John Young and Commissioner of Taxation
[2013] AATA 347
•28 May 2013
[2013] AATA 347
ADMINISTRATIVE APPEALS TRIBUNAL
Division Small Taxation Claims Tribunal
File Numbers 2011/3256-3264
Re John Young
APPLICANT
And Commissioner of Taxation
RESPONDENT
AND
File Numbers 2011/3187-3195
Re John Lyon
APPLICANT
And Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President D G Jarvis
Date 28 May 2013
Place Perth
1. In matters number 3256-3258 of 2011:
(a) the Tribunal sets aside the objection decisions under review insofar as they included a surcharge on the notional superannuation contributions attributed to the applicant during the periods from 15 December 1996 to 31 January 1997 and 31 March 1998 to 8 April 1999 (when the applicant was an Acting Deputy Crown Solicitor), and from 9 April 1999 to 30 June 1999 (when the applicant was a Deputy Crown Solicitor), and in substitution therefor decides that the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) (the Surcharge Acts) are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme; and
(b) the Tribunal otherwise affirms the objection decisions.
2. In matters number 3259-3264 of 2011, the Tribunal sets aside the objection decisions under review, and decides in substitution therefor that the Surcharge Acts are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme.
3. In matters number 3187-3194 of 2011, the Tribunal sets aside the objection decisions under review, and in substitution therefor decides that the Surcharge Acts are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme.
4. In matter number 3195 of 2011, the Tribunal sets aside the objection decision under review, and in substitution therefor decides that the Surcharge Acts are invalid insofar as they purpose to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme.
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Deputy President D G JarvisCATCHWORDS
TAXATION - Superannuation contributions surcharge assessments - Deputy State Solicitors of Western Australia - implied constitutional limitation on Commonwealth legislative power - held that Commonwealth legislation did not validly apply to applicants - objection decisions set aside.
LEGISLATION
Commonwealth of Australia Constitution 1900 (Imp) 63 and 64 Vic, c 12
Constitution Act 1889 (WA)
Public Sector Management Act 1994 (WA)
Salaries and Allowances Act 1975 (WA)
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth)
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth)Supreme Court Act 1935 (WA)
CASES
Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129
Austin v Commonwealth (2003) 215 CLR 185
Clarke v Commissioner of Taxation (2009) 240 CLR 272
Deputy Commissioner of Taxation v State Bank of NSW (1992) 105 ALR 161
Melbourne Corporation v The Commonwealth (1947) 74 CLR 31
R v Commonwealth Conciliation and Arbitration Commission; Ex parte Association of Professional Engineers, Australia (1959) 107 CLR 208
Re Australian Education Union; Ex parte the State of Victoria (1995) 184 CLR 188
Re Walsh and Commissioner of Taxation [2012] AATA 451
Thomas v Mowbray (2007) 233 CLR 307Victoria v Commonwealth (1971) 122 CLR 353
REASONS FOR DECISION
Deputy President D G Jarvis
May 2013
INTRODUCTION
The applicants, John Francis Young and John Lamb Lyon, have applied to this tribunal for review of objection decisions made by the Commissioner of Taxation to disallow objections that they had lodged to superannuation contribution surcharge assessments for the financial years ended 30 June 1997 to 30 June 2005. During that period they were members of the Gold State Super Scheme, a defined benefits superannuation fund administered by the Government Employees Superannuation Board (GESB). Their objections were based on the decision of the High Court of Australia in Clarke v Commissioner of Taxation.[1]
[1] (2009) 240 CLR 272.
In that case, the High Court of Australia held that the provisions of the legislation that imposed the superannuation contributions surcharge were invalid insofar as they purported to create a liability on the part of Mr Clarke, who was a member of the House of Assembly of the Parliament of South Australia, in respect of his membership of certain constitutionally protected superannuation funds established under Acts of the South Australian Parliament. The Court referred to the implied constitutional limitation that a law of the Commonwealth that substantially interferes with the right of a State to determine the terms and conditions on which the State engages persons at the “higher levels of Government” constitutes an impermissible interference with the capacity of the State to perform its constitutional functions.
Mr Young was an acting Deputy Crown Solicitor from 15 December 1996 for various periods until he was appointed to that office as from 9 April 1999. Prior to being so appointed, and when he was not acting as Deputy Crown Solicitor, he had been a Class 4 Legal Officer, with the title Senior Assistant Crown Solicitor, between 15 December 1996 and 9 April 1999.[2] His objections to the superannuation contribution surcharge assessments referred only to the periods when he was holding office as a Deputy Crown Solicitor, or acting in that office, and did not apply to earlier periods when he did not hold, or was not acting in, that office.
[2] The title to the office of Deputy Crown Solicitor was later changed to Deputy State Solicitor, following the renaming of the Crown Solicitor’s Office as the State Solicitor’s Office from 1 January 2004. For ease of reference I will generally refer in these reasons to the positions that the applicants occupied, in respect of which they have lodged objections, as Deputy State Solicitors. That expression, and the expressions State Solicitor and State Solicitor’s Office shall, where the context admits, include Deputy Crown Solicitors, Crown Solicitor and Crown Solicitor’s Office respectively.
Mr Lyon was a Deputy Crown Solicitor as at 1 July 1996, and continued in that role (later retitled to Deputy State Solicitor) until he retired on 6 October 2006. He acted as Crown Solicitor for over two months in 2003 commencing from 29 August 2003, and also from 23 April to 25 May 2004, and as State Solicitor from 19 April to 13 May 2005. The Commissioner has accepted that the Commonwealth legislation imposing the surcharge could not validly apply to him when he was acting in those positions. I am satisfied from the authorities to which I will refer below that that was a proper concession.
The laws which imposed the superannuation contributions surcharge were the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) (the Surcharge Acts). The Surcharge Acts were part of a legislative scheme enacted in 1997 which provided for the imposition of a surcharge on superannuation contributions made by or on behalf of taxpayers in receipt of taxable income above certain thresholds. The legislation that applied generally throughout Australia imposed liability for the surcharge on the trustees of superannuation funds, who were entitled to discharge their liability from the assets of the funds, but separate legislation was enacted in the form of the Surcharge Acts, to apply to “constitutionally protected superannuation funds”, which were funds established by State legislation specified in regulations, and included the GSSS. This separate legislation imposed liability upon individual members of State superannuation schemes, and not the trustees of the funds, apparently so as to avoid the operation of s 114 of the Australian Constitution, which prohibits the imposition of Commonwealth taxes on State property.[3] The legislation imposing the surcharge has since been repealed, but applied in respect of the 1997 to 2005 financial years.
[3] See Austin v Commonwealth (2003) 215 CLR 185 at [66].
The Surcharge Acts provided for liability to pay the surcharge to be deferred until the superannuation benefit became payable to the member of the fund, and for interest to accrue on the deferred amount. In 2002, the State Superannuation Regulations 2001 (WA) were amended to ameliorate the effect of the Surcharge Acts so as to permit members of the Gold State Super Scheme to commute so much of their pension entitlement as was required to provide a lump sum equivalent to their liability for the contributions surcharge tax.[4]
[4] State Superannuation Regulations 2001 (WA), regulation 49A.
ISSUE BEFORE THE TRIBUNAL
The applicants contended in support of their applications for review of the Commissioner’s objection decisions that the positions that they occupied were positions at the higher levels of the Western Australian Government for the purposes of the implied constitutional limitation, and that on the basis of the decision in Clarke (supra) the legislation imposing the superannuation contribution surcharge could not validly apply to them.
Counsel for the Commissioner, Dr Melissa Perry QC, disputed their contentions, and submitted that their responsibilities were not directly relevant to the constitutional functioning of the State of Western Australia, and that the Surcharge Acts, in their application to them in their capacity as Deputy State Solicitors, did not significantly impair or interfere with the State’s capacity to exercise, or the actual exercise, of its constitutional powers and functions.
The issues raised in the applications for review by Mr Young and by Mr Lyon are the same, and with the consent of all parties, I directed that they be heard together, and that evidence in each matter should be treated as evidence in the other.[5]
[5] In these reasons I will refer for convenience to the Consolidated Book of Documents prepared in respect of Mr Young’s applications, unless otherwise specified.
BACKGROUND FACTS
The following background facts are not in contention. They are based on the applicants’ joint summary of evidence,[6] and refer to the period during which the Surcharge Acts were in operation.
[6] Consolidated Book of Documents, Exhibit A1, pages 65-89.
The steps leading to the applicants’ appointments as Deputy Crown Solicitors were as follows. In the case of Mr Young, he was appointed to a Class 4 Legal Officer position as from March 1990. The appointment was made by the then Public Service Commissioner on the recommendation of the Crown Solicitor. Following subsequent reclassifications he was appointed to the position of Deputy State Solicitor following the advertising of the position and a merit selection process, in accordance with the requirements of the Public Sector Management Act 1994 (WA). In the case of Mr Lyon, he was appointed an Assistant Crown Solicitor in 1974, and a letter from the Chairman of the Public Service Board advised him that his promotion to that position had been approved by the Governor in Executive Council.[7] An agreement between Mr Lyon and the then Crown Solicitor recorded that Mr Lyon agreed to convert his appointment as Deputy Crown Solicitor to a term appointment expiring on his 60th birthday, and later agreements further extended the term until the date of his subsequent requirement.[8]
[7] Exhibit A7. A subsequent change to the title of his office with effect from 1 November 1985, is evidenced by an extract of a letter from the Public Service Board.
[8] Consolidated Book of Documents, Exhibit A1, page 93.
The State Solicitor’s Office was at all material times the prime provider of legal and related services to the government of Western Australia, including its ministers, departments and agencies. Legal work having a governmental character, or being of particular sensitivity or significance to the government, was provided exclusively by the Office. Other than on limited occasions where a firm had been included on a panel appointed through a tender process, private law firms providing services to the government were ordinarily briefed directly by the Office, on behalf of the departments or agencies to which the services were to be provided, in accordance with rates and terms determined by the Office. The State Solicitor’s Office was one of a number of administrative divisions of the Department of Justice, previously known as the Ministry of Justice. The Attorney-General was at all times the Minister responsible for the Department.[9]
[9] Consolidated Book of Documents, Exhibit A1, page 68, paragraph 3.
A brief summary of the duties of a Deputy State Solicitor were listed in a Job Description form, in descending order of importance, as follows:
1The provision at the highest level, without supervision or direction, of legal advice on a broad range of matters relating to the Crown and its instrumentalities.
2A particular knowledge of the principles of statutory interpretation, administrative law, the obligations and liabilities of the Crown and of its instrumentalities, and health legislation.
3The conduct and coordination of highly complex and politically sensitive litigation, unlimited in amount.
4The supervision, as appropriate, of other solicitors in the conduct of litigation and the provision of legal advice.[10]
[10] Consolidated Book of Documents, Exhibit A1, page 302.
The form included a section headed “Reporting Relationships” which indicates that the Deputy Crown Solicitor was responsible to the Crown Solicitor. However, the applicants emphasized the reference in paragraph 1 of the summary of duties, that their role was to be discharged “without supervision or direction”, and said that in practice, Deputy Crown Solicitors discharged their functions, for all practical purposes, with complete independence. I am satisfied that this was the position in fact. The form also states, under the heading “Reporting Relationships”, that the classification of the Deputy Crown Solicitor, is “Special”, a matter to which I will refer below.
Mr Young’s experience and background
Mr Young did articles with the Crown Solicitor’s Office and was admitted to practice in December 1976. After a period of overseas travel and work, he recommenced employment with the Crown Solicitor’s Office in July 1978, and was successively reclassified to more senior positions within the Office, on the recommendation of a Review Committee.
He said that in his role as a Deputy State Solicitor, at all times, he provided high level legal advice, including frequent advice involving statutory construction and the application of administrative law principles, on a broad range of matters to multiple government clients, including Ministers (frequently the Attorney-General), their advisers and Directors-General of government departments. His work included advising on Cabinet submissions and Parliamentary questions, drafting responses to Ministerial correspondence, and making recommendations in relation to applications for ex-gratia payments. He also provided advice to the Minister for Health, the Department of Health, individual hospitals and various other boards, including the Mental Health Review Board, RiskCover, the Fire and Emergency Services Authority, the Bush Fires Board, the Office of Energy, the Office of Water Regulation, the Departments of Water, Local Government and Agriculture and Health, and from time to time, the Electoral Commission. He said that the advice, whether oral or written, was often required at short notice, notwithstanding the complexity of the advice sought. It frequently addressed matters of special legal or political sensitivity or difficulty, it being anticipated that advice of the above character would be provided or overseen by the most senior legal officers within the Office. The issues canvassed required a sound knowledge of the particular law relating to the Crown and the operations of government, the conventions and procedures of government and Parliament, the principles of statutory interpretation, and what he termed the State’s “fundamental” legislation, which he enumerated. He not only personally provided advice, but on an ongoing basis discussed legal issues with other legal officers and frequently supervised or, upon request, checked proposed advice.[11] He also listed key litigation of particular complexity or sensitivity of significance to the State that he managed directly or strategically, during all or part of the relevant periods.[12]
[11] Consolidated Book of Documents, Exhibit A1, pages 80-81.
[12] Consolidated Book of Documents, Exhibit A1, pages 81-82.
Under the heading “Policy role” he reiterated that policy issues were frequently involved in the advice provided to government, and said that he was also involved in discrete policy formulation, in addition to the frequent provision of advice to Attorneys-General to assist in their responses to Ministerial correspondence and Parliamentary questions requiring or involving policy considerations. He then provided a non-exhaustive list of a number of policy or particular taskforces in which he had been involved, and these covered a wide range of significant matters.[13]
[13] Consolidated Book of Documents, Exhibit A1, pages 82-83.
Under the heading “Management”, he said that his roles included responsibility for managing the training of articled clerks, prime responsibility for the management of human resource issues related to the delivery of legal services and the classification criteria progression system, and involvement in ensuring adequate continuing legal education for legal officers.[14]
[14] Consolidated Book of Documents, Exhibit A1, pages 83-85.
Mr Lyon’s experience and background
The applicants’ summary of evidence includes the following statement as to Mr Lyon’s role as Deputy Crown Solicitor and later Deputy State Solicitor.
“As Deputy Crown Solicitor, Mr Lyon provided legal, policy and strategic advice on a broad range of complex issues, often at short notice, to Ministers (including the Attorney General), a Cabinet Sub-Committee (over a number of years), Ministerial advisers, the Directors General of Departments (including the Director General of the Department of the Premier and Cabinet), the Electoral Commissioner, the State Ombudsman, officers of Departments and agencies and the Clerks of the Parliaments and Parliamentary bodies headed by the President of the Legislative Council and the Speaker of the Legislative Assembly. His role included special responsibility for the provision of advice in relation to electoral issues, and the appointment of Ministers.
Mr Lyon’s advice was sometimes given orally and sometimes given in writing, as the circumstances demanded. It often dealt with subjects central to the running of government such as Crown immunity, public interest privilege, the power of Ministers to direct, the power of Parliament over the Executive and the nature of Cabinet. Insofar as written advice is concerned, over the nine years the subject of this appeal Mr Lyon sent out over 1100 written opinions.
The advice to Ministers was usually given in situations of great urgency and often involved personal attendance on Ministers. Mr Lyon recalls that one particular matter necessitated many telephone and personal attendance by him over the space of five days including a weekend at meetings involving five different Ministers, including the Attorney General.
Advice to the Clerk of the Parliaments was nearly always given orally as a matter of urgency on constitutional and parliamentary issues involving the various statutes and standing orders governing parliamentary practice, procedure and privilege.
The Electoral Commissioner was an important client of Mr Lyon. … Advice to the Electoral Commissioner concerned both constitutional and electoral matters. Mr Lyon was available to advise on all State electoral days and attended at the count on electoral nights. …
Mr. Lyon was the prime adviser within the office on local government matters and dealt frequently with Mr John Lynch the head of the Department of Local Government. …”[15]
[15] Consolidated Book of Documents, Exhibit A1, pages 85-86.
The Cabinet Sub-Committee to which the summary of evidence referred was made up of the Premier, the Attorney-General and other Ministers, and met on an ongoing basis as necessary.[16] Mr Lyon could recall giving extensive advice on the nature of Cabinet and of the Executive Council, as well as advice concerning the Senate powers in relation to calling state public servants as witnesses before Parliamentary Committees. He sent out over 1100 written opinions during the period for which the Surcharge Acts applied. He also routinely perused Cabinet submissions for the purpose of alerting Cabinet to relevant legal issues. He described this as a very important role, and said the work was also performed by the then Crown Solicitor, Mr Panegyres, and Mr Young.[17]
[16] Exhibit A5, page 2.
[17] Exhibit A5, page 2.
Mr Lyon’s involvement in routine litigation had lessened prior to his appointment as a Deputy Crown Solicitor, but he was nevertheless involved in one very substantial matter that commenced in about 1992 and continued until quite recently, and he was always involved in some Aboriginal sacred site matters. He provided numerous opinions to the Attorney-General and others over the years on different issues involving matters of policy, and his work under this heading involved drafting replies to Ministerial correspondence and Parliamentary questions, preparing of and commenting on Cabinet submissions, and participating in the development of a number of Bills. He was also the most senior adviser involved in the preparation of a Ministerial Code of Conduct.
He was involved in management matters, including recruiting articled clerks, supervising more junior officers on complex matters, and on occasions being a member of selection panels for the most senior positions in the Office. He also took part as required in regular and urgent office management meetings concerning matters critical to the running of the Office.[18]
[18] Consolidated Book of Documents, Exhibit A1, pages 86-87.
It is apparent from the applicants’ evidence that they regularly provided advice to Ministers, including the Attorney-General, government departments and agencies and their heads in a wide variety of very significant and complex matters. They regularly received instructions from all of the above persons, and the State Solicitor’s Office was structured in such a way that matters were not required to be, or generally were not, referred to them by the State Solicitor. Further, they provided their advice independently of the State Solicitor, and their advice was not referred to or checked by the State Solicitor.
The role of the Attorney-General
The applicants maintained that all of the lawyers in the State Solicitor’s Office had obligations to the Attorney-General to assist him to carry out his responsibility to provide advice to the government, and the Attorney carried out his responsibility through the State Solicitor’s Office. They contended that in order to understand the role of the State Solicitor and Deputy State Solicitors it is accordingly relevant to consider the role of the Attorney-General. The office of the Attorney-General was provided for in s 154 of the Supreme Court Act 1935 (WA) (as in force on 1 July 1996). This provided relevantly as follows:
“154(1)Her Majesty’s Attorney General shall be a practitioner as defined by the Legal Practitioner’s Act 1893, to be appointed from time to time by the Governor, and to hold office during the Governor’s pleasure.
(2)The Attorney-General shall be the legal representative of the Crown in the Supreme Court, and shall have, exercise, and enjoy all the powers, authorities and privileges usually appertaining and belonging to the like office in England.”
The applicants pointed out that the Attorney-General is, by long convention, the first, or chief, law officer of the Crown in right of the State of Western Australia. They referred to passages from the Logan Report which, whilst dealing with the Commonwealth Attorney, applied correspondingly to the Attorney-General of Western Australia. The passages to which they referred included the following:
“The ministerial office of Attorney-General is a hybrid office of state, which has policy, legal service, and public interest functions (para 0.4).
The Attorney-General is the primary source of legal advice to the Cabinet, and fulfils other core legal service roles. The Attorney-General also has a responsibility for the general operation of the system by which legal services are provided to the Commonwealth. The Attorney-General is particularly responsible for ensuring that these services are provided in such a way that the Commonwealth’s legal outcomes are co-coordinated, consistent and promote the interests of the whole of the government. The Attorney-General is also particularly responsible for ensuring that public interest considerations are met, and that persons are treated fairly by the Commonwealth in the exercise of its legal rights and powers … (para 0.5).”[19]
[19] Consolidated Book of Documents, Exhibit A1, page 77.
They also referred to further propositions in the Logan Report, namely that the Attorney-General was the chief legal representative of the Crown, and had full authority to represent the Commonwealth and to act on its behalf in all legal proceedings to which the Commonwealth is a party. They pointed out that independently of the responsibility for the protection of the Government’s legal interests, the Attorney-General was independently a guardian of the public interest and of public rights.
The applicants referred to the “fundamental” principle of Crown “indivisibility”, that is, that the Attorney-General is responsible ordinarily to only one client, namely the Crown, whatever requirements or expectations of a department or agency might be. Next they referred to the principle that it is an essential element of the rule of law that governments should operate in accordance with the law, and for that purpose it should make reasonable endeavours to ascertain the law. They submitted finally that the Attorney-General was under an obligation to discharge his duties with integrity and independence, and that this extended to an obligation to endeavour to ensure the independence of the lawyers within government.[20]
[20] Consolidated Book of Documents, Exhibit A1, pages 78-79.
Salaries and Allowances Tribunal
The Salaries and Allowances Tribunal was established by the Salaries and Allowances Act 1975 (WA). This Act makes provision for the Tribunal to enquire into and determine the remuneration to be paid or provided to a number of specified office holders, including the Governor, Ministers of the Crown, Parliamentary Secretaries, Members of Parliament, Clerks and Deputy Clerks of both Houses of Parliament, the judiciary, the Parliamentary Inspector of the Corruption and Crime Commission and “officers of the Public Service holding offices included in the Special Division of the Public Service”.[21]
[21] Salaries and Allowances Act 1975 (WA), ss 5A, 6 and 7.
The Special Division of the Public Service was, during the period covered by the objections, constituted by those public service offices which the Governor, on recommendation of the Premier, determined to be so included.[22] Those offices were not within the ordinary classification provisions of the Public Service.[23] In the course of the Second Reading Speech in respect of the Bill for the Salaries and Allowances Tribunal Act 1975 (WA) the then Treasurer, Sir Charles Court, referred to the means by which the salaries and allowances payable to the holders of various offices had previously been determined, and continued:
“The ministerial, parliamentary, judicial and other positions which I have referred to, comprise the most important offices remunerated by the Crown, and, in the Government’s opinion, it is unsatisfactory that there should be such a marked divergence in the methods by which the remuneration for these offices is fixed.”[24]
[22] Public Sector Management Act 1994 (WA), s 38.
[23] Public Sector Management Act 1994 (WA), ss 36(1)(c) and 44.
[24] Consolidated Book of Documents, Exhibit A1, Attachment 36 at page 291.
In 1996 the Governor determined that the offices of Deputy Crown Solicitor (as well as Deputy Parliamentary Counsel and Crown Counsel) should be included within the Special Division of the Public Service. In a determination dated 13 August 1996, the Salaries and Allowances Tribunal determined the salaries payable to the holders of those offices,[25] and continued to determine the salaries and entitlements of those office-holders during the period of operation of the Surcharge Acts. The salaries for the Deputy Crown Solicitors exceeded that of the salary for the Director-General of the Ministry of Justice (later renamed the Department of Justice) in each year when the Surcharge Acts applied.[26]
[25] Consolidated Book of Documents, Exhibit A1, page 170.
[26] Statement of John Lamb Lyon, Attachment to Exhibit A5.
The applicants tendered a witness statement from Peter Apostolos Panegyres AM, who was Crown Solicitor from 1995 until his retirement in August 2003. His statement records his opinion that:
“[I]t was critical that the State government had at all times immediately available expert legal advisers able to address confidently, competently and with complete professional independence the many complex legal and related policy issues, including constitutional issues, associated with the operation of government and of parliament.”[27]
[27] Exhibit A4, page 1.
He further confirmed that the applicants, as Deputy Crown Solicitors, met the criteria of legal officers with the necessary experience and expertise, and carried out that role in providing advice to the highest levels of government in the State. He referred to the role of the Salaries and Allowances Tribunal in fixing the salaries of the Deputy State Solicitors, and said that generally speaking they, Crown Counsel and Senior Advisers were at the highest level remuneration of the State Public Service, and higher than most CEOs of government departments.[28]
[28] Exhibit A4, page 2. It appears also that the salary levels of Deputy State Solicitors were at all relevant times higher than that of the Director-General of the Department of Justice.
Mr Panegyres also confirmed the evidence of the applicants as to the structure of the State Solicitor’s Office, and its professional independence. He explained that the Crown Solicitor’s Office did not operate under a strict public service type administrative structure with clear internal hierarchy, and said that in many areas grouping of lawyers would be arranged in response to demands received by the Office. He described the Office as unique in the WA public service, and from discussions with his counterparts around Australia, unique in the broader context.[29] He concluded:
“Focussing solely on John Lyon and John Young, allowing for particular expertise developed over their careers, they and I shared the most senior work of the Office. What each of us did usually depended solely on availability.”
[29] Exhibit A4.
Walter Bela Munyard, the Parliamentary Counsel for the State of Western Australia, stated that during the relevant period the Parliamentary Counsel, Deputy Parliamentary Counsel and others in their office worked very closely with the Crown Solicitor and the Deputy Crown Solicitors, including the applicants, and that there were innumerable occasions when, as the then Deputy Parliamentary Counsel, he relied upon their oral and written advice in drafting legislation.[30]
[30] Exhibit A2.
Grant Richard Donaldson, the Solicitor-General for Western Australia, said that he was aware of the function of the applicants from serving in the Crown Solicitor’s office for about two years commencing from late 1995 or early in 1996. He observed that the applicants and one other Deputy Crown Solicitor, who died in 1998, provided all of the complex advice work of the greatest importance to the government, whereas the Crown Solicitor was responsible largely for the administration of the Office.[31]
[31] Consolidated Book of Documents, Exhibit A3, page 319, at paragraph 15.
During the hearing, the Commissioner contended that there was no evidence that the Surcharge Acts would have made it more difficult for the State to attract or retain persons in senior positions in the State Solicitor’s Office as a Deputy State Solicitor. Because this issue had not been raised in the Commissioner’s Statement of Facts, Issues and Contentions, I gave leave to Messrs Young and Lyon to file any further witness statements or documents on which they intended to rely in response to this contention.[32] They then filed supplementary statements and estimates of the effect of the surcharge assessments on their retirement benefits. They also filed a statement by his Honour Judge Timothy Sharp, a former State Solicitor. In response, the Commissioner contended that the estimates were speculative and should not be given any weight, but also conceded that in the light of the further evidence generally, he no longer pressed his above submission.
[32] I also ruled that the Commissioner was not precluded from raising this matter notwithstanding that it had not been included in his Statement of Facts, Issues and Contentions, because proceedings in this tribunal are not adversarial, and the tribunal’s role is to arrive at the correct or preferable decision by conducting a hearing de novo to consider all relevant issues.
CONSIDERATION
For the reasons I explained in some detail in Re Walsh and Commissioner of Taxation[33] I am satisfied that I have jurisdiction to reach an opinion on the constitutional validity of the Surcharge Acts in their application to the applicants, and to act on that opinion in determining their applications for review of the objection decisions. The Commissioner has accepted this, and has also accepted that the reasons that I gave in Walsh for not referring the issue that has arisen to the Federal Court are equally applicable to the present matters,[34] and did not request me to refer the issue to the Federal Court.
[33] [2012] AATA 451 at [14], [19(c)] and [20].
[34] [2012] AATA 451 at [21]-[25].
Since the Engineers’ Case[35] the High Court has interpreted the Constitution on the following basis (as explained by Dixon J in Melbourne Corporation v The Commonwealth):[36]
“The prima-facie rule is that a power to legislate with respect to a given subject enables the Parliament to make laws which, upon that subject, affect the operations of the States and their agencies.”
[35] Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129.
[36] (1947) 74 CLR 31 at 78.
However, it is also clear (adopting the summary of French CJ in Clarke) that:
“The constitutional implication considered in Austin and its precursors means that the Commonwealth cannot, by the exercise of its legislative power, significantly impair, curtail or weaken the capacity of the States to exercise their constitutional powers and functions (be they legislative, executive or judicial) or significantly impair, curtail or weaken the actual exercise of those powers or functions. The Constitution assumes the existence of the States as ‘independent entities’. This implies recognition of the importance of their status as components of the federation.”[37]
[37] (2009) 240 CLR 272 at [32].
His Honour then elaborated on the considerations relevant to a determination of whether a particular Commonwealth law would infringe the implied limitation. He continued:
“The ‘significance’ of a Commonwealth law affecting the States’ functions is not solely to be determined by reference to its practical effects on those functions. This is not a return to any generalised concept of inter-governmental immunity. It simply recognises that there may be some species of Commonwealth laws which would represent such an intrusion upon the functions or powers of the States as to be inconsistent with the constitutional assumption about their status as independent entities.
[33] The application of the implied limitation is evaluative. It has always been thus. There is a normative element in the criterion of ‘significance’ by which the adverse effects of a Commonwealth law on State capacities or functions must be characterised, before such a law will be held to be invalid. Whether the effects of a law upon the capacities or functions of the States are ‘significant’ is to be judged qualitatively and also, but not only, by reference to its practical effects. …
[34] In my opinion, the application of the implied limitation requires a multifactorial assessment. Factors relevant to its application include:
1. Whether the law in question singles out one or more of the States and imposes a special burden or disability on them which is not imposed on persons generally.
2. Whether the operation of a law of general application imposes a particular burden or disability on the States.
3. The effect of the law upon the capacity of the States to exercise their constitutional powers.
4. The effect of the law upon the exercise of their functions by the States.
5. The nature of the capacity or functions affected.
6. The subject matter of the law affecting the State or States and in particular the extent to which the constitutional head of power under which the law is made authorises its discriminatory application.
None of these factors, considered separately, will necessarily be determinative of the application of the limitation. The decisions of this Court indicate that the fact that a law singles out the States or a State will be of considerable significance, to be weighed together with the effects of such a law on their capacities and functions. The fact that a law is of general application may make it more difficult to demonstrate, absent operational discrimination in its impact upon the States, that it transgresses the limitation.”
In the same case Gummow, Heydon, Kiefel and Bell JJ in their joint judgment identified a number of “points” which they regarded as relevant to determine whether there had been a significant curtailment or interference with the exercise of State constitutional power in that case. The first point was that the Surcharge Acts were not “laws of ‘general application’ which the States must take as they find them as part of the system governing the whole community”[38], such as laws imposing pay-roll tax and fringe benefits tax, which had been imposed on the States and taxpayers generally. The second point was that members of a State legislature were within the class of persons at the higher levels of government “in respect of whom it is critical to the State’s capacity to function as a government that it retain the ability to fix the terms and conditions under which they serve” upon their election to Parliament[39] (emphasis added). The third point was in effect that the disabling effect on State authority and interference with capacity to function as a government was the basis for the implied limitation, and not the significance of the size of any financial burden. The fourth point was to explain that the issues that had arisen did not relate to s 109 of the Constitution, which provides for the invalidity of a State law to the extent of any inconsistency with a Commonwealth law. The fifth point was to reiterate views that had been expressed by the majority of the Court in Austin to the effect that the notion of a federal law discriminating against the State was merely an illustration of the essential question of whether the relevant Commonwealth law relevantly interfered with or impaired State functions, and discrimination was not a separate ground for the implied constitutional limitation. The sixth point was to adopt a formulation in Austin as to the nature of the inquiry that had to be made to determine the appeal before them. I will refer to this formulation below.
[38] (2009) 240 CLR 272 at [61].
[39] (2009) 240 CLR 272 at [62].
In Clarke, the High Court held that the Surcharge Acts could not validly apply to the appellant, who was a member of the South Australian House of Assembly, on the grounds that they involved a significant impairment of the exercise by that State of its constitutional powers and functions in fixing the terms of remuneration of its legislators.
A similar conclusion was reached in Austin v Commonwealth[40] where the plaintiffs were a judge of the Supreme Court of New South Wales and a Master of the Supreme Court of Victoria. In that case, Gaudron, Gummow and Hayne JJ held that the Surcharge Acts involved a significant impairment on the exercise by the States of their freedom to select the manner and method for discharge of their constitutional functions regarding the appointment and remuneration of the judges of the courts of the State, in that secure judicial remuneration at significant levels assisted to attract persons to judicial office, and the surcharge might have encouraged State judges to retire before reaching the statutory retiring age. In the course of their joint judgment, their Honours said:
“... The question presented by the doctrine in any given case requires assessment of the impact of particular laws by such criteria as ‘special burden’ and ‘curtailment’ of ‘capacity’ of the States ‘to function as governments’. These criteria are to be applied by consideration not only of the form but also ‘the substance and actual operation’ of the federal law. Further, this inquiry inevitably turns upon matters of evaluation and degree and of ‘constitutional facts’ which are not readily established by objective methods in curial proceedings.”[41]
[40] (2003) 215 CLR 185.
[41] (2003) 215 CLR 185 at [124].
A number of specific considerations referred to in the High Court’s judgments in Clarke and Austin are relevant to the determination of the present matter. On my analysis those cases establish the following propositions.
(a)A Commonwealth law which interferes with retirement benefits, being part of the remuneration package provided by the State to senior office holders, can constitute a special burden on the capacity of the States to carry out their constitutional functions, or on the exercise of those functions, in that it interferes with the freedom of the States to remunerate such persons in the manner the States might choose.[42]
(b)The Surcharge Acts were not laws of general application. They discriminated against the States, but that factor, whilst relevant, was merely an example of a law which would attract the implied constitutional limitation.[43]
(c)It is relevant to consider the effect on the State, and not the effects on the particular officers concerned. The passing by a State of amending legislation to ameliorate the effects of the Surcharge Acts is evidence that the Surcharge Acts has affected the arrangements made by the State with its senior office holders.[44]
(d)The absence of a significant adverse financial impact on the State was not a significant consideration.
(e)None of the factors or considerations of the kind referred to above will be determinative of whether particular Commonwealth legislation has or has not transgressed the implied limitation.
[42] See for example Clarke (supra) (2009) 240 CLR 272 at [72].
[43] (2009) 240 CLR 272 at [16] and [34] per French CJ, and at [65], in the joint judgment of Gummow, Heydon, Kiefel and Bell JJ, and their references to Austin, where the Court expressed a similar view, which of course reflects the basis on which the implied limitation exists, namely the coexistence of States as independent entities within the components of the federation, so that the fact that legislation is discriminatory should not, of itself, be sufficient to attract the limitation. In earlier cases, discrimination entailing the imposition on the States of special burdens or disabilities appears to have been regarded as a separate ground for attracting the implied limitation.
[44] In Re Walsh (supra) I commented, at [67], that in the case of accumulation funds (as opposed to defined benefits funds) it is likely that, in order to meet their fiduciary obligations to all members, the trustees of such funds would have deducted the amount of the assessments of surcharge contributions tax from member balances, and in that event, members would have borne the impact of the surcharge, as occurred in the case of constitutionally protected superannuation funds. However, the Commissioner did not adduce any evidence relevant to this issue, or dispute in the present proceedings (or in Walsh) that the Surcharge Acts discriminated against the States.
It is clear from the High Court’s analysis in Austin and Clarke that members of the State judiciary and Parliament are essential functionaries in the judicial and parliamentary arms of government, and so are essential to the constitutional functioning of the State.
The implied limitation was also applied by the High Court in a case involving persons in the executive arm of government in Re Australian Education Union; Ex parte the State of Victoria (AEU case).[45] In that case the Court recognised that the arbitration power in the Constitution did not authorise the Industrial Relations Commission to make awards which would infringe the implied immunity. The Court said:
“At this point it is convenient to consider South Australia’s argument based on impairment of a State’s “integrity” or “autonomy”. Although these concepts as applied to a State are by no means precise, they direct attention to aspects of a State’s functions which are critical to its capacity to function as a government. It seems to us that critical to that capacity of a State is the government’s right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State’s rights in these respects would, in our view, constitute an infringement of the implied limitation. …
In our view, also critical to a State’s capacity to function as a government is its ability, not only to determine the number and identity of those whom it wishes to engage at the higher levels of government, but also to determine the terms and conditions on which those persons shall be engaged. Hence, Ministers, ministerial assistants and advisers, heads of departments and high level statutory office holders, parliamentary officers and judges would clearly fall within this group. The implied limitation would protect the States from the exercise by the Commission of power to fix minimum wages and working conditions in respect of such persons and possibly others as well ... .”[46]
[45] (1995) 184 CLR 188.
[46] (1995) 184 CLR 188 at 232-233, per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ.
The Court’s comments in that case leave open the question of what is meant by persons engaged at the “higher levels of government”; the examples of such persons referred to by the Court only included those who would “clearly fall” within the relevant category, and the Court said that the implied limitation would apply “possibly” to others also.
In my view, the determination of whether a particular person is engaged at the “higher levels of government” for the purposes of the implied constitutional limitation does not depend simply on the position of that person in the hierarchy of the government. The question will include considering that issue as well as his or her role and functions, and then analysing whether that person exercises functions that are “critical to a State’s capacity to function as a government”.[47] This in turn involves analysing the relationship between the person’s functions and the exercise of, or the capacity to exercise, the State’s constitutional powers or functions. The reference to the State’s “constitutional” powers or functions encompasses its legislative, executive or judicial functions.[48] It is then necessary to evaluate the actual operation of the Commonwealth legislation under consideration, and to decide whether the Commonwealth, by that legislation, has significantly impaired, curtailed or weakened the exercise by the State of its constitutional functions (in this case, its executive functions), or its capacity to exercise those functions.
[47] Re Australian Education Union: Ex parte the State of Victoria (1995) 184 CLR 188 at 233 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ.
[48] See the summary by French CJ in Clarke, reproduced at para [26] above, and in this case, the relevant constitutional power and function is the function of the executive government.
This in turn necessitates analysing the system of responsible government under the Westminster system as it applies in Western Australia pursuant to the Constitution Act 1889 (WA). In Walsh, I adopted the following helpful summary provided by Dr Perry, who also appeared for the Commissioner in that case:
“The doctrine of responsible government can be described as providing for a single consolidated chain of command from the people (the electorate) to the Crown. Specifically, the electorate controls Parliament through the election process; Parliament controls the Ministry in that the Ministry needs the confidence of Parliament in order to continue in government; and the Ministry controls the Crown in its capacity as the Executive Government comprised of the Ministers, Government Departments and Department employees.”[49]
[49] [2012] AATA 451 at [40].
I then continued (omitting citations):
“A further aspect of the doctrine of responsible government to which Dr Perry referred is that the invariable practice is that Ministers have responsibility for a department of the public service, and are responsible to Parliament for the administration of their departments; they must be prepared to answer questions in the Parliament concerning their responsibilities, and to resign if censured by the House. She accordingly submitted that Ministers exercise functions that are critical to the capacity of the State to function as a government under applicable constitutional principles and conventions.”[50]
[50] [2012] AATA 451 at [42].
In further support of her contention that the link between the executive and the discharge of State constitutional functions lies in responsible and representative government, Dr Perry made the following further submissions in the present matters, which I also accept.
“In practice, therefore, the doctrine of responsible government means that the Government can stay in power only for so long as it has the confidence of the Lower House, that is, that it has a majority in the (democratically elected) Lower House. If the government should lose this majority, convention requires that it resign.
In this way the Executive is collectively responsible to the Parliament for the general conduct of the affairs of the State, for which person a Minister is, by convention in the case of the Western Australian Constitution required to be a Member of the State Parliament.” (citations omitted)
On the basis of the above analysis I accepted in Walsh (consistently with the view expressed by the High Court in the AEU case) that the heads of State government departments would be protected by the implied constitutional limitation, since they are directly responsible to the Minister for the management of the departments of which they are the chief executive officer, and so are key functionaries in the constitutional structure of government. I accordingly concluded that such persons are engaged at the “higher levels of government” within the contemplation of the High Court in the AEU case, and so entitled to the benefit of the implied constitutional limitation.
It is necessary to determine in the present case whether the applicants, who have been affected by the Surcharge Acts, were within the class of persons at the higher levels of government “in respect of whom it is critical to the State’s capacity to function as a government that it retain the ability to fix the terms and conditions under which they serve.” (emphasis added).[51]
[51] (2009) 240 CLR 272 at [62].
In my view it would ordinarily be the position that having regard to the role of the executive and the doctrine of responsible government to which I referred above, public servants who do not hold office as chief executive officers of a government department or agency would not be entitled to the protection of the implied immunity. This position is reinforced by the provisions of the Public Sector Management Act 1994 (WA). This provides for the appointment of CEOs and their functions, including those of managing their departments, providing advice to the ministers responsible for the departments, and ensuring the appropriate deployment of resources and the management of the employees. The Act also draws a distinction between CEOs, non-CEOs appointed as senior executive officers, and other public service officers.
However, notwithstanding the above matters, there are a number of aspects of the position of the applicants in the present matter that have led me to conclude that they are in a different position from that of other senior public servants or senior executives who do not hold office as CEOs. In this regard I record the following findings:
(a)The applicants were part of a small core group of four, or at times five, senior executive officers of the State Solicitor’s Office who together provided advice on the most significant, sensitive and complex matters to the Attorney-General and other Ministers, as well as departments and agencies and their heads, according to which of the core group were available. That core group comprised the State Solicitor, two and (for a time) three Deputy State Solicitors, the Crown Counsel, and at one stage, a person whose title was Special Adviser.
(b)The provision of high quality independent legal advice from experienced lawyers was essential to the capacity of the State to function as a government, and to the Attorney-General in discharging his very significant constitutional role. The advice that was provided by the applicants (and the other members of the above core group), either to the Attorney himself or to other government personnel, was essential to enabling the Attorney to fulfil his key constitutional role of ensuring that the government was properly advised and acted lawfully in its diverse functions.
(c)The advice provided by the applicants was independent. There was no requirement for the advice to be checked or approved by the State Solicitor.
(d)The applicants did not report to the State Solicitor, and often the matters on which they advised were not assigned to them by the State Solicitor or by anyone on his behalf. On the contrary, the applicants established relationships with Ministers and others, and would regularly receive instructions from them and provide advice to them without any involvement from the State Solicitor.
(e)The importance of Mr Lyon’s function is further evidenced by the fact that he and the State Solicitor shared the function of assigning tasks to solicitors in the Office, so that in situations when instructions were received in this manner by the Office, this function was not done by the State Solicitor alone.
(f)The above aspects of the structure of the State Solicitor’s Office support the statement by Mr Panegyres, which I accept, to the effect that the structure of the State Solicitor’s Office was unique.
(g)Whilst the applicants’ appointments to the offices they held were evidenced by the documents to which I referred above, they were not employed pursuant to formal contracts with the State Solicitor or the Director of the Ministry of Justice, and were not subject to any special conditions of employment relating to such matters as performance reviews or reporting obligations.
(h)The applicants were included in the Special Division of the Public Service, and therefore outside the provisions of the Public Sector Management Act 1994 (WA) which applied generally to public servants.
(i)Copies of the determinations by the Salaries and Allowances Tribunal list the other offices which were also included in the Special Division of the Public Service, and it appears that all of those offices in the Special Division of the Public Service (except for the applicants, the Crown Counsel, the Special Adviser and the Deputy Parliamentary Counsel) were CEOs of departments or agencies.[52]
(j)Having regard to the inclusion of the office of Deputy State Solicitor within the Special Division, and also to the status of the other offices included in that Division, I infer that the government regarded the persons holding that office as fulfilling a very significant role in the function of the State, and also considered that they were persons whose independence from those whom they were advising should be enhanced by having their remuneration and allowances determined by the Salaries and Allowances Tribunal.
(k)The salaries determined by the above Tribunal in respect of the Deputy State Solicitors were consistently among the highest of the offices included in the Special Division of the Public Service, and this is also some evidence of the importance of which the Tribunal attached to the functions being performed by the Deputy State Solicitors and others in the core group from their Office.
[52] Consolidated Book of Documents, Exhibit A1, pages 125-288, which contained copies of the reports of determinations made by the tribunal.
Dr Perry drew attention to the comment in Mr Panegyres’ statement to the effect that ultimately, as Crown Solicitor, he carried responsibility for the work of lawyers in his Office classified as Senior Assistant Crown Solicitors and above. I am also mindful of the reference to reporting relationships in the Job Description form to which I referred in paragraph 14 above. The concept of the State Solicitor’s responsibility was explored in the cross-examination of Mr Young. The effect of his answers in cross-examination was as follows. He agreed that the State Solicitor would be made aware of anything of great significance to the State, but went on to say that any such matter could be undertaken either by him, the State Solicitor, Mr Lyon or perhaps the State Counsel. However, he did not regard himself as having a function or responsibility to inform the State Solicitor of any such matter, but he thought that this was something that should occur as a matter of common sense. He conceded that if incorrect advice was provided by the Crown Solicitor’s Office Mr Panegyres, as Crown Solicitor, would “carry the can”. He added that he could not think of occasions where the government was unhappy with advice that had been provided, but said that theoretically the government office concerned might have come back to the Deputies because of relationships with them, or (if it were a very significant matter) might have gone to the State Solicitor; in the latter eventuality there would never have been a directive to change the advice, but it would have been discussed with the Deputies. Mr Young also said that if the concern had been raised with him because of his relationship with the relevant Department he would have dealt with it, but if he thought it significant, he would make the State Solicitor aware of what was happening. I also note in this context that in his witness statement, Mr Panegyres compared those holding office in the senior positions within the Office as equivalent of senior partners in private practice.
I accept Dr Perry’s observation that one would expect lawyers in the State Solicitor’s Office to be able to act with professional independence. However, in my assessment the State Solicitor’s Office had been structured in such a way that from a practical point of view, the small core group of lawyers to whom I have referred to a very large extent shared the responsibility for fulfilling the key function of assisting the Attorney-General and providing legal advice to the government, and there did not exist formal processes of control, management or supervision which would ordinarily result in the CEO of a department, but not those below the CEO, occupying a position which, because of its constitutional significance, could be described as being at the higher levels of government for the purpose of the implied constitutional limitation.
Dr Perry also relied upon the provisions of the Public Sector Management Act 1994 (WA) in support of her argument that the CEOs of government departments are the persons in whom the functions that are essential to the constitutional functioning of the executive limb of the State Government have been vested. Reference was made to the provisions in that Act that provide for departments and for the appointment of their CEOs, the terms of employment of the CEOs and their functions, which include managing their department and providing policy advice to the Minister responsible for the department, and the deployment of resources within the department, including managing and directing employees and allocating functions and responsibilities to them. In the present matter, the State Solicitor’s Office was part of the Department of Justice, but the State Solicitor and the other core group of senior lawyers in the Office had the very significant functions to which I referred above, which they exercised independently of the Director-General of the Department. I consider that because of the structure of the State Solicitor’s Office and the matters to which I have referred above, the position of the applicants differed from the situation that would ordinarily apply, by virtue of the provisions of the Public Sector Management Act, to senior officers in other departments who were responsible to, and managed and directed by, the CEOs of their departments.
I accept the Commissioner’s contention that the mere fact that the applicants advised a Minister or head of a department was not sufficient to attract the implied constitutional institution, and that they could not be said to be “ministerial assistants and advisers” as that expression was used in the AEU case, because that expression was intended in its context to refer to senior members of a Ministers’ personal staff. Such persons were not employees of the Public Service, and their employment was governed by a contract of employment with the Minister.[53] However, the applicants also were excluded from the provisions of that Act, and performed the significant functions that I have described independently of the customary formal structure of a government department. In my view the applicants occupied a position and performed a function that was equally as significant, from the point of view of the capacity of the State to function as an independent constitutional entity, as the position and function of ministerial assistants and advisers.
[53] Public Sector Management Act 1994 (WA), s 68(2).
It was further submitted that the applicants were not entitled to the implied constitutional limitation because they were advisers rather than decision-makers, and as such, did not occupy any positions that were critical to the State’s capacity to carry out its constitutional functions as a government. I do not accept this submission. The role of the applicants, like that of the State Solicitor, was not to be a decision-maker, but to advise the Attorney and others. Ministerial assistants and advisers were recognised in the AEU case as being within the higher levels of government for the purposes of the implied constitutional limitation, and those persons could not be regarded as decision-makers.
Evidence of the effect of legislation on the actual exercise of a State’s constitutional functions is a relevant factor in determining the application of the implied constitutional limitation to particular legislation. It has been recognised by the High Court that such constitutional facts are not readily established by objective methods in curial (or in the present case, tribunal) proceedings.[54] In curial proceedings, it appears that courts can rely on facts that have not been proved by evidence admissible under the rules of evidence in order to determine the constitutional validity of statutes, other enactments or executive acts done under those statutes or enactments.[55] That of course is the position that ordinarily obtains in this tribunal, which is not bound by the rules of evidence. [56]
[54] See Austin v Commonwealth (2003) 213 CLR 185 at [124].
[55] Thomas v Mowbray (2007) 233 CLR 307 at [635] per Heydon J.
[56] Administrative Appeals Tribunal Act 1975 (Cth), s 33(1)(c). Furthermore, the tribunal is often constituted by one or more members with specialist knowledge, and may take official notice of relevant material, subject of course to observing the rules of procedural fairness.
In some cases evidence has been adduced as to whether or not the Commonwealth legislation concerned had an actual impact on the States on their ability to attract or retain persons in senior positions. For example, in Austin (supra), the Court had evidence before it as to the significant effect of the contributions surcharge on State judges, including its increasing impact which was likely to discourage judges from serving their full term until retirement age. In Walsh (supra)[57] the applicant had served for a time as the Commissioner for Public Employment, but he was unable to say that the introduction of the Surcharge Acts had been a major impediment in recruiting outside persons to senior positions in the government of South Australia.
[57] [2012] AATA 451.
In the present matter, the Commissioner drew attention to the express qualifications that applied to the assessments produced by the applicants of the effect of the surcharge assessments on their retirement benefits. I agree that those qualifications affect the weight that should be attached to those assessments. In any event, the relevant factor is the effect of the Surcharge Acts on the State, and not on the applicants. The further evidence that the applicants provided indicates that the Surcharge Acts had the potential to interfere with the ability of the State to attract and retain legal practitioners to senior public service positions, but does not constitute evidence of a significant practical impact on the State’s functions. The amending regulation to which I referred in paragraph 6 above is evidence that the State regarded it as necessary to assist those public servants who were subject to the surcharge to meet their liability, and recognised that the surcharge had the effect of reducing their retirement benefits. However, the evidence before me does not demonstrate that the application of the Surcharge Acts to the applicants has significantly impaired or interfered with the actual exercise by the State of its powers and functions.
Nevertheless, the above evidence must be considered in conjunction with the effect of the legislation in question on the capacity of the State to function as an independent constitutional entity. In Clarke (supra) the Court did not examine the effect of the Surcharge Acts on the actual exercise of the State’s function, but inferred, because of the impact on State Parliamentarians, that the legislation had the capacity to affect the States.[58]
[58] See paragraph 6 above.
I also note that in Clarke, French CJ referred by way of example to a Commonwealth law which purported to subject State Governors to a special “gubernatorial privileges tax” which fixed the tax at a level which, in a financial sense, would be of little practical importance to the States or to their Governors, but his Honour nevertheless considered that such a tax would be inconsistent with the status of the States as independent entities under the Constitution.[59] It follows that the practical impact of the tax cannot be said to be determinative of whether it could validly apply to particular persons, where the tax has the capacity relevantly to affect the State’s position.
[59] (2009) 240 CLR 272, at [33].
Of course, the role of the applicants and the issue of the degree of responsibility exercised by the State Solicitor over them as Deputy State Solicitors must be evaluated with all of the other factors identified by French CJ and the plurality in Clarke, to which I referred in paragraphs 40 and 41 above. None of those factors is determinative on its own, but I consider a number of them, which I have identified above, weigh in favour of the conclusion that in this case, the Surcharge Acts have transgressed the implied constitutional limitation insofar as they apply to the applicants.
After evaluating the relevant factors and the evidence as to the role and functions of the applicants, I have concluded that the Surcharge Acts did not validly apply to them in their role as Deputy Crown Solicitors or Deputy State Solicitors, or (in the case of Mr Young) when he was acting as a Deputy Crown Solicitor.
DECISION
In matters number 3256-3258 of 2011:
(a)the Tribunal sets aside the objection decisions under review insofar as they included a surcharge on the notional superannuation contributions attributed to the applicant during the periods from 15 December 1996 to 31 January 1997 and 31 March 1998 to 8 April 1999 (when the applicant was an Acting Deputy Crown Solicitor), and from 9 April 1999 to 30 June 1999 (when the applicant was a Deputy Crown Solicitor), and in substitution therefor decides that the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) (the Surcharge Acts) are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme; and
(b)the Tribunal otherwise affirms the objection decisions.
In matters number 3259-3264 of 2011, the Tribunal sets aside the objection decisions under review, and decides in substitution therefor that the Surcharge Acts are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme.
In matters number 3187-3195 of 2011, the Tribunal sets aside the objection decisions under review, and in substitution therefor decides that the Surcharge Acts are invalid insofar as they purport to create the liability of the applicant to superannuation contributions surcharge in respect of his membership of the Gold State Super Scheme.
I certify that the preceding 70 (seventy) paragraphs are a true copy of the reasons for the decision herein of Deputy President D G Jarvis ... [Sgd] ...
Associate
Dated 28 May 2013
Date of hearing 26 March 2013 Date final submissions received 1 May 2013 Applicants Mr Young in person
Mr Lyon in personCounsel for the Respondent Dr M Perry QC with Mr J Vaughan Solicitors for the Respondent Australian Government Solicitor
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