Repatriation Commission v Kohn

Before the Tribunal the applicant's case was put on two bases. First, it was said that the goods in question fell within the terms of a by-law (Item 32 of Schedule 4 to the Customs Tariff Act 1987 - By-Law 8736225). Alternatively, it was contended that the goods fell to be classified under heading 4901 and likewise, as classified under that heading, entitled to free entry. The goods in question are best described as trade catalogues. Each is bound and consists of some 1500 pages. Each catalogue is divided into 41 chapters dealing with various types of electronic products. The bulk of the document consists of a description of items offered for sale, often accompanied by photographs, technical details, order codes and prices in Australian dollars. The catalogue is devoted almost entirely to products manufactured by the parent company of the applicant. As the Tribunal found, the applicant is a wholesaler of electronic components and at any given point of time holds between 40,000 and 45,000 different lines of product in stock. Of the approximately 40,000 lines of product sold and thus dealt with in the catalogue, only 81 lines were manufactured in Australia. The catalogue has a restricted circulation, that circulation being restricted to electronic users in industry research establishments, universities, technical colleges and schools. The by-law under which free entry is sought is in the following terms:

"Paper catalogues and paper price lists relating exclusively to products or services of a country other than Australia." It was not in dispute that the document in question could properly be categorised as a paper catalogue or a paper price list. The issue between the parties was whether it related exclusively to products or services of a country other than Australia. It would not ordinarily be said that the catalogue related to services. If it did, those services were carried out wholly in Australia. But the catalogue concerned products. The great majority of those products were sourced outside Australia. Eighty-one of the 40,000 products dealt with were, however, manufactured in Australia. So it was submitted by the Collector that the by-law had no application because the catalogue did not relate exclusively to products of a country other than Australia. The applicant submitted before the Tribunal that a de minimis rule should be applied so that the Australian products should be disregarded in determining whether the catalogues related exclusively to non-Australian products. The Tribunal appears to have been given little assistance in the course of argument. I hasten to say that the counsel who argued the appeal before me were not the counsel who argued the case before the Tribunal. No authority in support of the application of the so-called de minimis rule was offered to the Tribunal, although reference was apparently made to the decision in Repatriation Commission v Kohn (1989) 87 ALR 511 at 526 where the possibility of the existence of such a rule was at least admitted. The Tribunal indicated it had been unable to find any case which amounted to a recognition of a de minimis rule. The Tribunal said: "19. The use of the word exclusively' makes it clear that the by-law is to be read literally. There is nothing appearing in its terms, or in the facts to be considered in relation to the by-law, which would entitle me to read down the word exclusively' in any way. The so called de minimis rule is certainly not a rule of interpretation. It is not even mentioned obliquely in the Third Edition of Statutory Interpretation in Australia by Pearce and Geddes. Accordingly I find that the subject goods do not fall within the terms of the by-law." It is submitted before me that the Tribunal erred in law in failing to accept that there was a rule of interpretation encompassed in the Latin maxim de minimis non curat lex, and in failing to apply that rule in the present circumstances. Notwithstanding the comments made by the learned Deputy-President, there are many references in texts and cases to the de minimis rule as a rule of construction. Bennion, F.A.R. Statutory Interpretation (2nd ed) at 780 refers to there being a general rule of statutory interpretation that: "unless the contrary intention appears, an enactment by implication imports the principle of the maxim de minimis non curat lex (the law does not concern itself with trifling matters)." Similarly, Halsburys Law of England, 4th edition, Vol 44(1), under the title Statutory Interpretation says (at para 1441) "De Minimis Principle. Unless the contrary intention appears, an enactment by implication imports the principle of legal policy expressed in the maxim de minimis non curat lex (the law does not concern itself with trifling matters); so if an enactment is expressed to apply to matters of a certain description it will not apply where the description is satisfied only to a very small extent." (See also Broom, H, A Selection of Legal Maxims, 9th ed, 100-2). The principle has been applied, either expressly or by implication in a wide variety of situations where a trivial failure to comply with a specific condition has been ignored. In Hayes v Lloyd [1985] 1 WLR 714 the statutory issue was whether land of the appellants was "land used as a racecourse". The judgment of the House of Lords admits of the notion that a de minimis use of the land could be disregarded although on the facts the use of the land as a racecourse was not de minimis. In Otter v Norman [1989] 1 AC 129, the Rent Act 1977 had provided that a tenancy was not to be taken to be a protected tenancy of a dwelling house "... bona fide let at a rent which includes payments in respect of board or attendance". The House of Lords expressed the view that any amount of board not de minimis would be sufficient to exclude the tenancy from the statutory protection. By inference a trifling amount would not affect the status of the premises. In Wood v Carwardine [1923] 2 KB 185 the statutory issue was whether a landlord who supplied hot water to a tenant through a pipe and caused a caretaker to deliver letters, messages and parcels, received rent which included "attendance". It was held that the de minimis rule applied, with the result that the delivery of letters, parcels etc, although constituting "attendance", was such a trivial part of the duties of a caretaker that it could ignored. Thus it was held that the rent did not include "attendance". In Biga Nominees Pty Ltd v Commissioner of Taxation (1991) 104 FLR 74 the issue before the Supreme Court of Victoria was whether a forklift was exempt from sales tax as being for use "exclusively ... in connection with, the establishment, operation or maintenance ... of a railway". It was known that it was probable that the forklift machine would occasionally be used to assist the State Rail Authority when its gantry crane in the terminal broke down. In the result it was held that the plaintiff did not operate a railway, so that the exemption was not applicable. However, in dicta Southwell J expressed the view that the incidental use of the forklift in the manner suggested would not have operated to exclude the exemption if otherwise the plaintiff had operated a railway. In so holding his Honour (at 93) referred to Randwick Municipal Council v Rutledge (1959) 102 CLR 54 at 94, where Windeyer J made the following observation: "The question arises, for example, when part of the subject land is used for the relevant purpose and another part for a different purpose (Sisters of Mercy Property Association v. Newtown and Chilwell Corporation (1944) 69 C.L.R. 369.) The presence of exclusively', solely', or `only' always adds emphasis; and is not to be disregarded (Reg. v. Cockburn (1852) 16 Q.B. 480, at p.491 [117 E.R. 962, at p. 967].) When such words are present, it is a question of fact whether the land is being used for any purpose outside the stipulated purpose (c.f. Trustees of Victorian Rifle Association v. Mayor of Williamstown (1890) 16 V.L.R. 251; Down v. Attorney-General of Queensland (1905) 2 C.L.R. 639. As Kitto J. said in Lloyd v. Federal Commissioner of Taxation (1955) 93 C.L.R. 645, at p.671, such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipulated use. Even without such words, an exemption from rating based upon use or occupation for a particular purpose or in a particular manner can only apply when the property is so used that it can properly be described as used for that purpose or in that manner, any other user being merely incidental, or at least not inconsistent with such main user." (Emphasis added) In addition to the class of case already mentioned, the maxim finds application in the criminal law. It was applied by Murphy J in Williams v R (1978) 140 CLR 591 at 602 in quashing a conviction of the appellant for having Indian hemp in his possession where only a minute quantity of cannabis was found in the appellant's pocket. His Honour said (at 602): "In my opinion, this a case for the application of the principle that the law is not concerned with trifles (de minimis non curat lex). This principle has been recognized throughout legal history and is often applied to avoid imposition of punishment after a finding of guilt where an offence is trivial. This application of the principle is expressed in various State Acts of general application (and in s19B of the Crimes Act 1914 (Cth), as amended). The de minimis principle is also applied to avoid hysterical or oppressive law enforcement; cases in which a finding of guilt would tend to bring the law or the judicial system into ridicule or contempt because of triviality. This is such a case." The majority of the Court, comprising Gibbs J, Mason J (as he then was) and Jacobs J reached the same conclusion, although not directly referring to the de minimis principle to support their reasoning. In contrast, Virtue J of the Supreme Court of Western Australia in Pearce v Paskov [1968] WAR 66, refused to acknowledge the existence of a principle of de minimis non curat lex as a defence to a criminal law charge. Reference may also be made to the decision of Muirhead J in this Court in Re Secretary to the Department of Health (unreported, 1 August 1986) where his Honour in holding in the circumstances of that case that the application of the maxim by the Administrative Appeals Tribunal was inappropriate said: "The maxim that the law does not concern itself with trifling matters is a maxim principally referred to in criminal cases and applicable in few cases of a nature which require consideration of statutory interpretation. Examples where it has been said to have been applied in interpretation cases are to be found, eg Customs and Excise Commissioners v Dodd [1961] 1 WLR 144; Coleshill and District Investment Co Ltd v Minister of Housing and Local Government [1968] 1 All ER 62. (See Maxwell's Interpretation of Statutes (12th Ed.) p 103). But I read those decisions as indicating that the Statute did not apply to the actual mischief complained of, the mischief being other than that contemplated by the legislation." The two cases referred to by his Honour provide little support for the existence of the maxim. In Dodd the question was whether what in essence was a sweepstake involved the making of a bet. It was held that it did not because a bet required an action on behalf of the entrant affecting the chance of a prize. In the course of argument it was argued that one of the conditions posed the possibility that an act of the applicant might affect the chance of qualifying for a prize. However it was said that the existence of a mere possibility could not turn into a betting transaction what was not. There is no direct reference in the case to the maxim. Coleshill involved the question whether the removal of protective banks of rubble and soil outside a disused ammunition magazine was a building operation, an engineering operation or a mining operation. It was held that it was none of these. Again no reference is made to the maxim and to the extent that the case has anything whatsoever to do with the application of the maxim, that must lie in a passage (at 66) where Widgery J referred to the operations on the land as being a "simple little activity". The most recent example of the application of the de minimis principle in Australia by a superior court is to be found in the decision of Smith J of the Supreme Court of Victoria in Pinho v Andre (unreported, 20 December 1994) where it was held that a debt had been paid for the purposes of s52(3) of the Supreme Court Act 1986 although $7.63 was still owing to the bank.

Finally, reference may be made to a decision of the Administrative Appeals Tribunal in Case 10,716 (1996) 32 ATR 1132 at 1143. The question that arose in that case was whether trucks of the applicant were: "... for use exclusively: (i) within premises controlled by the exemption user ...; or (ii) in going between adjacent premises covered by sub-paragraph (i); or (iii) for a combination of both...". The Tribunal, comprising Mr Barnett, Deputy-President, Professor Hotop and Mr Fayle, Senior Members, found that the vehicles the subject of the application could fall within this description, notwithstanding that they were used as well for the purpose of transporting metal for sale in and around Kalgoorlie. The Tribunal said (at 1143): "50. However, the Tribunal is of the view that exclusively', in the context of the use of general purpose road vehicles devoted to mining operations, ought not to be construed strictly literally. It would seem reasonable that incidental or insignificant use should not operate to deny an otherwise qualifying use. For instance, if a vehicle should need to travel away from the mine site for repairs or to make an occasional trip to the town dump or be used occasionally for charitable or community purposes, such incidental and minor use, in a pragmatic sense, ought not disqualify the user who would otherwise comply. 52. Having regard to the de minimis doctrine, exclusively' should be, at least, considerably more than `mainly' ... but not necessarily 100 per cent." However, the Tribunal found that the actual use of the vehicles fell outside the exemption so that the above comments did not form part of the decision. These examples illustrate two principles. The first is that in an appropriate case the maxim de minimis non curat lex will be applied as a rule of interpretation. To the extent that the learned Deputy-President held that the maxim had no significance as a rule of interpretation of statutes, he erred in law. The second principle which these cases illustrate, however, is that the applicability or otherwise of the maxim depends upon the context in which it falls to be considered. No better example can be given of this than the decision in Case 10,716 referred to above. Clearly, motor vehicles will need to be driven to a repair shop from time to time for repairs. The legislature, in requiring a use of vehicles to be exclusively within certain premises of the taxpayer, could hardly have intended that the very obvious need for vehicles to be driven for service or for that matter to be driven from the dealer's premises to the site of the mining operations before use by the taxpayer in its business could operate to exclude the exemption. Hence the word "exclusively" in the particular context could hardly have its strict meaning of admitting no other application. The real question in the present case is whether the context of the by-law permits of a de minimis exception where the paper catalogue or paper price list related substantially to products or services of a country other than Australia, but where there was some, albeit small, relationship as well to products or services of Australia which was capable of being categorised as de minimis or trivial and not worthy of consideration. If that question be answered in the affirmative, the question will then arise whether 81 out of some 40,000 items is, in the relevant sense, trivial. In my view the context of the by-law does not admit of any exception. The word "exclusively" in the present context means what it says. If a catalogue or paper price list relates to some product or service of Australia, then the by-law is not available, even if the great majority of the products or services have their source in a country other than Australia. The present is not a case where resort to logic or legislative policy requires the word "exclusively" to admit of exceptions. Even if, contrary to my view, there is room in the present context for the operation of a de minimis principle, in my view the inclusion of 81 items can not be regarded as of such triviality as to be ignored. And this is so whether the 81 items are considered alone or by comparison with the other 40,000 items listed in the catalogue. Accordingly I am of the view that although the Tribunal may be said to have erred in holding that there is no principle of law or construction represented by the de minimis rule, that error did not affect the outcome and thus may be disregarded. The second set of submissions concerned the question of classification. Chapter 49 of the Third Schedule to the Customs Tariff Act 1987 applies to "Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans." Prima facie the applicant's catalogue falls within this heading. Note 5 to the notes to the Chapter, which must be taken into account in construing the principal heading, provides as follows: "5. Subject to note 3 of this Chapter, 4901 does not cover publications which are essentially devoted to advertising (for example, brochures, pamphlets, leaflets, trade catalogues, year books published by trade associations, tourist propaganda). Such press publications are to be classified in 4911." Item 4911 has the heading "Other printed matter, including printed pictures and photographs" and item 4911.10.00 covers "Trade advertising material, commercial catalogues and the like". Before the Tribunal the applicant submitted that it was necessary before a trade catalogue was excluded from 4901 and relegated to 4911, that it be essentially devoted to advertising. This submission the Tribunal rejected. The learned Deputy-President said: "22. ... It was submitted that not all brochures or leaflets would be necessarily essentially devoted to advertising and that it was necessary to look at each and every one to establish whether the goods under consideration fell within the overall description, whether or not they also fell within the scope of particular examples. 23. I do not accept that once an example has been given, it can be other than a member of the class of which it is said to be an example. A trade catalogue, in other words, is deemed to be essentially devoted to advertising because it is a trade catalogue. The chapter note assumes (and requires me to assume) that all the examples are within the opening generic term." With respect, I do not agree with the construction adopted by the learned Deputy-President. It can hardly have been intended that a pamphlet, a leaflet or a brochure would fall outside item 4901 and within 4911 merely because they were brochures, pamphlets or leaflets. A pamphlet may relate to a matter of political interest. The pamphleteers of generations past debated in their pamphlets all manner of political matters which would hardly be described as advertising. In my view, their pamphlets would not, if requiring to be classified, be relegated to item 4911. But once it is decided that a brochure, pamphlet or leaflet would not automatically be relegated to 4911 merely because it is cited as an example in note 5, it should follow that a trade catalogue will not likewise be relegated to item 4911 merely because it is a trade catalogue. It will only be because it is a trade catalogue which in fact is essentially devoted to advertising that it will fall within item 4911. However, the Tribunal then went on to make the following comment in the next paragraph of the reasons appealed from: "24. In any event, it seems to me that each of the catalogues is essentially devoted to advertising. All the products in the catalogue are offered for sale by setting out their qualities, pricing them and giving them an order code." The Tribunal dealt with the question in a number of paragraphs concluding: "In all cases, on an ordinary reading of the words it can only be said that each of the catalogues is essentially devoted to advertising". The question whether the catalogues are essentially devoted to advertising is a question of fact. If that fact has been found by the Tribunal and it is accepted that it would be open for the Tribunal so to find, then this Court has no jurisdiction to interfere with the Tribunal's decision.

However, it is submitted that the Tribunal did not in fact reach a finding on whether the catalogues were essentially devoted to advertising because having found that a trade catalogue was automatically relegated to Item 4911, the Tribunal did not make any factual finding of the advertising nature of the catalogue so that all of its discussion on this issue was in effect merely throw away comment. Reference was made in argument to the decision of the High Court in Wade v Burns (1966) 115 CLR 537 and the decision of Moore J in Yong Min Jung v Minister for Immigration and Ethnic Affairs (1994) 35 ALD 729 at 732-3 in support of a submission that the matter should now be remitted to the Tribunal to determine the question whether the catalogues were in truth essentially devoted to advertising. In my view the issue in Wade v Burns was very different from the present issue. In that case a mining warden had refused an application for an authority to enter on a particular basis which was ultimately found to be wrong in law. The warden had then said that had there been a general discretion to grant or refuse the application, he would have refused it. It was held by the High Court that the warden did have a discretion and that the matter should be remitted to the warden for reconsideration. As appears from the judgment of Barwick CJ, at 555, a reason why in that case the matter had to be remitted to the magistrate was that the warden had not in fact exercised the discretion granted to him or applied his mind to the matter. All he had done was make some anticipatory comments. The judgments of Menzies J (at 563) and Owen J (at 568) proceeded rather on the basis that the warden had referred to a "general discretion" and it was not clear precisely what he had meant by this and so it was preferable to refer the matter back to the warden. Nothing in this decision requires me to conclude that in the present case the matter should be referred back to the Tribunal to decide the factual question when that question has already been determined by the Tribunal. In Yong Min Jung Moore J considered whether a matter should be remitted to the Tribunal. The Tribunal had reached a particular conclusion in error, but had considered, unnecessarily in the view of the Tribunal, another matter. His Honour held that where the Tribunal had reached a conclusion on the basis that the matter considered was not relevant, it was still appropriate for the matter to be remitted to the Tribunal and that in this regard there was no distinction between that case and Wade v Burns. With respect to Moore J I think there is a considerable distinction between a case such as Wade v Burns where a discretion was not exercised, although an indication was given as to what might happen if the discretion were, and the case where a matter is considered by the Tribunal and ruled upon. It may be that in the particular case before Moore J the Tribunal had not ruled on the factual question at all because it was unnecessary to its decision so to do. In such a case it would be necessary for the Tribunal to find the relevant facts. But if the Tribunal has found the facts it would be pointless for the matter to be remitted to the Tribunal to repeat the exercise. It is unnecessary for me to consider, however, the correctness of Yong Min Jung for the present case is distinguishable from both Wade v Burns and Yong Min Jung. As I read the Tribunal's reasons, what the Tribunal here did was to decide substantively that the catalogues were, as a matter of fact, essentially devoted to advertising. That finding made the Tribunal's prior discussion of the question whether a trade catalogue automatically was deemed to be essentially devoted to advertising unnecessary to determine. It was not the other way around. The applicant concedes that if I construe the Tribunal's reasons as involving the finding that the catalogues were essentially devoted to advertising as the prime finding on the application of tariff classification heading 4901, then the present application can not succeed.

I am thus of the view that the present application must be dismissed and that the applicant must pay the respondent's costs of it. I certify that this and the preceding nineteen (19) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Hill.

Counsel and Solicitors N J Williams instructed by for Applicant: Phillips Fox Counsel and Solicitors P Roberts instructed by the for Respondent: Australian Government Solicitor Date of Hearing: 7 November 1996 Date Judgment Delivered: 24 December 1996