Austin v Commonwealth

Case [2003] HCA 3

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GAUDRON, McHUGH, GUMMOW, KIRBY AND HAYNE JJ

ROBERT PETER AUSTIN & ANOR  PLAINTIFFS

AND

THE COMMONWEALTH OF AUSTRALIA  DEFENDANT

Austin v The Commonwealth of Australia
[2003] HCA 3

5 February 2003
M10/2001

ORDER

Answer questions in Stated Case as follows:

Question 1

On their true construction, do the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth):

(a) make the First Plaintiff liable to pay superannuation contributions surcharge in respect of surchargeable contributions reported for the financial years ending 30 June 1999 and 30 June 2000?

(b) make the Second Plaintiff liable to pay superannuation contributions surcharge in respect of surchargeable contributions reported for the financial years ending 30 June 1997, 30 June 1998, 30 June 1999 and 30 June 2000?

Answer

(a)  Yes.

(b)  No.

Question 2

If so, are the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) and/or the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) invalid in their application to the First Plaintiff and/or the Second Plaintiff:

(a)  on the ground that they so discriminate against the States of the Commonwealth, or so place a particular disability or burden upon the operations and activities of the States, as to be beyond the legislative power of the Commonwealth;

(b)  on the ground that the first-named Act imposes a liability to pay superannuation contributions surcharge:

(i)by reference to criteria which are so incapable of ascertainment or lacking in general application;

(ii)as a result of administrative decision based upon individual preference which is not sufficiently related to any test laid down by legislation; or

(iii)which is so arbitrary and capricious,

so that they are not laws with respect to taxation or otherwise are beyond the legislative power of the Commonwealth;

(c) on the ground that the first-named Act deals with more than one subject of taxation contrary to section 55 of the Commonwealth Constitution;

(d) on the ground that the first-named Act imposes a tax on property belonging to a State contrary to section 114 of the Commonwealth Constitution; or

(e)  otherwise?

Answer

(a)Yes. The legislation referred to is invalid in its application to the first plaintiff on the ground that it places a particular disability or burden upon the operations or activities of the State of New South Wales so as to be beyond the legislative power of the Commonwealth.

Question 3

Save for those otherwise dealt with by order, who should pay the costs of the Stated Case and of the hearing of the Stated Case before the Full High Court?

Answer

The defendant should pay the costs of the plaintiffs.

Representation:

G A A Nettle QC and M K Moshinsky for the plaintiffs (instructed by Allens Arthur Robinson)

D M J Bennett QC, Solicitor-General of the Commonwealth of Australia and M Sloss with G A Hill…

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AGLC
Austin v Commonwealth [2003] HCA 3
Case
[2003] HCA 3
Decision Date

CaseChat Overview and Summary

The case of *Austin & Anor v Commonwealth* involved a challenge by the plaintiffs, identified as the First Plaintiff and the Second Plaintiff, to the validity of Commonwealth legislation imposing a superannuation contributions surcharge. The dispute centred on whether State judicial officers were liable to pay this surcharge and whether the legislation was constitutionally valid in its application to them. The matter was heard by the High Court of Australia.

The High Court was required to determine several legal issues. These included the true construction of the *Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997* (Cth) and the *Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997* (Cth) to ascertain if the plaintiffs were liable for the surcharge. Crucially, the Court had to consider whether this legislation was invalid on various constitutional grounds, including whether it impermissibly discriminated against or burdened the States, whether the criteria for imposing the tax lacked general application or were arbitrary, whether it contravened section 55 of the Constitution by dealing with more than one subject of taxation, and whether it otherwise exceeded the legislative power of the Commonwealth.

The Court's reasoning, as articulated by Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, and Hayne JJ, ultimately rejected the plaintiffs' constitutional challenges. The majority found that the imposition of the federal tax on notional superannuation contributions did not imperil the State judicial institution or impair the essential governmental activities of the States. They reasoned that the tax did not impede the functioning of the States or the independence of the judicature to a degree that would justify invoking an implied constitutional limitation. The Court considered that the judiciary was made of "sturdier stuff" and that the tax did not affect the selection and retention of State judicial officers to such an extent that the judiciary would be jeopardised in fulfilling its constitutional functions. The Court also noted that other taxpayers in receipt of equivalent remuneration were subjected to a similar surcharge, making the invocation of an implied constitutional protection unconvincing.

The High Court answered the questions posed in the Stated Case. It found that the First Plaintiff was liable to pay the superannuation contributions surcharge for the specified financial years, while the Second Plaintiff was not. However, the Court also held that the legislation was invalid in its application to the First Plaintiff on the ground that it placed a particular disability or burden upon the operations or activities of the State of New South Wales, thereby exceeding the legislative power of the Commonwealth. The defendant was ordered to pay the costs of the Stated Case.

Orders

Orders of the court

Answer questions in Stated Case as follows:

Question 1

On their true construction, do the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth):

(a) make the First Plaintiff liable to pay superannuation contributions surcharge in respect of surchargeable contributions reported for the financial years ending 30 June 1999 and 30 June 2000?

(b) make the Second Plaintiff liable to pay superannuation contributions surcharge in respect of surchargeable contributions reported for the financial years ending 30 June 1997, 30 June 1998, 30 June 1999 and 30 June 2000?

Answer

(a) Yes.

(b) No.

Question 2

If so, are the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) and/or the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) invalid in their application to the First Plaintiff and/or the Second Plaintiff:

(a) on the ground that they so discriminate against the States of the Commonwealth, or so place a particular disability or burden upon the operations and activities of the States, as to be beyond the legislative power of the Commonwealth;

(b) on the ground that the first-named Act imposes a liability to pay superannuation contributions surcharge:

(i) by reference to criteria which are so incapable of ascertainment or lacking in general application;

(ii) as a result of administrative decision based upon individual preference which is not sufficiently related to any test laid down by legislation; or

(iii) which is so arbitrary and capricious,

so that they are not laws with respect to taxation or otherwise are beyond the legislative power of the Commonwealth;

(c) on the ground that the first-named Act deals with more than one subject of taxation contrary to section 55 of the Commonwealth Constitution;

(d) on the ground that the first-named Act imposes a tax on property belonging to a State contrary to section 114 of the Commonwealth Constitution; or

(e) otherwise?

Answer

(a) Yes. The legislation referred to is invalid in its application to the first plaintiff on the ground that it places a particular disability or burden upon the operations or activities of the State of New South Wales so as to be beyond the legislative power of the Commonwealth.

Question 3

Save for those otherwise dealt with by order, who should pay the costs of the Stated Case and of the hearing of the Stated Case before the Full High Court?

Answer

The defendant should pay the costs of the plaintiffs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ GAUDRON, GUMMOW AND HAYNE JJ
I see no reason why this Court should now adopt an approach to the constitutional validity of a federal taxation law that is more protective of newly appointed judges in Australia than the approach followed by the Supreme Courts of Canada and the United States when confronted with taxing provisions having an impact on judicial remuneration. Nothing in the text of the Australian Constitution justifies a different approach. The decisional history in this Court suggests a contrary conclusion. The notion that the judges themselves would regard their offices as compromised by the surcharge is unpersuasive. The idea that reasonable members of the Australian public might come to such a conclusion, on the basis of the new federal surcharge on the superannuation entitlements or their equivalents in the case of high income earners, including judges, must be rejected. The public and the judges themselves, as La Forest J of the Supreme Court of Canada said, regard the judiciary as made of sturdier stuff[440].[440]Re Provincial Court Judges [1997] 3 SCR 3 at 192 [337]. See also at 197 [346].Conclusions and disposition It is therefore "far too long a stretch"[441] to hold that the imposition of a federal tax, payable by persons such as the first plaintiff on notional contributions for their pensions, imperils the State judicial institution. I do not accept that the federal taxing laws challenged in these proceedings affect the selection and retention of State judicial officers to such a degree that the State judiciary is placed in jeopardy of not fulfilling its constitutional functions. Only if that were shown would the essential governmental activities of a State be impaired and the continued existence and integrity of a State threatened, contrary to the constitutional implication invoked by the first plaintiff.[441]R v Beauregard [1986] 2 SCR 56 at 77 per Dickson CJ. The evidence in this case falls far short of such a gloomy estimate of the resilience of State governmental institutions in Australia – and the State judiciary in particular. The tax neither impedes the functioning of the States nor the independence of the judicature implicit in the Constitution. Other taxpayers cannot escape the burden of the surcharge. Their complaints of unfairness, if any, must be addressed to the Parliament and the Government, not the courts. In the past, Australian judges have shared equally prospective taxes of general application imposed on them without relevant discrimination. This case represents the first departure from that principle. In my view the departure has no constitutional or other legal validity. It appears to be contrary to the approaches taken by the final courts of Canada and the United States in analogous circumstances. I do not deny the premise that the Constitution is based on certain assumptions and contains implications[442]. But, with all respect, I find the invocation of the federal implication in this case unconvincing. When expressly stated constitutional guarantees[443], and particular words in the Australian Constitution[444], are read in ways that confine the rights of individuals, and when implied constitutional rights of persons arguably more vulnerable and needy are rejected[445], it is singularly unconvincing to say that an unwritten implication can be invoked to protect from a federal taxing law the value of judicial pensions. Such an implication is unconvincing when virtually all other Australian taxpayers in receipt of equivalent remuneration have been subjected to a surcharge upon that element of their receipts. Least of all is such a conclusion convincing when the legal foundation of the implication is said to arise from the suggestion that the tax impairs, in a substantial degree, the very capacity of the States to operate as the Constitution envisaged for them. I would reject all of the first plaintiff's constitutional challenges.[442]Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; Roberts v Bass (2002) 194 ALR 161 at 199-200 [145]-[146].[443]eg under s 80 of the Constitution: Re Colina; Ex parte Torney (1999) 200 CLR 386; Cheng v The Queen (2000) 203 CLR 248; Brownlee v The Queen (2001) 207 CLR 278.[444]eg the word "appeals" in s 73 of the Constitution: Eastman v The Queen (2000) 203 CLR 1 at 79-89 [240]-[266]; Crampton v The Queen (2000) 206 CLR 161 at 203-204 [114].[445]eg the claims of Aboriginal plaintiffs to a constitutional implication of equality before the law: Kruger v The Commonwealth (1997) 190 CLR 1 at 45, 63-68, 142-144, 153-157. See also Leeth v The Commonwealth (1992) 174 CLR 455 at 466-470, 476-479; cf 483-489.

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ, GAUDRON, GUMMOW AND HAYNE JJ

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