Capital Duplicators Pty Ltd v Australian Capital Territory

[1992] HCA 51

HIGH COURT OF AUSTRALIA

MASON CJ, BRENNAN, DEANE, DAWSON, TOOHEY, GAUDRON AND McHUGH JJ

CAPITAL DUPLICATORS PTY. LIMITED AND ANOTHER v. AUSTRALIAN CAPITAL TERRITORY AND ANOTHER

(1992) 177 CLR 248

15 October 1992

Constitutional Law (Cth)—Duties of excise—Exclusive power of Commonwealth Parliament—Power of Australian Capital Territory Legislative Assembly to impose excise duty—The Constitution (63 and 64 Vict. c. 12), ss. 90, 122—Australian Capital Territory (Self-Government) Act 1988 (Cth)—Business Franchise ("X" Videos) Act 1990 (A.C.T) Constitutional Law (A.C.T.)—Legislative Assembly—Power to make laws for peace, order and good government of Territory—Whether Assembly delegate of Commonwealth Parliament—The Constitution (63 and 64 Vict. c. 12), s. 122—Business Franchise ("X" Videos) Act 1990 (A.C.T.)—Australian Capital Territory (Self-Government) Act 1988 (Cth), ss. 22.28,35.

Hearing

1992, CANBERRA, March 3; PERTH, October 15. #DATE 15:10:1992

QUESTION reserved pursuant to s. 18 of the Judiciary Act 1903 (Cth).
Capital Duplicators Pty. Ltd. and Luhaza (A.C.T.) Pty. Ltd. brought an action in the High Court against the Australian Capital Territory and the Commissioner for Australian Capital Territory Revenue Collections alleging that they were the holders respectively of a wholesale license and a retail license under the Business Franchise ("X" Videos) Act 1990 (A.C.T.), and that they paid under protest the license fees exigible in respect of those licenses, and claiming, inter alia, a declaration that the sections of the Act which imposed the license fees were invalid in so far as they imposed a duty or duties of excise contrary to s.90 of the Constitution. The defendants demurred to the plaintiff's statement of claim on the ground that the license fees were not duties of excise, or in the alternative that the exaction of the fees by them did not contravene s.90. Pursuant to s.18 of the Judiciary Act Mason CJ ordered that the following question, as subsequently amended, be reserved for the consideration of the Full Court: "Does Ch.IV of the Commonwealth Constitution operate so as to preclude the Legislative Assembly of the Australian Capital Territory from exercising the power to impose duties of excise within the meaning of s.90 of the Constitution?"

D.M.J. Bennett QC (with him R.C. Refshauge), for the plaintiffs. The object of s.90 of the Constitution is to make possible a uniform fiscal policy for the whole of the Commonwealth by giving the Commonwealth complementary control of customs, excise and bounties Matthews v Chicory Marketing Board (Vict) (1938) 60 CLR 263 at pp296 298 299 300 Whitehouse v Queensland (1960) 104 CLR 609 at p618. It is not a breach of s.90 for the Commonwealth Parliament to delegate its power to impose duties of excise Nott Bros and Co Ltd v Barkley (1925) 36 CLR 20. The Australian Capital Territory legislature is not a delegate of the Commonwealth Parliament. Section 122 of the Constitution permits a wide range of independence in relation to territories Berwick Ltd v Gray (1976) 133 CLR 603. Where a legislature with plenary powers sets up in a territory formally controlled by it another legislature with power to legislate for the peace, order and good government of that territory, the new legislature acts on its own behalf and not as a delegate Reg v Burah (1877) 3 App Cas 889 Hodge v The Queen (1883) 9 App Cas 117 Powell v Apollo Candle Co Ltd (1885) 10 App Cas 282 Reg v Toohey Ex parte Northern Land Council (1981) 151 CLR at p279 The Commonwealth v Carkazis (1978) 23 ACTR 5 at p10. The power of disallowance in s. 35 of the Australian Capital Territory (Self-Government) Act ("the Self-Government Act") does not affect the matter. Such a power existed in the Acts in question in Reg.v. Burah; Hodge v The Queen; Powell v. Apollo Candle Co. Ltd. and Reg. v. Toohey; Ex parte Northern Land Council. Making a power "exclusive" means nothing more than it may not exercised by anyone else. The Territory legislature is clearly someone else vis-a-vis the Commonwealth legislature. Similarly in Nott Bros. and Co. Ltd. v. Barkley, the issue was whether the delegated legislation made by the Minister under statutory authority was made by someone else. The nature of the delegation (although the word "delegation" was not used) meant that the legislation was "made" by the Commonwealth legislature. Therefore it was valid. It is true that Issacs J said that "exclusive" meant "exclusive of State Parliaments". But the case was not about Territory legislatures. They did not exist in 1925. "Exclusive" in s. 90 was intended to have a more general meaning than "exclusive of the States" Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at pp632 661 662. Municipality of Delhi v. Birla Cotton Mills (1968) All IR (SC) 1232 depended on the provisions of ss. 245 and 246 of the Indian Constitution which, unlike s.90 were concerned with the division of the legislative power between the Union and the States. The Delhi Corporation's taxation power was an express taxation power and not a plenary power to legislate for peace, order and good government. The inclusion of "taxation" in Sch.4 to the Self-Government Act must be read subject to the Constitution. Accordingly, it does not confer the power to impose duties of customs and excise in relation to which the power of the Parliament remains exclusive. The words "subject to this Constitution" in s.52 relate to express limitations on power such as those in ss.92 and 114. Pemberton v. The Commonwealth (1933) 49 CLR 382 and Le Leu v. The Commonwealth (1921) 29 CLR 305 provide examples. The words do not relate to independent legislative powers such as s.122 which might limit the word "exclusive". There are not two types of power, exclusive and non exclusive. The ambit of s.122 is to confer a power. The ambit of s.52 is to confer a power and to make it exclusive. There is no inconsistency such as to require the invocation of the words "subject to this Constitution" to resolve it. The power over territorial excises is conferred by both provisions, but s.90 and s. 52(iii) make it exclusive to the Commonwealth. If there is a power in the Commonwealth Parliament to confer upon a subordinate legislature a power falling within s.52, the intention to do so should not be imputed to it in the absence of clear and specific language. A grant of plenary power to a territorial legislature should not, without more, be construed as conferring upon its powers in relation to which the power of the Commonwealth Parliament is exclusive. (Deane J. Do you rely on ss. 80 and 81 of the Constitution?) Yes. They demonstrate that part of the purpose of s. 90 is to ensure that the proceeds of the excise pass into consolidated revenue. That is an additional reason why this legislation is invalid. The proceeds here are paid to the Territory. That is precluded by s. 90 by virtue of the other provisions. The Self-Government Act was enacted pursuant to s. 122 rather than s. 52. The concept of "seat of government" is more limited than that of the Australian Capital Territory Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 at pp97 114 124 Spratt v Hermes (1965) 114 CLR 226 at pp241 258 262 263 282. In relation to Commonwealth places, Worthing v. Rowell and Muston Pty. Ltd. is still applicable to Commonwealth places in the Territories. Section 4 of the Commonwealth Places (Application of Laws) Act does not amount to a delegation but rather to an incorporation of State law as Commonwealth law Reg v Holmes (1988) 93 FLR 405 at p410 Rose The Commonwealth Places (Application of Laws) Act 1910 Federal Law Review vol 4 (1971) 263 at p268. The contrary decision in Pryce v. King (1985) 37 NTR 19 is wrong.

D.F. Jackson Q.C (with him L.S. Katz), for the defendants. Section 90 is intended to ensure that the execution of whatever policy the Commonwealth Parliament adopted regarding the taxation of commodities should not be hampered or defeated by State action Parton v Milk Board (Vict) (1949) 80 CLR 229 at p260 Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at p238 Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR at p631 Phillip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at p426 Western Australia v Chamberlain Industries Pty Ltd (1970) 121 CLR 1 at p17 Gosford Meats Pty Ltd v New South Wales (1985) 155 CLR 368 at p387. The section is concerned wholly with the demarcation of authority between Commonwealth and State to tax commodities Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529 at p547. It was framed for a well-know purpose, which appears on the face of the section read in its context. The word "exclusive" means exclusive of State Parliaments Nott Bros and Co Ltd v Victoria (1960) 104 CLR 529 at p547. That case held that s. 90 did not invalidate s.8 of the Customs Tariff (Industries Preservation) Act 1921 (Cth), which imposed a dumping exchange duty on imported goods, provided that the Minister had beforehand published a certain notice in the Gazette. It was held that s.90 had no function of hampering the Commonwealth Parliament in utilizing the necessary offices of the Executive Department as an aid in effecting its objects. The case did not decide that s.8 delegated to the Minister the Commonwealth Parliament's power to impose custom duties. Indeed the contrary was held ibid at pp24 29. Accordingly, the plaintiffs' attempt to distinguish the case on the basis that in enacting the Business Franchise ("X" Videos) Act the Legislative Assembly was not acting as a delegate of the Commonwealth Parliament is not to the point. Under the Constitution a subordinate legislature derives its powers from the legislature which establishes it because they are powers which the latter may exercise itself of permit a body established by it to exercise Powell v Apollo Candle Co Ltd (1885) 10 App Cas at p291 Cobb and Co Ltd v Kropp (1967) 1 AC 141 at p157. The Self-Government Act remains subject to alteration or recall until the Territory becomes a State. The exercise by the Commonwealth Parliament of power to create a territory legislature is equivalent to the Imperial Parliament's laws establishing colonial legislatures. (He referred to Binns v. United States (1904) 194 US 486; Inter-land Steam Navigation Co. v. Territory of Hawaii (1938) 305 US 306; and Sakamoto v. Duty Free Shoppers Ltd. (1985) 764 F 2d 1285.) "Exclusive" in s.52 means exclusive of the States Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR at p109. No reason in either history or authority appears why the benefit conferred on the Commonwealth Parliament of exclusively of its power vis-a-vis the State Parliaments to impose taxes on commodities should be converted into a detriment prohibited it from conferring on the Legislative Assembly a power to impose excise duties. Nor is there any reason in policy why the benefit should be so converted. The imposition by the Legislative Assembly of excise duties, rather than being calculated to hamper or defeat the execution of a policy that the Commonwealth Parliament has adopted for the taxation of commodities, should be presumptively seen as effectuating that policy, given the Parliament has chosen to confer on the Legislative Assembly by the Self-Government Act, s.22 a power to make, inter alia, tax laws. If any particular imposition were contrary to the Commonwealth Parliament's policy for the taxation of commodities, it retains control over the situation. As well as the power of disallowance contained in s.35 of the self-government legislation, there is the power of the Commonwealth parliament ton enact appropriate superseding legislation. If the particular Territory law were not only inconsistent with Commonwealth policy regarding the taxation of commodities, but also with existing Commonwealth law on the matter, s.28 would apply. If the plaintiffs' argument about the effect of the conferral by s.90 of exclusively to impose taxes on commodities were correct, it would apply equally to the conferral by s.52(i) on the Commonwealth Parliament of exclusive power to make laws with respect to the seat of government of the Commonwealth. Thus, on the plaintiffs' argument, the Commonwealth Parliament could no more validly confer power on the Legislative Assembly to make laws with respect to the seat of government of the Commonwealth than it could confer power to make laws imposing excise duties. The Commonwealth Parliament may validly endow a Territory with separate political, representative and administrative institutions, having control of its own fiscus Berwick Ltd v Gray (1976) 133 CLR at p607 Section 52(i) does not prevent the Commonwealth Parliament from delegating to the Governor-General its power to make laws with respect to the seat of government of the Commonwealth Golden-Brown v Hunt (1972) 19 FLR 438 at p444. There is no reason why the Parliament may not validly confer on the representative legislature with which it has endowed the Australian Capital Territory a power to make laws with respect to the seat of government of the Commonwealth. (Mason CJ In view of the plaintiffs' reliance on ss.81,86 and 87 it would seem desirable to amend the question referred to the Full Court so as to replace "s.90" with "CH.IV") The Contention based on s.81 is inconsistent with Berwick Ltd. v. Gray Berwick Ltd v Gray (1976) 133 CLR at p607.

T.I. Pauling QC (with him G.R. Nicholson), for the Attorney-General for the Northern Territory, intervening in support of the defendants. The power of the Commonwealth Parliament to enact laws to impose duties of excise is a federal power derived from s.51(ii) read with s.52(iii), excise being tax on goods Phillip Morris Ltd v Commissioner of Business Franchise (Vict) (1989) 167 CLR at p427 Mutual Pools and Staff Pty Ltd v Federal Commissioner of Taxation (1992) 173 CLR 450. Section 90 is not a source of such power, nor a limitation or restriction on such power. The section makes that power exclusive to the Commonwealth. "Exclusive" means simply exclusive of State Parliaments; exclusive as opposed to concurrent; exclusive in the sense in which that word is found in ss.52 and 107. It was not intended to limit the ambit of Commonwealth power, but to make that power exclusive on the subject matter Nott bros and Co Ltd v Barkley (1925) 36 CLR at p29 Golden Brown v Hunt (1972) 19 FLR at p444 Quick and Garran Annotated Constitution of the Australian Commonwealth (1900) p656 Municipality of Delhi v Birla Cotton Mills (1968) All IR (SC) at p1226. The effect of s.90 is to take certain forms of fiscal legislative power away from the States and give them to the Commonwealth. The word "exclusive" and derivations thereof in the Constitution are consistently used in the sense of exclusive in relation to the States and State Parliaments: ss. 52, 77(ii), 85(i) and (ii), 90, 107, 111. Section 122 is not only plenary but is unlimited by reference to subject matter. It is a complete power to make laws for the peace, order and good government of a territory. This is as large and universal a power of legislation as can be granted. Its is non-federal in character, in the sense that the total legislative power to make laws operate in and for a territory is not shared in any way with the States Spratt v Hermes (1965)114 CLR at p243 Teori Tau v The Commonwealth (1969) 119 CLR 564 at p570 Northern Land Council v The Commonwealth (1986) 161 CLR 1 at p6 Berwick Ltd v Gray (1976) 133 CLR at p607 Attorney-General (WA) v Australian National Airlines Commission (1976) 138 CLR 492 at p512. The territories' power stands outside the division of legislative power between the Commonwealth and the States in the sense that it is not restricted by it. This is so even in the Territory having the seat of government Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 Attorney-General (NSW) v Stocks and Holdings (Constructors) Pty Ltd (1970) 124 CLR 262 Reg v Phillips (1970) 125 CLR 93. Section 90 refers to "States" and "Government of any State". The location of s.90 in Ch. IV, which contains a comprehensive package of fiscal arrangements between the Commonwealth and the States, supports the view that it does not apply to the Territories. (DEANE J Does Ch. IV apply to the legislative powers under s.122?) No. (DEANE J referred to Lamshed v. Lake (1958) 99 CLR 132 at p141.) Section 90 must be read together with s.92. Together they combine with the safeguards against Commonwealth discrimination in s.51(ii) and (iii) and s.88 to ensure equality of opportunity both for interstate trade and commerce and for local manufacture of goods, and ordain that the Commonwealth be an economic union, not an association of States each with its own domestic economy Phillip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR at p426 Cole v Whitfield (1988) 165 CLR 360 at p398. Other exclusive Commonwealth powers have been held not to apply to the Territories Pryce v King (1985) 37 NTR 19. (He also referred to Australian Postal Commission v. Dao (1985) 3 NSWLR 565; Paterson v. O'Brien (1978) 138 CLR 276 at p276; and Kean v. The Commonwealth (1963) 5 FLR 432 at p437.) There is no limitation on the power of the Commonwealth Parliament to create subordinate territory law making bodies empowered to make laws for the territory including taxation laws, so long as the Commonwealth Parliament does not abdicate its powers Berwick Ltd v Gray (1976) 133 CLR 603 Golden Brown v Hunt (1972) 19 FLR 438 Porter v The Queen (1926) 37 CLR 432 Namatjira v Raabe (1958) NTJ 608 at pp614 617 Reg v Lampe Ex parte Maddalozzo (1963) 5 FLR 160 at pp167 170 Kean v The Commonwealth (1963) 5 FLR 432 at p437 Millirrpum v Nabalco Ltd (1971) 17 FLR 141 at pp284 286. A law which emanates directly or indirectly from the Commonwealth Parliament is a law of that Parliament Nott Bros and Co Ltd v barkley (1925) 36 CLR at p29 Reg v Phillips (1970) 125 CLR at p103 Co-operative Committee on Japanese Canadians v Attorney-General (Canada) (1947) AC 87 at pp106 107. An excise can be imposed by a territory legislature without offending the exclusive power in s.90 either because it is a law of the Parliament under s.90 or because it stands outside s.90 and is supported by s.122. Section 122 does not use the word "exclusive" Frost v Stevenson (1937) 58 CLR 528 st p558. A grant of plenary legislative power to a State Parliament extends to the empowering by that Parliament of some subordinate agency or machinery to fix and recover taxes, notwithstanding the constitutional requirement that no tax may be imposed save with the assent of Parliament Cobb and Co Ltd v kropp (1967) 1 AC 141 Giris Pty Ltd v Federal Commissioner of Taxation (1969) 119 CLR 365 at p374. Territory laws are, or are necessarily supported by, laws enacted by the Commonwealth Parliament Breavington v Godleman (1988) 169 CLR 41 at p115. Unlike State laws, they are dependant for their validity on an Act of the Commonwealth Parliament. While it may seem logical to apply the guarantees in some sections of the Constitution to territories, as being consistent with the concept of one Commonwealth of Australia covering both States and Territories, there being no logical reason for doing so in the case of s.90 which contains no guarantees. Part IV of the Self-Government Act confers power on the Legislative Assembly to pass laws as to taxation, subject to the overriding powers of the Commonwealth and to the superior operation of any Act of the Commonwealth Parliament. None is relied upon. Territories under s.122 are in different stages of political and economic development. The section is wide enough to enable the Commonwealth Parliament to endow a territory with separate political, representative and administrative institutions, having no control of its own fiscus Berwick Ltd v Gray (1976) 133 CLR 603. If the Parliament has these wide powers, there is no logical reason why it cannot confer power on a territory legislature as to excise. The Commonwealth retains control in that the power, once granted, can later be withdrawn Attorney-General (NT) v Minister for Aboriginal Affairs (1989) 25 FCR 345 at pp365 366. When the Territory collects money it does not do so as the executive government of the Commonwealth but in its own right. Accordingly, ss80 and 81 do not apply.

G. Griffith QC, Solicitor-General for the Commonwealth, (with him G.K. Burton), for the Commonwealth, intervening in support of the defendants. Section 90 only excludes the power of the States to impose, or to authorise other bodies to impose, duties of customs or excise Nott Bros and Co Ltd v Barkley (1925) 36 CLR at p29 Quick and Garran op cit pp656 838. The whole of Ch.IV is concerned with the fiscal relationship between the Commonwealth and the States. The fiscal operations of the territories is not within the contemplation of the Chapter. It could not have been intended that subordinate State authorities such as local government bodies should be able to impose excise duties. Accordingly, in s.90 the reference to the power to "impose" duties of customs or excise includes a power to authorize a subordinate legislature or other authority to impose them. Conversely, s.90 does not prevent the power of the Commonwealth Parliament to authorize the enactment of Territory legislation imposing excise duties. The express exclusive power in s.52(i) does not exclude the power from being conferred on, and being exercised by, subordinate Commonwealth authorities. Although s.22 of the Self-Government Act enables the Legislative Assembly to levy taxes, including duties of excise, such taxes nonetheless are imposed by the Parliament. They are empowered by a law of the Parliament and the Parliament retains power to pass laws to override such taxes, by specific provisions, or by exercise of the powers to amend or repeal, in addition to the power to disallow in s.25. Although s.90 makes a uniform fiscal policy possible for the whole of the Commonwealth, it does not require taxation to be imposed uniformly between the States and the Territories. Nothing in the Constitution requires duties of excise or any other taxes to be uniform throughout the Commonwealth. The constitutional prohibitions is ss.51(i) and 99 on discrimination and preference apply only between States and parts of States and therefore do not preclude special duties of excise in the Territories. Sections 81,82 and 83 deal with the consolidated revenue of the Commonwealth and the executive government of the Commonwealth, and not with the revenue of subordinate legislatures.

D.M.J. Bennett QC, in reply. The American cases proceed on the basis that a territory legislature is a delegate. This is not the case with Australian Territories.
Cur.adv.vult.