Case: Hygienic Lily Ltd v Commissioner of Taxation (1987) 13 FCR 396
Outcome: considered
The Commissioner sought to derive support for his contention from Hygienic Lily Ltd v Commissioner of Taxation (1987) 13 FCR 396. The question there was whether waxed paper cups used by McDonald's Restaurants were "goods ... of a kind ordinarily used for household purposes". Gummow J at 399 said: "the setting in which the phrase 'goods of a kind' appears suggests it is directed not to the use for which the particular goods in question were designed or manufactured, nor to the purpose to which it is intended these particular goods shall be put, but rather to the nature, quality and adaptation of goods in the class or genus in question. Thus, goods are 'of a kind ordinarily used for household purposes' if they are to be recognised as members of a class or genus which commonly or regularly (albeit not necessarily exclusively or principally) is used for household purposes; cf Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd (1979) 1 WLR 305, at 312-313, 315, 316-317." At 400 his Honour pointed out that other items in the Schedule there in question directed attention not to goods identified by the purposes for which goods of that kind are ordinarily used, but to the goods in question themselves or to the identity or character of a particular user. He concluded that the cups were of a kind ordinarily used for household purposes because they were "members of a class or genus (paper cups) which commonly or regularly (albeit not necessarily exclusively or principally) was used for household purposes (viz the carrying of beverages and the consumption thereof)". 19 In Air International Hill J, dissenting, quoted with approval the decision of the Court of Appeal in Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd [1979] 1 WLR 305, to which Gummow J had referred in Hygienic Lily . The question in the English case was whether couplings and winches were to be classified for value added tax purposes as "Goods of a kind suitable for use as parts of goods within item 1 or item 5". Hill J said at [28]: "Brown LJ held that the words 'goods of a kind' referred to some class or category or genus of goods which had characteristics in common. That holding is generally consistent with the Australian sales tax cases referred to in Clean Investments." Hill J then quoted with approval this passage from Megaw LJ's judgment (at 316-317): "It is not 'the goods' the particular articles, here the couplings and the winch which have to be suitable for use as parts. It is the kind of goods to which these particular articles belong, their genus, which has to be thus suitable. The addition of 'of a kind', would be meaningless if goods which are themselves suitable are necessarily also goods of a kind which is suitable. The question is, first, what is the relevant 'kind of goods' of which they are members; and, secondly, is that kind of goods generically, suitable for use as parts of the goods comprised in items 1 and 5 of Group 3." 20 I doubt that there is any real difference between the cases upon which the parties based their respective approaches to the construction of item 13. In Air International , before the passage set out at [16], Tamberlin J quoted at [47] from Hygienic Lily the passage appearing at [18], introducing it at [46]-[47] with the words: "In answering the question [whether the fans etc are goods 'of a kind used as replacement components'], it is necessary to construe the quoted expression as a whole. The intent or purpose of the manufacturer or importer is not the criterion to be applied. Nor is it necessary that the goods should in fact have been used or be used as replacement components. It is sufficient if they are 'of a kind' which can be so used. That is to say, if they come within the genus of 'goods used as replacement components'. In order to determine whether the goods are within that genus, it is necessary to examine the 'nature quality and adaptation of the goods in the class': see Gummow J in Hygienic Lily ...." When Tamberlin J went on to say, in the passage relied on by Cascade (set out at [16]), that it is helpful to look at actual use when deciding whether goods are 'of a kind' used in a particular way, because when they are so used, that points to a conclusion that they are 'of a kind' so used, his Honour was not, in my view, intending to depart from the approach mandated by the words of item 13 or that appearing in Hygienic Lily . He was simply saying that the answer to whether goods are of a kind used in a particular way may, depending on the circumstances, be assisted by looking at how they have in fact been used. 21 Nor do I think the passage in Clean Investments relied on by Cascade (set out at [17]) discloses any departure from Hygienic Lily . After an elaborate examination of the earlier cases, especially Hygienic Lily (which had not been drawn to the primary judge's attention), Lindgren J distilled the propositions he derived from them. The one preceding the proposition set out at [17] is: "The statutory question is not whether those goods of the taxpayer will in fact be used for household purposes but whether they are goods 'of a kind ordinarily used for household purposes' (Chubb per Hill J (with whom Tamberlin J agreed) at 571; Diethelm per Hill J at 470)." Further, in the second paragraph set out at [17] his Honour identified the existence of two questions. He was not saying there was not two questions, but that in some cases it may be misleading to address them separately.