ZEROZ PTY LTD v DFC of TJudges:
Full Federal Court
Lee, Hill and Nicholson JJ
The appellant, Zeroz Pty Ltd, appeals from the judgment of a judge of the Court, dismissing the appellant's application to set aside a decision of the Administrative Appeals Tribunal (``the Tribunal'') adverse to it.
The appeal arises from two assessments of sales tax issued by the respondent, the Deputy Commissioner of Taxation, against the appellant. The first assessment was made under s 10(1) of the Sales Tax Assessment Act (No 6) 1930 (Cth) and related to sales made by the appellant between 1 December 1989 and 31 December 1992. The second related to sales made by the appellant between 1 January 1993 and 31 January 1993 and was made pursuant to s 101(1) of the Sales Tax Assessment Act 1992 (Cth). In each case the products the subject of the assessments were marketed as ``Zeroz Soft Serve Frozen Yoghurt'' and were imported by the appellant and sold by it by wholesale. The products are compendiously hereafter referred to as ``the product''.
The nature of the product can best be understood from the following passage in the reasons for judgment of the learned primary judge:
``The Product is manufactured in the United States of America. Its manufacture involves three phases described as `the dairy phase', `the sweetener phase' and `the combination of dairy phase and sweetener phase'. In the dairy phase, a solution of non-fat milk, fortified with condensed skim milk is homogenised and pasteurised. It is then inoculated with a bulk starter culture medium containing bacteria of the types known as Lactobacillus bulgaricus , Streptococcus thermophilus , and Lactobacillus acidophilus . This is followed by six hours of fermentation at which time the Product becomes completely curdled in the form of a thickset gel of custard-like consistency having a pH level (a matter dealt with later in these reasons) in the range of 4.45 to 4.65. It is then cooled to 35-40°F and held in a tank for later processing. The sweetener phase (conducted separately from the dairy phase) involves mixing and processing of liquid sugar, liquid corn syrups, malto-dextrin, vegetable stabilisers or emulsifiers and, sometimes, cocoa powders. That separate solution is also pasteurised, homogenised and immediately cooled to 35-40°F. The substances which have to this point been separately processed are then (in the combination of dairy phase and sweetener phase) pumped together into the same tank and agitated under high speed until homogenised. The mixture is then submitted to a `sheering' process (very high speed mixing) which breaks down any remaining curd or precipitated milk protein and results in a thin viscosity liquid mix which can appropriately function in a soft serve freezer and soft serve dispenser. The mixture has a pH level of about 5.7 to 5.8. The Product is then packed into cartons and frozen, for shipment to customers. The applicant imports the Product into Australia and wholesales it in frozen form to retailers. The retailers partly thaw the Product, stir it for aeration purposes and sell it at a temperature of about 4°C.''
It is the appellant's primary argument that its product is exempt from sales tax. In respect of the first assessment period, the exemption is said to arise from the application of Item 23 of The First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (Cth) (``the 1935 Act''). That item is in the following terms:
- (a) of a kind sold exclusively or principally; or
- (b) put up for sale, as food for human consumption (whether or not requiring processing or treatment) or as ingredients of food for human consumption or as goods to be mixed with or added to food for human consumption, including condiments, spices and flavourings, but not including-
- (c) beverages (except beverages of a kind marketed exclusively or principally as food for infants or invalids) or cordials;
- (d) confectionery or goods of a kind marketed exclusively or principally as ingredients of confectionery;
- (e) goods of a kind marketed exclusively or principally as ingredients of goods falling within paragraph (c);
- (f) biscuits, other than biscuits manufactured in premises or vehicles in which the business of manufacturing biscuits is carried on exclusively or principally for the purpose of sale by
ATC 4279retail directly from those premises or vehicles;
- (g) mixes marketed exclusively or principally for use (other than household use) in the manufacture of biscuits;
- (h) goods, being ice-cream, ice-cream cakes, ice-creams, ice-cream substitutes, frozen confectionery (other than frozen yoghurt ), flavoured iceblocks (whether or not marketed in a frozen state) or similar goods, other than any such goods manufactured in premises or vehicles in which the business of manufacturing goods of that kind is carried on exclusively or principally for the purpose of sale by retail directly from those premises or vehicles;
- (j) mixes marketed exclusively or principally for use (other than household use) in the manufacture of ice-cream, ice-cream cakes, ice-creams, ice-cream substitutes, frozen confectionery (other than frozen yoghurt ), flavoured iceblocks or similar goods;
- (k) savoury snacks; or
- (m) goods consisting principally of any 2 or more of the following, namely confectionery, biscuits and savoury snacks; or
- (n) bicarbonate of soda marketed exclusively or principally for non- culinary purposes.''
``Confectionery'' was defined in The First Schedule to the 1935 Act as follows:
- (a) goods marketed as confectionery or consisting principally of confectionery;
- (b) popcorn;
- (c) confectionery novelties;
- (d) crystallised fruit, glacé fruit or drained fruit;
- (e) crystallised ginger or preserved ginger; or
- (f) edible cake decorations,
but does not include candied peel.''
As from 1 January 1992 the then existing sales tax law was replaced by what was later termed the ``streamlined sales tax legislation''. This involved an attempt to rewrite the legislation in simplified language. Generally, unless indicated in the Explanatory Memorandum, the rewrite was not thought to change the law. In consequence, in the period covered by the second assessment the exemption is said to arise from the application of Item 68 of Chapter 7 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) (``the 1992 Act''). That item and related provisions are in the following terms:-
(1) Goods marketed principally as:
- (a) food for human consumption (whether or not requiring processing or treatment); or
- (b) ingredients of food for human consumption; or
- (c) goods to be mixed with or added to food for human consumption (including condiments, spices and flavourings).
(2) This item does not cover:
- (a) cordials, or goods of a kind marketed principally as ingredients for cordials;
- (b) beverages, except:
- (i) beverages of a kind marketed principally as food for infants or invalids;
- (ii) thick-shakes, or similar goods, manufactured in premises or vehicles in which the business of manufacturing thick-shakes or similar goods is carried on mainly for the purpose of retail sale directly from those premises or vehicles;
- (c) goods of a kind marketed principally as ingredients for beverages covered by paragraph (b).
(1) Milk products.
(2) Goods that consist of milk products to the extent of at least 95%.
(4) This Item does not cover goods that are covered by Item 12 in Schedule 2.
(5) In this Item, `milk products' means:
- (a) milk, skim milk or butter milk (whether liquid, powdered, concentrated or condensed);
- (b) casein;
- (c) whey, whey powder or whey paste.''
However, s 14 of the 1992 Act provides:
``14 Unless otherwise indicated, Chapter 7 does not cover:
- (a) goods marketed principally as food or drink for animals;
- (b) confectionery, or goods of a kind marketed principally as ingredients for confectionery;
- (c) biscuit goods, other than biscuit goods manufactured in premises or vehicles in which the business of manufacturing biscuit goods is carried on mainly for the purpose of retail sale directly from those premises or vehicles;
- (d) savoury snacks;
- (e) goods consisting principally of 2 or more of the following:
- (i) confectionery;
- (ii) biscuit goods;
- (iii) savoury snacks;
- (f) ice-cream goods, other than ice-cream goods manufactured in premises or vehicles in which the business of manufacturing ice-cream goods is carried on mainly for the purpose of retail sale directly from those premises or vehicles;
- (g) mixes marketed principally for use (other than household use) in manufacturing:
- (i) biscuit goods;
- (ii) ice-cream goods;
- (iii) thick-shakes or similar goods.''
Section 3(2) of the 1992 Act defines ``confectionary'' and ``ice-cream goods'' respectively as follows:
- (a) goods marketed as confectionery or consisting principally of confectionery;
- (b) popcorn;
- (c) confectionery novelties;
- (d) goods known as muesli bars or health food bars, and similar foodstuffs;
- (e) crystallised fruit, glacé fruit and drained fruit;
- (f) crystallised ginger and preserved ginger;
- (g) edible cake decorations;
but does not include candied peel;
`ice-cream goods' means the following goods, or any similar goods:
- (a) ice-cream, ice-cream cakes, ice- creams and ice-cream substitutes;
- (b) frozen confectionery (other than frozen yoghurt );
- (c) flavoured iceblocks (whether or not marketed in a frozen state);''
The Tribunal's decision
In the Tribunal the parties appear to have proceeded on the basis that the issue to be resolved was whether the product was ``yoghurt''. It seems not to have occurred to anyone to investigate specifically whether the product was ``frozen yoghurt''. The unstated assumption was that ``frozen yoghurt'' was but ``yoghurt'' that was frozen. This is far from self-evident.
The Tribunal noted some relevant dictionary definitions. Thus the New Shorter Oxford English Dictionary provides:
``yoghurt n Also, yogurt ... A semi-solid, somewhat sour foodstuff, now often fruit- flavoured, made from milk curdled by the addition of certain bacteria; a carton of this substance.
curd n... 1 The coagulated substance formed (naturally or artificially) by the action of acids or rennet on milk, and made into cheese or eaten as food;...
curdle vt & i. The act or product of curdling; a curd.
coagulate vt & i Change from a fluid to a more or less solid state, esp. by chemical reaction;...''
The Macquarie Dictionary defines these terms as:
``yoghurt = yogurt n. a prepared food of custard-like consistency, sometimes sweetened or flavoured, made from milk that has been curdled by the action of enzymes or other cultures.
curd n. 1. a substance consisting of casein, etc, obtained from milk by coagulation, used for making into cheese or eaten as food.
curdle v.t. 1. to change into curd.
Coagulate v.i. 1. to change from a fluid into a thickened mass; curdle; congeal.''
The Tribunal stopped short of making a finding whether the product was ``yoghurt'' within these dictionary meanings. The closest it came was in the following passage:
``If, by reference to general principle (i), the Tribunal is to apply a liberal construction to the term then SSY could be classified as `yoghurt' and hence frozen yoghurt.''
The reference in this passage to ``principle (i)'' is a reference to the first principle enunciated by French J in his Honour's judgment in
Diethelm Manufacturing Pty Ltd v FC of T 93 ATC 4703 at 4714; (1993) 44 FCR 450 at 464 in the following terms:
``Classifications of goods attracting exemptions or beneficial rates should be liberally construed unless the text or context requires a narrow construction.''
The reason the Tribunal did not feel the need to determine whether the product was ``yoghurt'' in the ordinary or dictionary meaning of the term was the conclusion it reached that there was a special or trade meaning of the term ``yoghurt'', that the relevant statutory provisions in using the words ``yoghurt'' and ``frozen yoghurt'' intended these words to be used in their special or trade meaning and that the product was not ``yoghurt'' and thus was not ``frozen yoghurt'' within this special or trade usage.
The evidence before the Tribunal consisted of evidence from a number of witnesses in the dairy industry each of whom defined ``yoghurt'' by reference to a document Standard H8 of the Food Standards Code sanctioned by the Australian National Food Authority. Evidence was also received from a Mr Jackson, the Principal Food Scientist in the Environmental Health Branch of the Western Australian Health Department, who at the time of swearing his affidavit was the Acting Director of that branch. His evidence was directed to the development of Standard H8. It seems that since at least 1975 there had been a standard of the National Health and Medical Research Council governing yoghurt. That Council is responsible for the formulation of food standards in consultation with Commonwealth and State Government representatives, industry and consumer groups, and scientific organisations. Once approved by the Council these Standards are then recommended to the various State and Territory authorities for adoption. The prime concern of the standards appears to be health and marketing.
In 1975 the Council's standard defined yoghurt as:
``the clotted products made from pasteurised preparations of milk products by the agency or organisms of the types lactobacillus bulgaricus or lactobacillus acidophilus and Streprococcus thermophilus.''
As so defined there was in truth no substantial difference between the dictionary and the Standard definition of ``yoghurt''. It seems that the relevant Committee responsible for the Standard accepted a recommendation from the Food Microbiology Sub-Committee that the Standard should incorporate a limitation of pH 4.5 to ensure that the acidity of the food was sufficiently high so as to inhibit the growth of pathogenic micro-organisms (ie for a health reason).
Work continued on the Standard thereafter and it was not until October 1982 that a revised Standard was approved by the Council. This Standard was subsequently incorporated into the Food Standards Code and given legislative force in the States and Territories. Standard H8 represented the fruits of these labours. It was first published in the Commonwealth of Australia Gazette No. P27 on 27 August 1987. Although there have been amendments subsequent to that date they do not affect the present issue.
One might wonder at the relevance in interpreting a statutory provision first incorporated in legislation effective from 20 September 1985 (when Item 23 of the 1935 Act was introduced by Act No 145 of 1985) of a Standard not published until 1987 and on the evidence still the subject of consideration and alteration until that date. However, it is clear that the Tribunal and all witnesses before it placed great significance on the Standard.
It is unnecessary to set out the relevant portions of the Standard which are to be found extracted in the Reasons for Decision of the Tribunal. It suffices for present purposes to say that the Standard prescribes that for a product to be labelled ``yoghurt'' it have a pH value of not greater than 4.5. It is this requirement of a pH value in the Standard which in essence produces the difference between the dictionary definition of ``yoghurt'' on the one hand and the trade meaning of that expression on the
ATC 4282other, as discussed in the evidence given before the Tribunal.
It should be noted here that the products offered for sale and sold by the appellant have pH levels varying from 4.82 to 6.29 with a mean average of 5.74 and a standard deviation of O.413. It seems that the addition of some types of fruit flavours impacts upon the pH levels and that this is one reason why the appellant's products have a pH level greater than that prescribed by the Standard.
It might also be noted that the Standard does not specifically refer to ``frozen yoghurt'', although in dealing with packaging the Standard refers to:
``a food specified in this Standard that has been prepared by freezing and is intended for sale in a frozen state.''
The evidence before the Tribunal noted that in 1990 an application had been made to vary the Standard in respect of a frozen yoghurt product which had a pH level higher than that mandated by the Standard. It is interesting to note that the product was referred to as a ``new type of frozen yoghurt''. The assessment report in respect of this application which was before the Tribunal noted that some imported frozen yoghurt products had pH levels above 4.5 and others had levels below that figure. It is also interesting to note that the assessment did not suggest that these products were not ``frozen yoghurt''. The report noted:
``... frozen yoghurt is considered to be a product in its own right in many American States. As yet there has not been agreement to a federal definition of frozen yoghurt, and this scenario has apparently caused a difficult situation in the enforcement of any standards on a national basis.''
The report further noted that ``frozen yoghurt'' had not been defined in any international standards and that the American Federal Drug Authority was currently assessing the worth of adopting a federal approach to the regulation of ``frozen yoghurt''. The ultimate resolution was not to amend the Standard.
After referring to the Standard the Tribunal said:
``Except to the extent that the above definition is couched in more technical phrases, in essence, there is no discernible difference between that part of the Standard's definition of yoghurt and the ordinary usage definition. The Tribunal finds that SSY, to the extent that its pH level is more than 4.5 at the completion of the `dairy phase' of production,... meets both the ordinary or vernacular definition and the sub-clause 2(a) of the Standard's definition of `yoghurt'.''
However, the Tribunal was of the view that the product, because it had a pH in excess of 4.5 at the time of the assessable dealing did not meet the terms of the Standard. After a consideration of the cases the Tribunal concluded:
``... since the law addresses a particular trade or industry, namely the dairy products industry in Australia, then adopting general principle (ii) above SSY fails the test and is not `yoghurt'.''
Again the reference to ``principle (ii)'' is a reference to the judgment of French J in Diethelm, to which reference has earlier been made. The principle as enunciated by French J is in the following terms:
``Revenue laws addressed to commercial people frequently but not always classify goods in terms known to those in the relevant trade or industry.''
The Tribunal was further of the view that the product was an ``ice-cream substitute'' or ``frozen confectionery''. Although this was an issue in the Court below and before us on appeal, the Tribunal's conclusion involved a finding of fact which was open to it and cannot be the subject of an appeal. The application to this Court is in the original jurisdiction of the Court and is an appeal on , that is to say limited to , a question of law.
The judgment appealed against
There was no contest in the Court below (and with justification) that there was a question of law arising from the Tribunal's judgment, that being in essence the question whether the word ``yoghurt'' or the words ``frozen yoghurt'' as a composite phrase were used in their ordinary English sense as reflected by the dictionary definitions or whether they were used in the special or trade sense reflected in the Standard where the pH value is limited to 4.5 or under. This involves a question of construction in the sense used by Isaacs J in
Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78, referred to with approval in
Collector of Customs v Agfa-Gevaert Limited 96 ATC 5240
ATC 4283at 5244; (1996) 141 ALR 59 at 64, and, thus, a question of law.
After a consideration of the cases which have discussed the difficult question of whether words in a statute are used in a trade sense or in accordance with an ordinary English meaning, the learned primary judge concluded that the Tribunal had not erred in law in accepting that the relevant statutory provisions bore their technical or trade meaning. In arriving at this conclusion his Honour said that the Standard H8 ``assisted'' in confirming that Parliament intended such an industry or trade meaning.
Having concluded that the products were not ``frozen yoghurt'', the primary judge found it unnecessary to determine whether the goods were to be categorised as an ``ice-cream substitute'' or ``frozen confectionery''.
From this decision the appellant appealed to the Full Court of this Court.
Whether the Tribunal erred in law?
It is not difficult to enunciate the rules relating to the use of trade expressions in statutes, but it is much more difficult to apply those rules in many cases and the present is one such case.
In construing statutes such as the 1935 Act or the 1992 Act it is necessary to determine whether the Act uses a particular word or phrase in its ordinary English meaning or in some different and special trade sense. In performing this task it is necessary first to identify the word or phrase under consideration. Here the relevant phrase was ``frozen yoghurt''. It was not as such ``yoghurt''. It may well be that there is and was, as at the introduction of Item 23 of the 1935 Act, a recognisable product called ``frozen yoghurt''. Some of the evidence before the Tribunal (there was no cross- examination on any of the evidence) so suggests. One's own experience as a consumer of such frozen products if anything reinforces that evidence.
The evidence also made clear that neither in the United States of America, where the product is apparently popular, nor in Australia, is there any accepted standard applied to ``frozen yoghurt''.
There is a familiar problem which emerges whenever the meaning of a composite phrase arises for determination, that being, whether that phrase has a composite meaning or whether its meaning is to be determined by taking the defined meaning of each of the composites of the phrase: cf Agfa-Gevaert referred to earlier. Thus in
General Accident Fire and Life Assurance Corporation Ltd & Anor v Commissioner of Pay-Roll Tax (NSW) 82 ATC 4407; (1982) 56 ALJR 775, where the expression to be construed was ``Insurance... canvasser'', the meaning was not to be found by taking the word ``insurance'' and the word ``canvas'' and concluding that an ``insurance canvasser'' was a person who canvassed for insurance business. Rather, the meaning must, as Lord Keith of Kinkel delivering the advice of the Privy Council observed (at ATC 4409; ALJR 777), 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.''
So in the present case, there was need for an initial enquiry into whether ``frozen yoghurt'' was no more than a yoghurt which is frozen, or whether there is actually a product called ``frozen yoghurt'' having characteristics of its own. It may be noted that this initial inquiry was not embarked upon by the Tribunal, largely it must be said because the parties chose to argue the case on the assumption that ``frozen yoghurt'' as a composite phrase was nothing other than ``yoghurt'' that was frozen. However, the evidence before the Tribunal suggested the contrary of this.
It is hard to resist the conclusion in the present case that ``frozen yoghurt'' is something other than ``yoghurt'' which has been ``frozen''. At the very least there will need to be the addition of an emulsifier to aid the smoothness of the product when frozen, as well as sweeteners and flavouring. Indeed it may thus be said that ``frozen yoghurt'' is no more yoghurt which is frozen than ice-cream is cream which has been iced.
If it were necessary to determine whether a particular product was ``ice-cream'' (a combination of words used to denote a well understood product in common parlance), evidence would be adduced as to the method of making ice-cream and as to the method of making the product in question. The Tribunal could also undertake a physical comparison. It would decide as a matter of fact whether the product to be categorised was thus ``ice- cream''. The same procedure was necessary in
ATC 4284determining whether the product here in issue was or was not ``frozen yoghurt''.
Having identified the word or phrase to be construed it is then necessary for the Tribunal to determine whether there is some trade usage of the word or expression and if so what that trade usage is. In this quest the Tribunal will be required to determine the appropriate trade in which the expression is used. That may, in the present case, be the dairy industry generally. However, it may be that there is a particular trade in ``frozen yoghurt'' and in that event regard should be had to that trade to determine the trade usage, rather than some other trade not directly concerned with ``frozen yoghurt''. Because the Tribunal in the present case concerned itself with ``yoghurt'' simpliciter, it accepted as the relevant trade or industry the dairy industry. Had it considered the composite phrase ``frozen yoghurt'' as a separate product it may well be that the Tribunal would have considered more critically whether the relevant industry for consideration was the dairy industry.
If there is no trade usage then a fortiori the expression must be used in its ordinary English sense: cf
Pepsi Seven-Up Bottlers Australia Pty Ltd & Anor v FC of T 95 ATC 4746. Likewise, if the evidence is such that witnesses differ as to a trade meaning, the conclusion will usually be drawn that there is no trade usage different from the ordinary usage: cf
Telstra Corporation Ltd v FC of T 95 ATC 4400. Often an examination of this evidence will lead to the conclusion that any trade meaning adopted is no different from the ordinary English meaning. This means no more really than that the ordinary English meaning of the expression to be construed should be adopted.
The difficulty will only start to arise, as in the present case, where the evidence reveals that there is a trade usage of the expression to be defined (and for the purpose of the present discussion I put to one side the problem whether ``frozen yoghurt'' should be considered as a product in its own right and not merely yoghurt that has been frozen) but where that trade usage differs from the ordinary English meaning of the expression under consideration.
Where the statute to be construed is, as here, a revenue statute directed to particular trades or industries, the law ``generally favours'' interpretation of the terms as they are understood in the trade or industry to which the Statute applies: Agfa-Gevaert (supra at ATC 5246; ALR 66). Other phrases used to describe this principle are that revenue laws ``frequently'' classify goods in terms of those known in a relevant trade or that in statutes such as the 1935 Act (and, of course, the 1992 Act) words will ``more readily'' be treated as being used in accordance with trade usage: cf Pepsi Seven-Up Bottlers (supra at 4752).
But none of the above statements exclude the possibility that words used in the 1935 Act, or the 1992 Act, may bear their ordinary English meaning:
D & R Henderson (Mfg) Pty Ltd v Collector of Customs (NSW) (1974) 48 ALJR 132. So, the language of Lord Simon of Glaisdale in
Maunsell v Olins  AC 373, cited with approval by the Full High Court in Agfa-Gevaert at ATC 5245-5246; ALR 65-66 with approval must be borne in mind. His Lordship said (at 391):
``Statutory language, like all language, is capable of an almost infinite gradation of `register' - ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants etc). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances.''
Equally, it is necessary to bear in mind the words of Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ in Agfa-Gevaert where their Honours emphasise that (at ATC 5247; ALR 67):
``Trade meaning and ordinary meaning do not necessarily stand at opposite extremities of the interpretative register.''
Finally, it may be said that in Agfa-Gevaert the High Court cautioned against adopting rigid principles of construction in this area. In this context it must be remembered that the adoption of a trade usage meaning tends to limit the meaning of an expression to the trade meaning at a particular time and to leave no or
ATC 4285little scope for new products to extend the denotation of an expression: per Mason J in Henderson at 134.
The leading sales tax case in this area is the decision of the High Court in
Herbert Adams Pty Ltd v FC of T (1932) 2 ATD 31; (1932) 47 CLR 222. At issue in that case was the meaning of an exemption expressed in terms of ``Pastry but not including cakes or biscuits''. It will be observed that it is hard to imagine how the ordinary meaning of the word ``pastry'' could encompass ``cakes or biscuits''. This difficulty led readily to the conclusion that if there was a trade meaning of the word ``pastry'' which did encompass ``cakes or biscuits'', then the word ``pastry'' was used in the statute in that trade meaning. Evidence from the trade (the evidence was received from pastry-cooks) made it clear that the word ``pastry'' referred to the product of the art of pastry-cooks and so encompassed all classes of flour goods other than bread, and thus included ``cakes''. In these circumstances it is not surprising that the High Court concluded that the statute in using the word ``pastry'' did so in the sense of the trade usage rather than in accordance with ordinary English usage. On the other hand, the word ``cakes'' was held to have its ordinary English meaning. This was so notwithstanding that the word ``cake'' in the trade had a specialised meaning.
In discussing the acceptance of the trade meaning of ``pastry'', Dixon J, with whose judgment Rich J agreed, said (at ATD 33; CLR 227):
``... the Legislature has expressed itself in a manner which amounts to a recognition, if not an adoption, of the trade meaning. Such a recognition might be expected, because the tax is levied by the various statutes upon persons who sell commodities in the common course of distribution, whether they manufacture or produce the goods they sell or acquire them by purchase. A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned.''
However, in rejecting the trade meaning of the word ``cake'' his Honour said (at ATD 33-34; CLR 228-229):
``... To establish that the schedule of exemptions has adopted this limited or restricted meaning is no easy undertaking. In the first place, there is nothing in the form of expression `pastry not including cakes or biscuits' to suggest an unusual signification of `cake' as there is in the case of `pastry'. In the next place, it is always less difficult to show that a word has a wider meaning than it is to establish a specialized use. For an extension of meaning involves no abandonment of the use in respect of things to which it would in any case apply; but a uniformly restricted application among any class of persons is necessary in order to establish that it has among them a narrower meaning and that meaning only.... There is no sufficient reason for attaching to the word `cakes' in the schedule a special sense which would exclude `sponge'.''
The reference to the difficulty of adopting a trade meaning which is narrower than the ordinary English meaning is repeated in Agfa- Gevaert at ATC 5246; ALR 66.
Although counsel for the Commissioner submitted otherwise, the present is a case where the trade meaning for ``yoghurt'', if applicable to the interpretation of ``frozen yoghurt'', is narrower than the ordinary English meaning because it excludes, somewhat arbitrarily, from the definition of ``yoghurt'' all products having a pH in excess of 4.5. Such arbitrariness may be essential in legislation directed at public health or even labelling, where fixed criteria must be laid down, but sits less easily when revenue legislation is considered. It can hardly be accepted that a product on the border line of pH 4.5 might change its character from ``yoghurt'' to something else not being ``yoghurt'', if in the manufacturing process the pH level was found to be slightly in excess of 4.5, say 4.51.
The reluctance to accept readily a trade meaning which is narrower than the ordinary English meaning stems from the peculiarity that an item which is within the ordinary acceptation of a term used in a statute is not addressed at all by that statute. That result may follow, but it would not be one lightly reached. The peculiarity is illustrated by the Tribunal's conclusion in the present case that an item which could be ``yoghurt'' in the ordinary meaning of that expression falls outside an exemption dealing with ``yoghurt''. The ultimate aim of legal interpretation is to arrive at a common sense result: cf Agfa-Gevaert at ATC 5246 and footnote 30; ALR 67 and footnote 30.
The present is a case where there is nothing in the relevant legislation which suggests that the words ``frozen yoghurt'' are used in any trade or special sense which is narrower than the ordinary English meaning. There is nothing in the context which points to any particular legislative policy, save the preferment for the purposes of sales tax of ``frozen yoghurt'' to other frozen confectionaries including ice cream. Although this is in no way determinative, the words ``ice-cream'', ``ice- cream cakes'', ``ice-cream substitutes'' and ``frozen confectionery'' appear to be all used in an ordinary English sense, save, perhaps for the fact that ``confectionery'' has a defined meaning, but only in an inclusory sense, where the word ``confectionery'' appears also in the definition, as well as the expression defined. In the 1992 Act the expression ``ice-cream goods'' has a defined meaning, but again the words ``ice-cream'', ``ice-cream cakes'', ``ice-cream substitutes'' and ``frozen confectionery'' are all used in their ordinary English sense, save for the statutory definition of ``confectionery''. Having regard to the history of the legislation of which the 1992 Act is part as being intended, unless otherwise indicated, to restate the law in simplified terms rather than to change it, nothing turns upon the difference between the 1935 Act and the 1992 Act.
It follows that, in respect of the objection to each assessment, the treatment by the respective statutes of ``frozen yoghurt'' as an example of ``frozen confectionery'' meant that the meaning of the latter phrase in the context in which it appeared had to be considered in ascertaining the meaning ascribed to ``frozen yoghurt''. That is to say, ``frozen yoghurt'' would have the hallmark of a confection.
Great care must, of necessity, be taken in using Standard H8. First, the fact that the standard is directed at public health concerns rather than the definition of a product admits of some concern. More cogently, here the Standard neither deals specifically with the product ``frozen yoghurt'' nor had it been formally published in the Commonwealth of Australia Gazette as at the commencement of Item 32 of the 1935 Act. It is hard to accept that a public document still in process of formulation and not yet published at the time the word ``yoghurt'' was introduced into the sales tax law should be seen as the source of a definition of the expression ``yoghurt'' in a statute passed years earlier.
It is apparent from the above comments that the Tribunal erred in law in the task of construction before it. First, the Tribunal had to determine whether there was a separate product ``frozen yoghurt'' which was referred to in the exemption item or whether ``frozen yoghurt'' had no meaning different from merely yoghurt which was frozen. On the evidence before it, it was open for the Tribunal to conclude that there was a product known as ``frozen yoghurt'' which would be recognisable to consumers or producers. It was then required to determine whether the product came within the ordinary meaning of ``frozen yoghurt'', whatever that might be. Although it was entitled to embark upon an investigation whether there was any trade meaning of the expression ``frozen yoghurt'' which was different from the ordinary meaning, and from this evidence to draw conclusions as to the ordinary usage in the trade of the expression ``frozen yoghurt'' if this trade meaning was narrower than the ordinary English meaning of the expression, there was no indication in the statute that a meaning other than the ordinary meaning should prevail. In carrying out this task the Tribunal would be entitled to receive expert evidence from the relevant trade independently of any Standard, that prima facie being those who produce or market ``frozen yoghurt''.
Accordingly, the appeal should be allowed and the matter remitted to the Tribunal to hear again in accordance with the principles discussed in these Reasons. The respondent Commissioner should pay the appellant's costs of the appeal and of the hearing below.
THE COURT ORDERS THAT:
1. Appeal allowed.
2. Application be remitted to the Administrative Appeals Tribunal for rehearing in accordance with law.
3. Respondent to pay the appellant's costs of the appeal and of the hearing before his Honour.