Airservices v Canadian Airlines

[1999] HCATrans 109

IN THE HIGH COURT OF AUSTRALIA

Registry  No C22 of 1998

B e t w e e n -

AIRSERVICES AUSTRALIA

Appellant

and

CANADIAN AIRLINES INTERNATIONAL LTD

Respondent

Registry  No C23 of 1998

B e t w e e n -

AIRSERVICES AUSTRALIA

Appellant

and

MONARCH AIRLINES LIMITED

Respondent

Registry  No C24 of 1998

B e t w e e n -

AIRSERVICES AUSTRALIA

Appellant

and

POLARIS HOLDING COMPANY

Respondent

GLEESON CJ
GAUDRON J
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON MONDAY, 3 MAY 1999, AT 2.18 PM

(Continued from 15/4/99)

Copyright in the High Court of Australia

MR D. GRAHAM, QC, Solicitor General for the State of Victoria:  May it please the Court, I appear with my learned friend, MR S.G.E. McLEISH, for the Attorney-General for the State of Victoria, intervening.  (instructed by the Victorian Government Solicitor)

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, our written submissions, which we describe as the further written submissions or supplementary submissions, and those of the Attorneys-General, deal comprehensively with the question of whether the Authority’s charges can be supported by section 51(i) or other heads of power. Today we would like to concentrate on whether the liens provisions in sections 68 to 83 are within power in particular in respect of their relationship to the trade and commerce power and the acquisition power.

KIRBY J:   You mentioned a number of lien provisions, and many of them seem to relate to the rights of what I will call citizens, corporations or individuals.  Are there others that protect the Commonwealth as such of those that you have found?  Presumably it can be done by a computer search.

MR JACKSON:   Some of those in our submissions deal with liens that are attracted to the Commonwealth or, perhaps more accurately, a statutory body.

KIRBY J:   Anyway, some of them in your list are Commonwealth protective or statutory body protective provisions.

MR JACKSON:   Statutory body protective ‑ ‑ ‑

KIRBY J:   When is the first mention of liens in English law?

MR JACKSON:   If one is talking about in, perhaps, an analogous context, your Honour, the first which we have referred to is the Harbours Docks and Piers Clauses Act 1847 which was ‑ ‑ ‑

KIRBY J:   Surely liens go back to ancient common law.

MR JACKSON:   Quite, and that is why I said in an analogous context.  I am talking about a lien by statute in respect of a body which performs a role or function similar to that performed by ‑ ‑ ‑

GAUDRON J:   In respect of the property of persons who did not incur the original debt?

MR JACKSON:   Yes, your Honour, it was in respect of the ship.

GAUDRON J:   Sorry?

MR JACKSON:   In respect of the property in the ship irrespective of the ownership.

CALLINAN J:   Mr Jackson, is there any case in Australia in which it has been held that the lien could attach to the interest of third parties when the proscribed matter or in circumstances in which there is not a criminal sanction imposed upon the actual offender?  In other words, there is no criminal sanction here, is there?

MR JACKSON:   There is no criminal sanction.

CALLINAN J:   In respect of a failure to pay the charges?

MR JACKSON:   No, your Honour, but if I could answer that, perhaps, in two or three parts.  If one takes the forfeiture cases in respect of fisheries, of which Lawler is an example, the imposition of the forfeiture as against the party who was the owner of the vessel is against somebody who was not a party to the offence in any way – he is an innocent outsider.

CALLINAN J:   Yes, but while there was an offence provision and the person bringing in the boat was using the boat for the proscribed purpose, was guilty of an offence, is that not right?

MR JACKSON:   That is true in that case.

CALLINAN J:   Is there any case in which it is not true?  That is, is there any case in which there is no criminal sanction but an imposition of a lien or a forfeiture upon an innocent third party?

MR JACKSON:   The clearest case, your Honour, is the common law possessory lien which attaches in respect, for example, of a workman’s services.

CALLINAN J:   A warehouseman’s lien, that sort of thing, or a ‑ ‑ ‑

MR JACKSON:   There are many of that kind:  accountants, architects, all sorts of people, parliamentary agents, tailors.  The common law lien in that respect is quite wide.

CALLINAN J:   And to what extent are they good against innocent third parties?

MR JACKSON:   To take a simple example, a repairing improver, they are good against the owners, so, if I have a car and I put it on hire to somebody who then takes it to be repaired and it is subject to the possessory lien, my interest as the owner is affected, as is the hirer.

CALLINAN J:   What about on the sale?  Is there a sale in the exercise of the lien, and what happens to the proceeds if there is?

MR JACKSON:   At common law the possessory lien did not give rise to a right of sale but statute ‑ ‑ ‑

GUMMOW J:   It just gave a right to possession to make a pest of yourself until you ‑ ‑ ‑

MR JACKSON:   Quite, your Honour, but in many places the right has been converted or added to by statute.

GUMMOW J:   Equitably it is a different matter.

MR JACKSON:   Perhaps another example, again using the common law, is distress for rent.  The chattels which are in the premises at the time of the distress are subject to it irrespective of the ownership of the chattels, so that the landlord can have resort to them and sell them for the purpose of paying himself the rent.  In that case there is a right of damages conferred upon the true owner as against the tenant.

GUMMOW J:   But this lien under the statute gives a power of sale.

MR JACKSON:   Yes, it does.

GUMMOW J:   It is nothing like a common law lien.

MR JACKSON:   Well, the lien for distress for rent.

GUMMOW J:   It is just an accident that it fixed on this word “lien”, that is all.

MR JACKSON:   Quite, your Honour, it could easily have not used it.  “Lien” is only a ‑ ‑ ‑

GUMMOW J:   It is just misleading.

MR JACKSON:   I was going to say to your Honour “a broad description”.

CALLINAN J:   Mr Jackson, really your response is not an answer in the sense that – and perhaps I did not make myself clear, but I was referring to the Commonwealth, any other case in which the Commonwealth has been able to exercise this sort of right when there has been no statutory provision for a criminal or quasi-criminal sanction to be imposed upon the actual defaulter or offender.

MR JACKSON:   I cannot think of a straight-out example that satisfies the test or the category which your Honour is looking for, but we would submit the ‑ ‑ ‑

CALLINAN J:   You see, it was an offence in Burton v Honan, was it not?

MR JACKSON:   Quite, your Honour, but in other cases it is said that an offence is not of the essence of a forfeiture.  Smithers is authority for that proposition.

KIRBY J:   It is not entirely dissimilar to a common law lien though in that it is an assurance of the payment of a sum by the seizure of a chattel, rather a large chattel, but it still is for the same sort of purpose.  It is a bit like the use of injunctions in statutes.  They are commonly thrown around in statutes.  They are not exactly the same as the equitable injunction but they have a lot in common.

MR JACKSON:   Quite, and so far as one is talking about the right at this level in terms of assessing its proportionality – which is what, with respect, we would submit one is doing in this inquiry – it is not an unusual right so far as Australia and the Authority which provides services of this kind is concerned.  It has analogues throughout the world, in particular ‑ ‑ ‑

KIRBY J:   Yes, but it is pointed out against you that that really does not matter in that we have to measure it against our Constitution and our provisions may be different from those of other countries.

MR JACKSON:   We certainly have to do that, your Honour, but when one is assessing the question here, which is the question of proportionality, that involves as a matter of the way in which the Court has previously gone about it, in our submission, but one looks at both history, which is why we go back to Acts like the 1847 Harbours Docks and Piers Clauses Act and bring it forward.  One looks at common law analogues and one also looks at what is, we would submit, considered to be acceptable practice around the world.  Those things can go into the assessment of a question of proportionality of this kind.

The question as to how to identify the species of laws which are not laws to which section 51(xxxi) applies cannot be answered, in our submission, by reference to the proposition that paragraph (xxxi) abstracts power from the other heads of power.  We could illustrate that by taking the defence power as an example.  Your Honours might well be familiar with Attorney-General v Schmidt which concerned the control of a corporation’s property where the corporation was in the control of enemy aliens.  That ‑ ‑ ‑

GAUDRON J:   Was that under the defence power?

MR JACKSON:   That was a law with respect to defence, yes.

GAUDRON J:   Or under the aliens power?

MR JACKSON:   Justice McHugh said, I think, your Honour, in Lawler’s Case that it was a law with respect to defence.

GUMMOW J:   It may have been both.

MR JACKSON:   Quite.  Both could be in the picture, but we are content, for the purpose of this submission, to perhaps leave it at that.

GUMMOW J:   It might have something to do with external affairs too.

MR JACKSON:   On the other hand, the appropriation in wartime of land in Sydney for defence in the Minister for the Army v Dalziel was within the acquisition power.  One does not answer the question simply by looking at the particular power and saying that is inside or outside the operation of paragraph (xxxi).  It cannot be said, we would also submit, that any law under some heads of power is necessarily excluded from the operation of paragraph (xxxi).  The acquisition of a taxation office is within paragraph (xxxi), though it would otherwise be a law with respect to taxation.

In this Court, your Honours, Justice Brennan has attempted something which might be said to approach a definition of an acquisition outside paragraph (xxxi) which we would like to take you to in Mutual Pools 179 CLR 155, and the passage is at page 180. At the foot of the page in the last paragraph over to the top of page 181, his Honour said that:

In my view, a law may contain a valid provision for the acquisition of property without just terms where such an acquisition is a necessary or characteristic feature of the means which the law selects to achieve its objective and the means selected are appropriate and adapted to achieving an objective within power, not being solely or chiefly the acquisition of property.  But where the sole or dominant character of a provision is that of a law for the acquisition of property, it must be supported  by s 51(xxxi) and its validity is then dependent on the provision of just terms.

GAUDRON J:   Well now, what do you say the objective is here?  What is the relevant objective by which we would apply that test in this case?

MR JACKSON:   The objective within power of the liens provisions?

GAUDRON J:   Well, no; the liens provision has got to be appropriate and adapted on that test to achieving an objective within power.

MR JACKSON:   The objective within power, your Honours, is to provide for the recovery of the charges in respect of the services.

GAUDRON J:   But they are services provided to particular people, are they not?

MR JACKSON:   They are.

GAUDRON J:   Well, how do you relate it? could you tell me precisely how you relate it in this case?

MR JACKSON:   The services are provided to particular people.  Their recovery is sought by the statute to be obtained from both those to whom they are provided and those who, in the case of the owner, authorise in a limited way the provision of the services.  The owner does that by, in the first place, committing the aircraft to be used in Australian airspace, as the lessors did here and permitting it to be used in a way that incurs the charges, because the services are necessarily provided.

CALLINAN J:   But, Mr Jackson, before you go on, given that, is not the achieving of an objective within power, the carrying out or the performance or the achievement of a purpose in respect of which the Parliament has power?  How do you distinguish the two, if you accept that definition?  What is the difference between achieving an object within power, the difference between that, and the achieving of a purpose or the effecting of a purpose in respect of which the Parliament has power, and that is the language of section 31, of course?

MR JACKSON:   The two questions, your Honour, must be connected. In other words, the law must be supported by the head of power to which one points as supporting it. The object of the provision, though, does not have to be a direct execution of the constitutional description, it can be a less proximate connection than that, and that is what the submissions, concerning the scope of section 51(i).

CALLINAN J:   It must be for a purpose, surely; for a purpose in respect of which the Parliament has power to make laws, otherwise there is no power to make the law at all.

MR JACKSON:   Yes, your Honour, and the purpose, in respect of which there is power to make the laws, starting from the constitutional source, is, if one takes the first branch, the trade and commerce power.  The provision of the services is within the purpose.  The charging for the services is intimately connected with the provision of the services and is therefore within the constitutional head of power.  The securing of the payment of the charges, which is what the liens provisions are concerned with, is also so connected and within power.

GAUDRON J:   But if you go back to what Justice Brennan said in that case, the acquisition must be “a necessary or characteristic feature of the means which the law selects to achieve its objective”.  It is a very strict test on that reading, so if your objective is to secure payment - - -

MR JACKSON:   His Honour does not, in that passage, use “necessary” in the sense which I anticipate your Honour means in asking me that question, and that appears from page 182.

GUMMOW J:   Whereabouts at 182?

MR JACKSON:   Page 182, his Honour refers to the – I am sorry ‑ ‑ ‑

McHUGH J:   Different judgment.

MR JACKSON:   I am sorry, I apologise.  In the joint judgment of your Honour and Justice Deane reference is made to how necessary the connection must be.

GAUDRON J:   Yes, I would have thought that the test that Justice Deane and I propounded was not as strict as that propounded by Justice Brennan.

MR JACKSON:   Perhaps I can put it best this way, your Honour.  The way in which we would interpret what Justice Brennan says, is that the passage focuses on the connection between the means adopted and whether they are appropriate and adapted to achieving the object, which is what might be described broadly as the proportionality issue as it is picked up in the other judgments.

GAUDRON J:   There are two aspects.  One has to be “a necessary or characteristic feature of the means”.  Now, let us assume that is a lien, it does not seem to be a necessary or characteristic feature of the lien that you should have a power of sale, and then – I am just looking at the Justice Brennan test – you have this difficulty, I would have thought, you have to establish that the imposition of a lien with the power of sale is appropriate and adapted to achieving the payment for services rendered to another person.

MR JACKSON:   Yes.

GAUDRON J:   So, you have two difficulties with that test, I would have thought.

MR JACKSON:   Well, we would have submitted the first part of the proposition, as your Honour has outlined, it is satisfied by the circumstance that liens are what they are.  There is not another means ‑ ‑ ‑

GAUDRON J:   Well, a lien is a right to possession at common law.

MR JACKSON:   Not a maritime lien, your Honour, for example.

GAUDRON J:   We are talking about a maritime lien, are we, which has developed out of an entirely different area of the law?  It developed in Admiralty.

MR JACKSON:   It developed in circumstances that are not entirely clear in a number of different areas but if one takes the law as at the 1850s or 1880s, it was a clearly recognised lien which attached to the ship or a right in rem which attached to the ship, for example, in the case ‑ ‑ ‑

GAUDRON J:   But the debt also attached to the ship, did it not?

MR JACKSON:   A case of collision would not fall within that category, your Honour.

GAUDRON J:   All right.  For services rendered, the debt attached to the ship?  Whereas, here, you are talking about a fee for services rendered.  You are not talking about, which are rendered to Compass.

MR JACKSON:   The statutory lien or charge which attached to the ship, for example, under the Maritime Clauses Act, was not in respect of a debt that attached to the ship.  It was in respect of provision of services in the nature of port facilities.

GUMMOW J:   You have to get out of the word “characteristic feature”, “characteristic” having regard not only to general law, but also to statute, I think.

MR JACKSON:   Yes.

GUMMOW J:   That is where you get the statutes from the 1840s into play, is that right?

MR JACKSON:   In one sense, yes, we would seek to rely on it in that way.  That is part of it.  We really do not try to say there is a precise lien in respect of aircraft.  Obviously, aircraft are a much more modern invention.  What we are trying to submit to your Honours is that in assessing a question of proportionality which is assessing the means – the liens – in respect of the purpose, which is the recovery of the charges from the user group, that one can ‑ ‑ ‑

GAUDRON J:   But you are not recovering them from the user group ultimately by the lien, are you?  When the lien is against a third party, you are not recovering the charges from the user group.  Then you face the problem whether it is in fact a fee for service.

MR JACKSON:   We submit that the question is not as general in this case as that and that is because the owner is someone who, in the sense that I have already outlined, gives a limited authority for use.  He is also someone who gets benefit from the provision of the services to be ‑ ‑ ‑

GAUDRON J:   You say he gives limited authority.  You imply authority, do you?

MR JACKSON:   In the same way that is implied in the case of the common law lien which is of a possessory nature for the workman.  It is no different that we say that.

GLEESON CJ:   Is it the case that some conventions and statutory provisions in relation to aircraft have applied or borrowed concepts from maritime law?  Some of the practical problems that have to be addressed are similar, are they not?

MR JACKSON:   Yes.

CALLINAN J:   One is, Mr Jackson, that you can get specific performance of a contract of the sale of a ship and you can similarly get specific performance for the specific performance of the sale of an aircraft on the basis that they are similar, and those are exceptions to the rules in relation to contracts for the sale of personal property.

MR JACKSON:   Yes, your Honour.  The analogy also seems to exist in the case of liens that exist for aircraft which either crash or are capable of, without crashing, going on water.  There are some specific analogies that apply in the case of liens in those specific situations but the common law seems not to have created a regime of liens beyond that situation.  The analogy though is obvious.

GLEESON CJ:   It is not surprising that the common law did not create a regime of liens over aircraft.

MR JACKSON:   Quite, your Honour, and that is one the reasons by which we seek to have regard to the situation with regard to shipping.  Many of the things are common but the nature of the sorts of services provided by the Authority and those which are provided in the way of port services or by way of pilotage is obvious - the comparison can readily be drawn.  The existence of rights which would go directly against the ship in that context is readily pointed out, we hope, by the paragraphs in our written submissions which are set out between 34 and 42.  The best ones, we hope, are those referred to in 36 and 37 which in the case of shipping in the first case refer to liens which we describe as being similar and which were described in the judicial context as being clear and reasonable.

Could we, perhaps to go back to the shipping case, for instance, also mention to your Honours one other highly regarded writer – and we have copies of the passage to which I want to refer – from The Collected Works of Justice Holmes for your Honours.  In The Collected Works in 1880 in volume 3 at page 128 his Honour wrote of the case of collisions between ships.  In the last complete paragraph on page 128 he said:

By way of seeing what those peculiarities are, take first a case of collision at sea.  A collision takes place between two vessels, the Ticonderoga and the Melampus, through the fault of the Ticonderoga alone.  That ship is under a lease at the time, the lessee has his own master in charge, and the owner of the vessel has no manner of control over it.  The owner, therefore, is not to blame, and he cannot even be charged on the ground that the damage was done by his servants.  He is free from personal liability on elementary principles.  Yet it is perfectly settled that there is a lien on his vessel for the amount of the damage done, and this means that that vessel may be arrested and sold to pay the loss in any admiralty court whose process will reach her.

He distinguishes the case of the livery stable keeper.  Over the page in the second paragraph on page 129 Justice Holmes said:

It may be admitted that, if this doctrine were not supported by an appearance of good sense, it would not have survived.  The ship is the only security available in dealing with foreigners, and rather than send one’s own citizens to search for a remedy abroad in strange courts, it is easy to seize the vessel and satisfy the claim at home ‑ ‑ ‑

KIRBY J:   I am sure you understand that the issue is one of testing this proposition because, take for example, if this lien is upheld could it be that if the Commonwealth could so frame its legislation that every debt to the Commonwealth of all sorts of kinds could be, in effect, guaranteed by statutory lien provisions, it may be directed at third parties, it may be directed at the householder of the home in which the debtor lives on the basis that this is a way of ensuring the payment is made, and that would be to extend very greatly the ambit of the Commonwealth’s acquisition of property.  One must test propositions in constitutional law by the consequences of what will happen if it becomes the general rule.  It is really a Immanuel Kant’s Theory of Morality applied to constitutional law.

MR JACKSON:   Perhaps there is two parts of the answer, your Honour.  The first is a lien of this kind certainly, in principle, could occur in other situations where laws of the Commonwealth provide for the provision of services and the recovery of their costs.  The particular application here, though, is one which we seek to focus upon before your Honours, because, in this case, there is obvious benefit to the owner.  To put it as bluntly as one can, in the case here where the charge is payable by the operator and the operator is a lessee, his business may be worth nothing.  But the object which is being preserved by the services, or benefited by the services, is a very valuable aircraft.  In other words, the services may be of much more worth to the owner than they are to the operator.  Also, we would submit, your Honour, that one should have regard to the circumstance that, under section 66, it may well be provided that the owner is liable for the charges.  That is in fact the scheme of the legislation in Canada that we have included in our supplementary authorities, that the operator and owner are both liable for the charges for the services which are provided to the aircraft.

GAUDRON J:   Let us imagine an aircraft which is mortgaged to the National Australia Bank.  Could the Commonwealth legislate to say that in the case of any unpaid charges, it shall have a charge over the assets of the bank to the extent that the charges are unpaid?

MR JACKSON:   At that point, your Honour, the question of proportionality may well have reached breaking point, if one is talking about the assets of a bank in ‑ ‑ ‑

GAUDRON J:   But the mortgagee has impliedly authorised the ships entering into these arrangements - or flying around, in much the same way as the owner, the third party.  It has an interest in preserving the asset and seeing that it does not collide with other planes.  What is the difference?

MR JACKSON:   The difference in the example, your Honour, is that the property which is the subject of the postulated charge is the general property of the bank, which has only an interest in the aircraft by virtue of its security interest for money lent.  If the property were confined to the aircraft, we would submit that there be no difference with this case, but there is an extra step in terms of connection.

GAUDRON J:   Yet, your law, does it not, the law you have in issue here, apropos proportionality, it protects the mortgagee, does it not?

MR JACKSON:   It does, except if his mortgage is floating and not fixed.

KIRBY J:   If you look at the list of statutory examples that you have at paragraph 34, all of them, save for (b), the collector’s lien would appear to be liens for the benefit of private individuals.

MR JACKSON:   Yes, your Honour.

KIRBY J:   Now, is it perhaps significant that the Commonwealth has never previously, save in the Excise Act, enacted a provision for a lien that is analogous to this one?

MR JACKSON:   We would submit not, where the area of fielding, which the legislation is operating, is the provision of services.  This could be engaged in as much by a private individual as they could by a government and, in fact, of course, the authority was established and calculated to do it, that is, provide the services.

KIRBY J:   But the Commonwealth has been engaged in lots of - over the years, its authorities have been engaged in business-like activities; indeed, some might say, more than now.  Nowadays there is a tendency to divest all this, but there was a time when there were lots of business-type activities.

MR JACKSON:   It may be relevant to look at it the other way, your Honour.  If the Commonwealth cannot do so in the field of activity which we postulated, as a matter of generality, then, so far as it incurs costs which would otherwise have been recovered through the payment by the user, and here we are postulating where it is not being recovered that way, it will have to recover that cost from somewhere else, so one is talking about the recovery of the expense for which the charge provided, by means of the Commonwealth’s or Government’s other resources, namely taxation.  Or, it has to pass the charge, as part of, if one likes, one year’s unrecovered expenses on to the balance of the user body, so that amongst those who pay charges in the future, they make up the difference.

KIRBY J:   But how could one fashion a principle that confined this power to enact a lien, which was, in some way, analogous – I mean, everyone will understand patent attorney’s liens and maybe broker’s liens, insurance brokers, as analogous to attorneys, and ships and rights in rem are ancient or, at least, they are well-established precedents – but what is the common genus that permits this kind of lien, but which would prevent a rapid expansion of this way of getting at people’s property, without just terms provision?

MR JACKSON:   Within the current framework of decision it would be a question of assessment of proportionality.

HAYNE J:   Well what then would distinguish this case from the case of a law which permitted seizure of leased property and in sale in payment of income tax owed by the lessee?

MR JACKSON:   The point of distinction which we seek to make in this case and which makes it stronger, is the common law and statutory comparable laws.  So, because one can see that such provisions have existed, not recently, but over an extended period of time, historically, and that they do exist, commonly now and in this precise context elsewhere, that assists the Court in determining the answer to the question of proportionality.

KIRBY J:   Is that done on an analogy like - I am sorry.

MR JACKSON:   Could we add to that that, in the case your Honour has just suggested, there is no suggestion of benefit to the person who is the subject of the lien, as in this case, and there is no connection between the tax ‑ ‑ ‑

HAYNE J:   Why not?  The lessee, in my example, benefits from whatever the taxation revenues of the Commonwealth has spent on, to the extent of every other citizen.

MR JACKSON:   But the lessor does not, your Honour, and there is no connection between the tax and the lease in the example you have just given me, with respect.  I am conscious of the time, your Honour ‑ ‑ ‑

KIRBY J:   Is your analogous reasoning, as it were, drawing upon the way in which the court excused criminal finds and well-established patterns of receiving property, which could not be made the subject of the provision of just terms, without defeating the very kind of payment which was involved?

MR JACKSON:   Yes, your Honour, and in one sense we say, with respect, the law here is more readily seen to be connected to the purpose than in the case of the forfeiture of the boat for the fishing rights.  One can talk about the forfeiture of the boat for the fishing rights by saying, “We can see an offence” and forfeiture goes with offences, but the innocent owner in the case of the forfeiture is really, in a sense, a party more innocent, than is an owner in a case like this.  The owner of the boat in the forfeiture case for the fishing rights did not get any benefit at all, whereas, plainly in the case of services like this, and like the pilotage or port services in the shipping context, the owner does get such a benefit.

Your Honours, may we make a couple of brief further submissions about the liens provisions.  We have already submitted that a common law possessory lien is effective against the owner of the goods, whether or not he wished the work to be done, and we have made reference to the maritime example.  The maritime example of course extends beyond the vessel in question.  It can go to a surrogate vessel, that is the other property of the owner, showing just how extensive liens of comparable kinds can be. 

In the passage of Justice Brennan to which we were referring, the last element was a negative one that the objective which has been sought to be achieved by the law is not solely or chiefly the acquisition of property, and we would emphasise that aspect because it is one which can be seen to be satisfied here.  Other members of the Court ‑ ‑ ‑

GAUDRON J:   How do you satisfy it?  The person does not owe the debt.  What other objective with respect to third parties can it be said to have other than the acquisition of the property, albeit it is an acquisition to counterbalance the fees paid for services rendered but not paid?  It seems to me to be its main objective.

MR JACKSON:   We submit that the character of the liens provision is readily seen in the system of regulation of the Act as being an adjustment of competing claims and interests.  Could we ‑ ‑ ‑

GUMMOW J:   What is the source of the competition.

GAUDRON J:   Yes.

MR JACKSON:   Perhaps I can illustrate that or answer that question, your Honours, by referring to what was said by Chief Justice Mason in Mutual Pools at page 171.

GUMMOW J:   This is all about other matters, I think, is it not?

MR JACKSON:   It was on its facts, your Honour, but his Honour was discussing the matter, we hope, a little more broadly.  At 179 CLR at page 171, at about the middle of the page, his Honour said:

Of these instances, it may be said –

and he set out the examples, including taxation –

that they are all cases in which the transfer or vesting of title to property or the creation of a chose in action was subservient and incidental to or consequential upon the principal purpose and effect sought to be achieved by the law so that the provision respecting property had no recognizable independent character.  Indeed, the taxation cases apart, they were all cases in which the relevant statute provided a means of resolving or adjusting competing claims, obligations or property rights of individuals as an incident of the regulation of their relationship, eg, the relationship between a bankrupt and the creditors in the bankruptcy –

and then the next example is:

between the Crown and the person who brings in prohibited imports, and between the Crown and an enemy alien with respect to enemy property.

That is the language of adjusting claims and rights in the area of regulations applied ‑ ‑ ‑

GUMMOW J:   I know, you can read it to me, but it does not explain to me what is the source of the competition.  It is self-referential.  Who charts out the boundaries of this competition ‑ ‑ ‑

MR JACKSON:   The charter which ‑ ‑ ‑

GUMMOW J:   How does one draw the metes and bounds of it?

MR JACKSON:   Perhaps, can I answer it by reference to the specific rather than a definition which - I probably cannot provide a satisfactory one.  The forfeiture case for the fisheries law is one in which the owner has no claim against anyone except he wants to maintain ownership of his boat, and there was no claim against him prior to the forfeiture.  The relationship was the one between the preservation of the fisheries and the person who committed the offence whilst in possession of the boat. 

GUMMOW J:   I own this wretched aeroplane.  I did not have a competing claim with anybody; I owned it.

MR JACKSON:   Quite.

GUMMOW J:   I had the highest form of ownership the law could give me.  I was not in competition with anybody.

MR JACKSON:   And the owner of the fishing boat was in the same position, your Honour.

GUMMOW J:   It was not a question of an unregistered mortgage in competition with another unregistered mortgage to race to register – I owned it.

MR JACKSON:   Yes, your Honour, with respect, and so ‑ ‑ ‑

GUMMOW J:   Why is that taken away from me on the theory that other people have a competition between themselves?

MR JACKSON:   Well, it is not just taken away from you in that simple circumstance and I ‑ ‑ ‑

GUMMOW J:   I cannot sell it.

MR JACKSON:   That is the effect of the right, but they are not the circumstances in which it is taken away from you.  They are taken away from you in circumstances where you had the benefit of the provision of the services and you have permitted and authorised, in the relevant sense, the use of the thing you own so that those services and the costs that go with them could be provided.  Could we perhaps also take your Honour to one other example and we will go off this point.  It is the Nintendo Case.  Your Honour, Nintendo Company Limited v Centronics Systems Pty Limited (1993-1994) 181 CLR 134. The passage to which we wanted to take your Honours is at page 161. In the first complete paragraph on the page their Honours said:

The cases also establish that a law which is not directed towards the acquisition of property as such but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity is unlikely to be susceptible of legitimate characterization as a law with respect to the acquisition of property for the purposes of s 51 of the Constitution…..It cannot properly, either in whole or in part, be characterized as a law with respect to the acquisition of property for the purposes of that section.  Its relevant character is that of a law for the adjustment and regulation of the competing claims, rights and liabilities of the designers or first makers of original circuit layouts and those who take advantage of, or benefit from, their work.  Consequently, it is beyond the reach of s 51(xxxi) –

Centronics was the owner of the articles which incorporated the circuit when the Act had the effect of depriving them of that property.  Perhaps not in the order that we hoped to make the points, your Honour, we think we

have touched on the matters which we can in the time available say something about by way of oral address.

GLEESON CJ:   Thank you, Mr Jackson.  Mr Solicitor for the Commonwealth, did you wish to support Mr Jackson on the liens issue?

MR BENNETT:   Your Honours, I want to deal briefly with three matters:  the question of power supporting the Act and, specifically, the liens provision, the questions of section 51(xxxi) and the liens, and the question of severability.  The issue of taxation appears to have been withdrawn and, therefore, I do not propose to say anything about it unless it is something which the Court is contemplating raising in the face of it having been withdrawn.

GAUDRON J:   I thought it was not withdrawn to the extent that it was concerned with the liens.  That is to say, I understood from the written submissions that it was argued that to the extent that there were no services rendered to these people, it could not be argued it was a fee for services provided to them as individuals and, therefore, it must be taxation.  That is the liens as against third parties – that is how I read them.

MR BENNETT:   I read it differently, I must say ‑ ‑ ‑

GAUDRON J:   Mr Campbell might tell us.

MR CAMPBELL:   We do not seek to say that it is taxation and has the consequence of bringing down the rest of the Act by virtue of section 55.  We do, however, rely upon the many similarities that it has to taxation as a way of showing that it is not proportionate to any exercise of power and as a way of showing that it is not a law that is made under any other hidden power other than 51(xxxi).

MR BENNETT:   Yes, I think that amounts to a withdrawal of the submission for my purposes, your Honour.

GAUDRON J:   Yes.  Yes, I think so.

MR BENNETT:   In relation to power, it does not appear to be submitted, again subject to what my learned friend, Mr Campbell, may say, that the Act itself is not supported by a number of possible heads of power. What is submitted, as I understand it, is that the lien provisions are not supported by the heads of power upon which we rely. We seek to support them under section 51(i) under the external affairs power and to a small extent, although not for the whole of it, under the territories power. In relation to the trade and commerce power, we simply rely on Airlines [No 2] and in relation to the external affairs power on both the fact that international aviation is an external affair and the fact that there is a convention which requires, as we have shown, to maintain a system of safety and to have in place the various matters which this legislation is directed to.

GAUDRON J:   But it does not require you to impose liens on the property of third parties?

MR BENNETT:   No.  It does not require us to, no.  In each case I then have to make good the connection between the charge, and ultimately the lien, and ‑ ‑ ‑

GAUDRON J:   In order to permit you, I take it, to in turn permit you to impose a lien on the property of third parties.

MR BENNETT:   Well, there is no ‑ ‑ ‑

GAUDRON J:   No.  The relevant treaties are silent about it, are they not?

MR BENNETT:   Are silent on it, yes, your Honour.  But the treaty requires us to put in place the services.  There is no doubt about our right to charge for those services.  The liens provision simply has the effect that in certain circumstances the burden, up to the limit of the value of the aircraft, may be borne by a person other than the person operating the aircraft at the time of the use of the services.  As has been pointed out, there would have been no reason why the basic charges could not have been imposed on the owner as well as the user of the aircraft, or the operator.

GAUDRON J:   They might ‑ ‑ ‑

KIRBY J:   Is it only Canada that does it that way or ‑ ‑ ‑

MR BENNETT:   We do not know of any other country which does it, your Honour, but we have not checked through around the world to see.

GAUDRON J:   Let us assume these were entirely interstate planes, for the moment, and they were leased from Royal Jordanian Airlines, and we will assume, for the moment, that Royal Jordanian Airlines – we will take another one.  We will take an airline company that does not fly into this country at all, we will make one up, Royal Antarctic Airlines, but it does not fly here.  Where would be your constitutional power to impose the charge on Royal Antarctic Airlines?

MR BENNETT:   Your Honour, when the Commonwealth provides a service within power it may charge for that service.

GAUDRON J:   But you said they could charge the owner and person who availed themselves of the service.

MR BENNETT:   Your Honour, where one has a charge ‑ ‑ ‑

GAUDRON J:   In fact, the question is important because I think, perhaps, if you cannot charge the owner you probably cannot put a lien on the owner.

MR BENNETT:   Well, your Honour, we would have put charging the owner was almost easier that putting a lien on the owner.

GAUDRON J:   Yes, but the owner who does not avail itself of the services and who is not itself engaged in interstate trade, the aircraft is not engaged in interstate trade, and the owner is not engaged in overseas trade with Australia, except for the lease.

MR BENNETT:   Your Honour in the question puts one assumption which we would not accept in relation to the relationship between the owner and what the aircraft is doing.  If the owner leases the aircraft for use in Australia there is only one way you can use a plane in Australia unless you are ‑ ‑ ‑

HAYNE J:   But if the owner leases the aircraft, it is in effect a bare boat charter.  Use it where you will.  Take that example, Mr Solicitor.  I know it may be inconvenient, but take that example.  How, then, does the Commonwealth have power to charge the owner for the service?

MR BENNETT:   Your Honour, if one added one element to your Honour’s example, that it was prohibited to use the plane in Australia, it may well be that the Act could not extend that far.  But where it is a permitted or, a fortiori, the commonly intended use of the aircraft in Australia, then there is only one way you could use it in Australia, and that is to fly it from one airport to another unless, perhaps one is going to use it to teach people on the ground and things concerning it.

So the owner is extracting a rent for a use which necessarily involves, and which everyone knows will involve, the incurring of these charges.  And the benefit from the plane being able to be used in that way, flows to some extent to lessee and to some extent to lessor, to the knowledge of the lessor and, indeed, one could say, as a matter of intention of the lessor in most cases, certainly in these cases.  Now, your Honour, we would submit, in that situation, there is more than sufficient nexus to justify charging the owner, as well as the operator. 

Your Honour put an example which is inconvenient because it involves an inconvenient element of severance, if one cannot take it as far as your Honour’s example.  If one accepts that a plane which is prohibited from coming to Australia, it may not be able to attract a charge to the owner, and probably would not, one then has to deal with the bare boat overseas lease where the plane may or may not be brought to Australia.  It may be, in that situation, one would have to ask further questions about the overt intentions of the parties, about their permission and one might even have ‑ ‑ ‑

GAUDRON J:   Why does not one ask questions about the head of power, which is where we started?  Forget about the intentions of the parties.  The head of power is what - - -

MR BENNETT:   I started with that, your Honour.  The relevant heads of power are external ‑ ‑ ‑

GAUDRON J:   To charge the bare boat charterer, in respect of a lease, entered in Nicaragua to do what ever you like with the plane.

MR BENNETT:   Your Honour adopts Justice Hayne’s example, so ‑ ‑ ‑

GAUDRON J:   Yes, well we can then work down.  All right.

MR BENNETT:   One can work down, but working down may involve questions of severance.  The example that is put to me is one which is on the borderline ‑ ‑ ‑

GAUDRON J:   Which is the head of power that you assert?

MR BENNETT:   There are two heads of power, external affairs and trade and commerce, because the ‑ ‑ ‑

GAUDRON J:   To charge the owner?

MR BENNETT:   To charge, and then the question is can one charge the owner?

GAUDRON J:   And how do you make the external affairs power work in this, just because the owner is overseas?

MR BENNETT:   But each of the three powers is invoked by what the aircraft does, by the use of the services.

GLEESON CJ:   Well you have to add, do you not, the character of the services which include caring for the safety of the aircraft?

MR BENNETT:   Yes, that is one of the ways it is put.  But that arises equally under trade and commerce, and under both categories of external affairs that I have referred to.

In this case it is a much easier case.  Here one is dealing with leases for planes to fly in Australia and to be used in Australia and, as I say, there is only one way they can be used in Australia.  So everyone intends that these charges will be incurred.  Everyone knows of the liens which are a matter of public statutory law.  Where is the imposition of some burden upon a stranger?

GUMMOW J:   This is some sort of benefit and burden argument, is it?  You cannot have the benefit without getting the burden.

MR BENNETT:   It is more than benefit and burden, your Honour.  It is ‑ ‑ ‑

GUMMOW J:   It may be a good argument, but that it I what it seems to be

MR BENNETT:   Well, that is part of it, your Honour.

GUMMOW J: .  Approbation and reprobation, and all that stuff.

MR BENNETT:   But it is a lot more than that, your Honour.  It is the creation of a situation.  It is the leasing of a plane for use in Australia and that use necessarily involves the incurring of these charges in a statutory regime which imposes a lien.  Now, it is more than obtaining a benefit, it is consenting, in effect, to the system under which the plane will be used.  They have no obligation to send their planes to Australia.

GUMMOW J:   Then it becomes approbation.

MR BENNETT:   Well, in one sense, it is.  But the point we make is that there is more than sufficient nexus, however one words the test.  Once one accepts that there is power to impose the charge on the operator, we submit there is also the right to impose the charge on the owner and there is also the right to, a fortiori from that, impose something less of the owner which is a lien on the aircraft to the extent of the value of the aircraft only, to the extent that the operator defaults.  Once it is characterised that way, it fits easily within the relevant heads of power.

Now, the question Justice Hayne put to me about the bare boat charter in an overseas country where the plane happens to be brought to Australia and it could equally be brought anywhere else in the world, we would characterise that as the owner consenting to the plane being made subject to whatever liens different countries impose on the use of their facilities.  If your Honours were against me on that, that would not be fatal to the appellant’s argument in this case because one could sever in such a way as to limit it to owners who had in some way consented to, in the lease document or otherwise, the plane being used in Australia, but it was never suggested here that the planes would be used anywhere else, as we understand it.

We have provided in our submissions the details of how we fit it into trade and commerce under the airlines case, how we fit it under the external affairs power under the airlines case and under the convention, which we have given your Honours the references to and which require the various matters.  There is also, to some extent, the territories power as to part of it.

Your Honour Justice Gaudron in Mutual Pools put the test in a way which is, as your Honour said, with respect, more favourable to the appellants than the way Justice Brennan put it, but the way your Honour put section 51(xxxi) and its relationship to other powers we would submit sits very comfortably with what has been done here because a fee for service, a service rendered within power, is clearly not something within section 51(xxxi).  That is before one gets to the lien - I appreciate we want to do it in two steps – but no one could suggest that a simple fee for service, otherwise properly charged for a service, is in any way something to which one would apply section 51(xxxi).  It fits within the examples given by your Honour on page 187 and the top of page 188 as matters to which, on its face, the acquisition power simply does not apply.

One then comes to the more detailed test that your Honour put at page 188, that there has to be a characterisation or a sole or dominant character and the phrase your Honour used at the bottom of page 188 was:

However, unless a law can be fairly characterized, for the purposes of paragraph (xxxi) as a law with respect to the acquisition of property, that paragraph cannot indirectly operate to exclude its enactment from the prima facie scope of another grant of legislative power.

So, at the end of the day, one has to fairly characterise the law.  That is, if it fails the first test, if it fails the test of being one of these categories of law - and we would put fee for service as one of them and something ancillary to fee for service as being within that.  But if one is outside that, one still has this characterisation element, and the characterisation here has to be, we would submit, as a means of collecting a fee for service from ‑ ‑ ‑

GAUDRON J:   By taking the property of the owner?

MR BENNETT:   Yes, your Honour – by taking the property of a person ‑ ‑ ‑

GAUDRON J:   That sounds very much like ready characterisation as the acquisition of property.

MR BENNETT:   Well, your Honour, it is taking the property of the owner, being a person who has, to a degree, little difference from the operator, both consented to and obtained the benefit of the services rendered.  So, if an owner does not wish to have its aircraft subjected to a lien, all the owner has to do is not allow the aircraft to be used in Australia in a manner which will utilise these services.  In other words, it does not fly in Australia.  If the owner wants the plane to fly in Australia -and Justice Gummow put it as approbation and reprobation, which, in one sense, it may be close to - that, we would submit, is not far distant from the situation concerning the operator.  Now, ultimately it is a question of degree.  One can put examples.  The example of BHP, a totally unrelated party, was put on the last occasion.  Examples are put today about mortgagees and Justice Gummow put the example of the other assets of a mortgagee being taken and of course one can take examples which are more remote, and certainly one may get to a point where the lien is so remote as not to fall within the various heads of power.  What we submit is that this case is a long way short of that, for all the reasons that have been put by my learned friend Mr Jackson and by myself.

KIRBY J:   Can you cite any other illustrations apart from that one of the Excise Act that is analogous to this one where an office of the Commonwealth or an agency of the Commonwealth are protected by a statutory lien, and is the absence of a body of such legislation significant?  Forensically, it seems significant.  It may not be legally.

MR BENNETT:   I am not sure if there was something in relation to port charges.

KIRBY J:   It is not difficult to run a computer search on Commonwealth statutes, I would not have thought.

MR BENNETT:   Yes.  There is certainly an example in relation to port charges in South Australia which is one of the reasons ‑ ‑ ‑

KIRBY J:   No, that is State Act, that is a different kettle of fish.  I am talking about federal statutes.

MR BENNETT:   Your Honour, when one is looking for analogies to see if something is characteristic, there is no reason why one cannot look, we would submit, to State statutes or, indeed, overseas statutes.

KIRBY J:   No, but they are not constrained by the just terms provisions of the Constitution, whereas, you are.

MR BENNETT:   Yes.  Your Honour, I suppose one could certainly find examples in taxation law of liabilities being imposed on other people.  I suppose the MacCormick’s Case is the classic example of that, although that was held to be a separate tax in that case.

KIRBY J:   If you find any other illustrations except the Excise Act, I would be interested to know of it.

MR BENNETT:   Your Honour, if we could have leave to do that within seven days, I would seek that leave, but I am not aware of any others at the moment.  Your Honour also asked about universal liens, about the concept of applying a lien in relation to all property of people with a view to extracting money and, of course, one comes to the point where it either has to be justified as taxation or it is an acquisition of property.  But the question of degree in this case really turns, we would submit, on the relationship between lessors of aircraft and the services provided to the aircraft in this situation where, (a), there is nothing else that can be done with the planes to earn the rent and to make the lease justified and (b), the preservation of the property is very much to the owner’s benefit, and (c), they know in advance of the situation when they enter into the leases.

One could well imagine an argument being put that there may be situations which would have to be severed and in which the provision might go too far.  One possibility which no one has raised, I raise it simply to show that one could always imagine situations that may go a lot further, is the problem of the stolen aircraft and the question of the imposition of a lien against the owner of a stolen aircraft.  In practice, it would not matter very much because it is unlikely that a stolen aircraft could land more than once or twice and, fairly obviously, in that situation the lien would be for a comparatively small amount.  But it may be that one might have to sever in that situation.

McHUGH J:   What about an aircraft subject to a Romalpa clause?

MR BENNETT:   Your Honour, there is a provision, although a Romalpa clause may not fall within it, there is a provision in the Act which protects prior mortgages on the aircraft other than floating charges.  One would have to look at the Romalpa charge and see whether it fell within it on the construction of that section.  Certainly, one can imagine a great many cases which may provide problems that this case does not provide, but this is not the difficult case.

HAYNE J:   Just go back, if you would, a moment to your consent argument?  May it not be said to be an odd form of consent by the lessor in circumstances where the lessor, firstly, stipulates that the lessee will pay and, secondly, stipulates that it is an event of default if the lessee does not?  It is an unusual feature of the lessor consenting to the running up of the charges in these circumstances, is it not?

MR BENNETT:   It is a fairly typical provision, we would submit ‑ ‑ ‑

HAYNE J:   Just so, and how does that bear upon your consent argument?  What is the consent constituted by?  Consent to what?

MR BENNETT:   Your Honour, the existence of that provision in the lease illustrates that the owner is conscious of and accepts the risk that a lien might be imposed, and seeks to avoid that by having the right to take the plane back if the situation emerges that it is likely to arise.  The clause itself indicates acceptance rather than rejection of that possibility and provides for a method of dealing with it.  But it is more than a consent, your Honour; it is leasing for a known common purpose which necessarily involves these charges being incurred and the owner saying, “Well, I know that I have the risk of being subject to this lien, and I seek to protect myself as best I can”. 

In relation to severability, the only point which we wish to make verbally is this, that if one does decide that the lien provision in its operation against a third party is an acquisition of property, if the Court does come to that conclusion contrary to our submissions, we would submit that the invalidity only extends to situations where the aircraft is owned by third parties.  It would not arise in situations where, for example, we were enforcing against the liquidator of Compass the lien on the aircraft, assuming Compass were the owner.  That is a fairly easy severance to effect.  It does not, of course, affect the result in this case but it is one which we would submit would clearly remain.

There is a second question of severance, which is whether one goes further and says that the lien provisions are only valid where there has been a lease under which the operator is permitted to operate the aircraft in Australia.  It may be that one has to sever in that respect.  That does not arise in this case because here the leases clearly were for that purpose but if there is invalidity in the situation where that consent does not exist, again, we would submit that is clearly an area where severance can occur.  Those are our submissions, your Honour.

GLEESON CJ:   Thank you, Mr Solicitor.  Mr Solicitor for Victoria.

MR GRAHAM:   May it please the Court, as would perhaps be apparent from our written submissions, our presence here before the Court was engendered by some observations made by members of the Court on 16 April, particularly by your Honours Justices Gaudron and Gummow at pages 46 and following and your Honour Justice McHugh at page 58. It now appears, having heard my learned friend the Solicitor for the Commonwealth, that there does not seem to be any serious contest between the Commonwealth and the States concerning the scope of the power of the Commonwealth under section 51(i) in relation to matters relating to air navigation. We submit that the legal foundation for the Commonwealth laws dealing with air navigation was established by the decision of this Court in Airlines of New South Wales [No 2] where five members of the Court determined that a sufficient foundation in respect of the legislation there in question was provided by section 51(i).

GUMMOW J:   One of the regulations was struck down, was it not, 200B?

MR GRAHAM:   Regulation 200B, your Honour, yes that is right. I think I may have expressed that without adding a proviso to it. We support the correctness of that decision so far as it went and the basis upon which it went, and we would submit that, subject to the question of the validity of the liens upon which we do not venture, it is still a sufficient authority to support the validity of Division 2 of Part VI of the Civil Aviation Act 1998.  We had thought, having regard to what fell from some members of the Court, that because 35 years or thereabouts had elapsed since Airlines [No 2], that it might be appropriate to re-examine Division 2 of Part VI, not only in the light of the views of the majority in that case, but also in the light of tests of constitutional validity which have been formulated or refined in later years.

In our written submissions which I should formally adopt as part of our argument before the Court this afternoon, we have attempted to do that and have referred to, in particular, what your Honour Justice McHugh said in In re Dingjan and what his Honour the former Chief Justice had to say in Cunliffe.

The only other observation that we desire to make that concerns the question which Justice McHugh raised concerning the possible dichotomy between the practical operation of an impugned law and its legal effect.  I think reference was made to what his Honour Justice Kitto had said in Airlines [No 2] on that topic, and your Honour Justice McHugh referred, I think - we understood your Honour to be referring to the decision of this Court in North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW.  In this context it is important, we submit, to have regard to the practical effect, as well as the legal operation, of the impugned law.

McHUGH J:   But when you read Justice Kitto’s judgment again, it does seem that he did take into account the factual operation.

MR GRAHAM:   Yes.  I am obliged to your Honour – I had not noticed that.  His Honour was considering the way in which the aviation industry or the activities of aviation in this country work and how there is interaction overlapping and intermingling, if one can use that word, physically, that his Honour seemed to be conscious of that aspect of the matter as well as the legal operation of the legislation there in question.  We would only add that there is no occasion, we would respectfully submit, for this Court to have resort to the co‑mingling doctrine which did not commend itself to this court in Airlines [No 2].  It does not seem to be relied upon in the latest submissions from the Commonwealth.

We would submit that, speaking generally, Division 2 of Part VI is supportable under the trade and commerce power.  We do not wish to venture upon the question of whether that power extends to the liens which are specifically the subject of contention in this case.

GLEESON CJ:   Thank you, Mr Solicitor.  Mr Solicitor for Western Australia.

MR MEADOWS:   May it please the Court.  In light of the way things have transpired, we too would simply seek to rely on our written submission in regard to the issue of the trade and commerce power and to adopt what my learned friend the Solicitor-General for Victoria has said in that regard.

The only other matter that we would seek to refer to, if it please the Court, is the question of the external affairs power and to say that Western Australia is content to accept that in authorising the provision of all of the relevant services the Act is reasonably capable of being considered appropriate and adapted to the implementation of the Chicago Convention.  Western Australia would be the first to cry foul if it was thought that the provisions of the Act extended beyond the requirements of the convention.  However, we are content to accept that that convention obliges Australia to make those services available and the Act does not go beyond the limits of the convention.

For that reason we are content to accept that in this instance there is a legitimate use and, dare I say it, a genuine use of the external affairs power.  However, Western Australia would not accept that it is legitimate to look at the second and alternative basis upon which the Commonwealth contends that the Act can be supported by the external affairs power and in that regard we would refer to what the Commonwealth has said in paragraph 20 of its submissions.

Now, we would say that it cannot be correct to say that merely because a commercial operation within Australia has some commercial links to persons or activities outside Australia, a law regulating that commercial activity can be characterised as a law with respect to external affairs.  We would also take issue with the contention that an agreement with a private foreign corporation – I think the Commonwealth speaks in terms of bilateral agreements with airlines – that that could authorise the Commonwealth to legislate under the external affairs power to implement Australia’s obligations under that agreement.

GUMMOW J:   Would it not be a foreign corporations power case?

MR MEADOWS:   It may be justifiable or supported by the foreign corporations power but certainly we would not see it as being something which fell within the external affairs power.

KIRBY J:   Why does not the fact that the plane comes from outside Australia attract the power?

MR MEADOWS:   Well, in our submission, the fact that it comes from outside Australia ‑ ‑ ‑

KIRBY J:   And is owned by somebody outside Australia?

MR MEADOWS:   That does not involve any concept of external affairs, in our submission.

KIRBY J:   Well, it is external to Australia.

MR MEADOWS:   The fact that the aircraft comes from outside of Australia is external to Australia, but that is not a fact which falls within the concept of external affairs.

KIRBY J:   I thought the Court had held that it did.

MR MEADOWS:   I am not sure in what context your Honour is saying that.

KIRBY J:   I am not sure either, but I thought that was the authority, that was the doctrine.  Anyway, you deny it.

MR MEADOWS:   I do.  We say the core concept of external affairs is relations with other nation states.

KIRBY J:   I thought there was established doctrine that says that if it is external to Australia, it falls under the power.

McHUGH J:   We said in Horta that if what is regulated is outside Australia, then external affairs extend to it, but I take it your point is that this law is only operating on planes within Australia.

MR MEADOWS:   Once they come within, not so much the territory, but certainly the ambit of our air regulation requirement.

GLEESON CJ:   Well on one famous occasion it was pointed out that outside Australia is where most of our imports come from.

MR MEADOWS:   I take your Honour’s point.  Anyway, our point is that the fact that external affairs relates to our relations with nation states precludes agreements with private bodies being the equivalent in status to an international instrument between nation states.  In any event, if it please the Court, because of the existence of the relevant obligation under the Chicago Convention, we would submit that it is unnecessary for the Court to explore these questions in order to find the legislation to be valid.  If it please the Court.

GLEESON CJ:   Thank you Mr Solicitor.  Mr Solicitor for South Australia.

MR SELWAY:   If it please the Court, we rely upon our written submissions and only wish to make oral submissions on one matter and that is the proper application of the “reasonably adapted test” in respect of incidental powers.

Having said that, your Honours, we do not wish to make a submission on the question of the validity of the lien, but only on how one might use the test.  The test of “reasonably capable” of being seen as appropriate and adapted to achieving an objective or purpose, is a test that the Court has adopted in relation to purposive powers.

However, by its nature, it is not a test that enables you to say what the purpose it.  It is a negative test.  It enables you to say that the purpose is not something or other.  The reason the Court has adopted ‑ ‑ ‑

GAUDRON J:   But if the test is applicable here, the purpose is fairly evident, is it not, to ensure that the user pays, basically?

MR SELWAY:   With respect, the Commonwealth describes the purpose in its submissions as to ensure collection of charges.  That has another problem.  But the whole point we wish to make, your Honour, is that there is an issue about deciding what the objective is.  The objective, at the end of the day, is an objective of the legislation.  It is not an objective of the power.  The difficulty with applying the “reasonably adapted test” in this context, as a test of the incidental power, is that you have the risk of adding incidental powers to incidental powers, to incidental powers, without end.  Because the object you are looking to ascertain is the object within the statute, not the object of the power, there is still the question of what the relationship between the statute objective and the power is.

The danger, we say, is that the use of the “reasonably adapted test” may divert attention from considerations of whether the relevant object has, itself, a sufficient connection with the law.  In our submission, the reasonably adapted test in relation to a provision that can only be supported under the incidental power, is a negative test.  If the provision is not reasonably adapted to the object of the law in relation to which it is incidental then, on the face of it, it is likely to be invalid.  However, the mere fact that it is reasonably adapted does not mean it is valid.  The question still has to be satisfied as to whether there is a sufficient connection between the law, including this incidental provision, and the relevant power.  In this case, we would say that the issue is ‑ ‑ ‑

McHUGH J:   Well, is it to be a sufficient connection with the power or sufficient connection with some exercise of the power?  Could I illustrate it from the matrimonial causes field?  It may be, with a Commonwealth divorce legislation, you could justify under an incidental power licensing private inquiry agents, but supposing there was no divorce system, could the Commonwealth license private inquiry agents on the basis it is connected to the matrimonial causes power, which the States, for example – you see, why I draw the distinction between power and ‑ ‑ ‑

MR SELWAY:   Yes, I take your Honour’s point – the answer is no, but what we would say in each case is that the answer is not given solely by asking whether the relevant law is reasonably adapted to some purpose; the answer is, what is the connection to the power, and it is the lack of a connection to the power that makes it obvious that it is not incidental, and, what we would say, in this case, is that the issues that relate to the relevance

of these powers, at least so far as the lien is concerned, are those dealt with in paragraphs 33(ii) and (iii) of the Commonwealth’s written submissions and paragraphs 28 and 29 of the appellant’s submissions and, whether they are sufficient or not is not a matter upon which we make a submission.  If it please the Court.

GLEESON CJ:   Thank you, Mr Solicitor.  Mr Dunphy.

MR DUNPHY:   Your Honours, we also rely on our written submissions by the scope of power in section 51(i) of the Constitution, in relation to Division 2 of Part VI of the Civil Aviation Act and also in relation to the issue of the referral of power in respect of their transport by Queensland.

GUMMOW J:   Yes, in relation to that reference of power, what would be the territorial scope of the exercise of that power.  Section 51(xxxvii) talks about extend to the State, does it not?

MR DUNPHY:   That is correct, your Honour, yes.

GUMMOW J:   Now, is that to be given some literal territorial meaning?  States can refer powers, can they not, which, when exercised by the State, could, probably before and certainly after the Australia Acts, go beyond matters geographically conveniently linked to the State.

MR DUNPHY:   Yes, your Honour, in our respectful submission, the ‑ ‑ ‑

GUMMOW J:   In other words, when these Compass planes were flying from Sydney to Brisbane and incurring fees in Sydney, would that not be sufficient to connect with a referred power?

MR DUNPHY:   Your Honour, there is some discussion of the issue of the referral of powers in relation to Queensland and Tasmania in Western Australia Airlines Case.

GUMMOW J:   Yes, but not to this question, is it?

MR DUNPHY:   No, your Honour, though there is implicit at page 505, Justice Gibbs - discussed the potential validity of section 19(2)(b) in relation to the operation of that law in States such as Queensland and Tasmania.

GUMMOW J:   The text of the Constitution says:

shall extend only to States by whose Parliament the matter is referred –

and the question is, what does that mean “extend only to”?

MR DUNPHY:   The starting point in relation to section 51 is, of course, that these provisions are, of course, Commonwealth laws that can be passed for the peace, order and good government of the Commonwealth.

GUMMOW J:   Yes.

MR DUNPHY:   Your Honours, we are not aware of any specific discussion in the cases on that point.

GUMMOW J:   I know there is not, that is why I need help.  If there were I could find it for myself.  It seems to be significant here, perhaps, because these Compass planes flew a lot within Queensland, did they not?

MR DUNPHY:   There are charges in respect of landings in Queensland, yes, your Honour.

GUMMOW J:   And between Queensland and New South Wales, and Victoria too, I think.

MR DUNPHY:   Perhaps the answer, your Honour:  one looks back to the extent of the referral in the Queensland legislation which, of course, was done in the wartime context and was as bare as a referral to air navigation.  The answer, perhaps, is a construction of what was intended by the referral as to whether there was a territorial limit in the referral under the Queensland statute.

KIRBY J:   The limitation is in the Constitution. It is not something which the State can vary because it is in the Constitution. It “shall extend only to States by whose Parliaments”. The question is whether the fact that it is a matter referred by the Parliament of a State, that Parliament to the State from colonial times have had an extra-territorial jurisdiction, when they refer it picks up that, or whether those words “shall extend only to States” means shall extend only to things that happen within the States. But it is not something that is governed by the referral of power because the referral of power is subject to what can be referred which, in turn, sticks by the Constitution.

MR DUNPHY:   Yes, your Honour, except that my submission in relation to this particular incidence was that, perhaps, the issue does not arise on the basis that the original referral from Queensland did not purport to go beyond the territorial limitations in the way that the initial referral was worded.  Your Honours, our investigations of this point illustrate that, perhaps, the only reference to date is, in fact, the discussion, brief as it is, by

Mr Justice Gibbs in the Western Australia Airlines Case, and I doubt if we can assist the Court much further than that.

GLEESON CJ:   Thank you, Mr Dunphy.  Yes, Mr Campbell.

MR CAMPBELL:   Your Honours, we have sought to respond in our written submissions to as much as we would seek of the written submissions of the various other parties. There are some matters that we would address in addition. The first point that we would make is that all of the written submissions of the various Attorneys-General and of the Civil Aviation Authority are ones where they seek to characterise the liens provision, seek to characterise whether it would be possible to say that the liens provisions were a provision with respect to, for instance, section 51(i), trade and commerce, were section 51(xxxi) not in the Constitution. All of the submissions, we submit, have a fundamental flaw in overlooking the way in which section 51(xxxi) just abstracts power to acquire a property from the other heads of power.

The next point that we would make is that it is not sufficient to show that a law is within power, that the purpose of the liens provision is better to secure payment of money that is owing to the Commonwealth, and there have been two cases where the mere fact that a law better enables a sum owing to the Commonwealth to be collected was not sufficient to allow that law to be within power.  The first of them was Waterhouse v The Deputy Federal Commissioner of Land Tax, South Australia, 17 CLR 665. There, there was a provision that said that if a husband and wife transferred land between themselves then there was deemed to be an ownership of all the land that they between them owned, by both of them. That was a provision which was designed to better collect land tax, nonetheless, it was held not to be incidental to the taxation power to pass such a law.

GUMMOW J:   Now, that case is discussed in the Bottom of the Harbour Tax Case, is it not?  In MacCormick and Truehold - - -

MR CAMPBELL:   Yes, it is, it is discussed in MacCormick and not dissented from in MacCormick, although said to be difficult.  It was distinguished in MacCormick on the ground that in MacCormick the tax that was imposed there was a separate tax that was imposed on the company promoters who had sent the companies to the bottom of the harbour. 

The next case which is in this category, is the Second Uniform Tax Case, The State of Victoria v The Commonwealth, 99 CLR 575, and there, there was a provision which forbade a taxpayer from paying any State income tax until he had paid all the Commonwealth income tax that he owed. Again, the obvious purpose of that was to better collect Commonwealth income tax as well as to deter the States from imposing their own system. That was held not to be a law with respect to taxation.

GUMMOW J:   Yes, but that was because of immunity of intergovernment relations, was it not?

MR CAMPBELL:   No, with respect, it was not, your Honour.  There was a discussion by Sir Owen Dixon who wrote the leading judgment for the majority there, where he said it would not be possible, for instance, for the Commonwealth to forbid anyone from paying any old civil debt that they happened to owe until they had paid their income tax.  So that reasoning is not dependent on intergovernmental relations.  The passage in Sir Owen Dixon’s judgment where that remark was made was at page 615 in the judgment.

GUMMOW J:   And what was the actual issue of Waterhouse, the validity?

MR CAMPBELL:   It was the validity of the provision of the Land Tax Act.

GUMMOW J:   But was it a section 55 problem?

MR CAMPBELL:   No, it was not. It was a simple question of whether it was ultra vires the Parliament. The next matter that we would submit is that there is some reliance by Western Australia, in particular, on heads of power other than section 51(i) and the external affairs power. So far as that is concerned, there is reliance on a Commonwealth places power. We say that these particular laws imposing the lien are not laws with respect to Commonwealth places at all. There is no requirement that an aerodrome be a Commonwealth place. It is just an accident that most of them happen to be.

There is reliance by Western Australia on the meteorological observations power.  So far as that is concerned, we say that it is not incidental to the Commonwealth making any meteorological observations, that the Civil Aviation Authority should provide them to anyone, or charge anyone for providing them, or, as a further stage of remoteness yet, to have a lien in relation to the charges made for them.

So far as external affairs is concerned, we submit that there is nothing in the Chicago Convention which either requires or permits the imposition of a lien, and so that source of power is not one which can be relied upon. In relation to all of these additional heads of power, we say that they are subject to the same argument as section 51(i), namely that the power to acquire property under them has been abstracted by section 51(xxxi), save in the exceptional cases which have been dealt with in the judgments in Mutual Pools and Lawler, which have been discussed on the previous occasion.

GLEESON CJ:   Are not the services for which these charges are being made the services related to the safety of aircraft?

MR CAMPBELL:   Well, related to the safety of aircraft in part, in safety of passengers in part, relating to the ‑ ‑ ‑

GLEESON CJ:   Well, the safety of passengers is not threatened otherwise usually than by something that will endanger the aircraft, is it?

MR CAMPBELL:   Yes, it is also related to just making sure that the system flows smoothly.

KIRBY J:   Poisoning by the food might be an example of the safety of passengers being endangered, whilst the aircraft is quite safe.

MR CAMPBELL:   Yes.  One other matter that we would point out is that there has been some reliance, particularly by the Commonwealth, on the particular circumstances in which the people who I represent stand in relation to these charges.  However, the validity of the law is, of course, not to be judged by reference to that.  The validity of the law has to stand or fall on its own merits.  And while it is my clients who are complaining about the lien provisions, it is not as though they are the only people who are third parties whose property has been acquired.  In relation to one of these planes, my client is itself a lessee of the plane and it is the interest of the ultimate lessor who has been acquired by the lien, as well as the interest of my client. 

KIRBY J:   But if we are talking about the interests of your client, it was in the interests of your client to have a safe airline system and that it could not have expected that that would be provided free of charge, and the benefit that it secured from the payments that were made to it was a benefit which presumably was negotiated, bearing in mind the fact that these charges would be levied.

MR CAMPBELL:   That is completely hypothetical and there is no evidence in relation to ‑ ‑ ‑

KIRBY J:   Well, I mean, we live in a real world.  When you are subject to charges, this would be an international market for hiring of aeroplanes.  An international market for hiring aeroplanes would take into account the fact that charges of this kind are universally levied, have to be paid, and they are for the safety of the aircraft.

MR CAMPBELL:   It is a matter that the evidence just does not go to, and which we would respectfully submit ‑ ‑ ‑

KIRBY J:   I mean, we can draw common sense ‑ ‑ ‑

MR CAMPBELL:    ‑ ‑ ‑ is not relevant as to whether that is an element which entered into the negotiation and as to whether the fact that any ‑ ‑ ‑

KIRBY J:   I am not talking about the negotiation, I am talking about the inferences that arise from the fact that you lease aircraft to people who will use them in airspace that must be controlled safely and for which fees are levied.

MR CAMPBELL:   It is a separate question, we would submit, your Honour, as to whether any lien that might be imposed on the aircraft could be brought home to the people who are the lessors.

GLEESON CJ:   But the observation that you made simply demonstrates that there may be a number of people who have a financial stake in the safety of the aircraft.

MR CAMPBELL:   Indeed.  For instance, many corporations are corporations which have got some sort of an equitable mortgage over assets granted to a financier.  That equitable mortgage over assets is one which would be as effectively taken by the existence of the lien as any interest of the lessor.

The final matter that we would point out concerns the suggestion that the liens are able to be justified under the referred powers provision.  So far as that is concerned, we say that it is not possible to read this law down so as to make it one which applies in Queensland only or, indeed, as to so make it apply ‑ ‑ ‑

GAUDRON J:   It is not suggested that the referred power is not subject to 51(xxxi), is it, and never was?

MR CAMPBELL:   I do not believe so and it must be.  So far as any reading down of the law is concerned, the test for reading down a law which on its face applies throughout Australia as this one does, has been considered in Spratt v Hermes in relation to reading down a law of general application to the Territories, and the relevant passage in Spratt v Hermes was quoted in Justice Gaudron’s judgment in Newcrest at 564, and in applying that test, we say that it is just not possible to read this law down so as to make it a law which applies just to Queensland.  Those are our submissions, if the Court pleases.

GLEESON CJ:   Thank you, Mr Campbell.  We will reserve our decision in this matter and the Court will adjourn until 10.15 tomorrow morning.

AT 4.06 PM THE MATTER WAS ADJOURNED