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MAYNE NICKLESS LIMITED v FC of T

Judges: Fullagar J
O'Bryan J

Ashley J

Court:
Supreme Court of Victoria (Full Court)

Judgment date: Judgment handed down 28 June 1991

Ashley J

The appellant in the course of its business transports payrolls and other valuables. It does so by the use of armoured vehicles. These have now reached a high stage of sophistication in design and construction. A commercial cab chassis is brought by a supplier to the appellant. The cab is removed and the chassis and engine substantially remodelled to the appellant's design and specifications. An armour-plated body is then fabricated and placed upon the chassis. Again it is to the appellant's specifications. The completed vehicle is not only armoured, but equipped with a variety of ancillary features resulting from the need to keep it inviolate. There are also some few features which relate more specifically to the comfort of the users. Once completed, the vehicle is sold to the appellant. A large percentage of its cost (about 75%) is attributable to the modifications which have been effected.

The vehicle is used for the transport, as I have said, of payrolls and other valuables. It has a crew of three. It is purpose-oriented. It really has no use save for the task for which it is employed.

Access to valuables is achieved by an attack on those who transport them. The sophisticated armour and the various integrated security systems within the vehicle are designed, therefore, to protect the crew. It is true that, but for the goods carried, the occupants would not be in peril. But it is the security of the occupants which prevents robbery occurring and inhibits the risk of robbery being attempted.

The question for determination by the Court is whether an armoured vehicle as described, when sold to the appellant, should be subject to sales tax. Marks, J. held, in effect, that this was the situation. From that decision this appeal has been brought.

The Sales Tax (Exemptions and Classifications) Act 1935 not only provides for sales tax, but by s. 5(1) exempts certain goods from liability for tax. That section reads as follows:

``Notwithstanding anything contained in any Sales Tax Assessment Act, sales tax shall not, subject to this section, be payable upon the sale value of any goods covered by any item or sub-item in the first column of the First Schedule, under any Act specified in the second column of that Schedule opposite that item or sub-item.''

The Sales Tax (Exemptions and Classifications) Act 1935 provides by Schedule 1, Item 113G(1), an exemption which is said to be relevant in this case. It reads:

``(1) Equipment of a kind used exclusively, or primarily and principally, in the course of industrial operations to protect persons engaged in those operations, including masks, respirators, shields, goggles, vizors, helmets, belts and machine guards

(2) parts for goods covered by sub-item (1).''

The item has been in that form since 1981. Prior thereto it read as follows:

``113G(1) Equipment of a kind used in the course of industrial operations to protect persons engaged in those operations, including masks, respirators, shields, goggles, vizors, helmets, belts and machine guards.''

An initial and important question that arose in the course of submissions was whether the words ``exclusively, or primarily and principally'' should be read to attach to the words:

  • (a) ``the course of industrial operations''; or alternatively
  • (b) ``the course of industrial operations to protect...''

The appellant contended for interpretation (a); the respondent contended for interpretation (b). Mr. Shaw, Q.C., senior counsel for the appellant, submitted that the words of the item, simply read, led to interpretation (a). He pointed to various instances where the same words had been inserted into descriptions of items by the 1981 amendment. He submitted that these instances and other instances of the use of the formula within Schedule 1 supported a conclusion that the placement of the words in

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Item 113G was not capricious, but was designed to achieve the interpretation for which he contended. He submitted that any ambiguity was to be resolved by consideration of the explanatory memorandum circulated with the relevant Bill. Pertinently, it reads as follows:

``The intention of the item was to exempt industrial safety equipment but as presently expressed, goods which are not in the nature of industrial safety equipment may qualify for exemption. The amendment will restore the original intention of the exemption by declaring that exemption will apply only where the equipment is of a kind used exclusively or primarily and principally for industrial safety purposes.''

Marks, J. adopted the interpretation urged on behalf of the appellant. He did so although, on first reading the words of Item 113G(1) he had been attracted to the contention espoused by the respondent.

I have reached the conclusion that his Honour's interpretation was correct. Unlike his Honour, I would not read the words inserted in 1981 as prima facie qualifying the entirety of the concept ``in the course of industrial operations to protect persons''. The words appear to me to refer to the ``course of industrial operations''. It is apparent, however, from the opportunity I have had of reading in draft the judgments of the other members of the Court that this is a contentious matter. In the event that there is ambiguity, then in my view the explanatory memorandum to the terms of which I have already referred assists the reading advanced by the appellant.

But before I refer again to the terms of that memorandum I should go back to the second reading speech which introduced Item 113G in its original form. The Treasurer said, on 18th August 1954:

``The Government has taken care to select concessions which will... contribute to the reduction of costs in industry...''

and

``Exemption is being granted in respect of safety equipment for use in industrial operations....''

It seems to me to be clear that these passages set the framework in which the item was to operate - one of planned reduction of cost to industry. That concession related to safety equipment used in industrial operations. It was not to operate in respect of safety equipment used outside industry.

Against that background, the explanatory memorandum of 1981 appears to me to show that it was Parliament's concern that the exemption was being applied to safety equipment which lacked a requisitely close connection with industrial operations; and that this was the problem which the amendment set out to remedy. I would, if necessary, construe Item 113G so as to accord with Parliament's intention thus revealed.

There was at the outset a question raised whether armoured vehicles as described could be properly described as being used in the course of ``industrial operations''. This point was conceded in the course of argument by Mr. Graham, Q.C., senior counsel for the respondent. I have not the slightest doubt that the concession was properly made.

Given the reading of Item 113G(1) which I have accepted, and that armoured vehicles as described have no useful purpose other than in the course of an industrial operation which involves transporting bankrolls and other valuables, it is inevitable that they should be regarded as being ``of a kind used exclusively, or primarily and principally, in the course of industrial operations''. It was submitted for the respondent that Item 113G(1) refers to equipment used in the course of industrial operations, and that the driving of the armoured vehicles is the industrial operation. Thus, it was contended, there was no separate industrial operation in the course of which the vehicle could be said to be used. In my opinion that submission must fail. The industrial operation in which the appellant engages is the preparation, receipt, transport and delivery of valuable cargo. In the course of that sequential operation the armoured vehicles have a place, no doubt a very important place. But that does not permit a conclusion that the industrial operations undertaken are represented by no more than the vehicles and their passage from point A to point B. It is a separate question, requiring consideration hereafter, whether the vehicles may be regarded as equipment used to protect persons in the course of industrial operations.

ATC 4630

There remain three principal arguments for resolution. The first is whether it is sufficient that the words ``used... to protect persons'' require only that the use be appreciable or significant. The second is whether the vehicles, as distinct from certain of their fittings or features, could be regarded as ``equipment''. And the third is whether the vehicles should be regarded as ``equipment'' within Item 113G(1) at all.

In my opinion Mr. Shaw was correct in his submission that it is sufficient that the ``use to protect'' be an appreciable or significant use of relevant equipment. That appears to me to flow from these considerations:

  • (a) the qualifying words introduced in 1981 do not relate to the words ``to protect''; that is, in context, suggestive of a lesser connection being required in order that those words be satisfied;
  • (b) at least some of the items in that part of Item 113G(1) which commences - ``masks, respirators'' have an industrial application which could be regarded as being of major importance;
  • (c) exemptions to a taxing statute should not be read over-narrowly;
  • (d) authority supports the construction advanced by Mr. Shaw. I refer particularly to
    FC of T v. Hamersley Iron Pty Ltd 81 ATC 4582 at 4590 where the words under examination were ``for use in''. Lush, J., with whose judgment Kaye, J. concurred, held that the item in question not being in terms which made it clear that only goods with a specialized use were exempt,
  • ``The expression... leads to the conclusion that, if the operations of the machines constituted in a significant degree, `treatment', the machines... were `for use in treatment'.''

(my emphasis)

In that case Lush, J. referred to the judgment of Sheppard, J. in
DFC of T v. Lincoln Industrial Cleaners Pty Ltd 75 ATC 4208 ; (1975) 2 N.S.W.L.R. 499 . Construing the words ``for use in'' the context of the Schedule to the Sales Tax (Exemptions and Classifications) Act his Honour held that the requirement was for only an appreciable and not a predominant use.

Reference may also be made to
DFC of T v. Stewart & Anor 84 ATC 4146 at 4149 per Gibbs, C.J. and at 4153 per Brennan, J. In that case the question was whether certain items were exempt as ``goods for use... by... a public benevolent institution''; see also
Magna Stic Magnetic Signs Pty Ltd & Anor v. FC of T 91 ATC 4216 at 4217 per Davies, J.

It is clear that the phrases construed in the authorities to which I have just referred were not on all fours with that now under consideration; and there is the consistent observation that in some cases the terms of exemptions within Schedule 1 to the Sales Tax (Exemptions and Classifications) Act show that an identified use is to be exclusive. None the less, with these reservations firmly in mind, it appears to me that the thrust of the authorities does assist Mr. Shaw's argument. For reasons to which I have already adverted the context of the words ``used... to protect'' in Item 113G(1) does not lead to a conclusion that only equipment with a solely protective function is encompassed within the exemption.

There can really be no doubt that a substantial function of the armoured vehicles is to protect their occupants. The fact that the Transport Workers' (Armoured Vehicles) Award 1978 requires, by clauses 3 and 8, that employers bound by the award, of whom the respondent is one, must provide armoured vehicles for carrying out the work in question does no more than underline the perceived protective function of those vehicles. The fact that the respondent is obliged by contractual obligations with some of its customers to provide armoured vehicles for carriage of their valuables in no way overturns the conclusion otherwise reached.

It appears to me, then, that resolution of the appeal does require determination of what is comprehended by ``equipment'' in Item 113G(1).

In my opinion, it may readily be conceded that, in some contexts, ``equipment'' might embrace the entirety of the effective workplace. That was the factual situation which arose in
Coltman v. Bibby Tankers Ltd (1988) A.C. 276 . This was a claim by the widow of a deceased worker for damages in respect of his death. The deceased had been an engineer employed on a bulk iron ore carrier. It was contended that the vessel sank because of a structural defect

ATC 4631

attributable to its manufacture. That defect was said to be a consequence of negligence of the shipbuilder. It was argued that the negligence of the builder was, by the Employer's Liability (Defective Equipment) Act 1969 cast upon the employer. No negligence otherwise was alleged against the employer. A preliminary question was whether the vessel could be ``equipment''. A majority in the Court of Appeal held that, within the meaning of the Act there under consideration, it could not; the House of Lords took a contrary view.

In the Act there under consideration the section which imposed liability was in these terms:

``(1) Where after the commencement of this Act - (a) an employee suffers personal injury in the course of his employment in consequence of a defect in equipment provided by his employer for the purposes of the employer's business; and (b) the defect is attributable wholly or partly to the fault of a third party (whether identified or not), the injury shall be deemed to be also attributable to negligence on the part of the employer (whether or not he is liable in respect of the injury apart from this subsection), but without prejudice to the law relating to contributory negligence and to any remedy by way of contribution or in contract or otherwise which is available to the employer in respect of the injury.''

``Equipment'' was defined as follows:

```equipment' includes any plant and machinery, vehicle, aircraft and clothing...''

Lord Oliver, in whose speech four Law Lords agreed, rejected the view that, as a matter of language, ``equipment'' imported something ancillary to or part of a greater whole. His Lordship said (at 296):

``My Lords, if subsection (1) stood alone... I would not, for my part, have encountered any difficulty in concluding that, in the context of this Act, a ship was part of the `equipment' of the business of a shipowner. In the Court of Appeal, O'Connor L.J. ante, p. 281A, expressed the view that the word in its natural meaning denoted something ancillary to something else and an echo of this is to be found in the judgment of Glidewell L.J. Thus both Lords Justices would, I think, regard machinery attached to a ship as `equipment', because it would be ancillary to the main object, the vessel, but both regarded the word as inappropriate to describe the vessel itself. I do not doubt that the word is frequently and quite properly used to describe the appurtenances of some larger entity, but I can see no reason either in logic or as a matter of language why its use should be so confined. Indeed, there is nothing in the entry in The Oxford English Dictionary quoted by O'Connor L.J. which necessarily imports that `equipment' is restricted to parts of a larger whole. The meaning is given as `anything used in equipping; furniture; outfit; warlike apparatus; necessaries for an expedition or voyage'.''

But his Lordship also said this (at 297):

``Moreover, your Lordships are concerned not with the meaning of `equipment' simpliciter but of the composite phrase, `equipment provided by his employer for the purposes of the employer's business'. Speaking for myself, I can think of no more essential equipment for the setting up and carrying on of the business of a shipowner than the ship or ships with which the business is carried on. This involves no misuse of language... In my judgment, a shipowner's fleet of ships is properly described as the equipment of his business.''

In the present case, as it appears to me, the word ``equipment'' should be viewed in the context of:

  • (a) the requirement that it be ``of a kind used... to protect persons engaged in [industrial] operations'';
  • (b) its ``including masks, respirators, shields, goggles, vizors, helmets, belts and machine guards''.

I first give consideration to the significance, if any, of the list of equipment in Item 113G(1) commencing ``masks, respirators''. Obviously enough, the word ``including'' shows that the listed items are not exhaustive of equipment benefiting from the exemptions. Whether the items sufficiently identify a class as to enable the operation of the ejusdem generis principle requires careful consideration. But before going on to consider that matter, I would contrast

ATC 4632

Item 113G(1) with the definition of ``equipment'' which was pertinent to Coltman. It is relevant to the context in which the word ``equipment'' is found.

In that case the statutory definition specifically included items such as would be used to carry out the employer's undertaking - viz: any plant and machinery, vehicle, aircraft. That was entirely understandable, because the legislation concerned an employer's liability to his employees, where the issue of adequacy of equipment might well involve consideration of the adequacy of plant used in the production activity undertaken by the employer.

In the case of Item 113G(1), however, none of the listed items of equipment appears to be central to the conduct of the industrial operations which are in contemplation. Each of the items is either one for personal protection - secured by its being worn, or alternatively one that protects employees from the dangers of machinery used in the conduct of industrial operations.

In the present case, except by the broadest analogy, the armoured cars are not ``worn'' by the respondent's employees. In the present case, also, the armoured trucks are central to the respondent's industrial undertaking. There is a large cost differential, too, that may highlight the difference between items such as masks, respirators and armoured vehicles. The former items are essentially small and easily portable by the wearer. They are carried by the wearer; not so with an armoured vehicle.

Having pointed up the differences which exist between the listed items and armoured vehicles, the question remains whether those listed items of themselves, or alternatively the full text of Item 113G(1) colours the meaning to be given to the word ``equipment'' so as to exclude armoured vehicles. I have, with very considerable hesitation, come to the conclusion that Item 113G does not include the armoured vehicles the subject of this appeal. It is important to undertake statutory construction, rather than engage in judicial legislation under the guise of the former. It is unacceptable to conclude that armoured vehicles are exempt because, if the armour was individually fitted to the occupants of the vehicles, that armour would unarguably fall within the exemption; although the very fact that personal armour would, in the circumstances, attract the exemption does highlight what might be said to be the unsatisfactory consequences of the reading of Item 113G that I have ultimately adopted.

In expanding upon the conclusion that I have reached, I should say that whilst I am not satisfied that the ejusdem generis principle has application in the circumstances, yet the word ``equipment'' should be read in context; and in context ``equipment'' appears to me to bear a meaning at odds with its including armoured vehicles.

Whilst it has been said that no particular form of words is required to establish the application of the ejusdem generis principle, an important qualification to this proposition has been often stated. There is at the least a great reluctance to treat apparently wide words followed by terms indicating a narrower genus as an application of the ejusdem generis principle. See Bennion, Statutory Interpretation at 836-837. The author notes that both Craies and Maxwell are to similar effect.

It is critical that there be sufficient indication of a category that can be properly described as a genus, even though that class be not specified in the enactment; and that the class be narrower than the residual words.

There has been judicial reluctance to apply the ejusdem generis principle (see, e.g.
R. v. Regos and Morgan (1947) 74 C.L.R. 613 at 623 per Latham, C.J.), and it is apparent that, if a genus is to be identified, the string of words must ``possess some common and dominant feature'' - see Regos and Morgan's case, supra, at 624 per Latham, C.J.

In the present case, as I said a little earlier, I am not satisfied that the ejusdem generis principle can be invoked. The list of words follows the general words. The list is prefaced by the expansive word ``including''. And there is, at the least, difficulty in establishing a genus.

It has been repeatedly stressed that statutory interpretation involves reading a provision as a whole, rather than word by word; see, for example,
Cooper Brookes (Wollongong) Pty Ltd v. FC of T 81 ATC 4292 at 4295-4296, (1980-1981) 147 C.L.R. 297 at 304 per Gibbs, C.J.,
The Metropolitan Gas Company v. The Federated Gas Employees' Industrial Union & Anor (1925) 35 C.L.R. 449 per Isaacs and

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Rich, JJ. at 455; and generally the discussion in Pearce, Statutory Interpretation in Australia, 2nd Edition at paragraph 38. The concept of ``equipment of a kind used... in the course of industrial operations to protect persons engaged in those operations'' does carry with it the flavour of what is called, in common parlance, ``safety equipment''. The listed items of equipment which are exempt fit in with that contextual impression. The impression is reinforced by harking back to the second reading speech in 1954, where the reference was to ``safety equipment for use in industrial operations''. See also the reference to ``industrial safety equipment'' in the 1981 explanatory memorandum. It appears to me that the appellation ``safety equipment'' is not properly descriptive of equipment which, whilst it has an important protective function, at the same time plays a central role in the conduct of the industrial operations in respect of which the protection is given.

The colour that attaches to the word ``equipment'' in its particular statutory context is further evidenced, in my opinion, by the comparison of the texts of the statutory definition in Coltman and Item 113G to which I referred a moment ago.

The conclusion which I have reached does not deny the proposition that the armoured vehicles protect persons engaged in industrial operations. Nor does it deny that the entire vehicles, rather than certain of their components, should be regarded as carrying out that protective function. But the question to be determined is not whether the vehicles afford such protection in the course of industrial operations, but whether they are equipment of a kind used to protect persons in the course of industrial operations; and to that question, in the context of Item 113G, I am forced to the conclusion that the answer is no.

I would dismiss the appeal.


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