MAYNE NICKLESS LIMITED v FC of T

Members: Fullagar J

O'Bryan J
Ashley J

Tribunal:
Supreme Court of Victoria (Full Court)

Decision date: Judgment handed down 28 June 1991

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O'Bryan J

This appeal is from a judgment of Marks, J. [reported at 90 ATC 4104] whereby he dismissed a proceeding in which the appellant had sought a declaration from the Court that the sales of 19 armoured vehicles by Chariot (Australia) Pty. Ltd. to it were exempt from sales tax by virtue of s. 5 and Item 113G(1) of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (the Act).

Section 5(1) of the Act provides:

``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.''

Under the First Schedule Item 113G (as amended by Act No. 142 of 1981) 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).''

Item 113G is in the First Schedule in Division XV - Miscellaneous. Items, other than 113G, cover such things as hand-tools, coffins, films, goods, machinery and plant, materials, machinery and motor vehicles for use by the armed forces, ships, aeroplanes, omnibuses, tractors etc.

Uncontradicted evidence given in the Court below by employees of the appellant was directed to the unique design, operation and use of the armoured vehicles. Each vehicle, it was said, is extensively armoured and provided with bulletproof glass in order to protect and secure cash and valuables transported by the vehicle from a pick-up point to a point of delivery. The business and activity of transporting cash and valuables in an armoured vehicle is known as ``Armaguard business''. Persons engaged in the operation of transporting cash and valuables by means of these vehicles are afforded considerable protection against armed bandits by the armoured vehicle.

The learned trial Judge determined that the business of the appellant in picking up and transporting cash and valuables for its clients by means of an armoured vehicle was ``in the course of industrial operations'' within the meaning of Item 113G. Counsel for the respondent did not seek to disturb this conclusion. Quite clearly, the activity of transporting cash and valuables is comprehended by the phrase ``the course of industrial operations''.

Although the learned Judge addressed the question whether an armoured vehicle is ``equipment'' within the meaning of Item 113G his Honour found it unnecessary in the end to answer the question. The learned Judge posed a further question ``whether the equipment under consideration is `of a kind used exclusively, or primarily and principally, in the course of industrial operations to protect persons engaged in those operations''' which he answered in the negative. He said [at 4108]:

``It is true that the armoured vehicle involves protection of persons but that protection is a necessary by-product of making the service [transporting cash and valuables for clients] attractive to clients of the [appellant]. Such protection or added protection does not mean that the entire vehicle (which alone can be the subject of the exemption) is `used' to protect those

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persons within the meaning of the exemption as expressed in item 113G.''

Accordingly, having found as he did that use of an armoured vehicle to protect the crew is simply ancillary to another use, transporting cash and valuables, his Honour determined that the ancillary use did not exempt the armoured vehicles from sales tax.

The appellant has contended that the learned Judge was in error:

• 1. In failing to give effect to uncontested evidence of the appellant that the method adopted by the appellant in conducting its Armaguard business was to use vehicles designed primarily to protect the persons operating them and thereby to secure not only the safety of the valuables entrusted to the appellant.
• 2. In holding that in substance Item 113G was limited to items of equipment which only performed one function, namely a safety function. His Honour should have held it sufficient to render the vehicles exempt under Item 113G that one of their functions and uses (not being an insignificant function and use) is to ensure the safety of the persons operating them.

The respondent to the appeal contended that the exemption provided by Item 113G does not apply to the vehicles because they are not ``equipment'' within the meaning of the item. An armoured motor vehicle, it was argued, is not ``equipment of a kind'' which belongs to the genus or class identified by the eight specified items in Item 113G.

It is convenient to turn first to the words which were added to Item 113G(1) by amendment in 1981 ``exclusively, or primarily and principally''. The learned Judge determined that the adverbial phrase added in 1981 governs ``the course of industrial operations'' and not the words ``to protect persons engaged in those operations''. His Honour had regard to the explanatory memorandum circulated with the Bill in 1981 in which it was stated:

``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.''

The adverbial phrase is used elsewhere in the First Schedule (e.g. Items 13, 14A, 113E, 113F) prior to the amendments made by Act No. 142 of 1981. In 1981 the adverbial phrase was inserted in several places (e.g. in the definition clause ``aids to manufacture'', Item 20B, Item 113A etc.) for the purpose of limiting the application of the exemption.

I am of the opinion that the proper construction of Item 113G requires one to read the adverbial phrase as governing both the course of industrial operations and the protection of persons engaged in those operations. The exemption applies to equipment of a kind used exclusively, or primarily and principally, in the course of industrial operations if it is of a kind used exclusively, or primarily and principally to protect persons engaged in those operations. It cannot be supposed that the legislature intended to grant exemption to equipment used exclusively, or primarily and principally in the course of industrial operations but which is of secondary importance to protect persons using the equipment in those operations.

The claim for exemption is in respect of the armoured vehicles and not for the materials such as the armour or bulletproof glass with which each vehicle is equipped. In my opinion, the evidence fell short of showing that armoured vehicles are used exclusively, or primarily and principally to protect persons who use them to transport cash and valuables. That the vehicles afford strong protection to the persons who use them in the course of industrial operations cannot be gainsaid but at the same time the prime or principal use of the vehicle is protection of the valuable cargo.

A further critical question is whether an armoured motor vehicle is ``equipment'' within the meaning of Item 113G. The meaning of ``equipment'' was considered in
Coltman v. Bibby Tankers Ltd. (1988) A.C. 276 in the context of the Employer's Liability (Defective Equipment) Act 1969 (U.K.). A widow of an engineer employed on a bulk carrier brought an action for damages against the shipowners, the employer of the deceased engineer. It was alleged that the deceased's death was caused in the course of his employment by reason of defects in the equipment, namely the vessel, provided to him by the employer, which defects were attributable to the shipbuilder. It was

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further alleged that by reason of the provisions of the Employer's Liability (Defective Equipment) Act 1969 the said defects of the shipbuilder were attributable to negligence on the part of the employer.

A preliminary issue of law was tried as to whether the vessel was ``equipment'' provided by the employer within the meaning of the Act. At first instance Sheen, J. held that the vessel was ``equipment''. In the Court of Appeal, by a majority, the Court held that the vessel was not equipment within the meaning of the Act. In the House of Lords an appeal from the Court of Appeal was allowed. Their Lordships held that ``equipment'', in the context of an Act imposing vicarious liability on an employer for a defective article, was wide enough to include a vessel of whatever size provided by an employer for the purposes of his business.

In s. 1(3) of the Employer's Liability Act ``equipment'' was defined as follows:

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

In the Court of Appeal O'Connor and Glidewell, L.JJ. had expressed the opinion that the normal meaning of the single word ``equipment'' does not include a vessel. O'Connor, L.J. observed:

``The ordinary meaning of equipment must I think denote something ancillary to something else. The English Oxford Dictionary establishes that this is so and I quote the two main paragraphs:

• `1a. The action or process of equipping or fitting out.
• b. The state or condition of being equipped; the manner in which a person or thing is equipped.
• 2. Anything used in equipping; furniture; outfit; warlike apparatus; necessaries for an expedition or voyage.'''

Lord Oliver of Aylmerton took a different view and held that as a matter of language ``equipment'' need not be restricted in meaning to parts of a larger whole. More importantly, his Lordship observed:

``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.''

The speech of Lord Oliver was agreed in by four Law Lords.

The context of Item 113G in which ``equipment'' is used is significantly different to the context of the English Act. Moreover, it is ``equipment of a kind... including masks, respirators, shields, goggles, vizors, helmets, belts and machine guards'' to which a meaning must be given.

In determining the meaning of ``equipment'' are the eight specified items significant? In my opinion, they are. The eight specified items are kinds of protective equipment commonly used in the course of industry to protect workers. Such items are either worn by a worker for protection or are placed over belts or machines to protect workers from moving or dangerous parts of the machine. In my opinion, the eight specified items form a genus or class of equipment and govern the construction of Item 113G. In the context of Item 113G, the word ``including'' means ``comprising'' or ``embracing'', in my judgment. When read in this way it is impossible to construe ``equipment'' in Item 113G as meaning armoured motor vehicle.

If the appellant had provided each person engaged in the Armaguard operation with a bulletproof or armour-plated vest for protection against armed bandits one would have no difficulty in determining that such apparel is ``equipment'' within the meaning of Item 113G provided it was used exclusively, or primarily and principally in the Armaguard business to protect persons engaged in such business. A bulletproof vest fits comfortably within the genus or class of equipment specified in Item 113G; and armoured motor vehicle does not.

I entertain no doubt that in the context of Item 113G ``equipment of a kind used exclusively, or primarily and principally, in the course of industrial operations to protect

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persons engaged in those operations'' does not include armoured vehicles in which workers travel in the course of transporting cash and valuables from place to place.

In my opinion the decision in the Court below was correct and I would dismiss the appeal with costs.