Commissioner of Taxation v Brambles Holdings Ltd

Re: COMMISSIONER OF TAXATION
And: BRAMBLES HOLDINGS LIMITED (Now known as Brambles Australia Limited)
No. G445 of 1990
FED No. 126
Sales Tax
91 ATC 4285
99 ALR 523
28 FCR 451
72 LGRA 284

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard(1), Beaumont( 2) and Burchett(3) JJ.

CATCHWORDS

Sales Tax - exemption in respect of goods "for use by" a municipal or shire council - council enters into contract with a contractor for collection and removal of rubbish in its area - contractor provides garbage bins to householders and uses vehicles for the purposes of the contract - whether garbage bins and vehicles "for use by" the council.

Sales Tax (Exemptions and the Classifications) Act 1935, Item 78 of Schedule 1

Health Act 1958 (Vic.) ss. 48, 63

Health (General Sanitary) Regulations 1985 (Vic.), regs. 30,31

Commissioner of Taxation v. Brambles Holdings Limited

HEARING

SYDNEY

#DATE 10:4:1991

Counsel for the appellant and Mr I.V. Gzell QC and
cross respondent: Dr. H.R. Sorensen

Solicitor for the appellant and Australian Government
cross respondent: Solicitor

Counsel for the respondent and Mr D.H. Bloom, QC and
cross appellant: Mr B.J. Sullivan

Solicitors for the respondent A.J. Law and Co. and appellant:

ORDER

1. The appeal be dismissed.

2. The cross appeal be dismissed.

3. There be no order as to the costs of either the appeal or the cross appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

JUDGE1

The facts and the relevant legislation are set out in the judgment to be delivered by Beaumont J. which I have had the advantage of reading. I do not need to repeat them except that I think it helpful to refer generally to the nature and extent of the contract which was entered into between Brambles Holdings Limited and the Council of the City of Knox on 29 July 1986. The contract is comprised of a number of documents. These include Brambles' Tender, General Conditions of Contract, the Council's Specification and the Schedule of Prices or Rates. The Specification (described as "Specification and Information") provides for the calling of tenders and describes the Municipality which is administered by the Knox City Council. The City is said to form part of the Eastern Refuse Disposal Region of Metropolitan Melbourne. It has a population of approximately 100,000 people. It was expected that by October 1986 there would be some 33,000 tenements within the City.

Clause 3 of the Specification describes the services to be effected. Refuse matter stored in receptacles is to be removed from each tenement on a weekly basis. Other services concern the removal of commercial waste, the removal of hard and bulky refuse and a special bin service.
This case concerns bins used to store domestic refuse and vehicles used to empty them and carry the refuse away. Clause 4.1.6 of the Specification provides that refuse is to be collected from the various tenements provided that it is stored in approved type wheeled containers having a capacity of either 120 or 240 litres or such other capacity as may be approved by the Council. Clause 4.1.7 provides that all refuse receptacles shall, after being emptied, be replaced as near as practicable to the position in which they were left to be emptied with their hinged lids closed. Clause 4.4, much of which is set out in the judgment of Beaumont J., is headed "Wheeled Containers". The critical provision of the clause is clause 4.4.1 which provides that Brambles shall supply for hire by the Council a sufficient number of wheeled containers to enable the efficient performance of the contract. By clause 4.4.2 Brambles is required to maintain in good order all wheeled refuse containers hired by the Council for use at both commercial and residential premises throughout the Municipality. Clause 4.4.3 required Brambles to deliver the wheeled containers hired by the Council to residential premises at least one week prior to 6 October 1986.
Clause 5.1 of the contract provided that the contract documents comprised in the Specification included City of Knox, By-Law No. 42 which is entitled "Refuse Receptacles and Refuse Collection By- Law", as well as "relevant provisions" of the Health Act 1958 (Vic) and regulations described as the "General Sanitary Regulations 1950". The By-Law was confirmed by the Council on 19 August 1986 and approved by the Administrator in Council of the State of Victoria on 28 October 1986. I shall refer to some of the provisions of the By-Law in due course.
Clause 5.3 provides for the contract rate which, at the time the contract was entered into, was 88.9 cents per bin collected. Clauses 5.3.3 and 5.3.4 provide for the adjustment of this and other rates in terms of the Consumer Price Index.
Clause 5.1.4 provides for the behaviour of Brambles' employees. Amongst its provisions are provisions obliging employees not to throw back to its position any bin which has been emptied, to prevent damage to bins during the emptying process, and the taking of care of bins during the emptying process.
The By-Law defines the bins or receptacles as MGBs. Clause 4 of the By-Law defines "proprietor" to mean the proprietor of any premises and includes the owner, the occupier or any person in charge or having the management or control thereof. Clause 5 of the By-Law provides that the proprietor shall use the MGB provided by the Council and shall cause all refuse and rubbish produced or accumulated upon his premises to be deposited in the MGB. There are restrictions on the types of rubbish that may be placed in the MGB and upon the use of other receptacles for the storing of refuse.
Clause 11 obliges the proprietor of every premises to which the Council has supplied an MGB to cause it to be placed adjacent to the kerb at the front of such premises on the morning of the day allocated for the removal of refuse. The proprietor is to cause the MGB provided for by the Council to be maintained at all times in good order and in a sanitary condition. If the MGB is lost or damaged, the proprietor is to notify the Council. A person who causes damage to an MGB is liable for the cost of replacement of it. Failure to observe the provisions of the By-Law is an offence.
I should next refer to the provisions of the Specification in relation to motor vehicles. The relevant provisions are to be found in clause 5.1.3. Brambles is to provide and maintain throughout the term of the contract a sufficient number of motor vehicles and of necessary plant to carry out the works and services in a thorough and efficient manner. The vehicles are to be of a compactor type of minimum full load of 18 cubic metres. The compaction ratio is provided for as are a number of other matters including a requirement that the vehicles be so constructed that at no time during loading and transporting refuse, the refuse will be in any way exposed to the weather or exposed to view. All vehicles are to be kept clean and washed down at least once a week. Tenderers were required to furnish details of the type of vehicle and compaction unit which were to be used. The tender specified the vehicles which Brambles would use in carrying out the contract.
The relevant provisions of the Health Act are ss. 48 and 63. Section 48 provides that the Council of every city or town shall undertake or contract for or otherwise arrange for the removal of house and trade refuse in its Municipal District. Section 63 provides that, where a Council has undertaken or contracted for or otherwise arranged for the collection, removal and disposal of refuse, the work is to be executed promptly, efficiently and at regular and prescribed intervals.
Regulation 30 of the Health (General Sanitary) Regulations 1985 (Vic.) provides that, unless exempted by the Council, the proprietor of every premises in every city and town shall provide a proper and suitable receptacle for temporarily storing refuse produced or accumulated on the premises. Regulation 31 provides that the Council shall cause all refuse to be collected and removed from the premises once in each week.
The combined effect of the relevant provisions of the Health Act and the General Sanitary Regulations was to impose upon the Council a statutory duty to institute a proper system for the removal of refuse from the premises within its area, and to oblige householders to store refuse temporarily in appropriate containers to be provided by them unless exempted by the Council. By-Law 42 compelled householders or occupiers to accept the MGBs and to store their refuse in these pending its collection. Occupiers were obliged to place the MGBs at or near the kerb of their streets at regular intervals and to take them in when they were emptied. It also obliged them to take proper care of the MGBs.
The Council decided not to engage in refuse collection itself but to let the contract to Brambles for this purpose. Brambles was required to supply the MGBs which were to be hired by the Council from it but delivered by Brambles to each tenement. Brambles was required to replace MGBs which were damaged or lost as a result of want of care by its employees. Thus the Council discharged the obligation which it had under the Act and Regulations by engaging a contractor and enabled occupiers of tenements to discharge their obligations under the By-Law by providing to them through the agency of Brambles bins or MGBs which had been hired from Brambles for this purpose.
In order to carry out the contract Brambles needed to use vehicles which met certain specifications provided for in the contract. These had to be maintained and kept in accordance with standards also provided for in the contract. But unlike the MGBs, the vehicles were not hired to the Council; they were part of the equipment needed by Brambles to discharge its obligations under the contract. So long as those obligations were discharged, the Council left it to Brambles to carry out the contract in the way that Brambles considered best to achieve this object.
The learned primary Judge held that the bins or MGBs were "for use" by a municipal council and were thus exempt from sales tax under Item 78 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1935. But he also decided that the trucks were not "for use" by the Council within the meaning of item 78.
As Beaumont J. has remarked, counsel for the appellant Commissioner sought to add an additional ground of appeal when he commenced his submissions. In essence the ground raised the question whether clause 4.4.1 of the Specification really created the relationship of hire which it purported to do. In explaining the ramifications of the ground to the Court, counsel for the appellant said that it was an essential element of a contract of hire that the person to whom goods were hired should be in possession of them. In other words there had to be a bailment of the goods to that person. Here, so counsel submitted, there was no bailment to the Council; rather there was a gratuitous bailment to each occupier. Counsel for the respondent opposed the addition of the ground on the basis that, had it been raised at first instance, he may have led evidence from employees of Brambles and the Council which would have revealed detail concerning the delivery of the bins which may have been relevant in considering the ground. Counsel could not be specific about what course he would have taken, but he said that he could not say that the evidence would have been unquestionably as it now is had the matter been raised.
In Water Board v. Moustakas (1988) 77 ALR 193 the majority of the High Court held that a point cannot be raised for the first time on appeal when it could possibly have been met by the calling of evidence below. But where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point; otherwise the rule is strictly applied; see p 196.
To my mind, the fact that counsel acting responsibly has said that the raising of the ground at the primary hearing may have affected the evidence he would have led is enough to dispose of the question. Leave to add the ground should be refused.
Before I leave the matter I should, however, say some further things. There are not usually pleadings in revenue matters in this Court but directions hearings are held and a procedure has been instituted whereby each party must state his facts and grounds so that it is clear to the other party what evidence and what grounds will be relied upon in the opposite case. If that procedure is to have any meaning, litigants must accept the fact that it will take a very exceptional case to warrant the Court departing from the consequences of it. In this respect it is pertinent to refer to what was said by Lord Griffiths in Ketteman v. Hansel Properties Limited (1987) AC 189 in relation to the allowance of an amendment at a trial. His Lordship said (p 220):-

"Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence. Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall upon their own heads rather than by allowing an amendment at a very late stage of the proceedings."

Lord Griffiths was dealing with a situation different from the present involving as it did the seeking of leave to amend during a trial. But whether an amendment is allowed during a trial, or a new ground of appeal is added during the hearing of an appeal, is a matter within the discretion of the primary judge or the court which hears the appeal as the case may be. Obviously the discretion is a wide one and each case will depend upon its own facts and circumstances. Nevertheless, I would adopt, with respect, what Lord Griffiths has said about the strain that litigation imposes on litigants, anxiety occasioned by the need to face new issues and the legitimate expectation that the trial will determine the issues which have been raised by the pleadings when the hearing commences. I would also respectfully adopt his remarks concerning the pressure on courts caused by the great increase in litigation and the public interest that there is in the business of the courts and of the legal profession being conducted efficiently. The public cost of maintaining the system of courts which this country has is considerable. Those who are privileged to practise before the courts should understand that the days when careless work will usually be overlooked are over. The profession charges high fees for the work which it does. It has a responsibility to see that the work is done well. The day has come when failure to discharge professional obligations efficiently will not be to the account of the community or of the parties but to the account of the profession itself.
One knows, of course, that sometimes amendments are sought because new counsel are brought into a case and see it differently from counsel whom they have replaced. This often happens and is no reflection on any member of the profession. In complex affairs different minds will approach problems differently. I would suspect that that is what has occurred in the present case. In such a case one might adopt a more relaxed attitude, but this cannot be done in a case where counsel for the other party says, in good faith, that he may have conducted his case differently at the trial if the point had been relied upon there.
The question then is whether, firstly the bins, and, secondly the vehicles, were for use by the Knox City Council. The words "for use by" are ordinary English words and should be given their ordinary meaning. Here we have a situation in which the Council has discharged its obligation regularly to remove refuse from tenements by engaging a contractor to perform the necessary work. The method selected is to require the contractor to provide the bins on hire to the Council. The fact that the bins appear to have been delivered directly to the occupiers of the tenements in the Council's area does not affect the fact that the bins were hired to the Council. There is good reason for this. It helps give the Council the control it needs to have over the efficient removal of rubbish in its area.
To achieve this object, a number of steps had to be taken. The Council needed to impose on occupiers an obligation to take care of the bins. It did this by making By-Law No. 42. Occupiers are required to keep bins clean and in good condition, not to damage them and not to lose them. They are also required to place them at the kerbside on a specified day of each week and to remove them after they have been emptied. An adjunct to By-Law No. 42 was the hiring by the Council of the bins from Brambles. This gave it control. Because it has hired the bins, the Council has the right to demand possession of them at any time. In this way it is able to control them, and the use of them, both by and for the occupiers in whose care they are. If the bins have been stolen, wrongfully removed from premises, or vandalised by persons, be they occupiers or strangers, the Council has the right to take proceedings against such persons for an offence against the By-Law and also to take civil proceedings for the recovery of the bins. The provisions of By-Law 42 and the hiring clause in the Specification make it clear to the parties to the Contract, and to occupiers of premises and other persons to whom it may be produced, that it is the Council and not Brambles nor any occupier that has the right to control the way in which the bins are kept and used.
The question then is whether the various matters to which I have referred lead to the conclusion that the bins were goods for use by the Council. I think that the task of answering this question must involve questions of degree and of proximity; cf. Deputy Commissioner of Taxation v. Stewart (1984) 154 CLR 385 per Brennan J. pp 397-8. Plainly it is not necessary that the Council be the only person by whom the bins are to be used nor need its use be the principal or dominant use. The exemption will be attracted so long as the use is a substantial one. I refer again to Stewart's case. I think that, as a matter of the ordinary use of language, it is apt, as the learned primary Judge thought, to say that the Council used the bins which had been hired to it for the purposes of discharging its obligations under the Health Act and the General Sanitary Regulations. It hired them from the contractor and it used them in the way that I have described in order to fulfil its obligation regularly to remove household refuse.

It follows that I am in agreement with the conclusion reached by the learned primary Judge in relation to the bins.
I am also in agreement with his conclusion that the vehicles were not used by the Council. It seems to me that they were used by Brambles to fulfil its contract. The fact that they had to meet specifications provided for in the Contract is not to the point. The Council was simply ensuring that the vehicles would be of a type and capacity properly to do the work which they were required to do. But so long as Brambles performed its contract, the Council had no warrant to interfere with the way in which the vehicles were operated or otherwise to control them. If the vehicles were stolen or vandalised or lost, that was not the Council's affair. It discharged its obligation by entering into a contract requiring Brambles to collect refuse and satisfactorily dispose of it. No doubt the vehicles were being used for the purposes of the Council but, in my opinion, they were not being used by the Council itself. The use was that of Brambles alone.
In the result, I would dismiss both the appeal and cross appeal. I would make no order as to costs.

JUDGE2

Item 78 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1935 exempts from sales tax, inter alia:

"Goods for use (whether as goods or in some other form) and not for sale by -

(i) A municipal, shire or district council constituted for the general purposes of local government under any law of the Commonwealth or of a State or Territory;"

The question in these proceedings is whether certain wheeled rubbish containers ("the containers") and certain special refuse trucks ("the trucks") purchased by the respondent, Brambles, fall within Item 78. A judge of the Court has held that the containers were exempt (see 90 A.T.C. 4,584). The Commissioner now appeals from this finding. The judge has also held that the trucks were not exempt. Brambles now cross-appeals.
There was no dispute about the facts. For some time, Brambles supplied a waste collection service to the Council of the City of Knox in Victoria ("the Council"). In July 1986, the Council and Brambles entered into a written agreement entitled "Contract No. 593/85 Waste Collection Service" ("the contract"). The conditions of the contract, which was to commence on 6 October 1986, and to terminate on 30 September 1996, were stated in a document entitled "Specification and Information" ("the specification") inviting tenders for the provision of certain waste collection services. Relevantly, the specification provided as follows:

"4.4.1 The Contractor shall supply for hire by the Council a sufficient number of wheeled containers to enable the efficient performance of this contract. Such containers shall be of 120 or 240 litre capacity and shall be constructed of moulded high density polyethelene fitted with solid rubber tyres and an axle of galvanised hardened steel. The colour of the wheeled containers shall be green for residential premises and black for commercial premises.

4.4.2 The Contractor shall maintain in good order all wheeled refuse containers hired by the Council for use at both commercial and residential premises throughout the municipality.

4.4.3 The wheeled containers hired by the Council shall be delivered by the contractor to residential premises at least one week prior to 6th October, 1986. ...

4.4.5 All wheeled containers supplied and delivered by the contractor in accordance with this contract shall be permanently marked with the contractors name, City of Knox and be consequently numbered and show date of manufacture. All such wheeled containers shall be embossed on the lid with the following Warning: 'NO HOT ASHES OR CORROSIVE MATERIAL. WASH REGULARLY.'

...

4.4.7 All wheeled containers supplied and delivered by the contractor in performance with this contract shall be of the specification approved by the Council. ...

4.4.10 The contractor shall at the conclusion of the contract period cause all wheeled containers to be removed from the premises at which they are located at that particular time..."

........ ........ ... 5.13.1 The Contractor shall provide and maintain throughout the term of this Contract a sufficient number of motor vehicles and all necessary plant to be approved by the Council to carry out the works and services herein specified in a thorough and efficient manner. 5.13.2 All vehicles used in this Contract shall be of a compactor type of minimum full load of 18 cubic metres and capable of a compaction ratio of two loose cubic metres reduced to 1 compacted cubic metre and shall be constructed in such a manner that all loading may be carried out without recourse to the removal of any covers, be they rigid or otherwise and the vehicle shall be such that at no time during loading or transporting of the garbage will rubbish, once placed in the unit, be in any way exposed to the weather, exposed to view or permit flies to gather thereon. Further, on no account will the consolidation of garbage be permitted in the vehicle other than by mechanical means. The vehicles shall house the collected garbage in such a manner that in the loading and transport of the garbage, no refuse may be blown out or dislodged from the vehicle. Each collection vehicle shall be equipped at all times, whilst carrying out the collection process, with a broom and shovel of a type satisfactory to the Council. 5.13.3 All vehicles shall be kept clean and washed down both inside and outside at least once per week. Cleansing must be carried out at a Depot site maintained by the Contractor and the Contractor shall state in his Tender where such site is to be located and the method that will be employed in the cleaning of the vehicles. 5.14.2 The Contractor shall ensure that adequate provision is made on refuse-carrying vehicles to prevent damage to receptacles during the emptying process. All employees shall be instructed to ensure that care is taken of all refuse receptacles during the whole of the emptying process. The Contractor shall be liable for any damage caused by him or his employees to any refuse receptacle.

5.21 Marking of Vehicles

All vehicles used in performance with the requirements of this Contract shall be marked near the top of the load carrying section with the letter K in no less than 200 millimetres in depth and shall be followed by a number of similar size. Vehicles used shall be numbered consecutively and such letters and numbers shall be on the front and rear of the load carrying section as aforesaid. Such lettering and numbering shall be painted on the vehicles with a paint which contrasts with that of the body and shall be to the satisfaction of the Council."

Under the sub-heading "Contract documents comprising this specification" (para.5.1), reference was made, inter alia to:-

"...General Sanitary Regulations 1950, City of Knox By-Law 42, relevant provisions of the Health Act 1958 or any amendments of the aforesaid Regulations, By-Law or Act which may be made at any time."

Section 48(1) of the Health Act 1958 (Vic.) provides that every council shall undertake or contract for or otherwise arrange for the efficient execution of certain works within its municipal district, including the removal of house and trade refuse and other rubbish from premises and its collection. By s.63(1) of the Health Act, where a council has undertaken the collection of rubbish, the work shall be executed promptly, efficiently and at regular and prescribed intervals. By reg. 30(1) of the Health (General Sanitary) Regulations 1985 (Vic.), the proprietor of every premises, unless exempted by council, shall provide a proper and suitable receptacle for temporarily storing all refuse produced or accumulated on the premises which is offensive or likely to become so. By reg. 31(a), it is provided that the council shall cause all refuse which is offensive, or likely to become offensive, to be collected and removed from the premises once in each week. Council By-Law No. 42 relevantly provides as follows:

"4. In this by-law, unless inconsistent with the context or subject-matter -

...

'Multi User Receptacle' means a wheeled receptacle of in excess of 240 litres constructed of either high-density polyethelene or galvanized steel having a self-closing lid capable of being locked. Such multi user receptacle shall be fitted with not less than four wheels and shall be able to be locked in situ. Such receptacle shall hereinafter be described as a Multi Use MGB. 'Proprietor' means the proprietor of any premises and includes the owner, the occupier or any person in charge or having the management or control thereof.; ...

5. The proprietor shall use the MGB provided by the council as defined in Clause 4 hereof and shall cause all refuse and rubbish produced or accumulated upon such premises to be deposited in such MGB. Provided that refuse matter of such shape size or weight which cannot be contained in such MGB shall be excluded.

6. The proprietor of any premises shall not cause suffer or permit any other receptacle to be used for the storage of refuse where an MGB has been provided. However, the provisions of this clause shall not prohibit the temporary storage of waste matter in another container prior to transfer to such MGB or multi use MGB. ...

11. The proprietor of every premises to which the council has supplied an MGB shall cause such MGB to be placed adjacent to the kerb at the front of such premises or at such other place as may from time to time be approved by council by 6 o'clock in the morning of the day allocated for the removal of refuse. ...

14. The proprietor of every premises shall cause the MGB provided by the council at his premises to be maintained at all times in good order and in a sanitary condition.

15. The proprietor of premises shall on becoming aware that the MGB provided by the council to his premises has become damaged, developed any defect, become lost, stolen or missing, notify the council within seven (7) days of such occurrence. ...

18. Any person who causes any MGB or Multi Use MGB to be damaged by placing same on any carriageway or by placing hot materials or any other material deleterious to the material from which the MGB or Multi Use MGB is constructed shall be liable to the cost of replacement of such receptacle."

In his judgment, the judge considered the decision and reasoning of the High Court in Deputy Commissioner of Taxation v. Stewart (1984) 154 CLR 385, a case concerned with the meaning and application of Item 81 of Schedule 1. The judge said (90 ATC at p 4,589):

"...to meet the description of goods 'for use by' the Council, the intended use by the Council, if not exclusive, must be sufficient so to characterize the goods....In the end, the question is whether, as a matter of ordinary language and understanding, the subject goods fall within the category of goods described by Item 78... I am satisfied that the refuse vehicles, which were owned and operated by (Brambles) were not 'for use by' and were not used by the Council. Their operation by (Brambles) served a purpose of the Council but the Council had no rights in respect of the vehicles. It did not possess them or have any right to do so. It had no right to control them. The Council's rights were limited to overseeing the proper performance of the rubbish collection service according to the terms of the contract. The vehicles were used by (Brambles), not by the Council and were used by

(Brambles) in the performance of its contract with the Council...

The MGBs were, however, in a different position. The MGBs were hired to the Council. The Council had rights of use over the MGBs and, as was contemplated by the Council's By- law No. 42, they were provided by the Council to individual householders who were responsible to the Council for the care of the MGBs and for any damage which might ensue from wrongful use. It follows that the MGBs were used by the Council. That use was not transient or insubstantial."

It is convenient to deal with the appeal and the cross-appeal separately.
Were the containers exempt goods?
By his notice of appeal dated 10 August 1990, the Commissioner contends that the judge should have held that the containers were not for use by the Council within the meaning of Item 78 and that the judge should not have held that, because the containers were hired by Brambles to the Council, they were being used by the Council by being provided to householders.
On the day before the date fixed for the hearing of the appeal, the solicitor for the Commissioner notified the solicitors for Brambles of his intention to apply for the leave of the Full Court to add an additional ground of appeal as follows: "3. His Honour erred in holding that the (containers) were hired or bailed by (Brambles) to the (Council)." When the appeal was opened by counsel for the Commissioner, leave to amend the notice of appeal was sought. Counsel for Brambles opposed the grant of leave on the grounds that the point had not been taken at the trial and could involve the calling of further evidence. The Court deferred ruling on the application to amend at that stage, indicating that we would need counsel for the Commissioner to develop his new argument before we could rule on the application to amend.
Counsel for the Commissioner then sought to advance the following arguments in support of his appeal (assuming, for the purposes of his first argument, that he had leave to amend): (1) There was no bailment of the containers to the Council. They remained the property of Brambles and were delivered directly to ratepayers. The element common to all bailments is the imposition of an obligation, because the taking of possession involves an assumption of liability for the safekeeping of the goods. Actual and not merely constructive possession by a bailee is essential. Since no possession was taken by the Council, there was no bailment to it. Instead there was a gratuitous loan for use by Brambles to ratepayers. (2) (Alternatively) Even if there were a bailment of the containers to the Council, there was no use of them by the Council within the meaning of Item 78. The meaning of the word "use" depends upon its context which, in this case, is an exemption from tax on the sale value of goods sold by a manufacturer, treated by it as stock for sale by retail or applied to its own use. The imposition of the tax is in respect of physical chattels. It follows that exemption is also by reference to the physical nature of the goods, the physical user of them, or the person who physically uses them. Without physical user by the Council, there is no relevant use by it. If this were not so, there would be no need for a number of items in the First Schedule. (3) (Alternatively) The relevant questions are: (a) what is the projected use of the container? (b) does that use answer the description in Item 78? The intended and actual use of the containers was the placing of rubbish in them. The direct use of the containers for that purpose was by ratepayers and not by the Council. In point of principle, the position is the same as in the case of the trucks where it was held by the judge that there was no exemption. Another judge of the Court was of the same opinion in Otto Australia Pty. Ltd. v. Federal Commissioner of Taxation (90 ATC 4,604). (An appeal from the decision in Otto's Case has been brought and argued before us. Our decision on that appeal will be given at the time that we publish our reasons in this appeal.) (4) (A formal submission only in the light of its rejection in Stewart's Case.) Item 78 cannot apply unless a council obtains the benefit of the exemption.
As to argument (1): The Commissioner accepts that this submission can only be advanced if leave to amend is now granted. But a reference to the history of the proceedings at first instance indicates that there are powerful reasons for refusing leave.
First, pre-trial directions were given that each party file a "statement of facts, issues and contentions". In its statement, Brambles asserted that - "...Pursuant to the terms of the (contract), the (containers) supplied by (Brambles) are hired by it to the (council)." In the Commissioner's statement in reply, the making of the contract was alleged but no reference was made to its terms. Significantly, the Commissioner did not put in issue Brambles' assertion that the goods were hired by it to the Council.
Secondly, it is common ground that, at the trial, the Commissioner conceded that the goods were hired by Brambles to the Council. His Honour's reasons for judgment proceed explicitly on that basis (see 90 ATC at p 4,585; p 4,586; p 4,589).
Given this history of the matter, it would be quite wrong, in my view, for this Court either to reverse this finding, or to decline to accept, or act, upon it (see Federal Commissioner of Taxation v. Suttons Motors (Chullora) Wholesale Pty. Ltd. (1985) 157 CLR 277 at p 284). I would refuse the application for leave to add the fresh ground of appeal.
I should add that even if this additional point could properly have been raised on the appeal, it is unlikely, in the circumstances of this case, that the result of the appeal would have been different. Unless the Commissioner could show that the purported hiring arrangement was a sham, or void for uncertainty, in other words, could demonstrate that there was no valid agreement for hire, it is difficult to see how the Commissioner could succeed on this branch of the argument. There was no material before the primary judge to suggest that the hiring arrangement was a sham. Nor, in my view, was there any substantial basis for the suggestion that the agreement was void for uncertainty.
As to arguments (2) and (3): It is first necessary to consider whether the expression "goods for use...by...a...council" was intended to have any meaning other than that which it has in ordinary speech.
The expression is not defined in the legislation; it has no technical legal signification. Item 78 appears in Division XI of the First Schedule, which Division is entitled "Goods for use by Governments, representatives of Governments and public bodies", but there is no indication in the legislation that the Parliament intended Item 78 to have any other meaning than that which its words ordinarily have. The common understanding of the words has therefore to be determined (see N.S.W. Associated Blue-Metal Quarries Limited v. Federal Commissioner of Taxation (1955) 94 CLR 509 at p 512; Federal Commissioner of Taxation v. Thomson Australian Holdings Pty. Ltd. (1989) 87 ALR 682 at pp 683-4; pp 687-8). If there is more than one popular meaning, the appropriate meaning must be determined (see Hope v. The Council of the City of Bathurst (1980) 144 CLR l at p 8).

According to the Macquarie Dictionary, the preposition "for" can have the following, among other, popular meanings: "7. appropriate or adapted to: a subject for speculation..." The Macquarie gives the following, inter alia, definition of the noun "use": "13. the act of employing or using, or putting into service:..." The verb "use" is given these, among other, meanings: "1. to employ for some purpose; put into service; turn to account: use a knife to cut, use a new method. 2. to avail oneself of; to apply to one's own purposes: use the front room for a conference." According to the Macquarie, the preposition "by" has the following, among other, meanings: "9. with the participation of: regretted by all. ... 12. Through the agency or efficacy of: founded by Napoleon, done by force."
In my opinion, the words in the expression "goods for use...by...a...council" were intended to have these popular or ordinary meanings, that is, to spell it out: "goods which are appropriate, or adapted, to being employed, put into service, or applied, for the purposes of a council, with the participation, or through the agency, or efficacy of the council."
The next question is whether the material before the Court reasonably admitted of different conclusions as to whether the containers fell within the ordinary meaning of the words. This is a question of law. If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact, not of law (see the Blue-Metal Quarries Case, above, at p 512).
The circumstance that the primary judge, and another judge in an analogous case (Otto's Case), found that another article, the trucks, were not exempt suggests that the question whether the containers fall within Item 78 is a question of fact and degree about which reasonable minds can reasonably arrive at different conclusions. It is necessary then to decide whether, in fact, the containers fall within the statutory description.
It is convenient, at this point, to proceed in stages. First, were the containers appropriate, or adapted to being employed, put into service, or applied for the purposes of the Council? In my opinion, the containers could properly be characterised in these terms. The removal of rubbish was a statutory function of the Council and the containers were designed and manufactured with a view to their being employed in the process of rubbish removal.
Next, could it be said that the containers were utilised in this way with the participation, or through the agency, or efficacy, of the Council? It was accurate, I think, to describe the utilisation of the containers in this way. The Council arranged that the containers be utilised for the removal of rubbish and, for this purpose, the Council hired the containers and directed that they be employed in a particular fashion. In my view, this conduct of the Council justifies the description that the goods in question were utilised for Council purposes with the participation, or through the agency, or efficacy of the Council; that is to say, the goods were for use by a council.
It follows, in my opinion, that the judge correctly held that the containers were exempt goods.
Were the trucks exempt goods?
On behalf of Brambles, it is submitted that an exemption such as Item 78 should be construed and applied liberally; that it would defeat the legislative purpose behind Item 78 if a narrow view were to be taken of the form of the transaction by which a council could secure the relevant "use" of the goods; that it is not necessary that a council have a contractual right to use the goods physically; and that it is sufficient if the Council can, as here, require that the goods be "used" entirely on its behalf in the provision of the relevant service.
Counsel for Brambles relies especially upon the reasoning of Gibbs J. in Max Factor and Company Inc. v. Federal Commissioner of Taxation (1971) 124 CLR 353 at pp 361-2, to the effect that the phrase "goods applied to his own use" in s.17(1) of the Sales Tax Assessment Act (No. 1) 1930 is of broad import and is equivalent in meaning to "employed for his own purposes"; and that the meaning of the noun "use" is not confined to physical consumption: its ordinary meanings include "purpose served" and a "purpose, object or end, especially of a useful or advantageous nature".
It was there held that a manufacturer may apply goods to his own use within the meaning of s.17(1), notwithstanding that he gives away the goods to others, provided that the purpose for which the goods are given is a purpose of the manufacturer. But, in my opinion, this reasoning is not applicable here. For one thing, we are now concerned with the interpretation of an exempting provision and not with the distinct question of liability to tax. For another, the phrase "goods applied (by a manufacturer) for his own use" is, I think, substantially different, in terms, and in context, from the expression "goods for use...by a...council."
On behalf of Brambles, reliance is also placed upon Stewart's Case, above. There, a supplier of lottery tickets also manufactured machines which could be used by its customers to sell the tickets mechanically. It supplied a number of the machines to certain public benevolent institutions free of charge. The institutions used the machines to raise funds by conducting lotteries. The machines remained the property of the supplier, who serviced them. Item 81(1)(c) of the First Schedule exempts "goods for use (whether as goods or in some other form), and not for sale, by...a public benevolent institution."
Gibbs C.J., with the agreement of Dawson J., said (at p 390):

"...the words 'for use' (in e.g. Items 78 and 81) indicate the purpose to which it is intended that goods shall be put, rather than the use for which the goods were designed. It is certainly true of item 81(1), since many goods used in a hospital or by a public benevolent institution might equally well be used by any person or any other organization. The word 'use' does not connote exclusive use...If item 81 were construed as requiring that the goods should be exclusively used by a public hospital or public benevolent institution, inconvenient or absurd results would follow. For example, many goods necessarily obtained by a public hospital are used not only by the hospital but by patients and visitors. Hospital beds, and chairs in a hospital ward, provide obvious examples. No doubt an article would not fall within item 81 if the use to which it was to be put was transient or insubstantial...the machines fell within the exemption described in item 81, notwithstanding that their inherent character was not that of goods designed for use by a public benevolent institution, and notwithstanding that they were not exclusively used by the institution..."

Brennan J. (at p 397) was also of the view that the use need not be exclusive and added:

"But the proposed use...must be sufficiently substantial in extent and time that it is right to regard (it) as giving a character to the goods. That is a question of fact and degree."

Deane J. was of the same view (at pp 401-2) and added:

"It is true that, in the wider context of the overall business of the respondents' 'organization', the machine could properly be seen as also being used by the respondents in their business. In the absence of any requirement of exclusive or primary or principal use however, that consideration does not preclude the machine from being properly characterized as (within the item)...the evidence

(was)...to the effect that, from the time of their manufacture, the contemplated and actual direct use of each of the subject machines for an indefinite period was by a public benevolent institution."

In Stewart's Case, the relevant institution was entrusted with the possession of the machine and was responsible for the machine's day to day operation (per Deane J. at p 402). For this reason, the facts there should, in my view, be distinguished from the circumstances of the present case. The trucks were in Brambles' possession and Brambles operated them.
In this respect, the present case is, in my view, on all fours with the decision in Otto's Case, above (see our reasons in the appeal in that matter). The primary judge in Otto's Case said (at p 4,604):

"...the word 'use' in the context of item 78 does not connote exclusive use; but this is not to the point in the present case because in my view there is no relevant use at all by the councils concerned. The use is the use of the bins by the applicant as contractor to the councils, though in one sense the use is shared by the local residents themselves who deposit their rubbish into the Otto carts. The fact of shared use would not, of course, destroy the exemption if it were otherwise available."

The judge said (at p 4,610) that the hiring of the rubbish containers in the present case was "the vital point of distinction" between the two cases.
Reverting to the popular or ordinary meaning of the words "for use...by...a...council", it can, I think, be accepted that the trucks were appropriate, or adapted, to being employed, put into service, or applied, for the purposes of the Council, for the reasons given in the case of the containers. That is to say, the trucks were for use for a Council purpose. But were the goods for use by the Council? That is to say, were they for use with the participation, or through the agency or efficacy of the Council?
I have come to the conclusion that there was no relevant user of the trucks by the Council.
As has been said, these goods were not entrusted to the Council's possession. Nor did the Council conduct the day to day operation of the trucks. It is true that the Council arranged that Brambles supply to the Council waste collection services. But Brambles did not supply the trucks to the Council, by hire or otherwise. What Brambles supplied to the Council was its services, but not its goods. Council acquired no rights of any kind over the trucks.
In Arbuckle Smith and Co. Ltd. v. Greenock Corporation (1960) 1 All ER 508, Lord Radcliffe said at p 574:

"'Use' is not a word of precise meaning, but in general it conveys the idea of enjoyment derived by the user from the corpus of the object enjoyed."

In the present case, in my opinion, the Council did not enjoy the objects in question in this sense. Put differently, the Council used Brambles' services; it did not use Brambles' goods.
It is true that Council had a statutory function and duty to ensure that waste was properly collected and that Council could have discharged that function and duty by acquiring possession of, and access to, vehicles by hire or other methods. The Council did not do this. It is hardly necessary to say that Item 78 comes to an actual situation as it finds it; it is not possible, for present purposes, to reconstruct events which have in fact occurred.
It may be accepted that an exemption such as Item 78 should, ordinarily, receive a liberal interpretation so as to give effect to a policy to promote a particular activity, in this case, the use by councils of goods for council purposes and not for resale (see e.g. Federal Commissioner of Taxation v. I.C.I. Australia Ltd. (1972) 127 CLR 529 at pp 563,581). But where, as here, the facts disclose no intended or actual user with the participation, or through the agency, or efficacy, of a council, it would be contrary to the policy sought to be promoted by the Parliament to allow an exemption.
It is plain that the present items were "for use" by somebody. The question for determination is: For whose use? Use by whom? It is one thing to say, as is common ground here, that the goods were for use by a contractor in the provision of services to a council. But it is a different thing, I think, to say that the goods were for use by the Council. In my opinion, as a matter of the language of the provision and its evident policy, the latter falls within the description of the exemption, whereas the former does not. Unless it can be said that the contractor and the Council were jointly, or even concurrently, to use the goods (and this is not, in my view, open) the present case is one of use by the contractor, but not of use by the Council.
It follows, in my view, that the judge correctly held that trucks were not for use by a council and were thus not exempt goods.
Result of the proceedings
In the result, both the appeal and the cross-appeal must be dismissed. In the circumstances, it is appropriate that there be no order for costs.

JUDGE3

This appeal and cross appeal are concerned with the interpretation and application of item 78 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935, by which an exemption is conferred upon the following:

"Goods for use ... and not for sale by -

(i) a municipal, shire or district council constituted for the general purposes of local government under any law of the Commonwealth or of a State or Territory; ... ."

The Council of the City of Knox is, it was not questioned, a municipal council within item 78. Knox is a new city in the environs of Melbourne, with a population of over 100,000 persons. In 1986, it adopted a mechanised system for the collection of garbage, involving the use of large wheeled mobile garbage bins (known as "MGBs"), emptied each week at the kerb side by the use of garbage trucks specially equipped with hydraulic lifting, tipping, and compacting gear. This system was the Council's chosen method of discharge of its statutory responsibility for rubbish collection within its area under the Health Act 1958 (Vic.), and under regulation 31 of the Health (General Sanitary) Regulations 1985 (Vic.) which reads as follows:

"The council shall cause -

(a) all refuse which is offensive or likely to become offensive to be collected and removed from the premises once in each week, or, in case of specified premises, at shorter periods as are required;

(b) all trade or other refuse which is not offensive or not likely to become offensive to be collected and removed from the premises at those periods of time as the Health Surveyor directs."

The inauguration of the new system involved the passing by the Council of the City of Knox of a special by-law number 42, including the following provisions:

"A By-Law of the City of Knox made under the provisions of the Health Act 1958 and numbered 42 for the provision use and control of receptacles for the storage and collection of refuse and rubbish and prescribing the size and shape of and the materials to be used in the construction of such receptacles and imposing on the occupier of any premises the duties of cleansing footways and pavements adjoining such premises.

In pursuance of the powers contained in the Health Act 1958 and of any and every other power thereunto enabling it in that behalf, the Council of the City of Knox makes the following By-Law.

1. This By-Law shall be known as the Refuse Receptacles and Refuse Collection By-Law.

. . .

4. In this By-Law, unless inconsistent with the context or subject matter:-

. . .

`Proprietor' means the proprietor of any premises and includes the owner, the occupier or any person in charge or having the management or control thereof. `Receptacle' means a container constructed of high density polyethelene (sic) having a maximum capacity of 240 litres, a maximum height of 1100 mm and a maximum width of 600 mm fitted with two wheels having a minimum diameter of 200 mm and provided with a strong hinged lid constructed of the same materials as the body and having a handle so fitted as to enable easy manoeuvreability. (Such container shall hereinafter be referred to as an MGB.) `Refuse and Rubbish' means all waste matter (except night soil, sewage and manure) produced or accumulated in or about any house, building or premises including ashes and dust, but does not include industrial or chemical waste material.

5. The proprietor shall use the MGB provided by the Council as defined in clause 4 hereof and shall cause all refuse and rubbish produced or accumulated upon such premises to be deposited in such MGB. ... (It will be noted that the MGB is described in this By-Law as `provided by the Council'.) . . .

11. A proprietor of every premises to which the Council has supplied an MGB shall cause such MGB to be placed adjacent to the kerb at the front of such premises or at such other place as may from time to time be approved by Council by 6 o'clock in the morning of the day allocated for the removal of refuse. . . .

14. The proprietor of every premises shall cause the MGB provided by the Council at his premises to be maintained at all times in good order and in a sanitary condition.

15. The proprietor of premises shall on becoming aware that the MGB provided by the Council to his premises has become damaged, developed any defect, become lost, stolen or missing, notify the Council within seven (7) days of such occurrence.

. . .

18. Any person who causes any MGB ... to be damaged by placing same on any carriageway or ... shall be liable to the cost of replacement of such receptacle. . . ."

The Council has a Waste Management Department and a Special Projects Engineer who has special responsibilities in relation to waste collection and disposal. But it decided, as it was entitled to do under the provisions of the Health Act, to have the actual work of garbage collection carried out on its behalf by a contractor. It called for tenders, and Brambles, trading under the name "Cleanaway", was the successful tenderer. In accordance with the provisions of the contract, Brambles was required to obtain and deliver the MGBs - to the number of 33,000 - which it was the Council's duty to provide under cl. 5 of By-law 42. When these MGBs were delivered accordingly, they were accompanied by a brochure headed "THE CITY OF KNOX INTRODUCES A TOTAL RESIDENTIAL WASTE COLLECTION SERVICE". The brochure included the following:

"Each household is to receive a 240 litre mobile garbage bin, the property of Cleanaway. Each bin has a serial number engraved on it. This number will be recorded against the address to which the cart has been delivered. . . .

The Council must be advised within 24 hours if the container -

* Develops defects

* Is damaged

* Is stolen or is missing

. . .

All enquiries should be directed to:

CITY OF KNOX

WASTE MANAGEMENT DEPARTMENT

TELEPHONE ... ."

It is plain that residents were intended to see the garbage collection service as a council service. Indeed, unless it were such a service at least to the extent that the MGBs were truly "provided by the Council", the proprietors of the premises within the city would not have been bound by cl. 5 of By-law 42 to use their MGBs.

Under its contract with Brambles, the Council paid what was described as a "cart hire fee" for every MGB calculated on a weekly basis. The contract included the following provisions in relation to the MGBs:

"4.4.1 The Contractor shall supply for hire by the Council a sufficient number of wheeled containers to enable the efficient performance of this contract. ... 4.4.2 The Contractor shall maintain in good order all wheeled refuse containers hired by the Council for use at both commercial and residential premises throughout the municipality.

4.4.3 The wheeled containers hired by the Council shall be delivered by the contractor to residential premises at least one week prior to 6th October, 1986.

. . .

4.4.5 All wheeled containers supplied and delivered by the contractor in accordance with this contract shall be permanently marked with the contractors (sic) name, City of Knox and be consecutively numbered and show date of manufacture. ...

. . .

4.4.7 All wheeled containers supplied and delivered by the contractor in performance with (sic) this contract shall be of the specification approved by the Council. 4.4.8 The Council shall furnish the contractor with a computer list showing the addresses of all tenements in the municipality as at 30th June, 1986. The contractor shall cause the number of the wheeled container delivered to a particular premises to be recorded against the address in the computer list. Such completed record shall be delivered to the Council prior to the commencement of collections on the 6th October, 1986.

4.4.9 Wheeled containers of 120 litre capacity shall be supplied at premises where directed by the Council ..."

By cl. 5.6 the contractor was forbidden to "sub-let any portion of the work and services" without the consent in writing of the Council. Provision was also made by cl. 5.4.1 for the Council to "take possession of and itself use and operate the whole or any part of the contractor's plant, vehicles and equipment used in connection with this contract" in the event of breach of the contract by the contractor, or in certain other eventualities.
The contract made provision for the daily attendance of a representative of the contractor at the City offices, during each working week, to receive "notice, orders, instructions or complaints in regard to any new service, or omission breach or default in the performance of any work provided for in this specification" (cl. 5.17). By cl. 5.9 it was specified that the Council would investigate any complaint concerning the removal of refuse, and could direct removal at the contractor's charge or enforce a penalty against the contractor. The service was required to be in accordance with a schedule approved by the Council.
The contract contained a number of special provisions concerning the employees and motor vehicles involved in its carrying out. These included:

"5.13.1 The Contractor shall provide and maintain throughout the term of this Contract a sufficient number of motor vehicles and all necessary plant to be approved by the Council to carry out the works and services herein specified in a thorough and efficient manner.

5.13.2 (Here were set out details of the capacity and use of the vehicles.)

. . .

5.13.4 If, in the opinion of the Council any driver or workman is unsatisfactory he (sic) may require the Contractor to replace such workman forthwith. Failure by the contractor to carry out such instructions shall be held to be a wilful breach of the Contract and shall render the Contractor liable to forfeiture of his deposit and the determination of the Contract."

There was also provision for delivery to the Council of "an inventory of the motor vehicles, plant and equipment in use in connection with this Contract", and for the furnishing of details of the types of vehicles and compaction units, lifting apparatus and crews to be employed (see cls. 5.13.5 and 5.13.6). By cl. 5.21 it was provided that:

"All vehicles used in performance with (sic) the requirements of this Contract shall be marked near the top of the load carrying section with the letter K in no less than 200 millimetres in depth and shall be followed by a number of similar size. Vehicles used shall be numbered consecutively and such letters and numbers shall be on the front and rear of the load carrying section as aforesaid. Such lettering and numbering shall be painted on the vehicles with a paint which contrasts with that of the body and shall be to the satisfaction of the Council."

Certain important evidence was given by the Council's Special Projects Engineer and by a Branch Manager of Brambles. Neither was challenged in cross examination concerning the matters I shall now recount, though each was cross examined briefly as to other matters. The Special Projects Engineer said that Council employees under his direction and control were responsible "for monitoring and supervising the performance of waste collection in the city of Knox on a daily basis." They received and recorded complaints and requests concerning the garbage service and were, in the normal course, "in contact with representatives of Cleanaway several times each day." Officers of Council maintained a register of all complaints and were responsible for following up the result of each complaint with Brambles' operations supervisor. Council kept its own register showing the serial number of each MGB against the address to which it had been delivered. Where an MGB was not suitable for emptying, as, for instance, where it had been improperly filled, Brambles would advise the Council and the Council would communicate with the occupier. In case of dispute, a Council officer would inspect and, if he disagreed with Brambles' assessment, he would direct immediate clearance of the MGB.
Brambles' Branch Manager said that the regular route followed by the collection vehicles was a route agreed with the Council. He described how approximately 2,000 new service requests were received each year from the Council, MGBs being delivered within 24 hours of receipt of the Council's request form, and the form then being returned marked with the serial number of the new MGB. All MGBs were received from the manufacturer marked with individual serial numbers and having the words "City of Knox" and "Cleanaway" moulded into the lid. (The lid is a hinged lid permanently fixed to the container.) The Branch Manager stated that motor vehicles purchased by Brambles for waste removal within the city of Knox are "generally used only for that purpose". On "rare occasions", however, these vehicles carried out waste removal in a neighbouring council's area when more than one vehicle used there was out of service. He said: "In those circumstances, I would normally approach the city of Knox's Special Projects Officer for permission to use one of the Knox vehicles ... on a temporary basis." Each vehicle employed in the city of Knox was marked with the letter K and its own serial number, as required by the contract. By reason of its hydraulic equipment, it was adapted to fulfil the specific purposes of garbage collection according to a system utilizing MGBs.
The Branch Manager confirmed that employees under his supervision were in contact with officers of the Council "at least several times each day". From time to time, the growth of the city of Knox required alterations to weekly collection arrangements. The schedules were reviewed on an annual basis, and if alterations were considered necessary the Council was approached to approve an amended schedule. It was the Council which then prepared a letter to the affected residents, and Brambles arranged for distribution of the letter.
In these circumstances, Brambles claimed in the proceeding below that both the MGBs and the trucks fell within item 78 as "(g)oods for use ... by ... a municipal ... council". Its claim was successful as regards the MGBs; hence, the appeal. It was unsuccessful as regards the trucks; hence, the cross-appeal. The ground of the distinction drawn by the learned trial judge was the direct link between the Council and the MGBs by virtue of the hiring provision of the contract.
But, in my opinion, the most significant thing about the contract, for present purposes, is the closeness of the Council's involvement in its performance. This is not a case of a party engaging a contractor and remaining in the background, demanding only results. Here, the Council never ceased to be involved, in close and constant detail, with the carrying out, day by day, of the garbage collection work. Of course, it had a statutory duty, which it may well have regarded as both politically and legally incapable of entire delegation. The agreement to hire the MGBs is not tacked onto the rest of the arrangements as some addition. It is an integral part of them, consistent with the permanent marking of the MGBs with the Council's name, the recording of each serial number and address by the Council, the terms of the inaugural brochure firmly attaching responsibility for the waste collection service to the Council itself and referring enquirers to its Waste Management Department, the daily supervision of the work, and the direct participation of the Council's officers whenever the system faltered. Even if, technically, the MGBs were not bailed to the Council, the right described by the contract as a hiring reflected the real agreement of the parties that the MGBs would be obtained for the Council, delivered on its behalf, paid for on a weekly basis at its expense, and ultimately controlled by it.
The close involvement of the Council did not stop with delivery of the MGBs to the kerb for collection. The garbage trucks were marked with a K, for the City of Knox. They were dedicated to the waste collection task. They operated under the same daily supervision. Even their drivers - who, in a normal contract situation, would have been answerable only to their own employer - had to be satisfactory to the Council. It was the Council which dealt with complaints about the service they gave, and might direct reparation where it considered there had been some omission.
Except when exercising some of the specific powers I have mentioned, the Council did not directly carry out the waste collection work. But it could be said to have used a contractor to do so. At the same time, through the contractor, and through its own supervisory operations, it used the MGBs and the trucks. So far as it did so through the contractor, the maxim applies: "Qui facit per alium facit per se." Of course, it used both the MGBs and the trucks to proclaim publicly (by its name on the MGBs and initial on the trucks) that the waste collection service was provided by the Council. That, in itself, might not be a very large use by comparison with the total work done by the MGBs and the trucks, but it is significant as an indication that in reality all the work is an activity carried on by the Council, though in a substantial measure through its contractor. Taken together with the Council's direct role, it is an important use. So far as the MGBs were concerned, having obtained a contractual right in respect of them, the Council used them by making them available to the persons at whose premises they were placed: Tourapark Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia (1982) 149 CLR 176 at 181, 187; Max Factor and Company Inc. v. The Commissioner of Taxation of the Commonwealth of Australia (1971) 124 CLR 353 at 359, 362.
Item 78 is one of a group of items the draftsman of which has chosen the use of goods as a criterion for exemption. As was pointed out by Deane J. in Deputy Commissioner of Taxation v. Stewart (1984) 154 CLR 385 at 400-401, the wording of these exemptions illustrates a number of variations. In some cases, in order to qualify for exemption, the use must be exclusive. In others, there may be an additional requirement, for example, a particular ownership, as in item 73A. In this context, it is important to observe that item 78 is not limited to exclusive use by a relevant council, nor to a case where the council is also the owner of the goods. In Deputy Commissioner of Taxation v. Stewart, an item expressed in precisely similar words (item 81) was held to apply to goods, not owned by the relevant institution, which had been placed on its premises, under a gratuitous bailment determinable at will, for the mutual benefit of the owner and the institution. No member of the High Court suggested that such property interest as the institution had under a bailment of that kind determined the application of the exemption. What was vital was the use of the goods (a vending machine for lottery tickets) by the institution, though the machine was at the same time used by the company that owned and supplied it as an outlet for the sale of lottery tickets - or, at least, trustees associated with the company sold the lottery tickets - and the company maintained the machine so that it could fulfil its function. The machine thus had a direct use and an indirect use, an aspect of the case to which I shall return.
The vital question is the meaning of "for use ... by" in this context. In Council of the City of Newcastle v. Royal Newcastle Hospital (1957) 96 CLR 493 at 515, Taylor J. (with whom Webb J. agreed and whose view was that which ultimately prevailed in the Privy Council (100 CLR 1)) said:

"The word `used' is, of course, a word of wide import and its meaning in any particular case will depend to a great extent upon the context in which it is employed. The uses to which property of any description may be put are manifold and what will constitute `use' will depend to a great extent upon the purpose for which it has been acquired or created."

See also the remarks of Gibbs ACJ., in Ryde Municipal Council v. Macquarie University (1978) 139 CLR 633 at 637. Use is not confined to direct personal use, as is illustrated by the sweeping statement made by Lord Hardwicke LC. in Marshall v. Blew (1741) 2 Atk 217; 26 ER 534 ("She (a widow devised the use of goods for life) may ... use the goods in her own or any other person's house, alone, or promiscuously with other goods, or may let them out to hire"). Once ownership is discarded as a necessary determinant, if some clear link between the Council and the goods be required to enable an indirect use to be found, that link may be provided by the devotion of the goods to the Council's waste collection system, recognized by their marking with the name or symbol of the Council. Confirmation that a connection of this kind is sufficient for the purposes of item 78 is to be found in the application of the identical words (in item 81) to the case of goods for use by a public hospital. As is well known, public hospitals commonly have auxiliaries which function in close relationship with them and serve their purposes in various ways. I do not think parliament intended "use" to have so confined a meaning that the acquisition of goods by an auxiliary, to be put into service in the work of the hospital by a member or employee of the auxiliary, would not qualify for the exemption. On the contrary, I think the wide word "use", unlimited by any reference to the property in the goods, was plainly intended to enable the exemption to travel beyond equipment operated by servants of a hospital or council, in which the institution would normally have some property interest, so as to include cases of the kind I have mentioned. It would be unduly artificial to read the exemption by reference to the difficult distinction between contracts of service and contracts for services rather than by reference to the substance of what is done. Cf. the appeal of Hope J.A. (with whom Samuels and McHugh JJ.A. agreed) in Federal Commissioner of Taxation v. Kentucky Fried Chicken Pty Limited (1988) 88 ATC 4363 at 4370 to the importance , for the purposes of the sales tax legislation, of "looking at the substance and reality of the matter".

Of course, in many cases (perhaps in most) of contracts for the performance of services on behalf of a council, the council will not itself be intimately involved in the performance of the work. In such a situation, it may be right to say that the council uses the services of the contractor, but that equipment operated by the contractor is used by him. An example might be the trucks of a builder erecting new council chambers. But where the council, through its officers, works alongside a contractor in the performance of work which is a statutory function of the council, equipment central to the task and publicly bearing the council's name is, in my opinion, as a matter of ordinary English, used by the council as well as by the contractor. (Cf. the circumstances in which the Court was able to say, in Hamilton Island Enterprises Pty Ltd v. Federal Commissioner of Taxation (1982) 43 ALR 519 at 525, that "Sea World used the helicopters made available to it by the taxpayer", although the actual operation of the helicopters was entirely under the control of another company and of its employees.) It is the ordinary use of language which is relevant to the construction of the exemptions: Federal Commission of Taxation v. Thomson Australian Holdings Pty Ltd (1989) 87 ALR 682; Rotary Offset Press Pty Ltd v. Deputy Commissioner of Taxation (1972) 46 ALJR 609.
In construing an exemption such as item 78, which is clearly directed to assisting a public body having significant functions to perform in the public interest, the court should have regard to the beneficial purpose of the exemption. Where both a broad and a narrow construction are open, it may be appropriate to give the provision a construction that promotes the beneficial purpose in a realistic way and does not restrict it by technicalities which the language of the exemption would only impose upon it if taken in a narrow sense. Cf. Federal Commissioner of Taxation v. Reynolds Australia Alumina Ltd (1987) 77 ALR 543 at 549, 559-560; Federal Commissioner of Taxation v. Northwest Iron Co Ltd (1986) 9 FCR 463 at 473; The Commissioner of Taxation of the Commonwealth of Australia v. ICI Australia Limited (1972) 127 CLR 529 at 581.
The distinction between the direct use of a thing and an indirect use of it is drawn in the judgment of Deane J. in Deputy Commissioner of Taxation v. Stewart (supra, at 402). That case involved almost the converse of the present, so far as the use of the machines by the manufacturer was concerned (see the statement of the position by King C.J. in the Supreme Court reported (1982) 63 FLR 385 at 387). After pointing out that the "direct use of the machine" was there made by the benevolent institution, Deane J. added: "It is true that, in the wider context of the overall business of the respondents' `organization', the machine could properly be seen as also being used by the respondents in their business." This was so although the machine had been bailed to the institution and was directly utilized in its fund raising operations.
An important proposition for which Deputy Commissioner of Taxation v. Stewart is authority is the proposition that the use of goods by a relevant institution need not be exclusive. But there is here an ambiguity. An example of non-exclusive use might be where a thing is used for three days in the week by the institution and for the remainder of the week by some individual. Or non-exclusive use might mean use by an institution which, at the same time and by virtue of the same acts, constitutes use by someone else, as, for example, a hospital's use of its beds by having patients sleep in them. This was the example actually given in Deputy Commissioner of Taxation v. Stewart (at 390, 397). It was also the type of non-exclusive use with which that case was concerned. But the High Court's answer to the problem that a less than exclusive use might facilitate tax evasion is applicable to both types of situation. The principle laid down in Deputy Commissioner of Taxation v. Stewart in respect of this issue is that the use in question must be (as Brennan J. put it at 397-398)

"sufficiently substantial in extent and time that it is right to regard that proposed use of the goods as giving a character to the goods. That is a question of fact and degree. Among the material circumstances which reveal a characteristic use, regard may be had to the nature of the goods, the activity of the institution which is to be advanced by using the goods, the terms upon which the goods are to be acquired by the institution or upon which the institution is to be entitled to use them, the power of others to determine or qualify that use, and the likelihood of the use being changed by the decision of the institution, by the decision of another person having power to determine or qualify the use or by the decision of both the institution and that person."

Deane J. put it (at 401-402) as follows:

"The projected use by the institution must be such as would warrant characterization of the goods by reference to it. Ordinarily, that would involve definite commitment to a use by the institution as the main projected use of them."

As Deane J. pointed out (at 400), the question must be answered at the time when a liability to sales tax would otherwise attach. At that time, if the exemption is to apply, the court must be able to say of the goods that they were "for use ... by ... a municipal ... council". The word "for" implies that the test involves purpose, but no particular person, whether manufacturer, purchaser or council, is selected by the legislature as the one whose purpose is relevant. The exemption calls for a characterization by reference to a purpose not identified with any particular mind, a purpose of an objective or generalized kind, perhaps best expressed by the word "destined". The search for such a purpose - the purpose the goods were at the relevant time destined to serve - would generally best be undertaken by an examination of all the circumstances with particular regard to the purpose the goods have in fact since served. The actual use to which the machines were put was a prime factor relied on in Deputy Commissioner of Taxation v. Stewart, by Gibbs C.J. (at 393), by Brennan J. (at 398), and by Deane J. (at 401- 402). In the present case, the MGBs and the trucks were branded from the beginning as dedicated to the task in which they have ever since been retained. In the case of the MGBs, the Council, by stipulating in the contract with Brambles for their delivery to the respective premises recorded against the serial number of each one of them, did, I think, in pursuance of cl. 5 of By-Law 42 provide the MGBs to those premises; and by cl. 11 of the By-Law it required the various persons bound by that clause to deposit the MGBs on the Council's footpath from time to time for collection.
In Otto Australia Pty Limited v. The Commissioner of Taxation of the Commonwealth of Australia (unreported, 12 July 1990), Lockhart J. took a different view of the use of the garbage receptacles there in issue. However, with respect to his Honour, he looked only at the direct use of the receptacles, without taking full account of their indirect use. And he gave no weight to the extent to which the Council did directly use them, in that case as in this, through the role of its own officers, and to announce, by the branding of its name on them, the Council's fulfilment of its duty to provide a garbage disposal service. In the light of these matters, the decision should not persuade the court to depart from the views which have been set forth in these reasons.
It was sought to be objected, by amendment of the Notice of Appeal, that there was no true hiring of the MGBs by the Council since a bailment is not possible without delivery. The argument was the Council had never received the MGBs. I pass by the question whether, from the circumstances, it could be inferred that Brambles, which picked up the MGBs from the manufacturer, had attorned to the Council so as to constitute a constructive delivery (see Dublin City Distillery (Great Brunswick Street, Dublin), Limited v. Doherty (1914) AC 823 at 847-848, per Lord Atkinson; Palmer on Bailment (1979) 787-788). I do not need to consider the possibility of a constructive delivery or, if there was such a delivery, its effect, first, because I agree that it would be wrong to allow the point to be raised at this stage, and secondly, because, even assuming there was no bailment, what was done under the contract plainly amounted, in my view, to a use of the MGBs by the Council. I cannot, for a moment, think that the ancient distinctions the argument invokes, which, as O.W. Holmes J. pointed out in the sixth of his lectures on The Common Law, have led the law into confusion concerning what is a delivery of goods under a contract, have any part to play in the application of item 78 to this case. In the circumstances discussed in these reasons, I think it is also the proper conclusion that the trucks were used by the Council, and that both, at the relevant time, answered the description of "goods for use ... by ... a municipal council" within the meaning of the exemption.
Accordingly, I would dismiss the appeal, and allow the cross-appeal.

[1991] FCA 126

10 APRIL 1991