Federal Commissioner of Taxation v. Hamersley Iron Pty. Ltd.
Judges:Gobbo J
Court:
Supreme Court of Victoria
Gobbo J.
This is a claim by the Commissioner of Taxation for the recovery of sales tax from the defendant company. The sales tax amounting to $944.03 (and additional tax of $176.75) is claimed to be due in respect of certain items of equipment used in larger items of equipment known as iron ore stackers and bucket wheel reclaimers. The company claims exemption under two separate headings. In the first place, the exemption was claimed under Item 14 of the First Schedule to the Sale Tax (Exemptions and Classifications) Act 1935-1973, on the basis that the items were parts of machinery used in the mining industry in carrying out mining operations and in the treatment of the products of those operations. Secondly, exemption was claimed under Item 113C of the same schedule of exemptions on the basis that the parts were aids to manufacture. Here the principal question was whether they were used in the processing and treatment of goods.
The liability for tax arises where a registered person for sales tax purposes applies to his own use taxable goods purchased free of tax as a result of quotation of his sales tax certificate. The company was a registered person as defined in the Sales Tax Assessment Act (No. 1) (1930-1973). It was agreed that when it purchased these items, it duly quoted its sales tax certificate.
The defendant company operates two mines in the region of Western Australia known as the Pilbarra. The mines are at Mt. Tom Price and Paraburdoo which are located respectively 293 and 386 rail kilometres southwest of the port of Dampier. The iron ore mined is - to use a neutral phrase - ``dealt with'' by certain crushing, screening, blending, storing and transporting procedures and is then railed to the coast at Dampier where it is again the subject of similar procedures before being loaded on large ore carriers. The products of the mines are shipped and sold for the most part as lump ore which is ore less than 30 millimetres and greater than 6 millimetres in width. There is also shipped a quantity of fines, being ore smaller than 6 millimetres in width.
I had the benefit of a view of the whole of the Paraburdoo mine operations extending virtually from geological drill exploration sites to the final loading of the ore at the railhead for despatch to the port facilities at Parker Point and East Intercourse Island. I made an equally comprehensive inspection of the unloading and loading facilities, the stockpiles and the pellet plant at Parker Point. It was agreed that I might treat what I
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saw as evidence. There was a great deal of elaborate evidence led on behalf of the company to explain the full range of procedures from exploration to ship loading. The Commissioner did not lead evidence other than formal proof to establish its prima facie case but there was a searching cross-examination of the lengthy evidence of the various witnesses called on behalf of the company.In order to deal with the substantial questions raised as to whether the machinery in question was either used in the treatment of the products of mining or in the processing of iron ore, it is necessary to set down the procedures as I found them on the evidence.
The company's mining operations commenced at Mt. Tom Price in 1966. That site has a richer ore body than Paraburdoo which was opened in 1972. I accept that at all material times the ore being produced at Paraburdoo was sufficiently poor to mean that it could not commercially or economically be mined by itself. I also accept that it was possible to open and operate the Paraburdoo mine only because its products could be blended with those from Mt. Tom Price.
There was ample evidence to demonstrate that the characteristics of the Mt. Tom Price ore were markedly different from those of the Paraburdoo ore. This evidence lay both in the geological data and also in the demonstrated results of the product actually mined. The main significance of the difference in characteristics lay in the differing levels of iron, alumina and phosphorus content - the last two being undesirable characteristics that as a general rule need to be kept to as low a level as possible.
The geological evidence showed quite clearly - and this was borne out by the results of actual mining - that within the ore bodies at each mine there was considerable variability in the grade of iron ore and in the chemical characteristics of the ore body at particular locations.
In the conduct of its operations the company aimed both to achieve consistency and to achieve it with a level of product that met contract and market demands. The company for these reasons carefully planned its mining operations so as to extract material of particular grades from trenches in different locations within particular zones. In neither of its mines was it simply possible to conduct its operations on the basis of extracting the ore and then selling it in that form after the requisite screening had occurred. It was necessary to bring about a blending of the ore bodies found in different zones. This therefore, necessitated careful planning of the extraction operations. Nonetheless, the selection of the blocks to be mined and subsequent screening would not, as a general rule, suffice to bring about satisfactory product. More elaborate procedures were therefore employed to secure such product. The essence of these procedures was a particular method of blending and herein was to be the principal issue in the case.
The achievement of satisfactory blending was also directed to bringing about maximisation of the ore reserves, since the delivery of lump ore with higher than necessary iron content, though it carried some bonus factors, was undesirable if it meant that a quantity of ore could not be usefully mined because on its own it did not have a satisfactory level in some chemical characteristic. This was a factor not only in proper use of the deposits at one mine but also in the ability to blend the higher grade deposits at Mt. Tom Price with those of lower iron content at Paraburdoo.
There was a further consideration as to the need for uniformity and consistency that was the subject of much evidence and argument. It was put on behalf of the company that quite apart from any contractual requirements, there was ever increasing need to meet the desire, if not demands, of the major users of the iron ore for consistent product. It was said that a Japanese steel mill might frequently mix in its blast furnaces the company's ore with ore from other suppliers. Difficulties were often created for such steel mills if there was not a level of consistency in major components of the mix, even though such major component might meet contractual specification.
Any account of the mining operations as they actually occur needs to have regard to the geological exploration and the elaborate planning and selection in respect of sequence of mining of particular portions. All of this
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was an important part of the procedures designed to secure a satisfactory product from the mining operations.With this short introductory description, it is useful to consider briefly the actual procedures employed at both the Paraburdoo mine site and at the port sites. The extracted material is first dumped into the primary crusher by dump trucks. That crusher reduces the material to lumps of a certain size and the crushed material is conveyed by conveyors to the primary stockpile. This material is then conveyed to the secondary crushers which reduce the large lump material to a maximum of 30 millimetres in width. Thereafter the material passes through a number of product screens which separate the over 6 millimetre in width material from the material of lesser size. The first type is conveyed to one of several lump stockpiles whilst the latter smaller material, known as fines, is conveyed to other stockpiles.
The material in each case reaches the stockpile by conveyors which feed the travelling stacker. This travels up and down on rails and deposits the material in a long pass up and down the length of the stockpiles. The action of the stacker and in particular the lengthy passage of the depositing boom along the whole length of the stockpile, which is itself some 400 metres in length, means that a considerable distribution occurs over the larger area of the stockpile.
The material is thereafter removed by means of a bucket wheel reclaimer which is a large piece of machinery being essentially composed of a large wheel with a whole series of buckets that rotate into the stockpile and remove the material. In some cases these reclaimers are of the bridge variety, that is to say the wheel mechanism is seated on a bridge that straddles the stockpile which is some 80 metres in width. The buckets scoop up the material from the base of the pile moving laterally in passes across the stockpile as the bridge moves on rails along the stockpile.
The material at the Paraburdoo stockpiles is removed by the reclaimer and the attendant conveyors to the rail loading facility whence some four to five trains each day transport the lump ore and fines to the two port facilities at Parker Point and East Intercourse. There, invariably the trains are unloaded by a hopper tipping method and the contents are again conveyed to large stockpiles. These stockpiles are stacked and reclaimed in the same way as that applicable for the stockpiles at Paraburdoo. The material being reclaimed is either conveyed to the ship berth for loading into an ore carrier or, in respect of some of the fines, used in the company's pellet plant at Parker Point.
In addition to the geological and other drilling investigations that occur to enable the characteristics of the material to be identified, there are elaborate procedures at various points in the system, including on the last conveyor to the ship itself, whereby regular samples of the ore are taken and analysed. Sometimes these samples are taken on an hourly, or even more frequent basis. These are designed to provide a detailed profile of the contents of each stockpile. I am satisfied that the foregoing procedures applied at the relevant dates in 1976.
It was claimed that the stockpiles were built up of many layers which were then removed in a manner that brought about a quite different profile for the material removed. It was said that each pass across the stockpile by the bucket reclaimer secured a representative portion of each of the many layers that had been laid down by the travelling stacker. As the chemical characteristics of the various layers could differ in significant respects, the action of the reclaimer was said to be critical in bringing about a homogeneity in the ore as well as enabling the correct material conforming to specification to be delivered to the ship. The essence of the blending that produced satisfactory product was not the result, it was said, of the stacking procedures alone. Rather the blending lay in the putting down of the material in a particular mode and in the picking up of the material in a quite different mode.
I am satisfied that the company made out the foregoing claims. The claims largely rested on the oral evidence of the company's employees - whom I found cogent and impressive witnesses - and the records and data produced in evidence. In my view the particular manner of removal adopted was a
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critical element in bringing about a homogeneity in the ore that was not achievable by mere removal from the stockpile, for example, by a front end loader. The company's particular manner of removal also secured the result that the iron ore for shipment had chemical characteristics across the whole former contents of a stockpile that were different from what would have otherwise been the case. Blending procedures were adopted that were carefully and elaborately designed and monitored to secure a blending result that was important for the fulfilment of contract and market requirements. They were also important for meeting the requirements of the pellet plant at Parker Point and for achieving homogeneity of the iron ore and thereby protecting the company from denial of markets. It is convenient to defer for later consideration whether the blending procedures adopted were nonetheless incidental to the major purpose of transportation and stockpiling for reserves.Some particular matters in the evidence need to be noted. There is first the elaborate evidence as to the planning and control of the composition of the iron ore as it was finally shipped. These measures not only involved close planning of extraction of material from particular portions of the pit. They also involved elaborate testing and monitoring of the ore. It was said that the achievement of the appropriate quality in the ore product was the result of selection and like procedures at the pit face. It is clear that this was an important feature but as the progressive analysis and standard deviations data indicate, much more than pit selection was necessary to secure the ultimate quality at shipment.
There was some evidence as to the importance of return fines in securing the appropriate result. Return fines were the fines that were placed back on the stockpiles for blending purposes; the fines resulted from the process of screening out of the lump ore those particles that were below the size required for lump ore. At various stages of the handling of the lump ore. At various stage of the handling of the lump ore degradation in the particles occurs and fines are generated. As such fines were generated from the high grade lump ore, they were found to be higher in iron content and lower in alumina and phosphorus content than the fines railed from the mine site. I accept that the return fines were important in securing the requisite quality of the fines stockpile and I accept that at the relevant time the proportion of return fines used were of the order of 17%.
It was argued on behalf of the plaintiff that the mere act of removal from the stockpile, given an appropriate from of stacking, achieved an adequate degree of blending whatever the method of reclamation involved. It was also put that random mixing occurred at various points in the handling process, such as the points of rail truck loading and discharge and indeed even on loading into the ship's hold. As to removal from the stockpile, there is no doubt that this achieved some blending, even if the mere means of front end loader removal was employed. But it was the particular use of reclaimers removing in a pattern related to the prescribed method of stacking that brought about significantly greater blending. Though blending occurred in any removal from a stockpile, it was established that significantly high fluctuations were found where there were no blending procedures other than those incidental to mere removal, whereas the company's blending procedures showed only minimal fluctuations.
As to the random mixing said to occur during conveyance and loading and unloading, I am satisfied that this was of a trivial order. The mixing that occured when a train load was discharged was no doubt of some benefit as to the contents of that wagon. It did little, however, to respond to the problem of achieving the requisite blending of particular batches from the pit over a whole shipload, much less to achieve the appropriate blending between the ore from one mine and another.
The plaintiff relied a great deal on the evidence that on occasions there was direct rail and shiploading of iron ore moved straight from the first stockpile to the ship. It is clear that this only occurred during a breakdown of a reclaimer and in that situation somewhat elaborate arrangements were made to mitigate the absence of the reclaimer. The usual methods adopted were indicative of a close concern for blending at the stockpiles, designed to achieve both compliance with contract specification and with what were reasonably accepted as the demands of the market. In this context it was
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also argued that the iron ore is saleable without the further blending done at the port stockpiles. In my view the evidence did support this conclusion, up to a point. This was because the contract specifications were such that the iron ore as loaded onto the train at the mine would have been saleable with a penalty. It needs to be added, however, that the pressure to achieve a high standard was such that the continued sale of large quantities of ore to major steel mills would not have been at all probable, if what one might describe as the unblended or partly blended ore had been delivered as a matter of course. In addition, there was at the very least a high degree of risk that even existing contracts might be terminated if persistent incurring of penalties existed.I turn now to the particular issue as to whether the defendant company succeeded in demonstrating that it fell within one of the exemptions relied upon. It is first necessary to identify precisely the goods that were the subject of the sales tax in question. There was first an alarm panel purchased for $1301 and fitted to the cabin of a Hitachi bucket wheel reclaimer used at the port stockpiles at Parker Point. The second item consisted of two travel gears for the Hitachi stacker, again at Parker Point. The gears were purchased for $2807.25. The third item of equipment was an imported one and comprised a repair kit forming part of a bucket wheel reclaimer at the mine site at Paraburdoo. The liability for tax arose in the case of each item when the company applied the goods to its own use. The three items in question were purchased in January, February and March 1976 and were so applied by the company shortly thereafter. All were assessed for sales tax by an assessment issued on 20 September 1976. The plaintiff established a prima facie case by means of a certificate under sec. 10 of the Sales Tax Procedure Act 1934-1973. The onus therefore rested on the company to bring itself within an appropriate exemption.
The first exemption relied upon was Item 14 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1973. This reads:
``Machinery, implements and apparatus (and parts therefor), for use in the mining industry in carrying out mining operations and in the treatment of the products of those operations.''
It was common ground that the company was in the mining industry. The plaintiff conceded that the company had to bring itself only within one of the two limbs in Item 14 and the company was not obliged to show that the machinery was for use both in mining operations and also in the treatment of the products of mining operations. The plaintiff also conceded that the mining operations in this case went so far as to include the delivery into the stockpiles at the mine sites at Mt. Tom Price and Paraburdoo. For this reason the stackers at the mine sites were accepted as being within the exemption but it was put that once the iron ore reached the stockpiles, the mining operations were concluded and subsequent reclamation and further stacking and removal at the port were outside the exemption. The three items assessed for tax squarely raised the issue as they related to the reclaimer at Paraburdoo and the stacker and reclaimer at Parker Point. It was clear that these machines and, the parts therefor that were the subject of disputed sales tax, were for use in the mining industry. The dispute was whether that requirement was for use in mining operations and secondly, whether it was used in the treatment of the products of mining operations.
On the question of mining operations, the main authority was
F.C. of T. v. Broken Hill Pty. Co. Ltd. 69 ATC 4028; (1969) 120 C.L.R. 240. The taxpayer there claimed a deduction under Div. 10 of the Income Tax and Social Services Contribution Assessment Act 1936-1964 for a pellet plant at Whyalla. The mine from which the iron ore was transported was some 30 miles by rail from the plant. The Judge at first instance, Kitto. J., had taken the view that the pellet plant was part of mining operations. On appeal a majority of the Court, Barwick C.J., McTiernan J. and Menzies J., took the opposite view and the following lengthy passage sets out both views at ATC pp. 4030-4031; C.L.R. pp. 272-274:
``Kitto J. took a very broad view of what falls within the description of `mining operations'. His Honour said: `This expression is wider than `the working of a mining property'. It embraces not only
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the extraction of mineral from the soil, but also all operations pertaining to mining:
Parker v. Federal Commissioner of Taxation (1953) 90 C.L.R. 489 at p. 494. Thus it comprehends more than mining in the narrow sense which imports the detaching of lumps of material from the position in which in a state of nature they form part of the soil. It extends to any work done on a mineral-bearing property in preparation for or as ancillary to the actual winning of the mineral (as distinguished from work for the purpose of ascertaining whether it is worthwhile to undertake mining at all):
Federal Commissioner of Taxation v. Broken Hill South Ltd. (1941) 65 C.L.R. 150 at pp. 153, 156, 159, 161. Likewise it extends to any work done on the property subsequently to the winning of the mineral (e.g. transporting, crushing, sluicing and screening) for the purpose of completing the recovery of the desired end product of the whole activity:
Federal Commissioner of Taxation v. Henderson (1943) 68 C.L.R. 29 at pp. 45, 50. In each case it is the close association of the work with the mining proper that gives it the character of operations pertaining to mining.' We agree entirely with his Honour's view that `mining operations' covers `work done on a mineral-bearing property in preparation for, or as ancillary to, the actual winning of the mineral', but, with regard to the statement, that `it extends to any work done on the property subsequently to the winning of the mineral (e.g. transporting, crushing, sluicing and screening) for the purpose of completing the recovery of the desired end product of the whole activity', we have a reservation. We do not doubt that to separate what it is sought to obtain by mining from that which is mined with it, e.g. the separation of gold from quartz by crushing etc., or the separation of tin from dirt by sluicing, is part of a `mining operation' but we would not extend the conception to what is merely the treatment of the mineral recovered for the purpose of the better utilization of that mineral. Thus to crush bluestone in a stone crushing plant so that it can be used for road making, or to fashion sandstone so that it becomes suitable for building a wall or a town hall is not, as we see it, a mining operation. Nor would the cutting of diamonds or opals which have been recovered by mining operations fall within the description of mining operations.In Federal Commissioner of Taxation v. Henderson (supra) it was decided that to obtain gold from gold-bearing material, i.e. slime dumps, by sluicing, screening, filtering and chemical treatment was a mining operation and this, of course, we accept. The reason for so deciding, however, has no application to a process that does no more than either reduce in size lumps of ironstone of manageable size taken from the earth, or, to increase the size of small fragments of ore taken from the earth in order that the ore which has been mined can be conveniently carried away from the mine and utilized in steel making. In Henderson's case the object of the taxpayer's mining operations was to obtain gold and those operations comprehended all the steps in the recovery of gold from the slime dumps; here the object of the taxpayer's mining operations is to obtain iron ore - the end product - and those operations comprehended all the steps taken to do so, but once the iron ore is obtained in manageable lumps then its further treatment, either to reduce or increase its size so that it can be conveniently transported from the mine and better utilized in industry, forms no part of the mining operation. in the same way we would not regard the converting of brown coal into briquettes as part of a mining operation; nor would we regard the treatment in a refinery of naturally occurring hydro-carbons in a free state as part of the operation of mining for petroleum. The mining operation in the last-mentioned instance would finish with what is referred to in sec. 122AA as the `obtaining' of petroleum as defined. Accordingly, we would not treat `the whole activity' referred to in the passage from his Honour's judgment just quoted as extending to the disposal of the product mined, and because we think `the end product' of the mining activity in this case is iron ore to be taken away from the mining property, we consider that `mining operations' ends when the iron ore is in a
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state suitable for this. The taking away from the mining property of ore which has been mined, whether that be done by the mining company or by someone else, is a step subsequent to the conclusion of the mining operations.''
The significant passage is that where their Honours said that ``once the iron ore is obtained in manageable lumps then its further treatment, either to reduce or increase its size so that it can be conveniently transported from the mine and better utilized in industry, forms no part of the mining operations''. It is also to be noted that mere treatment of the ore for its better utilization was regarded as not being within mining operations.
These passages pose particular difficulties for the company. This is especially illustrated in the example of bluestone crushing. If the bluestone is in that situation not part of a mining operation, it is difficult to see why like treatment for iron ore is within mining operations. It was argued that there was a considerable difference between the elaborate technological procedures involved in a pellet plant and the procedures involved in treating iron ore that remains throughout iron ore. That is largely true but it is also clear that the mining operation was seen as concluding once the end product was obtained; its subsequent treatment was in a different situation. Their Honours were not saying that, providing the end product is iron ore, all the steps taken to secure such product no matter how protracted, fell within mining operations. The stone in the bluestone is still stone after it is crushed, yet the process of crushing is taken to be outside mining operations.
There is, in my opinion, no reason to treat the phrase ``mining operations'' as having any different meaning in its context in the present case from the meaning given to it in the Broken Hill Pty. Co. Ltd. case. The meaning given to it in that case does not assist the company. I accordingly reject the exemption argument insofar as it sought to show that the reclaiming at the mine and the stacking and reclaiming at the port were within the first limb of Item 14 in the First Schedule.
The alternative submission on Item 14 was that the use of the equipment in question was sufficiently integrated with the mining operations as to form part of such operations. Reliance was placed on the wholly integrated way in which all the operations from pit face to ship loading were conducted. I have already adverted to the elaborate planning and arrangements employed to secure blending and control during the course of moving the material to the ultimate destination, whether that be the ship's hold or the company's pellet plant at Parker Point. It was put that it was wholly illogical to treat the stacker at the mine as being embraced by the notion of mining operations but not likewise include the reclaimer at the same place.
I do not see that this is an illogical approach. It is understandable that if the mining operation was to be regarded as concluded at a convenient point, the point to choose was that to which the ore was first transported after it had been won. This appeared to be either the first stockpile or the stockpile after the ore had passed through the screen house. No matter how integrated the whole operation may have been, I am not persuaded that this process of integration can give an ancillary and special role, as it were, to mining operations. This is so even for the reclaiming procedures at the mine site; it is clearly so for the procedures at the port facilities. Furthermore, the very presence in Item 14 of an exemption for treatment of products of mining does not support the concept of an all-embracing meaning for mining operations sufficient to gather up everything said to be within the integrated operation. I accordingly reject the alternative submission based on the expanded meaning of mining operations by reason of the close integration of the various procedures for handling and blending of the iron ore.
The second main submission was that the work done by the stackers and reclaimers constituted treatment of the products of mining operations. It was common ground that the only issue here was the meaning of treatment; it was agreed that the iron ore was a product of mining operations. It was also not contended by the plaintiff that the activity had to be characterized as exclusively or principally for treatment of the products before the activity could qualify. It was sufficient if it played a material part in treatment. This largely avoided the argument
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that existed in respect of Item 113C as to whether reclaiming was primarily mere transportation. At the same time it was stressed, however, that the phrase ``in the treatment'' should not be read as though it meant ``in connection with the treatment''. I have already described the work done by the stackers and reclaimers and I accept that the methods adopted were important to reduce standard deviations in the various characteristics of the ore. I also accept that these methods were important to achieve not only contractual performance but also to enable effective blending and use of the ore from three sources, namely from the mines at Mt. Tom Price and Paraburdoo and the return fines.The argument on behalf of the company as to treatment in Item 14 was put in a number of ways. The primary argument was that treatment in its ordinary meaning embraced the stacking and reclaiming of iron ore. The Oxford English Dictionary meaning of ``treat'' most relevant was as follows:
``To deal with in order to some particular result.
- (a) to deal with or operate upon... in order to relieve or cure;
- (b) to subject to chemical or other physical action; to act upon with some agent.''
Other standard non-technical dictionaries put forward like meanings. It was submitted that the word ``treatment'' and indeed the whole of Item 14 should not be interpreted restrictively and that the Item as a whole indicates an intention that there be wide concessions in favour of the mining industry.
Reliance was placed on the decisions in
Davies Coop & Co. Pty. Ltd. v. F.C. of T. (1947-1948) 77 C.L.R. 299;
D.F.C. of T. v. Stronach (1936) 55 C.L.R. 305;
Carpenter v. Lusty & Sons 1957 Lloyd's List Reports 16;
Utah Development Co. v. F.C. of T. 76 ATC 4119 (1976) 50 A.L.J.R. 678. In the Davies Coop case, the spinning works used cones and tubes upon which to spin yarn and to store it until the yarn was spun off again. The issue was whether the cones and tubes were subject to sales tax or were exempt as aids to manufacture, as being used in the actual ``processing or treatment of goods''. The cones were held to be aids to manufacture even though they did nothing to the yarn except have it wound around them. In Stronach's case, the question was whether granite cut out of quarries and moved in large blocks and then sawn were goods not subject ``to any process or treatment resulting in an alteration of the form nature or condition of the goods''. Dixon J. described the work as follows at p. 312:
``When blocks were removed from the quarry they were taken to a stonemason's yard and were classified for colour and size and were sawn into sizes suitable for use in the construction of buildings. The blocks of stone were then placed upon the stonemason's bench and, in a majority of cases, worked by the stonemason by means of hammers and chisels into the correct sizes and shapes for setting in positions in the building that is the particular building in course of erection. The blocks were then further treated by planing one side which was then polished by an abrasive stone worked by hand.''
It was held that this work deprived the stone of the benefit of exemption. The decision is only of limited relevance, however, since the regulation referred not merely to treatment, but to treatment resulting in an alteration of the ``form nature or condition'' of the goods.
The Utah case was sought to be relied upon by the company as illustrating how various processes falling short of chemical change can result in a product, namely metallurgical coking coal, that was significantly different from the coal removed from a mine. It was put that the iron ore as it came out of the primary crusher was similarly a quite different product by the time it reached the ship's hold. The procedures were, however, much more extensive in the Utah case and I do not find that that case assists the company in the present case.
The company also relied upon expert evidence as to the technical meaning of treatment and as to usage of the word in the mining industry, but for reasons that I shall set out hereafter I do not act upon such evidence. It was also sought to equate treatment and processing and to call in aid the latter word to explain the first.
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It was argued on behalf of the Commissioner that treatment had to be considered independently of processing. The other items in the exemption schedule were relied upon to argue that treatment means more than storage and is different from processing. It was also argued that the dictionary meanings of treatment required action that resulted in a chemical change or at least a physical change by way of a change in form nature or condition.
It was put that the notion of treatment of products of mining referred to activities such as sluicing, smelting and refining rather than what was said to occur here, namely a mere mixing, albeit sophisticated, of the contents of the stockpiles. The first activity was illustrated by
F.C. of T. v. Henderson (1943) 68 C.L.R. 29, which was a case of recovery or extraction.
There were no decided cases relied upon as really directed to the meaning of treatment contended for, though some limited reliance was placed on the decision of the Full Court of the Federal Court in
Dampier Mining Co. v. F.C. of T. 79 ATC 4469 (Brennan, Deane and Fisher JJ.). In that case work had been carried out by way of dredging and reclamation and deductions had been claimed under the Income Tax Assessment Act. One basis for the deductions was a claim under Div. 10 either as expenditure on plant for use primarily and principally in the treatment of minerals or as improvements for use directly in connection with storage. It is to be noted that ``treatment'' was the subject of an elaborate definition in the Income Tax Assessment Act. Deane J. at p. 4483 held that the expenditure on raising and compacting the surface of the general area of the land to be used as the storage and blending area constituted capital expenditure ``on improvements for use directly in connection with the storage (whether before or after treatment) of minerals in relation to the operation of such plant''. His Honour found that this expenditure was related to improvements constructed for use in connection with the establishment, operation or use of a port or other facilities for ships. The tertiary crusher was not such an improvement but was described as plant for the treatment of ore and located on land adjacent to the area from which the treated ore was to be taken (being blended in the process of being taken) and loaded into the ore carrying vessels. His Honour said at p. 4483:
``It can be strongly argued that the blending process which is carried out after storage and immediately before loading so closely integrates the relevant area with the tertiary crusher that it would be wrong to see it as an area used for storage of ore pending shipment. On balance, however, I incline to the view that, to use the words of one of the witnesses (Mr. Wallwork), the stacking and the blending (by the process of reclaiming) `can be considered as sort of part of the storage, if you like to look at it that way, it's sort of putting it in and taking it out of the storage' and that the relevant area can properly be regarded not only as a storage area in relation to the operation of the tertiary crusher and for the operation of the blending process but as an overall storage area for ore pending shipment, which was constructed in connection with the establishment, operation or use of the shipping facilities at Port Hedland.''
I am of the view that I should not use this decision as persuading me to treat the blending as storage rather than treatment. This is because of the fact that a statutory definition of treatment was involved and because the choice between storage and treatment was neither a matter of importance in that case, nor was it apparently the subject of detailed argument. In addition, a finding that a stockpile area is properly characterized as a storage area is not inconsistent with the view that the manner in which the iron ore is put into storage or taken out of storage may itself constitute treatment or processing. It is in any event a somewhat doubtful procedure to elevate dicta on at most ancillary matters into direct authority. It would be similarly of doubtful relevance if I were, for example, to use the reference to ``blending process'' in the judgment relied upon as being persuasive authority for the proposition that blending was ``processing'' within the meaning of Item 113C. I therefore decline to use the judgment in the Dampier case in the way submitted on behalf of the Commissioner.
It was also argued that the dictionary meaning of the word ``treatment'' put forward on behalf of the company was so wide that it would cover anything that was a
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physical dealing with the iron ore at all. The word treatment, it was said, should be regarded as more than processing and should have the same meaning in Item 14 as in Item 113C(2) and reg. 4(1). The substance of the case for the Commissioner was that if chemical change were not necessary, then at least a change of form was required. But not every change of form could suffice; it had to be for a particular purpose.There appear to be no decided cases that bear on the interpretation of the word treatment for present purposes. It is necessary to note Stronach's case (supra) which illustrates how limited acts there were held to amount to process or treatment. the Davies Coop case (supra) dealing with processing or treatment in Item 113C also appears to support a meaning of processing or treatment that involves acts that fall short of causing a chemical or like change.
I have come to the view that I should apply ordinary dictionary meanings of the word ``treatment''. I am further of the view that it is not feasible to secure a meaning that can be applied consistently for each use of the word in the many items in the First Schedule of Exemptions. The word has to be given its ordinary meaning in the context of the item in which it appears. It is an unwarranted restriction of the ordinary meaning of treatment to have it cover only the act of subjecting to a chemical action; that covers only part of one of the common dictionary meanings of the word. Such a narrow meaning would in the present situation exclude crushing of stone or other mined products. I accept, however, that the word ``treatment'' in Item 14 comprehends a subjection to an action or agent. By contrast storage of a product is essentially not in this category, even though some handling is involved. In my view treatment in Item 14 involves subjecting the products to an action to some result. The most convenient way to describe this is as a change in form nature or condition. I also accept that it is not every such change that constitutes treatment. There would need to be a realistic purpose for the treatment. A procedure not directed to enabling the products of mining operations to be used or made marketable would in my view not be such treatment, even though it brought about a change in the form nature or condition of the goods.
I do not accept the initial argument on behalf of the Commissioner that I am to consider only what the machines do and not the purpose for which it is done. It is an argument with an appealing but deceptive simplicity about it. It is often not possible to characterize what is done without an understanding of purpose. Thus the machine may be said to reclaim ore from a stockpile in a particular fashion. This only goes part of the way in deciding whether to characterize this as treatment, processing, mere transportation or otherwise.
The company urged that I should have particular regard to the contractual specifications that applied to long term contracts. The difficulty about doing this is that it would mean that procedures not otherwise amounting to treatment might become so simply because of the specifications of one buyer imposing requirements necessitating certain levels of iron, alumina or phosphorus content. In my view this is too narrow an approach; contract requirements alone cannot determine the matter. They are only part of the circumstances that need to be considered.
In the present case I am satisfied that the three machines in question brought about a change in the form nature or condition of the iron ore as a result of the physical action of the integrated blending procedures employed by the company. The main evidence here consisted of the company's own witnesses and records. I am further satisfied that the change had a commercial purpose for it over and above that of meeting the requirements in the relevant contracts. In this context I note the direct evidence of Mr. Thorne as to the operations of steel mills and blast furnaces. I also had regard to the evidence as to what was said to the company by its buyers and potential customers as exemplified by the Japanese Trade Missions. Save as to some admissions against the company I did not treat the statements in the Minutes as evidence of the truth of the content of the statements.
In my view the iron ore as a result of being ``treated'' as it left the stockpiles at the mine was a product that was significantly different to that which emerged from the primary crusher, or indeed to that which was conveyed to the stockpile for stacking. Such difference lay in the changed chemical
ATC 4520
characteristics of a profile of the total contents of the stockpile. As a result of the procedures employed, there was a change in the given quantity of iron ore from ore which fluctuated markedly and undesirably in the Fe, phosphorus and alumina contents to ore which was relatively homogeneous and, subject in some cases to further blending, capable of complying with contract specifications and market requirements. I am satisfied that that came about as a result of the particular techniques and equipment employed.The position at the port stockpiles was more debatable in that there was some basis for finding that the blending done there was of less importance than that done at the mine. I have come to the view, however, that I should accept the evidence that the blending at the port plays an equal role in achieving consistencies. The whole movement from crusher to ship's hold was an integrated one, carried out by the one operator directing itself to meeting its contract and market requirements in respect of its own iron ore, won by its own mining operations. I find also that the blending at the port achieved by the stackers and reclaimers brought about the necessary mixing of the ore from the Paraburdoo and Mt. Tom Price mines. In the case of fines the port blending brought about the blending and use of the return fines which were a significant portion of the total fines.
An illustration of the nature of the change that occurred is to be found in Exhibit 35. That document shows, for example, that one batch of iron ore from Paraburdoo had the following percentage chemical characteristics.
Block Iron Alumina Phosphorus Sulphur
9/24B 59.9 2.28 0.088 0.031
There were other blocks showing better figures in some respects and poorer figures in other respects. Product from this block was not only mixed at the mine with the product of higher quality; it was also blended at the port stockpiles with Mt. Tom Price Product. Thus the product on Train 1070 and Train 1062 from Mt. Tom Price had the following characteristics, being a weighted mean in each case.
Iron Alumina Phosphorus Sulphur
61.6 3.0 0.050 0.012
62.9 2.66 0.063 0.012
The eventual iron ore shipped had the following characteristics.
62.67 2.72 0.066 0.023
The above figures fail to bring home what was to be found in other data, namely the various and sometimes significant improvements in homogeneity at each stage of the procedures.
In view of my decision that the relevant machines, namely the reclaimer at Paraburdoo and the stacker and reclaimer at Parker Point, were used in the treatment of the products of mining operations within the meaning of Item 14 it is not necessary that I make findings on the further exemption claimed under Item 113C. It may be convenient, however, for a number of reasons, to set down my findings on this further matter. It is in any event necessary for me to indicate my decision as to certain items of evidence received subject to objection.
The exemption under Item 113C of the Sales Tax (Exemptions and Classifications) Act 1935-1973 was sought under subpara. (1) and (2) of the Item. I should say at the outset that the claim for exemption under subpara. (2) was not pressed, it being conceded that it was difficult to see how the exemption could succeed under Item 113C(2) if it failed under 113C(1). I am satisfied that this was a realistic and correct appraisal and I will say no more about Item 113C(2).
Item 113C, omitting obviously irrelevant portions, reads as follows:
``(1) Goods applied by a registered person to his own use as aids to manufacture.
(2) Goods applied by a registered person to his own use -
ATC 4521
- (a) in the processing or treatment of goods to be used by him as aids to manufacture...; or
- (b)... or
- (c) as integral parts in the construction in situ or repair of machinery, implements or apparatus to be used in the processing, treatment, cleansing or sterilizing specified in paragraph (a) or (b) of this sub-item,
but excluding machinery, implements or apparatus (or parts therefor) which are not applied exclusively, or primarily and principally, in a manner specified in paragraph (a) or (b) of this sub-item or which are of any of the kinds specifically excluded from the definition of aids to manufacture.
For the purpose of this item, `aids to manufacture' means aids to manufacture as defined by Regulations made under the Sales Tax Assessment Acts.''
It was common ground that the parts of the machinery in question were goods and that they were applied by the company to its own use. The issue was whether they were aids to manufacture within the meaning of the definition of that phrase in the Sales Tax Regulations. The relevant portions of that definition in reg. 4(1) are as follows:
``4(I) In these Regulations, unless the contrary intention appears -
`aids to manufacture' means goods for use by a registered person being -
- (a) machinery, implements and apparatus for use exclusively, or primarily and principally -
- (i) in the actual processing or treatment of goods to be used in, wrought into or attached to goods to be manufactured;
- (ii) in any processing or treatment by which the goods to which that processing or treatment is applied are used in, wrought into or attached to goods to be manufactured;
- (iii) in any processing or treatment for the purpose of bringing goods into, or maintaining goods in, the form or condition in which they are marketed or used by the manufacturer thereof;
- ...
- ...
- (c) parts for, or materials for use in the repair of so as to form part of, any of the machinery, implements or apparatus specified in paragraph (a) or (b) of this definition; or
- ...
`goods to be used in, wrought into or attached to goods to be manufactured' means goods to be so used or dealt with that those goods, or some essential element thereof, will form an integral part of the goods to be manufactured.''
It was not disputed that the company was the manufacturer of the iron ore sold by it. The issue was therefore whether the stackers and reclaimers were used exclusively, or primarily and principally, in the actual processing or treatment of goods, that is to say iron ore, to be used in goods to be manufactured. The alternative exemption was sought to be put under reg. 4(1)(a)(iii), namely that similarly there was processing or treatment for the purpose of bringing goods into the form or condition in which they were marketed or used by the company.
Turning first to the meaning of ``processing or treatment'', there is nothing in the context of Item 113C to suggest that the ordinary meaning of treatment found for Item 14 should not be adopted. Treatment was there taken to mean the act of subjecting to chemical or physical action so as to bring about a change in form nature or condition. I further found that in its context such treatment had to be directed to a relevant result, namely, to use or marketability. As to processing, this in my view should in its context in Item 113C and reg. 4 be taken to have a different, and probably wider meaning than treatment. Its ordinary dictionary meaning may be gathered from the Oxford English Dictionary.
Process as a noun is defined as follows:
``A continuous and regular action or succession of actions taking place or carried on in a definite manner, and leading to the accomplishment of some result; a continuous operation or series of operations.''
ATC 4522
As a verb it is defined as follows:
``To subject to or treat by a special process.''
The Shorter Oxford English Dictionary defines process as follows:
``A continuous and regular action or succession of actions taking place or carried on in a definite manner; a continuous operation or series of operations; a particular method of operation in any manufacture.''
The relevant meaning in the second edition of Webster's New International Dictionary is:
``To subject (esp. raw material) to a process of manufacture, development, preparation for the market; to convert into marketable form.''
The normal use of the verb process is exemplified as follows - to process milk by pasteurising, to process grain by milling and to process cotton by spinning. These meanings all suggest that a change in nature form or condition is effected. I am disposed to the view that even in processing some change must result if this procedure is to be regarded as a process.
The main authority relied upon by the company was the decision of the High Court in
Davies Coop & Co. Ltd. v. F.C. of T. (1947-1948) 77 C.L.R. 299. The question there was whether the cones and tubes used in the spinning works were exempt from sales tax. There was in issue whether these were aids to manufacture within the meaning of reg. 4 of the Sales Tax Regulations 1930-1944. Some of the cones and tubes were used by the defendant itself for the purpose of winding yarn upon them and then for the purpose of unwinding the yarn in the process of producing woven and knitted piece goods.
Latham C.J. said at p. 311, in agreeing with the learned trial judge Starke J. that the goods fell within para. (c) (now (iii)) of reg. 4(1):
``It was argued that the use of goods in processing or treatment within the meaning of this clause meant the use of goods in such a way that they disappeared into the finished product; as, for example, where a chemical substance was used for producing a particular change in a substance or substances, but was not itself part of a substance in its final form. The suggestion is that `processing or treatment' means manufacturing activities involving the use of material which disappears and cannot be discovered in the final product. There is no satisfactory reason for limiting the words to chemical processes or to processes like cleaning or polishing. A mere mixture of substances or a mechanical arrangement of substances may be a necessary part of a process in order to produce a marketable product. It would be useless to produce yarn in a tangled mass. It is useful only if it can be used readily and speedily by being unwound from a carrier upon which it is held. Thus the use of the cones and tubes is necessary in the case of the yarn which is wound upon them to make it possible to use the yarn for the knitting and weaving purposes for which the defendant in fact used it. This use was part of the process of bringing the ultimate product, namely the piece goods, into a form or condition in which they could be marketed. Accordingly, in my opinion, the cones and tubes are included within par. (c) of the definition of `aids to manufacture'.''
Dixon J. at p. 317 said of aids to manufacture:
``The phrase is defined so as to cover such things. The purpose is seen when the phrase is taken up into the paragraphs of the definition of `aids to manufacture'. The purpose is to secure the result, to take par. (a), that whatever is used in processing or treating such goods will qualify as an aid to manufacture. The question then is whether the cones and tubes may properly be said to be used in the actual processing or treatment of the yarn. On the whole I think that the winding upon the cone or tube of the yarn from the ring bobbin should be considered as part of the processing or treatment of the yarn. It is part of the method of taking the yarn from the machines and of putting it into a final condition for handling and use. But in addition I agree with the learned judge from whom the appeal comes, Starke J., that par. (c) applies. The winding upon the cone or tube is part of the processing
ATC 4523
or treatment of the yarn and its purpose is to give the goods, that is the yarn, a form or shape in which the yarn may be marketed, and also one in which it may be used in the creels of a manufacturer of knitted or woven piece goods.''
The above decision lends considerable support to the company's argument in this case that the machines used in the blending procedures I have described are no less aids to manufacture than the cones or tubes in the Davies Coop case. The case also supports a meaning of processing that does not require that there be a change producing a commercially distinct article. A number of other decisions were referred to that lend some support to the company's argument. Such support was somewhat limited given the different legislative provisions in question. See
Southern Transylvannian Timbers 1975 Arbitration Reports N.S.W. 144;
Kilmarnock Equitable Co-operative Society Ltd. v. Commr. of I.R. (1966) 42 T.C. 675;
Federal Farms Ltd. v. The Minister for National Revenue 1966 Ex. Court Reports, Canadian Series, 410;
Canadian Wire Vision Ltd. v. The Queen 1978 Canadian Tax Cases 69;
Nova Scotia Sand and Gravel Ltd. v. The Queen 1978 Canadian Tax Cases 279;
F.C. of T. v. I.C.I. Australia Ltd. 72 ATC 4213; (1971-1972) 127 C.L.R. 529;
Buckingham v. Securitas Properties Ltd. (1980) 1 W.L.R. 380. In this last case Slade J. adopted the view expressed in the Kilmarnock Equitable Co-operative case that alteration of the material was not necessary to involve subjecting it to a process.
I am satisfied that having regard to the nature of the operations of stacking and reclaiming, the machines in question here - and accordingly parts of those machines - were used in processing or treatment of iron ore. Such iron ore as processed or treated in my view comes within both paragraphs of reg. 4(1).
There remains the question as to whether the stackers and reclaimers were used exclusively, or primarily and principally, for processing or treatment. It was contended on behalf of the Commissioner that the stackers and reclaimers were primarily for materials handling - to build and reclaim stockpiles. Reliance was placed on the history of the development of the company's stockpiles and the contention that the stockpiles had an important function as a surge or buffer. Even as to the procedures themselves, the use of the rake on the reclaimer was on the evidence primarily to secure uniformity of flow rather than blending.
There was a great deal of evidence and argument directed to this matter of the purpose of the stacking and reclaiming. Not without considerable hesitation, I have come to the view that the procedures of stacking and reclaiming - treated as a single unified operation - are properly to be categorized as being primarily and principally processing or treatment. I have particular regard to the elaborate planning and monitoring of the operation involved and the proven commercial purpose and effect of this operation. Here storage and transportation would not only not have required such an operation, they would have made it commercially quite unnecessary, if not useless. The putting down of particular material in a special manner and the picking up of the material in another particular manner - together with all the associated testing and monitoring of the success of the procedures - would have been largely otiose. Had mere storage or transportation been the aim, then simpler, and above all, more expeditious procedures were open and could have been expected to have been employed. Thus the tunnel load out system of reclaiming from a stockpile was abandoned, so far as fines were concerned, in the cause of better blending. This was so even though it was a more rapid form of removal than the mechanical reclaimer system. These considerations are also relevant in leading me to the conclusion that of the two purposes of blending, that is, processing or treatment or storage and removal, the primary and principal purpose for the use of the machinery in question was blending rather than storage and removal. In one sense the contrast is a misleading one since blending necessarily involves at least removal, if not temporary storage. Equally transportation necessarily involves some blending. But insofar as it is necessary to categorize the use by reference to primary purpose I find that in the particular circumstances prevailing here this primary purpose was blending.
This renders it unnecessary to decide on the argument advanced by the company that
ATC 4524
the facts here show a single use, namely picking up and setting down, and that this is exclusively processing or treatment. The difficulty about this argument is that if the use is exclusively for processing, it is difficult to see how there would ever be room for operation of the phrase primarily and principally. It may be correct to say that these words are there to provide for the case where the machine is used, for example, for some quite separate purpose for a portion of the time. One example is a crane that is used for manufacturing in one part of the factory and for storage in another part. This is not the case here and it is not suggested that storage or handling are separate uses. I confine myself to indicating my view that the machines in question here were used for processing and treatment of the ore and for no other separate use and that insofar as the use is to be described in terms of primary function I find this was processing or treatment rather than storage or transportation.The final matter to be dealt with concerns the evidence that was the subject of objections and the particular objection that it was not open to the company to seek to establish by expert evidence the meaning of the words ``treatment'' or ``processing''. In addition there was an objection to the whole of the evidence of Keith Thorne, the Technical Superintendent of coke ovens and sinter plant employed by Broken Hill Proprietary Co. Ltd. There was also an objection as to evidence at to practices adoption by competitors in relation to blending. The main objection related to the substantial portion of the evidence of Professor Evans. In my view this objection was well founded and I did not act on any of this evidence. As this evidence was lengthy, as was the argument over its admissibility and weight, I propose to set out briefly the nature of the objection and my reasons for upholding it. I did however act on some portions of Mr. Thorne's evidence and it is therefore necessary that I deal with the objection to his evidence.
In the careful and comprehensive argument submitted on behalf of the Commissioner, it was put that Professor Evans' evidence as to the meaning or usage of the words ``treatment'' and ``processing'' was inadmissible as being directed to normal English words of frequent use and not technical or unusual terms. In any event it was put that the witness's evidence was directed largely to phrases such as ``mineral processing'' differing from those in issue and was given by him as an expert in particular scientific disciplines; it was not evidence of uniform commercial understanding. It was further submitted that in any event all that would be admissible would be evidence as to the common trade meaning at the date the Act or item was enacted or the regulation was made.
It was argued on behalf of the company that the witness was entitled to give evidence as to what he regarded as encompassed within the meaning of ``mineral processing'' and secondly as to whether there is any usage of such words. The evidence objected to was sought to be justified on the basis that the terms were used with a technical significance. The terms were said to be on all fours with the expression ``mining operations'' as to which evidence was received in F.C. of T. v. Henderson (1943) 68 C.L.R. 29; F.C. of T. v. I.C.I. Australia Ltd. 72 ATC 4213; (1971-1972) 127 C.L.R. 529. It was submitted that it was relevant to consider whether as a matter of the usage of those experienced in the field of activity involved, the activities are regarded as falling within the general terms used. Though the terms had but one meaning, that meaning embraced a large category of activities which might constantly change with technological advances.
The leading authority on this matter is Marquis Camden v. I.R. Commrs. (1914) 1 K.B. 641. There the appellant unsuccessfully sought to lead evidence that the words ``nominal rent'', appearing in the Finance Act (1909-1910) Act 1910 sec. 13(2), had in the profession of land surveyors a particular and technical meaning. Cozens-Hardy M.R. said at pp. 647-8:
``The duty of this Court is to interpret and give full effect to the words used by the Legislature, and it seems to me really not relevant to consider what a particular branch of the public may or may not understand to be the meaning of those words. It is for the Court to interpret the statute as best they can. In so doing the Court may no doubt assist themselves in the discharge of their duty by any literary
ATC 4525
help which they can find, including of course the consultation of standard authors and reference to well-known and authoritative dictionaries, which refer to the sources in which the interpretation which they give to the words of the English language is to be found. But to say we ought to allow evidence to be given as to whether there is any such technical meaning, to be followed up, of course, by evidence as to what that special meaning is, would I think be going entirely contrary to that which seems to be the settled rule of interpretation.''
I note, however, that Phillimore L.J. contemplated evidence in respect of trade terms when he said at p. 650:
``It is enough to say that in construing a modern statute, not dealing with the particular customs of a particular locality, or the practice of a particular trade, but of general application, evidence such as is sought to be adduced in this case is inadmissible.''
There are many illustrations of the courts refusing to admit evidence for the purpose of interpreting a word of normal parlance. See
The Australian Gas Light Co. v. The Valuer General (1940) 40 S.R. (N.S.W.) 126 (plant);
Bendixen v. Coleman & Ors. (1944) 68 C.L.R. 401 (bottle);
Scott v. Moses (1957) 75 (N.S.W.) W.N. 101 (perimeter);
Brisbane City Council v. A.-G. Queensland (1978) 3 W.L.R. 299 (showground). See too Wigmore on Evidence vol. 7 p. 85, para. 1955;
Atlantic Coast Line Railroad Co. v. Phillips 332 U.S. 168 at p. 171. The interpretation of words not apparently used in a trade or technical fashion should be based on the ordinary or popular meaning of the words. See
A.-G. v. Wynstanley (1831) 2 D. & C. 302 at p. 310;
Adams v. Rau & Anor. (1931) 46 C.L.R. 572 at pp. 577-8;
Unwin v. Hanson (1891) 2 Q.B. 115 at p. 119;
Rotary Offset Press Pty. Ltd. v. D.F.C. of T. 72 ATC 4212; (1972) 46 A.L.J.R. 609.
The force of the case for admissibility of the evidence was that the words were used in a trade or technical manner. I am not persuaded that the terms treatment and processing in Item 113C, having as they do possible applications to a multitude of trades and industries, can be regarded as having a trade meaning that requires special explanation or evidence. The matter is more uncertain with respect to the meaning of ``treatment'' in Item 14 since that is tied to the products of mining operations. It is not illogical that there might in this context be a trade meaning for treatment in Item 14 that differed from that in Item 113C. But in my view the word treatment is to be construed according to its ordinary or common meaning; it does not follow that it is to be regarded as having a trade meaning simply because mining operations has such a meaning.
In
Herbert Adams Pty. Ltd. v. F.C. of T. (1932) 47 C.L.R. 222 trade evidence was relied upon as to the phrase ``pastry but not including cakes or biscuits''. But it appears that this evidence was supported as a denomination of articles enumerated because of the obvious unusual signification of the expression. In Henderson's case (supra) the meaning of mining operations was discussed with reference to the evidence of a mining expert. But it does not appear that that evidence was the subject of any debate as to admissibility. In the I.C.I. case (supra), Walsh J. had relied upon evidence of geological and mining engineering usage with respect to the term ``mining operations''. But again, though Walsh J. plainly appeared to approve the use of such evidence, it does not appear that admissibility of this evidence was a real issue on the appeal. Moreover, the phrase in question is more obviously directed to a particular industry and evidence as to its trade meaning would fall within the reservation in the statement of principle in the Marquis Camden case (supra).
In any event the main phrase that was the subject of Professor Evans' evidence was mineral processing. This is not of course the phraseology of the legislative terms in issue. It was sought to come to these terms by inviting the court to treat ``mineral processing'', ``treatment'' and ``processing'' as all bearing more or less the same meaning. I found that Professor Evans' evidence on this subject was unconvincing; it had a somewhat contrived air about it. I would not have relied upon such evidence even if I had been satisfied it was admissible, but, as I have indicated, I am of the view that the objection to its admissibility should be sustained. As I have not relied upon any of Professor Evans' evidence as to the meaning
ATC 4526
and use of the terms in issue, it is not necessary in these circumstances that I decide the objection as to whether the evidence as to the meanings of words in the Statute have to be related to the time of the first appearance of the words in the legislation.There were a number of other objections to evidence that were reserved for decision. The first concerns the use of textbooks that used and described the terms in issue or like terms. They also described the use of blending piles and blending procedures. These were partly relied on by Professor Evans. They were also sought to be used independently of the witness as a freestanding body of evidence. It was put that the textbooks were themselves evidence of meaning and as to what the usage was in the industry at the time of publication. In my view the textbooks could not be relied upon to prove the meaning of the terms in question for the same reasons that expert evidence was not admissible on that issue. Where the expert relies on the textbooks to refresh or confirm his memory as to usage then it is not thereby independent evidence and in the ordinary course will not be admitted into evidence. As to the argument that the textbooks of themselves proved usage of terms, I have considerable reservations whether a textbook could be used in this fashion. It is not in the same category as a dictionary; rather it contains the opinion of an expert not called to give evidence. In my view the textbooks were not admissible as independent evidence of the meaning of the expressions in issue and I so rule; I have made no use of the material therein. As to usage, I leave the general question open though I find that the evidence of usage of the particular terms in issue is so limited that I am unable to rely upon it and I do not do so. Finally, as to the methods of blending employed by others, assuming that the material was otherwise admissible, which was not conceded, I find that this evidence was of very little weight having regard to the direct evidence as to the blending procedures employed by the company and others.
A further matter concerns the whole of the evidence of Mr. Thorne. He was a cogent and thoughtful witness who was well qualified as an expert to speak as to the operation of blast furnaces and sinter plants. It was put that his evidence established how the iron ore was used and thus that it was used in the manufacture of goods within the extended definition of aids to manufacture. I accept that to qualify the goods, whether steel sinter or iron, they do not have to be manufactured by the person carrying out the processing or treatment. In my opinion the evidence of Mr. Thorne was admissible to show how the iron was used. It was also admissible on the question as to whether the achievement of the levels of homogeneity sought by the company's blending procedures was important to the users of iron ore, that itself being relevant to the utility of the blending procedures set up by the company.
Another matter that was received subject to objection was a short piece of evidence from Mr. Finucane as to use by others in the iron ore industry of standard deviations of the kind used by the company. He sought to draw on the result of various technical interchanges between mine operators and evidence as to the views expressed by buyers about the company's ore in comparison to other ores. He also sought to show that buyers wanted consistent levels of homogeneity in the ore. In my view evidence of the witness as to industry practice was admissible as going to the issue that the kind of procedures employed were commercially and industrially realistic and not an unnecessarily complex means of storing and loading iron ore. They supported the existence of a genuine purpose of blending. The evidence was not, however, admissible to prove the opinions of others as to the company's ore or its blending procedures. Nor was evidence admissible as to opinions as to the chemical characteristic of iron ore produced in other countries. To that extent I reject the evidence and I do not rely upon it. Similar considerations apply to the evidence of Mr. Roberts, though I am of the view that it was admissible and relevant to have regard to the discussions with buyers on the topic as to the requests to the company to reduce or control the levels of phosphorus and alumina in its ore. It was an ancillary matter in issue between the parties as to whether the stacking and reclaiming procedures were a response to these requests. I am of the view that where the purpose of the procedure was an issue and added to that it was also an issue as to how and when the procedure came
ATC 4527
about, then evidence as to what the buyers told the company was admissible not to prove the truth of the content of these discussions but for the more limited purpose of proving what the company was being told at particular points of time. The minutes of the visit of the Japanese Trade Mission in 1971 and to a more limited extent the 1974 Mission are in this category. I do not admit, however, the 1977 discussions with the German mills or the 1978 convention paper since these relate to a time after the relevant period in 1976 when the machines were being used.Having regard to the findings I have made the claim for exemption succeeds and the plaintiff's claim is dismissed.
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