Dennis Hotels Pty Ltd v Victoria

[1961] HCA 36

HIGH COURT OF AUSTRALIA

Viscount Simonds, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Hodson

DENNIS HOTELS PTY. LTD. v. VICTORIA

(1961) 104 CLR 621

14 June 1961

Constitutional Law (Cth)—Privy Council

Constitutional Law (Cth)—Privy Council—Jurisdiction—Appeal from High Court—Question as to limits inter se of constitutional powers of Commonwealth and State—What constitutes inter se question—Exclusive power of Commonwealth—Claim that State statute attempts to deal with same subject matter—Duties of excise—Decision that duty of excise not imposed by State statute—Inter se question—The Constitution (63 &64 Vict. c. 12), ss. 51 (i), 74, 90, 92—Licensing Act 1928 (Vict.), s. 19 (1) (a)—The Licensing Acts, 1912 to 1958 (Q.), s. 18 (1). Privy Council—Petition for special leave to appeal—Question as to jurisdiction of Board to hear appeal—Practice as to determination of jurisdictional question.

Decision

June 14.
LORD RADCLIFFE delivered their Lordships' reasons for judgment in each appeal as follows:-

Dennis Hotels Pty. Ltd. v. Victoria.

The appeal in this case comes before the Board by special leave granted by Her Majesty by Order in Council dated 3rd August 1960. By this order leave was reserved to the respondents to raise as a preliminary point at the hearing of the appeal the plea that in the absence of a certificate of the High Court of Australia granted under s. 74 of the Commonwealth of Australia Constitution the appeal was incompetent. (at p623)

2. This preliminary objection to jurisdiction was duly raised and argued before the Board concurrently with the opening of an appeal in similar circumstances Whitehouse v. Queensland, and at the conclusion of the argument their Lordships intimated that in their opinion the objection succeeded and that it was not open to them to proceed to the hearing of the substantive appeals. It is now for their Lordships to state their reasons for this opinion. (at p624)

3. Section 74 of the Constitution preserves the prerogative right of Her Majesty in Council to grant special leave of appeal from the High Court but subjects that right to certain limitations which are set out in the section. The main limiting provision is to the effect that no appeal is to be permitted to the Queen in Council from a decision of the High Court upon any question, howsoever arising, as to the limits inter se of the constitutional powers of the Commonwealth and those of any State or States, or as to the limits inter se of the constitutional powers of any two or more States, unless the High Court itself certifies that the question is one which ought to be determined by Her Majesty in Council. A lengthening line of judicial opinions of some complexity has by now made it clear that the meaning of these words is more elusive than at first sight it would appear to be. (at p624)

4. The nature of the decision of the High Court from which it is sought to appeal can be stated with fortunate brevity. It is convenient to relate it in terms of the action that is the subject of the appeal now under consideration, Dennis Hotels Pty. Ltd. v. Victoria, but there is no difference of any materiality between the facts and circumstances of this appeal and the considerations relevant to it and those of and relevant to the second appeal. Whatever is said with regard to the one is therefore equally valid with regard to the other. (at p624)

5. The appellant was the plaintiff in the action. The relief which it claimed against the respondents as defendants was (i) a declaration that two provisions of the Licensing Act 1928, of the State of Victoria, s. 19 (1) (a) and s. 19 (1) (b), were invalid, and (ii) the return of certain fees paid thereunder in respect of what were called a "victualler's licence" and a "temporary victualler's licence" prescribed by those provisions. The ground upon which this claim of invalidity was rested was set out in par. 12 of the appellant's statement of claim, which ran as follows: "The said provisions of the said s. 19 of the said Licensing Acts purport to impose a duty of excise contrary to the provisions of s. 90 of the Constitution of the Commonwealth and are and at all times have been invalid." There was no other ground alleged: the whole issue lay in the question whether the fees imposed by s. 19 (1) (a) and (b) were duties of excise within the meaning of the Constitution and, as such, within the exclusive legislative power of the Federal Parliament. (at p624)

6. The respondents demurred to the whole of this statement of claim on the ground that neither of the impugned provisions imposed a duty of excise contrary to s. 90 of the Constitution and that each of them was a law validly made by the Parliament of the State of Victoria. (at p625)

7. By the judgment of the High Court, from which it is now sought to appeal, this demurrer has been sustained so far as it relates to s. 19 (1) (a) by a majority of four to three, but overruled, also by a majority of four to three, so far as it relates to s. 19 (1) (b). The Court thus decided that s. 19 (1) (a) did not amount to the imposition of a duty of excise, but s. 19 (1) (b) did amount to the imposition of such a duty. The respondents do not seek to disturb the judgment in its application to s. 19 (1) (b), but the appellant seeks its reversal so far as it relates to s. 19 (1) (a). (at p625)

8. It is apparent therefore that success or failure in the appeal would turn entirely upon the question whether s. 90 of the Constitution applies to the statutory enactment which is contained in the impugned section of the State licensing law. The material words of s. 90 are as follows: "On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and excise, and to grant bounties on the production or export of goods, shall become exclusive." If s. 19 (1) (a) of the State Act does purport to impose a duty of excise within the meaning of s. 90, then the State does not possess legislative power to enact this because under the Constitution only the Commonwealth has legislative power in that field. On the other hand if the State's enactment is not to be read as imposing an excise duty, then there is nothing in the Commonwealth's powers under the Constitution which impairs the State's legislative authority to make s. 19 (1) (a) into law. (at p625)

9. Does the determination of this question involve a question as to the limits inter se of the constitutional powers of the Commonwealth and those of the State, as the respondents contend that it does? There are, at any rate, two generally accepted descriptions of what constitutes an inter se question in this sense and both of them lend support to the respondents' contention. First, it has always been recognized that the general purpose of the agreement enacted in s. 74 is to reserve for the final decision of the High Court in Australia, unless the Court itself wishes to refer the matter to the Judicial Committee, "questions which arise in connexion with the federal distribution of power between the Commonwealth on the one hand and the States on the other" (Quick &Garran, The Annotated Constitution of the Australian Commonwealth (1901) p. 757). The clear intention of s. 74, as was said by Isaacs J., in Pirrie v. McFarlane (1925) 36 CLR 170 , is that "on the purely Australian question of the distribution of the totality of governmental powers on this continent, the High Court of Australia - the highest judicial organ created by the Australian people - was to be the final arbiter, unless it voluntarily requested the intervention of the Sovereign in Council" (1925) 36 CLR, at p 196 . The questions so reserved are questions "characteristic of federalism" (per Dixon J., Nelungaloo Pty. Ltd. v. The Commonwealth (1952) 85 CLR 545, at p 570 ). It would be a strange departure from this general conception if a case was not to be treated as raising an inter se question although the single proposition that it put in issue was that a State had no power to make a particular enactment because under the Constitution the power to pass such legislation had been allotted to the Commonwealth alone. (at p626)

10. Secondly, the words "inter se" are pregnant words and what must be looked for is an issue that involves some reciprocal relation between the extent or nature of the powers on one side and the powers on the other. "The essential feature", as was said by Dixon J., in a well-known passage in Ex parte Nelson (No. 2) (1929) 42 CLR 258 is that there should be "a reciprocal effect in the determination or ascertainment of the extent or the constitutional supremacy of either of them" (1929) 42 CLR, at p 272 . Here again it seems that in any ordinary sense of language there is plainly a reciprocal effect upon the extent or supremacy of Commonwealth and State powers respectively when a decision is given upon the question whether a State cannot pass a particular law simply because only the Commonwealth can. Indeed their Lordships see nothing unreasonable in the view of a recent commentator on the Australian Constitution (see Wynes, Legislative, Executive and Judicial Powers in Australia, 2nd ed. (1956) p. 681) that questions relating to the limits of the exclusive powers of the Commonwealth are "cases par excellence of inter se questions", whatever be adopted as the precise definition of the test of reciprocity. (at p626)

11. What is challenged in a case such as the present is the validity of a State law: what is argued is that having regard to the powers exclusively allotted to the Commonwealth under the Constitution, the State's power of law-making does not extend to cover the enactment impugned. Such a proposition does not differ in any essential respect from that advanced in Baxter v. Commissioners of Taxation (N.S.W.) (1907) 4 CLR 1087 , in which it was held that having regard to the executive functions and powers vested in the Commonwealth by the Constitution a State enactment was invalid to the extent that its full implementation according to its letter would trespass upon that field of power; or from that advanced in Pirrie v. McFarlane (1925) 36 CLR 170 , where the issue was whether a State law was within the legislative power of the State in so far as its operation trenched upon the defence power reserved to the Commonwealth by the Constitution. A similar question was present, though it may not have been exposed, in Attorney-General for New South Wales v. Collector of Customs for New South Wales (1909) AC 345 , in which the contest of power was between the exclusive power of legislation in the Commonwealth and the State executive powers. In all these cases (whatever the ultimate fate of the doctrine of the immunity of instrumentalities asserted in Baxter's Case (2a) it was held judicially that inter se questions were involved. (at p627)

12. There are however two recent opinions delivered in this Board which appear to contain general statements to the effect that no inter se question is capable of arising when the extent of an exclusive constitutional power of the Commonwealth is the subject of dispute; and the forcible argument of counsel for the appellants has naturally dwelt upon these statements and endeavoured to propound a theory of the interpretation of s. 74 which would give support to such a view. The first passage consists of a sentence in the opinion of the Board in Nelungaloo Pty. Ltd. v. The Commonwealth (1951) AC 34; (1950) 81 CLR 144 , in which Lord Normand said: "Equally, when a power is declared to be exclusively vested in the Commonwealth no question can arise as to the limits inter se of the powers of the Commonwealth and those of any State, and on this point the reasoning of Dixon J., in Ex parte Nelson (No. 2) appears to their Lordships to be conclusive" (1951) AC, at p 48; (1950) 81 CLR, at pp 154, 155 . The second passage occurs in Attorney-General of the Commonwealth of Australia v. The Queen (1957) AC 288; (1957) 95 CLR 529 , where Viscount Simonds, in delivering the opinion of the Board, said: "If the power is one of which the exercise is exclusively vested in the Commonwealth no such inter se question arises. It is only where the delimitation of the Commonwealth power necessarily implies a decision as to the extent of a subordinate State power that an inter se question truly arises" (1957) AC, at p 324; (1957) 95 CLR, at pp 548, 549 . (at p627)

13. Their Lordships do not think that they can regard the law as settled by these statements. In neither case were they essential or even directly relevant to the decisions come to; in each case they appear as incidental to a more or less comprehensive summary of the various aspects in whcih inter se questions can arise under s. 74. When the proposition which they appear to state is scrutinized at close quarters, as has to be done for the purpose of deciding the preliminary objection in the present case, its very generality is sufficient to arouse doubts as to its correctness. This has already been pointed out by the present Chief Justice when giving his judgment in the High Court of Australia in Nelungaloo Pty. Ltd. v. The Commonwealth (1952) 85 CLR, at p 574 . The first passage in question does not offer any reasoned analysis of the conclusion it states, since it merely assumes the point to have been established by the judgment of Dixon J., in Ex parte Nelson (No. 2) (1929) 42 CLR 258 , to which it will be necessary to turn. The second passage is evidently intended to restate the same proposition without reconsidering its basis. The question to which their Lordships must now address themselves, therefore, is whether the reasoning employed by Dixon J., in Ex parte Nelson (No. 2) (1929) 42 CLR 258 when dealing with the connexion between s. 92 of the Constitution and inter se questions, can safely or even properly be transferred to the consideration of this other section, s. 90, and its relation to inter se questions. For this purpose the Nelson Case (1929) 42 CLR 258 requires a few words of introduction. (at p628)

14. Section 92 contains the well-known injunction, "trade, commerce and intercourse among the States . . . shall be absolutely free". It was accepted from the first that this overrode the exercise of constitutional powers by any authority to whom the injunction was addressed; but over the years judicial opinion in Australia fluctuated on the question whether it was addressed to the Commonwealth as well as to the States or to the States alone. At first the former view prevailed, and so long as it did no doubt seems to have been entertained that an inter se question was not raised by a case which involved the application of s. 92. Whether legislation of State or of Commonwealth or some other exercise of the powers of one or other was the subject of challenge it was seen that a decision of the issue had no reciprocal bearing upon the extent or nature of any power of the other authority. (at p628)

15. In course of time however judicial opinion changed and in W. &A. McArthur Ltd. v. State of Queensland (1920) 28 CLR 530 , the High Court decided that s. 92 bound the States alone. This view was later to be overruled by the opinion of the Judicial Committee in James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 ; but the Nelson Case (1929) 42 CLR 258 came before the High Court at a time when the McArthur decision represented the prevailing doctrine. Upon those premises the Court had before it the issue whether an attack upon the validity of State legislation as infringing s. 92 raised an inter se question and whether, if it did, the instant case was one which justified the grant of a certificate under s. 74. Of the six judges who participated in hearing the application for a certificate, two, Knox C.J. and Gavan Duffy J., expressed no opinion on the inter se question, since they were not in any event in favour of granting a certificate; two, Isaacs and Starke JJ., held that an inter se question did arise, while two others, Rich and Dixon JJ., held that it did not. Both Isaacs and Starke JJ., agreed that in any event there was no case for the grant of a certificate. The argument that was pressed upon the Court was that, as the Commonwealth had legislative power over "trade and commerce with other countries, and among the States" under s. 51 (i), any decision that the State could not pass a particular enactment because its terms came within the prohibition of s. 92 necessarily had a bearing upon the powers of the Commonwealth as well as of the State since it meant that over that matter at any rate the Commonwealth alone had legislative power. In essence it was an argument that a s. 92 decision helped to define an exclusive power of the Commonwealth and so raised an inter se question. It was upon the acceptance or rejection of this proposition that the four members of the Court divided. It seems plain from what was said by Rich and Dixon JJ., that, had they been prepared to accept this premise that a decision on the effect of s. 92 did "say something about" the Commonwealth power, which would thus become exclusive, they would have joined Isaacs and Starke JJ., in holding that an inter se question was involved. (at p629)

16. One or two quotations from the judgments will serve to illustrate the reasoning employed. On the one side Starke J. said "The decision, it appears to me, affects the distribution of constitutional power as between the Commonwealth and the States: it affirms certain constitutional power in the Commonwealth which it denies to the States: it measures out the area over which the Commonwealth and the States can respectively operate" (1929) 42 CLR, at p 269 . On the other side, Rich J., said that in his view the real question was as to the extent and application of the prohibition laid upon the States. The sole question was "whether the power was withdrawn from the State irrespective of the extent or existence of the Commonwealth power" (1929) 42 CLR, at p 267 . The word "irrespective" is the key word in this context. So too Dixon J., speaking of section 92 "Whether these provisions deny much or little power to the States must be immaterial as well for the purpose of defining the subject matter of Commonwealth power as for the purpose of determining its supremacy, of measuring its constitutional strength" (1929) 42 CLR, at p 272 . And again "The ambit of the commerce power is the same because s. 51 (i) defines it, not s. 92. Indeed it is hard to see how a decision upon s. 92 could even provide a judicial precedent which, if followed would determine a question upon s. 51 (i). For the power which is conferred upon the Commonwealth Parliament by s. 51 (i) is not coextensive with that denied to the States by s. 92. It is much greater . . . " (1929) 42 CLR, at p 273 . (at p630)

17. These observations of Rich and Dixon JJ., as well as their conclusion evidently commended themselves to this Board in James v. Cowan (1932) AC 542; (1932) 47 CLR 386 , and their Lordships accept them as authoritative. But the quotations that have been made above show that they are far from supporting the conclusion that a decision as to the extent of a power which is in truth declared by the Constitution to be vested exclusively in the Commonwealth and so denied to the States does not raise an inter se question. On the contrary they tend to show that it does. For while it was impossible, when interpreting s. 92, to say that the interpretation of it did anything to define the limits or nature of the Commonwealth legislative power over trade and commerce, it is equally impossible, when interpreting s. 90, to say anything else than that the interpretation of such words as "duties of customs and of excise" and "bounties" bears at one and the same time upon the limits of the Commonwealth's powers in this field and upon the limits of the State's powers in everything that is not within this field or otherwise reserved to the Commonwealth. For it is the limits of the Commonwealth power themselves that exclude the State power. To put it shortly, the considerations arising from the proposition "the State has no power to do this, whether or not the Commonwealth has" cannot be equated with the considerations implicit in the proposition which is involved in the present case, "the State has no power to do this, because only the Commonwealth has". (at p630)

18. An explanation on these lines as to the different implications of s. 90 and s. 92 has already been offered by Evatt J. in Hopper v. Egg and Egg Pulp Marketing Board (Vict.) (1939) 61 CLR 665 . The learned Judge there says "in dealing with s. 92 no question as to the limits inter se of the constitutional powers of the Commonwealth and the States arises; but in relation to s.90 such a question is involved . . . The question whether a law passed by a State legislature imposes a duty of excise, however the question is answered, is a question as to the limits inter se of the constitutional powers of State and Commonwealth. For the question can be answered adversely to the State only by asserting that, however far the area of power of State powers is coextensive with Commonwealth powers in relation to taxation, the boundary of the State area of power falls far short of the power sought to be exercised" (1939) 61 CLR, at p 681 . (at p631)

19. For the reasons which they have set out above their Lordships regard this as a correct statement of the constitutional position. In their opinion two points emerge with certainty from the analysis that they have made. One is that the considerations that would prevent a decision on s. 92 from involving an inter se question, assuming that the section bound the States alone, do not apply to a decision on the effect of s. 90 as denying to a State a power which it reserves to the Commonwealth. The second is that the reference to the position of an exclusive power of the Commonwealth in relation to the raising of inter se questions which is found in the Nelungaloo opinion of this Board (1951) AC 34; (1950) 81 CLR 144 and is repeated in the Boilermakers Case (1957) AC 288; (1957) 95 CLR 529 is not well-founded. (at p631)

20. In arriving at this conclusion their Lordships have given full attention to two arguments on which the appellants naturally placed much reliance. It was said that the principle of Dixon J.'s, judgment in the Nelson Case (1929) 42 CLR 258 was properly applicable to s. 90 because the difference between the constitutional effects of s. 90 and s. 92 was merely one of form. Admittedly s. 92 was no more than a prohibition but then, when s. 90 itself was analysed, there was nothing more in it than a prohibition either. It did not "give" any power to the Commonwealth - it simply withdrew it from a State. But their Lordships do not think that it can be right to interpret the words of s. 74 by recasting other sections of the Constitution in this way. The instrument that contains it was shaped as a whole and the structure that it assumed and the phrases and forms of expression that were adopted cannot be treated as of no importance in relation to each other, merely because it is thought that in substance a form that was not chosen might as well have been used in place of one that was. Section 90 was directly expressed in terms that relate to the distribution of powers. It is impossible therefore by reasoning on these lines to obliterate the distinction between s. 90, a decision upon which plots at any rate one point as falling on one side or other of the line that separates what the State can do from what the Commonwealth alone can do, and s. 92, a decision upon which, even given the Nelson premises (1929) 42 CLR 258 , could plot no point in relation to any such imaginary boundary. This consideration was, after all, the basis of Dixon J.'s, reasoning in that case and it is materially reinforced by the observation of this Board in James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 ". . . though trade and commerce mean the same thing in s.92 as in s. 51 (i), they do not cover the same area, because s. 92 is limited to a narrower context by the word 'free' . . ." (1936) AC, at p 632; (1936) 55 CLR, at p 60 . (at p632)

21. Lastly their Lordships have given most careful consideration to what was said by the present Chief Justice in Nelungaloo Pty. Ltd. v. The Commonwealth (1952) 85 CLR 545, at p 574 , in suggested explanation of the sentence in the Board's Nelumgaloo opinion (1951) AC 34; (1950) 81 CLR 144 which has already been discussed. The purport of the explanation is to suggest that while it could not have been in the mind of the Board to lay down a rule about exclusive powers in the absolute terms that were apparently employed, they may have intended to rely on a distinction between an exclusive power over "part only" of a subject of Federal power (such as excise and customs, looked at as part of taxation) and an exclusive power that is co-extensive with the whole legislative subject (such as bounties). With great respect to the learned Chief Justice, who was plaintly seeking to find an acceptable interpretation of a passage that was bound to cause difficulty, their Lordships do not think that it would be a satisfactory development to adopt his explanation. It is not one which proceeds by any necessity of reasoning from the observations made in the Nelson Case (1929) 42 CLR 258 and the distinction between an exclusive power that forms part of a defined subject of a s. 51 placitum and one that is co-extensive with such a subject seems to them to be somewhat too refined for a useful application of the words of s. 74. In their view the "powers" referred to in that section can be exclusive powers just as much as powers of any other quality, the only difference being that powers that are exclusive offer the most obvious occasion for the drawing of reciprocal limits. Moreover, it does not appear to them that it is a significant consideration in this connexion that the words "excise" or "customs" are not the subject of a separate placitum in s. 51. Reading the Constitution as a whole it would be impossible to doubt that the combined effect of s. 51, s. 52 and s. 90 is to confer on the Commonwealth alone what can properly be spoken of as the customs or excise power. In dealing with s. 90 therefore their Lordships prefer to adhere to the simpler conception that any decision that directly bears upon the constitutional distribution of powers between State and Commonwealth and so has a reciprocal effect on their delimitation is an inter se question. (at p633)

22. Their Lordships will therefore humbly advise Her Majesty that they have no jurisdiction to hear this appeal, no certificate from the High Court having been obtained, and that it must be dismissed. Having regard to the special circumstances their Lordships make no order for payment of costs with regard to the petition for special leave; the appellant must pay the respondents' costs of the appeal. There will be no order as to the costs of the interveners. (at p633)

23. Their Lordships take this occasion to give notice that in future, when a petition for special leave discloses a question as to the Board's jurisdiction to hear the appeal, they will make it their general practice to endeavour to give their final decision on the point before advising the grant of leave. The practice of reserving such preliminary points for the opening of the appeal is of long standing and has, no doubt, advantages as well as disadvantages. Unfortunately it is impossible in any particular case to know on which side the balance of advantage inclines until the question of jurisdiction has been argued and decided: but their Lordships have come to the conclusion that under modern conditions the general rule which will be more likely to meet the interests of the parties and the convenience of their advisers, without prejudicing the cause of justice, would be to hear and express their opinion upon an objection to their jurisdiction before making any recommendation as to the granting of special leave.

Whitehouse v. Queensland (at p633)

24. The respondents in this appeal raised the same objection to the jurisdiction of the Board as was taken in the appeal Dennis Hotels Pty. Ltd. v. Victoria and the arguments were heard concurrently on both appeals, since it was common ground that a decision upon the objection to one must necessarily apply to the objection in the other. (at p633)

25. At the conclusion of the arguments their Lordships announced that the objections must be upheld - their reasons for so deciding are set out in full in their opinion in the Dennis Hotels appeal and they must be taken as governing this appeal. (at p634)

26. For those reasons their Lordships will humbly advise Her Majesty that the appeal must be dismissed. Having regard to the special circumstances they make no order for payment of costs with regard to the petition for special leave; the appellant must pay the respondents' costs of the appeal. There will be no order as to the costs of the interveners.