Wilson & Anor v. Commissioner of Stamp Duties (N.S.W.).
Judges:Lee J
Court:
Supreme Court of New South Wales
Lee J.
The proceedings before the Court (815 of 1986) are a stated case pursuant to sec. 124 of the Stamp Duties Act 1920 as amended in which the Court is asked certain questions arising under sec. 74D which defines ``Hiring arrangement''. Prior to the statement of the case the plaintiffs had filed a summons in proceedings 902 of 1985 seeking certain declarations in respect of sec. 74D but by agreement of the parties the stated case proceedings were substituted therefor.
Division 15 dealing with ``Hiring Arrangements'' was introduced into the Act by Act No. 92 of 1967 and it provides that in respect of a ``hiring arrangement'' as defined, the person from whom the goods are hired shall make out an instrument setting out the matters required by the Act and that instrument is to be stamped as a ``hiring arrangement'' under the Act.
Section 74D as it presently stands, is as follows:
``74D For the purposes of this Division and of the matter appearing under the heading `Hiring Arrangement' in the Second Schedule to this Act, unless inconsistent with the context or subject matter -
- `Goods' includes all chattels personal (other than money, livestock and things in action) and any fixture severable from the realty.
- `Hiring arrangement' includes any arrangement under which goods are or may be used at or during any time or times by any person other than the owner of such goods where -
- (a) the arrangement is entered into in New South Wales;
- (b) the goods are supplied or delivered or agreed to be supplied or delivered in New South Wales; or
- (c) the goods may be used in New South Wales,
but does not include -
- (i) any arrangement made under a hire-purchase agreement;
- (ii) any arrangement relating to the use of an electricity, gas or water meter, a motion picture film or a book;
- (iii) any arrangement made under a lease of real estate where the rental or other consideration in respect of which stamp duty is chargeable under this Act also includes rental or other consideration for goods, or
- (iv) any arrangement made for the use, by a person who is partially or totally incapacitated, of an invalid aid or prosthetic device or of any similar aid, device or appliance. [This paragraph was inserted by Act No. 219 of 1985 which came into operation on the 11th December, 1985]
`Hirer' means the person to whom goods are hired under a hiring arrangement.
`Owner' means the person from whom goods are hired under a hiring arrangement.''
It is not disputed in the present case that the hiring arrangement under consideration would fall within sec. 74D if it were not for the exclusion of ``a motion picture film'' referred to in subpara. (ii) and the sole question for decision is whether the goods the subject of the hiring arrangement, namely video cassettes are or are not ``a motion picture film'' within the section.
The plaintiffs carry on in partnership a business of hiring out video cassettes which they obtain from various suppliers under what are called ``dealer agreements''. These agreements, under which the plaintiffs hire the cassettes, oblige the plaintiffs to hire them out only for the purpose of home entertainment. These dealer agreements make clear that copyright in the cassettes is otherwise preserved. The plaintiffs hire the cassettes to the public in the following way: a person desirous of hiring video cassettes is required to become a member of the Hollywood Boulevard Video Club conducted by the plaintiffs and this he can do by completing and signing a membership application. The application contains (inter alia) the following:
``In consideration of acceptance of this application and the issue to me of a membership card in the Hollywood Boulevard Video Club I agree that any video cassette(s) issued to me... from the club shall be my entire responsibility to the
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intention that I shall be legally responsible for the safe return of that cassette(s) to the Hollywood Boulevard Video Club and that I shall indemnify the club against...''
The applicant then receives a membership card from the plaintiffs and on production of that card at the plaintiffs' place of business the member becomes entitled to select a video cassette of his choice, the transaction being recorded on a computer. There is no written hiring agreement entered into by the member with the plaintiffs, although signs displayed at the premises state ``Membership card must be shown when renting'' and ``Movies to be returned by 7 p.m. on the following day or an extra night's rental will be charged''. All the cassettes hired contain a notice on the outside stating that they are limited to home use and that copyright in the cassettes is otherwise preserved. The plastic box in which a cassette is housed contains information in writing and in pictures describing the movie picture in the cassette. There is evidence that cassettes may be hired for a comparatively small rental, $3 being mentioned in respect of one hiring, and that appears to be typical of the rentals charged.
The stated case asserts that on 30 October 1984 the plaintiffs lodged with the defendant an application pursuant to sec. 74F of the Act for approval to pay stamp duty in accordance with that section in respect of the hiring of ``video movie tapes'' by the plaintiffs to members of the club. The ``video movie tapes'' referred to are in the form of video cassettes. The obligation of the plaintiffs under sec. 74F was to lodge with the Commissioner each month returns setting out the details prescribed by the Act necessary to enable the Commissioner to assess duty on the hirings made, and then to pay the stamp duty assessed. The defendant approved the application and required the plaintiffs to lodge monthly returns and this was done by the plaintiffs each month until the month of March 1985. After this last-mentioned date the plaintiffs lodged no returns, contending that the hiring of the video tapes was not a ``hiring arrangement'' within sec. 74D. On 13 February 1986 the Commissioner issued a default assessment to the plaintiffs claiming a total amount of duty in the sum of $3207.18.
The questions asked in the stated case are:
- (a) was the defendant correct in making the assessment referred to in para. (9);
- (b) if the answer to (a) is no, how should the assessment be varied;
- (c) are the plaintiffs bound to comply with sec. 74F;
- (d) should the costs of this appeal be paid by the plaintiffs or the defendant.
An affidavit by Mr J.G. Hedberg, Co-ordinator of Continuing Education at the University of New South Wales and one-time Senior Lecturer in Educational Technology at the Western Australian Institute of Technology, has been filed in the proceedings. In the position which Mr Hedberg holds at the university he is responsible for the design of audio tape and videotape programs for continuing education purposes. He is a Bachelor of Science and Master of Education (University of Sydney) and Doctor of Philosophy (New York). In his affidavit Mr Hedberg explains the nature of motion picture photography and the nature of the videotape. The following is an extract from his affidavit:
``I am familiar with and experienced in the use of motion picture films and television and the various methods used in projecting and relaying images and sound on to a screen. A motion picture film is a program consisting of recorded images and sounds. Historically, the recording of motion picture films has been achieved technically by photographic means. A series of `still' photographs is taken in rapid succession. When they are sequentially projected on to a screen, a reproduction of the original action takes place.
Motion picture films are produced in several standard sizes. With the advent of colour photography, motion picture films rapidly incorporated this feature. The advent and development of electronic means of sound amplification led to the inclusion of a sound track on the film.
Motion picture films originally produced for cinema distribution are now widely broadcast by television. When a motion picture film is replayed on special television projection apparatus (`telecine') an electrical television signal is produced which is suitable for transmission as a television picture.''
Mr Hedberg went on in his affidavit to point out that there are at the present time different
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methods for recording images, namely optical and magnetic and there are also several methods for recording sound such as optical, mechanical and magnetic. His affidavit goes on:``Because of these advances in technology, motion picture film and television program producers are not limited to the use of celluloid for recording images and sound. Another method exists which in effect produces the same result so far as the viewer is concerned.
This method of recording images and sound utilises magnetic tape and is called `videotape recording'. In this process, image and sound information is recorded on special magnetic oxide coated tape. A television signal is produced when this tape is replayed. Although the videotape `image' is invisible to the naked eye, the image and sound information may be readily retrieved by placing the videotape in a `videotape recorder/player'. This machine converts that latent magnetic visual and sound information into a television picture signal virtually identical to that obtained from telecine film production equipment. Motion picture films originally produced for cinema distribution are now also available on videotapes. In the early 1960's increasing use was made of videotapes for television purposes and in 1977 videotape recorders/players for domestic use became more commonly available. Programs comprising visual and sound information can now be produced and supplied on both celluloid and videotape. Programs originally recorded on celluloid can be re-recorded on videotape and vice versa. The most usual method of storage for celluloid and videotapes is on reels. The two systems are similar, in that in each case when the medium on which the program is stored is loaded into the appropriate replay device, images and sound are produced on a screen. Each method records and presents to the viewer in effect the same program of images and sound. The choice of the medium is for the viewer.''
Two matters of significance to the present proceedings emerge from Mr Hedberg's affidavit - firstly that a motion picture may be displayed, that is projected on to a screen, either per medium of a film upon which the images are stored or per medium of a magnetic tape producing a television signal. The same moving picture, for example Gone With the Wind, may thus appear ``on film'' at the cinema or on video on the TV screen.
The second matter to be observed is that the images recorded on film or video may be interchanged by use of appropriate mechanism and that storage on a reel is appropriate to each method.
The problem to be solved in these proceedings is whether the expression ``a motion picture film'' in sec. 74D(ii) can include a video cassette of a moving picture for if it can the hiring arrangements which the plaintiffs have with their members are outside the terms of the section and duty is not payable. Mr Hill Q.C., counsel for the plaintiffs, contends that the expression ``a motion picture film'' is a compound expression the substantial concept in which is the actual images which are stored and projected, i.e. the actual named ``motion picture'' and that a videotape is but a technological advance on the method of storing images on celluloid - images can now be stored also on magnetic tape. Even magnetic tape, he says, can be referred to as film. ``A motion picture film'' in the sense he is propounding is a genus which includes a motion picture on celluloid or videotape. Other media for projecting or displaying moving pictures may be developed in the future. So far as the arrangement between the plaintiff and its hirers - and that between the plaintiffs and its dealers - is concerned, counsel lays stress upon the fact of the limitation of display to the home and of the scrupulous observance of the copyright in the ``film'', and submits, that it is the hire and right to display the motion picture in the cassette which is the real substance of the agreement, so that each is to be regarded as a motion picture film. In support of this proposition counsel seeks to call in aid the expression ``arrangement relating to the use of... a motion picture film'', claiming that the words ``relating to'' have a very wide meaning (
I.R. Commrs v. Maple & Co. (Paris) Ltd. 1908 A.C. 22 at p. 24) and that their use in this context supports the meaning of ``a motion picture film'' which he propounds.
The expression ``a motion picture film'' first appeared in the Act in 1932 when the Second
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Schedule to the Act was amended by Act No. 53 of 1932 by inserting after para. (8) of the matter appearing under the heading ``Lease or Promise of or Agreement for Lease or Hire of any Property not being a Ship or Vessel'' the following new paragraph:
``} Persons primarily liable
(9) Agreement for the hire of a motion }
picture film -- }
}
(a) where the amount of rental or hire }
payable does not exceed 1,000 pounds: -- }
For every 25 pounds or part of 25 pounds of such }
rental or hire ..... }
}
(b) where the amount of such rental or } The person to whom
hire exceeds 1,000 pounds: -- } the film is hired.
For the first 1,000 pounds of such rental }
or hire, the same duty as provided in }
subparagraph (a) hereof, and }
thereafter for each additional 1,000 pounds}
or part of 1,000 pounds of such rental or }
hire ..... }''
At the present time, the amount of $2,000 replaces the amount of £1,000 where stated and the amount of $50 replaces the amount of £25 where stated.
In 1932 television was not available in this country to the public, and video cassettes were unknown.
Volume 136 of the Parliamentary Debates (2nd series) discloses that the reason for introducing a specific provision in respect of motion picture films, was to reduce the duty then payable on such films under the general provisions relating to leases or hire of property, and thus to give relief to picture theatre proprietors who were suffering financial hardship, and also to prevent unemployment due to closing down of theatres (pp. 2736-2737).
The ``hiring arrangements'' to be found in Div. 15 came into the Act through Act No. 92 of 1967 and Mr Hedberg's evidence shows that at that time video cassettes had been introduced into Australia and by 1977 videotape recorders/players for domestic use were common.
There can be no doubt that there are authorities establishing the proposition that the words of an Act may be interpreted to accommodate advances in technology. Maxwell on the Interpretation of Statutes 12th ed. at p. 102 states:
``The language of a statute is generally extended to include things which were not known and could not have been contemplated when the Act was passed, when the Act deals with a genus and the thing which afterwards comes into existence was a species of it. Thus the provision of Magna Carta which exempted lords from the liability of having their carts taken for carriage was held to extend to degrees of nobility not known when it was made, such as dukes, marquises and viscounts.''
Professor Pearce in his Statutory Interpretation in Australia 2nd ed. said at para. 41:
``Consequently, courts find that they are frequently asked to determine whether things or activities not known when the legislation was passed fall within the scope of the Act. The assumption that is adopted by the courts in dealing with these problems is summarised in the expression `an Act is to be deemed to be always speaking', that is to say words in an Act are to be interpreted in accordance with their current meaning.''
In
Chappell & Co. Ltd. v. Associated Radio Co. of Australia Ltd. (1925) V.L.R. 350 Cussen J. delivering the judgment of the Court referred to the way in which the law had applied the word ``vehicle'' to a motor car when the motor car was first made. In
Lake Macquarie Shire Council v. Aberdare County Council (1970) 123 C.L.R. 327 a proclamation made in 1958 delegated ``all powers and duties under sec. 416-419 of the Act (the Local Government Act) relating to the supply of gas...'' At the time of the proclamation liquefied petroleum gas was not used, only coal gas. Barwick C.J. at p. 331 said:
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``It may be granted that `gas' in these statutes denoted coal gas... and no doubt in 1906, gas denoted coal gas because no other form of gas for lighting and heating was in common use. Nonetheless the connotation of the word `gas' may not be so described. The Act here speaks of gas, not of coal gas. In my opinion, it thus selects the genus, and not any particular species of gas.''
See also
The King v. Brislan; Ex parte Williams (1935) 54 C.L.R. 262 at p. 277. Counsel for the plaintiff also cited an American case of
Turner Communications Corpn v. Chilevis, Supreme Court of Georgia 239 GA. 91 where it was held that videotape was motion picture film, and that as ``motion picture film'' was exempted from sales tax so was the videotape. But that case was not concerned with ``a motion picture film''.
Counsel for the plaintiffs also has sought to rely upon the dictionary meaning of the word ``film''. Both the Concise Macquarie Dictionary and the Shorter Oxford Dictionary make clear that the word ``film'' can refer either to the physical substance of film or the images recorded thereon. The same meanings of the word are given in the Dictionary of Film and Television Terms by Virginia Oakey. In the Complete Dictionary of Television and Film by Ensign and Knapton videotape is defined as ``flexible film...''. Other references might be given.
With all due respect to counsel's careful argument I do not find that I can accept same. It is my view that the meaning which counsel for the plaintiff seeks to put upon the words ``a motion picture film'' is not a natural or ordinary usage of those words, but is at best a loose usage. I think that counsel would be on much stronger ground, if the words in the section had been ``a motion picture'' for the actual film, i.e. the object itself, recording Gone With the Wind and the actual videotape of the same movie, may each be naturally referred to as ``a motion picture'', and even a ``a film''. One can pick up a video of Gone With the Wind and say ``I have seen that film''. But except for that usage, one usually refers to the object, which is the videotape as the ``video'' and the object which is the motion picture reel as ``the film'' or ``the motion picture film''. However, it is in my view unnecessary to go further into the question of semantics, for even assuming that the words can naturally mean what counsel claims they mean, the Act itself, shows that that is not the meaning in which they are used. In short, it is not necessary to resort to any principle of interpretation referable to a word being a genus and applicable to various species within it, for the Act in my view makes clear that it is referring to a motion picture film as it was known when the expression was first introduced in 1932.
It is to be noted that the ``hiring arrangement'' to which sec. 74D applies is one concerned with ``goods'' which under para. (b) are to be ``supplied or delivered'' and that of course is a plain pointer to physical objects irrespective of whether for instance, they are of such a nature as to be able to project images to which copyright may be applicable. I begin with the proposition that the expression ``a motion picture film'' in 1932 when the words were first used in the Act was referring to a thing that was clearly identifiable, and that the arrival of the video cassette at a later stage has in no way altered its identity - if anything it has accentuated it. ``A motion picture film'' had the meaning and still has the meaning of a motion picture made up of a series of frames recording on film single images of the action, the film being flexible and consisting of celluloid acetate or triacetate that is perforated and coated with a light-sensitive emulsion, iron oxide, and the images on the film being intended to be projected on to a screen by a movie film projector. The film would always be expected to contain images of some moving picture that has been produced, e.g. Gone With the Wind but it is that reel containing that picture which, according to the original meaning of the words, falls within the expression ``a motion picture film''. That which is thrown on to the screen is the motion picture derived from the images on the physical object which is the motion picture film. The actual reel of film before it was used would be called not a motion picture film but merely ``motion picture film''.
Although a motion picture film and a video cassette may each result in the viewer seeing on the screen either at the cinema or on a television set the same motion picture, the two things are inherently different. Motion picture film and videotape are different in composition. A motion picture camera containing motion picture film is required to ``take'' a motion picture on film. A video camera
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containing videotape is required to ``take'' a movie on video. A motion picture projector is required to project a motion picture film, a video player is required for a movie on a videotape to be displayed on a television screen. The terminology just referred to is the ordinary natural terminology. The dictionaries to which reference has been made above - I would add two further references, McGraw-Hill Dictionary of Scientific and Technical Terms and The Video Encyclopaedia by Larry Langman - all show that although the end result from the point of view of displaying movie pictures may be the same, the motion picture film and the video are two separate and distinct things.It is important to bear in mind that the meaning, which the plaintiff gives to the words in no way denies that a motion picture film, as it was and as it has been since 1932 is different from a video cassette - it merely takes the function of the two separate objects and somewhat loosely refers to them as motion picture films. The emphasis is upon the fact that they deal with motion pictures rather than upon the significance of the word ``film'' which is intrinsically appropriate to the traditional motion picture film. A magnetic tape can be called a film but in fact it is usually called a tape.
On the footing therefore that a motion picture film and a video cassette are in fact two separate identifiable things although serving the same ultimate purpose of showing motion pictures, let me now turn to the Act.
It will be seen from the rate of duty chargeable in 1932 that the hiring of a motion picture film could give rise to very high rental charges. The two levels of rental chosen are those under 1,000 pounds and over 1,000 pounds. One shilling duty is chargeable for every 25 pounds of rental. Paragraph 9(b) in the case of rental exceeding 1,000 pounds refers to ``each additional 1,000 pounds... of rental''. The Act in its present form preserves the scheme of charging duty applied in 1932 except that it translates the figures into dollars. It takes $50 as the portion of the rental up to $2,000 which attracts the duty of 12 cents and as in 1932 it makes reference to ``each additional'' $2,000 of rental. Both visually and from the substance of the provisions, the inference is inescapable in my view that the legislature is intending in the Schedule now to deal with the same object that is a motion picture film, in its basic sense - that was being dealt with and was the only motion picture film known in 1932. The method of stating the duty payable is wholly inapt to sec. 74D rentals of goods generally including videotapes, which can be only $3 or thereabouts, and may be compared with the method of stating in the Second Schedule, the duty payable upon ``hiring arrangements'' viz. 50c or ``an amount equal to 1½% of such total amount payable under the hiring arrangement whichever is the greater''.
One immediately then asks why would a hiring arrangement ``relating to the use of... a motion picture film'' be excluded from the hiring arrangements which were to be a source of revenue to the Government under Div. 15? The answer, in my view, is plain; the legislature did not intend to interfere in any way with or expand the existing duty provisions referable to instruments of hiring of motion picture films in the traditional sense. The instruments of hiring were already covered for duty in the Second Schedule under the heading ``Lease or Promise of or Agreement for Lease...'' and unless a specific exclusion were effected the definition of ``hiring arrangement'' would apply to them.
For the same reason sec. 74D(i) has excluded arrangements under a hire-purchase agreement, such instruments being already dutiable under Div. 17 sec. 75A and in the Schedule under ``Instalment purchase arrangements''. Section 74D(ii) has excluded arrangements relating to the use of an electricity, gas or water meter, the instruments of hiring in respect of these being already dutiable under ``Lease or Promise of Agreement for Lease...'' para. (8). The exclusion of ``hiring arrangements'' relating to books is explicable upon the footing that written agreements for the hire of books are dutiable under the heading ``Lease or Promise of or Agreement for Lease...''. Section 74D(iii) has excluded arrangements made under a lease of real estate where the rental or other consideration in respect of which stamp duty was chargeable also included rental or other consideration for goods, such leases being already chargeable under the Act by reference to the rental or other consideration for goods (sec. 76 and 77, definition of ``property'' in sec. 2 and Second Schedule ``Lease or Promise of or Agreement for Lease... (1)'' Each
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exclusion set out in subpara. (i), (ii) and (iii) is thus explicable upon the footing that the legislature in creating a new head of duty was not intending to affect goods already, by the Act, marked out for duty when the subject of an ``instrument'' as defined in sec. 3. Subparagraph (iv) was not introduced into the Act until 11 December 1985 and was obviously dictated by humanitarian considerations.There is thus discernible a rational reason for the legislature having excluded a motion picture film and made the other exclusions referred to in (i), (ii) and (iii) and the result is achieved that subject to those exclusions, the net cast by Div. 15 is as wide as the definition of ``goods'' in sec. 74D. On this construction, the words ``relating to the use of electricity, gas or water meter, a motion picture film or a book'' merely operate to catch and thereby exclude all kinds of hiring arrangements in respect of such goods, but they do not affect in any way the meaning to be given to any of those goods, as the plaintiff would claim in the case of the motion picture film.
The construction which I have put upon sec. 74D accords with the natural and literal meaning of the expression ``a motion picture film'', supplies a rational reason for the exclusion of motion picture films from ``hiring arrangements'', and is a construction which gives to the words ``a motion picture film'' the same meaning in the Schedule, as in sec. 74D. Although there is no absolute requirement that the same words in a statute must be given the same meaning, the need to give different meanings should be clearly apparent and should lead to a result which is consonant with the purpose of the statute. But if the construction put on the words by the plaintiff is accepted, then the legislation has the effect of capriciously excluding from an area of revenue the hiring of videotapes. The continuance of that exclusion up to the present time is even more capricious when the fact is that the hiring out of video cassettes has become each year a more lucrative commercial activity, yet the section has remained unchanged. Videotapes have become a fact of modern life and the legislature obviously has been aware of the difference between film and video. The Theatres and Public Halls and Cinematograph Films (Amendment) Act No. 12 1971 by sec. 2(c) altered the definition of ``film'' in sec. 26B of the Act viz. ``film means film used or proposed to be used for the purpose of exhibiting a picture'' and substituted the words ``film or video tape used...''
In my view, as I have stated earlier, the case is therefore not one in which the advances of technology play any part in the interpretation of the words ``a motion picture film'' which I consider have a clear and unambiguous meaning. The application for membership which the hirer fills in before he can obtain a video cassette makes clear that what is hired out by the plaintiffs to its members is a particular video cassette showing a particular movie. The transaction constitutes a bailment of that chattel and a ``hiring arrangement'' within sec. 74D. The fact that the cassette case has upon it a warning as to copyright in the film in no way prevents or qualifies this conclusion - the copyright relates to the images on the film.
In the result then I am of the opinion that the Commissioner was correct in assessing the duty that he has and I would answer the questions in the stated case as follows:
- (a) Yes
- (b) -
- (c) Yes
- (d) By the plaintiffs.
As mentioned at the outset of this judgment the plaintiffs originally began these proceedings by way of summons (No. 902 of 1985) for declarations but the parties agreed that the matter should proceed by way of stated case. That summons will therefore be dismissed. Each party shall bear his own costs in regard to that. These orders may be entered.
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