1926 ] AC 205 at 213 – 214 per Viscount Cave LC. . Even then there might be " special circumstances " leading to an opposite conclusion [25] [ 1926 ] AC 205 at 213 – 214 per Viscount Cave LC. . British Insulated and Helsby Cables was long treated in this Court as " the leading case on the subject " [26] Broken Hill Theatres Pty Ltd v Federal Commissioner of Taxation (1952) 85 CLR 423 at 434 per Dixon CJ, McTiernan, Fullagar and Kitto JJ; [ 1952 ] HCA 75 . .

16. The fact that a payment is recurrent is not determinative of its character. The payment by instalments of a charge, imposed as a condition upon the grant of a liquor licence reflecting its monopoly value, was held by the Court of Appeal in Henriksen v Grafton Hotel Ltd [27] [ 1942 ] 2 KB 184 . to be a capital outlay. Du Parcq LJ, citing Viscount Cave LC, said [28] [ 1942 ] 2 KB 184 at 195, citing British Insulated and Helsby Cables v Atherton [ 1926 ] AC 205 at 213 – 214. :

" Here each sum in question was part of a total amount paid to acquire the right to trade for a period of years. At the date when that period began the possession of that right was essential before trading could be begun. In these circumstances, I am of opinion that each sum paid must be considered part of a capital outlay. "

Referring to that decision, the Privy Council in BP Australia Ltd v Federal Commissioner of Taxation [29] (1965) 112 CLR 386 at 405; [ 1966 ] AC 224 at 273. observed that:

" Without the license the business could not be carried on. There was also an element of monopoly. "

The term " an element of monopoly " might today be understood in terms of enhanced market power where the requirement for a licence, not freely given to all comers, constitutes a barrier to entry for potential competitors into the relevant market.

17. The need for Viscount Cave LC ' s caution about Lord Dunedin ' s " rough " criterion was illustrated in Royal Insurance Co v Watson [30] [ 1897 ] AC 1 . . The purchaser of an insurance business agreed, as part of the purchase arrangements, to pay a fixed salary to a continuing employee with an election to commute the salary to a gross sum and terminate the employment. The salary, whether or not commuted, was found to be part of the consideration for the purchase of the business and thereby an outgoing of a capital nature. Lord Halsbury LC put it thus [31] [ 1897 ] AC 1 at 7. :

" The result is that one of the companies sells to the other, and part of the consideration which was contemplated by both parties, and in respect of which the bargain was made, and without which it would not have been made, was the manager, and all that was incident to the manager, in respect of the payments to be made to him, whether made at once or made in this form of commutation. "

The key factor in characterisation in that case, which is of considerable significance in the present appeal, was that the contested payment was part of the consideration for the acquisition of the business [32] [ 1897 ] AC 1 at 7 per Lord Halsbury LC, 8 per Lord Herschell, 9 per Lord Macnaghten, 10 per Lord Shand, 10 – 11 per Lord Davey. . In the ordinary course, a lump sum paid to an employee to procure his or her resignation would be on revenue account " made for the purpose of organizing the staff and as part of the necessary expenses of conducting the business " [33] W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 at 306 per Dixon J, see also at 302 per Latham CJ, 304 per Rich J, 308 per McTiernan J; [ 1937 ] HCA 9 . .

18. The significance attached to the purchase price of a business by the Privy Council in Tata Hydro-Electric Agencies, Bombay v Income-tax Commissioner, Bombay Presidency and Aden [34] [ 1937 ] AC 685 . was debated in the submissions on this appeal. The contested outlay in that case was a payment by the assignees of an agency business of a percentage of certain commissions, in discharge of an obligation owed by the assignor to certain third parties. The statutory test of deductibility under s 10(2)(ix) of the Indian Income-tax Act 1922 required that the " expenditure (not being in the nature of capital expenditure) [ was made ] solely for the purpose of earning such profits or gains " . In holding that the payments were not deductible, the Privy Council, in a passage quoted by the primary judge, said [35] [ 1937 ] AC 685 at 695, quoted at 2013 ATC ¶ 20-416 at 15,502 [ 90 ] . :

" the obligation to make these payments was undertaken by the appellants in consideration of their acquisition of the right and opportunity to earn profits, that is, of the right to conduct the business, and not for the purpose of producing profits in the conduct of the business " .

AusNet pointed out that the question considered by the Privy Council was the positive question posed by s 10(2), not the negative question relating to capital

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expenditure. The negative question was not reached because the positive question was answered adversely to the taxpayer. Nevertheless, the passage quoted was consistent with the approach adopted in this Court to the characterisation of expenditure as being " of a capital nature " . So much appears from the discussion below of the judgment of Fullagar J in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [36] (1953) 89 CLR 428 ; [ 1953 ] HCA 68 : see (2014) 220 FCR 355 at 359 [ 12 ] , 362 [ 25 ] per Edmonds J, 368 – 369 [ 56 ] – [ 59 ] per McKerracher J. , which referred to Tata Hydro-Electric [37] (1953) 89 CLR 428 at 455. . The fact that a payment can be viewed as part of the consideration for the acquisition of a business or capital asset weighs heavily in favour of its character as a capital outlay. However, as also appears from Cliffs International Inc v Federal Commissioner of Taxation [38] (1979) 142 CLR 140 ; [ 1979 ] HCA 8 . , the question must always be asked - was the payment made " for " the acquisition?

19. The proposition is well established that expenditure of a kind ordinarily treated as being on revenue account in one set of circumstances may be treated as on capital account in another set of circumstances. An example is found in the decision of the Scottish Court of Session in Law Shipping Co v Inland Revenue [39] 1924 SC 74 . . The expenditure of substantial sums on repairs to a ship which had been necessary at the time of its purchase was treated as capital [40] 1924 SC 74 at 79 – 80 per Lord Clyde, 80 – 81 per Lord Skerrington, 81 per Lord Cullen, 81 – 82 per Lord Sands. . The need for repairs meant that the ship when purchased was a less valuable asset than if it had been in repair [41] 1924 SC 74 at 79 per Lord Clyde. . Absent the need for repairs, the sellers could have demanded a higher price [42] 1924 SC 74 at 79 per Lord Clyde. . Analogical reasoning suggests that the Transmission Licence, bringing with it as it did the burden of the charges imposed under s 163AA, was on that account a less valuable asset than it would have been if PNV had paid the charges before transfer.

20. Both parties in this appeal relied upon well-known passages about the characterisation of capital and revenue outlays in the judgment of Dixon J in Sun Newspapers Ltd v Federal Commissioner of Taxation [43] (1938) 61 CLR 337 ; [ 1938 ] HCA 73 , described in BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 394; [ 1966 ] AC 224 at 261 as a “ valuable guide to the traveller in these regions ” . . The contested expenditure by Sun Newspapers secured, from its potential competitor, a non-compete covenant which was limited in duration and spatial coverage. Although, as Rich J held at first instance, it was a wasting asset, that did not deprive it of its capital character [44] See Parsons, Income Taxation in Australia , (1985) at 431 – 432 [ 7.10 ] for a discussion of wasting assets as structural capital assets, the costs of which are on capital account and non-deductible. . Its purpose was " to buy out opposition and secure so far as possible a monopoly " [45] (1938) 61 CLR 337 at 347. . As Latham CJ said, the payment obtained " a very real benefit or advantage … namely, the exclusion of what might have been serious competition " [46] (1938) 61 CLR 337 at 355. .

21. Dixon J said that the distinction between capital and revenue account expenditure corresponded with the distinction between the business entity, structure or organisation set up or established for the earning of profit and the process by which such an organisation operates to obtain regular returns by means of regular outlay [47] ( 1938) 61 CLR 337 at 359. . Acknowledging the infinite variety of business structures, his Honour said that some might comprise little more than the intangible elements constituting goodwill [48] (1938) 61 CLR 337 at 359 – 360. . Implicit in that observation was the uncontroversial proposition that an intangible asset might, according to its nature and function in the conduct of the business, be properly characterised as forming part of the structure of the business and the cost of its acquisition as a capital cost. As Starke J said in Hallstroms Pty Ltd v Federal Commissioner of Taxation [49] (1946) 72 CLR 634 at 644. See also British Insulated and Helsby Cables v Atherton [ 1926 ] AC 205 at 222 per Lord Atkinson; Van den Berghs Ltd v Clark [ 1935 ] AC 431 at 439 – 440 per Lord Macmillan. after quoting Dixon J in Sun Newspapers :

" The asset or advantage need not have a tangible existence: thus the acquisition of the goodwill of a business or of restrictive covenants not to compete in business and the promotion of Parliamentary bills and so forth may all involve expenditure of capital or of a capital nature. " (citation omitted)

As in the case of Henriksen v Grafton Hotel Ltd , mentioned earlier, a licence, essential to the conduct of the business, may fall within that description.

22. Dixon J in Sun Newspapers analysed the question of characterisation by consideration of three factors [50] (1938) 61 CLR 337 at 363. :

" (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment. "

He later observed in Hallstroms Pty Ltd v Federal Commissioner of Taxation that the distinction also depends upon " what the

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expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process " [51] (1946) 72 CLR 634 at 648. . The advantage may not comprise any " rights " at all. In holding in John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation [52] (1959) 101 CLR 30 . that the corporate taxpayer ' s legal costs in a contest over control of another company were of a capital nature, Dixon CJ said [53] (1959) 101 CLR 30 at 36, Kitto J agreeing at 43. :

" It is not in my opinion right to say that because you obtain nothing positive, nothing of an enduring nature, for an expenditure it cannot be an outgoing on account of capital. "

The competition in that case, as Fullagar J put it, was " for a capital gain or advantage " [54] (1959) 101 CLR 30 at 42. . It should be added, however, that the emphasis placed by Dixon J on the " practical and business point of view " does not mean that it is unnecessary to examine the legal rights (if any) obtained by the expenditure [55] Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645 at 662 per Stephen and Aickin JJ; [ 1978 ] HCA 32 . .

23. The real question, as Gibbs ACJ identified it in Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd [56] (1978) 140 CLR 645 . , may be " not to determine the character of the advantage sought, once it has been identified, but to decide what was the advantage sought by the taxpayer by making the payments " [57] (1978) 140 CLR 645 at 655. . If one advantage for the acquisition of a capital asset was " the fact that the payments were called ' rent ' , and were made periodically, [ that ] would not necessarily prevent them from being in part outgoings of a capital nature " [58] (1978) 140 CLR 645 at 655. . It might be thought that that observation has considerable relevance to the present case. The assumption by AusNet of liability to pay the s 163AA charges by operation of law upon the transfer of the licence to it and by the contractual promise to pay the charges was, as appears later in these reasons, an integral part of the consideration it had to provide in order to acquire the assets of the transmission business, which necessarily included the Transmission Licence. The observation of Gibbs ACJ was reflected in GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [59] (1990) 170 CLR 124 ; [ 1990 ] HCA 25 . , in which the Court said " the chief, if not the critical, factor " is the character of the advantage sought by the expenditure [60] (1990) 170 CLR 124 at 137. . That factor had been the focus of consideration in Colonial Mutual Life , which was relied upon by the Commissioner in this case.

24. In Colonial Mutual Life , payments by the purchaser of an income producing property of a percentage of the rents derived from it, made as part of the consideration for the acquisition of the property, were held to be on capital account. The parties to this appeal focussed upon the observation of Fullagar J, with whom Kitto and Taylor JJ agreed [61] (1953) 89 CLR 428 at 460. , that the payments were made in order to acquire a capital asset and that they constituted the price payable on the purchase of the land. How they were calculated, how and when they were payable and whether they might cease to be payable for a time, did not matter. Fullagar J said [62] (1953) 89 CLR 428 at 454. :

" If they are paid as parts of the purchase price of an asset forming part of the fixed capital of the company, they are outgoings of capital or of a capital nature. "

His Honour formulated the questions commonly arising in such cases as [63] (1953) 89 CLR 428 at 454. :

" (1) What is the money really paid for? - and (2) Is what it is really paid for, in truth and in substance, a capital asset? " (emphasis in original)

25. Williams ACJ treated the case as indistinguishable from Tata Hydro-Electric and applied what Dixon J had said in Sun Newspapers . His Honour adopted as the relevant question [64] (1953) 89 CLR 428 at 448, derived from the test applied by Lord Clyde in Robert Addie & Sons ’ Collieries v Inland Revenue 1924 SC 231 at 235. :

" Are the sums in question … capital outlays, are they expenditure necessary for the acquisition of property or of rights of a permanent character the possession of which is a condition of carrying on the trade at all? "

Webb J also treated the outgoings as " expenditure for the acquisition of a capital asset … and not expenditure in the working of that or any other asset with a view to making it income-producing, although this asset is to be used for rent-production " [65] (1953) 89 CLR 428 at 448 – 449. . The thrust of the reasoning in each of the three separate judgments of Williams ACJ, Webb and Fullagar JJ was to the same effect.

26.

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AusNet questioned reliance upon the proposition, taken in isolation from the judgment of Fullagar J, that payments, however calculated or payable and whenever payable, if made as part of the purchase price for an asset forming part of the fixed capital of the taxpayer were outgoings of capital or of a capital nature. As AusNet pointed out, the proposition directs attention to the question then formulated by Fullagar J - " what is the money really paid for? "

27. AusNet accepted that in the usual case an outgoing which forms part of the consideration for the acquisition of a capital asset will be " for " the advantage of securing that asset on an enduring basis. The usual case, however, is not every case. AusNet pointed to the treatment by this Court, in Commissioner of Taxation v Morgan [66] (1961) 106 CLR 517 ; [ 1961 ] HCA 64 . , of the apportionment of municipal and water rates reimbursed by a purchaser of land to the vendors, who had paid the annual levy covering a period beyond the date of transfer of the land to the purchaser. The apportionment was treated as paid on revenue account. It is important, however, to note the factors upon which the Court focussed in that case, including the separateness of the payment from the purchase price and, importantly, its variability dependent upon the time of settlement. That variability reflected its treatment between vendor and purchaser as part of the " flow " of outgoings characteristic of expenditure on revenue account [67] (1961) 106 CLR 517 at 521 per Dixon CJ, Kitto and Windeyer JJ. . The time-dependent and variable character of the outgoing and its place in the contract of sale put it in a different category from the fixed liability assumed by AusNet upon transfer to it of the Transmission Licence, both by force of the statute and, as will be seen, pursuant to its contractual promise to pay the charges.

28. AusNet also relied upon Cliffs International , in which Colonial Mutual Life was distinguished [68] (1979) 142 CLR 140 at 151 per Barwick CJ, 175 per Jacobs J. . The contested expenditures in that case were royalty payments on iron ore mined by the taxpayer which were paid to the vendors of shares acquired by the taxpayer in a mining company which held certain tenements. The payments were held to be on revenue account and thereby deductible. Barwick CJ said that the fact that the promise to make the payments was part of the consideration for the acquisition of the capital asset did not necessarily mean that they were of a capital nature [69] (1979) 142 CLR 140 at 148, citing Egerton-Warburton v Deputy Federal Commissioner of Taxation (1934) 51 CLR 568 at 572 – 573; [ 1934 ] HCA 40 . . The promise to make the payments was part of the consideration given for the purchase of the shares [70] (1979) 142 CLR 140 at 149. :

" [ b ] ut they were acquired without making the payments in question. The recurrent payments were not made for the shares though it might properly be said that they were payable as a consequence of the purchase of the shares. "

The Chief Justice did not find the facts in Colonial Mutual Life analogous although he did not say why and expressly left open the correctness of that decision [71] (1979) 142 CLR 140 at 151. . As appears from the passage quoted, he effectively found that the payments were not made " for " the shares. Jacobs J, also in the majority, acknowledged that in Colonial Mutual Life the recurrent payments could hardly be regarded otherwise than as part of the cost of the acquisition of the freehold [72] (1979) 142 CLR 140 at 175. . Accepting that each case turned on its own facts and circumstances, he said of the case before him [73] (1979) 142 CLR 140 at 175. :

" The preponderating factors are that the payments were in respect of a depreciating asset, that they were recurrent over the life of the asset if the asset was used throughout its life and that the amount of the payments were proportioned to the use made of the asset. These factors in my opinion clearly outweigh the other factors which might support a contrary view. "

Murphy J, who formed the third member of the majority, found that there was a strong analogy with an agreement to pay rent as part of the consideration for acquisition of a lease [74] (1979) 142 CLR 140 at 176. . Gibbs and Stephen JJ dissented, holding that the case was covered by the principle on which Colonial Mutual Life was decided [75] (1979) 142 CLR 140 at 156 per Gibbs J, 161 per Stephen J. . The majority judgments do not disclose a common proposition applicable to this case.

29. More recently, in Federal Commissioner of Taxation v Citylink Melbourne Ltd [76] (2006) 228 CLR 1 ; [ 2006 ] HCA 35 . , payment of a fixed annual " base concession fee " as part of the consideration given by the taxpayer to the State of Victoria for the concession to construct and operate a toll road system was held to be deductible. In rejecting the proposition that the payment was on capital account, Crennan J, with whom Gleeson CJ, Gummow, Callinan and Heydon JJ agreed [77] (2006) 228 CLR 1 at 8 [ 1 ] per Gleeson CJ, 8 [ 2 ] per Gummow J, 27 [ 76 ] per Callinan J, 27 [ 77 ] per Heydon J. ,

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observed that the taxpayer did not acquire permanent ownership of the roads or associated land. Her Honour said [78] (2006) 228 CLR 1 at 44 [ 154 ] . :

" Unlike periodic instalments paid on the purchase price of a capital asset, the concession fees are periodic licence fees in respect of the Link infrastructure assets, from which the [ taxpayer ] derives its income, but which are ultimately ' surrendered back ' to the State. Accordingly, they are on revenue account. "

As appears below, the charges imposed under s 163AA, being of an ad hoc character imposed for a time-limited purpose, could not be described as " periodic licence fees " . Periodic fees were payable in respect of the Transmission Licence but pursuant to a separate provision of the Electricity Act.

30. Against that background it is now convenient to turn to the legislative framework.

The Office of the Regulator-General

31. It is necessary, in order to understand the relevant regulatory provisions of the Electricity Act and the provisions of the Transmission Licence, to say something about the Office of the Regulator-General. That Office was established under the Office of the Regulator-General Act 1994 (Vic) ( " the Regulator-General Act " ). The Office is empowered to act as regulator of any industry specified as a " regulated industry " by the legislation under which the industry operates or by an Order in Council [79] Regulator-General Act, s 8, read with the definition of “ regulated industry ” in s 3(1). . Its involvement in the electricity industry came from Pt 12 of the Electricity Act, introduced into the Act in 1994 [80] Electricity Industry (Amendment) Act 1994 (Vic), s 25. , and conferred regulatory functions on the Office [81] Electricity Act, s 155. . The Office was given the power under Pt 12 to regulate charges for connection to, and the use of, the transmission system [82] See eg Electricity Act, s 158(1)(b)(iii). . It was also responsible for approving the grant [83] Electricity Act, s 162(1). , transfer [84] Electricity Act, s 167(5). and revocation [85] Electricity Act, s 164(3). of licences under the Electricity Act, including transmission licences [86] Electricity Act, s 161(1)(b). .

The Transmission Licence and its conditions

32. A transmission licence granted pursuant to s 162 of the Electricity Act could be granted for such term (if any) [87] Electricity Act, s 163(1). and on such conditions [88] Electricity Act, s 163(2). as were determined by the Office of the Regulator-General. A non-exhaustive list of conditions which could be imposed upon a licence was set out in s 163(3), including the requirement in s 163(3)(a) that:

" the licensee … pay specified fees and charges in respect of the licence to the Office " .

Section 163(4) required that the fees and charges so specified be determined by the Minister having regard to the proportion of the total cost of the Office incurred in the administration of Pt 12. The Office could also determine conditions specifying procedures for the variation or revocation of the licence [89] Electricity Act, s 163(3)(h). . The Office was empowered under s 164(3) to revoke the licence in accordance with the procedures specified in the licence conditions.

33. Clause 2 of the Transmission Licence granted to PNV and transferred to AusNet pursuant to the Asset Sale Agreement on 6 November 1997 provided:

" The Office, in exercise of the powers conferred by section 162 and section 168 of the Act, licenses the Licensee to transmit electricity and to supply electricity using the Licensee ' s electricity transmission system, subject to the conditions set out in this licence. "

The licence took effect on and from 3 October 1994 [90] Transmission Licence, cl 3.1. .

34. It was a condition of the licence that the licensee pay the fees and charges determined by the Minister under s 163(4) of the Electricity Act [91] Transmission Licence, cl 16.1. There was no condition relating to the charges imposed under s 163AA, as that provision had not been enacted at the time that the licence issued. . Clause 18 of the Transmission Licence provided:

" COMPLIANCE WITH LAWS

The Licensee must comply with all applicable laws including but not limited to the Tariff Order. "

It may be taken, although it was not argued, that cl 18 applied to the statutory obligation to pay charges imposed under s 163AA. Non-compliance with cl 18, or any other condition, did not automatically lead to loss of the licence. There was a process for its revocation.

35. Clause 3.2 provided for revocation of the licence by the Office of the Regulator-General in accordance with cll 3.3 and 3.4. Clause 3.4 empowered the Office to give a notice of revocation to the licensee if the licensee did not comply with an " enforcement order " or an undertaking, and the Office decided that it was

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necessary or desirable to revoke the licence in order to achieve certain policy objectives [92] The objectives specified in s 157 of the Electricity Act and s 7 of the Regulator-General Act and, to the extent context requires, in a statement of government policy under s 10 of the Regulator-General Act: Transmission Licence, Schedule, cl 1, definition of “ policy objectives ” . , in which case the term of the licence would end, subject to cl 3.5, on the expiration of the period of the notice. The term " enforcement order " refers to an enforcement order served under s 35 of the Regulator-General Act. Section 35 applied where the Office was, as in this case, responsible under relevant legislation for licensing, and a person was contravening, or in the opinion of the Office was likely to contravene, the conditions of a licence, and the Office considered that the contravention or likely contravention was not of a trivial nature [93] Regulator-General Act, s 35(1). . The Office could serve an order on the person (which might be provisional or final) requiring the person to comply with the licence condition [94] Regulator-General Act, s 35(2). . It was an offence for a person not to comply with such an order [95] Regulator-General Act, s 35(8). . Importantly, failure to pay a charge imposed under s 163AA, while placing the licensee at risk of revocation, did not necessarily lead to revocation of the licence. The State could simply take action in such a case to recover the charge as a debt when it became due and payable.

36. It is convenient now to consider s 163AA of the Electricity Act, under which the Order in Council was made which imposed the charges on PNV, as holder of the Transmission Licence, which were ultimately paid by AusNet.

Section 163AA of the Electricity Industry Act 1993

37. Section 163AA of the Electricity Act was inserted in that Act in 1995 [96] Electricity Industry (Further Amendment) Act 1995 (Vic), s 13. . As at October 1997 it provided:

" Charges payable to Treasurer

(1) The Governor in Council, on the recommendation of the Treasurer, may, by Order published in the Government Gazette, declare that specified charges, or charges calculated in a specified manner, are payable as an impost by the holder of a licence at such times and in such manner as are so specified.

(2) The holder of a licence must pay to the Treasurer for payment into the Consolidated Fund the charges determined under sub-section (1) and applicable to the licence at the times and in the manner so determined.

(3) An Order made under this section does not apply to a distribution company, a transmission company or a generation company that ceased to be a public distribution company, public transmission company or public generation company before the Order was made.

(4) Nothing in this section or in an Order under this section prevents a charge being paid, or the payment of a charge being received, before the due date for payment. "

Section 163AA(3) had been amended, with effect from 3 June 1997, to include references to " a transmission company " and " public transmission company " [97] Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 24(b). .

38. " [ T ] ransmission company " meant [98] Electricity Act, s 3(1), inserted by Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 18(b). :

" (a) Power Net Victoria while it continues to hold a licence to transmit electricity issued under Part 12;

(b) a person who is the holder of a licence to transmit electricity issued under Part 12, being a person declared by Order of the Governor in Council published in the Government Gazette to be a transmission company for the purposes of this Act " .

" [ P ] ublic transmission company " meant a transmission company which was [99] Electricity Act, s 3(1), inserted by Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 18(a). :

" (a) a statutory authority; or

(b) a company all the shares in which are held by, or on behalf of, the State or a statutory authority " .

Other provisions of Pt 12 gave content to the definitions. Section 161(1) provided that a person could apply to the Office of the Regulator-General for the issue of a licence authorising one or more of a number of certain activities where specified in the licence, including " to transmit electricity " [100] Electricity Act, s 161(1)(b). . The term " licence " was defined in s 154 as " a licence specified in section 161(1) " .

39. It follows from the definitions of " transmission company " and " public transmission company " that PNV would cease to be a public transmission company for the purposes of s 163AA(3) if it ceased to be a licence holder or if it ceased to be a State-owned company. It followed that no charge could be imposed on PNV under s 163AA after it had transferred the licence to AusNet.

40.

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As appears below, the Asset Sale Agreement included a provision that AusNet would not challenge the validity of the charges imposed on PNV pursuant to s 163AA which AusNet was to pay post-transfer. The imposition of the charges on PNV, which was in effect an instrumentality of the State of Victoria, may have been calculated to avoid characterisation of the charges as an excise [101] See Queanbeyan City Council v ACTEW Corporation Ltd (2011) 244 CLR 530 at 541 – 542 [ 19 ] – [ 22 ] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [ 2011 ] HCA 40 . . However, the liability to pay the charges, in this case, was extended by the Order in Council to transferees of the licence from PNV. Although it was acknowledged by counsel for AusNet that characterisation of the charges as an excise may have been a continuing concern, no submissions were made on the question whether they were, and it is neither necessary nor desirable to express a view on that matter, which, in any event, would involve a question arising under the Constitution. It is sufficient for present purposes to observe that, as appears from the Asset Sale Agreement, the possibility of a challenge by AusNet to the validity of the charges was contractually precluded. There is no suggestion that the contractual provision was unnecessary or unenforceable. It was an element of the consideration moving from AusNet under the agreement.

41. It is necessary next to refer to s 163A of the Electricity Act, which provided for the imposition, by Order in Council, of franchise fees on distribution companies. The Full Court of the Federal Court in United Energy held that the payment of the franchise fees was on capital account. Its reasoning has significance for this case.

Section 163A of the Electricity Industry Act 1993 - an analogous provision?

42. As part of the process leading from State ownership of the electricity industry to full privatisation, five entities known as " Municipal Electricity Undertakings " were restructured into five regionally based distribution companies each with a retail arm and a regulated geographic distribution area. That process took place in 1994. Each distribution company was, until December 2000, to be the sole retailer of electricity for what were designated as " franchise customers " in a " franchise area " . In effect, the distribution companies, which were privatised on 31 January 1995, had exclusive licences in respect of their areas.

43. Section 163A [102] Introduced by s 29 of the Electricity Industry (Further Amendment) Act 1994 (Vic) and substituted by s 30 of the Electricity Industry (Amendment) Act 1995 (Vic). provided that a distribution company which was the holder of an exclusive licence under Pt 12 of the Act was to [103] Electricity Act, s 163A(1). :

" pay to the Treasurer, in respect of each financial year during which it holds, or held, such a licence the impost determined in respect of that year by Order of the Governor in Council, on the recommendation of the Treasurer, applying to that company and published in the Government Gazette " .

The Treasurer, in recommending the amount of an impost for each financial year, was required to be satisfied that the amount reasonably represented the amount by which the income of the company derived from the sale of electricity to franchise customers in that year was likely to exceed the sum of the costs of deriving the income, taxes payable in deriving that income and a reasonable return on the capital of the company used in deriving that income [104] Electricity Act, s 163A(2)(a) – (c). .

44. The payments of franchise fees by distribution companies under s 163A were held by the Full Court of the Federal Court in United Energy to be not deductible because they were payments of a capital nature [105] (1997) 78 FCR 169 at 181 per Lockhart J, 196 per Sundberg and Merkel JJ. Special leave to appeal from that decision was refused by this Court on 13 February 1998: [ 1998 ] HCATrans 41 . . Lockhart J asked the questions posed by Fullagar J in the Colonial Mutual Life decision - " what is the money really paid for and is what it is really paid for in truth and in substance, a capital asset? " [106] (1997) 78 FCR 169 at 181. Their answers required a practical examination of the facts concerning " what the expenditure is calculated to effect from a practical and business point of view " [107] (1997) 78 FCR 169 at 182, quoting BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 397; [ 1966 ] AC 224 at 264. . His Honour concluded that the payments could be viewed in substance as a purchase price for a business which the distribution company had acquired for nothing and which conferred on it monopoly power in a specific geographic area [108] (1997) 78 FCR 169 at 182. His Honour also held that the fees did not fall within either limb of deductibility in s 51(1) of the Income Tax Assessment Act 1936 (Cth), and in that respect differed from Sundberg and Merkel JJ, but the difference was not material for present purposes. :

" In return for obtaining the exclusive right to conduct its business in Melbourne, the applicant makes payment of franchise fee until the monopoly runs out in the year 2001; it receives the monopoly right to

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distribute and sell electricity in its defined area and in return makes payment of the associated monopoly rent. "

Sundberg and Merkel JJ characterised the franchise fee as benefiting " the business entity, structure, or organisation set up or established for the earning of profit " [109] (1997) 78 FCR 169 at 194, quoting Sun Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR 337 at 359 per Dixon J. . They also invoked the joint judgment in Broken Hill Theatres Pty Ltd v Federal Commissioner of Taxation [110] (1952) 85 CLR 423 at 434 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. , observing that [111] (1997) 78 FCR 169 at 194. :

" ' the advantage of being free from … competition ' in the sale of electricity for the period for which the franchise fee is payable is ' just the very kind of thing which has been held in many cases to give to moneys expended in obtaining [ that advantage ] the character of capital outlay ' " .

The payments of the fees, as a monopoly rent for freedom from competition in respect of a substantial body of retail customers in the taxpayer ' s licence area, were held to be qualitatively different from payments of the annual licence fees payable under the licence to sell electricity in Victoria [112] (1997) 78 FCR 169 at 196, evidently a reference to the licence fees chargeable pursuant to s 163 of the Electricity Act. .

45. AusNet submitted that the charges under s 163AA of the Electricity Act were a tax. It suffices to say that those charges, and those imposed on distribution companies under s 163A, were compulsory exactions of money by a public authority for a public purpose and were not a payment for services rendered. Those attributes may support their characterisation as a tax [113] See Matthews v Chicory Marketing Board (Vict) (1938) 60 CLR 263 at 276 per Latham CJ, 290 per Dixon J; [ 1938 ] HCA 38 ; Parton v Milk Board (Vict) (1949) 80 CLR 229 at 258 per Dixon J; [ 1949 ] HCA 67 . , at least with respect to privately owned licence holders [114] cf Queanbeyan City Council v ACTEW Corporation Ltd (2011) 244 CLR 530 at 542 [ 20 ] – [ 22 ] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. . However, they may not always be determinative [115] Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467; [ 1988 ] HCA 61 ; Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 336 per Dawson, Toohey and McHugh JJ; [ 1989 ] HCA 47 . . The charges under s 163A were characterised by the Full Court of the Federal Court in United Energy as the price paid by the distribution companies for a geographic monopoly right [116] (1997) 78 FCR 169 at 182 per Lockhart J, 196 per Sundberg and Merkel JJ. See also Browns Transport Pty Ltd v Kropp (1958) 100 CLR 117 at 129 – 130; [ 1958 ] HCA 49 , concerning licence fees imposed on road transport operators in Queensland. . That characterisation involved the application of orthodox approaches to a particular set of facts. It did not rest upon the proposition that recurrent periodic licence fees paid as a condition of a right to carry on a business activity must always be treated as an affair of capital.

46. As appears later in these reasons, the rationale for the imposition of the charges under s 163A, which included the limitation of the distribution companies to a reasonable return on their capital, was not dissimilar to the rationale for the charges imposed under s 163AA, which were directed to a restriction on the return of capital earned by PNV and its successors in title. Despite the emphasis which AusNet placed upon the purpose of the charges in its submissions, its identification is not determinative and to some extent distracts from the proper approach to characterisation. The critical question must always be - what was the expenditure calculated to effect from the taxpayer ' s point of view? What was the taxpayer paying the money for? Neither the distribution company in United Energy nor AusNet paid the charges under s 163A and s 163AA respectively in order to limit their return on capital. They paid the charges to secure rights to carry on their respective businesses of the distribution and transmission of electricity.

47. It is now necessary to consider the particulars of the charges imposed on PNV by the Order in Council.

The Order in Council

48. On 30 October 1997, there was published in the Victorian Government Gazette an Order in Council under s 163AA(1) of the Electricity Act in the following terms:

" The Governor in Council acting on the recommendation of the Treasurer under Section 163AA(1) of the Electricity Industry Act 1993 declares that the amounts payable as an impost by Power Net Victoria, as the holder of a licence (the ' Transmission Licence ' ) to transmit electricity issued under Part 12 of the Electricity Industry Act 1993 , to the Treasurer for payment into the Consolidated Fund under Section 163AA(2) of the Electricity Industry Act 1993 , are as follows:

  • (a) $ 37,500,000 in respect of the financial year ending 30 June 1998, payable in arrears in two instalments, being $ 25,000,000 on 31 March 1998 and $ 12,500,000 payable on 30 June 1998;
  • (b) $ 50,000,000 in respect of each of the financial years ending 30 June 1999 and 30 June 2000, payable in arrears in four equal instalments on 30 September, 31 December, 31 March and 30 June in each relevant financial year; and

    ATC 17472

  • (c) $ 40,000,000 in respect of the 6 months ending on 31 December 2000, payable in arrears in two equal instalments on 30 September 2000 and 31 December 2000.

This Order applies to any person or persons (jointly and severally) to whom the Transmission Licence is transferred or any subsequent holder of the Transmission Licence or any person or persons (jointly and severally) who acquire all or substantially all the business of Power Net Victoria and who is or are issued with a licence to transmit electricity under Part 12 of the Electricity Industry Act 1993 . "

There is nothing in s 163AA, nor the Order in Council, to suggest that the charges were imposed as any kind of fee for service. They were not licence fees of the kind imposed pursuant to s 163(3)(a). They did not require for their determination consideration of criteria like those required to be considered in determining fees under s 163(4). Nor did they require, for their determination, that the Treasurer have regard to matters of the kind specified in respect of franchise fees by s 163A(2).

49. In the light of that background, the terms of the Asset Sale Agreement can be examined.

The Asset Sale Agreement

50. The parties to the Asset Sale Agreement were the Treasurer of the State of Victoria, designated as " State " ; PNV, designated as " Seller " ; and AusNet (then known as ATC), designated as " Buyer " [117] GPU Inc, a United States company, became the holding company for ATC at the time, and was designated as guarantor, but plays no role in the determination of this appeal. .

51. The recitals to the agreement included:

" B. The Seller agrees to sell and the Buyer agrees to buy the Assets (excluding the Land which will be allocated from the Seller to the Buyer) on the terms and conditions set out in this agreement.

…

E. The total value attributed by the parties to the sale of Assets (net of Creditors and Contract Liabilities) the subject of this agreement is $ 2,555,000,000 made up of:

Total Purchase Price $ 2,502,600,000
Estimated Duty $ 52,400,000
  $ 2,555,000,000

F. The parties agree that the total payments to the State in connection with the privatisation of the Seller are $ 2,732,500,000 (including future licence fees of $ 177,500,000 payable by the Buyer, which the State values in net present value terms at approximately $ 161,000,000). "

52. The term " Assets " was defined to include " the Licences " , a category which, in turn, was defined to include the " Transmission Licence " . " Transmission Licence " was defined as:

" the transmission licence issued to the Seller under Part 12 of the Electricity Act by the Office of the Regulator-General on 3 October 1994 as amended on 7 August 1995 and 1 March 1996 and to be amended in accordance with the draft amendments included in the Data Room Documentation " .

53. The term " Total Purchase Price " mentioned in recital E was defined as:

" $ 2,502,600,000 being the sum of the price of the Assets (including the Land) net of Contract Liabilities and Creditors (excluding Specified Creditors) assumed under this agreement and, for the avoidance of doubt, does not include the Estimated Duty. The sum of $ 2,502,600,000 is fixed, notwithstanding that the components referred to above may be shown collectively to have a different value. "

54. Clause 2.1 of the Asset Sale Agreement required that, subject to the terms of the agreement, on the " Completion Date " , a date not earlier than 6 November 1997, the Seller was required to sell the Assets (excluding the Land) and the Buyer was required to:

" (1) buy the Assets (excluding the Land);

(2) assume the Creditors (except the Specified Creditors) and the Contract Liabilities;

(3) pay the Total Purchase Price to the Seller " .

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The term " Creditors " was defined expansively. It included " all persons to whom are owed amounts, debts, obligations and liabilities, whether currently owed or prospectively or contingently owing by the Seller " .

55. Under cl 4.2(c)(1), at completion [118] Defined to mean “ completion of the sale and purchase of the Assets and the assumption of Creditors and Contract Liabilities under clause 2 ” . the Seller was required to deliver to the Buyer the Transmission Licence, transferred so that the Buyer replaced the Seller as the licensee. If any party were to fail to pay any sum payable by it under the agreement at the time and otherwise in the manner provided in the agreement, that party was required to pay interest on that sum at a " Base Rate " plus two per cent.

56. It was a condition precedent to completion that the State, the Seller and the Buyer would procure that the Office of the Regulator-General approve the transfer of the Transmission Licence from the Seller to the Buyer with effect from completion [119] Asset Sale Agreement, cl 4.3(a). . It was also a condition precedent that the State would procure the publication in the Government Gazette of an Order in Council declaring that the Buyer was a transmission company for the purposes of the Electricity Act, to take effect when the Buyer held a licence to transmit electricity issued under Pt 12 of the Electricity Act [120] Asset Sale Agreement, cl 4.3(b). . The term " Licence Fee Order " was defined as " the order in substantially the form set out in annexure G " , which reflected the terms of the Order in Council made following the execution of the agreement. It was a further condition precedent to completion that the State would procure publication in the Government Gazette of the Licence Fee Order [121] Asset Sale Agreement, cl 4.3(d). .

57. An important clause in the agreement was cl 7, which provided under the heading " ASSUMPTION OF LIABILITIES AND CREDITORS " :

" Following Completion, the Buyer assumes with effect from Completion all liabilities of the Seller to the Creditors, including without limitation the Contract Liabilities, other than the Specified Creditors and agrees to pay all Creditors other than the Specified Creditors in the normal course of business for obligations of the Seller existing before or after Completion. "

Given the definition of " Creditors " in the Asset Sale Agreement, the obligation thus assumed embraced PNV ' s contingent liability, which existed when the agreement was signed, to pay the charges imposed by the Order in Council when they fell due. AusNet ' s submissions to the contrary should be rejected, as should its submission that the Asset Sale Agreement did not otherwise impose upon it a contractual liability to pay the charges under the Order in Council. The contractual liability was imposed by cl 13.3(d) of the agreement.

58. Clause 13.3(d) provided that the Buyer acknowledged and agreed with the State and the Seller that:

" (1) the amounts to be payable by the Buyer pursuant to the Licence Fee Order are an integral part of the regulatory framework of the industry and the Buyer accepts that it must pay the amounts set out in the Licence Fee Order in order to carry on the Business transferred from the Seller;

(2) the Buyer must not challenge the validity of the Licence Fee Order or the amounts, or the basis of calculating the amounts, specified in the Licence Fee Order;

(3) the Buyer agrees to pay to the Treasurer the amounts specified in the Licence Fee Order in accordance with the terms of, and at the times specified in, the Licence Fee Order, whether or not the Licence Fee Order is valid or enforceable; and

(4) the Buyer may not transfer the Transmission Licence or allow any person to become a licensee under the Transmission Licence unless the proposed licensee has first delivered to the State a covenant (in form and substance satisfactory to the State) agreeing to be bound by this clause 13.3(d) as if it were the Buyer. "

59. AusNet submitted that cl 13.3(d) confirmed that the Order in Council was the source of its liability to pay the charges which it imposed. The promise in cl 13.3(d)(3) to pay the charges " whether or not the Licence Fee Order is valid or enforceable " was said to be operative only if the Order in Council were found to be invalid or unenforceable. That submission cannot be accepted. The promise was unconditional. Its effect and evident

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purpose was to provide to PNV and the State certainty that the charges would be paid even if they turned out not to have been validly imposed. The promise was consideration moving from AusNet under the Asset Sale Agreement and was necessary to secure not only the Transmission Licence but the other assets that were the subject of the sale.

60. Central to AusNet ' s case on characterisation was its proposition that the Total Purchase Price, which did not include the s 163AA charges, was the amount expended by AusNet in order to acquire the Assets. It was said the licence fees were not described in recital E of the agreement as forming part of the total value to be attributed to the Assets. They were described in recital F as " future licence fees … payable by the Buyer " . Invoking the language of Commissioner of Taxation v Morgan , AusNet said " [ t ] he price remains fixed. The payment of the [ s 163AA imposts ] is separate " . Commissioner of Taxation v Morgan , however, is not apposite. The charges imposed under s 163AA cannot be viewed in the same way as an adjustment of municipal and water rates on the sale of land. Such rates are recurrent charges connected with the provision of public services. Their adjustment as between vendor and purchaser is time dependent. The imposts under s 163AA were significant liabilities not inherently recurrent and able to be imposed at such times and in such manner as are " specified " in the exercise of power conferred by that provision. They were a significant part of the consideration moving from AusNet for the acquisition of the Assets. The designation of an amount as the Total Purchase Price to be paid to PNV, as distinct from the licence charges to be paid to the State, does not relegate the payment of those charges to some lesser, incidental purpose. From the perspective of AusNet, " from a practical and business point of view " , they were part of the consideration moving from it for the acquisition of the Assets.

61. Submissions by AusNet about the characterisation of the charges made reference to their purpose, as set out in the reasons for judgment of the primary judge. That rationale is explained in the following section.

The rationale of the Order in Council

62. Section 158A(1)(c) of the Electricity Act provided for the making of Orders in Council to " regulate, in such manner as the Governor in Council thinks fit … charges for connection to, and the use of, the transmission system " . A Tariff Order, made pursuant to s 158A on 20 June 1995, prescribed charges to be levied by PNV for certain network and connection services. It also imposed a cap on the revenue which PNV could derive from the provision of defined network and connection services and augmentation to the system and connection facilities. The cap on PNV ' s gross revenue for each financial year was designated the Maximum Allowable Revenue ( " MAR " ). That figure was the product of a specified Maximum Allowable Charge and forecast Summer Maximum Demand. The MAR was calculated by reference to efficient levels of operating and maintenance costs, a return on capital and straight line depreciation at rates reflecting estimated useful lives on a Current Cost Accounting asset base. The charges were fixed so that PNV would recover the cost of its assets over time and its operating and maintenance costs and would gain a return on its capital [122] The return on capital was assessed using the Optimised Depreciated Replacement Cost value of assets multiplied by a weighted average cost of capital. . The tariff fixed in each year after the first was to be adjusted by reference to the Consumer Price Index less a factor designated " X " , which was a proxy for the expected real rate of improvement in efficiency.

63. Between the making of the Tariff Order on 20 June 1995 and the time that PNV was privatised in 1997, the State Government decided to extend the Tariff Order applicable to that company for a further two years in order to provide some price certainty for its prospective purchasers. However, the Government was advised that some of the assumptions upon which the Tariff Order was based were no longer correct. The prescribed MAR was higher than that necessary to yield a reasonable return on capital. Amending the " X " factor would avoid a windfall to PNV or its acquirer by lowering permitted transmission charges. The problem with that approach was that reduction of the transmission charges would provide a windfall for distributors [123] The tariffs charged by distributors were fixed for the period to 31 December 2000. . To overcome that problem, the State Government was advised that the excess revenue which would accrue to PNV or its purchaser before the Tariff Order

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lapsed in December 2000 should be recovered by the imposition of a " special licence fee " . The fee could be separately invoiced and levied by imposition of a charge under s 163AA of the Electricity Act.

64. The Treasurer of Victoria agreed that the Tariff Order applicable to PNV or its purchaser after December 2000 should be varied by increasing the " X " factor for 2001 and 2002. The additional charges under s 163AA were imposed for the preceding years. An information memorandum to prospective bidders for PNV ' s assets foreshadowed charges that would be imposed by an Order in Council made under s 163AA of $ 50,000,000 per annum for each of the years ending 30 June 1998 to 30 June 2000 and a further $ 40,000,000 for the six months ending 31 December 2000. In its successful bid made on 10 October 1997 for the acquisition of the PNV assets, AusNet requested that the proposed charges be changed to reflect the fact that the sale would take place after the first quarter of the financial year ending 30 June 1998.

65. As appears below, the purpose for which the charges were imposed does not determine the character of the payments made by AusNet as holder of the Transmission Licence.

The characterisation of the AusNet payments

66. AusNet advanced six propositions, some of which overlapped, against characterisation of AusNet ' s payments of the s 163AA charges as being of a capital nature. First, it said that the purpose for which the charges were imposed informed the inquiry into the character of the advantage sought from AusNet ' s perspective in making the payments. Undue emphasis on the purpose of the charges, however, is apt to direct the inquiry away from the critical question - from AusNet ' s perspective what was the character of the advantage sought? - or, as Fullagar J put it in Colonial Mutual Life , what was the money really paid for? The answer to that question has already been reached. AusNet did not pay the charges in order to reimburse the State for excess revenue it might generate as licence holder. From a practical and business point of view, the assumption of the liability to make the expenditure was calculated to effect the acquisition of the Transmission Licence and the other assets the subject of the Asset Sale Agreement. The Transmission Licence was an intangible asset, but was properly viewed as part of the structure of the business. Without it, acquisition of the rest of the assets was pointless. If it were revoked after acquisition, the whole business structure would collapse.

67. The second proposition was that the charges were a tax imposed not upon AusNet specifically but upon whoever was the licence holder. AusNet argued that its liability did not arise until after it had acquired the Transmission Licence and that it acquired nothing by making the payments. This was analogous to the approach of Barwick CJ in Cliffs International to the royalties paid on iron ore mined by the taxpayer. Whether or not the charges were a tax, that submission should be rejected. AusNet ' s assumption of the fixed and ascertained statutory liabilities and its contractual promise to pay the charges, whether or not they were validly imposed, was consideration moving from it, prior to and for the acquisition of the licence and the other assets.

68. The third submission, related to the second, was that the liability to pay the charges did not arise upon the execution of the Asset Sale Agreement in October 1997. That proposition did not advance the case any further than the second proposition.

69. Fourthly, AusNet submitted that the charges were not part of the Total Purchase Price and therefore not part of the payment it made " for " the acquisition of the transmission business. For the reasons already given, that submission, which relied in part upon the decision of this Court in Commissioner of Taxation v Morgan , is also rejected.

70. The fifth proposition was that the Asset Sale Agreement did not impose any contractual liability upon AusNet to pay the s 163AA charges. That submission has already been rejected in the discussion of the terms of the Asset Sale Agreement.

71. The final submission was that liability to pay the charges was contingent upon AusNet continuing as the holder of the Transmission Licence at the particular times the charges were due for payment pursuant to the Order in Council. AusNet could, at any time, have transferred the Transmission Licence and

ATC 17476

avoided future liability to pay the charges. However, as the Commissioner submitted, upon Completion of the Asset Sale Agreement, AusNet was under a present legal obligation to make the payments at the times specified in the Order in Council. No further or other matter was necessary for the liability to crystallise. The case was distinguishable from Cliffs International , where the relevant royalty payments were contingent upon the removal of iron ore from the relevant reserves [124] (1979) 142 CLR 140 at 149 per Barwick CJ, 175 per Jacobs J, 176 per Murphy J. .

Conclusion

72. For the preceding reasons, the charges paid by AusNet were of a capital nature. The primary judge and the majority in the Full Court were correct so to conclude. The appeal should be dismissed with costs.

Footnotes

[1] John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation (1959) 101 CLR 30 at 34 ; [ 1959 ] HCA 4 .
[2] Electricity Act, s 163AA(2).
[3] Electricity Act, s 159(1).
[4] (1997) 78 FCR 169 .
[5] A “ loss year ” for a company is an income year where it has a “ tax loss ” : ITAA, ss 165-70(5), 175-35(5). There will be a “ tax loss ” if certain deductions exceed certain incomes for the company for the income year: ITAA, ss 165-70(1) – (5), 175-35(1) – (5).
[6] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶ 20-416 at 15,492 [ 37 ] .
[7] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation 2013 ATC ¶ 20-416 at 15,492 – 15,493 [ 38 ] – [ 39 ] .
[8] [ 2014 ] HCATrans 288 .
[9] 2013 ATC ¶ 20-416 at 15,500 [ 79 ] – [ 80 ] .
[10] 2013 ATC ¶ 20-416 at 15,502 [ 88 ] .
[11] 2013 ATC ¶ 20-416 at 15,502 [ 92 ] .
[12] 2013 ATC ¶ 20-416 at 15,503 [ 93 ] .
[13] SPI PowerNet Pty Ltd v Federal Commissioner of Taxation (2014) 220 FCR 355 at 357 – 358 [ 6 ] – [ 7 ] .
[14] (2014) 220 FCR 355 at 359 [ 11 ] .
[15] (2014) 220 FCR 355 at 359 [ 12 ] .
[16] (2014) 220 FCR 355 at 363 [ 29 ] .
[17] (2014) 220 FCR 355 at 372 [ 80 ] – [ 81 ] .
[18] In Inland Revenue Commissioners v British Salmson Aero Engines Ltd [ 1938 ] 2 KB 482 at 498 Sir Wilfrid Greene MR equated the process to “ the spin of a coin ” . The late Professor Julius Stone relegated the distinction to a legal category of meaningless reference: Stone, Legal System and Lawyers ’ Reasonings , (1964) at 340.
[19] (1946) 72 CLR 634 at 646; [ 1946 ] HCA 34 .
[20] BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 397; [ 1966 ] AC 224 at 264.
[21] Vallambrosa Rubber Co Ltd v Inland Revenue 1910 SC 519 at 525.
[22] [ 1926 ] AC 205 .
[23] [ 1926 ] AC 205 at 213.
[24] [ 1926 ] AC 205 at 213 – 214 per Viscount Cave LC.
[25] [ 1926 ] AC 205 at 213 – 214 per Viscount Cave LC.
[26] Broken Hill Theatres Pty Ltd v Federal Commissioner of Taxation (1952) 85 CLR 423 at 434 per Dixon CJ, McTiernan, Fullagar and Kitto JJ; [ 1952 ] HCA 75 .
[27] [ 1942 ] 2 KB 184 .
[28] [ 1942 ] 2 KB 184 at 195, citing British Insulated and Helsby Cables v Atherton [ 1926 ] AC 205 at 213 – 214.
[29] (1965) 112 CLR 386 at 405; [ 1966 ] AC 224 at 273.
[30] [ 1897 ] AC 1 .
[31] [ 1897 ] AC 1 at 7.
[32] [ 1897 ] AC 1 at 7 per Lord Halsbury LC, 8 per Lord Herschell, 9 per Lord Macnaghten, 10 per Lord Shand, 10 – 11 per Lord Davey.
[33] W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 at 306 per Dixon J, see also at 302 per Latham CJ, 304 per Rich J, 308 per McTiernan J; [ 1937 ] HCA 9 .
[34] [ 1937 ] AC 685 .
[35] [ 1937 ] AC 685 at 695, quoted at 2013 ATC ¶ 20-416 at 15,502 [ 90 ] .
[36] (1953) 89 CLR 428 ; [ 1953 ] HCA 68 : see (2014) 220 FCR 355 at 359 [ 12 ] , 362 [ 25 ] per Edmonds J, 368 – 369 [ 56 ] – [ 59 ] per McKerracher J.
[37] (1953) 89 CLR 428 at 455.
[38] (1979) 142 CLR 140 ; [ 1979 ] HCA 8 .
[39] 1924 SC 74 .
[40] 1924 SC 74 at 79 – 80 per Lord Clyde, 80 – 81 per Lord Skerrington, 81 per Lord Cullen, 81 – 82 per Lord Sands.
[41] 1924 SC 74 at 79 per Lord Clyde.
[42] 1924 SC 74 at 79 per Lord Clyde.
[43] (1938) 61 CLR 337 ; [ 1938 ] HCA 73 , described in BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 394; [ 1966 ] AC 224 at 261 as a “ valuable guide to the traveller in these regions ” .
[44] See Parsons, Income Taxation in Australia , (1985) at 431 – 432 [ 7.10 ] for a discussion of wasting assets as structural capital assets, the costs of which are on capital account and non-deductible.
[45] (1938) 61 CLR 337 at 347.
[46] (1938) 61 CLR 337 at 355.
[47] ( 1938) 61 CLR 337 at 359.
[48] (1938) 61 CLR 337 at 359 – 360.
[49] (1946) 72 CLR 634 at 644. See also British Insulated and Helsby Cables v Atherton [ 1926 ] AC 205 at 222 per Lord Atkinson; Van den Berghs Ltd v Clark [ 1935 ] AC 431 at 439 – 440 per Lord Macmillan.
[50] (1938) 61 CLR 337 at 363.
[51] (1946) 72 CLR 634 at 648.
[52] (1959) 101 CLR 30 .
[53] (1959) 101 CLR 30 at 36, Kitto J agreeing at 43.
[54] (1959) 101 CLR 30 at 42.
[55] Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645 at 662 per Stephen and Aickin JJ; [ 1978 ] HCA 32 .
[56] (1978) 140 CLR 645 .
[57] (1978) 140 CLR 645 at 655.
[58] (1978) 140 CLR 645 at 655.
[59] (1990) 170 CLR 124 ; [ 1990 ] HCA 25 .
[60] (1990) 170 CLR 124 at 137.
[61] (1953) 89 CLR 428 at 460.
[62] (1953) 89 CLR 428 at 454.
[63] (1953) 89 CLR 428 at 454.
[64] (1953) 89 CLR 428 at 448, derived from the test applied by Lord Clyde in Robert Addie & Sons ’ Collieries v Inland Revenue 1924 SC 231 at 235.
[65] (1953) 89 CLR 428 at 448 – 449.
[66] (1961) 106 CLR 517 ; [ 1961 ] HCA 64 .
[67] (1961) 106 CLR 517 at 521 per Dixon CJ, Kitto and Windeyer JJ.
[68] (1979) 142 CLR 140 at 151 per Barwick CJ, 175 per Jacobs J.
[69] (1979) 142 CLR 140 at 148, citing Egerton-Warburton v Deputy Federal Commissioner of Taxation (1934) 51 CLR 568 at 572 – 573; [ 1934 ] HCA 40 .
[70] (1979) 142 CLR 140 at 149.
[71] (1979) 142 CLR 140 at 151.
[72] (1979) 142 CLR 140 at 175.
[73] (1979) 142 CLR 140 at 175.
[74] (1979) 142 CLR 140 at 176.
[75] (1979) 142 CLR 140 at 156 per Gibbs J, 161 per Stephen J.
[76] (2006) 228 CLR 1 ; [ 2006 ] HCA 35 .
[77] (2006) 228 CLR 1 at 8 [ 1 ] per Gleeson CJ, 8 [ 2 ] per Gummow J, 27 [ 76 ] per Callinan J, 27 [ 77 ] per Heydon J.
[78] (2006) 228 CLR 1 at 44 [ 154 ] .
[79] Regulator-General Act, s 8, read with the definition of “ regulated industry ” in s 3(1).
[80] Electricity Industry (Amendment) Act 1994 (Vic), s 25.
[81] Electricity Act, s 155.
[82] See eg Electricity Act, s 158(1)(b)(iii).
[83] Electricity Act, s 162(1).
[84] Electricity Act, s 167(5).
[85] Electricity Act, s 164(3).
[86] Electricity Act, s 161(1)(b).
[87] Electricity Act, s 163(1).
[88] Electricity Act, s 163(2).
[89] Electricity Act, s 163(3)(h).
[90] Transmission Licence, cl 3.1.
[91] Transmission Licence, cl 16.1. There was no condition relating to the charges imposed under s 163AA, as that provision had not been enacted at the time that the licence issued.
[92] The objectives specified in s 157 of the Electricity Act and s 7 of the Regulator-General Act and, to the extent context requires, in a statement of government policy under s 10 of the Regulator-General Act: Transmission Licence, Schedule, cl 1, definition of “ policy objectives ” .
[93] Regulator-General Act, s 35(1).
[94] Regulator-General Act, s 35(2).
[95] Regulator-General Act, s 35(8).
[96] Electricity Industry (Further Amendment) Act 1995 (Vic), s 13.
[97] Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 24(b).
[98] Electricity Act, s 3(1), inserted by Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 18(b).
[99] Electricity Act, s 3(1), inserted by Electricity Industry (Miscellaneous Amendment) Act 1997 (Vic), s 18(a).
[100] Electricity Act, s 161(1)(b).
[101] See Queanbeyan City Council v ACTEW Corporation Ltd (2011) 244 CLR 530 at 541 – 542 [ 19 ] – [ 22 ] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [ 2011 ] HCA 40 .
[102] Introduced by s 29 of the Electricity Industry (Further Amendment) Act 1994 (Vic) and substituted by s 30 of the Electricity Industry (Amendment) Act 1995 (Vic).
[103] Electricity Act, s 163A(1).
[104] Electricity Act, s 163A(2)(a) – (c).
[105] (1997) 78 FCR 169 at 181 per Lockhart J, 196 per Sundberg and Merkel JJ. Special leave to appeal from that decision was refused by this Court on 13 February 1998: [ 1998 ] HCATrans 41 .
[106] (1997) 78 FCR 169 at 181.
[107] (1997) 78 FCR 169 at 182, quoting BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 397; [ 1966 ] AC 224 at 264.
[108] (1997) 78 FCR 169 at 182. His Honour also held that the fees did not fall within either limb of deductibility in s 51(1) of the Income Tax Assessment Act 1936 (Cth), and in that respect differed from Sundberg and Merkel JJ, but the difference was not material for present purposes.
[109] (1997) 78 FCR 169 at 194, quoting Sun Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR 337 at 359 per Dixon J.
[110] (1952) 85 CLR 423 at 434 per Dixon CJ, McTiernan, Fullagar and Kitto JJ.
[111] (1997) 78 FCR 169 at 194.
[112] (1997) 78 FCR 169 at 196, evidently a reference to the licence fees chargeable pursuant to s 163 of the Electricity Act.
[113] See Matthews v Chicory Marketing Board (Vict) (1938) 60 CLR 263 at 276 per Latham CJ, 290 per Dixon J; [ 1938 ] HCA 38 ; Parton v Milk Board (Vict) (1949) 80 CLR 229 at 258 per Dixon J; [ 1949 ] HCA 67 .
[114] cf Queanbeyan City Council v ACTEW Corporation Ltd (2011) 244 CLR 530 at 542 [ 20 ] – [ 22 ] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[115] Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467; [ 1988 ] HCA 61 ; Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 336 per Dawson, Toohey and McHugh JJ; [ 1989 ] HCA 47 .
[116] (1997) 78 FCR 169 at 182 per Lockhart J, 196 per Sundberg and Merkel JJ. See also Browns Transport Pty Ltd v Kropp (1958) 100 CLR 117 at 129 – 130; [ 1958 ] HCA 49 , concerning licence fees imposed on road transport operators in Queensland.
[117] GPU Inc, a United States company, became the holding company for ATC at the time, and was designated as guarantor, but plays no role in the determination of this appeal.
[118] Defined to mean “ completion of the sale and purchase of the Assets and the assumption of Creditors and Contract Liabilities under clause 2 ” .
[119] Asset Sale Agreement, cl 4.3(a).
[120] Asset Sale Agreement, cl 4.3(b).
[121] Asset Sale Agreement, cl 4.3(d).
[122] The return on capital was assessed using the Optimised Depreciated Replacement Cost value of assets multiplied by a weighted average cost of capital.
[123] The tariffs charged by distributors were fixed for the period to 31 December 2000.
[124] (1979) 142 CLR 140 at 149 per Barwick CJ, 175 per Jacobs J, 176 per Murphy J.

 

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