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Feltex Commercial Interiors Pty. Limited trading as Co Design v. Federal Commissioner of Taxation

Judges:
Lockhart J

Court:
Federal Court

Judgment date: Judgment handed down 26 September 1990.

Lockhart J.

This proceeding was commenced in the High Court of Australia. The High Court made an order under sec. 44 of the Judiciary Act 1903 (Cth) that the matter be remitted to this Court and that it proceed here as if the steps already taken in the High Court had been taken in this Court.

The case concerns the question whether certain ducted panelling and related accessories supplied by the applicant and installed by it in commercial premises in Sydney are exempt from sales tax pursuant to sec. 5 and certain items in the First Schedule of the Sales Tax (Exemptions and Classifications) Act 1935 (``the Act'').

The applicant carries on business, trading as ``Co Design'', of manufacturing, supplying and installing ducted panelling and related accessories in premises throughout Australia. In about December 1986 Mr J.R. Fisher whilst he was employed as the applicant's State manager for Victoria and Tasmania was approached by Mr R. Cowan, the manager for office planning of Coles Myer Ltd. in Melbourne. The two men had a discussion during which Mr Fisher said that he would arrange for ``a budget figure'' to be given to Mr Cowan for the project of supplying and installing the applicant's ``System 2'' panelling at the Sydney head office of Coles Myer on the first floor of the building at the corner of Pitt and Liverpool Streets, Sydney. During the discussion Mr Cowan handed Mr Fisher a floor plan diagram of the Pitt Street premises which showed details of the partitions and fittings as required by Coles Myer.

Mr Cowan and Mr Fisher discussed the matter more than once in late 1986 and early 1987, particularly the detailed requirements as to the type and size of the partitions required by

ATC 4927

Coles Myer. By letter dated 4 February 1987 Coles Myer requested the applicant to ``forward a quotation to supply and install partitions as indicated on this drawing...''. The reference to the drawing is to the drawing which accompanied the letter.

Following receipt of the letter Mr Fisher directed an estimator employed by the applicant to prepare an estimate for use as the basis of a quote to be given to Coles Myer. The estimator prepared and gave to Mr Fisher his notes setting out details of the size and quantity of partitions and related fittings and accessories required for the job. The notes were very detailed.

By letter dated 24 February 1987 the applicant set out its quotation for the job including a summary of all the components required. The total price shown was $156,270. It was not until some time later, about 20 August 1987, that the applicant received written confirmation of the order from Coles Myer showing the price as $169,500 inclusive of sales tax. Accompanying the confirmation was a detailed list of the sizes and quantities of panels and related fittings and accessories together with a statement of the quantities required, the unit price and the total of each particular unit with a grand total of $169,500.

Meantime in July 1987, following a discussion between Mr Cowan and Mr Fisher, Coles Myer required certain additional components for the job and a drawing was given by Mr Cowan to Mr Fisher for this purpose showing the additional components. Mr Fisher agreed that those components would be ordered immediately and that he would inform Mr Cowan of any variation to the price already quoted. By letter dated 11 August 1987 from the applicant to Coles Myer a revised quotation was set out including the additional components ordered by Mr Cowan on behalf of Coles Myer. It showed a total contract price of $176,365 for the supply and installation of the panels and related components and accessories. The figure included the cost of all labour necessary for the installation but this and any other installation charges were not shown separately.

Following the telephone conversation between Mr Fisher and Mr Gorsuch of Coles Myer in early June 1987, Mr Fisher took steps with the applicant to order from its factories the various components required for the Coles Myer job. All partitions, posts and ``work tops'' were manufactured by the applicant's Adelaide factory, all metal storage units by its Brookvale factory and all metal legframes by its Lidcombe factory. Glass and door hardware were obtained from outside suppliers.

The installation of the partitions, fittings and related accessories into the Coles Myer premises in Liverpool Street took place in early August 1987 over a period of some weeks.

Prior to the installation of the partitioning by the applicant the Coles Myer premises was vacant. There was no existing partitioning to be removed nor was there any other physical work of a preparatory nature to be carried out by the applicant at the premises.

The partitioning components delivered to the Coles Myer site by the applicant consisted of the following items which are the items the subject of this proceeding:

  • (a) Fabric covered aluminium framed panels both ducted and non-ducted. The ducted panels contain ducts at a uniform height above the floor comprising three separate channels for cabling. One channel is dedicated for electric cabling, a second channel for telephone cabling and a third panel for computer or any other form of cabling.
  • (b) Aluminium power posts which were subsequently connected from the ceiling to the bottom of some of the partitions and which serve the function of channelling electrical and other cables from the ceiling to the ducted partitioning panels.
  • (c) Rectangular aluminium frames ready to receive glass panels, generally referred to as ``office frames''.
  • (d) ``Wall-starters'', the function of which is to enable panels to be attached to a wall. The same fitting is used as a ``ceiling track'' in which capacity it is used to connect frames to ceilings and to walls above the frame. In the Coles Myer premises these tracks were used only to attach a number of frames of glass partitioning to gyprock.
  • (e) Aluminium posts of various lengths and angles (45°, 90° and 180°), the function of which was to enable one panel to join at the

    ATC 4928

    appropriate angle to an adjacent panel or panels.
  • (f) Fixing brackets, the purpose of which was to enable panels to be fixed to the floor.
  • (g) Duct cover plates which were to be attached to ducted panels to cover electrical and other wiring running within the ducts.
  • (h) Power and other outlets which were to be attached to ducted panels, to enable power cable and other cables running through the ducts to be connected to electrical appliances.
  • (i) Post caps, panel caps and top caps. These caps were placed on the top or end of posts and panels to improve their aesthetic appearance.
  • (j) Steel strengthening bars which were attached to the top or tops of 2,700 mm panels to improve their rigidity. These are the highest panels used by the applicant on the Coles Myer job and they extend from floor to ceiling.
  • (k) Joining keys, screws and clips, the purpose of which was to join panels either to adjacent panels or to aluminium posts.
  • (l) Various fixing materials and hardware such as dynabolts, toggle bolts and wall plugs, used to attach panels and/or wall starters to walls and floors.
  • (m) Door frame panels, some 2,700 mm in height and others 2,100 mm in height, to which doors were subsequently attached.
  • (n) Doors which were attached to the door frame panels during installation.

In addition to these partitions and components there were certain other components including work tops, metal storage units and mobile draw units supplied by the applicant to the Coles Myer premises. There are coloured photographs in evidence of each of these components which clearly depict them.

The task of installing the equipment under the contract between the applicant and Coles Myer involved as the first step in installation the installation of glass partitions and timber doors along one side of the premises where there had already been installed some gyprock partitioning. The gyprock partitioning had been installed leaving appropriate gaps for the glass partitions and doors. Aluminium tracks of the kind referred to in (d) above were attached to the gyprock partitioning using heavy industry standard fasteners. To this track was attached a slotted aluminium frame of the type referred to in (c). Subsequently a glazier attended to install glass panels into the frame. A number of doors similar to those referred to in (n) made of timber covered by laminex were installed at the entrance to the separate offices formed by those partitions.

After that area of the premises was completed the cable services were extracted from the ceiling. The services available included electrical power, telephone and data systems. In the Coles Myer premises all those services originated in the ceiling. In other premises access to such services may be obtained from either the floor or the walls. The electrical and other services were subsequently connected to the partitions by the aluminium power posts referred to in (b). Holes were cut into the false ceiling of the premises and the power posts were placed through those holes. The cables and wiring were then led into the posts from the ceiling and then through the posts down to the partitioning itself. The posts are slotted thus enabling them to be attached to the partitions. Partitions were fixed to the posts by means of screws and joining keys.

The partitioning panels manufactured by the applicant were then installed. Panels were installed to form partitioning in accordance with the appropriate plan.

Installation of the panels to make up the partitioning involved the following steps:

  • (i) Wall-starters of the type referred to in (d) were attached to the wall. That involved drilling of walls, placing plugs in drilled holes and then using screws to connect the wall-starters to the plugs. That formed a solid foundation to subsequently connect the partitioning to the wall.
  • (ii) Panels were then attached to the wall-starters. That involved attaching pieces of timber to the panels by means of screws, slotting the timber end of the panel into the U-shape wall-starter and fixing it in place by screwing through the side of the wall-starter into the timber.
  • (iii) Panels were then connected to other panels, by means of joining keys and screws to make up the partitioning in the

    ATC 4929

    configuration shown in the plan. At each panel-to-panel join approximately six screws were used to form a solid and inflexible connection. In the case of what were to be glass panels, initially the empty frame was put into place and the glass installed subsequently. Frames surrounding glass panels are identical to frames surrounding fabric covered panels.
  • (iv) When the above steps were completed all the partitions were levelled and the position of each partition was checked against the plan.
  • (v) The partitions were then fixed to the floor. At this stage each partition was simply resting upon plastic feet which were incorporated into the panel when manufactured. In addition to these feet, a proportion of the panels had fitted to their base a steel-fixing bracket. Those brackets were fixed to the concrete floor of the premises by means of two industry standard dynabolts.

After the position of each partition had been confirmed and some partitions had been attached to the floor or wall, cables which had been led from the ceiling through the power posts were led along the ducted partitions to the point where outlets were required for installation. Some of the cables led through the partitions were continuous cables of up to 50 m in length. After the wiring had been completed, power outlets of the type referred to in (h) were installed. Final installation of the electrical, telephone and datum system services was subsequently completed by tradesmen who were not employees of the applicant.

After all the services had been installed the applicant's employees completed the detailing of the partitions. This included the placing of cover plates, one on either side of a ducted panel to close off the duct. In addition to the cover plates all other forms of detailing such as post caps, top caps and panel caps were attached to the tops and ends of panels and posts.

After the completion of this work glaziers attended the premises and installed glass panels into the metal frames which had by then been installed by the applicant. The glass was fitted into the aluminium tracks and sealed with silicone.

After the partitioning had been completed all work stations, work tops and the various other accessories were installed.

If the partitioning installed at the Coles Myer site had to be removed the procedure to be followed would essentially be the reverse of the installation procedures described above. The most difficult aspect of removing partitioning is normally disconnecting the brackets to the cement floor which often ``freeze'' in place after a period of time and become extremely difficult to remove. Removal of the entire partitioning necessitates the use of the tradesmen who installed it. Removal of the applicant's partitioning from the Coles Myer premises would take about half as long as the installation procedure.

Some of the partitioning installed in the Coles Myer premises is curved partitioning, but it is not ducted and it is only the ducted partitions that are the subject of these proceedings.

The evidence in the case was principally by affidavit but some of the witnesses were examined in chief and cross-examined. The witnesses who gave oral evidence were Mr N.G. Doherty, presently the New South Wales operations manager of the applicant, Mr V.M. Berk, an architect called by the applicant; Mr S.P. Little, a commercial interior designer called by the applicant and Mr B.R. Longfoot, an academic and building diagnostics consultant presently the head of the Department of Building at the University of Technology, Sydney. Mr Longfoot is also a qualified civil and structural engineer and has worked in the building industry since 1955. Affidavit evidence was also received from Mr J.R. Fisher, presently the national sales manager of the applicant.

The first question to be determined is the proper construction of the contract between the applicant and Coles Myer.

Counsel for the Commissioner argued that the ``goods'' the subject of the contract were not the individual components but the assembled partitions and work stations installed in the positions provided for by the plan furnished by Coles Myer. This global mass was described as ``the furniture''. It was said that the furniture was manufactured by the applicant out of the various components and became distinct from those components once supplied

ATC 4930

and installed. It was then submitted that the goods so manufactured and sold are not within any of the exemption items in the First Schedule and in particular not within item 83.

This is not in my view the correct construction of the contract. The contract was to supply and install a large number of specific items of equipment each of which was assigned a particular price and ultimately the total price was stated with no charge overall for installation. It was not a contract of the kind for which the Commissioner contended. If, however, the Commissioner's construction of the contract is correct then it does not follow that the goods would fail to qualify for exemption. For reasons which I will set out later in my opinion the goods would in that event answer the description of goods having structural uses similar to those of plaster or plaster products and of a kind used principally in the construction of and wrought into or attached to so as to form part of the building in which the Coles Myer premises is situate, thus qualifying under item 83(2) of the Act. In one sense the case of the applicant would become stronger because there would then be a combination of all the various components into the whole which would be the fixed partitioning viewed in its position after installation.

However, as I have said, given its correct construction, it was a contract to supply and install a large number of specific items of equipment. Thus, the case involves a detailed analysis of the panels and related equipment and accessories which are mentioned in para. (a) to (n) above. It involves taking each component and relating it to a particular item in the First Schedule which is said by the applicant to apply to exempt it from sales tax.

During the course of the hearing the Commissioner conceded that certain items were exempt which had previously been in contest and I shall refer to these items as I come to them. It was agreed between the parties that nothing turns so far as the question of costs of the proceeding is concerned upon the fact that the concessions were made as recently as after the commencement of the hearing.

The convenient course to follow, indeed the only course that will make the judgment intelligible, is if I proceed from component to component in turn, examining each component against the particular item in the First Schedule for which exemption is claimed.

The principal component for which exemption is claimed consists of the different sized ducted panels mentioned in (a) above. I repeat that it is only the ducted panels for which exemption is claimed in this proceeding. The only relevant difference between the three forms of panel which are described in the evidence is their height.

The applicant contends that the panels are exempt under item 83(2) or 83(3) in the First Schedule to the Act. Item 83 is in the following terms:

``83(1)...

83(2) Goods being -

  • (a) plaster products;
  • (b) goods having structural uses similar to those of plaster or plaster products; or
  • (c) boards, sheets and linings made of metal, wood, wood pulp, asbestos or fibro-cement, or of bituminous or other compositions,

that are of a kind used exclusively or principally in the construction and repair of, and wrought into or attached to so as to form part of, buildings or other fixtures, but not including -

  • (d) asphalt tiles, cork tiles, linoleum tiles, rubber tiles, vinyl tiles or other similar floor tiles;
  • (e) cork, linoleum, rubber, vinyl or other similar floor coverings;
  • (f) vinyl liners, fibreglass liners or other similar liners for swimming pools or spa baths;
  • (g) components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
  • (h) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
  • (j) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
  • (k) goods covered by item 12 in the Third Schedule

ATC 4931

83(3) Boards, sheets and linings, n.e.i., to be used in the construction or repair of, and wrought into or attached to so as to form part of, buildings or other fixtures, but not including -

  • (a) asphalt tiles, cork tiles, linoleum tiles, rubber tiles, vinyl tiles or other similar floor tiles;
  • (b) cork, linoleum, rubber, vinyl or other similar floor coverings;
  • (c) vinyl liners, fibreglass liners or other similar liners for swimming pools or spa baths;
  • (d) components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
  • (e) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
  • (f) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
  • (g) goods covered by item 12 in the Third Schedule

83(4)...''

The applicant claims that the ducted panels are exempt under item 83(2) as:

``(2) Goods having structural uses similar to those of... plaster products... that are of a kind used... principally in the construction... of,... and wrought into or attached to so as to form part of, buildings...''

Prior to the late 1950s no distinction was made in the building industry between materials originally included in the ``shell'' of a building and materials subsequently added in the internal ``fit-out''. All exterior and interior work necessary for the construction of a building was completed by the builder of the premises before the building was declared complete. In the late 1950s and early 1960s there emerged the genesis of the modern multi-storey office building in Australia. This type of building was constructed as an empty ``shell'' without internal divisions being completed. This emergence of buildings with an open layout arose as a result of both an increase in consumer need for larger and more flexible office spaces and a trend which began in the construction of speculative office building, that is to say office buildings that were built not for a specific end user but constructed so that the building could be sold or leased after completion. For this reason it was preferable to have the flexibility afforded by open layout rather than to have the building restricted by a fixed layout. Also in the late 1950s and early 1960s there was an increased tendency to use electronic equipment in offices. The use of partitioning enabled the fit-out of cables and related services to be undertaken with greater ease. The empty shell principle of construction enabled the internal fit-out of the building to be completed, not by the builder, but by the subsequent owners or tenants. This type of building readily lent itself to the use of internal office partitioning, the concept of which was brought to Australia from the United States of America.

With the advent of office partitioning to complete the empty shell came initially a combination of non load-bearing plaster walls and demountable timber partitions. At that time the plaster walls could not be altered without the destruction of the wall itself. However, the plaster walls could nevertheless be readily removed and office configurations could be altered without alteration or damage to the structure of the building itself. These forms of partitioning were the forerunners of the modern partitioning such as that manufactured and supplied by the applicant.

In the building industry the word ``structural'' is used in two senses. It may be used to refer to those elements of a building or other structure which are part of the fabric of the building or structure itself in the sense that they are inherent to it, not added to it. In this sense an element in a building will be described as structural if it is load-bearing or forms an essential part of a wall, floor or ceiling. Thus floor joists (which are load-bearing) and floorboards (which provide the floor surface) are structural elements. The other sense in which the term ``structural'' is used in the building industry relates to the concept of forces which are in equilibrium. All the forces which act on the structural framework of a building or in any of the structural components of that building have the ability to resist forces which are externally applied. A force is that

ATC 4932

which tends to change a body's state of rest. The force may act so as to push or pull a body at a definite point and in a definite direction. Such a push or pull force will give motion to the body. This tendency can be neutralised by the action of another force or other forces. Those forces can be caused by the resistance of a body brought about by external application or from within the composition of material of the body itself. It is this ability of a body to withstand external forces which gives the body its structural characteristics. This resistance is part of the law of statics.

In my opinion when item 83(2)(b) describes goods as ``having structural uses similar to those of plaster or plaster products'' it uses the word ``structural'' in both senses. The first is a strict and narrow sense. I do not accept that a provision such as item 83(2)(b) has in mind only structural uses of the kind embodied in load-bearing elements which form an essential part of walls, floors or ceilings. Modern building practices which construct the shell and leave the internal divisions to be determined by the owner or tenant are plainly intended, in my view, to be included in item 83(2)(b).

``Plaster products'' are themselves excluded provided they answer the second limb of item 83(2) (i.e. being of a kind used principally in the construction of and wrought into or attached to so as to form part of a building) whether they have structural uses or not.

When plaster is used as a composite material it has structural properties. Plaster can then be used as a building material for example as a light wall partition.

In the 1930s and 1940s plaster generally referred to a material made of gypsum. Gypsum is a combination of sulphate of lime with water in crystallisation. Plaster is itself a generic term that refers to any of a number of cementitious substances that are applied to a surface in paste form, after which they harden into a solid material. Gypsum has an ancient origin. Plastering began in prehistoric times with the smearing of mud over masonry walls, or over a mesh of woven sticks and vines to produce a construction known as ``wattle and daub'', the wattle being the mesh and the daub the mud. The early Egyptians and Mesopotamians invented finer, more durable plasters based on gypsum and lime. Portland cement plasters were developed in the nineteenth century. It is from the three materials - gypsum, lime and portland cement, that plasters used in buildings today are prepared.

Gypsum plaster was similar to the modern product known today as ``plasterboard'' of which an example is CSR's Gyprock. During the 1930s and 1940s gypsum was used to form partitions or divisions within the internal layout of premises. The material could be produced in standard units of width and length and could easily be adapted for filling. The material could also be adjusted or arranged to provide for doorways of standard size or for windows.

Various other building materials were used in the 1930s and 1940s for internal partitioning. These forms of partitioning sometimes were made of wood and consisted of wooden partitions mounted into a wooden frame or a light steel frame. As with the gypsum partitions, at the time all these partitions were securely fixed to the ceiling, wall and floor of premises. Other partitions at the time included sections of plywood framed in metal and sections of fibreboard and asbestos cement. All these partitions were structural in nature in the broader sense in which that expression was understood by architects and builders.

Since the 1930s and 1940s the use of plaster has developed within the building industry. Plaster is now used more as a prefabricated product such as gypsum or plasterboard rather than as a product prepared on the site. Such products provide a continuous surface which can be cut to specification.

The building industry has sought to develop more resistant materials for the internal use of premises to replace plaster and plasterboard products. The partitioning manufactured by the applicant is one of the products which is part of the development of plaster and plaster-based products. Like those products the applicant's partitioning has a structural capacity in the sense that each partition can contain itself in a fixed position and in a static manner. The partitions have an ability to withstand external forces. The applicant's partitioning has a number of advantages over and above the forms of partitioning used in the 1930s and 1940s, but those advantages do not in any way prevent the structural uses of the applicant's partitioning being identical to the earlier forms of partitioning.

ATC 4933

Since the applicant's partitioning has structural uses it can be used in the construction or repair of a building. The partitions have sufficient structural rigidity and integrity to withstand the types and possible combinations of forces which can be brought to bear against the partitions.

In my opinion the applicant's partitions installed in the Coles Myer premises in Sydney with which this case is concerned answer the description of ``goods having structural uses similar to those of plaster or plaster products'' within the meaning of item 83(2)(b). It matters not that the partitioning is not part of the load-bearing structure of the building at the corner of Liverpool and Pitt Streets, Sydney in which the Coles Myer offices are housed. Nor does it matter that it does not form an essential part of the walls, floors or ceilings of that building. The exemption afforded by item 83(2) is not confined to building concepts that preceded the 1950s.

Although the terms of item 83(2) changed over the years more than once, the item in its initial form was introduced into the Act in 1934 by the Financial Relief Act 1934 (Cth), an Act which was designed to provide financial relief for the community during the Depression including relief from sales tax to encourage both builders and citizens of Australia to build houses and business premises to get the country going after the stagnation of the Depression years. The exemption is intended to apply to ``goods having structural uses similar to those of plaster or plaster products'' whatever may, within the accepted concepts of the building industry, be included in that description from time to time, especially as the building industry reflects the advances in technology and building methods, a fast-moving scene.

The two principal witnesses that touched this question are Mr Berk and Mr Longfoot. Although Mr Longfoot adopted the traditional or ``load-bearing'' concept of the word ``structure'' in his affidavit to which he adhered in his oral evidence, he nevertheless frankly conceded in his oral evidence that the word had two connotations, the narrower concept and the broader one which was in substance the same as Mr Berk espoused. I accept that the word ``structural'' embraces both concepts and in my opinion, for the purposes of the legislation in question, item 83(2) has in mind both concepts and certainly not merely the narrower concept. This conclusion is reinforced when it is remembered that item 83(2)(a) relating to ``plaster products'' does not have to pass the test of ``having structural uses'' and yet plainly plaster products may or may not have structural uses in the narrow or ``load-bearing'' sense.

It is therefore unnecessary for me to consider the alternative argument advanced on behalf of the applicant that the panels answer the description of ``boards, sheets and linings'' for the purposes of item 83(2)(c) of the Act.

The second threshold that must be crossed by the applicant to qualify for exemption under item 83(2) is that the ducted panels must be ``of a kind used... principally in the construction... of, and wrought into or attached to so as to form part of, buildings...''

The words ``of a kind'' in the context of item 83 do not refer to the uses for which the particular goods in question are designed or manufactured, nor to the purpose to which it is intended that those particular goods shall be put, but ``rather to the nature, quality and adaptation of goods in the class or genus in question'': cf.
Hygienic Lily Ltd. v. D.F.C. of T. 87 ATC 4327 at p. 4330; (1987) 13 F.C.R. 396 at p. 399 per Gummow J.,
Customs & Excise Commrs v. Mechanical Services (Trailer Engineers) Ltd. (1979) 1 W.L.R. 305 at pp. 312-313, 315, 316-317.

The second limb of item 83(2) commencing with the words ``that are of a kind...'' and concluding with the words ``or other fixtures'' gives rise to the question whether the words ``of a kind'' govern both sets of expressions ``used exclusively or principally in the construction and repair of'' and ``and wrought into or attached to so as to form part of'' that follow it and precede the words ``buildings or other fixtures'' or only the former. In my opinion they govern only the former, so that once there are goods that answer the description of ``goods having structural uses similar to those of plaster or plaster products'' within item 83(2)(b), the goods must then pass the two tests of being ``of a kind used exclusively or principally in the construction and repair of'' buildings or other fixtures and the additional test of goods being themselves ``wrought into or attached to so as to form part of, buildings or other fixtures''. This is the construction which commended itself to Wilcox J. in
Magna Stic

ATC 4934

Magnetic Signs Pty. Ltd. v. F.C. of T. 89 ATC 5000 at p. 5003 with reference to a comparable provision in the First Schedule to the Act (item 84(2) relating to builders' hardware).

It was submitted by counsel for the Commissioner that in order to satisfy the test of goods being ``attached to... buildings or other fixtures'' it is necessary that the goods be attached either to a building or to some other fixture which was itself affixed directly to the soil. The examples that were given of such fixtures that were said to be like buildings included swimming pools, fences, railway lines and television transmission towers. It was submitted that goods which were attached to a fixture which was only indirectly affixed to the soil by being attached to a building would not satisfy the test. In my opinion there is no foundation for this submission. Fixtures should not be read down by reference to the word ``building''; rather, it should be given its traditional meaning.

The common law concept of fixtures is of relevance here and the classic statement of Sir Frederick Jordan in
Australian Provincial Assurance Co. Ltd. v. Coroneo (1938) 38 S.R. (N.S.W.) 700 at p. 712 is to the point, namely, that:

``The question whether a chattel has become a fixture depends upon whether it has been fixed to land, and if so for what purpose. If a chattel is actually fixed to land to any extent, by any means other than its own weight, then prima facie it is a fixture;... the test of whether a chattel which has been to some extent fixed to land as a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period... or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose...''

In my view the applicant's panels in the present case are goods of a kind used principally in the construction of the Coles Myer building. They are also wrought into or attached to so as to form part of that building. The panels and accessories are fixed with the intention that they should remain in position either permanently or for an indefinite or certainly a substantial period. This intention is illustrated by the degree of physical attachment through bolts to the floor of relevant panels and the fact that the ducted panels have the relevant electrical and telephone and other circuits passing through them to enable electricity, telephone and other services to be provided to the occupant of the first floor of the building. The relevant panels are fixed to the floor and some affixed, though by less certain means, to the ceiling and others to walls including the gyprock walls themselves are both wrought into and attached to the building.

The next items are those mentioned in para. (b) - the power posts. The applicant contends that these qualify for exemption under any of items 86(1), 84(1), 82A(1) or 90C. I shall turn first to item 86(1) which provides:

``86(1) Metal materials, namely, ingots, blooms, billets, slabs, bars, rods, plate, sheet (corrugated, flat or perforated), strip, circles, angles (including perforated channel), wire, mesh and rolled or extruded sections, made wholly of metal other than precious metal, whether or not covered with paint or a similar protective coating, but not including -

  • (a) materials insulated for electrical purposes;
  • (b) liners for, components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
  • (c) channelling used for slides or water slides;
  • (d) piping or tubing;
  • (e) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
  • (f) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
  • (g) goods covered by item 12 in the Third Schedule''

The Commissioner argues against the exemption under item 86(1) on the ground that relevant goods are all fabricated from metal but none of them are simply ``metal materials'' within the meaning of item 86(1).

ATC 4935

In my opinion the power posts are metal materials being extruded sections made wholly out of metal within the meaning of the item and qualify for the exemption.

Alternatively, I accept the argument of counsel for the applicant that they fall within item 84(1) which reads as follows:

``84(1) Metal building materials (including girders, rods, bars, wire, sheets, mesh, lathing and fabricated units composed of any of those goods, and attachments for such units) for use in the construction or repair of, and to be wrought into, or attached to, so as to form part of, buildings or other fixtures, but not including -

  • (a) liners for, components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
  • (b) channelling used for slides or water slides;
  • (c) piping or tubing;
  • (d) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
  • (e) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
  • (f) goods covered by item 12, 14 or 14A in the Third Schedule''

They are ``metal building materials... for use in the construction... of, and to be wrought into, or attached to, so as to form part of, buildings...''. They answer the description of metal building materials and the second limb is answered by what I have said already with respect to item 83(2) so far as the panels are concerned.

The next category of goods are those mentioned in para. (c), namely the office frames. In my opinion they too qualify under item 84(1). They are metal building materials for the use stipulated in the item. The alternative argument of counsel for the applicant is that they fall within item 84(3) which reads as follows:

``84(3) Metal window frames and sashes, metal fanlight frames and sashes, metal window screens, metal louvre frames and shutters, metal doors and door frames, of a kind used in the construction or repair of, and wrought into or attached to, so as to form part of, buildings or other fixtures''

I need not decide this question.

Items mentioned in para. (d) are the ``wall-starters'' enabling panels to be attached to the wall. It is conceded by the Commissioner that these items qualify for exemption.

The items mentioned in para. (e), namely the aluminium posts, in my opinion qualify for exemption under item 86(1) as metal materials being extruded sections made wholly out of metal. Alternatively they qualify under item 84(1).

The next items are those mentioned in para. (f), being the fixing brackets, the purpose of which is to fix panels to the floor. These are claimed for exemption by the applicant as falling within item 84(2) which reads as follows:

``84(2) Builders' hardware (not including electrical fittings, accessories or equipment, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems, or fittings, accessories or attachments for, components of, or goods designed to form part of, such duct work or channelling, or goods covered by item 12, 14 or 14A in the Third Schedule), being goods of a kind used in the construction or repair of, and wrought into or attached to so as to form part of, buildings or other fixtures, including -

  • Bolts, brackets, brads
  • Catches, ceiling ties, clips, clouts, corrugated fasteners
  • Decking spikes, door bells, door handles, door knockers, door sheaves and tracks, door stops and stoppers, door and cupboard catches, door and gate springs, drawer pulls, dryvins
  • Flush rings
  • Gate loops
  • Hasps, hinges, hooks, hooks and eyes, house numbers
  • Knobs
  • Latches, letter boxes, letter plates, locks, locksets and keys therefor, loxins
  • Metal frames for the support of wash basins

    ATC 4936

  • Nails, name plates, nuts
  • Padbolts, panel pins
  • Rivets
  • Staples, screws, scruins
  • Washers''

Each party led evidence as to the meaning in the building industry of the term ``builders' hardware''. The witness called by the Commissioner (Mr Longfoot) said that it had the meaning of stock items, namely, items available for use by builders and able to be purchased from recognised builders' hardware stores and did not include custom-built or tailor-made items, namely items made specially to suit the needs of a particular builder or client. The witness called by the applicant (Mr Berk) said that ``builders' hardware'' was understood in the building industry as including both stock items and custom-built items.

I regard the expression ``builders' hardware'' where appearing in item 84(2) as one which is to be defined according to its natural and ordinary meaning and not by the evidence of people in the building industry. But I regard that evidence as relevant not to determine the meaning of the expression which seems to me to be a simple expression; but to identify whether certain objects fit within it as understood in the building trade. Perhaps in the end it does not matter and may come down to semantics, but the distinction is nevertheless there. In this respect I take a different view from Wilcox J. in Magna Stic at pp. 5004-5005 about the use of evidence as to the meaning of the term in the building trade, but I agree with him that the expression ``builders' hardware'' means materials, tools etc. which are designed for use by builders. I do not think one needs to resort to evidence within the trade for that proposition. I therefore think that the meaning which should be ascribed to the terms accords with the definition given to it by the witness for the applicant.

I am satisfied that the fixing brackets in para. (f) are ``builders' hardware'' within the meaning of item 84(2) and qualify under that provision for exemption. They answer the description of ``Builders' hardware... being goods of a kind used in the construction... of, and wrought into or attached to so as to form part of, buildings...'' within the meaning of item 84(2).

Paragraph (g) deals with the duct cover plates. For the reasons given earlier these items qualify for exemption under item 86(1) or alternatively 84(1). It is not necessary to consider the further contention of counsel for the applicant that they qualify under item 90C.

The electrical outlets mentioned in para. (h) are conceded by the Commissioner as qualifying for exemption. The data outlets mentioned in para. (h) are not claimed by the applicant.

The top caps mentioned in para. (i) in my opinion qualify as claimed by the applicant under item 84(1) for the reasons previously given with respect to other items. The panel caps and post caps also mentioned in para. (i) are conceded by the Commissioner as qualifying for exemption.

The steel strengthening bars described in para. (j) are also conceded by the Commissioner as qualifying for exemption.

The joining keys mentioned in para. (k) qualify for exemption under item 86(1) or alternatively item 84(1) for the reasons mentioned earlier. The screws mentioned in para. (k) are conceded by the Commissioner as qualifying for exemption. The clips mentioned in para. (k) in my opinion also qualify for exemption under item 84(1). Alternatively, they qualify as builders' hardware under item 84(2).

The toggle bolts, dynabolts and wall plugs mentioned in para. (1) are conceded by the Commissioner as qualifying for exemption.

The door frame panels described in para. (m) are claimed by the applicant to qualify for exemption under item 84(3) or 84(1). In my opinion these items qualify under item 84(3). They also qualify, in the alternative, under item 84(1) for the reasons which have been given by me earlier.

The doors described in para. (n) are conceded by the Commissioner as qualifying for exemption.

That completes the items the subject of these proceedings. I direct the applicant to bring in short minutes of order to give effect to these reasons for judgment.

THE COURT ORDERS THAT:

1. The applicant bring in short minutes of order on a date to be fixed to give effect to these reasons for judgment.


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