Marsh v Shire of Serpentine-Jarrahdale

[1966] HCA 77

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Menzies, Windeyer and Owen JJ.

MARSH v. SHIRE OF SERPENTINE-JARRAHDALE

(1966) 120 CLR 572

29 November 1966

Local Government (W.A.)

Local Government (W.A.)—By-laws—Validity—Power to fix fees for licence—Relation between fee and cost of administering licensing system—Licence to quarry on privately owned land—Road Districts Act, 1919-1959 (W.A.), ss. 188, 202*, 204 (1) (b)*—Local Government Act, 1960-1963 (W.A.), ss. 6, 191, 222, 235—Interpretation Act, 1918-1962 (W.A.), s. 15.

Decisions

November 4.
The following written judgments were delivered:-
BARWICK C.J. This is a cause removed into this Court from the Supreme Court of Western Australia pursuant to s. 40A, Judiciary Act 1902-1959 (Cth). The plaintiff is registered under the Mining Act, 1904-1964 (W.A.), as the holder of the whole of the shares in a mineral claim for clay and shale upon certain land within the district of the defendant shire. He claims to have the right, subject to the provisions of the Mining Act, to mine this land for clay and shale by open cut quarrying and other methods of extraction. According to his statement of claim, the defendant Shire will not permit him to do so unless and until he obtains a licence in that behalf from the defendant and pays to it - (i) a fee (called by the plaintiff in his pleading a royalty) of

3d. per cubic yard "of quarried material for production", and

(ii) a deposit of 100 pounds.
He sought relief in the Supreme Court against this interference with the working of his mining tenement by the defendant who purports to act under certain by-laws passed by the Serpentine-Jarrahdale Road Board (the Board) to regulate and control quarrying for certain materials, including shale and clay. (at p575)

2. The inter se question arose before the Supreme Court at the outset of the suit as the plaintiff by his statement of claim alleged that by-law 7 of the said by-laws under which the council requires payment of the abovementioned amounts purports to exact a duty of excise contrary to s. 90 of the Constitution. (at p576)

3. Thus the case at that stage was removed to this Court, the Supreme Court having no jurisdiction to proceed further in the matter: see Reg. v. Green; Ex parte Cheung Cheuk To (1965) 113 CLR 506 . Its jurisdiction from the time of the initial pleading, if it had been free to exercise any, would have been federal jurisdiction, invested by s. 39 of the Judiciary Act. (at p576)

4. The by-laws which are set out in full in the statement of claim, provide relevantly as follows:

"1. No person without first obtaining the license of the said Board shall on any other than Crown land within the Serpentine-Jarrahdale Road Board District - (a) quarry for stone, gravel, sand, clay or other material; . . . . . . 2. All applications for a license must be accompanied by a plan of the area proposed to be excavated, such plan to show details of the levels, area of the proposed pits and the depth of the area to be excavated. Any other information required by the Board in connection with the site shall be supplied by the applicant on request. 3. The duration of any license which may be granted by the Board shall be one (1) year. . . . . . . 7. The fee payable to the Board for any such license shall be the sum calculated at the rate of 3d. per cubic yard of the total area in respect of which any such license may be granted; provided that where the fee payable by this by-law has been paid for a license in respect of any area and an application is made within 12 months of the granting of such license for a further license in respect of the same area or part thereof no fee shall be payable in respect of any area included in the license upon which the fee has already been paid. 8. Before any license is issued for any quarrying or excavations, the applicant must deposit with the Board an amount not exceeding one hundred pounds (100 pounds), such amount to be fixed by resolution of the Board and to be retained in trust by the Board until the requirements of the next succeeding paragraph are complied with, and should any licensee fail to carry out such requirement, it shall be competent for the Board to have the necessary work carried out and deduct the cost thereof from the deposit held. 9. When the removal of materials from any excavation is completed, the floor of the excavated area shall be graded and levelled to an even surface and the sides shall be sloped down to a suitable batter to the satisfaction of the Board. The removal of materials from an excavation shall be deemed to be completed - (a) when the license has expired; (b) when the area has been excavated to the extent of and in accordance with the area and depth shown on the plan accompanying the application for the license. . . . . . . 14. The Board may refuse to grant a license or to renew a license to quarry or excavate. . . . . . . 17. The whole of the Serpentine-Jarrahdale Road Board District, referred to in No. 1 of these by-laws, is to be taken as a 'prescribed area' as referred to in section 202 of the Road Districts Act, 1919, under which section these by-laws are promulgated." (at p577)

5. The plaintiff's submission is that the fee for the issue of a licence to quarry which by-law 7 requires to be paid is a tax rather than a fee and that it satisfies the criteria of an excise which this Court has laid down: see Bolton v. Madsen (1963) 110 CLR 264 and Anderson's Pty. Ltd. v. Victoria (1964) 111 CLR 353 . But, of course, in the case of a by-law made by a subordinate authority such as the Board, the first question logically is whether the by-law is within the by-law-making power of the Board. The appellant submits that it is not, for the same reasons in substance as led him to submit that the fee for which it provides is in reality a tax. Leave was given by this Court to amend the statement of claim so as to make it clear that the plaintiff was free to pursue this submission. (at p577)

6. By-law 7 depends for its validity upon certain provisions of the Road Districts Act, 1919-1959 (W.A.) (the Road Districts Act) and of the Local Government Act, 1960 (W.A.) (the Local Government Act). The relevant provisions of the Road Districts Act are the following:

Section 188 by which a board is given power to enter private lands and take therefrom earth, stone, sand or gravel for road making or repairing within its district and within a mile of the land so entered, making compensation for any damage which the land owner may thereby sustain, including the value of the material so taken. Section 202: "Subject to this Act, a board may make by-laws to regulate or prohibit the quarrying for stone, gravel, or other material, and other similar excavations on other than Crown land within townsites and prescribed areas, without the license of the board." Section 204 (1): "Any by-law made under this Act may - . . . . . . (b) fix the fees payable for and the duration of a license; . . . . . . (2) Any unlicensed person doing any act or thing for which a license is required, and any licensed person committing any breach of the conditions under which his license is granted shall be guilty of an offence against this Act." (at p578)

7. By-law 7 was made under s. 204 whilst it was still operative. But in 1960 the Road Districts Act was wholly repealed by s. 4 of the Local Government Act. However, s. 15 of the Interpretation Act, 1918-1962 (W.A.) saves by-laws made under repealed Acts where the by-law satisfies its requirements. In effect this means that the by-law should have been validly passed under the repealed law and capable of being validly passed under the repealing statute. (at p578)

8. The Local Government Act confers on a council of a municipality, and therefore on the council of a shire (s. 6), a general power to make by-laws prescribing forms, fees, etc. which by the Local Government Act "are contemplated, or are required or permitted to be prescribed, or which appear to the council to be necessary or convenient for the purpose of effectively carrying out the provisions of" the Local Government Act "or for better effecting the operation, objects and purposes of" that Act (s. 191). It also gives a Council a specific power by any by-law to "fix the fees payable in respect of the application for the issue and the renewal of the license" including "differentiating fees in respect of differentiating licenses, or licenses of the same class but issued for a particular purpose or subject to particular conditions;" s. 222 (2) (a) (iii). (at p578)

9. Section 235 (3) gives a council power to make by-laws:

"(a) regulating the carrying on of an extractive industry; (b) prohibiting the carrying on of an extractive industry unless by authority of a license issued by the council; and

(c) requiring, as a condition of the license, that the person carrying on an extractive industry shall pay into a fund established for the purpose of restoring and reinstating any area excavated under the authority of the license such sum at such times as is prescribed in the license, authorising the council to apply the money in the fund to or towards the restoration and reinstatement if the person does not carry out the restoration and reinstatement at his own cost, but otherwise requiring the council to refund to him the money so paid by him to the fund, when the restoration and reinstatement has been carried out to the satisfaction of the council; or

(d) requiring, as an alternative to payment into such a fund an applicant for a license to give to the council a bond, with or without sureties, in such sum as the council deems sufficient to ensure that the person carrying on an extractive industry will himself carry out, or cause to be carried out, such restoration and reinstatement work as is agreed upon between the council and the applicant on the granting of the license, and providing, in the case of default by the applicant in so carrying out the work or so causing it to be carried out, for forfeiture of the bond and payment of the sum therein referred to to the council, and empowering the council to apply that amount, or so much of that amount as is required, to carry out the work." (at p579)

10. "Carrying on an extractive industry" means quarrying and excavating for stone, gravel, sand and other material : s. 235 (1). Presumably clay and shale fall within the description of "other material" as used in the sub-section. (at p579)

11. Persons who do any act or thing for which a licence is required shall be guilty of an offence against the Act: s. 204 (2). (at p579)

12. The first question, therefore, is whether the Road Districts Act authorized a by-law requiring for the issue of a licence to quarry upon privately owned land the payment of a sum rated to the total volume of material which the applicant for the licence could remove from the area of the land in respect of which he sought the licence. (at p579)

13. It will be observed that the applicant for a licence under the by-law must furnish with his application a plan of the area to be quarried which presumably will enable a calculation to be made of the volume of material capable of being extracted by him from the area: see by-law 2. The fee payable for the issue of the licence is then a sum of 3d. per cubic yard of that volume. In the instant case, this computation, we are told, would produce the figure of $625,000. But the practice of the defendant in the case of a licence to quarry material, as we are informed, is to require the licensee to report the amount of material from time to time removed by him from the area the subject of the licence and to pay the sum of 3d. per cubic yard of the volume of material so removed as and when removed. This practice is reflected in the form of the plaintiff's statement of claim in which he alleges that the defendant requires the payment of a "royalty of 3d. per cubic yard on quarried material for production". But this practice cannot control the interpretation of the statute nor can it alter the obligation imposed upon the licensee by the combined effect of the by-laws and the licence to pay the total amount of the fee irrespective of the extent to which the licensee extracts any material under the licence. (at p580)

14. It was submitted that the validity of the by-law can be determined by placing the payment for which it provides into the category of a fee or into that of a tax, it being pointed out that in general a fee is a payment for or in respect of services rendered whereas a tax is not, but rather a means of obtaining revenue for governmental purposes. But, although the broad distinction between a fee for performing a service and a tax to raise revenue is quite valid, the instant question as to validity is not necessarily answered merely by designating this payment as one or the other. What is authorized under the description of a fee may very well be a tax and yet within the actual authority given. The question remains one of interpretation of the statute, bearing in mind its relevant purposes and the part the issue of a licence plays in them or with respect to them. (at p580)

15. Here the land from which material may not be taken is private land. It is not in the ownership of the Crown or of the Board or Shire. The power to regulate quarrying is not incident to the ownership of the land or of the material which could be removed therefrom. It was as part of the Board's function as a local government body that the power was given to make by-laws to regulate and control the removal of material from land by quarrying, a power to be exercised in the public interest of the neighbourhood. If the material is wanted for local government purposes, power to obtain it is elsewhere given by the statute: s. 188. The grant or refusal of a licence is a mechanism by which such regulation and control of the quarrying activity may be effected. If it is in the public interest to grant it, the Board has no interest to refuse it. The payment of money for the Board's permission to exercise a right to quarry derived elsewhere than from the Board does not seem to me to be contemplated as part of the mechanism for regulating or controlling extractive industry or activity in the neighbourhood. Nor can I find in the statute anything to suggest that the statute intended that the Board by its grant of a licence should aggrandize its own funds or participate financially in the quarrying operation carried on by the licensee. To put the matter another way, to require the payment of a sum of money rated to the volume of material capable of extraction is not, in my opinion, in furtherance of any purpose or policy discoverable in the Act nor is it a contemplated method of regulating or controlling the activity of quarrying in the public interest. But the Act, it seems to me, does contemplate that the Board may to some extent recoup itself for its administrative effort in considering the application and physically issuing the licence. Thus to use the language of the Court in Stevens v. Perrett (1935) 53 CLR 449, at p 459 adapted to the circumstances of this case, the fee bears no relation to the cost of administering a licensing system. It is evidently not a charge fixed as a reasonable fee for the issue of licences. Whilst that consideration may not be always decisive, in my opinion, the statute in this case authorized no more than fees which fall within this description. The instant fee certainly does not. (at p581)

16. Consequently as, in my opinion, the Act does not authorize the imposition of a fee of the nature and dimension of that fixed by by-law 7 for the issue of a licence to quarry clay and shale on private land, by-law 7 is invalid. (at p581)

17. The further questions raised by the plaintiff therefore do not arise. (at p581)

18. A declaration should be made that by-law 7 is invalid and an injunction granted to restrain the defendant from requiring the payment by the plaintiff of the fee sought to be thereby imposed for the issue of the licence to the plaintiff to quarry clay and shale upon which the Council resolved on 16th December 1963. (at p581)

McTIERNAN J. I agree with the judgment of the Chief Justice. (at p581)

MENZIES J. I agree with the judgment of the Chief Justice. (at p581)

WINDEYER J. I agree in the judgment of the Chief Justice. (at p581)

OWEN J. I agree with the order proposed by the Chief Justice and with his reasons. (at p581)

Orders

Declare that by-law 7 made by the Serpentine-Jarrahdale Road Board on 28th April 1960 in purported exercise of the powers vested in that Board by s. 204 of the Road Districts Act 1919 (W.A.) is invalid.

Order that the Council of the Shire of Serpentine-Jarrahdale be restrained from requiring the payment to it by the plaintiff of the amount calculated according to the terms of the said by-law as a condition of the exercise by the plaintiff of the licence to quarry and remove clay and shale upon and from the land the subject of the licence granted to the plaintiff by the Council on 16th December 1963.

Question of costs reserved.

THE COURT made the following further order:-
November 29.
Order that the defendant Shire pay the costs of the plaintiff of the proceedings in the Supreme Court of Western Australia and in the High Court.