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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Fullagar J

This is an appeal from a decision [reported at 90 ATC 4104] of a Judge of this Court refusing a declaration, sought before him by the appellant, to the effect that certain armoured motor vehicles manufactured in Australia for the appellant are exempted from sales tax by reason of the exemption contained in paragraph (1) of Item 113G of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935.

Item 113G (as amended by Act No. 142 of 1981) is in the following terms:

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

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

The sole amendment to this Item worked by Act 142 of 1981 was the insertion into the original words of the adverbial phrase ``exclusively, or primarily and principally''. In the course of these reasons, I shall from time to time refer to these added words as ``the adverbial phrase'', and from time to time use the word ``primarily'' with the intention of directing attention to all three of the adverbs.

The armoured vehicles are aptly called armoured trucks and the better view is that they are articles of a kind which is used exclusively in the industry of moving for reward cash, gold and other valuables from one place to another under armed guard, and of collecting and delivering for reward such valuable things. The trucks have been in a long and careful process specifically designed for this work. The appellant has been, of course, at all times under various legal duties, including a duty under an industrial award, to take careful precautions for the safety of the persons employed in this dangerous work, dangerous because of the great temptation which the valuable consignments present to would-be robbers, who may be expected to be armed with guns, explosives or other weapons. The legal duty to provide protection in the circumstances is a very heavy one having regard to the dangers of the work, and it is obvious that in the designing of the vehicles the appellant has been at very great pains, and to great expense, to comply with that duty. What has been done in the designing of the vehicle to these ends is very fully presented in the voluminous evidence and is adequately summarised in the reasons for judgment of the learned Judge. A high degree of protection is provided for the crews of these vehicles and especially for the driver. It is unnecessary to reproduce the summary by the learned Judge of the history of design, the method of construction, and the salient features of the vehicles, and the following short extract from his reasons for judgment will have to suffice here [at 4106]:

``The salient feature is the achievement of a vehicle which allows pick-up and delivery of cash and valuables without the driver at any time being compelled to leave his seat or being exposed to an external influence. This means that he is protected, as also is his load, at all times when the vehicle is most vulnerable to attack. No protection, of course, can be absolute but the armoured vehicles achieve a degree of security not previously reached. For practical purposes,

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ATC 4623

robbery of the contents of an armoured vehicle, at least before any discharge in the course of delivery, is made an unrealistic proposition for robbers.''

The question at issue is whether an armoured vehicle, so described and used, falls within the statutory words earlier quoted. That question necessitates construing the group of words as a whole, bearing in mind that they are intended to convey to the mind a class of goods to be exempted from a general rule which ordains that sales tax must be paid on the first wholesale sale of manufactured goods. The quoted words describe an area of immunity, one of many, from taxation upon first wholesale sale. The tax is calculated to add to the cost of the goods to the end user and the exemption is therefore calculated to make the goods cheaper to the end user of the goods.

The goods are exempted by reference to what may be called their primary use, in the sense of the use or uses to which such goods are put in the ordinary course of events. The critical use or uses referred to by the statute is or are referred to by two qualifications - first that they must be used in the course of industrial operations and secondly that they must be used to protect persons engaged in the industrial operations in which they are used.

It was argued by Mr Shaw for the appellant that the adverbial phrase modified only the past participle verb ``used'' to the exclusion of the verb to protect. He argued that the exempted item must be primarily used in the course of industrial operations, but that any use to protect persons engaged in such operations need be only substantial and not the primary and principal use of the item. In my opinion this construction must be rejected.

It is in my opinion quite safe to deduce in relation to Item 113G that the legislative intention, both before and after the 1981 amendment, was to facilitate, by making less expensive than otherwise, not the use of goods in industry but the use of goods to provide to employees in industry protection from the risk of personal injury. In any set of words enacted to achieve this obvious objective, any emphasis must necessarily be not upon use in industry per se but upon use to protect persons.

The words which follow the word ``including'' seem to me to be no more than a cautious addition to the general description preceding these words, added in an attempt to make clearer the ambit of the general description by giving some examples. So construed these final words do not imply that the preceding words might, in the absence of the final words, exclude masks etc. but on the contrary supply examples of goods which must be treated as included in the general words provided that they meet the whole of the description. A mask of a kind used solely or primarily upon the faces of surgical patients for the medical administration of anaesthetics is not included in the exemptions, but a mask of a kind primarily used in industry to protect the eyes of a welder during industrial welding is included amongst the exemptions.

These considerations lend strength to the view that, if one has to decide whether emphasis is to be laid upon use in industry on the one hand or upon the protection of persons engaged in industry on the other hand, emphasis should be laid upon the latter. But in truth it is, I think, quite clear that the adverbial phrase operates to modify the whole of the compound verb ``used to protect'', that is to say, operates to modify the whole of the expression ``used in the course of industrial operations to protect persons engaged in those operations''. Further, I think the primary meaning of ``those operations'' is not industrial operations generally but those particular ones first stated, namely industrial operations in which the exclusive or primary and principal use occurs.

In my opinion ``those operations'' are the industrial operations in which the relevant kind of goods is used exclusively or primarily and principally, and that is in my opinion the most natural and primary construction of the words used.

In my opinion the proper construction of the entire paragraph (1) of Item 113G is that which would be more emphatically conveyed by the following re-draft:

``Equipment of a kind which is exclusively, or primarily and principally, used in the course of industrial operations for the purpose of protecting persons engaged in those operations, including (etc.).''

Grammatically as well as logically, all that is needed, in order to arrive at this construction of the words actually used, is to treat the second modification of the verb ``used'' - namely to

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ATC 4624

protect etc. - as cumulative upon the first modification of the verb ``used'' which is comprised in the words ``in the course of industrial operations''. The exclusive, or principal and primary, use must be one which satisfies both the limitation upon operations and the limitation by reference to the affecting of persons.

Apart from the foregoing reasons, called for by the arguments of Mr Shaw for the appellant, I have shared what I think was the experience of the learned primary Judge that at first sight the primary and instantaneous impact upon the mind of the whole of the actual verbiage of Item 113G is one in which the words ``exclusively or primarily and principally'' govern both verbs, that is to say, modify the whole expression ``used in the course of industrial operations to protect persons engaged in those operations''. In my opinion no real or supposed rule of grammar or of logic detracts or points away from this, to me, primary construction of the words employed, especially as this construction is more consonant with the evident legislative object of making less expensive the provision, by an employer in industry, of protective equipment for the workers in that employer's industry.

Counsel for the appellant argued that there was admissible upon the construction of the present Item 113G a portion of the explanatory memorandum circulated with the Bill for the 1981 Act which added into Item 113 the words ``exclusively, or primarily and principally''.

The portion of the statement relating to the inserted words was in the following terms:

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

Counsel for the appellant argued that these words indicated that:

``the concern of the legislature was not to express the degree to which the designated equipment is used to protect persons engaged in industrial operations but the degree to which the equipment, although to protect the safety of persons, is used in industrial operations.''

I am unable to accept any of these contentions. In my opinion the Item 113G is not ambiguous and there is no occasion to go to the explanatory statement. But if that be wrong, I am of opinion that the above interpretation of the explanatory statement is erroneous and ignores the repeated use therein of the word ``safety''. Without the words added by amendment the item was apt, it was feared, to give exemption to goods merely because they were of a kind used to some small extent to protect persons in industry notwithstanding that the primary and principal use of the goods in question was one which had nothing to do with industry and therefore nothing to do with protection in industry. In my opinion the explanatory memorandum, if it can be used at all, fortifies the construction of the present Item 113G which appeals to me in its absence, because it emphasizes the intention all along to exempt only goods ``used to protect''.

Once the words of Item 113G are so construed, it becomes plain in my opinion that an armoured car of the kind presently in question fails on the facts of this case to obtain exemption. It is not shown that the car is goods of a kind used exclusively, or primarily and principally, for the protection of persons engaged in the industrial operation of pick-up and transfer and delivery of valuable consignments of cash and bullion and other very valuable items. The primary use of vehicles of this kind is the safe pick-up and transfer and delivery of the valuable consignments, not the protection of the persons who crew the vehicles used in that industry, although the vehicle is designed to achieve that protection. It is plain that the object of swift and efficient land transportation safe from robbers necessarily involves protecting all the crewmen, and especially the drivers, from persons outside the vehicle, and even from persons who enter part of the vehicle, but the primary use to which these vehicles are put remains the effective transportation and delivery of goods, not the protection of the crews. As the learned primary Judge put it, the high degree of protection provided to the crew is an ``inevitable by-product'' of providing the service of reliable transportation of the goods from pick-up to delivery.

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ATC 4625

The words of the item following the word ``includes'' lend strength to a construction which excludes from exemption the armoured vehicles. This is because each enumerated piece of equipment is not something the use of which itself constitutes the industry in which protection is given.

I would not wish to leave this appeal without observing that the uncontradicted evidence leaves the strong impression that the appellant has performed an extremely meritorious public service by the designing and putting into service of these particular armoured vehicles, and the strong impression that they are virtually ``state of the art'' in the world in the provision of safety for the employees who crew them. But taxing statutes are rarely passed with the intention merely of rewarding the meritorious, and I have indicated earlier what I consider was the legislative intention in creating the relevant exemption.

For these reasons I would dismiss the appeal.