General Accident Fire and Life Assurance Corporation Limited v. Commissioner of Pay-roll Tax (N.S.W.).Judges:
Lord Keith of Kinkel
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Judgment was delivered by Lord Keith of Kinkel
These appeals are concerned with the proper construction of part of the provisions of sec. 3(1) of the New South Wales Pay-roll Tax Act, 1971. This Act, by sec. 6, 7 and 8, imposes upon employers a liability to a tax, known as ``pay-roll tax'', in respect of wages paid or payable by them after August 1971. Section 3(1) of the Act contains a number of definitions. ``Employer'' is defined as meaning ``any person who pays or is liable to pay any wages and includes the Crown in right of the State of New South Wales''. The definition of ``wages'' is as follows:
```wages' means any wages, salary, commission, bonuses or allowances paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to an employee as such and, without limiting the generality of the foregoing, includes -
- (a) any amount paid or payable by way of remuneration to a person holding office under the Crown in right of the State of New South Wales or in the service of the Crown in right of the State of New South Wales;
- (b) any amount paid or payable under any prescribed classes of contracts to the extent to which that payment is attributable to labour;
- (c) any amount paid or payable by a company by way of remuneration to a director or member of the governing body of that company;
- (d) any amount paid or payable by way of commission to an insurance or time-payment canvasser or collector; and
- (e) the provision by the employer of meals or sustenance or the use of premises or quarters as consideration or part consideration for the employee's services.''
It is para. (d) of this definition which has given rise to the controversy in issue. The appellants are insurance companies. Each of them carries on part of its business through agents. The agencies are constituted, in the case of one of the companies concerned, by written agreement and, in the case of the other, by a simple letter of application followed by a letter of appointment. Typical documents were put in evidence. None of them places any obligation upon the agent to devote any particular part of his time or energies to promoting the business of the insurance company. The main provisions of the agency agreements with both companies are concerned with the calculation of commission payable to the agent in respect of business introduced. Some of the agents are individuals, others are partnerships and others again are limited companies. The manner in which they carry on their activities as agents varies widely, as does the proportion of their respective total incomes which they derive from these activities. All these matters, as derived from agreed statements of facts, are set out fully in the judgment of Sheppard J. in the Court of first instance, and it is unnecessary to rehearse them. It is the respondent's contention, disputed by the appellants, that the commissions payable to all these agents constitute ``wages'' within the definition in sec. 3(1) and that the appellants are accordingly liable to pay-roll tax in respect of such commissions.
So the question at issue is whether each of these agents is ``an insurance... canvasser or collector'' within the meaning of para. (d) of the definition. At an earlier stage there was an issue as to whether the commission was paid or payable to ``an employee as such'', but that point did not bulk largely in the argument before this Board.
Evidence was adduced by the appellants in an effort to demonstrate that there existed in the insurance industry a certain recognised class of persons to which the description ``insurance canvasser or collector'' was entirely apt, so as to found the inference that it was commissions payable to this class alone that Parliament had sought to catch in the taxation net, to the exclusion of those payable to the agents with whom this litigation is concerned. This evidence was contained in an affidavit by Mr. A.C. Gray and described the particular aspect of the insurance business known as industrial insurance, the nature of which is that premiums are paid on a weekly or monthly basis to collectors visiting the homes of those who have taken out policies. These persons also canvassed for new business on a house-to-house basis within a defined territory. It was to such persons as these, according to
ATC 4409Mr. Gray, that the description ``insurance canvasser or collector'' was understood in the insurance industry to be applicable. The respondent took objection to the admissibility of this evidence, on the ground that the meaning of the expression in question was to be ascertained in accordance with the ordinary use of language and under reference only to such standard works as dictionaries. The appellants supported the introduction of Mr. Gray's evidence on the ground that the expression was a technical one, in legislation directed to a particular industrial field, namely insurance, so that evidence of the meaning attributed to it by persons working in that field was admissible and relevant. Sheppard J. sustained the respondent's submission, but he did read, without objection from the respondent, a textbook written by Mr. Gray, part of which covered much the same ground as his affidavit. He decided the case in the appellants' favour, but by a majority the Supreme Court of New South Wales (Glass and Mahoney JJ.A., Reynolds J.A. dissenting) reversed his judgment.
Their Lordships do not consider that the admissibility or otherwise of Mr. Gray's affidavit evidence is crucial to the determination of this appeal. There are a number of Australian decisions in other contexts, to the most important of which their Lordships will refer later, which give a very clear picture of the factual background in the insurance industry against which the enactment now requiring to be construed falls to be considered. But having heard argument on the admissibility question, their Lordships think it appropriate to express their opinion. It is the rule that expert evidence as to the meaning of ordinary English words in a modern Act of Parliament of general application is not admissible:
Marquis Camden v. C.I.R. (1914) 1 K.B. 641, per Cozens Hardy M.R. at p. 647. But Phillimore L.J. in that case, at p. 650, was careful to confine the rule to statutes not dealing with the customs of a particular locality or the practice of a particular trade. In
Unwin v. Hanson (1891) 2 Q.B. 115 evidence was led as to the meaning attributed by persons in the country conversant with the cutting of trees to the word ``lop'', which was different from the generally understood dictionary meaning, and did not cover the cutting off of the top of a tree. The Court of Appeal held that the particular meaning was the correct one, regarding the evidence in question as unnecessary but not as inadmissible. It is not possible to construe any statute entirely in the air. Like any written document, it must be viewed against a background of surrounding circumstances, and this commonly emerges upon proof of the factual situation to which the statute is sought to be applied. Part of this situation emerges in the present case from the evidence about the activities of the agents whose commissions the respondent is seeking to draw into the tax net. But another part is to be found in Mr. Gray's description of the traditional modus operandi of those insurance company representatives who are engaged on the industrial insurance side of the business. Their Lordships are of opinion that this description was clearly admissible in evidence. It is another question whether it was right to go further and admit evidence of the general understanding in the insurance industry about the meaning of the expression ``insurance canvasser or collector''. Their Lordships would answer this question in the affirmative. The expression to be construed is not one of general application. It is confined to the insurance industry and its practices. It is a composite expression whose meaning cannot necessarily be correctly gathered from looking up in the dictionary the words ``insurance'', ``canvasser'' and ``collector''. Further, it appears in conjunction with ``time-payment canvasser or collector'', the meaning of which is by no means apparent to one unfamiliar with the branch of commerce in which such persons are to be encountered. For these reasons this case falls within the exception to the rule enumerated in Marquis Camden v. C.I.R. (supra).
The argument for the respondent accepted that ``collector'' meant a person who went from door to door asking for and receiving payments due, and did not cover persons who merely received payments, for example, through the post at his office. It was contended, however, that ``canvasser'' carried the dictionary meaning of one who solicited business, with no limitation as to the manner of solicitation. Thus one who solicited by telephone or postal communications was covered, in addition to
ATC 4410one who did so by door-to-door personal visits. It was also claimed to be irrelevant that the individual was under no contractual obligation to canvass. The respondent devised an elaborate formula descriptive of the activities which in his submission constituted canvassing. This was placed before the Courts below and is set out in para. 17 of his written case in the appeal.
The appellants founded upon the evidence of Mr. Gray, and also upon a number of reported cases in the industrial law field in which the status of insurance canvassers or collectors had been considered. Reference was also made to a series of statutes, mainly dealing with taxation and going back to the New South Wales Family Endowment Act, 1927, which specifically mentioned insurance canvassers or collectors in the context of employment or the receipt of wages. Various industrial awards in favour of that category of person were also referred to. The whole of such material makes it abundantly plain that the concept of an insurance canvasser or collector has been well known in New South Wales and other States of Australia for a very long time and is fully familiar to the various legislatures. In
Federated Clerks Union of Australia v. The Industrial Life Assurance Agents Association (1942) 46 C.A.R. 578 a question arose whether certain insurance agents were employees within the meaning of the Commonwealth Conciliation and Arbitration Act 1904-1934, so that their organisation was entitled to registration by the Industrial Registrar. Piper C.J. answered that question in the affirmative. His judgment, which refers to the agents in question as ``canvassers'' contains a very full description of their terms of engagement and the nature of their activities. That description completely matches the category of those who according to Mr. Gray's evidence are generally understood in the insurance industry to be canvassers or collectors. The most significant aspects of the description, in addition to the peripatetic character of the canvassers' work, are a contractual obligation to carry on that work and a high degree of control and supervision. The case is particularly important because it was roughly contemporaneous with the passing of the Federal Pay-roll Tax Assessment Act 1941, upon which the New South Wales Act of 1971 was clearly modelled, and which contains a definition of ``wages'' almost identical to that in the 1971 Act, apart from the omission of para. (a).
Their Lordships are of opinion that the term ``insurance canvasser'' in its context, and having regard particularly to its collocation with the words ``time-payment'' and ``collector'', naturally conveys the idea of one who operates by the door-to-door method, and is not apt to describe one who solicits insurance business by other methods. The matter is put beyond doubt by the material founded on by the appellants and referred to above, which points to the existence for a long period up to 1971 of a class of workers well recognised in the insurance industry and commonly described as insurance canvassers or collectors. The characteristics of that class have already been mentioned, and they are not applicable to the insurance agents with whom this appeal is concerned. One of the most important of these lies in the obligation which is undertaken to carry on the activity of canvassing, under either a contract of employment or a contract for services.
The principal reason for rejecting the appellants' contentions given in the Supreme Court judgment of Glass J.A., in which Mahoney J.A. concurred, was that the description applied in the insurance industry to the class of persons, to which these contentions would restrict the application of the definition, was ``industrial insurance canvassers or collectors'', and that the Act, by failing to use that description, had evinced an intention against such restriction. But the evidence made it plain that, although the class of workers exhibiting the requisite characteristics had first grown up in the industrial insurance field (so called because this type of business was started by the British Industry Life Assurance Company), and was still primarily concerned with that field, members of the class were commonly referred to as ``insurance canvassers and collectors'' without the prefix ``industrial''. So the omission of the prefix is not inconsistent with the appellant's contentions. Their Lordships consider it more important to observe that if the legislature had been minded to include in the para. (d) net commissions payable to the whole category of insurance agents or brokers it would have
ATC 4411been easy to find the appropriate language to do so.
Glass J.A. did not commit himself to acceptance of the respondent's formulation of the relevant category of workers. The complexity of that formulation and the difficulty of ascertaining the facts necessary to decide whether a particular person falls within it present some additional ground for the view that the legislature is more likely to have had in contemplation a recognised and clearly identifiable class.
For these reasons their Lordships will humbly advise Her Majesty that the appeals should be allowed, with costs here and in the Supreme Court.