Federal Commissioner of Taxation v Silverton Tramway Co Ltd

[1953] HCA 79

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88 C.L.R.] OF AUSTRALIA.

559

[H IG H COURT OF AUSTRALIA.]

FEDERAL COMMISSIONER OF TAXATION .

Plaintiff ;

AXD

SILVERTON TRAMWAY COMPANY LIMITED

Defendant.

Sales Tax (Cth.)—Exemption— Goods for use . . . by “ public transport author-

qj.

ities ” . . . — Trading company conducting public transport service in

1953.

pursuance of statutory powers for private profit— “ Public transport authorities ”

— “ Authority ”— Sales Tax [Exemptions and Classifications) Act

1935-1951

Me l b o u r n e ,

[No. 60 of 1935—No. 42 of 1951) s. 5, First Schedide, Div. X I , Item 77.

Sept. 29, 30;

Sy d n e y ,

Item 77 of the F irst Schedule to the Sales Tax (Exemptions and Classifica­ tions) Act 1935-1951 sets out the following as being exem pt from sales tax :—•

Nov. 25.

“ Goods for use . . . by public transport authorities . . . ”

Dixon C.J., Webb and

A trading company conducted a raihvay service. I t W'as authorized to do

Taylor JJ .

th is by a private Act of Parliam ent which conferred such powers as were necessary to enable the railway to be constructed and operated, including inter alia, pow'er to acquire land compulsorily, and to make by-laws subject to the approval of the Governor-in-C'ouncil on certain specified subjects relating to the conducting and travelling upon the railway. Under the Act the public were entitled to u.se the railway subject to the pa j’m ent of charges, the maximum am ounts of wUich were prescribed.

Held th a t the comjiany was not a “ public transport au thority ” within the meaning of Item 77, on the grounds, by Dixon C.J. and Webb J., th a t the expression “ public transport authorities ” means “ authorities providing public transport ” and not “ pubhe authorities providing transport ” ; th a t the designation “ au thority ” is not applicable to a body merely because it provides a public service and is inve.sted with sta tu to ry jjow’ers, if it executes its function, not in the public interest, bu t for the sake of private profit; by Taylor J ., the expression, public transport authorities ” , is a compo.site one, and is not intended to refer to a company constituted with share capital and operated for profit under the management and control of directors appointed by the shareholders.

Case Stated.

On 27th February 1953, the Commissioner of Taxation, as plaintiff, commenced an action in the High Court against Silverton Tram­ way Company Limited as defendant. On 18th August 1953,

560 HIGH COURT

[]953.

IT. C. OF A.

the parties to tlie action concurred in stating a special case for tlie opinion of the Court, pursuant to the High Court Rules, Order 35.

F kdfhalThe material portions of tlie case are as follows :—(!) The defen­

( 'O M M IS -

dant is a coni])any limited by shares and was duly incorporated

Slô M■:K oi''

T a XA'I'IONon 22nd December 1894 under the provisions of the Companies

V.          Act 1890 (Viet.). (2) On 5th October 1951 at Port Pirie in the

S u . v lOKTON

T ha.mwav

State of South Australia the defendant imported as goods for

Co. Lt d .use by it exclusively in or in connection with the conduct

of tlie tra,ns})ort service, hereinafter described as the Silverton Railway, four eight-wheeled coupled locomotives and tenders super heated and certain other outside packages, the sale value of which calculated in accordance with the provisions of s. 4 of the Sales Tax Assessm.ent Act {No. 5) 1930-1939, was £137,717 13s. 6d. (3) In pursuance of the provisions of the Silverton Tramway Act of 1886 (N.S.W.) and the Silverton Tramway Amending Act of 1888 (N.S.W.) (hereinafter called “ the Silverton Tramway Acts ” ) a tramway (hereinafter called “ the Silverton railway ”) was constructed from the point on the western boundary of the colony of New South Wales (to which the Government of South Australia was constructing a railway as referred to in the Silverton Tramway Acts), to Broken Hill via Silverton in New South Wales and the defendant company has owned and operated the Silverton railway since the year 1894 and still does so. (4) At all times material, in pursuance of ss. 54 and 55 of the Silverton Tramway Acts, the defendant has been and is the assignee and transferee of and there have been conveyed and released to it all the rights, powers, authorities, privileges, liabilities and obligations conferred and imposed upon Kenric Brodribb Charles Chappie, William Robert Wilson, Murdoch MacLeod, Henry Byron Moore and Charles Godde Lush by the Silverton Tramway Acts. (5) Large tonnages of goods are carried for the public annually by rail from Sydney to Adelaide and Adelaide to Sydney via Broken Hill over the Silverton railway. Large tonnages of goods are carried for the public annually by rail from Broken Hill to Adelaide and from Adelaide to Broken Hill over the Silverton railway. Many members of the public who travel on the Silverton railway are through passengers travelling by rail to or from a place beyond the terminals of the Silverton railway. (6) The plaintiff claims that sales tax upon the said goods amounting to £17,214 14s. 2d. is due and payable by the defendant to the plaintiff but the defendant has refused and still refuses to pay that sum or any sum, on the ground that the said goods are wholly exempt from sales tax. (7) The question for the opinion of the Court is : was the defendant, on 5th October 1951, a public trans­ port authority within the meaning of Item 77 of the First Schedule

88 C.L.R.] OF AUSTRALIA.

561

to the Sales Tax {Exemptions and Glassifications) Act 1935-1951 ?

H . C. OF A.

If the Court shall be of opinion in the negative of the said question

1953.

then judgment shall be entered for the plaintiff for the sum of F ederal

£17,214 14s. 2d. and costs of action to be taxed. If the Court shall Commis­

sio n er OF

be of opinion in the affirmative of the said question then judgment

T axation

shall be entered for the defendant with costs to be taxed.

V.

Silverton T ramway

Dr.' E. G. Coppel Q.C. (with him Peter Murphy), for the plaintiff. The question for decision is whether the defendant is a “ public transport authority ” . The words might be construed as meaning either “ an authority which provides transport to the public ” or “ a public authority which provides transport ” . The plaintiff contends that the second meaning is the correct one. The idea which underlies Div. X I of the First Schedule to the Sales Tax {Exemptions and Classifications) Act 1935-1951 (Cth.) is the denial of the exemption to any body or person existing for private profit. Although the defendant exercises statutory powers and provides services for the public, it is, in the final analysis, only a company which carries on for private profit and which provides the services, not on behalf of the public, but on behalf of its members. The words “ public transport authority ” cannot simply mean “ an authority providing transport for the public ” . If they did mean that, every common carrier could claim the exemption. An authority which carries on business for private profit is not a “ public author­ ity ” whatever the powers which it may exercise. [He referred to Renmark Hotel Inc. v. Federal Commissioner of Taxation, per Rich J. (1), per Latham C.J. (2), per McTiernan J. (3), per Webb J. (3) ; Griffiths v. Smith, per Viscount Simon L.C. (4), per Lord Porter (5) ; Littlewood v. George Wimpey & Co. Ltd. (6) ; Swain V. Southern Railway Co. (7).]

Co. L t d .

0. J . Gillard Q.C. (with him G. I. Menhennitt), for the defendant. The meaning of “ public transport authority ” is “ authority providing transport for the public ” . A public transport authority is any person or body of persons, corporate or unincorporate, which from a governmental source is entrusted with power to conduct public transport. The characteristics of such an authority are ; (a) the source of the power and the imposition of the obligations are by sovereign or governmental action ; (b) the person or body has a duty imposed on him or it to provide the public with a

(1) (1949) 79 C.L.R. 10, a t pp. 16-18.

(5) (1941) A.C., a t pp. 20.5-206.

(3) (1949) 79 C.L.R., at pp. 22-23.

(6) (1953) 1 W .L.R. 426, a t pp. 430,

(3) (1949) 79 C.L.R., a t p. 24.

431; (1953) 2 Q.B. 501.

(4j (1941) A.C. 170, at p. 178.

(7) (1939) 2 K .R. 560.

VOL.

L X X X V I I I . -

5()2 HIGH COURT

[1953.

H . C. OK A.transport facility or service ; (c) the person or body has power to

invade the personal or proprietary rights of other persons to carry

KumoRAi, out the function of providing transport to the public ; (d) the person

Commis­

or body has jiower to legislate, the legislation becomes part of the

sion HR OK

T axationgeneral law and the sovereign authority lends its aid to enforce

V.such legislation. The words “ public transport ” form an entire

S ilverton

'I’kamway concejition. It cannot be split up. Each noun qualifies the succeed­

Co. lyi'i).ing noun, in the absence of hyphenation. The following examples are

illustrative of this—silk stocking tax, poor rate collector, super­ fluous hair remover, Covent Garden market salesman. If the legislation intended to exempt from the payment of sales tax authorities carrying on public transport the words “ public transport authority ” are apt. There is nothing in the items specified in Div. X I of the First Schedule from which any denial of exemption from sales tax to bodies carrying on for the purpose of private profit can be spelled. For examiple, Item 74b provides for an exemption in the case of materials for use in the construction, &c., of munitions to the order of the Commonwealth and Items 74m and 74n exempt goods for use by British Commonwealth Pacific Airlines Limited and Qantas Empire Airways Limited. The munitions manufacturer and the airlines mentioned carry on for profit, although, as does the defendant, they may perform a public function. The defendant is an “ authority ”. That is a term well understood in legislation. The concept is merely that of the source of power. [He referred to the Acts Interpretation Act 1901-1950 (Cth.), s. 46 ; Commomcealth Employees' Furlough, Act 1943-1953, s. 5 ; Communist Party Dissolution Act 1950, s. 10 ; Merchant Shipping Act 1894-1952 (Imp.) (57 & 58 Viet., c. 60—15 & 16 Geo. 6 & 1 Eliz 2, c. 14) ss. 362, 742.] The sections of the Silverton Tramway Act of 1886 (X.S.W.) which are relied upon in this connection are s. 5 (tramw’ay to be open to public use on payment of charges), s. 27 (power to make by-laws), s. 30 (approval of by-laws by Governor-in-Council), s. 48 (power of arrest for breach of by-law) and s. 52 (provision for notice of action and limitation of actions against tramway proprietors). The defendant is a “ public authority ” within the meaning of the definition by Latham C.J. in Renmark Hotel Inc.

authority ” is that the latter carries on a function which is normally governmental whereas the former does not. If there is ambiguity in Item 77 of the First Schedule it should be resolved in favour of

V.

Federal Commissioner of Taxation (1).

[Dixon C.J. referred to the dictum of Rich J. (2).]

(1) (1949) 79 C.L.R. 10, a t p. 23.

(2) (1949) 79 C.L.R., a t p. 18.

88 C.L.R.] OF AUSTRALIA.

563

the subject. That rule was stated in Warrington v. Furbor (1) ;

H . C. OF A.

Armytage v. Wilkinson (2) ; National Trustees Executors & Agency

1953.

Co. of A/asia Ltd. v. The Queen (3) ; Australian Forge & Engin­

F ed er a l

COMMIS- .SIONEE OF

eering Co. Ltd. V . Wollaston (4) and Burt v. Commissioner of Taxa­

tion, per Barton J. (5), per Higgins J. (6). The contrary line of

T axation

authority consisting of Hogg v. Parochial Board of Auchtermuchty (7)

V.

Silv erto n

and Swinburne v. Federal Commissioner of Taxation, per Knox C.J. T ramway

(8), should not be followed.

Co . L t d .

Dr. E. G. Coppel Q.C., in reply.

Cur. adv. vult.

The following written judgments were delivered :—

Nov. 25.

D ix o n C.J. The question raised by this case stated is whether the defendant the Silverton Tramway Co. Ltd. is a public transport authority within the meaning of Item 77 of Div. XI of the First Schedule of the Sales Tax {Exemptions and Classifications) Act 1935-1951 so as to be exempt from sales tax in respect of the importation of four eight-wheeled coupled locomotives and tenders imported by the defendant company at Port Pine on 5th October 1951. Item 77 exempts goods for use (whether as goods or in some other form) by public transport authorities exclusively in, or exclusively in connection with the establishment, conduct or maintenance of, transport services. The question turns in part on the meaning to be placed upon the words “ public transport author­ ities ” and in part on the characteristics of the defendant company and the sufficiency of such characteristics to constitute it an

“ authority ” and a

public transport authority ” .

The defendant company was incorporated under the law of Victoria as a trading company on 22nd December 1894. I t appears to have been the successor in title to the undertaking of another company bearing the same name but then in liquidation. The undertaking is that called the Silverton Tramway. The defendant company took all the rights, powers, privileges and concessions conferred by the Silverton Tramway Act 1886-1888 (N.S.W.). As might be expected, the objects contained in the memorandum of association of the defendant company were wide, but doubtless the leading provision was one authorizing it to carry on the business formerly carried on by the old company. Another important object

(1) (1807) 8 E ast 242, a t p. 245 [103

(.5) (1912) 15 C.L.R. 469, a t p. 482.

E .R . 334, a t pp. 335-336].

(6) (1912) 15 C.L.R., a t p. 487.

(2) (1878) 3 App. Cas. 35.5, a t p. 370.

(7) (1880) 7 R ettie (S.C.) 986, a t p.

(3) (1893) 19 V.L.R. 132, a t p. 135.

996.

(4) (1900) 26 V.L.R. 414.

(8) (1920) 27 C.L.R. 377, a t p. 382.

504 HIGH COURT

[1953.

H. C. oir A.

was to carry on the business of carriers of passengers goods and

19,');?.

things of owery kind, and cattle and livestock of every kind.

I^umCRALThe Silverton Tramway Act of 1886 recited that the Government of South Australia was then constructing a railway to a point on

SIONUR OK

'I'axationthe western boumhiry of New South Wales and that five persons,

V.described resyiectively as a grazier, a broker, a gentleman, a financial

tSlIA'URTON

'Pram WAV agent and a merchant, were desirous of constructing a tramway Co. Jyi'i).from that point to Broken Hill via Silverton and, in effect, that

Bixon C..I .in order to do so they required statutory powers. The recital

stated that it was expedient to confer upon them legislative authority to construct maintain and use the tramway and further that it was expedient to enable them to transfer their rights, powers, authorities and liabilities under the Act to a company duly incor­ porated for that purpose. The Act proceeded to authorize the construction of the tramway, as it is called, the gauges being three feet six inches. Powers were given to carry it along any road or street. The Act directed that plans of the project should be prepared showing what lands were required. So far as they were Crown lands they were to be made available ; so far as they were private lands they might be acquired by agreement or compulsorily, subject, of course, to the assessment of compensation. I t was provided that the tramway should be open to public use upon a payment of tolls or charges, the maximum amounts of which were prescribed. The undertakers were empowered to make by­ laws subject to the approval of the Governor-in-Council for certain purposes. The by-laws might regulate the conduct of officers and servants employed in connection with the tramway. They might provide for the proper management of the affairs of the tramway and for the protection of the tramway and other property of the undertakers from trespass or injury. Other purposes for which by-laws might be made were regulating the speed at which the carriages using the tramway might be moved or propelled, pre­ serving the free course of the tramway, preventing obstructions, regulating the loading and unloading of carriages and the weights to be carried, regulating the receipt and delivery of minerals, goods, livestock and other things to be conveyed upon it, regulating the number of passengers to be carried and the occupation of the seats therein and preventing or restricting smoking or the commission of any other nuisance in or upon the carriages, and generally regu­ lating travelling upon or the use of the tramway. The statute dealt specifically with the liability of the undertakers as carriers and provided that they should not be liable to any greater extent than, according to the laws of New South Wales, stage-coach proprietors

88 C.L.R.] OF AUSTRALIA.

566

and common carriers would be liable. An express authority to

H . C. OF A.

use locomotive engines was given. A provision was included requir­

1953.

ing the tramway to carry public mails on terms to be fixed by F e d e r a l

arbitration. The Act provided for the recovery of penalties and Commis­

sio n er OF

for the mode of prosecution. In accordance with the recital full

T axation

power was expressly given of assigning the rights, powers, author­

V.

Silv erto n

ities, privileges and liabilities conferred and imposed by the Act.

T ramway

The contention of the defendant company is that the effect of the foregoing provisions is to give to it the character of an

Co. L t d .

Dixon C.J,

“ authority ” , a public transport authority. The locomotives and tenders in respect of which sales tax is demanded were imported for use by the defendant company exclusively in or exclusively in connection with the establishment, conduct or maintenance of the transport service which it owns and operates as the Silverton Tramway. If therefore the defendant company fills the description of a “ public transport authority ” the goods are exempt. For the other conditions of the exemption are satisfied. Can it correctly be said, having regard to its powers, that the defendant company is a public transport authority ?

For the plaintiff Commissioner of Taxation the expression “ public transport authorities ” in Item 77 of Div. XI, was treated as meaning public authorities for transport or public authorities for public transport. For the defendant company, however, it was said that the natural meaning of the expression was “authorities for public transport ” . The word “ public ” described the character of the transport, not the character of the authority, which might or might not be public. I t may be conceded that according to ordinary English usage the position of the word “ public ” would make it qualify “ transport ” rather than “ authorities ” . But it does not follow that the plaintiff commissioner is wrong in denying that the defendant company is a public transport authority within the exemption. His case does not depend on attaching the adjective “ public ” to the word “ authorities ” so that it adds to the con­ notation of the word “ authorities ” . The word “ authority ” has long been used to describe a body or person exercising power or command. No doubt this has come about by a transfer of meaning from the abstract conception of power or command to the body or person possessing it. But in relation to such a public affair as public transport the use of the word “ authority ” as a description of a person or body implies be or it is an agency or instrument set up to exercise control or execute a function in the public interest whether as an emanation of the general government or as an adjunct of local government or as a specially constituted officer

566 HIGH COURT

[1953.

H.C. OF A.or body. The word “ authority ” would not readily be applied in

1953.ordinary speech to a company carrying on an undertaking for

F e d e r .vl private profit, even if tlie undertaking were a public utility and

Commis­

the company had secured a grant of statutory powers to enable it

sioner

OK

T axation

to do so. The natural reading of the expression would be against

V.such an application of it.

81LVHRTON

T ramway The draftsman of the First Schedule has lent some confirmatory

Co. 1/ru.support to this conclusion by the collocation he has given to the

Dixon c.,1.exemption. Item 77, which contains the words “ public transport

authorities ” occurs as one of a long list of exemptions grouped in Div. XI. This particular group is headed “ Goods for use by Governments, Representatives of Governments, and Public Bodies”. The curious provision in s. 3 (2) forbids the use of this heading to affect the interpretation of the items in the division but the heading in any case gives very little light. The list itself gives more. A scrutiny of the list shows, it is true, that many bodies having no governmental authority are included, but they are all bodies carried on exclusively for the advantage of the public or some section of the public and not for private profit. Institutions and bodies mentioned include public hospitals, benevolent institutions, welfare centres, societies for conducting infant clinics and the like, societies or institutions established for various public purposes, rehgious, philosophical, educational, scientific or literary. In the list are placed diplomatic representatives of foreign countries. Throughout the whole division there appears a policy of exempting persons or bodies either because of their connection with or service of govern­ ments or for their service of the public independently of profit gained or their contribution to the public welfare or for their governmental or quasi-governmental character. The association of ideas is unfavourable to the supposition that the word “ au thority” was employed to cover every person or company conducting public transport for private advantage simply because it had sought and obtained statutory powers. I t is true that the statutory powers conferred by the Silverton Tramway Act iuclude power to expropriate private property, to adopt by-laws if sanc­ tioned by the executive government and to do other things m the exercise of an authority conferred by law and affecting the public at large. The company, however, is armed with these powers for the purpose of enabling it to carry on adequately a transport under­ taking and so at one and the same time fulfil duties to the public and conduct a profitmiaking business. The general character of the company remains that of a body constituted for profit. .Statutory powers have often been sought and have often been

88 C.L.R.] OF AUSTRALIA.

667

granted in the case of commercial undertakings because the public

H. C. OF A.

is expected to gain an advantage from the establishment and

1953.

conduct of the enterprise and because the enterprise cannot be rEDEK.4.L

established and conducted without special statutory privileges and Commis­

s io n er OF powers. But because a public end is served and statutory powers

T axation

are enjoyed, the commercial enterprise does not become an agency

V.

S ilverton

exercising control power or command for the public advantage

T ramway

in such a sense that it would be designated an “ authority ” . All C o .

L t d .

that can be said is that it has been granted powers, privileges and

Oi.xon C.J.

authorities for its own purposes because its own purposes enure

for the public benefit.

In my opinion the defendant company does not qualify as an authority for public transport under the exemption and the question in the case stated should be answered : the defendant was not a public transport authority within the meaning of Item 77 of the First Schedule of the Sales Tax {Exemptions and Classi fications) Act 19.35-1951. In accordance with the agreement of the parties expressed in the special case the consequence of this answer is that judgment must be entered for the plaintiff for the sum of £17,214: 14s. 2d. and costs of action to be taxed.

Webb J. I think the term “ public transport authorities ” in Item 77 under Div. X I of the First Schedule to the Sales Tax {Exemptions and Classifications) Act 1935-1951 should be given the meaning it bears according to the rules of syntax, and that it means, what counsel for the defendant company submitted, i.e., an authority to provide public transport ; so that cases on the meaning of “ public authority ” are of little, if any, assistance. Division X I is headed “ Goods for use by Governments, Representatives of Governments, and Public Bodies ” ; but s. 3 (2) of the Act provides inter alia that the heading of a division shall not be read as affecting the interpretation of any item in the schedule.

However, although the defendant provides public transport, such as gas and electricity supply companies, operating as does the defendant solely for the profit of their shareholders. But, like the defendant, they have authority to place their installations on or under streets and other public places, and to make by-laws, with penalties for breach, for the protection of such installations against unauthorized interference, and in return are required to meet the public demands for their commodities or services and to do so at fixed or maximum prices. But as far as I am aware these

it does not follow, in my opinion, that it is an “ authority

5()8 HIGH COURT

[1953.

H. C. OK A. companies are never referred to or regarded as authorities, whether

i!)r>8.local or otherwise, no matter what might be the nature or the

F e d e r a lscale of their operations. They are, however, often called public

COMMIS-

utilities. As it cannot properly be claimed that government or

SU)NER OF

'I'axationcommand is vested in them, or that any public trust is discharged

r.

by them, the mere fact that they are authorized by legislation to

S ilverton

'I'kamwav

the extent indicated does not entitle them to be termed authorities,

C’o . J / r i ) .any more than does their creation or constitution by statute. To

warrant that designation they must, I think, have authority to

Webb

J .

act for and on behalf of the public, and not merely have authority to use or encroach upon public property, subject to providing compensation to the public in some form or other, and to take measures, even subordinate legislative measures, in support of such use or encroachment, but always for private profit.

I would answer the question in the negative and enter judgment for the plaintiff commissioner for £17,214 14s. 2d. and costs.

Ta y lo r J. The question which is raised by the case stated is whether the defendant company was, on 5th October 1951, a “ public transport authority ” within the meaning of Item 77 of the First Schedule to the /Sales Tax [Exemptions and Classifications) Act 1935-1951. If this question should be answered in the negative then, it is agreed, judgment should be entered for the plaintiff for the sum of £17,214 14s. 2d., whilst if the question should be answered in the affirmative then judgment is to be entered for the company.

The First Schedule to the Act contains a series of lists of goods which, by s. 5 of the Act, are exempted from the operation of various specified Sales Tax Acts. Division I of the schedule deals with specified items of agricultural machinery, implements, equipment and materials. Exemption under this division depends upon goods conforming to a specified character and this is true of a number of the divisions in the schedule. A perusal of the schedule indicates that specified exemptions apply in respect of such things as mining machinery and equipment, drugs medicines and surgical goods, book printed matter and paper, and scientific and religious goods and works of art. Division XI, however, in which Item 77 is to be found purports to relate to “ Goods for use by Governments, Representatives of Governments, and Public Bodies ” and the exemptions which are effected by the joint operation of s. 5 and the items specified in this division are not, in general, exemptions of any specified class or classes of goods but, in the main, of goods acquired for use by persons, bodies or authorities of specified

88 C.L.R.] OF AUSTRALIA.

569

character or characters. Item 77, which is the twenty-fifth item

H . C. OF A.

1953.

in the division, is in the following terms :

Goods for use (whether

as goods or in some other form) by public transport authorities F eder a l

exclusively in, or exclusively in connexion with, the establishment, Commis­

sioner OF

conduct or maintenance of transport services

T axation

V.

I t is common ground that the company is not a public authority in the sense that it is publicly managed and controlled but this

Sil v erto n

T ramway

circumstance, according to the contentions of the defendant Co. L t d .

company, is of no consequence. For the company it is maintained

Taylor J .

that the strictly grammatical meaning of the relevant words do not require the existence of that characteristic in an “ authority ” in order that it should answer the description “ public transport authority ” , and, further, that it is sufficient if the company may properly be described as an “ authority ” and if, in fact, it provides a service which may be characterized as “ public transport

The company is a company limited by shares and incorporated under the provisions of the Companies Act 1890 (Viet.) and it was formed to take over the undertaking of an earlier company of the same name. That company operated and the present company operates and conducts what is referred to in the case stated as the Silverton railway. This railway provides a service from the western boundary of the State of New South Wales to Broken Hill via Silverton in that State and the defendant company has owned and operated it since the year 1894. The earlier company enjoyed certain rights, powers, authorities and privileges which had been accorded to certain specified persons by the Silverton Tramway . Act o f 1886, a private Act of the Parliament of New South Wales. Likewise the earlier company was subjected to certain liabilities and obligations imposed upon those persons by that Act. By virtue of s. 54 of the Act these rights, powers and privileges, liabilities and obligations were assignable by such specified persons and at all material times the defendant company has been the assignee and transferee thereof.

There is no doubt that the service for passengers and goods which the company provides by means of its railway is a service to the public, and, equally, there is no doubt that members of the public have a statutory right to use it. Section 5 of the Act provides that the said “ tramway ” shall be open to the public use upon payment of certain specified tolls or charges and further provides that no differential charges shall be made but that the charges shall be equal to all persons using the said “ tramway The Act made extensive provision to enable the railway to be constructed and for this purpose conferred a power to purchase land by agreement

570 HIGH COURT

[1958.

H. (’. OF A.and also to accjuire it by a form of compulsory acquisition. Perhaps

it may be said the Act conferred such powers upon specified persons and tlieir assions as were necessary to enafjle the railway to be

(Y)m:\iis- constructed and operated.

Particular reference was, however,

.SION ICR OF

'I'axationmade to s. 27 l>y which authority was given to make by-laws for

r .

regulating tlie conduct of the officers and servants employed on

Sll.\’ FUTONor in connection with the railway, for the protection of the railway,

Tua.mwa V

(’o. Ltii.for regulat ing the mode by and the speed at which carriages using

'J’liylor J.the railway should be moved or propelled and for preserving the

free course of the railway and preventing any obstruction thereto and generally for regulating travelling upon or use of the railway. I t is the circumstance that the company is authorized by statute to exercise this a.nd other functions that has led the defendant company to claim that it is an “ authority ” but I must confess that I am not at all sure what this expression, standing by itself, connotes. If it merely means that the company has derived authority from the Parliament of New South Wales to do certain things, including the making of by-laws, I thoroughly agree. But to designate it, for this reason, by the bare term “ authority ” seems to me to be completely artificial for the statutory powers with which it is invested have been conferred, merely to enable it, effectively, to conduct its business and are not determinative of its real character or composition; it is essentially a company formed for the purpose of conducting and in fact conducting a business enterprise for its own profit. Moreover, in my opinion, the expression “ public transport authority ” is a composite expression and does not intend to refer to a company, such as this, constituted with share capital and operated for profit under the management and control of directors appointed by its shareholders. I think the observations of Rich J. in Renmark Hotel Inc. v. Federal Commissioner of Taxation (1) are peculiarly apposite to a con­ sideration of this case. Speaking of the expression “ public authority ” in s. 23 [d) of the Income Tax Assessment Act 1936-1947 he said : “ The characteristics of a public authority seem to be that it should carry on some undertaking of a public nature for the benefit of the community or of some section or geographical division of the community and that it should have some govern­ mental authority to do so. In s. 23 {d) it is made clear that it must be constituted under a State Act. Coercive powers over the indi­ vidual are given to many governmental authorities which could be called public authorities, but it is not an essential part of a conception of a public authority that it should have coercive powers, whether

(1) (1949) 79 C.L.R. 10.

88 C.L.R.] OF AUSTRALIA.

571

H . C. OF A.

of an administrative or a legislative character.

I t may, however,

be an essential characteristic of the conception that it should have

1953.

exceptional powers or authority, for instance a tramway board or F eder a l

trust has the exceptional authority of taking its trams down a Commis­

sio n er OF

public street. A. water authority may lay its water mains, a lighting

T axation

authority may do the like. Some exceptional powers of doing what

V.

Silverton

an ordinary private individual may not do are generally found T ramway

in any body which we would describe as a public authority. The Co. L t d .

words ■’ public utility ’ have a wider significance, embracing public

Taylor J .

utilities carried on for profit by private enterprise. No-one would describe as a 'public authority an electric lighting company which had obtained statutory powers but possessed a share capital issued to shareholders and which carried on for profit, but we might call it a public ‘Utility ” (1).

Notwithstanding the fact tha t his Honour was considering the meaning of the expression “ public authority ” and not the expres­ sion “ public transport authority ” the italicized passage is, I think, apposite to the circumstances of this case.

But even if the proper view should be to regard the word “ public ” as merely qualifying the word “ transport ” the result would, in my opinion, be the same for, as I have already said, it would be quite erroneous to designate as an “ authority ” a company which, though invested with some statutory powers and providing a public utility, is operated under the general control of and for the benefit of its shareholders.

In the circumstances I am of the opinion that the question should be answered in the negative and judgment entered accord­ ingly.

Question in the special case stated answered that the defendant was not on bth October 1951 a public trans­ port authority within the meaning of Item H of the First Schedule to the Sales Tax {Exemption and Classifications) Act 1935-1951. Enter judgment for the plaintiff for the sum of £17,214: 14s. 2d. with the taxed costs of the action, including the costs of the special case.

Solicitor for the plaintiff, D. D. Bell, Crown Solicitor for the Commonwealth of Australia.

Solicitors for the defendant, Malleson, Stewart & Go.

R. D. B.

(1) (1949) 79 C.L.R., a t p. 18.