Deputy Federal Commissioner of Taxation v. Rotary Offset Press Pty. Ltd.

Gibbs J

High Court

Judgment date: Judgment handed down 3 September 1971.

Gibbs J.: This action is brought by the Deputy Commissioner of Taxation against Rotary Offset Press Pty. Limited, the defendant, to recover sales tax allegedly payable by the defendant in accordance with the provisions of the Sales Tax Assessment Act (No. 1) 1930 (Cth), as amended, (``the Assessment Act''). The plaintiff claims $23,364.13, made up of $21,035.79, sales tax assessed on 28 May 1969 under sec.25(2A) of the Assessment Act in respect of the manufacture and sale during the period from 1 June 1967 to 31 March 1969, both inclusive, of a publication known as ``The Realtor'', together with $2,328.34 additional tax under sec.29 of the Assessment Act at the rate of 10% per annum from 28 June 1969 to 5 August 1970 (the date of the writ), inclusive, upon the amount of sales tax unpaid. In addition, the plaintiff claims a continuing sum for additional tax at the rate of 10% per annum upon the sum of $21,035.79 from 6 August 1970 until payment or judgment. It was common ground that during the period in question the defendant printed the publication for reward and it was not disputed - indeed it was, in effect, admitted on the pleadings - that the defendant manufactured and sold the publication within the meaning of the Assessment Act. The defendant's case, however, was that the publication was exempt from sales tax pursuant to sec.5(1) of the Sales Tax (Exemptions and Classifications) Act 1930 (Cth), as amended, (``the Exemptions Act'') and Items 51 and 54 of the First Schedule to that Act. The effect of sec.5(1) of the Exemptions Act is that, subject to an immaterial exception, sales tax under the Assessment Act is not payable upon the sale value of any goods covered by Item 51 or Item 54 in the first column of the First Schedule to the Act. The whole question in the case, therefore, is whether the publication, ``The Realtor'', is covered by either of those items. Item 51, so far is material, reads as follows -

``Books, pamphlets, leaflets, periodicals, magazines and printed music, but not including (unless covered by any other item or sub-item in this Schedule) -

  • (c) catalogues or price lists;
  • (e) advertising matter; or
  • (f) books, pamphlets, leaflets, periodicals, magazines or printed music published or to be published for the purpose or as a means of advertising the business or the products of the publisher or of the person or persons for whom they are or are to be published.''

Item 54 reads simply -


The arguments submitted on behalf of the defendant make it necessary to refer to the evidence given as to the history of ``The Realtor'' and the manner and purposes of its publication and distribution. In April 1960, there was formed and registered under the Co-operation Act 1923 (N.S.W.), as amended, a body corporate named Estate Agents Co-operative Limited (``the Co-operative''). Its objects were said to be, inter alia, to deal in real estate and to engage in any other form of real estate or allied activity. It was set up to provide various services for its members who were persons and firms who were members of the Real Estate Institute of New South Wales. During the year 1964 the Co-operative decided to publish what was called in the minutes of the discussions that then took place a ``newspaper'' and to form a company for that purpose. A company, Real Estate Times Pty. Limited, was formed on 10 June 1964, with objects which included to publish ``any newspaper or newspapers or other publications''. The publication first appeared on 7 August 1964 under the name of ``The Real Estate Guide'' and it has been published continuously since that date, although its name has been changed and its form has been altered from a tabloid to that of a magazine. The publication has appeared, and continues to appear, regularly every Thursday except for a break during Christmas periods. It was printed, first, by Albert J. Camp & Associates Pty. Limited and then by Hornsby Advocate Press Pty. Limited (a company which publishes many newspapers) and in the contracts with both of those companies it was described as a ``newspaper''. Subsequently, a dispute arose between Real Estate Times Pty. Limited and Hornsby Advocate Press Pty. Limited which led to litigation concerning, inter alia, the right of the latter company to the use of the name ``The Real Estate Guide'' and as from 22 December 1966, the publication was printed by another firm, Publicity Press, and was published under the name of ``The Realtor''. Since June 1967, ``The Realtor'' has been printed by the defendant. On about 25 January 1968, the Real Estate Times Pty. Limited ceased to be concerned with the publication of ``The Realtor''. The publication was not regarded as profitable and it was thought more convenient for the Co-operative to take direct control of it rather than to continue to subsidise its publication through Real Estate Times Pty. Limited.

It now becomes necessary to describe the contents of the publication itself, but, by way of explanation, reference should first be made to one of the activities carried on by the Co-operative from its inception, namely, what is known as the multiple listing service or the ``photo co-op listing service''. This service was and is carried on as follows. If the prospective vendor of a property requests a multiple

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listing and enters into a sole agency agreement with a member of the Co-operative, that member furnishes particulars of the property to the Co-operative which circulates them, together with a photograph, to all members likely to be interested. The particulars include what is known as the V Figure which represents the hundreds of dollars by which the sale price asked for the property is thought to be too high; for example, V2 means that the property is thought to be $200 above market value. If the property is sold by an agent other than that to whom the sole agency was given, the commission is shared between the agents in a proportion fixed by the Co-operative's code and in any case of sale a small percentage of the commission payable is paid by the agents concerned to the Co-operative itself.

Upon its publication ``The Real Estate Guide'' was used, and, subsequently, ``The Realtor'' has continued to be used, to disseminate information as to properties listed for sale under the multiple listing scheme. Particulars of every property listed during the previous week, together with a photograph, were included in each issue of the publication. The description given of the property often contained a eulogistic epithet, such as ``superb'', ``delightful'' or ``immaculate'', and always contained the name of the selling agent and (unless the sale was to be by auction) the price asked. No direct charge was made for this insertion although for each property listed under the scheme a fee was charged by the Co-operative. The fees received, and the commissions obtained by the Co-operative when sales were effected, were not enough to pay the cost of the insertion of these particulars; the balance was paid by the Co-operative. Once a property had been listed, particulars of it continued to appear in the publication each week until the property was sold or withdrawn from sale. At first, in ``The Real Estate Guide'', the particulars were stated in a very abbreviated form, but at least by June 1967 they had come to appear as they do now, in a form which is commonly used in newspaper advertisements of properties for sale; indeed, Mr. Foristal, the manager of ``The Realtor'', referred to these parts of the publication as ``classifieds''. Each of these ``classifieds'' gave brief particulars of the property for sale, often including a word of praise, and also including a statement of the price asked and the name of the agent. According to the evidence of Mr. Foristal, until 8 January 1968 the cost of these ``classifieds'' was borne by the Co-operative, but on that date the practice was commenced of charging them to members at a specified rate. They were included in alphabetical order of localities and the publication contained what was described as ``an advertising index'' showing the pages on which the advertisements relating to the different districts appeared. Each copy of ``The Realtor'' thus contained a complete list, with particulars, of every property currently listed for sale under the multiple listing service.

The publication also contained special advertisements of properties for sale which were inserted either by non-members of the Co-operative or by members who wished to advertise a property in a manner more striking than that which the ordinary form of the ``classifieds'' would allow. Some other advertisements also appeared, mainly of services thought to be connected in some general way with the real estate business; for example, there were advertisements by persons carrying on real estate agencies, and travel and removal services. In many copies of ``The Realtor'' there also appeared an article (sometimes referred to in evidence as an editorial) on some subject thought to be of interest to owners, buyers or tenants of real estate. Some of these articles were obviously designed to promote the business of real estate agents, e.g., by commending the purchase of real estate as an investment, or extolling the virtues of agents in real property transactions. Sometimes the articles contained factual information, e.g., as to the operation of the War Service Homes Department, or the scale of charges of the Real Estate Institute. In some copies there appeared, often under the heading ``You and your home'', information in the form of question and answer on various matters relating to real estate. Most copies of ``The Realtor'' would contain either an article or a series of questions and answers; some copies would contain both but others would contain neither.

An analysis of the contents of a number of copies of the publication, selected at random, was made by Mr. Karklin, an investigation officer of the plaintiff, with a view to determining what proportion of each copy was devoted to the various kinds of material of which it was composed. A similar analysis was prepared by Mr. Foristal, and I regard Mr. Foristal's analysis as presenting a more accurate picture of the contents of the publication. The various categories into which Mr. Foristal classified the contents of ``The Realtor'', and the proportions of the total printed space which the material in each category occupied, were the following -

(1) Material (inc. photographs) submitted by members: 65.7%. This category included, in respect of all copies of ``The Realtor'' published after 8 January 1968, the so-called ``classified'' advertisements which, as I have said, gave particulars of all properties currently listed under the scheme. In addition, it included all advertisements specially inserted by members and paid for by them.

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(2) Material submitted by non-members: 1.07%. These were the advertisements inserted by persons who were not members of the Co-operative.

(3) Material submitted by the Co-operative: 27.47%. This comprised the particulars and photographs inserted in respect of newly listed properties. Before 8 January 1968 it also included the ``classifieds''.

(4) Other Material: 1.35%. This comprised the articles and the information contained in question and answer form.

(5) General Information: 0.81%. These were what were described as ``fill ins'': material inserted to occupy what would otherwise have been blank spaces in the publication. They often took the form of advertisements for ``The Realtor'' or the Co-operative itself.

(6) Index, Mastheads etc.: 4.23%.

The first three of these categories - about 94% of the contents of ``The Realtor'' - comprised what might, in my opinion, fairly be described as advertising material. However, there was evidence that ``The Realtor'' was not published simply as a medium of advertisement. According to the evidence of Mr. Gordon, a director of the Co-operative, the purposes which the directors intended the publication to serve, when it was decided to publish it and, subsequently, when in spite of some opposition it was decided to continue publication, were the following: (1) as a means of advertising properties for sale; (2) to provide information to agents as to properties available for sale; (3) to assist to agent to establish the market value of real estate outside his own area of operations; and (4) to provide information to the public on those matters. It was submitted on behalf of the plaintiff that ``The Realtor'' would not have been useful for valuation purposes because it did not contain either information as to actual sale prices or the V Figure. However, it seems to me that to an experienced agent, and, indeed, to a lesser extent, to an ordinary member of the public, the publication would provide some guide to general levels of valuation and to prices of land in the various districts concerned. I accept Mr. Gordon's evidence that ``The Realtor'' was published with those ends in view. Mr. Beard, the manager of the Co-operative for a number of years, said that a purpose of continuing publication of ``The Realtor'' was because it had become the best means of promoting the Co-operative, or, as he also put it, because it was in the business interests of the Co-operative and because it provided a service keenly sought after by the public. I accept also Mr. Beard's evidence on this point.

When the paper first appeared it was distributed through newsagents and was sold for sixpence a copy but, because the circulation achieved by that method of distribution was less than that desired by the Co-operative it was decided to distribute the publication free of charge. From about March 1965 the publication was distributed to members of the Co-operative who would display it outside their business premises on stands from which members of the public were invited to take copies. After a time ``The Realtor'' was so printed that on the front page a space was left for the agent distributing it to insert a statement that the journal was published with his compliments and this, of course, was something of an advertisement for him. In addition, copies were sent by mail to various other persons and institutions, such as banks, building societies, financial companies and government departments. The circulation now is 45,000 copies.

The question that first arises is whether the publication is exempt within Item 51. It is not contested that it is a periodical but it is contended on behalf of the plaintiff that it is a periodical of one of the kinds covered by paras. (c), (e) or (f). It does not seem to me that ``The Realtor'' is a catalogue or price list within para. (c). It is true that the publication does systematically list properties for sale in order of their localities and that the prices asked for the properties are stated, but it would be to strain language, and to fail to recognise the shades of meaning of the words, to say that ``The Realtor'' is a catalogue or price list. Further, I consider that the publication does not come within para. (f). To come within that paragraph the publication must be published ``for the purpose or as a means of advertising the business or the products of the publisher or of the person or persons for whom they are or are to be published''. No products are advertised in the present case but it was said on behalf of the plaintiff that ``The Realtor'' is published for the purpose or as a means of advertising the businesses of the members of the Co-operative who, it was said, are the persons for whom ``The Realtor'' is published. The actual publisher of ``The Realtor'' was, until 25 January 1968, Real Estate Times Pty. Limited and after that date, the Co-operative. It does not seem to me to be right to say that the publication was published for the members of the Co-operative. There is no doubt that it was published for the purpose, inter alia, of giving information to members of the Co-operative, and it may be said that it was published in their interests, but the initiative and responsibility for the publication lay with the Co-operative. In applying the words of para. (f) there is no justification to brush aside the distinction between a corporation and the persons who are members of it. The question then arises whether the publication was

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published for the purpose or as a means of advertising the business of the Co-operative. One purpose of the publication was, as I have said, to promote the Co-operative, and it may be right to say that the publication had the purpose of advertising the existence and functions of the Co-operative, but it did not have the purpose, nor was it the means, of advertising the business of the Co-operative. In the buying and selling of properties the Co-operative did not come into any direct relationship with the members of the public but performed services designed to make the business activities of its members more profitable and efficient. ``The Realtor'' was not designed to bring about business relations between the Co-operative and any member of the public, although it was intended to bring about business relations between the members of the Co-operative and members of the public. ``The Realtor'' was published to advertise properties for sale and as a means of advertising the businesses of some members of the Co-operative but not to advertise the business of the Co-operative itself.

The question remains whether ``The Realtor'' is ``advertising matter'' and within para. (e). The word ``advertise'' means to make generally or publicly known, or to give public notice of, but the phrase ``advertising matter'' in the context of Item 51 must have a somewhat more limited meaning, and must be restricted to published announcements of a business kind, for example, calling attention to the fact that property is for sale and setting out its qualities, especially the desirable ones. In my opinion, it is clear that the greater part of the material contained in ``The Realtor'' is ``advertising matter''. It seems to me that all the parts of the publication other than the articles and questions and answers and the ``fill ins'', indexes, mastheads etc. are advertisements - there is no other word by which they may properly be described. On behalf of the defendant, it was conceded that some of the published material was ``advertising matter'' but it was said that, in deciding what is ``advertising matter'' and what is not, it is necessary to have regard to the purpose with which the matter was published and that the evidence showed that the purpose with which some of the material was published was not an advertising purpose. In particular, it was submitted that the material published with regard to new listings was inserted as a means of conveying to the members of the Co-operative information that the working of the multiple listing scheme required should be transmitted to them and that the ``classifieds'' or notifications about properties already listed were also published as part of the arrangement between the Co-operative and its members and were intended to provide the members with information that it was necessary for them to have in carrying out their businesses. It was said that the evidence showed that the advertisement of the properties referred to in the announcements was not the sole or even the dominant purpose which actuated their publication.

In my opinion, however, the subjective purpose of those responsible for the publication is not the test in deciding whether a periodical falls within para. (e). In para. (f) purpose is expressly referred to but para. (e) looks to the nature of the matter itself. The question whether a periodical is ``advertising matter'' seems to me to depend on whether the periodical, viewed objectively and without regard to the actual intentions of those publishing it, answers that description. In other words, if the periodical on its face appears to be designed to promote the sale of property by means of public announcement that it is for sale, and by giving a description of its qualities and a statement of its price, it is ``advertising matter'' notwithstanding that its publication was, in fact, promoted not only by the desire to sell the property, but for other purposes as well. Ofcourse, the publication has to be viewed in the light of those surrounding circumstances which are rendered admissible by the ordinary rules governing the admissibility of extrinsic evidence for the purposes of construing a document. It, therefore, would not follow, to take an example touched upon in the course of argument, that a reproduction, for historical purposes, of an advertisement originally published in times past would be ``advertising matter''. It was submitted on behalf of the defendant that to say that a publication is ``advertising matter'' one must be able to say that it is ``advertising matter as such'' or ``simply advertising matter''. If that be so, those descriptions could rightly be applied to the whole of the publication, with the possible exception of the articles and answers to readers, whatever purpose may, in fact, have actuated the minds of those who published the advertisements. In my opinion, therefore, the greater part (about 94% on the average) of the contents of ``The Realtor'' consisted of announcements which clearly can be described as ``advertising matter''. Such things as the ``fill ins'', indexes and mastheads were obviously merely ancillary to the publication as a whole and did not alter its character. However there was in most issues some material - as I have said, constituting on the average only 1.35% of the total contents - which viewed alone could not be referred to as ``advertising matter'', namely, the articles and the answers to readers' questions. However, it seems to me that a publication does not cease to be properly described as ``advertising matter'' because it comprises some material that does not directly promote the transactions which the advertisements seek to bring about. With the increasing sophistication of modern advertising methods, much ``advertising matter'' contains some material which viewed alone does not appear to be intended to promote the business of the advertiser. When the publication is looked at as a whole, it seems to me

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that the articles and answers to questions are, like the ``fill ins'', indexes and mastheads, merely ancillary to the whole production and do not alter its character. The question is one of fact and degree and, indeed, perhaps almost one of impression. Having looked at the various copies of ``The Realtor'' that were put in evidence, I have reached the conclusion that each copy was ``advertising matter'' within para. (e) of Item 51.

The final question is whether ``The Realtor'' is a newspaper. That word is not defined in the Exemptions Act and must be there used in its ordinary sense. In
The Attorney-General v. Bradbury & Evans (1851) 7 Ex. 97; 155 E.R. 872, a case which concerned the construction of one of the Stamp Acts which imposed a duty on newspapers and were used as a means of controlling the press, Martin B. gave (at p.103 (p.875 of the E.R.)) a definition of the word ``newspaper'' in its ordinary sense. He said -

``The ordinary understanding of the word `newspaper' is, a publication containing a narrative of recent events and occurrences, published regularly at short intervals from time to time.''

That definition seems to me as satisfactory to-day as it was 120 years ago. Of course, a newspaper does not contain only news; it may contain, as well, comments on the news and on public and, indeed, private affairs, literary, artistic and dramatic criticisms, notices of public and private interest and advertisements. Since a large part of the revenue of the publishers of newspapers is usually obtained from advertising a large proportion of a newspaper will often comprise advertisements; Mr. Foristal gave evidence that the Saturday edition of the ``Sydney Morning Herald'' consists of 94% of advertising and 6% of other material. The mere proportion of advertising matter in a publication, therefore, cannot determine whether it is a newspaper or not. Although news may be defined as a report of recent events, the fact that some time has elapsed since the reported event occurred does not necessarily mean that it has become generally known in the meantime or that it cannot be described as news. A newspaper need not profess to contain all the news, or news on every subject, but it may confine its reporting to news of events in a particular locality or of interest to a particular class, such as cane farmers, Presbyterians or school children. The fact that a publication restricted itself to news of interest to estate agents would, therefore, not prevent it from being a newspaper. However, to be a newspaper it must contain some news (cf.
Henderson v. Wilson (1944) V.L.R. 144 at p.145). The variety of form and content of newspapers is great and whether a particular publication is a newspaper or not is ``almost entirely a question of fact, to be decided upon an inspection of the document, guided by common knowledge'', per Hood J. in In
re Bradshaw's Guide, Ex parte Stillwell (1903) 29 V.L.R. 415, at p.417.

In the present case Mr. Mahoney, for the defendant, submitted that ``The Realtor'' conveyed to the agents who obtained copies of it information as to what properties had been listed and were on the market for sale and that this information was not only of interest to them, as revealing the state of the market and as affording a possible opportunity to effect a sale, but was also rightly described, so far as they were concerned, as news and that the publication was a newspaper, although of a specialised kind. No doubt the line between news and advertising is sometimes a fine one. A statement that a particular property is for sale may sometimes truly be described as news - for example, when the property is well known or of historic interest or the price is exceptionally large. However, it seems to me that a compilation of advertisements of properties for sale, however useful it may be, does not make a newspaper, even if there be added an article containing information or comment on matters of interest. I cannot regard the advertisements themselves as giving information of relevant events or as being properly described as news in the ordinary meaning of that word and even though an occasional article may contain news rather than a commentary I find it impossible to say that the publication viewed as a whole is a newspaper within the ordinary understanding of that expression. Mr. Mahoney relied also on the fact that ``The Realtor'' was described in the minutes and in the contracts and on the front page of the publication itself as a newspaper, but a misdescription does not alter the nature of the thing described. I hold that ``The Realtor'' is not a newspaper within Item 54.

It follows that the printed copies of ``The Realtor'' were not exempt from sales tax and that the plaintiff must succeed in this action. Under sec.30 of the Assessment Act tax unpaid including additional tax under sec.29 is recoverable by the Deputy Commissioner and no reason was advanced why the judgment should not include additional tax. The question whether there should be any remission of any part of the additional tax is a matter entrusted to the discretion of the Commissioner and does not arise in this action.

There will, therefore, be judgment for the plaintiff as claimed in the statement of claim.


Judgment for the plaintiff for $23.364.13 and for a further sum for additional tax calculated at the rate of 10% per annum upon the sum of $21,035.79 from 6 August 1970 until the date of this judgment. Order that the defendant pay the plaintiff's costs of the action to be taxed. Usual order as to exhibits.

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