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ADMINISTRATIVEREVIEW COUNCIL

REPORT TO THEATTORNEY-GENERAL AND MINISTER FOR JUSTICE

Appeals from the Administrative Appeals Tribunal

to the Federal Court

Report No. 41

Administrative Review Council Information Officer

The Director of ResearchAdministrative Review CouncilGPO Box 3222CANBERRA ACT 2601

Telephone: (02) 6247 5100Facsimile: (02) 6257 6121

The office of the Administrative Review Council is located at 5th Floor, Canberra House, 40 Marcus Clarke Street, Canberra, ACT, 2601.

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ADMINISTRATIVE REVIEW COUNCIL

PROFESSOR MARCIA NEAVEPRESIDENT

29 September 1997

The Hon Daryl Williams AM QC MPAttorney-General and Minister for JusticeParliament House CANBERRA ACT 2601

Dear Attorney-General

I have pleasure in submitting to you the Administrative Review Council’s report Appeals from the Administrative Appeals Tribunal to the Federal Court.

Yours sincerely

Professor Marcia NeavePresident

5th FLOOR, CANBERRA HOUSE, 40 Marcus Clarke Street, GPO Box 3222, CANBERRA ACT 2601

Telephone (02) 6247 5100 Facsimile (02) 6257 6121 Email: [email protected]

ADMINISTRATIVE REVIEW COUNCIL

This report was adopted at a meeting of the Administrative Review Council held in Canberra on 5 September 1997. The members of the Council at the date of that meeting were:

PresidentProfessor Marcia Neave (President)

Ex-officio members:Justice Jane Mathews (President of the Administrative Appeals

Tribunal)Alan Rose AO (President of the Australian Law Reform Commission)Philippa Smith AM (Commonwealth Ombudsman)

Other membersJill AndersonBill BlickChristine CharlesProfessor Ian LoweWayne Martin QCAlan Robertson SCStephen SkehillHelen Williams AO

The Council commissioned Mark Leeming, a Sydney barrister, to prepare the draft of this report which was subsequently settled and adopted by the Council. The Council thanks Mr Leeming for his work on this report.

ADMINISTRATIVE REVIEW COUNCILFUNCTIONS AND POWERS

Section 51 of the Administrative Appeals Tribunal Act 1975 sets out the functions and powers of the Council as follows:

(1) The functions of the Council are:(a) to ascertain, and keep under review, the classes of

administrative decisions that are not the subject of review by a court, tribunal or other body;

(b) to make recommendations to the Minister as to whether any of those classes of decisions should be the subject of review by a court, tribunal or other body and, if so, as to the appropriate court, tribunal or other body to make that review;

(c) to inquire into the adequacy of the law and practice relating to the review by the courts of administrative decisions and to make recommendations to the Minister as to any improvements that might be made in that law or practice;

(d) to inquire into the adequacy of the procedures in use by tribunals or other bodies engaged in the review of administrative decisions and to make recommendations to the Minister as to any improvements that might be made in those procedures;

(e) to make recommendations to the Minister as to the manner in which tribunals engaged in the review of administrative decisions should be constituted;

(f) to make recommendations to the Minister as to the desirability of administrative decisions that are the subject of review by tribunals other than the Administrative Appeals Tribunal being made the subject of review by the Administrative Appeals Tribunal; and

(g) to make recommendations to the Minister as to ways and means of improving the procedures for the exercise of administrative discretions for the purpose of ensuring that those decisions are exercised in a just and equitable manner.

(2) The Council may do all things necessary or convenient to be done for or in connection with the performance of its functions.

SUMMARYThe Administrative Appeals Tribunal (the AAT) is the final merits review tribunal for most Commonwealth decisions. It is subject to judicial review by the Federal Court - principally by means of appeal on a question of law. The Federal Court has limited power, therefore, to review the factual findings made by the AAT, and no power to make factual findings of its own.

This report deals with the scope of appeals to the Federal Court from the AAT. It considers whether the grounds of appeal should be altered so as to provide for:

(a) administrative law remedies only (Chapter 3);

(b) appeals on questions of fact as well as of law (Chapter 4); or

(c) a separate regime for taxation and patents appeals (Chapter 5).

In the Council's view, the scope of review should remain unchanged.

The report also deals with certain other issues relating to the powers of the Federal Court on an appeal from the AAT (Chapter 6), and recommends that the Court's jurisdiction be expanded slightly, so as to give it a discretion to receive evidence and to make findings of fact where the AAT has failed to do so, provided that the Court's findings are not inconsistent with those of the AAT. This would address one of the major criticisms which has been made of the operation of appeals from the AAT. The Council considers that this amendment will improve the efficiency of the Commonwealth system of administrative law, yielding faster and cheaper justice to those who seek review of Commonwealth decisions, without displacing the AAT from its role as the primary arbiter of questions of fact.

RECOMMENDATION

(Paragraph 6.15)

The power of the Federal Court should be expanded to include making findings of fact where there has been an error of law by the AAT, provided that:

(a) such findings of fact are not inconsistent with findings made by the AAT; and

(b) it appears to the Court convenient to make such findings, having regard to:

(i) the timely and economical resolution of the whole of the subject matter of the application before the AAT;

(ii)the relative expense to the parties of the Court, as opposed to the AAT, making additional findings;

(iii) the relative delay to the parties of the Court, as opposed to the AAT, making additional findings;

(iv) the extent (if any) to which it is necessary for facts to be found and the means by which those facts might be established; and

(v)whether any of the parties considers that it is appropriate for the Court, as opposed to the AAT, to make additional findings of fact.

For the purposes of making such findings of fact, the Court may permit evidence to be adduced which was not before the AAT.

CONTENTS

Error! No table of contents entries found.ADMINISTRATIVE REVIEW COUNCIL FUNCTIONS AND POWERSCHAPTER 1CHAPTER 2CHAPTER 3CHAPTER 4CHAPTER 5CHAPTER 6APPENDIX AAPPENDIX BAPPENDIX CAPPENDIX DLEGISLATION

SUMMARY...........................................................................VIRECOMMENDATION............................................................VIICONTENTS..........................................................................IXINTRODUCTION....................................................................1CONSTITUTIONAL ASPECTS...................................................8DISTINGUISHING BETWEEN QUESTIONS OF..........................14LAW AND FACT...................................................................14A FULL APPEAL TO THE FEDERAL COURT?............................23SHOULD TAXATION AND PATENT APPEALS BE TREATED DIFFERENTLY?....................................................................32ADDITIONAL FINDINGS, ADDITIONAL EVIDENCE AND REFERRALS........................................................................39DISCUSSION PAPER: ISSUES...............................................44LIST OF SUBMISSIONS........................................................46SELECT BIBLIOGRAPHY.......................................................47

ADMINISTRATIVE REVIEW COUNCIL.......................................................IV(Paragraph 6.15)..................................................................vii

THE ADMINISTRATIVE REVIEW COUNCIL.................................................1OVERVIEW OF ISSUES.........................................................................1BACKGROUND TO THE INQUIRY.............................................................2

Criticisms of the system of appeals.......................................2Publication of the Discussion Paper.......................................3How the Council conducted the inquiry.................................4Criticisms subsequent to the Discussion Paper......................5

DELAY IN PUBLICATION OF THE REPORT..................................................5SCOPE OF THIS REPORT AND UNDERLYING ASSUMPTIONS..........................6INTRODUCTION..................................................................................8

The Separation of Powers Doctrine........................................8Merits review and judicial review.........................................10

Source of power and challenges to the validity of section 44..........................................................................11

TNT Skypak..........................................................................11Other challenges..................................................................12

APPEALS........................................................................................13INTRODUCTION................................................................................14THE LAW/FACT DISTINCTION...............................................................14

A problem with a long ancestry...........................................14A distinction embedded in the Australian legal system.......15The approach of the Federal Court......................................16The Agfa-Gevaert decision...................................................16

A NECESSARY DISTINCTION?...............................................................17JUDICIAL REVIEW OF THE AAT............................................................19

Should section 44 be repealed?...........................................19Appeals on questions of jurisdiction.....................................21

INTRODUCTION................................................................................23OVERVIEW OF SUBMISSIONS...............................................................23SCOPE OF THE PROBLEM...................................................................24SUBMISSIONS IN FAVOUR OF BROADENING THE SCOPE OF APPEALS............25SUBMISSIONS OPPOSING BROADENING THE SCOPE OF APPEALS.................26

Appeals from the Compensation Court of New South Wales - a case study..........................................................28

ACCESS TO JUSTICE..........................................................................30INTRODUCTION................................................................................32SUBMISSIONS FROM THE FEDERAL COURT............................................32TAXATION APPEALS..........................................................................32

Overview of taxation appeals..............................................32Submissions supporting special treatment for taxation appeals..............................................................................34

Submissions opposing special treatment for taxation appeals..............................................................................35

Review of taxation decisions in Victoria...............................36The Council's conclusions....................................................37

PATENTS APPEALS............................................................................38INTRODUCTION................................................................................39ADDITIONAL FINDINGS OF FACT...........................................................39ADDITIONAL EVIDENCE......................................................................41RECOMMENDATION...........................................................................42REFERRALS.....................................................................................43

Applications for review of decisions.....................................49Original jurisdiction of Federal Court of Australia................50

ADMINISTRATIVE REVIEW COUNCIL FUNCTIONS AND POWERSCHAPTER 1CHAPTER 2CHAPTER 3CHAPTER 4CHAPTER 5CHAPTER 6

APPENDIX AAPPENDIX BAPPENDIX CAPPENDIX DLEGISLATION

SUMMARYRECOMMENDATIONCONTENTSINTRODUCTIONCONSTITUTIONAL ASPECTSDISTINGUISHING BETWEEN QUESTIONS OFLAW AND FACTA FULL APPEAL TO THE FEDERAL COURT?SHOULD TAXATION AND PATENT APPEALS BE TREATED DIFFERENTLY?ADDITIONAL FINDINGS, ADDITIONAL EVIDENCE AND REFERRALSDISCUSSION PAPER: ISSUESLIST OF SUBMISSIONSSELECT BIBLIOGRAPHY





The Separation of Powers Doctrine........................................8Merits review and judicial review.........................................10Source of power and challenges to the validity of section 44..........................................................................11














ADMINISTRATIVE REVIEW COUNCIL FUNCTIONS AND POWERSCHAPTER 1CHAPTER 2CHAPTER 3CHAPTER 4CHAPTER 5CHAPTER 6APPENDIX AAPPENDIX BAPPENDIX CAPPENDIX DLEGISLATION

Error! No table of contents entries found.ADMINISTRATIVE REVIEW COUNCIL.......................................................IV

(Paragraph 6.15)..................................................................viiTHE ADMINISTRATIVE REVIEW COUNCIL.................................................1OVERVIEW OF ISSUES.........................................................................1BACKGROUND TO THE INQUIRY.............................................................2

Criticisms of the system of appeals.......................................2

Publication of the Discussion Paper.......................................3How the Council conducted the inquiry.................................4Criticisms subsequent to the Discussion Paper......................5
























APPEALS........................................................................................13

INTRODUCTION................................................................................14THE LAW/FACT DISTINCTION...............................................................14
























INTRODUCTION................................................................................23OVERVIEW OF SUBMISSIONS...............................................................23SCOPE OF THE PROBLEM...................................................................24

SUBMISSIONS IN FAVOUR OF BROADENING THE SCOPE OF APPEALS............25SUBMISSIONS OPPOSING BROADENING THE SCOPE OF APPEALS.................26









ADMINISTRATIVE REVIEW COUNCIL.......................................................IVADMINISTRATIVE REVIEW COUNCIL FUNCTIONS AND POWERS...........VSUMMARY...........................................................................VIRECOMMENDATION............................................................VIICONTENTS..........................................................................IXCHAPTER 1...........................................................................................1INTRODUCTION....................................................................1

THE ADMINISTRATIVE REVIEW COUNCIL.................................................1OVERVIEW OF ISSUES.........................................................................1BACKGROUND TO THE INQUIRY.............................................................2DELAY IN PUBLICATION OF THE REPORT..................................................5SCOPE OF THIS REPORT AND UNDERLYING ASSUMPTIONS..........................6

CHAPTER 2...........................................................................................8CONSTITUTIONAL ASPECTS...................................................8

INTRODUCTION..................................................................................8APPEALS........................................................................................13

CHAPTER 3.........................................................................................14DISTINGUISHING BETWEEN QUESTIONS OF..........................14LAW AND FACT...................................................................14

INTRODUCTION................................................................................14THE LAW/FACT DISTINCTION...............................................................14A NECESSARY DISTINCTION?...............................................................17JUDICIAL REVIEW OF THE AAT............................................................19

CHAPTER 4.........................................................................................23A FULL APPEAL TO THE FEDERAL COURT?............................23

INTRODUCTION................................................................................23OVERVIEW OF SUBMISSIONS...............................................................23SCOPE OF THE PROBLEM...................................................................24SUBMISSIONS IN FAVOUR OF BROADENING THE SCOPE OF APPEALS............25SUBMISSIONS OPPOSING BROADENING THE SCOPE OF APPEALS.................26ACCESS TO JUSTICE..........................................................................30

CHAPTER 5.........................................................................................32SHOULD TAXATION AND PATENT APPEALS BE TREATED DIFFERENTLY?....................................................................32

INTRODUCTION................................................................................32SUBMISSIONS FROM THE FEDERAL COURT............................................32TAXATION APPEALS..........................................................................32PATENTS APPEALS............................................................................38

CHAPTER 6.........................................................................................39ADDITIONAL FINDINGS, ADDITIONAL EVIDENCE AND REFERRALS........................................................................39

INTRODUCTION................................................................................39ADDITIONAL FINDINGS OF FACT...........................................................39ADDITIONAL EVIDENCE......................................................................41RECOMMENDATION...........................................................................42REFERRALS.....................................................................................43

APPENDIX A........................................................................................44DISCUSSION PAPER: ISSUES...............................................44APPENDIX B........................................................................................46LIST OF SUBMISSIONS........................................................46APPENDIX C........................................................................................47SELECT BIBLIOGRAPHY.......................................................47APPENDIX D........................................................................................49LEGISLATION......................................................................................49

Error! No table of contents entries found.Error! No table of contents entries found.

CHAPTER 1

INTRODUCTION

THE ADMINISTRATIVE REVIEW COUNCIL

1.1 The Administrative Review Council (the Council) is an independent statutory body which provides advice to the Attorney-General and Minister for Justice on a broad range of issues related to Commonwealth administrative decision-making processes. The Council was established under the Administrative Appeals Tribunal Act 1975 (the AAT Act) as an integral part of the Commonwealth system of administrative law. Section 51 of that Act sets out the Council's functions and powers.1

1.2 This Chapter briefly provides an overview of the issues in the report, explains the background to the report and indicates how the Council carried out the inquiry.

OVERVIEW OF ISSUES

1.3 This report is concerned with appeals from the Administrative Appeals Tribunal (AAT) to the Federal Court of Australia (Federal Court). Such appeals are governed by section 44 of the AAT Act, which provides:

(1) A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.

The effect of this provision is that an appeal to the Federal Court presupposes the existence and identification of, and is limited to, a ‘question of law’.

1.4 This is in keeping with the general approach adopted by the Commonwealth system of administrative law and is to a large extent a consequence of the separation of powers in the Commonwealth Constitution. It is also a feature of administrative review regimes in a number of other jurisdictions. A general explanation of the background and operation of the Commonwealth administrative law system may be found in the Council's Better Decisions report,2 while a brief explanation of those aspects which are most relevant to this report may be found in Chapter 2 of this report.

1.5 Determining whether a particular question is a question of law or a question of fact is not a simple task conceptually and difficulties

1 Section 51 is reproduced at page v.2 Administrative Review Council, Report No. 39, Better Decisions: review of

Commonwealth Merits Review Tribunals, Canberra, AGPS, 1995, Appendix B.

Appeals from the AAT to the Federal Court

often arise in practice. Despite this, the task is of central importance in an appeal from the AAT, because the Federal Court has jurisdiction only to determine the ‘question of law’. The Court does not have jurisdiction directly to review any findings of fact made by the AAT, nor does the Court have jurisdiction to make supplementary findings of fact where the Tribunal has made no finding on the relevant issue. Chapter 3 deals with these issues.

BACKGROUND TO THE INQUIRY

Criticisms of the system of appeals

1.6 The motivation for the inquiry which has resulted in this report was the criticism which has been expressed as to the above limitations upon the jurisdiction of the Federal Court. Criticism has been focussed in particular upon taxation decisions. The Council also became aware of similar concerns in relation to appeals from AAT decisions in patents matters; these concerns came to Council's attention during consultations on the Council's project on review of patents decisions.3 It is convenient briefly to outline below certain aspects of taxation appeals, in order to illustrate the explanation of the background of this report.

1.7 Until 1986, the review of certain decisions of the Commissioner of Taxation was undertaken by Boards of Review. These were administrative tribunals, empowered to review decisions on the merits, and from which an appeal lay to a court. Since their creation in the 1920s, an appeal lay when the matter ‘involved’ a question of law. In an appeal of that nature, the court was able to review findings of fact and make additional findings of fact because the whole controversy, not just any questions of law, was before the court.

1.8 In 1983, the Council recommended that the jurisdiction of the Boards of Review to review taxation decisions be vested in the AAT.4 The Commonwealth Parliament enacted the recommendations with the result that, from 1986, review of taxation decisions was entrusted to the AAT from which the more restrictive avenue of appeal lay to the Federal Court. The majority of the criticism of section 44 has been expressed in relation to taxation appeals.

1.9 In the course of giving the leading judgment of the Full Court in Commissioner of Taxation v Roberts, Justice Hill stated:5

There will be occasions when there will be great difficulty in determining whether a question of law is raised in an appeal, so

3 In January 1994, the Council published an issues paper on review of patents decisions: Administrative Review Council, Issues Paper, Administrative Review and Patents Decisions, Canberra.

4 Administrative Review Council, Report No. 17, Review of Taxation Decisions by Boards of Review, Canberra, AGPS, 1983.

5 (1992) 37 FCR 246, 252.

Introduction

as to make the appeal competent. A jurisdictional debate in matters of this kind is often a sterile exercise. There is unfortunate truth to be found in the criticism of French J in Nizich6 that the categories of fact and law could well be included in the class of ‘categories of meaningless reference’ described by Professor Stone in Legal Systems and Lawyers' Reasonings (1964), p.340. Consideration should be given to amending the law either to eliminate the distinction and thereby to create a full right of appeal to this Court on both matters of fact and law or at least to minimise the importance of the distinction by permitting the court with leave, to entertain an appeal, notwithstanding that no question of law appears to arise, so that in difficult, but nevertheless important, cases the parties might be given permission to litigate the issues, without the necessity of a jurisdictional challenge. In the meantime, valuable court time and the resources of parties continue to be poured into debating the distinction in a jurisdictional challenge.

1.10 While the other members of the Full Court expressly refrained from joining in the passage extracted above, Justice Hill’s criticism was echoed by some practitioners and by the Taxation Committee of the Business Law Section of the Law Council of Australia.7 The principal criticisms identified were:

(a) the wastage of cost and time on the jurisdictional argument as to whether there is, and what is the extent of, the question of law;

(b) the inability to appeal from findings of fact by the AAT which are wrong; and

(c) when the Court allows an appeal but considers that further findings of fact need to be made, it is ordinarily required to remit the proceeding to the AAT because it has no jurisdiction to make findings of fact.

1.11 It is important to note that some of this criticism was described as an ‘ill-informed and mischievous attack on the Taxation Division of the Administrative Appeals Tribunal’ by one of its Deputy Presidents.8 One of the Council's tasks in conducting this inquiry was to attempt to assess the real magnitude of the problems identified.

Publication of the Discussion Paper

1.12 In light of the concerns that had been expressed in both the patents and taxation areas the Council issued a Discussion Paper,

6 Nizich v FCT (1991) 91 ATC 4741, 4752.7 See Forsyth, ‘Practitioners are Fed Up!’ (1994) 28 Taxation in Australia 325;

Slater ‘Inadequate Fact Finding in the Tribunal’, CCH Journal of Australian Taxation 6(1) February/March 1994, 35. The Taxation Committee prepared a submission to the Council.

8 Gerber, ‘Are Practitioners Fed Up?’ (1994) 28 Taxation in Australia 499.


Appeals from the Administrative Appeals Tribunal to the Federal Court (the Discussion Paper).9 The

9 Administrative Review Council, Discussion Paper May 1995, Appeals from the Administrative Appeals Tribunal to the Federal Court, Canberra.

Introduction

issues in relation to which submissions were sought are reproduced as Appendix A, but essentially they cover the following points:

(a) Should section 44 be deleted, leaving parties to rely on other administrative law remedies to review decisions of the AAT?

(b) Should the scope of section 44 be expanded, to include a full appeal to the Federal Court, whether by leave or as of right?

(c) Should taxation and patent matters be treated differently from other matters?

(d) Should the Court have jurisdiction to make additional findings of fact, and to receive additional evidence, and should the AAT be able to refer not just a question of law but an entire proceeding to the Court?

These matters are dealt with in Chapters 3, 4, 5 and 6 respectively.

How the Council conducted the inquiry

1.13 As described above, the Discussion Paper emerged from the earlier inquiry on patents decisions undertaken by the Council.

1.14 The Council also obtained the views of a committee of judges of the Federal Court established by the Chief Justice,10 some of whom had previously been consulted by the Council in relation to the Council's inquiry on review of patent decisions. The comments of members of that committee were reflected in the Discussion Paper.

1.15 The Council called for submissions on the issues raised in the Discussion Paper. A list of people and organisations who made submissions is contained in Appendix B. All of those people and organisations agreed to have their submissions made available to members of the public, and they are available on request from the Council.

1.16 The Council received submissions from:

(a) individual practitioners and private firms in New South Wales, Western Australia and Tasmania;

(b) the Bar Association of Queensland, the Law Institute of Victoria, the Law Council of Australia (2 submissions), and other professional associations;

(c) a number of government departments and statutory authorities responsible for administering Acts in relation to which review lies to the AAT;

10 The committee comprised Lockhart, Sheppard, Gummow and Hill JJ.


(d) two judges and a senior member of the AAT.

1.17 In addition, the committee of judges of the Federal Court invited all Federal Court judges to send comments to the committee. The committee forwarded its considered responses to the Council. The Council also received a submission from the AAT.

1.18 The Council has taken these submissions into account in producing this report.

Criticisms subsequent to the Discussion Paper

1.19 Since the publication of the Discussion Paper, Justice Burchett and Justice Carr have agreed with the comments made by Justice Hill in Commissioner of Taxation v Roberts extracted in paragraph 1.9 above.11 The other member of the Full Court in that case was Justice Hill. His Honour made a reference to his earlier comments in Roberts, and repeated his call for reform.12

1.20 Writing extra-judicially, Justice Burchett and Justice Hill have also criticised the operation of section 44.13 There is also a significant body of academic and professional literature relating to the issues raised in this inquiry, which the Council has taken into account. A select bibliography is contained in Appendix C.

DELAY IN PUBLICATION OF THE REPORT

1.21 Approximately two years has elapsed between the publication of the Discussion Paper and this report. Shortly after the publication of the Discussion Paper, the High Court granted special leave to appeal from the decision of the Full Federal Court in Agfa-Gevaert Ltd v Collector of Customs.14 The transcript of the special leave application makes it clear that the Justices of the High Court were concerned with whether the court below had adopted the correct test in identifying a ‘question of law’.15 The appeal to the High Court was heard in November 1995, and judgment was delivered in December 1996.16

1.22 The Council delayed finalising this report pending the outcome of the Agfa-Gevaert case. That case is dealt with in Chapter 3.

11 Cowell Electric Supply v Collector of Customs (1995) 54 FCR 1, 6.12 (1995) 54 FCR 1, 10.13 Burchett, ‘Administrative Law - the French Comparison’ (1995) 69 ALJ 977, 983-

985; Hill, ‘What Do We Expect from Judges in Tax Cases?’ (1995) 69 ALJ 992, 994-995.

14 (1994) 124 ALR 645 (Full Federal Court).15 See transcript, 9 June 1995, 12-16.16 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389.

Introduction

SCOPE OF THIS REPORT AND UNDERLYING ASSUMPTIONS

1.23 This report is concerned exclusively with the issue of appeals from the AAT to the Federal Court, which is an aspect of the Commonwealth system of administrative law which directly affects only a tiny minority of applications for review. However, as will be seen in the following Chapters, it is an aspect of real importance to the entire structure of the Commonwealth system. The appeal mechanism is what links the tribunal hierarchy to the courts, and is critical to the constitutional validity of the system. Moreover, experience in other jurisdictions suggests that amendments of the type proposed in some submissions to the Council, but which have not been adopted in this report, can lead to a substantial increase in the number of appeals.

1.24 The Council anticipates that the recommendations contained in this report will not lead to an increase in the number of appeals, but instead that the efficient administration of justice will be served by permitting a small but significant class of appeals to be resolved more quickly and efficiently by the Federal Court without the need to remit the proceeding to the AAT.

1.25 In its Better Decisions report, the Council recommended wide-ranging changes to the system of merits review of Commonwealth decisions. On 20 March 1997 the Attorney General and Minister for Justice, the Hon. Daryl Williams AM QC MP, announced that the Cabinet had agreed in principle to amalgamate the Administrative Appeals Tribunal, the Social Security Appeals Tribunal, the Veterans' Review Board, the Immigration Review Tribunal and the Refugee Review Tribunal into a single tribunal, the Administrative Review Tribunal. An interdepartmental committee comprising senior Commonwealth officers was established to devise a strategy for implementing the amalgamation.

1.26 The Better Decisions report did not deal with the issue of appeals from the AAT to the Federal Court, that being the subject of this report.17 The Council's recommendations in this report are equally applicable to the appeals to the Federal Court from the AAT as presently constituted, or from the proposed Administrative Review Tribunal, subject to what is said in the following paragraphs.

1.27 The Council notes however that the interdepartmental committee is also looking at the “basis and scope of administrative review, designed to reduce the number of applications, the overall costs of merits review and excessive legalism”.18

17 Administrative Review Council, Report No. 39, Better Decisions: review of Commonwealth Merits Review Tribunals, Canberra, AGPS, 1995, paras. 8.73 - 8.77.

18 News Release, Attorney-General and Minister for Justice, Reform of Merits Tribunal, 20 March 1997.


1.28 The Administrative Review Tribunal as envisaged by the Council in its Better Decisions report retained a two tier structure, although there was to be no guaranteed access to a second level of external merits review. This reform was seen by the Council as avoiding unwarranted duplication of external merits review. The Administrative Review Tribunal was to have the capacity to permit cases that met specified grounds to proceed to a second stage of external merits review – by Review Panels within the Administrative Review Tribunal – to correct errors made at the first level.

1.29 If, however, the proposed amalgamation of review tribunals as currently being considered by the interdepartmental committee were to result in a single tier system, the basis on which appeals should be taken to the Federal Court from a tribunal in a single tier system would need to be considered further by the Council. Similarly if the basis of review by the new tribunal was to be something less than substituting the correct and preferable decision for that of the primary decision maker,19 the scope of the right of appeal to the Federal Court would also need further consideration. In these circumstances the Council would need to consider whether the basis for an appeal to the Federal Court should be that the matter involves a question of law.

1.30 While these issues are not within the scope of the present report, these are issues which the Council will continue to monitor.

19 For example if the new tribunal could only consider whether the original decision had been correct and reasonable.

CHAPTER 2

CONSTITUTIONAL ASPECTS

INTRODUCTION

2.1 The structure of the Commonwealth system of administrative review, and in particular the relationship between the AAT and the courts, has largely been moulded by the nature of the Australian Constitution. Without first appreciating the constitutional framework in which the provisions of the AAT Act which connect the executive and the judiciary20 are contained, it is not possible either to appreciate why those sections are worded as they are, or to evaluate meaningfully proposed amendments to those sections.

2.2 Accordingly, this Chapter briefly explains how the doctrine of separation of judicial and administrative powers of the Commonwealth has influenced the Commonwealth system of administrative review. It also explains the source of power for section 44 of the AAT Act and outlines the nature of the various constitutional challenges which have been made to the provisions.

2.3 In 1971, the Commonwealth Administrative Review Committee (the Kerr Committee) wrote:21

The existing structure of administrative decision-making in the Commonwealth and arrangements for review of administrative decisions has been influenced considerably by the distribution of legislative powers between the Commonwealth and the States made by the Commonwealth Constitution and by the provisions of Chapter III of the Constitution which impose significant qualifications on the exercise of the judicial power of the Commonwealth. An examination of the constitutional aspects is essential, not merely to an understanding of administrative law and practice as it exists today, but also to an appreciation of the possible developments which might occur in that field in the future.

Despite the sweeping changes which have occurred since 1971, the passage remains equally true today.

The Separation of Powers Doctrine

2.4 In the Boilermakers' cases, it was established that a federal court cannot exercise an administrative function which is not incidental to the exercise of judicial power, and, conversely, that a body other than a

20 Sections 44 and 45. Section 45 of the AAT Act allows the AAT to refer a question of law arising in a proceeding to the Federal Court.

21 Commonwealth Administrative Review Committee Report, Parliamentary Paper No. 144 of 1971, Canberra, Commonwealth Government Printing Office, 1971, para. 59.


court cannot exercise the judicial power of the Commonwealth.22 These prohibitions have given rise to numerous successful challenges to Commonwealth courts and tribunals,23 and more that did not succeed.

2.5 In the context of federal administrative law, these principles require the maintenance of a distinction which is, as the Kerr Committee put it, ‘artificial rather than functional’ and which is ‘productive of considerable practical problems’.24 On the other hand, another commentator has observed that the doctrine:25

enables a clear distinction to be drawn between courts and tribunals; and it provides a framework within which tribunals can develop a special role for themselves in the Australian system of government, based on their own particular functions and procedures, rather than limping along as quasi-courts.

2.6 From a constitutional point of view, and for the purposes of this report, the most significant difference between the AAT and the Federal Court is that the latter can exercise the judicial power of the Commonwealth, while the former may not. In making decisions, the AAT is required to, and does, form opinions on questions of law, which are sometimes complex and untested in the courts. Ultimately, however, the final determination of such questions is an exercise of the judicial power of the Commonwealth, and accordingly must be made by a court.

2.7 The Kerr Committee correctly perceived the need for the general administrative appeal tribunal to be subject to correction on all matters of law, and not just jurisdictional matters.26 Accordingly, section 44 of the AAT Act provides for appeals on questions of law to the Federal Court. The provision for review of this nature is essential to the maintenance of a single system of federal law in Australia.

2.8 The fundamental distinction between the character of the power exercised by the AAT and the Federal Court is reflected in the substantive and procedural differences between them.

22 R v. Kirby; Ex parte the Boilermakers' Society of Australia (1956) 94 CLR 254; Attorney-General for the Commonwealth v The Queen (1957) 95 CLR 529.

23 For examples of challenges to non-judicial power conferred on federal courts: Waterside Workers' Federation of Australia v J W Alexander (1918) 25 CLR 434; Boilermakers' cases; R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277. For examples of challenges to judicial power conferred on tribunals: New South Wales v Commonwealth (1915) 20 CLR 54 (Inter-State Commission); British Imperial Oil Co. Ltd.v Federal Commissioner of Taxation (1925) 35 CLR 422 (Taxation Board of Appeal); Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 (HREOC).

24 Commonwealth Administrative Review Committee Report above n 21, para. 62.25 Saunders, Constitutional Implications of Administrative Review - Food for Thought

for Public Sector Managers, unpublished, 1993, 3.26 Commonwealth Administrative Review Committee Report, above n 21, para. 232.

Constitutional Aspects

Merits review and judicial review

2.9 The AAT is the principal external review body for Commonwealth decisions. It provides merits review of a broad range of administrative decisions made by Commonwealth27 Government ministers, officials and authorities. In some cases, review by the AAT is preceded by internal departmental and/or intermediate external review by a specialised tribunal.28 ‘Merits review’ of an administrative decision involves a reconsideration of the facts, law and policy aspects of the original decision, and the making of a new decision in substitution for the old. If the decision is discretionary, the AAT decides whether the preferable decision has been made. The AAT's decision is substituted for that of the original decision maker: the AAT is regarded as ‘being in the shoes’ of the primary administrator,29 exercising administrative power afresh.

2.10 In contrast, the Federal Court has no power to determine what is the preferable decision having regard to generalised policy considerations;30 it may only decide whether a decision has been made according to law. A whole range of possible approaches to decision making, and a whole range of possible decisions, may be free from errors of law and thus beyond review by the courts.31

2.11 Procedurally, in civil litigation in a court, the court has to decide where, on the balance of probabilities, the truth lies as between the evidence which the parties have chosen to adduce on the issues selected by the parties. The AAT, in contrast, has power to require a person to lodge a statement of evidence,32 or to require an applicant to undergo a medical examination.33 Although the AAT has wide inquisitorial powers they are only rarely used.34 Moreover, the AAT is not bound by the rules of evidence but may inform itself in such manner as it thinks appropriate: ‘Tribunals are entitled to act on any material which is logically probative, even though it is not evidence in a court of law’.35 Proceedings in the AAT are to be conducted with expedition, and without formality and technicality, to the extent that is possible.36

27 And, in limited cases, State. 28 Social Security Appeals Tribunal and the Veterans' Review Board.29 Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139, 143.30 R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277,

306.31 See Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR

259, 282.32 AAT Act, section 38.33 In Re Health Insurance Commission and Hobbes (1990) 21 ALD 229.34 Dwyer, ‘Overcoming the Adversarial Bias in Tribunal Procedure’ (1991) 20 F L Rev

252. Matters are raised, informally, at pre-trial conferences: Katzen, ‘Procedural Fairness and Specialist Members of the Administrative Appeals Tribunal’ (1995) 2 AJAL 169.

35 T.A. Miller v Minister of Housing and Local Government [1968] 1 WLR 992, 995 per Lord Denning M.R.

36 AAT Act, section 33(1)(b).


Source of power and challenges to the validity of section 44

2.12 Section 44(3) of the AAT Act confers jurisdiction on the Federal Court to hear and determine appeals instituted in accordance with section 44(1) and (2). The power of the Parliament to confer jurisdiction upon a federal court is limited by the Constitution to the ‘matters’ mentioned in sections 75 and 76 of the Constitution.37 Sections 75 and 76 empower the Parliament to confer jurisdiction in various ‘matters’, including ‘in any matter arising under any laws made by the Parliament’.38 Prima facie, the power to enact section 44(3) is supported by the above sections of the Constitution.

TNT Skypak

2.13 However, in the constitutional sense, jurisdiction with respect to a ‘matter’ means jurisdiction to quell the controversy between the parties.39 The problem identified by Justice Gummow in TNT Skypak v Federal Commissioner of Taxation40 was that, in some circumstances, the Federal Court has not been given jurisdiction to determine the entirety of the ‘matter’ or the controversy between the parties.

2.14 Justice Gummow contrasted two situations:41

It may be that in a given case, of which in my view (as I shortly shall indicate) the present is one, the factual controversy between the parties has been quelled before the tribunal, so that all that remains outstanding between the parties are questions of law. There is no difficulty in such a case with the application of s 44 because s 44 will be coterminous with the matter submitted by the Parliament for resolution by the exercise of the judicial power of the Commonwealth. However, after the exhaustion of the administrative processes before the tribunal, the parties may still be in controversy as to questions both of law and of fact. In such a case it might appear that the jurisdiction of this court was, on the face of s 44, limited to less than the whole of the controversy and thus less than the whole of the matter arising under federal law. This would be because the effect of the law made by the Parliament would be to excise from the matter so much of the claims made therein as did not constitute questions of law. In such cases questions may arise as to the extent of the validity of s 44 of the AAT Act.

2.15 Justice Gummow then proffered a solution to this difficulty, by suggesting that in all the cases in which jurisdiction is conferred upon the Federal Court by section 44, the ‘matter’ arises under laws made by the Parliament (the head of jurisdiction in section 76(ii)). In respect of

37 Constitution, section 77(i).38 Section 76(ii).39 Fencott v Muller (1983) 152 CLR 570, 608.40 (1988) 82 ALR 175.41 (1988) 82 ALR 175, 181.


those matters, it might be for Parliament to determine the extent of the ‘matter’:42

... the rights and obligations, which supply the foundation for the controversy which is the ‘matter’, would be provided by the statute ... In this way, factual disputes might never be brought within the ambit of matters arising under the law in question. The only matter for the purposes of s 44 of the AAT Act which arose under laws made by the Parliament would be questions of law; questions of fact effectively would be excluded from the matter in respect of which [the Federal Court] was invested with jurisdiction.

It is convenient to note at this point that:

(a) the difficulty Justice Gummow adverted to did not arise under the old system of appeal from the Boards of Review, because, once a question of law was ‘involved’, the whole of the controversy between the taxpayer and the Commissioner came before the Court; and

(b) the criticism suggested by Justice Gummow (which did not require determination in the case, because the controversy between the parties was limited to questions of law) does not appear to have been resolved. In part, this may be because his proposed answer to the constitutional question is regarded as convincing.

Other challenges

2.16 The validity of section 44 was also challenged but upheld in Minister for Immigration and Ethnic Affairs v Gungor,43 on the question whether an appeal from a decision of the AAT which was merely a recommendation could be the subject of review by the Federal Court. In Drake v Minister for Immigration and Ethnic Affairs,44 the capacity of Federal Court judges to act as Presidential members of the AAT was upheld. The contention that the Social Security Appeals Tribunal was purporting to exercise judicial power was summarily rejected by Justice Toohey in Re Registrar, Social Security Appeals Tribunal; Ex parte Townsend.45

2.17 The AAT was in part modelled upon the former Taxation Boards of Review which, like the AAT, were administrative bodies empowered to review decisions of the Commissioner, and subject to review by a court (for most of their history, a single Justice of the High Court). The first attempt to establish the Board (named the ‘Board of Appeal’) failed, as it was held that the Parliament had attempted to confer the judicial power of the Commonwealth upon the Board.46 However, Parliament amended

42 Ibid.43 (1982) 63 FLR 441.44 (1979) 2 ALD 60.45 (1995) 130 ALR 163.46 British Imperial Oil Co. Ltd. v Federal Commissioner of Taxation (1925) 35 CLR 422.


the Act so as to establish the Board of Review. Many of the revised features of the Board of Review were shared by the AAT, including:


(a) the Board had all the powers and functions of the Commissioner and decisions of the Board were deemed to be decisions of the Commissioner;

(b) the appeal was not stated to lie to the High Court in its appellate jurisdiction, unlike appeals from the former Board of Appeal;

(c) the Board's orders were not stated to be final and conclusive on questions of fact, unlike the orders of the former Board of Appeal.

2.18 An appeal lay to the High Court from a decision of the Board which, in the opinion of the High Court, involved a question of law; the appeal was not confined to the question of law, as are appeals under section 44 of the AAT Act.

2.19 The validity of the amended legislation was also challenged, but this time upheld by the High Court and the Privy Council.47 Those cases established that the conclusive determination of facts, but not law, could be made an administrative function and therefore could be determined by an administrative tribunal.48

2.20 Few Commonwealth enactments have been subject to as many constitutional challenges as section 44 and, at least in respect of the problem identified by Justice Gummow in TNT Skypak, the constitutional difficulty remains unresolved. The Council considers that a significant factor in evaluating the merits of any proposal to alter section 44 is the impact the alteration would have upon the validity of the provision.

APPEALS

2.21 A basic consequence of the confinement of judicial power to courts is that a proceeding brought pursuant to section 44 is not an ‘appeal’ in the sense that it falls within the appellate jurisdiction of the Federal Court. Because there has been no exercise of the judicial power of the Commonwealth by the AAT, the proceeding is in the exercise of the Court's original jurisdiction.49 That is so even when the AAT is constituted by a Presidential member (who is a judge of the Court) and when the Federal Court sits as a Full Court (as section 44(3) requires). 50 The use of the word ‘appeal’ is of no significance.51

47 British Imperial Oil Co.Ltd. v Federal Commissioner of Taxation (1926) 38 CLR 153; Shell Company of Australia Limited v Federal Commissioner of Taxation (1930) 44 CLR 530.

48 See also Rola Co Pty Ltd (Australia) v Commonwealth (1944) 69 CLR 185, 201, 211.49 British Imperial Oil v Federal Commissioner of Taxation (1925) 35 CLR 422;

Farbenfabriken Bayer Aktiengesellschaft v Bayer Pharma (1959) 101 CLR 652, 657; TNT Skypak v Federal Commissioner of Taxation (1988) 82 ALR 175, 178.

50 Minister for Immigration and Ethnic Affairs v Gungor (1982) 63 FLR 441, 453.51 Farbenfabriken Bayer Aktiengesellschaft v Bayer Pharma (1959) 101 CLR 652, 657.


2.22 Nevertheless, because of the wording of the statute, and the invariable practice of the courts, this report refers to ‘appeals’ throughout.

CHAPTER 3

DISTINGUISHING BETWEEN QUESTIONS OF LAW AND FACT

INTRODUCTION

3.1 Section 44 of the AAT Act requires making a distinction between questions of law (which are subject to appeal and are the subject matter of the appeal) and questions of fact (which are not). In practice, this can lead to time and money being wasted arguing on the ‘sterile and technical’ question of jurisdiction.52 This Chapter describes the law/fact distinction, how it operates in practice in the Federal Court, and the nature of the criticisms made against it, including those of the High Court in the recent Agfa-Gevaert case. The second half of this Chapter also deals with the question whether it is possible or desirable to delete section 44 and rely entirely on judicial review of the AAT.

THE LAW/FACT DISTINCTION

A problem with a long ancestry

3.2 It has long been accepted that the distinction between what constitutes an error of law or an error of fact is artificial and difficult. In 1927, Professor Dickinson contended that:53

Matters of law grow downward into roots of fact and matters of fact reach upward without break into matters of law. The knife of policy alone effects an artificial cleavage where the court chooses to draw the line.

3.3 One Federal Court judge has recently noted the criticisms of the distinction 50 years ago, by Professor Winfield:

the intrinsic difficulty of laying down any hard and fast line separating the two ideas [ie. ‘law’ and ‘fact’] is so great as to make the task a practical impossibility

and Julius Stone, who held that the distinction was an example of what he termed ‘the legal category of meaningless reference’.54

52 Aafjes v Kearney (1976) 180 CLR 199, 206.53 Administrative Justice and the Supremacy of the Law (1927), 55, cited in Flick,

‘Error of Law or Error of Fact?’ (1983) 15 UWALR 193, 196.54 Winfield, ‘Mistake of Law’ (1943) 59 LQR 327, 341; Stone, The Province and

Function of Law, (1946), 173-4; cited in Burchett, ‘Administrative Law – the French Comparison’ (1995) 69 ALJ 977, 983.


3.4 Justice Gibbs, as he then was, encapsulated the nature of the problem when he stated:55

the Court is called upon to consider whether the alleged error is one of law or of fact - an inquiry of a sterile and technical kind but frequently productive of disagreement.

In other words, the debate (a) occurs relatively frequently, and (b) does not advance the substantive arguments to be determined. There has been much academic criticism of the distinction.56

A distinction embedded in the Australian legal system

3.5 Although the difficulties associated with defining and applying the concept of a ‘question of law’ are considerable, the distinction remains and has always been an important distinction in the Commonwealth legal system. For example, appeals lay to the High Court from the first Commonwealth administrative body, the Inter-State Commission (which was established by the Constitution) but only as to questions of law.57 Similarly the High Court, in exercising its discretion whether or not to grant special leave to appeal, is required to have regard to whether the judgment of the court below involved ‘a question of law’ of public importance.58

3.6 More particularly, section 44 of the AAT Act is only one of many Commonwealth enactments which confer jurisdiction upon the Federal Court to determine an appeal on a question of law.

3.7 The same wording may be found in (the following list is not exhaustive): appeals from the Australian Competition Tribunal,59 appeals from a Professional Services Review Tribunal established under the Health Insurance Act 1973;60 appeals from the National Native Title Tribunal;61 appeals from the Superannuation Complaints Tribunal;62 appeals from the Statutory Fishing Rights Allocation Review Board;63 appeals from the Federal Police Disciplinary Tribunal.64

3.8 The same distinction is also frequently made in the Australian States, as well as in England,65 Ireland,66 and South Africa.67 For the United States and Canada, see paragraph 3.15 below. 55 Aafjes v Kearney (1976) 180 CLR 199, 206.56 Flick, ‘Error of Law or Error of Fact?’ (1983) 15 UWALR 193; Whitmore, Principles of

Australian Administrative Law, 5th edn, 1980, 157-160; Wade and Forsyth, Administrative Law, 7th edn, 1994, 946ff.

57 Constitution, section 73(iii).58 Judiciary Act 1903, section 35A.59 Formerly the Trade Practices Tribunal; Trade Practices Act 1974, section 44ZR, and

see Moomba-Sydney Pipeline System Sale Act 1994, section 126.60 Section 124A.61 Native Title Act 1993, section 169.62 Superannuation (Resolution of Complaints) Act 1993, section 46.63 Fisheries Management Act 1991, section 161.64 Complaints (Australian Federal Police) Act 1981, section 79.

Distinguishing between Questions of Law and Fact

The approach of the Federal Court

3.9 Although the distinction is problematic, there are nevertheless general approaches which, while not identifying a single differentiating feature between these questions, provide bases for characterisation in certain cases.68 The Federal Court in recent times has most regularly relied upon the five guiding propositions formulated (with reference to many cases not cited below) by the Full Court in Collector of Customs v Pozzolanic Enterprises Ltd:69

1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law.

2. The ordinary meaning of a word or its non-legal technical meaning or interpretation is a question of fact.

3. The meaning of a technical legal term is a question of law.

4. The effect or construction of a term whose meaning is established is a question of law.

5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law. However, where a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fell within those words, the question as to whether they do or do not is generally one of fact.

The Agfa-Gevaert decision

3.10 The Council delayed finalising this report pending the delivery of judgment by the High Court in Collector of Customs v Agfa-Gevaert Ltd.70 The joint judgment of the five members of the Court who heard the case confirmed that

65 Where an English statute gives a right of appeal from a tribunal to a court, it is usually confined to a right of appeal on ‘a point of law’: Wade and Forsyth, Administrative Law, 7th edn, 1994, 945. For example, the Tribunals and Inquiries Act 1992 gives a right of appeal to a party ‘dissatisfied in point of law’ to the High Court.

66 A right of appeal is usually confined to an appeal on a point of law (although there are exceptions): Hogan & Morgan, Administrative Law in Ireland, 2nd edn, 1991, 392.

67 ‘First, and most common, is where an appeal is confined to a question of law’: Baxter, Administrative Law, Juta & Co Ltd, 1984, 709.

68 Nizich v Federal Commissioner of Taxation (1991) 91 ATC 4747, per French J at 4752.

69 (1993) 43 FCR 280, 287.70 (1996) 186 CLR 389. See para 1.21 above.


“no satisfactory test of universal application has yet been formulated”.71 Moreover, the Court queried the utility of the five propositions in Pozzolanic set out above. The Court criticised as ‘artificial, if not illusory’ the distinction between the identification of the ordinary meaning of a term (a question of fact) and the construction of the same term (a question of law), stating that:72

The meaning attributed to individual words in a phrase ultimately dictates the effect or construction that one gives to the phrase when taken as a whole and the approach that one adopts in determining the meaning of the individual words of that phrase is bound up in the syntactical construction of the phrase in question. In R v Brown [1996] 1 AC 543, 561, a recent House of Lords decision, Lord Hoffmann said:

“The fallacy of the Crown's argument is, I think, one common among lawyers, namely to treat the words of an English sentence as building blocks whose meaning cannot be affected by the rest of the sentence ... This is not the way language works. The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole.”

If notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction which is currently absent from the law.

3.11 Unfortunately, the High Court was not required to, and did not, resolve this issue, because counsel in effect conceded that a question of law existed. It appears that, notwithstanding the criticism in Agfa-Gevaert, the proposition in Pozzolanic will continue to be followed in the Federal Court.73

A NECESSARY DISTINCTION?

3.12 The distinction between a question of law and a question of fact is of twofold importance in relation to section 44: first, the existence of a question of law is a jurisdictional prerequisite, and secondly, the jurisdiction of the Federal Court is limited to determining the question of law. As the Full Court put it:74

The existence of a question of law is not merely a qualifying condition to ground an appeal from a decision of the Tribunal;

71 (1996) 186 CLR 389, 394.72 (1996) 186 CLR 389, 396-397.73 See Baxter Healthcare v Comptroller-General of Customs (Unreported, 21 February

1997); Australian Community Pharmacy Authority v Hanna (1997) 24 AAR 213, 220.74 Brown v Repatriation Commission (1985) 7 FCR 302, 304.


rather, it and it alone is the subject matter of the appeal, and the ambit of the appeal is confined to it.

By way of contrast, when review was undertaken by the Boards of Review, although it was still necessary to identify a question of law in order to appeal, once a question had been identified, the whole matter was brought before the Court.

3.13 In the light of the criticisms referred to above, a preliminary question is whether the distinction is, after all, necessary, in the sense that it is a distinction which must be maintained in the Commonwealth system of administrative review.

3.14 Under the Australian Constitution judicial review may not be excluded. If there were no such right of review it would follow that the AAT would be purportedly exercising the judicial power of the Commonwealth, in finally resolving matters between parties, in contravention of the separation of judicial and administrative powers required by the Constitution.

3.15 The distinction, in the present context, is of much less importance in the United States and Canada. In those countries, the separation of judicial and executive power is significantly weaker than in Australia. Not only do administrative tribunals determine questions of law such as the proper construction of a statute, but, applying what is known in the United States as ‘Chevron deference’, so long as the tribunal's construction is not in conflict with the plain meaning of the statute, the court will defer to it.75 (Indeed, in Canada, tribunals may refuse to apply a statute which, in the tribunal's opinion, is unconstitutional,76 although there are signs that Lamer C.J.C. at least considers that this is at odds with the fundamental principles of the Canadian constitution.77) The leading United States commentator has noted that ‘the Chevron doctrine all but does away with the law-fact distinction that has been so basic in American administrative law’.78

3.16 One way of avoiding the need for, or at least reducing the significance of, maintaining the fact/law distinction is that adopted in section 48 of the Australian Federal Police Act 1979, according to which

75 For the United States position, see Chevron USA v Natural Resources Defence Council 467 US 837 (1984), National Rail Passenger Corporation v Boston & Maine Corporation 503 US 407 (1992). For Canada, see CUPE Local 93 v New Brunswick (Liquor Corporation) [1979] 2 SCR 227, 237.

76 Douglas/Kwantlen Faculty Association v Douglas College [1990] 3 SCR 570; Cuddy Chicks v Ontario Labour Relations Board [1991] 2 SCR 5; Tetreault-Gadoury v Canada (Employment and Immigration Commission) [1991] 2 SCR 22. The trilogy of decisions is discussed in Holloway, ‘The Transformation of Canadian Administrative Law’ (1993) 6 Canadian Journal of Administrative Law and Practice 295.

77 Cooper v Canada (Human Rights Commission) (1996) 140 DLR (4th) 193, 199.78 Schwartz, ‘American Administrative Law: An Overview’ (1996) 45/46 Admin Review

14, 22.


an appeal lies from a decision of the Federal Police Disciplinary Tribunal to the Federal Court on ‘questions of law, questions of fact, or questions of both’. Another precedent was, for a short time, provided under section 61CZD of the Defence Act 1903. For a period in 1992 and 1993, where the AAT had determined an appeal from the Conscientious Objection Tribunal, a party to the AAT decision could:

appeal from the decision to the Federal Court on a ground involving a question of law only; or, with the leave of the Federal Court, appeal from the decision to that Court on any other ground.79

3.17 Clearly enough, a wider avenue of appeal will to a large extent eliminate the need to distinguish between questions of fact and questions of law. That issue is the subject of Chapter 4.

JUDICIAL REVIEW OF THE AAT

Should section 44 be repealed?

3.18 Alternatively, it has been suggested that the defects associated with section 44 may be cured by repealing that section and relying instead solely upon the grounds of review under the Administrative Decisions (Judicial Review) Act 1975 (the ADJR Act) and the Judiciary Act 1903.80 Those grounds would permit judicial review of decisions of the Tribunal on the grounds, amongst others, that the Tribunal had breached the rules of natural justice, had failed to observe procedures required by law or that the Tribunal's decision had involved an error of law.

3.19 Both the Kerr Committee and the Council in its Better Decisions report considered that the peak merits review tribunal should be subject to judicial review by the Federal Court.81 The Council left open the questions whether section 44 should be retained, or whether instead judicial review under the ADJR Act and section 39B of the Judiciary Act should entirely supplant section 44, because that was the subject of the present report.

3.20 While it is true that there is very considerable overlap between the scope of Federal Court review under section 44 and under the ADJR Act, the Council is of the view that the right of review pursuant to section 44 should be retained, for the reasons which follow.

3.21 First it is not clear that the repeal of section 44 would resolve the defects which have been identified. Only a larger power in the Federal

79 Defence Act 1903, section 61CZD (inserted by Defence Legislation Amendment Act 1992; removed by Defence Legislation Amendment Act 1993).

80 These grounds are reproduced at Appendix D.81 Commonwealth Administrative Review Committee Report, Parliamentary Paper No.

144 of 1971, Canberra, Commonwealth Government Printing Office, 1971, para. 231; Administrative Review Council, Report No. 39, Better Decisions: review of Commonwealth Merits Review Tribunals, Canberra, AGPS, 1995, para. 8.75.


Court in respect of facts, such as the old formulation ‘appeal involving a question of law’, would be certain to achieve that result.

3.22 Secondly the narrower section 44 formulation is consistent with the Court’s more limited role in fact finding where the Court is reviewing a decision of the Tribunal under section 44, as compared to the ADJR Act.82 For example, section 44, reproducing the common law, does not contain section 5(1)(h) or section 5(3) of the ADJR Act. Section 5(1)(h), as qualified by section 5(3), allows the Court to review a decision on the basis that there was no evidence or other material to justify the making of the decision.

3.23 The more limited role of the Court when reviewing a decision under section 44 is one which flows from the policy which gives the Tribunal, the peak merits review tribunal, primacy in fact finding. The retention of section 44 in its present form, whereby the appeal is limited to a question of law, supports that primacy.

3.24 The primacy referred to above is appropriate given that the Tribunal is better equipped than primary decision makers are to find facts and is a more appropriate forum for administrative fact finding than is the Federal Court. It is the Tribunal, not the Federal Court, which stands in the shoes of the decision-maker and exercises the decision maker’s powers and discretions and is thus part of that administrative continuum.

3.25 Thirdly, it is important that the AAT Act contains within its four corners a statement that the Tribunal is subject to judicial review and makes it clear that judicial review by the Federal Court is the primary remedy contemplated by the Parliament for review of the Tribunal's decisions.

3.26 Consistently with this approach, the Federal Court has construed section 44 as prescribing the ordinary basis upon which decisions of the Tribunal may be reviewed.83 Although there have been cases where either the ADJR Act or section 39B of the Judiciary Act (or both) have been used, those cases generally concern conduct falling outside the scope of the decision as that word is used in section 44.84 Those provisions have been used, for example, in cases where a bias is alleged on the part of the Tribunal member or where the procedures adopted by the Tribunal in reaching its decision have been questioned.

82 Minister for Immigration and Ethnic Affairs v Teo (1995) 57 FCR 94; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 and compare Curragh Queensland Mining v Daniel (1992) 34 FCR 212.

83 See Australian Fisheries Management Authority v PW Adams (1995) 61 FCR 314, 316.

84 See Director-General of Social Services v Chaney (1980) 47 FLR 80 and, for example, Australian Postal Commission v Hayes (1989) 23 FCR 320 and Khadem v Barbour (1995) 38 ALD 299, 21 AAR 555.


3.27 One beneficial consequence is that neither the Tribunal itself nor its members are ordinarily named as parties to the review, thus preserving impartiality in form.85 Thus the Tribunal is not seen to be defending its own decisions in matters which may be remitted to it by the Federal Court.

3.28 Fourthly, the retention of section 44 tends to impose some discipline on the parties to an appeal. When read with Order 53 rule 3 of the Federal Court Rules,

85 See R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13.


section 44 requires that the questions of law be identified.86 This is in sharp contrast to the not infrequent practice in applications under the ADJR Act where no errors of law are stated but the terms of section 5 of that Act are, without more, reproduced as the application.

3.29 For these reasons, the Council is of the view that the answer is not to repeal section 44 but to confer minor additional powers on the Court in relation to facts, where the exercise of that power would not conflict with the fact-finding by the Tribunal in the particular case. The Council notes that, although raised in the Discussion Paper, none of the submissions received proposed the repeal of section 44.

Appeals on questions of jurisdiction

3.30 It is convenient to deal here with the concern which was expressed in some of the submissions to the Council in relation to the inability of section 44 review to extend to review of preliminary decisions of the AAT concerning jurisdiction.87 This is a consequence of the decision of the Full Federal Court in Director-General of Social Services v Chaney,88 which held that a preliminary ruling by the AAT that it had jurisdiction to deal with an application was not a ‘decision’ for the purposes of section 44. That preliminary ruling could not therefore be the subject of an appeal under section 44.

3.31 The Council is of the view that no change is warranted as a consequence of this decision, for the following reasons:

(a) the decision is similar to the approach adopted in construing the term ‘decision’ in the ADJR Act;89

(b) if the AAT rules that it has no jurisdiction, an appeal will lie pursuant to section 44;

(c) if the question of jurisdiction is disputed, then the parties may seek to have the question referred to the Federal Court pursuant to section 45;90 and

86 Australian Telecommunications Commission v Lambroglou (1990) 12 AAR 515.87 See the submissions of the Administrative Law Committee of the Law Council of

Australia and from the Australian Government Solicitor.88 (1980) 47 FLR 80. 89 See, for example, Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321.90 See Director-General of Social Services v Chaney (1980) 47 FLR 80, 107.


(d) jurisdiction can also be challenged in the Federal Court by seeking prohibition.91 This was not available in Chaney because section 39B of the Judiciary Act was not in force when Chaney was decided.92

3.32 Given the existence of other mechanisms for interlocutory appeals on jurisdiction the Council is of the view that the scope for such appeals should not be enlarged. The capacity of a government department or statutory authority to challenge jurisdiction could expose the applicant to expensive and time-consuming appeals.93

91 Prohibition is an order issued by the Court preventing a tribunal, which is acting in excess of its jurisdiction, from proceeding any further (Nygh and Butt (eds) Butterworths Australian Legal Dictionary, Butterworths, Sydney, 1997).

92 (1980) 47 FLR 80, 99, 101-102 per Deane J, with whom Fisher J agreed.93 See para. 4.13 below.

CHAPTER 4

A FULL APPEAL TO THE FEDERAL COURT?

INTRODUCTION

4.1 This Chapter considers whether section 44 should be expanded so as to provide for a right of appeal not merely on a question of law, but in respect of the entire matter. The Court would review the decision and reasons of the AAT in the light of the entirety of the material before it, in much the same way as a right of appeal to intermediate appellate courts exists from decisions of a single judge of a Supreme or Federal Court.

4.2 The expansion could be achieved in at least three ways:

(a) a right of appeal per se (cf. Federal Court of Australia Act 1976, section 24);

(b) a right of appeal where the proceeding ‘involved’ a question of law (cf. Income Tax Assessment Act 1936, section 196 (repealed));

(c) a right of appeal where the proceeding ‘involved’ a question of law, and otherwise by leave (cf. Defence Act 1903 section 61CZD (repealed)).

It is convenient to deal with the various possibilities together. What is common to all is that the entirety of the matter, not just a question of law, would be before the Federal Court.

4.3 This Chapter deals with a general expansion of section 44. The following Chapter deals with whether different treatment is warranted in the case of taxation or patents appeals, to which not all of the factors mentioned below apply with equal force.

OVERVIEW OF SUBMISSIONS

4.4 Only a minority of the submissions to the Council argued in favour of a general expansion of section 44. Those which so contended were predominantly those from non-government practitioners94 or non-government professional associations.95 On the other hand, some non-

94 Including Mr Matthew Smith and Mr R O'Connor Q.C.95 Including the Business Law Section of the Law Council of Australia (prepared in

conjunction with the Taxation Institute of Australia and the Institute of Chartered Accountants); the Taxpayers Association of Tasmania and the Law Institute of Victoria. The Tax Unit of the Australian Government Solicitor also supported the proposal as it applied to taxation matters.


government interests were opposed to such amendments,96 as were almost all of the government departments and statutory authorities which made submissions.97 Neither the AAT nor the judges of the Federal Court favoured a general expansion of section 44.

SCOPE OF THE PROBLEM

4.5 Before turning to the arguments for and against an expansion of section 44, it is useful to appreciate the relative number of appeals from the AAT. The following table sets out recent statistics:98

Applications to the AAT

92/93 93/94 94/95 95/96 96/97

Gen. and Vet.

4696 4586 5373 5669 6080

Taxation 861 1444 931 843 769

Total 5557 6030 6304 6512 6849

Hearings by the AAT

92/93 93/94 94/95 95/96 96/97

Gen. and Vet.

1166 1110 1189 1361 1667

Taxation 129 89 97 92 89

Total 1295 1199 1286 1453 1756

Appeals to the Federal Court

92/93 93/94 94/95 95/96 96/97

96 The Queensland Bar Association, the Administrative Law Section of the Law Council of Australia.

97 Department of Defence, Department of Employment, Education and Training, Repatriation Commission, Department of Immigration and Ethnic Affairs, Comcare, Australian Securities Commission. The same position was adopted by most of the submissions originating from branches within the Attorney-General's Department.

98 Source: AAT Annual Reports. Statistics for 1996/1997 are preliminary. The "Appeals" figures indicate the number of appeals lodged in the Federal Court (several AAT applications may be the subject of a single appeal).

A Full Appeal to the Federal Court?

Gen. and Vet.

108 90 116 132 151

Taxation 24 32 34 41 30

Total 132 122 150 173 181

4.6 These figures show that (a) around 75-80% of applications are discontinued or settled without going to hearing, and (b) of those that are determined by the AAT, around 10-15% are taken on appeal to the Federal Court. They comprise approximately 4% of applications commenced in the Federal Court, although it is important to appreciate that because such applications are confined to questions of law they consume less than 1% of judges' time.99 More detailed consideration of statistics relating to taxation appeals appears in Chapter 5.

SUBMISSIONS IN FAVOUR OF BROADENING THE SCOPE OF APPEALS

4.7 First, an expansion of section 44 would remove or at least reduce the need to distinguish between questions of fact and law. Parties would have greater certainty as to whether their appeal was well-founded, and there would be no (or less) Court time consumed in jurisdictional debate.

4.8 Secondly, the Federal Court would be able to review the AAT's findings of fact. Of course, it would be accepted that an appellate court can only interfere with findings of fact based upon the acceptance of evidence of a witness or the rejection of evidence of another witness if it is satisfied that the advantages enjoyed by the Tribunal Member would not justify the finding made.100 This, it is said, would answer the most strongly perceived complaint concerning the operation of the AAT. Some submissions observed that while parties before the AAT could accept that a decision turned on a question of law, they found it difficult to accept an erroneous finding of fact, especially when it was not possible to appeal against it.101 Similarly, a number of judges have observed that the difficulty with the distinction between questions of fact and law is exacerbated by the ingenuity of counsel who, in seeking to review a finding of fact, have attempted to transmute the issue into a question of law.102

99 Statistics provided by the Federal Court to the Administrative Review Council.100 Abalos v Australian Postal Commission (1990) 171 CLR 167, 178; Devries v

Australian National Railways Commission (1993) 177 CLR 472; and see Barry, ‘Appellate Review of Procedural and Factual Error’ (1991) 65 ALJ 720.

101 See also Barry, ‘Appellate Review of Procedural and Factual Error‘(1991) 65 ALJ 720.


4.9 Thirdly, it would cure what has been described as the problem of proceedings ‘looping’ between the AAT and the Federal Court. Because the Federal Court cannot make its own findings of fact, it is ordinarily necessary when it finds that there has been an error of law for it to remit the matter back to the AAT. There is then the possibility of one or more further appeals to the Federal Court, such as occurred, notoriously, in the Fletcher and Blackman

102 For example, in Politis v Federal Commissioner of Taxation (1990) 16 ALD 707, Lockhart J commented (at 709) that ‘in substance the applicant sought to transmute questions of fact into questions of law’. The committee of Federal Court judges which advised the Council also made this point.


litigation.103 This issue, which is said by some to be a particular feature of taxation appeals, is further dealt with in Chapters 5 and 6.

4.10 Finally, the Council notes that the potential constitutional flaw in the present section 44 identified by Justice Gummow in TNT Skypak would be cured by amendments of this nature.

SUBMISSIONS OPPOSING BROADENING THE SCOPE OF APPEALS

4.11 The Council considers that the AAT should provide a mechanism of review which is ‘fair, just, economical, informal and quick’.104 A number of submissions expressed concern that an expansion of the scope of appeal would impact negatively upon the operation of the AAT. Too much interference by judges could promote excessive legality and technicality in the proceedings of the AAT, and hinder the effectiveness of its fact-finding.105 Former members of the Boards of Review were unwilling to rely on material which was not admissible in a court.106 Moreover, if an appeal lies of right to the Federal Court, parties may not prepare their case so well in the AAT.

4.12 Secondly, in many of its jurisdictions, the AAT is the second or even third tier of merits review.107 Adverse social security and student assistance decisions are reviewed internally before external merits

103 The Law Council of Australia provided an outline of the Fletcher and Blackman litigation in its submission of 18 September 1995. The Fletcher litigation involved the deductibility of interest. It was heard initially by the AAT. There was an appeal to the Federal Court which remitted the matter to the AAT. The second Tribunal found for the Commissioner and the taxpayer again appealed to the Full Federal Court which dismissed the appeal (90 ATC 4559). The taxpayer then appealed to the Full High Court ((1991) 173 CLR 1) which remitted the matter back to the AAT. At the third hearing before the AAT the decision of the Commissioner was upheld. The taxpayer appealed again and the Commissioner sought security for costs (92 ATC 4437). The appeal was dismissed (92 ATC 4611). The Blackman litigation involved the characterisation of a payment received by the taxpayer's family trust. The Commissioner of Taxation successfully appealed to the Federal Court from the AAT's decision on the basis that the Tribunal erred in law (92 ATC 4061). The matter was remitted to the Tribunal for rehearing. The second tribunal found for the Commissioner on the basis that the taxpayer had failed to discharge an onus of proof. This decision was set aside by the Full Federal Court which remitted the matter to a reconstituted Tribunal (93 ATC 4538). A third hearing was conducted by the Tribunal which upheld the assessment. At the time of the Law Council's submission that third decision was on appeal. For a further description of the litigation see Slater ‘Inadequate Fact Finding in the Tribunal’, CCH Journal of Australian Taxation 6(1) February/March 1994, 35.

104 Administrative Review Council, Report No. 39, Better Decisions: review of Commonwealth Merits Review Tribunals, Canberra, AGPS 1995, paras. 2.35 - 2.42.

105 Submission of Bar Association of Queensland.106 Administrative Review Council, Report No. 17, Review of Taxation Decisions by

Boards of Review, Canberra, AGPS, 1983, para. 158.


review is available, while internal review of all decisions of the Australian Taxation Office is available on request. The Social Security Appeals Tribunal and the Veterans' Review Board provide external merits review of decisions, from which a further appeal on the merits lies to the AAT. Accordingly, it was submitted, there is no need to broaden section 44 to include factual material which may have been traversed two or three times before. (Of course, this argument is not as strong where there are fewer tiers of review available or where review on the merits is in some way restricted.)

4.13 Thirdly, an appeal as of right may deter some applicants from seeking review in the AAT. Presently, a person knows that the facts of his or her case will be determined by the AAT, where no costs orders lie, without review in a court other than on questions of law. In a slightly different context, Justice Deane has deprecated the possibility that:108

the individual subject who challenged a decision of the executive before the Tribunal would not only have no assurance of an orderly and reasonably prompt resolution of his or her case by the Tribunal but that, in confronting the executive even if only to claim a widow's mite, he or she would be stepping into a maze in which the financial ruin of a myriad of possible appeals awaited at the whim of those who fund their enthusiasm for the fray not from their own purses but from the long purse of Government.

4.14 Fourthly, one Federal Court judge observed that permitting the Court to review the AAT's findings of fact would increase the risk that the AAT would be held to be part of the federal judiciary. The AAT's position was more precarious than that of the Boards of Review, which survived challenge in the second British Imperial Oil cases, because the AAT determined appeals from specialist bodies such as the Veterans' Review Board and the Social Security Appeals Tribunal.

4.15 Fifthly, it would seem inevitable that a widening of section 44 would lead to a larger number of appeals. This has important resource and access to justice implications. A number of submissions emphasised the importance of an attempt being made to assess quantitatively the consequences of suggested reforms.109 The Council is of the same opinion.

4.16 In his submission, Justice Kirby, then President of the New South Wales Court of Appeal, noted that, in 1989, appeals from the

107 See Administrative Review Council, Discussion Paper, Review of Commonwealth Merits Review Tribunals, Canberra, AGPS, 1994, paras. 3.15 - 3.17; Administrative Review Council, Report No. 39, Better Decisions: review of Commonwealth Merits Review Tribunals, Canberra AGPS, 1995, paras. 6.44 - 6.48.

108 Director-General of Social Services v Chaney (1980) 47 FLR 80, 103.109 See, for example, submissions of Justice Kirby and Mr Stephen Lloyd.


Compensation Court of New South Wales, which formerly had been confined to a question of law, were expanded in a way similar to the amendments considered in this Chapter. The following paragraphs contain details of the actual statistics relating to appeals from that Court.

4.17 Of course, there are significant differences between the Compensation Court and the AAT, and it is not suggested that the analysis below is more than crudely applicable to the proposed amendments to section 44, although there are some distinct parallels between the Compensation Court and the General and Veterans Division of the AAT, and the actual amendments made to the Compensation Court Act 1984 (NSW) very closely mirror the proposed amendments to section 44.

Appeals from the Compensation Court of New South Wales - a case study

4.18 The Compensation Court Act 1984 established the Compensation Court of New South Wales, in which is vested jurisdiction to hear and determine workers' compensation matters. At all times in its history, appeals lay to the Court of Appeal.110

4.19 Until 1989, appeals were confined to questions of law,111 and the Court of Appeal adopted a relatively narrow concept of what was a ‘question of law’. In Azzopardi v Tasman UER Industries 112 the Court of Appeal held that there was no error of law in making a finding of fact for which there was some evidence, even though the finding was “perverse”. The stringency of this standard, and the occasional criticism of the apparent injustices it produced,113 led to the amendment of section 32 in 1989.114 After 1989, appeals lay as of right to the Court of Appeal, unless there was no point of law and the compensation did not exceed $5,000. Where there was no question of law and the compensation awarded was less than $5,000, an appeal still lay, with leave.115 110 See Supreme Court Act 1970 (NSW), section 48.111 Section 32(1) provided:

"If a party to any proceeding before the Court (other than proceedings before a commissioner or registrar) is aggrieved by an award of the Court in point of law or in relation to the admission or rejection of any evidence, that party may appeal to the Supreme Court."

112 (1985) 4 NSWLR 139.113 For example, see the comments of Kirby P in Gaven v Goyder Tyre & Rubber

(unreported, Court of Appeal, 2 December 1986) and Soulemezis v Dudley (Holdings) (1987) 10 NSWLR 247, 253-254.

114 See Pitcher v Langford (1991) 23 NSWLR 142, 143.115 By the Compensation Court (Amendment) Act 1989 (NSW), section 32 was

amended so as to provide:(1) A party aggrieved by an award of the Court constituted by a judge may

appeal to the Supreme Court....


4.20 This amendment resulted in an increase in the number of appeals to the Court of Appeal. The statistics from the Compensation Court are as follows:116

Year Awards made by judges

Number of judges

Appeals

1986 na 13 421987 na 13 621988 na 13 601989 na 13 461990 na 13 1201991 7057 13 1341992 6784 13 1351993 6715 13 861994 8532 14 831995 8958 16 791996 8766 17 56117

4.21 In the words of Justice Kirby's submission to the Council, the amendment of section 32:

has had a very great consequence for the workload of the Court of Appeal. It has necessitated the adoption of new procedures simply to cope with that workload.

Those procedures included ‘pro-active case management’, identifying suitable test cases, arranging lists of similar cases to be called over.118

4.22 The overwhelming majority of appeals brought after 1989 were either discontinued prior to hearing, or were heard and dismissed with costs.119

4.23 In 1995, the New South Wales Parliament further amended section 32 to return to the position which prevailed before 1989.120

(3) If an appeal involves neither:(a) a point of law or the admission or rejection of any evidence; nor(b) compensation amounting to $5,000 or more,the appeal lies by leave of the Supreme Court.

(4) In any other case, the appeal lies as of right.116 Source: Manager Client Services, Compensation Court of New South Wales.117 The reduction in 1996 presumably reflects the 1995 amendment discussed in

para. 4.24.118 A research officer was assigned the task of reviewing all the appeals from the

Compensation Court: Supreme Court Annual Review, 1994, 36.119 For example, in 1996, of 70 appeals heard by the Court of Appeal, 53 (76%)

were dismissed with costs, 12 were allowed, and 5 were allowed in part. An unknown number of appeals were dismissed prior to hearing. Source: 1996 NSW Court of Appeal Judgments Bulletin.


4.24 Of course, care must be taken when attempting to extrapolate from those statistics expected consequences in a different jurisdiction. In particular, the narrowness of the Azzopardi standard of review prior to 1989 might well have resulted in a greater increase in appeals than would expanding the scope of section 44. It is obviously not valid to conclude from the material presented above that an expansion of section 44 will lead to a fivefold increase in the

120 The WorkCover Legislation Amendment Act 1995 (NSW), assented to on 19 December 1995, amended section 32 to reflect in substance the provisions of the original Act. It is too early for the available statistics to give a reliable indication of what effect this has had.


number of appeals to the Federal Court, nor that the preponderant majority of those appeals will be dismissed.

4.25 Nevertheless, it is clear that an expansion in the scope of appeals under section 44 will certainly increase the number of appeals brought to the Federal Court, and, quite possibly, the increase may be very considerable. The statistics tend to support the submission by the AAT that such an expansion of section 44 would lead to ‘an unjustified proliferation of appeals’. Moreover, individual appeals would necessarily take longer, which would materially increase consumption of the Court's resources (cf. para 4.6 above).

ACCESS TO JUSTICE

4.26 Clearly, broadening the scope of section 44 will result in significant resource implications. Moreover, if the result is:

(a) a substantial increase in the likelihood that a party successful before the AAT will be taken to the Federal Court;

(b) the certainty of additional time and costs incurred in preparing and conducting the Federal Court appeal; and

(c) an increased waiting time before the Federal Court is able to hear the appeal,

then it may fairly be said that access to justice has suffered.

4.27 The Council is of the opinion that section 44 should not be extended so as to provide for a full right of appeal to the Federal Court, across all jurisdictions of the AAT.

4.28 In relation to an earlier proposal to allow a full appeal to the Federal Court, the Council has advised that it was:121

inconsistent with the basic design of the Commonwealth administrative review system under which the AAT provides comprehensive and final merits review, with an avenue of further appeal to the Federal Court only on questions of law.

4.29 In Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (NSW) No. 2, Justice Fisher stated that:122

... this Court when hearing appeals from a Tribunal constituted for the purpose of reviewing decisions of [an administrative] nature, should adopt a restrained approach. Parliament contemplated

121 Administrative Review Council, Sixteenth Annual Report 1991-92, Canberra, AGPS, 1992, 121.

122 (1980) 47 FLR 131, 145.


that only in exceptional circumstances should the decision of the Tribunal not be the final decision.

4.30 Accordingly, the Council expressed its preliminary view in the Discussion Paper that the AAT should be the final arbiter of factual issues, with the role of the Federal Court limited to supervising the legality of the AAT's decision-making process and decision.123

4.31 The Council does not consider that the matters raised warrant a fundamental change in the system of Commonwealth administrative law. The primary arbiter of facts should continue to be the AAT.

123 Para. 2.23 of the Discussion Paper.

CHAPTER 5

SHOULD TAXATION AND PATENT APPEALS BE TREATED DIFFERENTLY?

INTRODUCTION

5.1 This Chapter considers the features which are peculiar to taxation and patents appeals, and whether a separate regime should apply.

5.2 Not only are taxation and patent appeals in some respects different from other proceedings within the AAT's jurisdiction, but they themselves are dissimilar in many respects, although they share a long history of adjudication in federal courts. It is convenient in this Chapter to deal with the two species of appeals separately.

SUBMISSIONS FROM THE FEDERAL COURT

5.3 The committee of judges of the Federal Court consulted by the Council expressed the strong view that administrative decision making was not all of the same genus, and was not all equally suited to merits review by the AAT. In particular, it was said that the notion of ‘fact finding’ was extremely artificial when applied to revenue and intellectual property laws, because the legal norms and the facts are so complex and intertwined.

5.4 Secondly, unlike the other heads of jurisdiction of the AAT, taxation and patents decisions have a history of treatment in federal law which long antedates the AAT. Moreover, each field was said to require a level of expertise on the part of the decision maker above that to be expected of the AAT.

5.5 Thirdly, the potential for constitutional problems was less in the case of taxation appeals, because of the precedent of the Boards of Review, which had been upheld in the British Imperial Oil Co cases.

TAXATION APPEALS

Overview of taxation appeals

5.6 As was stated in Chapter 1, the jurisdiction of the Boards of Review was transferred to the AAT in 1986, following a recommendation of the Council.124 In certain tangible respects, this has been extremely successful.125 By 1 July 1987, the AAT had inherited around 75,000

124 Administrative Review Council, Report No. 17, Review of Taxation Decisions by Boards of Review, Canberra, AGPS, 1983.

125 See Schabe, ‘The Taxation Appeals Division of the Commonwealth Administrative Appeals Tribunal’, in Administrative Law: Does the Public Benefit? Proceedings of

Should Taxation and Patent Appeals be Treated Differently?

appeals from the former Boards.126 By December 1991, the backlog had been largely cleared, partly by holding pre-trial conferences and partly because the ATO settled many of the objections.127

5.7 The table below is confined to proceedings in the Taxation Division of the AAT. It sets out the numbers of applications lodged, hearings determined by the AAT, appeals to the Federal Court,128 and the outcomes of those appeals:129

92/93 93/94 94/95 95/96 96/97Applications 861 1444 931 843 769Hearings 129 89 97 92 89Total appeals 26 32 34130 41 30

Appeal outcome

92/93 93/94 94/95 95/96 96/97

Allowed/remitted

6 6 2 10 2

Dismissed 10 20 11 7 12Discontinued 10 7 13 3 7Other 0 1 1 3 12Total 26 34 27 23 33

5.8 Although most of these appeals have been successful, there has been a higher percentage of AAT decisions subject to appeal than was the case with the Boards of Review, and the first three years of the AAT (in which the appeal rate was 2%, 4% and 6%).131 Schabe suggests that at least three factors have influenced this change:132

(a) the increase in filing fees from $2 to $300 has eliminated large numbers of spurious cases: thus matters before the AAT are more likely to raise

the Australian Institute of Administrative Law Forum, April 1992, McMillan (ed), 364; Gerber, ‘Are Practitioners Fed Up?’ (1994) 28 Taxation in Australia 499.

126 Schabe, ibid.127 There were 1729 outstanding applications, and most of those concerned the

Fletcher/Dunlop scheme: see Schabe, op cit.128 If multiple proceedings in the AAT give rise to a single appeal in the Federal Court,

it is only counted once.129 Source: Administrative Appeals Tribunal Annual Reports. Figures for 1996/97 are

preliminary.130 In 1994/95, 300 appeals were lodged from a single decision of the AAT,

concerning a related group of companies. These appeals have only been counted once.

131 Schabe, above n 125, 364.132 Ibid.


significant issues;133

(b) the Commissioner has become more amenable to settling disputes, with the result that the proceedings which are determined by the AAT are more likely to be contentious; and

(c) many of the proceedings are ‘test’ cases which have been thrown up largely as a result of the Commissioner's audits revealing new and untested issues.

Submissions supporting special treatment for taxation appeals

5.9 The Business Law Section of the Law Council of Australia (in whose submission the Taxation Institute of Australia and the Institute of Chartered Accountants joined) emphasised that, very often, the review of a taxation decision involves either a question of characterisation, or a question of discretion.

5.10 It was said that often the basic facts relating to the particular transaction are entirely or relatively uncontested, and the task on review is to characterise the transaction against statutory criteria. That has two consequences: first, ordinarily, the issues raised are suited to determination by a court. Secondly, it is in respect of these issues that the distinction between questions of law and questions of fact is hardest to maintain.

5.11 Similarly, Slater has contended that taxation appeals are in a different category from what he termed ‘citizen's rights’ appeals:134

Notably, taxation and commercial disputes frequently involve far more complex issues of fact and law and much greater amounts of money.

5.12 Of course, unlike the majority of other applicants before the AAT, taxpayers who seek a review of a decision by the Commissioner may have the alternative of by-passing the AAT and proceeding directly to the Federal Court.135

5.13 However, the Business Law Section of the Law Council of Australia was concerned to point out that an extremely important aspect of the review of Australian Taxation Office decisions relates to the exercise of various discretions:

133 Schabe suggests at 369 that the increase in filing fees “dramatically reduced those cases - however meritorious - where the amount in dispute does not make the game worth playing. These cases are generally determined at the objection stage, and, if unsuccessful are abandoned.”

134 Slater, ‘Inadequate Fact Finding in the Tribunal’ CCH Journal of Australian Taxation 6(1) February/March 1994, 35.

135 Taxation Administration Act 1953, Pt IVC.


Taxation legislation contains many areas in which critical issues depend upon the opinion, satisfaction or determination of the Commissioner. These


are discretionary decisions which are not reviewable on the merits by a court. For example, in 1991 the Australian Taxation Office compiled a list of the areas in which the Commissioner's pre-assessment discretions were causing the greatest practical difficulties. These were as follows:

Traditional securities section 26BBSuperannuation/ETPs section 27A-section 27JTrading Stock section 28-section 37Dividends section 44-section 47ALeveraged Leasing section 51ADLosses section 79E-section 80GTrust Income section 95-section 102Income of minors section 102AA-section 102AJPrivate companies section 103-section 109Australian Films section 124ZAA-section 124ZAPNon-leveraged finance lease section 159GE-section

159GOSecurities (accruals) section 159GP-section 159GZCapital gains and losses section 160H-section 160ZZUSuperannuation business section 267-section 315.

5.14 A further important area is penalty taxes.136 An appeal against a penalty on the ground that it is manifestly excessive does not raise a question of law.137 If a taxpayer wishes to review a penalty which has been assessed, or the exercise by the Commissioner of any of the above admittedly complex discretions, there is no choice but to apply to the AAT, unless the taxpayer seeks to contend that the discretion has sufficiently miscarried as to amount to an error of law.138

5.15 For those reasons, in other words, the choice between review by the AAT and an appeal to the Federal Court is, it is contended, in many cases, illusory.

Submissions opposing special treatment for taxation appeals

5.16 The Administrative Law Committee of the Law Council of Australia strongly contended that the same review process should apply generally to decision making at the Commonwealth level:

There is nothing inherently special about either the taxation jurisdiction or the patents jurisdiction. Indeed, the thrust of administrative review reforms in the income taxation area since the late 1970s has been to bring the jurisdiction into the mainstream of administrative review to ensure a degree of parity of decision making and review with other areas of Commonwealth decision

136 As noted in the submissions of Mr Roach and the Law Council of Australia (Business Law Section).

137 Phillips v Estate Agents Board [1988] VR 179 at 182.138 Slater, above n 134, 36-37.


making. It would be a mistake to move away from the present cohesion of the administrative law package by providing in the taxation and patents area for a different basis of appeal from the AAT to the Federal Court.A consistent approach across jurisdictions is conducive of greater overall equity in the system.

5.17 The tenor of that submission was echoed in the submissions from the AAT and from government departments and statutory authorities.

Review of taxation decisions in Victoria

5.18 Appeals lie to the Supreme Court of Victoria from a decision of the Victorian Administrative Appeals Tribunal under section 52 of Administrative Appeals Tribunal Act 1984 (the Victorian AAT Act). Like the Commonwealth regime, the existence of a question of law is not only a precondition of the right to appeal, it is the subject matter of the appeal itself.139

5.19 However, the Victorian Parliament has made separate provision in relation to decisions under ‘taxing Acts’, which are defined to mean the Business Franchise (Tobacco) Act 1974, the Debits Tax Act 1990, the Financial Institutions Duty Act 1982, the Gift Duty Act 1971, the Land Tax Act 1958, the Pay-roll Tax Act 1971, the Probate Duty Act 1962, the Stamps Act 1958 and the Taxation Administration Act 1997.140 Many of the provisions of the Victorian AAT Act do not apply or apply differently to taxing Acts.141

5.20 Of present relevance is the different regime which applies in the case of objections and appeals. In the case of each of the taxing Acts referred to above, a taxpayer who is dissatisfied with the decision of the relevant decision maker on objection may choose either to have the decision reviewed in the Victorian AAT, or alternatively to appeal directly to the Supreme Court. What is most significant for present purposes is that, in the case of some of the taxing Acts, if the taxpayer has elected to refer the decision to the Tribunal, a further appeal lies to the Supreme Court ‘from any decision of the Tribunal under this section which in the opinion of the Court, involves a question of law’.142 In other words, in Victoria, appeals from the AAT on some State tax matters can be brought on similar grounds to appeals from Taxation Boards of Review prior to 1986.

5.21 However, under the process of review presently being conducted by the Victorian Attorney-General's Working Party on Tribunals, which is

139 See Kyrou, Administrative Law, Law Book Company Ltd, para. 1025.140 See AAT Act (Vic), section 3(1).141 See, for example, sections 19(2), 25(4), 27(4), 29(10), 30, 31(6), 32(2), 33(1),

34(1), 36(9), 37(2), 38(1)(a), 46(7), 50(1), 64, 66(2).142 See, for example, Business Franchise (Tobacco) Act 1974, sections17-18CA; Land

Tax Act 1958, sections 24A-29; Probate Duty Act 1962, sections 19A-19FA; Stamps Act 1958, sections 33A-33GA.


scheduled to introduce new legislation into Parliament shortly, it is intended to confine review of all decisions of the AAT to judicial review coupled with appeals on questions of law.143

143 See Discussion Paper: Tribunals in the Department of Justice: A Principled Approach, issued by the Attorney-General in October 1996, 11,16.


The Council's conclusions

5.22 When the Council recommended the transfer of jurisdiction from the Boards of Review to the AAT, it took into account the narrowing of the scope of appeals which would result:144

As appeals from the AAT to the Federal Court may be made only on questions of law, appeals would no longer be by way of rehearing the matter, as presently occurs in hearings before the Supreme Courts. While such a consequence clearly limits the issues which can be raised on appeal, it will assist comprehensive treatment of issues before the AAT. As was explained by several Board Chairmen and members, the Boards presently feel constrained to exclude evidence which would not be admissible on a rehearing by a Court. That the AAT is not so limited is seen by the Council as likely to enhance the ability of the AAT to deal with taxation matters in a manner consistent with the original role envisaged for the Boards. Moreover, as section 45 of the AAT Act provides that the AAT may refer a question of law to the Federal Court of Australia and that, if it does so, the jurisdiction will be exercised by that Court constituted as a Full Court, there would be a ready means of having important questions of law specifically determined without the necessity of there being lengthy lower court or tribunal proceedings.

5.23 There are undeniably some differences between taxation appeals and some other heads of AAT jurisdiction. There are also areas in which rights of appeal have existed for many decades, and of course still exist, directly to a court. The taxpayer has been able to choose, for many decades, whether to proceed directly to a court, or to have a decision reviewed by a Board of Review or the AAT.145

5.24 However, the Council considers that the differences, and in particular the existence of that choice, do not warrant further differentiation in the system of Commonwealth administrative law. A major theme underlying the reports in the early 1970s, and the continuing accretion of jurisdiction to the AAT, has been the desirability of developing a comprehensive, coherent and integrated system of Commonwealth administrative law. The recent reforms announced in New South Wales and Victoria are also designed to achieve that end.

5.25 The Council is of the view that there is no reason of principle for treating taxation matters which are determined by the AAT differently. Moreover, certain of the problems (such as the need to remit

144 Administrative Review Council, Report No. 17, Review of Taxation Decisions by Boards of Review, para. 158.

145 An anomalous situation prevails in the Australian Capital Territory, where section 91 of the Taxation (Administration) Act 1987 requires a taxpayer to proceed first to the (ACT) AAT, even if the question is entirely a question of law and the matter will inevitably be appealed to a court (see, for example, Lion Nathan Brewing v Commissioner of ACT Revenue (1996) 96 ATC 4646).


proceedings to the AAT to make further findings of fact) are problems which are shared throughout the AAT's jurisdiction.


Although criticism has been most vocal in the case of the ‘looping’ in the Fletcher and Blackman taxation cases,146 it exists in the veterans’ and social security area.147 This problem should be addressed, and is addressed in the following Chapter, on a general basis.

PATENTS APPEALS

5.26 As has been noted in para 1.6, the present report was prompted in part by the Council's inquiry into the administrative review of patents decisions. One of the objectives of that inquiry is to determine whether the present allocation of decisions for review by the AAT or the Federal Court is appropriate. At present it is generally true to say that review lies to the AAT in respect of procedural decisions of the Commissioner, while appeals on fundamental matters such as the acceptance of a patent application, the outcome of an opposition, the extension of a patent, and the revocation of a patent lie to the Federal Court.148

5.27 Under the present legislative scheme, very few decisions are reviewed by the AAT. For example, in the 1994/95 year, only 1 application for review was lodged with the AAT.149 Most appeals are taken directly to the Federal Court.150

5.28 Not only do some patents decisions (such as the question whether there is an ‘inventive step’) present extremely complex mixed questions of fact and law, but also, at least in the case of opposition proceedings, they are fundamentally different from other matters within the jurisdiction of the AAT. When a matter is dealt with as a fully contested opposition proceeding, there can be considerable technical evidence called on both sides, and complex reasons for the Commissioner's decision. The dispute is between two private parties, neither of which represents the Executive.

5.29 These issues will be considered more closely in the Council's report on patents decisions. Under the legislative regime as it presently stands, the Council is of the opinion that those decisions of the Commissioner of Patents which are reviewable by the AAT should be subject to the same rights of appeal as other decisions of the AAT.

146 See para. 4.9.147 See the cases involving Mr Bushell, Mrs Lowerson, Mrs Nicholson and Mr Nation in

the veterans' area; and Mr Kalwy in the social security area, as noted in the submission of Mr Smith.

148 See Administrative Review Council, Issues Paper, Administrative Review and Patents Decisions, Canberra, 1993, 26-33.

149 Administrative Appeals Tribunal Annual Report 1994-95, 112.150 See Howard, ‘Applying to the AAT for Review of Decisions of the Commissioner of

Patents’ (1993) August Intellectual Property Forum 28. See also submission from Banki Palombi Haddock & Fiora.

CHAPTER 6

ADDITIONAL FINDINGS, ADDITIONAL EVIDENCE AND REFERRALS

INTRODUCTION

6.1 This Chapter considers whether the Federal Court's powers on an appeal under section 44 should be extended to making additional findings of fact and, if so, whether any restrictions should be placed on that power. It also deals with whether parties should be permitted to adduce evidence which was not led in the proceedings before the AAT, and whether the AAT should have the power to refer entire applications to the Federal Court.

ADDITIONAL FINDINGS OF FACT

6.2 As has been noted in earlier Chapters, one of the principal criticisms of the present system which confines appeals to the Federal Court to questions of law is that where an error of law is identified, it will usually be necessary for the Court to remit the matter to the AAT for redetermination if further findings of fact need to be made. The majority of the High Court stated in Harris v Director-General of Social Security:151

The jurisdiction of the Federal Court of Australia is limited to appeals from the Tribunal on questions of law (s. 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth)), though that court “may make such order as it thinks appropriate by reason of its decision” (s. 44(4)). Where the decision under review by the Tribunal turns on a question of fact, the Federal Court ... should by its order leave to the Tribunal the function of finding the facts if the Tribunal has not already found them. The Tribunal is bound to find the facts in accordance with the principles expressed in the judgment of the court.

As stated in paragraph 5.25, this problem arises on occasion in all of the jurisdictions of the AAT.

6.3 The need to remit a matter results in delay, increased costs, and the possibility of ‘looping’ (if there is a further appeal from AAT). Further, it appears to be unfair that, because orders for costs ordinarily follow the event, a successful appellant in the Federal Court will ordinarily obtain his or her costs, even if the appellant is unlikely to succeed on a rehearing in the AAT. This factor may also result in an increased number of appeals.

151 (1985) 7 ALD 277, 284.

Additional Findings, Additional Evidence and Referrals

6.4 A recent taxation appeal determined by Justice Hill indicates the limitations of the present system, as well as the extent to which the Federal Court is able to minimise inconvenience to the parties. In Lees & Leech v Commissioner of Taxation,152 what was in issue before Justice Hill was the assessability of an amount of some $36,760 received by the applicant from its landlord, in return for covenanting to effect certain improvements. It was contended by the Commissioner, and upheld by the AAT, that the amount was a lease incentive and therefore assessable income. Justice Hill set aside the Tribunal's decision, which did not address the correct question, namely, whether the tenant had made a profit from the improvements. His Honour then concluded as follows:

Although I think it is clear enough on the evidence that there was not substantial gain to the applicant, there is no finding to this effect by the Tribunal. The matter would have to go back to the Tribunal for determination whether there was a gain, and, if so, the extent of that gain, unless the parties agreed that the quantum of any gain in the circumstances was nominal, thereby avoiding the necessity for the matter to be remitted to the Tribunal.

I would accordingly allow the appeal and set aside the Tribunal's decision. In lieu therefore I would order that ... the applicant's objection be allowed. However, I would stay the operation of these orders for a period of three weeks to permit the parties to determine whether they wish to have the matter remitted to the Tribunal to determine the value of the profit or gain, if any, arising to the applicant by virtue of the work being performed. If the parties are unable to reach an agreement as to the quantum of any profit or gain to the applicant, I would rescind the orders made and remit the matter to the Tribunal for determination of the extent, if any, of the gain to the applicant.

6.5 The passage extracted above indicates the limitations of the present system. Despite the fact that there was essentially no dispute as to the facts, and despite the judge's indication of his views as to the relevant question, by withholding its consent the unsuccessful party could force the matter to be remitted to the AAT. This is manifestly inefficient and unsatisfactory.

6.6 The preliminary view of the Council, as published in the Discussion Paper, was that no changes be made to the present structure. However, all of the submissions received by the Council which expressed an opinion on this issue, save one, approved of a limited expansion in the Federal Court's power to make additional findings of fact.

6.7 The submission from the Bar Association of Queensland stated that an expansion of the Court's power to make findings of fact would result in de facto appeals to the Court on the merits. The Council is of 152 (1997) 36 ATR 127, 97 ATC 4407.


the view that an adequate guard against that possibility would be to permit the Court only to make findings of fact not inconsistent with the express findings of the AAT (excluding, of course, any findings which are vitiated by the error of law). Such a restriction would preserve the primacy of the fact-finding role of the AAT.

6.8 It is not intended by this proposal that the Federal Court would be unable to remit the matter to the AAT. It might be expected to do this where substantial additional fact-finding is required, taking advantage of the relative cost of fact-finding in the AAT as opposed to the Federal Court. Nor is it intended that the provision would give rise to any significant debate as to whether a finding of fact is inconsistent with those made by the AAT; the AAT is under a statutory obligation to make express findings of fact.153

6.9 Because the Court's power is to make such order as is appropriate by reason of its decision,154 the Court will thereby be able finally to determine appeals which would otherwise have been remitted to the AAT.

6.10 The Court's discretion to make additional findings of fact should not be conditioned upon the consent of the parties, although the Court would naturally take the parties' attitudes into account. It is inappropriate for jurisdiction to be conferred subject to the consent of the parties. Moreover, such a provision would encourage the party with more to gain from remitter (such as an appellant from the AAT with good prospects on the question of law, but poor prospects of ultimate success on the facts – see paragraph 6.3 above) to withhold consent.

6.11 The Council also notes that, to the extent that this amendment permits the Court to resolve the controversy between the parties, the potential constitutional defect identified by Justice Gummow in TNT Skypak (see paragraphs 2.13-2.14 above) would appear to be reduced.

ADDITIONAL EVIDENCE

6.12 There is authority to the effect that the Federal Court has no jurisdiction to receive additional evidence on appeal from the AAT. 155 However, at least in circumstances where administrative law remedies are sought against the decision or the conduct of the AAT, additional evidence is admissible.156 The question of the circumstances in which

153 Section 42(2B). In cases such as Lees & Leech where the AAT has simply made no findings on a particular issue, no inconsistency would rise. If the question of inconsistency is not straightforward, and would itself give rise to substantial legal argument, then that likewise will be a factor in the exercise of the Court's discretion to remit the proceeding.

154 AAT Act, section 44(4).155 Servos v Repatriation Commission (1995) 56 FCR 377 at 385.156 Committee of Direction of Fruit Marketing v Delegate of Australian Postal

Commission (1979) 37 FLR 457 at 459; Curragh Queensland Mining v Daniel

Additional Findings, Additional Evidence and Referrals

‘fresh evidence’ may be adduced has not been conclusively resolved. The Council considers that it is desirable that the position be clarified by legislation.

6.13 To give additional power to the Federal Court to receive further evidence would detract from the position of the AAT as the primary arbiter of fact, and encourage parties to pursue merits review in the Federal Court. The Council has also noted the problem which appears to exist in the veterans' area, in that some applicants withhold or fail to obtain relevant information (such as expert medical evidence) until the matter reaches the AAT, apparently because of a perception that the Veterans' Review Board will be less likely to accede to their application than the AAT, or because the Department of Veterans' Affairs is more likely to make a concession at the AAT level because of the cost of contesting the claim.157

6.14 Nevertheless, the Council is of the view that the Federal Court should, in limited circumstances, be permitted to adduce evidence which was not before the AAT. In order not to displace the fact-finding primacy of the AAT, the circumstances in which this power would be exercised should be limited. If credibility issues were involved, then it would be expected that the matter would almost certainly be remitted. However, where the Court finds that the AAT erred in law, and the result is to identify a gap in the evidence which otherwise would preclude the Federal Court from resolving the matter, the Court should be able to accept additional evidence if it is of the view that that course is expeditious and would enable to avoid the need to remit the matter to the AAT. Obviously, the Court would only permit evidence to be adduced if it considered it desirable to make additional findings, as discussed earlier in this Chapter.

RECOMMENDATION

6.15 Accordingly, the Council makes the following recommendation:

The power of the Federal Court should be expanded to include making findings of fact where there has been an error of law by the AAT, provided that:

(a) such findings of fact are not inconsistent with findings made by the AAT; and

(b) it appears to the Court convenient to make such findings, having regard to:

(i) the timely and economical resolution of the whole of the subject matter of the application before the AAT;

(1992) 34 FCR 212 at 223-224.157 Administrative Review Council, Report No. 39, Better Decisions: review of

Commonwealth Merits Review Tribunals, Canberra, AGPS, 1995, paras. 3.86 - 3.90.


(ii) the relative expense to the parties of the Court, as opposed to the AAT, making additional findings;

(iii) the relative delay to the parties of the Court, as opposed to the AAT, making additional findings;

(iv) the extent (if any) to which it is necessary for facts to be found and the means by which those facts might be established; and

(v) whether any of the parties considers that it is appropriate for the Court, as opposed to the AAT, to make additional findings of fact.

For the purposes of making such findings of fact, the Court may permit evidence to be adduced which was not before the AAT.

6.16 The effect of the changes proposed above is not to bring about sweeping changes to the Commonwealth system of administrative law, but rather to improve the efficiency of the system in a small but significant minority of proceedings.

REFERRALS

6.17 The Discussion Paper raised the issue whether the President of the AAT should have power to refer an entire application for review to the Federal Court, and if so, on what basis. At present, the AAT has power, with the concurrence of a Presidential member, to refer a question of law to the Court, which must be constituted as a Full Court.158

6.18 The submissions to the Council on the whole did not support this suggestion. Putting to one side the constitutional difficulties which would arise if the application required evaluations of policy, the obvious course is to have the application determined within the AAT constituted by a Presidential member. By that means, the parties gain the advantages of the procedural flexibility, promptness and cost effectiveness of the AAT, coupled with the judicial experience and authority of the Presidential member.

6.19 In the Council's opinion, the flexibility which the AAT already possesses (and which is proposed to be copied in Victoria) to constitute itself as is appropriate for particular matters renders it unnecessary for there to be the power to refer entire applications to the Federal Court.

158 AAT Act, section 45.

APPENDIX A

DISCUSSION PAPER: ISSUES1. Should section 44(1) of the AAT Act be amended to change the

ground of appeal from the AAT to the Federal Court? If so should the change apply to all appeals from the AAT, or should it be limited to appeals involving particular types of decisions? What is the justification for any suggested limitation?

2. Which of the following options for changing the ground of appeal from the AAT to the Federal Court would be most appropriate:

full right of appeal (on questions of fact and law);

appeal where the matter involves a question of law;

specify the grounds of appeal from AAT decisions (using an approach like that adopted in the Administrative Decisions (Judicial Review) Act 1977)?

Alternatively, are there some other options that would be more appropriate?

3. If section 44(1) of the AAT Act is not amended to change the ground of appeal from the AAT to the Federal Court, is there merit in providing the Federal Court with one or more of the following powers:

power to entertain an appeal where no question of law is raised (for example, in ‘difficult and important’ cases);

power to determine questions of fact on the material before it (that is, without taking oral evidence in the Court);

power to re-hear evidence put before the AAT (or to receive additional evidence); or

with the consent of the parties to the proceeding, power to hear further evidence in limited circumstances.

Alternatively, are there options for providing the Federal Court with additional powers not noted above that merit consideration?

Appendix A

4. If the Federal Court was provided with power to make findings of fact on appeal from the AAT, should that power be limited so that the Federal Court could not make findings of fact on some or all of the following:

matters on which the AAT had made findings of fact;

matters on which the AAT's findings of fact are based on the AAT's assessment of evidence it has heard (oral evidence), including its views on the demeanour of witnesses;

other particular matters?

5. How would the role of the AAT be affected by your preferred option (if any) for change to the Federal Court's powers on appeal from the AAT?

6. Would the advantages and/or disadvantages of any change to the powers of the Federal Court on appeal from the AAT be available in relation to decisions generally, or only in relation to particular types of decisions?

7. Should the AAT President have a general power to refer applications for review to the Federal Court for determination:

in relation to taxation and patents decisions?

in relation to other particular types of decisions?

in relation to all decisions?

If so, why and on what basis?

APPENDIX B

LIST OF SUBMISSIONS

Mr Stephen LloydDepartment of DefenceMr Matthew Smith, BarristerThe Hon Justice Michael KirbyDepartment of Employment, Education & TrainingThe Hon Justice J D DaviesMs Katrina Howard, BarristerMr Peter Roach, Barrister-at-lawAdministrative Appeals TribunalBanki Palombi Haddock & FioraThe Taxpayers Association of TasmaniaMr Robert K O'Connor Q.C.Repatriation CommissionLaw Council of Australia (Taxation Committee, Business Law Section)Bar Association of QueenslandLaw Council of Australia (Administrative Law Committee)Department of Immigration and Ethnic AffairsLaw Institute of VictoriaAttorney-General's Department:

Australian Government SolicitorCivil Law DivisionBusiness Law DivisionAustralian Government Solicitor - Office of LitigationInsolvency and Trustee ServiceSpecial Counsel

and enclosing ComcareAustralian Securities Commission

Joan Dwyer, Senior Member AAT

APPENDIX C

SELECT BIBLIOGRAPHY(References to standard works have been omitted)Barry, ‘Appellate Review of Procedural and Factual Error’ (1991) 65 ALJ 720.Burchett, ‘Administrative Law – the French Comparison’ (1995) 69 ALJ 977.Campbell, ‘The Choice between Judicial and Administrative Tribunals and the Separation of Powers’ (1981) 12 F L Rev 24.Carney, ‘Welfare Appeals and the ARC Report: To SSAT or not to SSAT – Is that the Question?’ (1996) 4 AJAL 25.Dwyer, ‘Overcoming the Adversarial Bias in Tribunal Procedure’ (1991) 20 F L Rev 252.Flick, ‘Error of Law or Error of Fact?’ (1983) 15 UWALR 193.Forsyth, ‘Practitioners are Fed Up!’ (1994) 28 Taxation in Australia 325.Gerber, ‘Are Practitioners Fed Up?’ (1994) 28 Taxation in Australia 499.Hall and Todd, ‘Administrative Review before the Administrative Appeals Tribunal - A Fresh Approach to Dispute Resolution?’ (1981) 12 F L Rev 71, 95.Hall, ‘Judicial Power, the Duality of Functions and the Administrative Appeals Tribunal’ (1994) 22 F L Rev 13.Hall, ‘Res Judicata and the AAT’ (1994) 2 AJAL 22.Hill, ‘What Do We Expect from Judges in Tax Cases?’ (1995) 69 ALJ 992, 995.Howard, ‘Applying to the AAT for Review of Decisions of the Commissioner of Patents’ (1993) August Intellectual Property Forum 28.Katzen, ‘Procedural Fairness and Specialist Members of the AAT’ (1995) 2 AJAL 169.McEvoy, ‘Res Judicata, Issue Estoppel and the Commonwealth AAT: A Square Peg in a Round Hole?’ (1996) 4 AJAL 37.McGann, ‘Snakes and Ladders and the AAT’ (1989) 19 QLSJ 37.Nicholson, ‘Tax Jurisdiction in the Administrative Appeals Tribunal’ (1987) 22 Taxation in Australia 59.Osborne, ‘Inquisitorial Procedure in the Administrative Appeals Tribunal - a Comparative Perspective’ (1982) 13 F L Rev 150.Pearce, ‘Judicial Review of Tribunal Decisions - The Need for Restraint’ (1981) 12 F L Rev 167.Schabe, ‘The Taxation Appeals Division of the Commonwealth Administrative Appeals Tribunal’, in Administrative Law: Does the

Appendix C

Public Benefit? Proceedings of the Australian Institute of Administrative Law Forum, April 1992, McMillan (ed), 364. Slater, ‘Inadequate Fact Finding in the Tribunal’ (1994) February/March CCH Journal of Australian Taxation 35 at 37.

APPENDIX D

LEGISLATION

ADMINISTRATIVE DECISIONS (JUDICIAL REVIEW) ACT 1977

Applications for review of decisions

5. (1) A person who is aggrieved by a decision to which this Act applies that is made after the commencement of this Act may apply to the Court for an order of review in respect of the decision on any one or more of the following grounds:-

(a) that a breach of the rules of natural justice occurred in connection with the making of the decision;

(b) that procedures that were required by law to be observed in connection with the making of the decision were not observed;

(c) that the person who purported to make the decision did not have jurisdiction to make the decision;

(d) that the decision was not authorised by the enactment in pursuance of which it was purported to be made;

(e) that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made;

(f) that the decision involved an error of law, whether or not the error appears on the record of the decision;

(g) that the decision was induced or affected by fraud;

(h) that there was no evidence or other material to justify the making of the decision;

(i) that the decision was otherwise contrary to law.

(2) The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to:

(a) taking an irrelevant consideration into account in the exercise of a power;

(b) failing to take a relevant consideration into account in the exercise of a power;

(c) an exercise of a power for a purpose other than a purpose for which the power is conferred;

Appendix D

(d) an exercise of a discretionary power in bad faith;

(e) an exercise of a personal discretionary power at the direction or behest of another person;

(f) an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case;

(g) an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power;

(h) an exercise of a power in such a way that the result of the exercise of the power is uncertain; and

(j) any other exercise of a power in a way that constitutes abuse of the power.

(3) The ground specified in paragraph (1)(h) shall not be taken to be made out unless:

(a) the person who made the decision is required by law to reach that decision only if a particular matter is established, and there was no evidence or other material (including facts of which he is entitled to take notice) from which he could reasonably be satisfied that the matter was established; or

(b) the person who made the decision based the decision on the basis of the existence of a particular fact, and that fact does not exist.

JUDICIARY ACT 1903

Original jurisdiction of Federal Court of Australia

39B.(1) The original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.

Appendix D

(1A)The original jurisdiction of the Federal Court of Australia also incudes jurisdiction in any matter:

(a) in which the Commonwealth is seeking an injunction or a declaration; or

(b) arising under the Constitution or involving its interpretation;

(c) arising under any laws made by the Parliament.

(2) The reference in subsection (1) to an officer or officers of the Commonwealth does not include a reference to:

(a) a person holding office under the Workplace Relations Act 1996 or the Coal Industry Act 1946; or

(aa)without limiting paragraph (a) of this subsection, a Judge or Judges of the Industrial Relations Court of Australia; or

(b) a Judge or Judges of the Family Court of Australia.

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