Essendon Corporation v Criterion Theatres Ltd

The Mayor, Councillors and Citizens of the City of Essendon (the plaintiff) brought an action against Criterion Theatres Ltd. and other landowners (the defendants) and the Commonwealth of Australia. The dispute concerned the recovery of municipal rates levied by the plaintiff on land owned by the defendants, which had been occupied by the Commonwealth for defence purposes. The Commonwealth demurred to the statement of claim, arguing that the Victorian Local Government Act 1928 did not empower the plaintiff to levy rates on the Commonwealth as occupier, nor did it impose any liability on the Crown in right of the Commonwealth. The High Court of Australia was asked to determine the liability of the defendants other than the Commonwealth for these rates.

The legal issues before the Court were twofold. Firstly, whether the term "the Crown" as used in section 265(b) of the Local Government Act 1928 (Vict.) included the Crown in right of the Commonwealth, thereby shifting the liability for rates from the occupier (the Commonwealth) to the owner of the land. Secondly, if "the Crown" did not include the Commonwealth, whether the Commonwealth, as an occupier, was liable for the rates under the general provision of section 265(b) which states that rates are levied upon "every person who occupies" ratable property.

A majority of the High Court (Latham C.J., Dixon, McTiernan, and Williams JJ.) held that the term "the Crown" in section 265(b) referred only to the Crown in right of the State of Victoria. This interpretation was based on the context of the section, which referred to other Victorian State bodies, and on established legal principles that a State statute is presumed not to bind the Crown in right of the Commonwealth unless expressly stated or necessarily implied. Furthermore, Latham C.J. and Dixon J. found that even if the Commonwealth were considered an "occupier" under the general wording of the section, imposing rates on it would constitute a tax on property belonging to the Commonwealth, which is prohibited by section 114 of the Commonwealth Constitution. Therefore, the section should be construed as not applying to the Commonwealth to avoid this constitutional conflict. Rich J. dissented, finding that the provision for the owner to be liable when the occupier is "the Crown" was intended to cover the Crown in all its capacities, including the Commonwealth, and that the general rule that statutes do not bind the Crown applied to the Commonwealth as well.

Consequently, the majority of the Court answered the question in the negative, finding that the defendants other than the Commonwealth were not liable to pay the claimed moneys. The demurrer of the Commonwealth was also allowed.