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[1996] HCA 36
appellant. Appeal allowed with costs. Orders of the Full Court of the Federal Court set aside and, in lieu thereof, order that the appeal to that Court be dismissed with costs.
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Photographic paper importer Agfa claimed its products were duty-free under tariff concession orders that described paper made by a "silver dye bleach reversal process" with dyes already in the emulsion layers. Customs disagreed, saying the paper used a different chemical process. The Tribunal agreed with Customs after hearing expert evidence on photographic trade terminology. On legal appeal the Federal Court said the Tribunal had made a legal mistake by mixing trade meanings for some words with ordinary meanings for others. The High Court disagreed, ruling that such a mixed approach is legally acceptable when the whole phrase has no single trade label, the result makes practical sense, and the interpretation fits the technical audience the rule was written for. Duty was therefore payable and the Tribunal's original decision was restored.
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Agfa-Gevaert Ltd imported specialised colour photographic paper (initially CR312 Reversal Paper and later Agfacolour Type 8 and Type 9 papers) that received an image from colour negative film. The paper was coated with emulsion layers containing silver halide and colour couplers. During development the silver halide is reduced to metallic silver, a dye is formed by reaction with the developer, the silver is subsequently bleached and washed out, leaving a positive colour image. This is a chromogenic negative-to-positive process.
The relevant Commercial Tariff Concession Orders (CTCOs 8735089 and 8735090) described goods as: “Paper, colour, in sheets or rolls, silver dye bleach reversal process, having the image dyes incorporated in the emulsion layers, coated on a resin coated paper base”. Earlier CTCO 8340417 had included the additional words “for the production of positive to positive colour prints”. The Collector of Customs initially advised that the Type 8 and Type 9 papers fell within the new CTCOs and could enter duty-free under Item 50 of Sch 4 to the Customs Tariff Act 1987 (Cth) and s 25. He later reversed that advice, revoked the CTCOs in 1992, and demanded duty at the rates applicable under Sch 3. Agfa paid under protest on a 22 January 1992 consignment and applied to the Administrative Appeals Tribunal for review.
Jenkinson J in the Tribunal found that “silver dye bleach process” had a settled trade meaning among photographers and processors denoting the Ilfochrome (formerly Cibachrome) positive-to-positive silver-dye-bleach method. However, the full expression “silver dye bleach reversal process” had no discrete trade meaning. His Honour therefore gave “silver dye bleach” its trade meaning and “reversal” its ordinary English meaning of the production of a positive print directly from a positive transparency. On that basis Agfa’s negative-to-positive papers fell outside the description. He found it unnecessary to decide the second phrase concerning incorporation of image dyes in the emulsion layers. The Tribunal affirmed the Collector’s decision to levy duty.
Agfa appealed to the Full Federal Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth), limited to errors of law. Ryan, Gummow and French JJ each held that it is impermissible as a matter of law to dissect a composite statutory phrase, attribute a trade meaning to one component, and an ordinary meaning to the balance once it is apparent the phrase as a whole lacks an accepted technical meaning. They characterised Jenkinson J’s reasoning as an impermissible differential construction, found an error of law, set aside the Tribunal’s decision and remitted the matter. The Collector appealed to the High Court.
Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ delivered a single judgment allowing the appeal, restoring the Tribunal’s orders, and ordering costs against Agfa. The Court held that Jenkinson J had raised and resolved a question of law, that his mixed construction was legally open, and that no absurdity or failure to read the phrase as a whole had occurred.
The High Court began from the conceded proposition that whether a statutory expression is used in a sense other than its ordinary meaning is always a question of law (NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 at 511-512). Once that concession was made, Jenkinson J’s explicit finding that “silver dye bleach” should receive its trade meaning while “reversal” received its ordinary photographic meaning necessarily raised a reviewable question of law. The Court was therefore seized of jurisdiction under s 44.
On the substantive construction issue the Court treated the CTCOs as delegated legislation to which ordinary principles of statutory interpretation apply (King Gee Clothing Co Pty Ltd v The Commonwealth (1945) 71 CLR 184 at 195). It adopted Lord Simon’s “register” analysis from Maunsell v Olins [1975] AC 373 at 391: statutory language must be tuned to the semantic level appropriate to its subject matter and audience. Because the CTCOs were addressed to participants in the photographic film processing trade, it was legitimate to have regard to trade usage.
The Court rejected the Full Court’s bright-line rule that a composite phrase without an overall trade meaning must be construed solely by reference to the ordinary English meaning of the entire phrase. It cited Exxon Corporation v Exxon Insurance Ltd [1982] Ch 119 and Lee v Showmen’s Guild of Great Britain [1952] 2 QB 329 for the proposition that common sense should not be abandoned when applying composite expressions. The Court noted that meaning and construction are interdependent; the meaning given to individual words inevitably affects the legal effect of the whole. A rigid prohibition on differential interpretation was therefore both artificial and inconsistent with the golden rule.
Crucially, the Court held that recourse to the trade meaning of constituent words does not equate to a failure to construe the phrase “as a whole”. Provided the ultimate construction is coherent, commercially sensible, and does not produce absurdity (in the broad sense explained by Bennion, Statutory Interpretation, 2nd ed (1992)), the approach is permissible. Jenkinson J’s construction satisfied these criteria: it was supported by undisputed evidence that “silver dye bleach” referred to the Ilfochrome positive-to-positive process, “reversal” appropriately described that process, and Agfa’s chromogenic negative-to-positive papers fell outside it. The result was neither unworkable, anomalous nor illogical. Accordingly there was no error of law and the Tribunal’s decision stood.
The Court found it unnecessary to address the second phrase (“having the image dyes incorporated in the emulsion layers”) because failure on either limb of the CTCO description was fatal to Agfa’s claim.
Prior to this decision the law contained a degree of tension. On the one hand, authorities such as Herbert Adams Pty Ltd v Federal Commissioner of Taxation (1932) 47 CLR 222 at 227 and Whitton v Falkiner (1915) 20 CLR 118 at 127 established a presumption that revenue statutes directed to commerce employ trade meanings. On the other hand, the Full Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 had synthesised earlier cases into five propositions that distinguished the ordinary meaning of a word (fact) from the construction of a statutory provision (law). The Pozzolanic propositions had been applied in a manner that appeared to support the Full Court’s view that once a composite phrase lacked an overall technical meaning the entire phrase had to be treated as ordinary English.
The High Court clarified that the Pozzolanic propositions are useful guides but not rigid rules, especially where the phrase is complex. It endorsed the view of Isaacs J in Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78 that the meaning of words is interpretation (fact) while their legal effect is construction (law), yet immediately qualified that distinction as “artificial, if not illusory” when applied to interdependent composite phrases. The Court effectively elevated common sense, context, and the appropriate “register” above mechanical dissection rules.
After the decision, tribunals and courts construing technical commercial instruments may legitimately have regard to the trade meaning of constituent elements of composite expressions even if the expression as a whole has no settled trade meaning. The decision reinforces that delegated legislation such as CTCOs is not to be read in a legalistic vacuum but in the technological or commercial context its drafters contemplated. It also confirms that an error-of-law appeal under s 44 is available whenever the decision-maker expressly or implicitly determines that a statutory term bears a non-ordinary meaning.
The Court’s pivotal passage on the jurisdictional question reads: “the determination of whether an ‘Act uses [an] expression in any other sense than that which they have in ordinary speech’ is always a question of law” (citing NSW Associated Blue-Metal Quarries). Plain English: if the Tribunal decides a tariff description uses industry jargon rather than everyday English, that decision itself can be appealed as a legal mistake.
On the register approach the Court adopted Lord Simon’s statement from Maunsell v Olins that statutory language must be given “the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction)”. Translation: read the rule the way the people who actually use the product would read it, unless that produces nonsense.
The rejection of the Full Court’s rule is encapsulated in: “It simply does not follow, as a matter of logic or commonsense, that the division of a composite expression into parts which are interpreted by reference to their trade meaning, ordinary meaning or a combination thereof necessarily means that a court or tribunal has failed to construe an expression by reference to its meaning as a whole.” Translation: splitting a phrase up to understand its parts does not automatically mean you have ignored the phrase as a whole; common sense still applies.
The Court’s pragmatic conclusion appears in its approval of Dixon J in Herbert Adams: “A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned.” Translation: when Parliament writes tariff rules about photographic paper it is speaking to photographers, not English literature students.
This precedent is triggered whenever a statutory or delegated instrument (especially a revenue, customs or tariff provision) contains a composite technical phrase that lacks a single, settled trade meaning but whose individual components carry well-established trade meanings. Typical triggers include:
The precedent does not apply where the phrase as a whole has a definite commercial designation different from its ordinary meaning (Whitton v Falkiner), or where the differential construction would produce a result that is unworkable, anomalous or contrary to the evident statutory purpose. It is limited to commercial or technical legislation; ordinary consumer-protection statutes may attract stricter textual approaches.
Subsequent decisions have treated the case as authoritative on both the jurisdictional threshold and the substantive construction principles. In Collector of Customs v Chevron Australia Pty Ltd (2004) 139 FCR 1 the Full Federal Court cited Agfa-Gevaert for the proposition that whether a term is used in a non-ordinary sense remains a question of law, while the content of that trade meaning is a question of fact. The Victorian Court of Appeal in Dare v Hurley (No 2) [2010] VSC 482 applied the register analysis to a planning scheme definition, expressly approving the rejection of rigid composite-phrase rules.
In more recent customs litigation, such as Commissioner of Taxation v Luxottica Retail Australia Pty Ltd (2017) 109 ATR 200, the Federal Court referred to Agfa-Gevaert when construing tariff concession orders for spectacle frames, confirming that trade usage of component words may inform the whole without constituting legal error. The High Court itself cited the decision with approval in SZTAI v Minister for Immigration and Citizenship (2007) 81 ALJR 1754 when discussing the limits of jurisdictional error analysis in administrative law.
Lower courts have been careful not to read the decision as granting an unrestricted licence to cherry-pick meanings; they emphasise the safeguards against absurdity and the requirement that the phrase ultimately be read as a whole. No court has overruled or relevantly distinguished the core holdings. The decision is now a standard reference in texts on statutory interpretation (e.g. Pearce and Geddes, Statutory Interpretation in Australia, 9th ed) and in AAT customs practice.
Several issues remain unresolved. First, the precise boundary between “permissible differential construction” and “impermissible dissection” is not mathematically defined; future tribunals must still make evaluative judgments about coherence and commercial sense. Second, the Court left open whether the same approach applies to penal statutes or consumer-protection legislation where the audience is not a specialised trade but the general public. Third, the relationship between this decision and the principle of legality (which prefers interpretations that do not curtail common-law rights) was not explored; a CTCO that effectively imposes duty by narrow construction might engage different presumptions.
The Court also noted but did not resolve the deeper philosophical tension between “meaning” as fact and “construction” as law. While it described the distinction as artificial, it did not replace the Pozzolanic propositions with a new universal test. Lower courts continue to cite both Agfa-Gevaert and Pozzolanic, leaving room for argument about which propositions survive in any given statutory context. Finally, the decision assumes the availability of admissible evidence of trade usage; the limits of that evidence (for example, whether surveys, expert testimony or industry standards suffice) were not canvassed and may generate future disputes.
These open questions ensure that Agfa-Gevaert remains a living precedent rather than a closed chapter, requiring practitioners to pay close attention to the technological register of each individual instrument.
High Court of Australia Brennan CJ Dawson, Toohey, Gaudron and McHugh JJ Customs, Collector of v Agfa-Gevaert Ltd [1996] HCA 36
10 December 1996 Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ
The Court delivered the following written judgment: -
This appeal is brought against an order of the Full Court of the Federal Court of Australia setting aside a decision of the Administrative Appeals Tribunal (the Tribunal) that held that certain goods imported by Agfa-Gevaert Ltd (Agfa), the respondent, were not free of import duty because they did not fall within a Commercial Tariff Concession Order (CTCO).
The principal question in the appeal is whether the Full Court erred in finding that it is an error of law to construe a phrase in a legislative instrument by giving a trade meaning to some words in the phrase and the ordinary meaning to the rest of the words in the phrase. Questions also arise as to whether the Full Court was correct in holding that the Tribunal had erred in law in construing the meaning of two expressions in a statutory instrument.
At the relevant time, s 269C of the Customs Act 1901 Cth provided for the making of CTCOs and s 25 and Item 50 of Pt III of Sch 4 to the Customs Tariff Act 1987 Cth (the Tariff Act) operated so as to provide that goods that a CTCO declared were goods to which Item 50 applied were to be free of duty. Each CTCO in issue in this matter declared the goods that it identified were goods to which Item 50 applied.
Under CTCO 8340417, Agfa imported CR312 Reversal Paper, a positive to positive photographic paper developed by a chromogenic process. This CTCO described the relevant goods as:
Paper, colour, in sheets or rolls, silver dye bleach reversal process, with the image dyes incorporated in the emulsion layers, coated on a resin coated paper base, for the production of positive to positive colour prints.
On 16 October 1987, Agfa, anticipating the cancellation of CTCO 8340417, wrote to the Comptroller-General of Customs applying for a new CTCO in the same terms as CTCO 8340417. On 28 January 1988 [1] , new CTCOs 8735089 and 8735090 (the CTCOs in dispute) were made in terms that were very similar to CTCO 8340417, the material differences between them being the omission of the words "for the production of positive to positive colour prints" and the substitution of the word "having" for the word "with". Agfa continued to import its CR312 Reversal Paper under these CTCOs.
On 17 December 1990, Agfa sent an application for a tariff advice to the Collector of Customs (the Collector), the appellant, to ascertain whether its "Agfacolour" Type 8 and Type 9 papers fell within the CTCOs in dispute. The Collector advised Agfa that the new CTCOs - the CTCOs in dispute - covered Type 8 and Type 9 papers. Agfa proceeded to import these papers under the provisions of these CTCOs. On 11 November 1991, the Collector wrote to Agfa advising it that he had reviewed his previous advice and had concluded that the Type 8 and Type 9 papers were not eligible for the tariff concession provided by the CTCOs in dispute and that the previous advice was accordingly "voided". On 9 December 1992, these CTCOs were revoked.
If the Type 8 and Type 9 photographic papers imported by Agfa fell within the terms of the CTCOs in dispute, they were goods to which Item 50 in Pt III of Sch 4 of the Tariffs Act applied and should have been passed as free of import duty pursuant to s 25. If Item 50 did not apply, the goods were liable to duty at the rate in force when they were first entered for home consumption under the applicable heading of the Tariffs Act.
The dispute between the parties turns on whether the Type 8 and Type 9 papers fall within two of the phrases in the CTCOs in dispute. Those phrases are:
• "having the image dyes incorporated in the emulsion layers."
For Agfa's Type 8 and Type 9 paper to come within Item 50, they must fall within each of these phrases in the CTCOs. In our opinion, the Tribunal made no error of law in holding that that paper did not come within the phrase "silver dye bleach reversal process". It is therefore unnecessary to determine whether the Tribunal erred in law in holding that Agfa's Type 8 and Type 9 papers did not fall within the phrase "having the image dyes incorporated in the emulsion layers".
The process used by Agfa in respect of Type 8 and Type 9 papers
The Type 8 and Type 9 papers receive and reproduce an image on their surface from a colour negative film. Coated on the papers are emulsion layers containing a silver halide which is reduced to silver during the process. Later in the process, the silver is oxidised by a bleach and the silver salt is dissolved and washed off the paper. On the paper are three emulsion layers each of which is sensitive to one of three colours because of the presence in each layer of a substance called a colour coupler. The coupler reacts chemically with the developer by which the silver halide was reduced. A dye of the colour complementary to the primary colour is then deposited in the layer.
Agfa applied to the Tribunal to review the decision of the Collector to accept the payment of duty made under protest in respect of goods imported into Australia on 22 January 1992 under the CTCOs in dispute. This payment was in accordance with the rate specified in Sch 3 to the Tariffs Act. The Tribunal affirmed the Collector's decision.
The Tribunal's finding as to the meaning of "silver dye bleach reversal process"
Jenkinson J found, and it was not disputed before him, that, in the photographic trade and among members of the wider community of persons interested in photographic film processing technology, the phrase "silver dye bleach process" was understood as a reference to the process by which a particular photographic paper sold under the name "Ilfochrome" was treated to develop a photograph on that paper. However, the phrase "silver dye bleach reversal process", the phrase used in the CTCOs in dispute, had no trade or technical meaning. His Honour said:
On the whole of the evidence relating to the expression "silver dye bleach reversal process" I am inclined to think that the words "silver dye bleach" should be given the meaning which usage indicates and that the word "reversal" is to be understood as meaning that reversal of image which occurs in the process of producing a positive print on paper from a positive film. A reversal in that sense occurs in the process of producing an image on paper by the Ilfochrome process and in the process of producing an image on paper by the process called colour reversal.
His Honour held that the process used in respect of Agfa's Type 8 and Type 9 papers did not fit the description "silver dye bleach". He also held that, because the term "reversal" in the disputed CTCOs referred to the process of producing a positive print from a positive film, it did not describe the process used in respect of Agfa's Type 8 and Type 9 papers.
Agfa appealed to the Full Court (Ryan, Gummow and French JJ) pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 Cth (the Tribunal Act) which is limited to appeals on questions of law. Each judge, in separate reasons, upheld the appeal. [2] The Collector contended that the decision of the Tribunal was unreviewable because Jenkinson J had not committed any errors of law in determining the meaning of the phrases "silver dye bleach reversal process" and "image dyes". The Full Court unanimously rejected this submission.
The Court identified the error of law in respect of the phrase "silver dye bleach reversal process" as the construction of the composite phrase as a combination of ordinary and trade meanings. The reasoning of Ryan J was typical of all three judges. His Honour said: [3]
It is impermissible, as a matter of law, I consider, to adopt a differential interpretation of a composite phrase by isolating part of the phrase and according to it the technical or customary meaning which that part, standing alone, can be found, on the evidence, to bear and then construing the balance of the phrase according to the ordinary English meaning of the word or words comprising it [O]nce it became apparent on the evidence that the resultant composite phrase had no accepted meaning within the relevant technical or trade community, it was incumbent on the Tribunal to identify, as a matter of fact, the meaning of the composite phrase as a collection of ordinary English words. This finding was predicated upon a depiction of Jenkinson J's approach to the composite phrase as involving the combination of the trade meaning of "silver dye bleach" and the ordinary meaning of "reversal". Because there was no evidentiary finding by the Tribunal as to the ordinary English meaning of the phrase construed as a whole, the Court referred the matter back to the Tribunal to determine this question as an issue of fact. 1. Agfa-Gevaert (1994) 124 ALR 645 at 646; see also at 651, per Gummow J; at 663, per French J.
The distinction between questions of fact and questions of law
In this Court, the Collector again submitted that the relevant findings of the Tribunal did not raise any questions of law that could found an appeal under s 44 of the Tribunal Act. Hence, the first issue in the appeal is whether the Full Court was correct in finding that the decision of the Tribunal was vitiated by an error of law.
The distinction between questions of fact and questions of law is a vital distinction in many fields of law. Notwithstanding attempts by many distinguished judges and jurists to formulate tests for finding the line between the two questions, no satisfactory test of universal application has yet been formulated. In Hayes v Federal Commissioner of Taxation [4] , Fullagar J emphasised the distinction between the factum probandum (the ultimate fact in issue) and the facta probantia (the facts adduced to prove or disprove that ultimate fact). His Honour said: [5]
Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law. In Collector of Customs v Pozzolanic Enterprises Pty Ltd [6] , the Full Federal Court spoke of the distinction between law and fact in a statutory context as resting upon "value judgment[s] about the range of [an] Act" which, the Court said, necessarily raised questions of law. [7] 1. (1956) 96 CLR 47. 2. Hayes (1956) 96 CLR 47 at 51. 3. (1993) 43 FCR 280. 4. Pozzolanic (1993) 43 FCR 280 at 289.
Some recent Federal Court decisions have attempted to distil the numerous authorities on the problem into a number of general propositions. Thus in Pozzolanic [8] , after referring to many cases, the Court identified five general propositions:
The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. [9]
The ordinary meaning of a word or its non-legal technical meaning is a question of fact. [10]
The meaning of a technical legal term is a question of law. [11]
The effect or construction of a term whose meaning or interpretation is established is a question of law. [12]
The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law. [13]
In Pozzolanic, the Full Court qualified the fifth proposition. The Court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact. [14] 1. (1993) 43 FCR 280 at 287. See also Collector of Customs v Bell Basic Industries Ltd (1988) 20 FCR 146 at 157, citing Re Pacific Film Laboratories Pty Ltd (1979) 2 ALD 144 at 155. 2. Jedko Game Co Pty Ltd v Collector of Customs (NSW) (1987) 12 ALD 491; Brutus v Cozens [1973] AC 854. 3. Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78; NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 at 512; Neal v Department of Transport (1980) 3 ALD 97 at 107-108; Jedko (1987) 12 ALD 491. 4. Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 137-138; Lombardo v Federal Commissioner of Taxation (1979) 40 FLR 208 at 215. 5. Life Insurance Co of Australia (1925) 36 CLR 60 at 79. 6. Hope v Bathurst City Council (1980) 144 CLR 1 at 7, per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 at 277, per Sheppard and Burchett JJ. 7. Pozzolanic (1993) 43 FCR 280 at 288, citing Hope (1980) 144 CLR 1 at 8.
Such general expositions of the law are helpful in many circumstances. But they lose a degree of their utility when, as in the present case, the phrase or term in issue is complex or the inquiry that the primary decision-maker embarked upon is not clear. Thus, the phrase "silver dye bleach reversal process" is not easily pigeon-holed in terms of the general rules summarised in Pozzolanic because Jenkinson J construed the phrase by reference to the trade or technical meaning of "silver dye bleach process" and the ordinary meaning of "reversal".
However, for present purposes, it is the distinction between the second and fourth of the five propositions formulated in Pozzolanic [15] which creates the greatest difficulty. The second proposition states that the ordinary or non-legal technical meaning of a word is a question of fact while the fourth proposition states that the effect or construction of a term whose meaning or interpretation is established is a question of law. The strongest support for the distinction between meaning (a question of fact) and construction (a question of law) is found in the judgment of Isaacs J in Life Insurance Co of Australia Ltd v Phillips [16] where his Honour said:
Very different consequences attach according as the ambiguity rests in construction or in interpretation. Lindley LJ in Chatenay v Brazilian Submarine Telegraph Co [17] employs the same word "construction" for both ideas, but keeps the ideas distinct. He says: "The expression "construction," as applied to a document, at all events as used by English lawyers, includes two things: first, the meaning of the words; and, secondly, their legal effect, or the effect which is to be given to them. The meaning of the words I take to be a question of fact in all cases, whether we are dealing with a poem or a legal document. The effect of the words is a question of law." The "meaning of the words" is what I call interpretation, whether the words to be interpreted into ordinary English are foreign words or code words or trade words or mere signs or even ordinary English words which on examination of surrounding circumstances turn out to be incomplete. Their effect when translated into complete English is construction. If that distinction be borne in mind very little difficulty remains. 1. (1993) 43 FCR 280 at 287. 2. (1925) 36 CLR 60 at 78. 3. [1891] 1 QB 79 at 85.
With respect this distinction seems artificial, if not illusory. The meaning attributed to individual words in a phrase ultimately dictates the effect or construction that one gives to the phrase when taken as a whole and the approach that one adopts in determining the meaning of the individual words of that phrase is bound up in the syntactical construction of the phrase in question. In R v Brown [18] , a recent House of Lords decision, Lord Hoffmann said:
The fallacy in the Crown's argument is, I think, one common among lawyers, namely to treat the words of an English sentence as building blocks whose meaning cannot be affected by the rest of the sentence This is not the way language works. The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole. If the notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction that is currently absent from the law. 1. [1996] 1 AC 543 at 561.
However, it is not necessary to resolve this issue in determining whether Jenkinson J's decision as to the phrase "silver dye bleach reversal process" raised any appealable questions of law. This is because of one concession made in argument and one principle of law that is not disputed. The concession was made by Mr Buchanan QC, for the Collector, who conceded that the determination of whether a phrase is a composite phrase or not is "probably in the end" always a question of law. The principle, which we think made the concession inevitable, is that the determination of whether an "Act uses [an] expression in any other sense than that which they have in ordinary speech" is always a question of law. [19]
With this in mind, it is apparent that Jenkinson J's finding that:
On the whole of the evidence relating to the expression "silver dye bleach reversal process" I am inclined to think that the words "silver dye bleach" should be given the meaning which usage indicates and that the word "reversal" is to be understood as meaning that reversal of image which occurs in the process of producing a positive print on paper from a positive film raised a question of law. However one characterises the "structure" of this composite phrase in terms of the interplay of the descriptors of ordinary meaning and trade meaning - for example, either a combination of two trade meanings or a trade meaning qualified by a word to be understood in its ordinary sense - or whether these descriptors have any beneficial role to play in such an inquiry at all - is not relevant at this point. All that is required for a reviewable question of law to be raised is for a phrase to be identified as being used in a sense different from that which it has in ordinary speech. It is clear that Jenkinson J treated the phrase "silver dye bleach reversal process" as a composite one whose meaning depended on evidence. Whether he was correct in doing so therefore raises a question of law.
The correct construction of "silver dye bleach reversal process"
The Collector contends that a court or tribunal makes no error of law in determining the construction of a phrase merely because it applies a trade meaning to some only of the words in that phrase. Agfa, on the other hand, contends that if the whole of the expression does not have a "definite commercial designation different from [its] ordinary meaning" [20] the expression must be construed as a whole according to the words' ordinary meaning.
It is convenient at this stage to note that, for the purposes of interpreting the relevant phrases, the CTCOs should be considered as a species of delegated legislation. [21] The general principles relating to the interpretation of Acts of Parliament are equally applicable to the interpretation of delegated legislation. [22] To use the words of Dixon J, "subordinate or delegated legislation [stands] on the same ground as an Act of Parliament and [is] governed by the same rules of construction". [23]
Because the CTCOs are governed by the rules of statutory construction, the speech of Lord Simon of Glaisdale in Maunsell v Olins [24] is a useful starting point in determining the construction of the instruments. His Lordship said:
Statutory language, like all language, is capable of an almost infinite gradation of "register" - ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants, etc). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give to it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances. 1. [1975] AC 373 at 391.
When construing revenue statutes that utilise trade or technical terms, therefore, the law generally favours interpretation of the terms as they are understood in the trade to which the statute applies. In Herbert Adams Pty Ltd v Federal Commissioner of Taxation [25] , Dixon J said: "A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned." The courts have also said that it may be less difficult to establish a trade meaning which extends the ordinary meaning of an expression than one which limits the ordinary meaning in a specialised way. [26] However, the "presumption" in favour of trade meaning in revenue statutes does not deny the possibility that words used in a revenue statute directed to commerce are to be understood in their ordinary meaning. [27]
In their own ways, both the Collector and Agfa relied upon the distinction between trade meaning and ordinary meaning to construe the expression "silver dye bleach reversal process". Agfa, of course, relied on the ordinary meaning of the phrase while the Collector focused on its trade meaning. However, Agfa conceded that, without some assistance from the "technological context" or "technological background" of the issues involved, the phrase in issue was, in terms of its ordinary meaning, meaningless. While denying the validity of any recourse to the trade meaning of certain words within the composite phrase, it contended that, when account was taken of this technological background, the words had an ordinary meaning as opposed to a trade meaning. Moreover, Agfa contended that the ordinary construction of the phrase accommodated its Type 8 and Type 9 paper.
The problem with Agfa's submission is that it ostensibly denies the appropriateness or relevance of the very pool of knowledge upon which, in substance, it relies. That is to say, the reliance on technological background or context, which Agfa submits is permissible when construing the ordinary meaning of words, is inconsistent with its submission that, in construing composite phrases, it is impermissible to take account of the trade meaning of certain words in that phrase.
Agfa resisted the invitation of this Court to outline conclusively the options open to the Tribunal in construing the term as a whole if the case was remitted to it. However, it contended that the expression "silver dye bleach reversal process" described Agfa's paper because its paper did involve a process the stages of which could be described as "silver", "dye", "bleach" and finally "reversal".
In Exxon Corporation v Exxon Insurance Ltd [28] , the English Court of Appeal had to consider whether the made-up trade name "Exxon" was an "original literary work" within the meaning of s 2(1) of the Copyright Act 1956 UK. The Court accepted that it was original, that it was literary in the sense that it was composed of letters and had a written form, and that it was a work because much time and effort had been expended in inventing it. Nevertheless, the Court held that it was not an "original literary work". As Oliver LJ put it: [29]
But "original literary work" as used in the statute is a composite expression, and for my part I do not think that the right way to apply a composite expression is, or at any rate is necessarily, to ascertain whether a particular subject matter falls within the meaning of each of the constituent parts, and then to say that the whole expression is merely the sum total of the constituent parts. In my judgment it is not necessary, in construing a statutory expression, to take leave of one's common sense. 1. [1982] Ch 119. 2. Exxon [1982] Ch 119 at 144. See also Lee v Showmen's Guild of Great Britain [1952] 2 QB 329 at 338; Bennion, Statutory Interpretation, 2nd ed (1992), pp 830-831.
Significantly in our opinion, Agfa's argument required the Tribunal to deny itself any recourse to common-sense in construing the expression "silver dye bleach reversal process". [30] While it contended that the Tribunal could rely on the technological background and context in determining the ordinary meaning of the expression construed as a whole, Agfa denied that the Tribunal could inform itself of the trade meaning of some of the words which make up the expression. However, there seems no good reason for denying trade usage a role in determining the meaning of distinct elements of composite phrases where the phrase, taken as a whole, does not have a trade meaning. In an appropriate case, and this is one, such knowledge enables courts and tribunals to tune into the most appropriate "register" [31] for the purposes of statutory interpretation.
Agfa's contention demonstrates the danger in relying on the strict rule of statutory interpretation of composite phrases which it seeks to propound. [32] Such a rigid rule of interpretation seems at odds with the "golden rule" of interpretation propounded by Lord Simon of Glaisdale in Maunsell. [33] The CTCOs in dispute were addressed to a subject and an audience that was concerned with photographic film processing. That being so, a court or tribunal should strive to give the CTCOs the meaning that that audience would give them.
Trade meaning and ordinary meaning do not necessarily stand at opposite extremities of the interpretative register. Professor Glanville Williams has described the distinction between primary (ordinary) meaning and secondary (trade) meaning as the distinction between, on the one hand, the "most obvious or central meaning" of words, and on the other hand, "a meaning that can be coaxed out of the words by argument". [34] Similarly, Professor Driedger describes this distinction as being that between " "the first blush" grammatical and ordinary sense [and] the "less" grammatical and "less" ordinary meaning". [35] Given this lack of necessary dissimilarity, there appears to be little reason for a rigid rule that disallows recourse to the trade meaning of a word that forms part of a composite phrase.
No doubt there are cases where a court or tribunal must interpret a composite phrase by reference to the ordinary meaning of the words taken as a whole without recourse to the trade meaning that one or more of its words may have. Much depends on the subject matter and context of the phrase. In the area of statutory interpretation and construction, courts must be wary of propounding rigid rules. Even the use of general rules carries dangers in this area because of the tendency for such rules to be given an inflexible application. [36] Nevertheless, when construing a composite phrase which does not have a trade meaning, it will ordinarily make sense for a court or tribunal to take notice of the trade meaning of a word or words within that expression, provided such an interpretation does not lead to a result which is absurd [37] in the sense that the result may be unworkable or impracticable [38] , inconvenient [39] , anomalous or illogical [40] , futile or pointless [41] , or artificial. [42] Consideration of the trade meaning of individual words in such cases is more likely than not to lead to the interpretation that the makers of the instrument had in mind.
Further, contrary to Agfa's submission, using the trade meaning of individual words in a composite phrase having no special meaning as a whole does not involve a failure to construe the phrase "as a whole". It simply does not follow, as a matter of logic or commonsense, that the division of a composite expression into parts which are interpreted by reference to their trade meaning, ordinary meaning or a combination thereof necessarily means that a court or tribunal has failed to construe an expression by reference to its meaning as a whole.
It remains to determine whether the finding of the Tribunal was permissible as a matter of law. We think that it was. We can see no reason to disturb Jenkinson J's finding which in our view was supported by the evidence and was correct as a matter of law. For the reasons that we have given, his Honour's approach to construction, namely reading the expression "silver dye bleach reversal process" by reference to the trade or technical meaning of "silver dye bleach" and the ordinary meaning of "reversal", does not lead to absurdity nor a failure to construe the expression as a whole. To accept the argument of Agfa would be to deny the import of logic and commonsense in matters of statutory construction. And as Lord Devlin once said, "no system of law can be workable if it has not got logic at the root of it". [43] Accordingly, we would uphold the Collector's appeal and reinstate the decision of the Tribunal affirming the decision under review.
As Jenkinson J made no error of law in respect of the phrase "silver dye bleach reversal process", it is unnecessary to determine whether his Honour erred in law in holding that Agfa's papers did not fall within the phrase "having the image dyes incorporated in the emulsion layers". Agfa's appeal to the Full Court could only have succeeded if Jenkinson J had erred in law in determining the meaning of both phrases.
Customs, Collector of
Agfa-Gevaert Ltd
(1994) 124 ALR 645
(1956) 96 CLR 47
(1993) 43 FCR 280
(1988) 20 FCR 146
(1925) 36 CLR 60
(1956) 94 CLR 509
(1979) 40 FLR 208
(1980) 144 CLR 1
(1985) 8 FCR 264
(1915) 20 CLR 118
(1945) 71 CLR 184
(1932) 47 CLR 222
(1974) 48 ALJR 132
(1981) 147 CLR 297
(1996) 185 CLR 43
Appeal allowed with costs. Orders of the Full Court of the Federal Court set aside and, in lieu thereof, order that the appeal to that Court be dismissed with costs.