Commonwealth v Morton

[1968] HCA 43

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Kitto, Taylor, Menzies and Windeyer JJ.

THE COMMONWEALTH v. MORTON

(1968) 117 CLR 383

27 June 1968

Constitutional Law (Cth)

Constitutional Law (Cth)—Taxation power—Levy on poultry farmers in respect of "hens kept for commercial purposes"—Whether law with respect to taxation—Application to poultry farmers in Australian Capital Territory—The Constitution (63 &64 Vict. c. 12), s. 51 (ii.)—Poultry Industry Levy Act 1965-1966 (Cth).

Decisions

1968, June 27.
The following written judgments were delivered: -
BARWICK C.J. I have had the advantage in this appeal of reading the reasons for judgment prepared by my brother Taylor. I agree with him that there should be judgment for the plaintiffs upon demurrer for the reasons given by him and desire to add nothing to them. (at p386)

MCTIERNAN J. I am of the same opinion as the Chief Justice. (at p386)

KITTO J. I agree in the judgment of my brother Taylor. (at p386)

TAYLOR J. In these proceedings the Commonwealth seeks to recover an amount alleged to be payable by the defendants as and for levies imposed by the Poultry Industry Levy Act 1965- 1966 (Cth). The ground upon which this claim is resisted is that, for a number of reasons, the Act is invalid. The arguments advanced, however, seem to me to be without substance. (at p386)

2. The Act, which came into operation on 1st July 1965, purports to impose a levy, on each prescribed day, in respect of hens kept for commercial purposes on that day (s.5). "Prescribed day", by definition, means the last day of each successive period of fourteen days after the date upon which the Act comes into operation. The rate of levy is to be such amount in respect of each hen as is prescribed and by s. 6 (2) it is provided that before making any regulations for the purpose of prescribing the levy the GovenorGeneral shall take into consideration any recommendation with respect to the rate of levy made to the Minister by the Council of Egg Marketing Authorities of Australia, and regulations shall not be made prescribing a rate in excess of the rate last recommended by the Council to the Minister. The levy in respect of a hen is payable by the owner of the hen (s. 7), and by s. 9 it is provided that the Minister, or a person authorized in writing by him to give directions under that section, may, by instrument in writing, direct that any hens that, at any time whilst the instrument remains in force, are in the possession or control of a person but of which that person is not the owner shall, for the purposes of the Act, be deemed to be owned by that person and the direction is to have effect accordingly. (at p386)

3. The defendants carry on in the Australian Capital Territory the business of poultry producers and egg producers and on 20th April 1967 - a prescribed day - they were the owners of 33,361 hens. A twofold complaint is made by the defendants based upon the fact that the Council of Egg Marketing Authorities of Australia is simply a council composed of persons representing the Egg Marketing Boards of the various States. First of all it is said that they, as poultry farmers in the Australian Capital Territory, have no voice in recommending the amount of the levy to be prescribed. Then it said that they do not participate in the proceeds of the levy. This complaint rests upon the provisions of s. 6A of the Poultry Industry Assistance Act 1965 (Cth) which provides that the Minister may from time to time approve the payment to a State out of moneys raised by the levy, by way of financial assistance, of such an amount or amounts as he determines after taking into account any recommendation made to him by the Council. By sub-s. (2) payment of an amount to a State in accordance with such approval is subject to a condition that the amount will be applied by the State for the assistance of the poultry industry, and will be so applied in accordance with the direction, if any, of the Minister. It may be observed, however, that s. 6B of the Assistance Act provides that the Minister may, in accordance with recommendations made to him by the Council, from time to time approve the payment out of moneys raised by the levy of amounts to be applied for the purpose of such research in connexion with the poultry industry as is specified in the approval. With these provisions in mind one must feel some sympathy for the defendants; but the fact that they are not represented on the Council and do not, except possibly pursuant to s. 6B, receive any benefit from the collection of the levy, does not afford any ground upon which it can be asserted that the Poultry Industry Levy Act is invalid. (at p387)

4. However, several grounds were advanced in support of the contention that the Act is invalid, or, alternatively, that it does not apply in respect of hens kept for commercial purposes in the Australian Capital Territory. The first of these was that the law is not, in the constitutional sense, a law imposing, or otherwise with respect to, taxation. As I understand this proposition it is based upon the presence in the Act of s. 9 which, it is asserted, authorizes the Minister to select individuals who will be subject to the impost and, that being so, it is impossible to characterize the impost as a tax although it may constitute some other form of exaction from individuals. In my view this submission must be rejected. The form of s. 9 is clumsily constructed but its purpose is clear enough; it is merely designed as a piece of machinery to bring within the meaning of the word "owner", as it is used in s. 7, a person who is in possession and control of hens in respect of which an instrument has been executed pursuant to s. 9. But even if s. 9 were held to be invalid that would not materially assist the defendants; it would be severable from the rest of the Act and would leave standing the provisions imposing the levy upon owners of hens kept for commercial purposes. (at p388)

5. The second ground is that the rate of levy is left by the Act to be prescribed by the Council and that this, in effect, represents a substantial abdication of the Commonwealth's power to make laws imposing taxation. Whether, if this accurately states the effect of s. 6, this would inevitably result in invalidity need not be considered, for what s. 6 does is to authorize the Governor-General to prescribe the rates of levy, and the subsequent words of sub-s. (2) merely require him to take into consideration any recommendation with respect to the rate of levy made to the Minister by the Council, and then limits his authority to prescribe a rate to one which is not in excess of the rate last recommended by the Council to the Minister. (at p388)

6. A further contention was raised that the Act on its true construction does not apply to impose the levy in respect of hens kept in the Australian Capital Territory. But despite the argument I was unable to see any legal basis for such a submission and it was not strongly pressed. Other minor objections to the Act were also taken but, in my view, these were sufficiently disposed of in the course of argument. (at p388)

7. In form the proceedings before us were by way of demurrer, but it was pointed out that the pleadings as they stood were not in an appropriate form. However, by agreement, amendments were made to the statement of claim which afforded the defendants an opportunity of demurring to it without alleging any other facts, and the hearing took place as upon a demurrer to the amended statement of claim. In my view the matter should be disposed of by ordering that judgment be entered for the plaintiff on the demurrer. (at p388)

MENZIES J. The grounds upon which the defendants have attacked the validity of the Poultry Industry Levy Act 1965-1966 (Cth), viz. (1) that by reason of s. 9 it is not a law with respect to taxation and is therefore outside s. 51 (ii.) of the Constitution; (2) that, if it is a law with respect to taxation, it is by reason of s. 10 a law which discriminates between States and so is contrary to s. 51 (ii.) of the Constitution; (3) that s. 6 (2) is an unlawful delegation of power; and (4) that upon its proper construction the Act does not apply in the Australian Capital Territory; have no substance. I agree with the order proposed by Taylor J. and his reasons for that order. (at p388)

WINDEYER J. I consider that the Poultry Industry Levy Act 1965-1966 (Cth) is a valid exercise of the power of the Parliament with respect to taxation. No legal ground was shewn for treating it as not applicable in respect of hens kept in the Australian Capital Territory. I have nothing to add to what has been said by Taylor J. The plaintiffs should have judgment upon the demurrer. (at p389)

Orders

Demurrer overruled.