Chaplin v Commissioner of Taxes (SA)

[1911] HCA 13

375

12 C.L.R.]

OF AUSTRALIA.

I can find no discrimination between States or parts of States. H- C. of A.

I concur in the opinion tha t this action should be dismissed,

and with costs.

Osb o r n e

V.

T h e

C o m -

Juclgvient fo r the defendants, w ith costs.

m o n w ea lt h .

Hig-gins J-

Solicitors, for the plaintiflF, Norton Smith & Co.

Solicitor, for the defendants, C. Powers, Crown Solicitor for the

Commonwealth.

DiscdB. L.

W at\D^uty

Comirumoner

of Taxation

» C L R « 7

[HIGH COURT OF AUSTRALIA.]

CHAPLIN . .

A ppellant;

D efendant,

COMMISSIONER OF TAXES FOR SOUTH I ^

. ̂ ,

\

Respondent,

A U S T R A L I A .................................... J

Plaintiff,

ON APPEAL FROM THE LOCAL COURT OF ADELAIDE.

Legidative powers of Slates—Taxation of salary o f OommomsealtJi officer—Grant H. C. OF A.

hy Commonwealth Parliament to Stale o f authority to tax—Commonwealth

I9 II.

Salaries Act 1907 (iVo. 7 o f 190~), sec. 2.

'—.—'

̂ ̂ A d e l a id e ,

The Commonwealth Parliament may make its grants of salaries to Common-

M ay 18

wealth ofiBoera subject to taxation by the States.

____

, Griffith C .J.,

The Commonvmallh Salaries Act 1907 is an effective grant to the States of

Barton and

, . . . „ . . . .

O’Connor JJ .

authority to impose upon Commonwealth officers taxation in respect of their

salaries, subject to the conditions stated in tliat Act.

A ppeal by way of special case.

376 HIGH COURT

[1911.

H.C. oj AFrederick William Chaplin, the appellant, a telegraph opei'ator,

1911. employed in the Department of the Postmaster-General, and as

Ch a pl insuch resident in South Australia, did not furnish to the Commis­

V.

Com m is­

sioner of Taxes for South Australia, the respondent, an income

s io n e r OE tax return for the year 1908 pursuant to the

Taxation Act 1884.

T a x es eor

Sou thThe respondent, under sec. 67 of tlie Act, made an assessment of A u st r a l ia , income tax which, in his judgment, ought to have been charged

by virtue of the Act, and thereupon forthwith gave notice thereof to the appellant, who did not appeal against such assessment under sec. 47 of the Act, and who did not pay the amount of the assessment. On 12th April 1910 the respondent brought an action in the Local Court of Adelaide to recover from the appel­ lant the sum of £1 13s. 6d., being moneys alleged to be payable for income tax under such assessment.

At the hearing, the material facts being admitted, it was con­ tended for the respondent that, as Chaplin had failed to appeal as before mentioned, the assessment was conclusive and binding upon him. For the appellant it was contended that his income being the official salary of an officer of the Commonwealth was exempt from taxation under the Act, tha t the principle of D’Emden v. Pedder (1) was applicable, and tha t the Common­ wealth Salaries Act 1907 was invalid and inoperative. The Court gave judgment for the respondent, and stated a special case to the Supreme Court, setting out the foregoing facts and asking the following questions :—

1. Is the said assessment conclusive and binding on the appel­ lant he having failed to appeal against the same ?

2. If question 1 he answered in the negative, then

(a) Is the appellant’s official salary as an officer of the Commonwealth of Australia exempt from taxation under the Taxation Act 1907 ?

(h) Does the principle of D’Emden v. Pedder (1) apply ? (c) Is the Commonwealth Scdaries Act 1907 invalid and inoperative in so far as it relates to the taxation of the salaries of officers of the Commonwealth ?

The special case was transmitted to the High Court pursuant to sec. 40a of the Jud iciary Act 1903-1907.

(1) 1 C.L.R., 91.

377

12 C.L.R.]

OF AUSTRALIA.

Nesbit K.C. (H. K. Paine with him), for the appellant.

As- R-

. •

1911.

suming that the Commonwealth Parliament has power to give ^

authority to the States to tax the salaries of Commonwealth officers c h a p l in

(see Baxter v. Commissioners o f Taxation, New South Wales (1); cqmmis-

doubted by Higgins J. in F lin t v. Webb (2)), the Parliament has

s ig n e r of

. . -1 rv • *X'a x es

fo r

effectively given that authority by the Commomvealth Salaries

S outh

Act 1907. Sec. 2 of that Act enacts that what this Court has Australia. tution of the Commonwealth of Australia, 2nd ed., p. 427.]

said is the law shall not be the law, viz., that taxation of salaries

of Commonwealth officers is not to be deemed to be an interfer­

ence with the exercise of any power of the Commonwealth.

Although the Privy Council in Commissioners of Taxation, New

South Wales v. Baxter (3) treated this Act as authorizing taxa­

tion by the States, their attention was not drawn to this point.

The Act does not show an intention to renounce the rights of the

[Griffith C.J. referred to California v. Central Pacific R a il­ road Co. (4) ].

E. E. Cleland, for the respondent. I t is not that the taxation of a federal officer is unconstitutional, but that the attempt to interfere with the exercise of the Commonwealth powers makes the taxation unconstitutional. That being so, directly the reason underlying the principle goes, the taxation ceases to be an in ter­ ference, and, directly there is a consent in any form by the Parliament, the taxation ceases to be an interference. The state­ ment of the principle of D'Emden v. Pedder (5) carries with it the authority of tlie Commonwealth Parliament to say that a particular act shall not be an interference.

[O’Connor J.—If the privilege were that of the individual I do not think the Commonwealth Parliament could give it up, but it is the privilege of the Commonwealth, which alone can complain of the interference and may therefore consent to it].

This Act is a direct exercise of the power conferred upon the Parliament, and the Parliament has used the most apt words

(1) 4 C.L.E., 1087, at p. 1133.(4) 127 U.S., 1, at p. 41.

(2) 4 C.L.R., 1178, at p. 1194.(5) 1 C.L.R.., 91.

(3) 5 C.L.R., 398 ; (1903) A.C., 214.

378 HIGH COURT

[1911.

H.

C OF A. because they do away with tlie facts which make the principle 1911.

applicable.

[He referred to Van Allen v. Assessoi's (1).]

Ch a pl in

[G r if f it h C.J. referred to N ational Bank v. Commonwealth

V.

Com m is­

(2); People v. Commissioners (3) ].

s io n e r OF

T a x es

fo r

South

Nesbit K.C., in reply.

A u str a lia .

G r if f it h C.J. This is an appeal transmitted to the High Court m dev the Jud iciary Act 1903-1907 raising the question whether the Comnioriiuecdth Salaries Act 1907 is valid. The appellant is an officer of the Commonwealth residing in South Australia who has been asse.«sed for income tax, and the que.stion raised is whether he is liable or not.

This Court held in the case of Baxter v. Commissioners of Taxation, New South Wales (4) that officers of the Common­ wealth were not liable to such tax in respect of their salaries for reasons to which it is not necessary to refer at length. But in the course of the judgment in that case, speaking for myself and my brothers Barton and O’Connor, I said (5) :— “ The question whether a State t^x upon the emoluments of federal officers is within the prohibition is a minor question, for the federal Parlia­ ment can make its grants subject to such a tax. Quilibet iJotest re7iunciare f u r i pro se introducto.” In D’Em den v. Pedder (6), the Court did not apply their minds to the question whether the federal Parliament could or could not renounce the claim to the privilege asserted in that case. But the doctrine laid down by this Court was admittedly based upon tha t laid down by the Supreme Court of the United States in the great case of JTCallocJi V. M aryland (7). That principle, however, has always been understood in the United States to be subject to qualification. In Cooley’s Constitutional Lim itations, 7th ed., at p. 682, a book which is recognized as of considerable autho­ rity, it is said :—“ I t follows as a logical result from this doctrine that if the Congress of the Union may constitutionally create a Bank of the United States, as an agency of the national govern-

(1) .3 Wall., .573, at p. 584.(5) 4 C.L.R., 1087, at p. 113.3.

(2) 9 Wall., .353, at p. 361.l6) 1 C.L.R , 91.

(3) 4 Wall., 244. ,(7) 4 Wheat., 316.

(4) 4 O.L.R., 10S7.

12 CX.R.j OF AUSTRALIA.

379

inent in the accomplishment of its constitutional purposes, any

H. C. OF A.

1911.

power of the States to tax such bank, or its property, or the

means of performing its functions, unless with the consent of the

Ch a pl in

V.

United States, is precluded by necessary implication.”

Com m is­

s io n e r OF

In the case of California v. Central Pacific Railroad Co. (1) the question was as to the taxation of a franchise granted by the

T a x es fo b

South

United States Congress, and, after discussing the general nature A u str a lia .

of franchises, the Court went on to say ;—“ In view of this

Griffith G.J.

description of the nature of a franchise, how can it be possible that a franchise granted by Congress can be subject to taxation by a State without the consent of Congress ? ” In an earlier case, National Bank v. Commonwealth (2) the Court said :—“ But it is argued that the banks, being instrumentalities of the Federal Government, by which some of its important operations are conducted, cannot be subjected to such State legislation. I t is certainly true that the Bank of the United States and its capital were held to be exempt from State taxation on the ground here .stated, and this principle, laid down in the case of M’Cidloch v. 3Iaryltmd (3), has been repeatedly affirmed by the Court. But the doctrine has its foundation in tbe proposition, that the right of taxation may be so used in such cases as to destroy the instru­ mentalities by which the Government proposes to effect its law­ ful purposes in the States, and it certainly cannot be maintained that banks or other corporations or instrumentalities of the Government are to be wholly withdrawn from the operation of State legislation. The most important agents of the Federal Government are its officers, but no one will contend that when a man becomes an officer of the Government he ceases to be sub­ ject to the laws of the State. The principle we are discussing has its limitation, a limitation growing out of the necessity on which the principle itself is founded. That limitation is, that the agencies of the Federal Government are only exempted from State legislation, so far as that legislation may interfere wdth, or impair their efficiency in performing the functions by which they are designed to serve that Government. Any other rule would convert a principle founded alone in the necessity of

(1) 127 C.S., 1, at p. 41.

(2) 9 Wall., 353, at p. 3C1.

(3) 4 Wheat , 316.

380 HIGH COURT

[1911,

H.C. or A.securing to the Government of the United States the means of

1911. exercising its legitimate powers, into an unauthorized and un­

Ch a pl in

justifiable invasion of the rights of the States.” In the case of

V.

COMMS- Thomson v. Pacific Railroad (1) the Court said;—“ There are

sioNEB o r

other instances in which exemption, to the extent it is established

T a x es

roR

South in M ’Cidloch v. Mai'yland (2), might have been held to arise

A u st r a l ia .

from the simple creation and organization of corporations under

Griffith C.J.Acts of Congress, as in the case of the National Banking Associa­

tions ; but in which Congress thouglit fit to prescribe the extent to which State taxation may be applied.” Reference was there made to, amongst others, the case of Van Allen v. Assessoi’s (3). In tha t case (4) a form of a S tatute passed by Congress is given in these te rm s:—“ That nothing in this Act shall be construed to prevent all the shares in any of the said associations, held by any person or body corporate, from being included in the valua­ tion of personal property of such person or corporation in the assessment of taxes imposed by or under State authority, at the place where such bank is located, and not elsewhere, but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State.”

W hat I have said shows how the doctrine is regarded in the United States and how it is applied. In Van Allen v. Assessors (3) the Supreme Court held that the State of New York, which imposed the tax, had not kept within the limits allowed by the Act of Congress. The privilege is a privilege of the Federal Government that its instrumentalities maj^ be unimpeded. If it grant a salary for the performance of duties, that is the same in principle as the grant of a franchise to an individual or to a com­ pany. The grant, if no more is said, is free fi'om taxation by the State, but in making the grant the Commonwealth may say that the grant to the individual is subject to State taxation. It is then impossible to say there is any interference with the free exercise of the federal power. I t is unimportant in what form the right to a limited interference is granted. Provided that it is granted, it cannot be asserted with tru th tha t there is any interference with the free exercise of the powers of the Com-

(1) 9..Wall., 579, at p. 589.(3) 3 Wall. , 573.

(2) 4 W heat, 316.

(4) 3 Wall., 573, at p. 584.

381

12 C.L.R.]

OF AUSTRALIA.

monwealth. These being the doctrines which I conceive have

application to this case, the only question is whether the Act

passed by the Federal Parliament gives effect to them. The

Ch a pl in

V.

terms of the Act tha t are material are these;—“ The taxation by

COMMIS-

SIONEB OF

a State, in common with other salaries earned within the State, T a x es f o r

of—

Sou th

(a) the official salaries of officers of the Commonwealth A u str a lia . residing in the State earned in the State . . . . Griffith c .j .

shall not, if the taxation is not a higher rate or to a greater extent than is' imposed on other salaries of the same amount earned in the State, be deemed—

(c) to be an interference with the exercise of any power of

the Commonwealth,” &c.

That is, in substance, saying th a t the grant of a salary to an officer of the Commonwealth is made on condition tha t he is subject to a law of the State as to taxation to the same extent as any other citizen, and is a solemn declaration that such taxa­ tion is not an interference with the exercise of the powers of the Commonwealth. The limitation, it is to be observed, is the same as that in the Act of Congress which was in question in Van Alien V. Assessors (1). If the State Parliament were to impose upon salaries of Commonwealth officers an income tax higher than that on other salaries of the same amounts, then the doctrine of Baxter v. Commissioners o f Taxation, New South Wales (2) would come in, and the Act would be so far void.

For these reasons I think that what we said in Baxter v. Commissioner o f Taxes, New South Wales (3), whether regarded as a dictum or not, is sound law and part of the law of the Com­ monwealth.

Our opinion upon this question disposes of the whole case, because, if the appellant is not exempt from taxation, the question whether the assessment is conclusive and binding on him, he not having appealed against it, does not arise. I t is unnecessary, therefore, to send the case back to the Supreme Court, and the appeal will be dismissed.

(1) 3 Wall., 673.

(2) 4 C.L.R., 1087.

(3) 4 C.L.R., 1087, at p. 1133.

VOL. XII.

HIGH COURT

[1911.

382

H . C. OF A.

B arton J.

I concur.

1911.

O’Connor J.

I concur.

C h a p u n

V.  Appeal dismissed w ith costs.

Com m is­

s io n e r OF

T a x es

fo r

S o u th

Solicitor, for the appellant, H. K. Paine.

A u s t r a l ia .

Solicitor, for the respondent, C. J, Dashwood, Crown Solicitor

for South Australia.

B, L.

[HIGH COURT OF AUSTRALIA.]

ARMSTRONG .

A p p e a l l a n t ;

Discd

Madden, Re

Plaintiff,

a w 1̂1

FLR430

AND

THE GREAT SOUTHERN GOLD MINING ) R

espo n d en ts .

COMPANY, NO LIABILITY . .

/

D efendants,

ON APPEAL FROM THE SUPREME COURT OF

VICTORIA.

H. C. OF A. Practice—County Court—New trial — Service o f notice o f application — Time—

1911.“ Clear days ”—Enlarging time—Appeal from exercise o f discretion—Mis­ direction—No objection at trial—County Court Act 1890 {Viet.), {No. 1078), sec.

M e l b o u r n e , 96

—County Court Rides 1891 {Viet.), Interpretation clause, rr. 188, 424, 426.

June 15, 16,

The interpretation clause of the County Court Rules 1891 (Viet.) provides that “ if not inconsistent with the context or subject matter . . . ‘ clear

Griffith

C .J.,

Barton and days’ shall mean tliat in all cases in which any particular number of days is

O’Connor JJ .

prescribed for the doing of any act, or for any other purpose, the same shall be reckoned exclusive both of the first and of the last day.” R. 188 provides that “ an application for a new trial . . . may be made either to the Court or a Judge . . . ; if application be not made at the trial notice in writing, setting out the grounds thereof, must be left with the Registrar . . . and a copy of such notice must be served upon the opposite party . . . within seven clear days after the day of trial.”