Osborne v The Commonwealth

12 C.L.R.] OF AUSTRALIA.

321

Solicitors,

for the appellant, Snowball & K aufm ann.

H. C. o r A.

Solicitors,

for the respondent, Malleson, Stewart, Stawell &

Nankivell.

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[HIGH COURT OF AUSTRALIA.]

OSBORNE .

P l a in t if f ;

AND

THE COMMONWEALTH AND GEORGEl

ALEXANDER McKAY (C o m m is s io n e r I

D e f e n d a n t s .

OF L a n d T a x ) . . . . .

Commonwealth legislation, validity of—Incorporation of Act not yet assented to— H. C. o r A.

Form and siibstance of Act—Direct and indirect effect—Power of taxation-

1911.

Act imposing taxation - Act dealing with more than one subject of taxation—

'—,—'

Act dealing ivith matters other than taxation—Severahility—The Constitution M e l b o u b n e ,

(63<fc UVict., c. 12), secs. 51, 55, 99, W^—Land Tax Act 1910{A'o. 21 o/1910).

May 23, 24,

sec. 2—Land Tax Assessment Act 1910 {No. 22 of 1910).

Griffith C.J.

The incorporation into the Land Tax Act 1910 by sec. 2 of that Act of the

Barton, O’Connor,

Land Tax Assessment Act 1910, which was not assented to until the following Isaacs and

day, is effectual and the Land Tax Act 1910 with that incorporation is in

Higfirins JJ.'

substance and in form an Act imposing taxation and not an Act to prevent

the holding of large quantities of land by single persons.

Per Oriffilh C.J., Barton, O’Connor and Isaacs J J .—The Land Tax Assess ment Act 1910 is not an Act imposing taxation within the meaning of sec. 55 of the Constitution.

Per totarn curiam.—The Land Tax Act 1910 does not deal with any other subject of taxation than land, and does not in that respect infringe sec. 55 of

the Constitution.

Bemble, the effect of the second clause of sec. 55 of the Constitution is to render invalid an Act imposing taxation which deals with more than one subject of taxation.

322 HIGH COURT

[1911.

H. C. OF A. Per HiggiiiH J .—Sec. 55 of the Constitution permits as man}’ objects of 191].taxation—persons to be taxed—as Parliament chooses to tax, and allows the insertion of any provision which is fairly relevant or incidental to the

OSBOBUE

imposition of a tax on one subject of taxation.

T h e

Com

m o n w ea lt h .The Land Tax Act 1910 read with the incorporated Act does not contain any provisions which, if they are invalid as being beyond the power of the Commonwealth Parliament to enact, are not severable from the rest of the Act under the rule laid down in Pex v. Oommonweallh Court of Covcdialion and Arbitration ; Ex parte Whyhroio cfc Co., 11 C .L .R ., 1, at p. 27, and the Act as a whole is valid.

Qweere per HigqinuJ.—Whether an Act is void if it deal with more than

one subject of taxation.

S p e c ia l c a se stated for the opinion of the Full Court of the

High Court.

Frank Osborne having brought an action in the High Court against the Commonwealth and George Alexander McKay, Commissioner of Land Tax, the parties concurred in stating the following special ca.se for the opinion of the Full C ourt:—

1. This is an action in which the plaintiff sues (1) fo ra declara tion that the Acts of the Commonwealth Parliament, the Laml Tax Act 1910 and the Land Tax Assessment Act 1910, are not within the powers of the Commonwealtli Parliament, and are invalid, and (2) for a declaration that .secs. 10, 11 and 12 of the Land Tax Assessment Act 1910 did not lawfully impose or charge any tax upon the land of the plaintiff or upon the plaintiff in respect of his ownership of such land, and (3) for an injunction to restrain the defendant McKay as such Commissioner of Land Tax under the said Acta from requiring the plaintiff to furnish the returns specified under secs. 15 and 16 of the fjand Tax Assessment Act 1910 in i’e.spect of his said land, and fi-om valuing the .said land, and from assessing him for any tax in respect thereof.

2. The plaintiff was before and on 30th June 1910 and still is a resident of the State of Mew South Wales.

3. The plaintiff on and before the said 30th June was and still is entitled to land situate in the said State for an estate of freehold in possession. The said land is of the unimproved value ap defined by sec. 3 of the Land Tax Assessment Act 1910 of

12 C.L.R.] OF AUSTRALIA.

323

£6,525 and is not exempt from taxation under arij" of the C.

o f A.

provisions of the said Act.

4. The plaintiff was on the said 30th June and still is the

1910 of a leasehold estate in seven allotments of land situate at m o n w ba lth .

o s b o r n e

owner within the meaning- of the said L and Tax Assessment Act which the plaintiff so holds were all made in the year 1884 before the commencement of the said Act, and the unimproved value of his said estate as defined by the said Act is £306, but if calculated according to the method directed by the defendant the Commis sioner of Land Tax the unimproved value would be £400 at the least.

5. The plaintiff was on the said 30th June a person in whom land situated at Bantry Bay, Middle Harbour, in the said State was vested as a trustee for certain persons named Moir who are absentees within the meaning of the said Act, and the said land is under the said Act of a taxable value of £250.

6. The plaintiff had not before 30th September 1910 sold or agreed to sell any of the lands mentioned in the three preceding paragraphs.

7. The plaintiff was on the said 30th June the holder of 500 shares in the Sydney Ferries Ltd., and also jointly with others as beneficial owners was the holder of 1,799 shares in the Sydney Ferries Ltd. and also of 1,380 shares in the North Shore Gas Ltd. Land situate in the Commonwealth in excess of the taxable value tliereof under the said Acts was on the said 30th June and still is owned by each of the said companies.

3. The plaintiff was on the said 30th June and still is the holder of a policy on his own life in the Australian Mutual Provident Society and the holder of several policies on his own life in the National Mutual Life Association of Australasia, and each of the said policies on the said date had and still has a surrender value and each of the said societies owns land situate in the State of New South Wales and elsewhere in the Commonwealth in excess of the taxable value thereof under the said Acts. . 9. Regulations purporting to have been made under sec. 74 of the Land Tax Assessment Act 1910 have been published pre scribing 1st March 1911 as the date on or before which returns

324 HIGH COURT

[1911.

H. C. OF A. must be furnished by taxpayers under the provisions of the said

Act.

Osb o r n e

’̂̂ ason of his ownership of the lands in paragraphs 3,

^ 4 and 5 more particularly mentioned, and the regulations men- MONWEAETH. tionod in paragraph 9 hereof, the plaintiff will be compelled to furnish returns of his said lands or if he fails to do so will become liable to the penalties provided under sec. 68 of the Land Tax Assessment Act 1910, and the defendant Mackay as such Com missioner of Land Tax will unless restrained by the High Court exercise the powers purporting to be conferred by secs. 17 (1) and 64 of the said L and Tax Assessment Act 1910 and cause his officers to enter upon the plaintiff’s land and property and inspect the said land and the plaintiff’s books and documents.

11. The lands of the plaintiff more particularly mentioned in paragraphs 3, 4, 5 and 6, by reason of the facts in the said paragraphs mentioned and by the pi’ovisions of the Land Tax Act 1910 and of secs. 10, 11,12, 51 and 56 of the Land Tax Assess ment Act 1910, purport to be charged with the amounts to be assessed in respect thereof for land tax under the said Act and the Land Tax Act 1910, and their use and value to the plaintiff have been diminished by the said alleged charge, and the defendant Mackay as such Commi.ssioner of Land Tax will unless restrained by the High Court cause such alleged charge to be registered under the provisions of such sec. 56 (2) of the said latter Act.

12. The Land Tax Act 1910, No. 21 of 1910, was assented to by His Excellency the Governor-General of Australia on 16th November 1910 and the L a vd Tax Assessment Act 1910, No. 22 of 1910, was assented to by His Excellency the Governor- General on l7 th November 1910.

13. The plaintiff will contend that on the said 16th November 1910 when the said Land Tax Act 1910 came into force, the said Land Tax Assessment Act 1910, which by sec. 2 of the former Act purported to be incorporated therewith and to be read as one with such Act, was not in existence.

14. The plaintiff will contend tliat the provisions of tlie said Land Tax Act 1910 of themselves, that is, without the provisions of the Land Tax Assessment Act 1910 are uncertain and unin-

12 C.L.R.] OF AUSTRALIA.

325

telligible and incapable of imposing the alleged taxes sought to H- C-

be enforced against the plaintiff or any taxation.

15. 'file plaintiff will contend that the provisions of the said

o sb o k n e

Land Tax Act 1910, even if capable of being read with the

provisions of' the Land Tax Assessment Act 1910, are inconsistent, m o n w ea b th .

uncertain and unintelligible, and incapable of imposing the taxes

sought to be enforced against the plaintiff or any taxation.

16. The plaintiff will contend that the effect of the matters alleged in paragraph 12 hereof are—(1) to make the alleged taxes now sought to be enforced against the plaintiff invalid, or (2) alternatively to make the said Land Tax Assessment Act 1910 a law imposing taxation within the meaning of sec. 55 of the Constitution.

17. The plaintiff will contend that the Land Tax Act 1910 if read as one with the Land Tax Assessment Act 1910 is a law imposing taxation within the meaning of sec. 55 of the Con stitution, and is also a law, not being a law imposing duties of Customs or Excise, dealing with more than one subject of taxation

within the meaning of that section.

18. The plaintiff will contend that the Land Tax Assessment Act 1910 is (apart from the inatters alleged in paragraphs 12, 13, and 16 hereof) a law imposing taxation witldn the meaning of sec. 55 of the Constitution and deals with matters other than the imposition of taxation, and is also a law, not being a law imposing duties of Customs or Excise, dealing with more than one subject matter of taxation within the meaning of that section.

19. The plaintiff will contend that the Land Tax Act 1910 and the Land Tax Assessment Act 1910 are not within the com petence of the Parliament of the Commonwealth, inasmuch as they are not laws for the peace, order and good government of the Commonwealth with respect to “ taxation ” not otherwise within the competence of the said Parliament, but are Acts to prevent persons resident in the Commonwealth from holding and owning- large areas of land, and to prevent persons not resident in the Commonwealth from holding and owning land within the Com monwealth.

20. The plaintiff will contend that the said Acts are not within the competence of the Commonwealth Parliament, ina.smuch as

326 HIGH COURT

[1911.

H. C. OF A. they are not Acts imposing taxation nor otherwise within tlie

competence of the said Parliament, but are Acts controlling the

Osb o r n e domestic affairs of the States, which are by the Constitution

T *CoM i'6ser%"ed to the States, by regulating the ownership of the lands

MONWBAI.TH. of the Statos in respect of the areas to be held by residents of the ' States, and in respect of the residence of the persons who may be

owners of the said land.

21. The plaintiff will contend that the said Acts are not within the competence of the Parliament of the Commonwealth because they are Acts to limit the ownership of lands within the States to persons who are residents of the Commonwealth and to persons holding areas of land not exceeding £5,000 in value, and are invalid as dealing with matters reserved to the States by the Constitution.

22. The plaintiff will contend tha t the said Acts are not an exercise of the power of taxation, but are Acts to regulate land ownership and are invalid.

23. The plaintiff will contend that the said Acts are laws with respect to the acquisition of land by the Commonwealth, but not in pursuance of any power possessed bj ̂ the Parliament of the Commonwealth.

24. The plaintiff will contend that so much of the provisions of the said Acts as relates to taxation of land or to the taxation of interests in laud of themselves di.scriminate between States and parts of States and given preference to States and parts of States over other States and parts thereof, and also give power to the Commissioner under sec. 17 and to the Boai'd mentioned in sec. C6 to so discriminate and give preference, and tha t the said Acts are therefore not within the competence of the Parliament of the Commonwealth.

25. The plaintiff will contend that the provisions of secs. 11, 30, 38, 39, 40, 41, 48, 63, 66, 69, 70, and 71 of the Land Tax Assessment Act 1910 are respectively not within the competence of the Parliament of the Commonwealth, and that if any of the said provisions are held to be invalid the remainder of the Act would be substantially different from the Act intended to be enacted.

12 C.L.R.] OF AUSTRALIA.

327

26. Tlie plaintiff will contend that the said Acts purport to H- C-

impose a tax on property belongino- to the States and are invalid.

27. The defendant will contend tha t the Laoid Tax Act 1910 and the Land Tax Assessment Act 1910 are within the com-

o s b o r n e

T̂ h e C o m

petence of the Federal Parliament and are valid and effectual to moitw

'ealth.

impose taxation and to provide for its assessment and collection. 28. The defendant will contend tha t each of the sections of the Land Tax Assessment Act 1910 referred to in paragraph 25 above is within the competence of the Federal Parliament and is valid, and alternatively that if any of the sections are invalid they and each of them are severable from the rest of the Act, and their invalidity, if invalid, does not affect the validity of the rest of the Act.

29. The parties to this cause agree that the Court shall give its decision upon the questions arising hereunder, and shall, if it decide in favour of the plaintiff', give him relief by injunction or otherwise, and in any event make such order respecting the claim of the plaintiff and the costs of this cause and special case as to the Court may seem fit.

Mitchell K.C. and Knox K.C. (with them Blacket), for the plaintiff. The Land Tax Assessment Act 1910 not being in force when the Land Tax Act 1910 was assented to and the latter Act by sec. 2 incorporating the former, the former was unintelligible and imposed no taxation, and the L and Tax Assessment Act on being assented to was an Act imposing taxation. The Schedules to the Land Tax Act show clearly that it would be unworkable without the Land Tax Assessment Act.

The impost which this legi.slation seeks to impose is not taxa tion at all. Taxation implies placing an impost upon some class of persons, and to select an individual and put an impost upon him is not taxation. This principle applies here for, a certain class having been selected, power is given by sec. 66 of the Land Tax Assessment Act to except individuals in case of hardship. The tax must be universal on the specific class, and if there is power to except individuals there is power to tax named indi viduals : Cooley on Taxation, 3rd ed., vol. i., p. 4.

328 HIGH COURT

[1911.

H. C. OF A.

[ I saacs J. referred to Delaware Railroad Tax (1)].

1911.For the purpose of taxation the Commonwealth can select for taxation any existing classes of individuals or things, but cannot create artificial entities which do not exist under the State law : . Licence Ta.x Gases (2); McCray v. United States (3). The implied restrictions on legislation apply with special force to State lands because land has always been recognized as peculiarly a subject fi’om which the States may raise revenue, because land has always been regarded as outside the interference of other Governments, and because it is implied from the Constitution that the power of the Commonwealth to deal with or control land

is limited to certain modes and purposes.

See secs. 51 (xxxi.), 52

(1.), I l l , 114 and 123 of the Constitution. The true nature and character of the Act within the principal laid down in The King V. Barger (4) is not to impose taxation, but to control matters which are by the Constitution essentially left to the States, namely, the mode of disposing of Crown lands, the aggregation of large estates, and the holding of land by absentees. See Cooley on Taxation, 7th ed., p. 169 (-?r); Russell v. The Queen (5); Prentice and Egan on the Commerce Clause, p. 129 ; Attorney- General fo r Quebec v. Queen Insurance Go. (6).

The legislation cannot be described as land ta.x legislation, but it imposes a tax on persons in respect of various matters, e.g., ownership of land, ownership of shares in a company, ownership of a policy of life assurance, &c.

If the Land Tax Assessment Act can be read into the Land Tax Act so tha t the latter imposes taxation, or if the Land Tax Assessment Act alone can be regarded as imposing taxation, the legislation in either case is contrary to the second clause of sec. 55 of the Constitution, and is invalid, for it deals with more than one subject of taxation. The effect of th a t second clause is that

an Act which infringes the provision is invalid.

That is borne

out by the change of language from that used in secs. 53 and 54. [ I saacs J. referred to Cooley on Taxation, 7th ed., p. 211;

Sutherland’s Statutory Construction, p. 121.]

(1) 18 Wall., 206.(4) 6 C .L .R , 41.

(2) 6 Wall., 462.(5) 7 App. Cas., 829, a t p. 8.39.

(3) 195 U.S., 27.

(6) 3 App. Cas., 1090.

12 C.L.R.] OF AUSTRALIA.

329

If an Act infringes that clause it is not an Act within the H. C. o r A. power conferred by sec. 51 of the Constitution.

[They referred

to Sutherland’s Statutory Construction, 2nd ed., p. 187 ;

Dorsey’s

o s b o r n e

Appeal (1); Commonwealth v. M artin (2); La Plume Borough

V. Gardner (3).]

Taking these Acts as being intended to impose m o n w ea lth .

a land tax, what is meant by a land tax ? A land tax is either a tax on the ownership of land or of some interest therein known to the law of the place where the tax is to operate, or it is a tax to be paid by the owner of land or by some person having such an interest therein. If in these Acts there is found a tax imposed which cannot with reasonable accuracy be called a land tax as so defined, the Acts offend against the prohibition of the second clause of sec. 55 of the Constitution. Taking the plain meaning of the words used, secs. 36, 39, 40 and 41 seek to impose taxes which cannot be called land taxes as so defined: Pacific Co operative Steam Goal Co. v. R ailw ay Commissioners of New South Wales (4); Bank of New South Wales v. Piper (5). By sec. 36 a husband becomes liable in respect of his wife’s land for a tax at an increased rate on his own and his wife’s land. Sec. 39 purports to tax shareholders resident out of the jurisdiction of the Commonwealth, and the Commonwealth Parliament has no power to do this. The only authority is to tax persons, property, or businesses within the jurisdiction of the Common wealth : Louisville and Jeffersonville Ferry Go. v. Kentttchy (6); Case of State Tax on Foreign-Held Bonds (7); Van Allen V. The Assessoi’s (8); W oodruffs. Attorney-Gen eral fen' Ontario (9); Gloucester Ferry Go. v. Pennsylvania (10). The share holders of a company are not the owners of land of the comjjan}’, and have no intere,st in it.

[Isaacs J. referred to Birch v. Cropper', I n re Bridgeioater

Navigation Co. Ltd. (11).]

A company is a distinct legal entity and the whole of the rights of the shareholders are governed by Statute, behind which you cannot go to look at the substance of the m a tte r; Salomon

(1) 72 Penn. St. R., 192.(7) 15 Wall., 300.

(2) 107 Penn. St. R., 185.(8) 3 Wall., ,573.

(3) 148 Penn. St. R., 192.(9) (1908) A.C., 508.

(4) (1904) A.C., 795.(10) 114 U.S., 196, at p. 208.

(5) (1897) A.G., 383.(11) 14 App. Cas., 525, at p. 543.

(6) 188 U.S., 385.

330 HIGH COURT

[1911.

H . C. OF A. V. Salomon tii Co. Ltd. (1). In Birch \\ Cropper (2) the question under discussion was whether in a distribution of the assets of a

Osb o r n e company in liquidation liolders of shares partly paid up were T h e ^Com entitled to be paid the same amounts as holders of shares fully

MONWEAiTH. paid up. Tlie statement there that shareholders are interested in the property of the company in proportion to their shares must be taken having regard to the circumstances of the case. The rights, liabilities and status of shareholders may be different in a liquidation from what it is when the company is a going concern. Sec. 40 also seeks to impose a tax upon persons who are not the owners of any interest in the particular land. J t seeks to impose a tax upon a shareholder of one c o m p an in re.spect of land belonging to another company. Sec. 41 is open to the same objection. The policy holders of a mutual life assurance society cannot be said to have any interest in the lands of the society.

If the Land Tax Assessment Act either by itself or as incor porated in the Land Tax Act be an Act imposing taxation, then by virtue of the first paragraph of sec. 55 of the Constitution all the sections in it which deal with anything else than the imposition of taxation are invalid. Thus, sec. 30 seeks to render invalid certain covenants in leases and sec. 63 to make void contracts to alter the incidence of the tax. These sections are so bound up with the rest of the Act as to render the whole Act invalid ; The K ing v. Barger (3); Quick & Garran’s Australian Constitution, p. 675. Other section,s, which are invalid for various reasons apart from sec. 55 of the Constitution, are also so bound up with the rest of the Act as to render the whole invalid. Thus sec. 25 is by reason of the proviso invalid under sec. 99 of the Constitution as giving a preference to States where the

cla.sses of estates there mentioned exist.

Secs. 26, 27, 28 and 29

purport to impose a tax on Crown lands contrary to sec. 114 of the Constitution : B'Enulen v. Pedder (4). This is emphasized by sec. 56 which makes the tax a first charge on the land. Until the Crown has pa.ssed the grant of the fee simple the land is not taxable ; Railway Co. v. Prescott (5); Raihvay Co. v. MeShane (6);

(1) (1897) A.C.. 2-2, at pp. 30, 51. (4) 1 C.L.R., 91.

(2; 14 App. Cas., 525.(5) 16 Wall., 603, at p. 608.

(3) 6 C.L.R., 41, at p. 77.

(6) 22 Wall., 444.

12 C.L.R.] OF AUSTRALIA.

331

Wisconsin Central Railroad Go. v. Price County (1); M unicipal

C. or A.

Council o f Sydney v. Commonvjcaltk (2); Judson on Taxation,

p. 26: Stearns v. Minnesota (3); Cooley on Taxation, 7th ed., o s b o b n e

P-

T h e^Com -

[ISAACS J. referred to Northern Pacific Railroad Co.

Traill m o n w ea lt h .

County (4); Baford v. Houtz (5) ; Colorado Go. v. Commis sioners (6); Northern Pacific Railroad Go. v. Patterson (7).

H iggins J. referred to Forbes v. Gracey (8).]

Those sections if valid would practically give the Parliament of the Commonwealth direct control over the disposition of land by the States. Secs. 48, 69, 70 and 71 are invalid as enabling the Commonwealth to acquire land in a way not authoiized and impliedly forbidden by the Constitution. If these sections be invalid, the Act without them would be quite a different A c t: Pollock V. Farmers’ Loan and Trust Co. ( 9 ) ; Owners o f S.S. Kalibia v. Wilson (10).

[They also referred to Campbell v. Hall (11); Stephens v. Abrahams (12); Sutherland’s Statutory Construction, 2nd ed., vol. I., p. 250.]

Duffy K.C. and Piddington (with them Armstrong), for the defendants. I t cannot be said as to these Acts, as the Court found that it could say in The K ing v. Barger (13), that they are not really Acts to impose taxation, but are solely Acts to deal with matters over which the States have the sole control. The effect of the second clause of sec. 55 of the Constitution is not to invalidate an Act which deals with more than one subject of taxation. According to English parliamentary practice it would be proper for the House of Comm jns to send up to the House of Lords a taxation Bill dealing with two subjects of taxation, but it would not be proper to send up a Bill dealing with taxation and some other subject matter which had nothing to do with taxation. The latter position is dealt with in the

(1) l:W U.S., 496, at p. 504.(8) 94 C.S., 762.

(2) 1 C.L.R., 208.(9) 1.58 U.S., 601.

(3) 179 U.S., 223, at p, 251.(10) 11 C.L.R., 689.

(4) 115 U.S., 600, at p. 608.(11) 1 CowD., 204, at p. 213.

(5) 133 U.S., .320, at p. 3.32.(12) 29 V.L.R., 229, at pp. 242, 248 ;

(6) 95 U.S., 259, at p. 265.24 A.L.T., 216.

(7) 154 U.S., 1.30, at p, 132.

(13) 6 C.L.R., 41.

[1911.

332 HIGH COURT

H. C. o r A. part of sec. 55, and the penalty is that the provisions dealing

witli the other subject m atter shall be void, and it cannot have

O sb o r n e been intended that in dealing with the former position, which

The*Com P̂ ’ssents the lesser offence, the penalty should he more severe, MONWEALTH, naiucly, the invalidity of the whole Act. [They referred to Hoicard v. Bodington (1)]. Even if such an Act is rendered invalid, there is no inclusion of more than one subject of taxation in the L and Tax Act, which is the Act that imposes taxation, W ithout sec. 2 tha t Act would have imposed a tax on the owner ship of land, but there might be some difBculty in carrying it out, but with sec. 2 it is to have operation when something comes into existence which will make it quite plain, namely, the Land Tax Assessment Act. Even if the latter Act is to be read w’ith the Land Tax Act, the whole is an attem pt to impose a land tax and no other tax. But the iM nd Tax Act is the Act which imposes the land tax, and the Land Tax Assessment Act provides the machinery for carrying the former Act into effect and con

tains nothing which makes it a law imposing taxation.

Sees. 26

to 29 follow out sec. 14 (5).

The word “ land ” in them means

an interest in land: Acts Interpretation Act 1901, sec. 22. Sec, 26 provides for the taxation of persons having certain interests in Crown lands, and sec. 29 makes provision exempting certain leasehold estates which would be incomsistent with sec. 26 but for the exception in it. The effect of sec. 56 as applied to secs, 26 to 29 is to make the tax a first chai’ge on the interest of the person sought to be taxed. Those secs, do not purport to tax land of the Crown. Even if they did they are severable from the rest of the Act. Sec. 30 is clearly severable, and, in addition, is a proper exercise of the power to impose a land tax, being ancillary to tha t power. Although the divisions of interests in land may he different in different States, the Commonwealth Parliament may make its own estimate of who are intci’ested in land apart altogether from the laws of the different States. Sec. 37 is an attempt to tax the owner of land where there has been a sale. As to secs. 39 and 41, it is essential in imposing taxation to see that no change of appearance shall have the effect of destroying a man’s real interest in land. A shareholder of a

(1) 2 P.D., 203.

12 C.L.R.] OF AUSTRALIA.

333

company has a real interest in the land of the company in the C. or A.

same way as he has in interests in the contracts of the com pany;

Todd V. Robinson (1). He is in substance one of several partners

o s b o e n e

owning land.

Secs. 36 and 40 also seek to impose a land tax.

They seek to tax the real interest of the taxpayer.

Sec. 37 m o n w ea et h .

merely provides a rule for finding out who is the owner. Sec. 41 has the object of putting a mutual life assurance society in the position of a trustee for the purpose of taxing the policy holders, instead of in the position of a company. I t seeks to impose a land tax, and in any view is severable from the rest of the Act. Even if secs. 30 and 63 are not severable they are clearly ancil lary to the povrer of land taxation ; Addyston Pipe and Steel Co. V. United States (2); Federated Amalgamated Government Railway and Tramway Service Association v. New South Wales Railway Trafic Employes Association (3); Pacific Insurance Go, V. Soule (4); Grand Trunk R ailw ay Co. o f Canada v. Attorney-

General o f Canada (5).

Sec. 48 and the other penal sections 69,

70 and 7l are clearly severable. They merely do what is done in every Customs Act, and are ancillary to the power of taxation. [Tliey also referred to Sutherland’s Statutory Construction, 2nd ed., p. 192.]

Mitchell K.C., in reply.

Cur. adv. vult.

Griffith C.J. The substantial relief claimed in this action is

May 31.

a declaration that Act No. 21 of 1910, which is entitled “ An Act to impose a Progressive Land Tax on Unimproved Values,” and was a.ssented to on 16th November 1910, and Act No. 22 of 1910 which is entitled “ An Act relating to the Imposition, Assessment and Collection of a Land Tax upon Unimproved Values,” and assented to on the following day, are invalid. The short title of

Act No. 22 is the Land Tax Assessment Act 1910.

Act No. 21,

the short title of which is the Land Tax Act 1910, merely pro vides that the Land Tax Assessment Act 1910 shall be incor porated and read as one with the L and Tax Act (sec. 2), that

(1) 14 Q.B.T)., 739, a t d. 744.

(4) 7 Wall., 43.3.

(2) 175 D.S., 211. *

(5) (1907) A.C., 65.

(3) 4 C.L.R., 488, at p. 541.

VOL.

X II.

[1911.

334 HIGH COURT

H. C. OF A. land tax is imposed at the rates declared in the Act and Sche dules (secs. 3 and 4), and that it shall be levied and imposed in

O sb o b n e for the financial year beginning 1st Ju ly 1910 and each year

T h b^Com tliereafter (sec. 5).

Under the Schedules higher rates of tax are

MONWEALTH, imposed upon absentees than upon non-absentees. The nature of

Griffith c J.

No. 22 is Sufficiently expressed in its title which I have Various grounds of objection were taken to these Acts, which may be thus summarized :—(1) That as the Land Tax Assess m ent Act referred to in sec. 2 of Act No. 21 was not in existence as a law on 16th November, the reference to it in the Act passed on that day is meaningless :

read.

(2) That the Acts are not in substance an exercise of the taxing powers of the Commonwealth, but an attem pt to regulate the holding of land in the Commonwealth, which, it is contended, is extra vires the Parliam ent:

(3) That the Acts either together or separately are in contra vention of sec. 55 of the Constitution :

(4) That several pi’ovisions of Act No. 22 are invalid for various reasons, and that tlie invalid parts are so closely bound up with the remainder tha t the whole Act must be held invalid, in accordance with the rule laid down in the Bootmakers’ Case (1) and applied in Owners o f S.S. K alibia v. Wilson (2) at the end of last year.

Tlie first point, that the attem pt to incorporate an Act which was not in existence is meaningless and ineffectual, was not very seriously pressed, and indeed could not be. In construing any Act the duty of the Court is to ascertain what the legislature meant. Now what did they mean when they spoke of the Land Tax Assessment Act 1910 ? As a matter of common sense they meant to refer to an Act of tha t name which was then in process of enactment. As soon as it became law the Act, although before ineffective, became effective. So tha t there is nothing in the objection.

In support of the second objection—that is, tha t the Acts are not in substance an exercise of the power of taxation—it is con tended that the real purpose of the so-called taxation is not so

(1) 11 C.L.R., 1.

(2) 11 C.L.R., 689.

12 C.L.R.] OF AUSTRALIA.

335

much to raise revenue as to prevent the holding of large quan- R-

titles of land by a single person.

There is no doubt that that

may be the consequence of the imposition of a progressive land o s b o b n e

tax, and it may well be that that indirect consequence was con

templated and desired by the legislature.

But, as was pointed m o n w ea lt h .

out by this Court in R. v. Barger (1), although it is a frequent

Griffith c.J.

result of taxation to bring about indirect consequences which could not practicably, or could not so easily, be brought about by other means, yet the circumstance tha t taxation has such a result is irrelevant to the question of the competence to impose the tax. In my opinion these Acts are in substance as well as in form Acts imposing taxation, although there may be some pro visions which may be open to objection upon other grounds. That objection therefore fails.

The objection founded upon sec. 55 of the Constitution takes two forms. That section contains two provisions :—“ Laws imposing taxation shall deal only with the imposition of tax ation, and any provision therein dealing with any other matter, shall be of no effect.”

“ Laws imposi)ig taxation, except laws imposing duties of Cus toms or of Excise, shall deal with one subject of taxation on ly ; but laws imposing duties of Customs shall deal with duties of Customs only, and laws imposing duties of Excise shall deal with Excise only.”

The objection based on the first paragraph goes only to some parts of the A ct; that based on the second paragraph goes to the

whole Act.

I will deal with the second branch first.

The contention is that the Acts in question deal with more than one subject of taxation, and are therefore wholly invalid. An interesting argument was addressed to the Court as to the efiect of a violation of tha t provision, and a subsidiary argument whether ih^ Land Tax Assessment Act is a law imposing taxation within the meaning of sec. 55. In the view I take of another branch of the case it is not necessary to express a concluded opinion on this point, but I think it righ t to say a few words about it. Some confusion was introduced into the argument, I think, by the tacit assumption that a law dealing with

(1) 6 C.L.R., 41.

[1911.

336 HIGH COURT

H. C. or A. taxation is necessarily a law imposing taxation.

But tha t is not

so. The terms are not synonymous. An Act imposing taxation

O sb o b n e

hke the English annual Finance Acts, both impose taxes

T h e ^Com contain a complete scheme for their collection. Or the Act MONWEAXTH. may impose taxation eo nomine, leaving its collection to he Griffith C.J. regulated by other laws. Now, Act 22, when examined, does not on its face purport to impose taxation at all. Sec. 10, which is the foundation of the whole structure, provides th a t—“ (1) Subject to the provisions of this Act, land tax shall be levied and paid upon the unimproved value of all lands within the Common wealth which are owned by taxpayers, and which are not exempt from taxation under this Act.” The term “ land tax ” is defined in sec. 3 as meaning “ the land tax imposed as such by any Act, as assessed under this Act.” Now if you substitute the words given in the interpretation clause for the words, “ land tax ” in sec. 10, you get this :—“ Land tax imposed as such by any Act shall be levied and paid ” &c. The Act then goes on to make provision for assessing and levying the tax, which it assumes to have been imposed by another Act. That, however, does not dispose of the objection, for, if Act No. 22 itself deals with more than one subject of taxation, though under a single name. Act 21 by incorporating it is guilty of the same olfence and is obnoxious to sec. 55 of the Constitution. So tha t point must be examined.

On the question whether a transgression of the provisions of the second paragraph of that section is fatal to the validity of the Act, I would remark tha t the change of language in sec. 55 from that in secs. 53 and 54 primarily imports a change of intention. Secs. 53 and 54 deal with “ proposed laws ”—that is. Bills or projects of law still under consideration and not assented to—and they lay down rules to be observed with respect to proposed laws a t that stage. Whatever obligations are imposed by these sections are directed to the Houses of Parliament whose conduct of their internal affairs is not subject to review by a Court of law. Sec. 55, on the other hand, deals with pro posals which have received the Royal assent, and which can be reviewed by Courts of law, if they offend against constitutional provisions. I should hestitate very much before holding that a

12 C.L.R.] OF AUSTRALIA.

337

provision such as that, which in form is prohibitory, is a

C. of A.

mere counsel of perfection.

On the other hand. Courts of law

would lean rather to support than to deny the validity of an o sb o b n b

Act in case of a mere technical or incidental transgression of the

injunction not affecting the substance of the

legislation, and, if m o n w b a l th .

the provision objected to were capable of two constructions, Griffith o.J. to say more.

would if possible adopt that which would not invalidate the law.

I proceed now to refer to the provisions which are relied upon as infringing the rule laid down by sec. 55 of the Constitution.

I will take, first, sec. 39 of Act No. 22, which is the best illus tration. That section provides th a t :—“ All land owned by a company shall be deemed (though not to the exclusion of the liability of the company or of any other persons) to be owned by the shareholders of the company as joint owners, in the propor tions of their interests in the paid-up capital of the company.

“ (2) The provisions of sec. 38 of this Act shall apply accord ingly (but so that the assessment and liability of the com pany shall be in lieu of the joint assessment and liability under sub-sec. 2 of that section), and the shareholders shall be separately assessed and liable, and entitled to deductions, in accordance with that section.”

Sec. 38 provides that where there are joint owners, “ The joint owners shall be jointly assessed and liable in respect of the land as if it were owned by a single person,” but tha t “ each joint owner of land .shall in addition be separately assessed and liable in respect of—

“ («) his individual interest in the land . . . . together

with

“ (6) any other land owned by him in severalty, and

“ (c) his individual interests in any other land,”

with provisions for avoiding double taxation, &c.

In sec. 39 Parliament has clearly proceeded upon the assump tion that the members of a joint stock company which owns land are in substance the beneficial owners of that land in proportion to their interests in the paid-up capital of the company. In sup port of that view the words of Lord Macnaghten in Birch v. Crop-

[1911.

338 HIGH COURT

H . C. or A. 2}er : I n re Bridgewater Navigation Co. Ltd. (1), were referred

to :—“ Every person who becomes a member of a company limited

Osb o r n e b y shares of equal amount becomes entitled to a proportionate

part in the capital of the company, and, unless it be otherwise

T h e Com - ^ ^

MONWBALTH. provided by the regulations of the company, entitieu, as a

Griffith c J. necessary consequence, to the same proportionate part in all the

property of the company, including its uncalled capital.” The learned Lord in tha t case was speaking of the rights of members of a company when all its objects are completed and it is simply a question of distributing its assets, but as a proposition of law it cannot be assailed. The contention is that this is an erroneous view, and tha t members have in the eyes of the law no interest in the land. If the case is considered apart from the positive law relating to the juridical relations inter se of jo int stock com panies and their members, the assumption is in accordance with the actual facts. I t is true tha t members have no Ifegal estate in- the land, but why should not Parliament act on the basis of their substantial beneficial interest in the land ? The only ground for saying that Parliament cannot do so is tha t it is extra vires as interfering with a matter pertaining exclusively to the States. Reduced to its naked form the objection is that Parliament has attempted to make persons who are not owners of land liable to pay land tax in respect of it. Suppose they have. The subject of taxation is still land, but an attem pt is made to make persons pay tax in respect of it who have no connection with the land. It is, therefore, not necessary to express any opinion as to the validity of the provision, which is an attem pt to make persons liable to land tax who are not formally the legal owners of land, but I do not encourage anyone to act upon the assumption that it is invalid.

I will deal next with sec. 41, which provides th a t :—“ Land owned by a Mutual Life Assurance Society (not being land of which the society is mortgagee in possession, or which the society has acquired under or by virtue of a mortgage) shall be deemed to be owned by the society as trustee for the several Australian policy-holders as beneficial owners in severalty in proportion to the surrender values of their policies as determined according to

(1) 14 App. Cas., 525, a t p. 543.

12 C.L.R.] OF AUSTRALIA.

339

a method to be prescribed.” Reference is made implicitly to secs.

33 and 62.

Sec. 33 provides th a t :—“ Any person in whom land

is vested as a trustee shall be assessed and liable in respect of O sb o e n e

land tax as if he were beneficially entitled to the land :

T h e ^Com -

“ Provided that where he is the owner of different lands in m o n w ba lth . severalty, in trust for different beneficial owners who are not for

Griffith o .J .

any reason liable to be jointly assessed, the tax so payable by him shall be separately assessed in respect of each of those lands,” &c. The result of that is that each policy holder is deemed to be the holder of a separate piece of land of a value proportionate to the surrender value of his policy, and that the society is to be deemed to be a trustee for him of that piece of land in severalty. I t follows that if the land is taxable as property of the policy holder, that is, if the value is such that, with or without other land of which he is the owner, it is liable to the tax, the society is responsible for the tax, but in one event only, namely, if it has property of the policy holder in its hands and disposes of it without providing for the tax, but not otherwise. That is the effect of sec. 62 ( /) . If for any reason the land is not taxable as property of the polic} ̂ holder, no question arises. If it is, he must pay the tax. Tlie general funds of the society are not liable in respect of the tax except by way of penalty. Whether the policy holders can be made liable in this way is substantially the same question as that which I have discussed under sec. 39 and must be resolved in the same way. I t may be that the pro vision may be ineffectual to reach the policy liolders or some of them, for instance, holders of non-participating policies, but in any view the subject matter of taxation is land and nothing else. Secs. 36 and 40, the other sections relied upon, raise substan tially the same question. Sec. 36 provides that if a husband transfers land to his wife or a wife to her husband, in certain events they are to be deemed to be joint owners of the whole of the land owned by either. Sec. 40 provides that two or more companies which consist substantially of the same shareholders are to be deemed to be a single company and shall be assessed and liable accordingly, and that two companies are to be deemed to consist of substantially the same shareholders if not less than three-fourths of the paid up capital of eaeh is held by or on behalf

[1911.

340 HIGH COURT

H. C OP A. q£ shareliolders of the other. In the case of each of those sections

the provision, if valid, may render a person liable, directly or OsBosNE indirectly, for land tax upon land in which he has no estate T h e ^Com equitable. But whether tha t provision is valid or not, MONWEALTH, tlic subjoct matter of taxation is still land. The utmost effect is

Qrifgth c J.

tha t an ineffectual attem pt is made to strike a man who cannot

be struck.

I do not think it necessary to refer in detail to two or three other sections which it is contended are open to the same objection. The result is tha t the Act as a whole is not invalid on this ground.

The objection based on the first paragraph of sec. 55 of the Constitution is not material. The only effect is that, if the Act is a law imposing taxation, any provisions which do not deal with the imposition of taxation are of no effect, but the rest of the Act remains in force. The sections mainly relied on under this objection are secs. 30 and 63, which purport to render invalid certain agreements relating to the incidence of land tax, and it is contended tha t tha t is a matter within tlie exclusive competence of the State legislatures. I express no opinion upon the validity of the objection, which may some day fall to be decided in some concrete case.

I now turn to the sections which are objected to as being ultra vires upon grounds other than those based on sec. 55 of the Constitution, and which are said to be so intimately bound up with the rest tha t if they go the whole Act must fall. The first is sec. 26, which provides th a t :—“ The holder of land under a purchase or a right of purchase from the Crown upon conditions, under the laws of a State relating to the alienation of Crown lands, shall be deemed to be the owner of the land if all the con ditions other than the payment of purchase money have been fulfilled, but not otherwise.” Sec 29 provides th a t :—“ Notwith standing anything in the last two preceding sections, the owner of a leasehold estate under the laws of a State relating to the alienation or occupation of Crown lands or relating to mining (not being a perpetual lease without revaluation, or a lease witli a light of purchase) shall not be liable to assessment in respect of the estate. I t is suggested tha t these sections impose a tax

12 C.L.R.] OF AUSTRALIA.

341

iipon Crown lands, whicli, of course, is prohibited by sec. 112 of

or A.

the Constitution.

Sec. 26 deals with the holders of land with a

■ right of purchase from the Crown, a form of tenure well known in

o s b o r n e

Australia, and particularly in New South Wales.

A person who

holds a certificate of fulfilment of the conditions has a market- m o n w ea b th .

able title practically equivalent to a grant in fee, subject to pay-

Griffith c.J.

ment of the balance of the purchase money. He is substantially the owner, and sec. 26 says that he is to be deemed to be the owner for the purpose of the Act, ju st as is a mortgagor. Secs. 27 and 28 deal with leasehold estates, and sec. 29 provides that notwithstanding the provisions of those sections, the owner of a leasehold estate under the laws of a State relating to the alienation or occupation of Crown lands shall not be liable to assessment or taxation with two exceptions mentioned. Now, the holder of a perpetual lease is to all intents and purposes the holder of an estate in fee, and “ a lease with a right of purchase ” refers to the right of purchase mentioned in sec. 26. If the provision in sec. 29 were not introduced there would or might be an apparent repugnancy between the two sections. Then the plaintiff relies upon sec. 56, which provides that land tax shall be a first charge upon the land taxed, as showing tha t the land is charged in the hands of the Ci’own. If sec. 56 should be so con strued it would be pro tanto invalid under sec. 112 of the Consti tution. But I do not think that that is the true construction, and, if it were, the only consequence would be that the provision would pro tanto he inoperative. Another section referred to is sec. 48, which contains a provision for the acquisition of land by the Commonwealth by way of penalty upon persons who make under-valuations of their land. Considering that the subject matter of the tax is land, it is contended that the wholesale acquisition of land by the Commonwealth to be held free from State taxation and not applied to Commonwealth purposes is not only not authorized by the Constitution, but is impliedly foi’bidden. I regard the question as one of some difficulty, but the provision stands quite apart from the taxing provisions of

the Act.

Similar arguments were used as to secs. 69 to 71,

which purport to impose forfeiture of land as a penalty for fraud. The same answer may be made—that it has nothing to

[1911.

342 HIGH COURT

H. C. or A. (Jo with the taxation of land, but merely with the enforcement

of a duty. I t is not necessary to express any opinion on this

Osb o b n e

objection, and I refrain from doing so.

Even if the sections as to the validity of which I have not

T h e Com - . . , . , , . , -

1.1,

MONWEALTH, expi'essod any opinion are invalid as being extra vires the

Griffith O.J.Parliament, they are clearly severable from the rest of the Act,

since the Act with these sections would, to adopt my own words in the Bootmakers Case (1), not be “ substantially a different law as to the subject m atter dealt with by what remains from what it would be witli ” tliose sections forming part of it.

I have only one other observation to make. When an Act creates a debt payable by A., and also attempts to enforce pay- mcAt of A.’s debt by B., I think tha t the law, so far as regards the relations between A. and his creditor, is substantially the same whether the attempt to enforce the debt as against B. is or is not effectual. For these reasons I think all the objections fail, and tha t there should be judgment for the defendants.

B a k to n j . read the following judgm ent:—The facts and con tentions are set out in the special case. The question for decision is whether, by reason of any of these facts and the contentions founded upon them, the Land Tax Act, No. 21 of 1910, and the Land Tax Assessment Act, No. 22 of 1910, are, or either of them is, invalid. I t is the legislation as a whole, or each Act as an entire unit of legislation, that is attacked. Unless therefore an attack on any part or parts is successful to the extent of invalidating the whole, it may be disregarded for the purpose in hand.

The Land Tax Act provides in its second section that the Land Tax Assessment Act “ shall be incorporated and read as one w ith ” the Tax Act. The Royal assent was given to the Tax Act on 16th November 1910, and to the Assessment Act on the next day. A contention was raised for the plaintiff’ that the Assessment Act could not be incorporated and read as one with the Tax Act on 16th November, as the reference was to something in the shape of a law which had not then become a law ; tha t the reference did not become effective when the Assess-

(1) 11 C .L .R ., 1, a t p. 27.

12 C.L.R.] OF AUSTRALIA.

343

ment Act received assent on 17th November; and that without H- C. or A.

such effect the Tax Act could not and did not become operative,

but was unworkable and, indeed, unintelligible, and therefore that

o s b o b n e

for the imposition of taxation reliance must be placed on the

Assessment Act alone, with the result tha t it became inconsistent m o n w ba lth .

with the provisions of the 55th section of the Constitution. The

alleged consequences as to sec. 55 need not be discussed in this

connection, for naturally the objection was not persevered with,

and it could not in any event be seriously regarded. I t is imma

terial whether Act No. 21 was workable on 16th November

or not. I t was made applicable to its purpose on and after the

17th, for it was the clear intention of Parliament that the other

measure, which the dates show to have completed or nearly

completed its passage through both Houses by the 16th, should,

when assented to, be read with No. 21. The first Act may be

compared to an engine, which, though finished and good on the

date of its completion, cannot be worked until its necessary

adjunct, a boiler, is added to it. The second Act performs that

function here.

It was further contended that the reference section in the Tax Act, if effective, constituted the two Acts one piece of legislation. So it did, but only for purposes of interpretation. The section could not make either Act valid or invalid, save so far as it helped to elucidate the meaning of either.

The next objection is that the Tax Act, as explained by the Assessment Act, is not truly an exercise of the power conferred by the Constitution in the second clause of sec. 51, but is an attempt to regulate the holding of land, a subject within the exclusive competence of the States. The power is one to make laws, subject to the Constitution, “ for the peace, order and good government of the Commonwealth with respect to . . . . taxation; but so as not to discriminate betwmen States or parts of States.” Apart from any such discrimination the power is unlimited. If that which purports to be an exercise of it is in reality a tax, it cannot be successfully challenged in this Court as a breach of clause 2 unless it discriminates in the manner for bidden. If, on the other hand, it is only a tax in name, then the fact that it designates itself by that name will not make it valid.

[1911.

344 HIGH COURT

H. C. OE A. and it must fail unless it can be supported as an exei'cise of some

other law-making power. If it is really an attem pt to exercise a

Osb o bn epower reserved exclusively to each State, such, for instance, as

V.the control of its lands, its domestic trade or its industrial affairs,

T h e

Com -

M O N W E A E T Hthen it is not a law at all, decked though it may be in the garb

Barton J.of a tax ; for styling an Act a tax does not make it one, if the

substance shows it to be something else. That this matter of clear sense is the law of the Constitution was declared by the case of The K ing v. Barger (1). The Judicial Committee of the Privy Council had already applied the same principle in the Canadian case of Attorney-General fo r Quebec v. Queen In su r ance Go. (2). The plaintiff relies mainly on these decisions to support his contention tha t what is intended is not in substance taxation. But he must show that the terms of the legislation

entitle him to rely on them.

This, I think, he has not done.

A law must be construed by its terms, and by these alone. It is only when it plainly appears from them, of course including any clear inference from them, to be in substance an attempt to deal with a matter outside the ambit of the power conferred that the Court is entitled to declare it invalid on tha t ground. Conceding this, the argument for the plaintiff is that it is apparent on the face of the Acts that the object is to exercise powers reserved to the States. One proof of this, he says, is tha t the land tax is and is designated a “ progressive ” one—that is, a graduated one; since the increase of the sum payable is not merely in proportion to the value assessed but by grades of rate progressing with grades of value. This, he says, indicates tha t the object is, in effect, to make the burden of large estates intolerable to the holder, and thus “ to prevent persons resident in the Common wealth from holding and owning large areas of land.” The plaintiff further argues that the exemption from taxation of land of an unimproved value of £5,000 when owned by a resident of Australia, an exemption not granted where the land is owned by an absentee, not only goes to emphasize the purpose stated, but to show that the legislation is also designed to prevent land holders from residing out of Australia or to prevent others than residents from owning lands within the Commonwealth. Now,

(1) 6 C .L .R , 41.

(2) 3 App. Cas., 1090.

12 C.L.R.] OF AUSTRALIA.

345

this legislation has nothing in its terms which dictates who shall H. C. o f A.

hold land and who shall not, or how much land any person shall

hold. Assuming th a t the taxation which it imposes is drastic,

as it is alleged to be, still it is not the function of the Court

to say that drastic taxation on landed interests will prevent m o n w ea lth .

o s b o r n e

residents from owning large areas, or prevent landholders from

Barton j .

residing out of Australia, or prevent absentees from holding land within the Commonwealth. Nor is it our function to say what degree of inducement to abstain from doing these things amounts to a prevention of the doing of them. The alleged objects are not to be collected from the terms of this legislation. Even assuming tha t such designs existed, they would not alter the construction of an Act or make it less an exercise of the taxing power. They may be the motive or even the ultimate object. We have not to do with either of these things. The arguments, in effect, predict certain results as consequences of the oppressive operation of the tax. These predictions are not for us to examine, because they are not relevant to the question of lawful authority. Conceding, for example, that in some cases a heavy tax may when administered operate, by the pressure of its severity, to destroy an industry which a State alone has power to control, or to force holders of large landed estates to sell them, or to remain in this country when they would rather live elsewhere, these are questions of the policy or wisdom of the tax, and belong to the people, directly or through their representatives, and not to the Court. And this is true even if the tax is so heavy and so carefully adjusted as to appear intended to produce the results foreboded. Questions of the abuse of power are for the people and Parliament. We can only determine whether the power exists, and if so, whether Parliament has in fact and in substance acted within it. I t is of the essence of the taxing power that when exercised to the full it may destroy the interest or the industry taxed. But even so, interference would involve the Court in the political function of deciding in what degree Parliament is justified in using a power on the exercise of which the Constitution itself places no limit. As was said by the majority of this Court in The K in g v. Barger (1):—“ The

(1) 6 C .L .R ., 41, a tp . 67.

[1911.

346 HIGH COURT

H. C. or A. circumstance that an indirect effect m ay be produced by the exercise of adm itted power is irrelevant to the question whether OsB^NB the legislature is competent to prescribe the same result by a

direct law. . . . The motive which actuates the legislature,

Th e Com- . . n • i j MONWEALTH. and the ultimate end desired to be attained, are equally irrelevant.

Barton J.A Statute is only a means to an end, and its validity depends

upon whether the legislature is or is not authorized to enact the particular provisions in question, entirely without regard to their ultimate indirect consequences.” The reasoning of the Supreme Court of the United States in McCray v. United States (1) is cogent upon this subject, and the case itself is very much in point. The conclusion drawn is thus expressed, in words which I venture to adopt (2):—“ The often quoted statement of Chief Justice Marshall in M ’Gulloch v. M aryland (3), that the power to tax is the power to destroy, affords no support whatever to the proposition that where there is a lawful power to impose a tax its imposition may be treated as without the powder because of the destructive effect of the exertion of the authority.”

Other objections are taken by the plaintiff to the legislation as a whole on the ground of its usurpation of State powers. So far as these involve the scope and purpose of both or either of the Acts, I am of opinion that they are covered by what I have

already said.

Of the remaining grounds of attack I will take next that which alleges tha t certain sections are invalid on grounds apart from the effect of sec. 55 of the Constitution, to be considered presently’, and are so interwoven with the rest of the legislation tha t they cannot be severed without results fatal to the whole of it.

In the Bootmakers’ Case (4) this question of severability was dealt with exhaustively in argument, and the judgments laid down lines which should serve as a test in the present and in future cases. The criterion, in the opinion of the learned Chief Justice, was whether, supposing the invalidity of some part or parts of an Act to be established, the Statute with the invalid portions omitted would be substantially a different law, as to

(1) 19.5 U S., 27,(3) 4 W heat., 316.

(2) 195 U.S., 27, at p. 56.

(4) 11 C.L.R., 1.

12 C.L.R.] OF AUSTRALIA.

347

the subject matter dealt with by what remains, from what it

C. o r A

would be with the omitted portions forming part of it.

learned brothers, O’Connor and

Isaacs, agreed with this pro-

o s b o b n e

position, the latter adding (1), a quotation from the judgment of

Shaw C.J. in Warren v. Mayor of Charlestown (2), in which the m o n w ea lth .

view is taken that the whole Act fails where the connection

Barton J.

with each other and the mutual dependence of the valid and the invalid provisions, as conditions, considerations, or compensations for each other, are such that the elimination of the bad would leave the good a different law in effect. Agreeing in substance with the test put by the Chief Justice, which differs from that put in some of the leading American cases on the subject, I came to the following conclusion as to the Act then in question (3) :—“ If the sections challenged be left out of consideration, there remains a law which is not radically different....................That law,

. . . . is armed with machinery adapted to its purpose, and not maimed as to that purpose by the severance. In that sense it is a workable measure, consistent in its parts and adapted to the end it has in view, without the necessity of expanding or restricting its sense with regard to its proper- subject matter.” Holding that view as to the Act without the provisions objected to, I came to the conclusion that it was a valid exercise of power. That pa.ssage, I think, states in suf ficiently strict terms the test to which such legislation as we are now considering should answer, and I think it does answer such a test even if all the provisions challenged are left out of con sideration. I do not decide that any one of them is invalid, but in my judgment there is not one of them which cannot be left out of consideration without so maiming the measure as to leave it a substantially different law, and not one “ dealing effectively, even if not comprehensivelj^ with so much of the subject matter as is within the legislative power.”

Section 26 appears to refer to such holders as the conditional purchaser in New South Wales and the lessee with an accrued and present right of purchase in Victoria, in either case with all his conditions fulfilled except payment of the balance of his

(1) 11 C .L .R ., 1, a t p. 55.

(2) 2 Gray, 84, a t p. 99.

(.̂ ) 11 C .L .R , 1, at p. 39.

348 HIGH COURT

[1911.

H. C. OF A. purchase money. Either of them may l)ave his grant on payment

of his balance, and meanwhile he has a right to hold even against OsB^NE Crown; subject to payment, if a time is prescribed therefor, and where no time is prescribed, subject to the payment of

T h e Com - ̂ . .

-n ,

■

MONWEALTH. intoi'est.

He is in as good a position as a mortgagor, it not in a

better position, and may lawfully sell and transfer. I t is his interest, and not any interest of the Crown as representing the State, that the section is framed to reach with the land tax. Such lands are in substance no longer owned by the Crown.

Barton J.

The whole tenour of secs. 27 and 28 shows that the tax is payable only on the interest of the taxpayer, who cannot as contended be the State. Indeed sec. 29 removes any doubt on this

head, if any serious doubt could have subsisted without it. But

there are two exceptions to sec. 29. One of them prevents any possible inconsistency with sec. 26, by excluding from the exemp tion a lease from the Crown with a right of purchase; the other excludes from that exemption a perpetual lease from the Crown without revaluation, which is a t least as secure a title and practically, though not technically, as large an estate as any estate dealt with by sec. 26.

In respect of this group of sections the contention that they interfere with the exclusive right of the State to regulate the disposal of Crown land, or tha t they amount to a tax on property of the State (The Constitution, sec. 114) seems to me to fail entirely.

But it was argued tha t the Crown lands of the State are affected unconstitutionally ■ by sec. 56, which makes the tax a first charge on the land taxed. Before this section however could be held to be invalid even in part, it must be clear that it applies to Crown lands. I t is not only not clear, but there is reason to think that by virtue of sec. 13 (a) it cannot so apply.

Under this head of objection the plaintiff impeaches Part VI, i.e., sec. 48, which empowers the Commonwealth to acquire land in certain cases of undervaluation, and also secs. 69 to 71, authorizing forfeiture for fraudulent undervaluation and for wilful or fraudulent evasion or attempted evasion of assessment or taxation. There is room for argument on both sides as to these sections, and since, like other doubtful ones, they may

12 C.L.R.] OF AUSTRALIA.

349

hereafter come before us in some proceeding necessarily involving C- or A.

their validity, I do not think it meet to pronounce an opinion on

them in a case like the present, in which their severability Osb o e n e

renders it unnecessary to do so.

T h e^Com

I turn now to the objection founded on sec. 55

of the m o h w e a l t h .

Constitution.

Barton J,

The provisions which are challenged, not as dealing with subjects of taxation other than land, but as dealing with some thing which is not the imposition of taxation, must be considered in relation to the first part or branch of sec. 55. If tlie Assess ment Act is a law imposing taxation, that part prohibits it from dealing with matters other than the imposition of taxation. But the consequence of the failure of the law so to confine itself is not its invalidity. The offending provisions are to be of no effect. The Act apart from them survives and is in force. As this suit is brought to obtain a declaration of the total invalidity of the legislation, it is obvious that these sections cannot form any foundation for such a declaration. Their alleged invalidity may however be put forward in future proceedings as ground of complaint or defence. This, therefore, is not the time to pronounce on that subject.

The provisions which as I thought sustained the bi’unt of the plaintiffs attack were those which were said to violate the second part of sec. 55, which enacts tha t “ laws imposing taxation, except laws imposing duties of Customs or of Excise, shall deal with one subject of taxation only,” &c. The consequence of such a violation, if only in one instance, was declared by the plaintiff and denied by the defendants to be the total invalidity of the legislation. The Assessment Act, it was contended, was a law imposing taxation. I t is not every Statute dealing with the imposition of taxation that is a taxing law. In terms the Assessment Act does not purport to be such a law. I t certainly is “ An Act relating to,” that is, it “ deals with,” “ the Imposition, Assessment, and Collection of a Land Tax.” That does not make it a law imposing taxation. The tax for which it provides macliinery is expressly defined to be “the land tax imposed as such by any Act, as asse.ssed under” the Assessment Act, No. 22 (see sec. 3). Until otlier provision is made by Parliament the reference is to

VOL. XII.

[1911.

350 HIGH COURT

H. C. OF A. the tax imposed by the Act No. 21. I t is the tax already so

imposed, therefore, which the Assessment Act (sec. 10) says shall OsBOBNE be “ levied and paid ” upon the unimproved value of lands not exempted, and tha t tax is to be “ at such rates as are declared by MONWEALTH. the Parliament ”—i.e., by No. 21 or by any subsequent enactment

taking its place, and not by this Assessment Act. The provisions for assessment and collection are therefore proper to an Act not imposing taxation. Still, provisions may have been inserted in the Assessment Act which “ deal with ” a subject or subjects of taxation other than land, and the incorporation of that measure by the Tax Act would in that event cause the last named law to deal with more than one subject of taxation. That might bring the Tax Act into conflict with the second branch of see. 55. I shall say something presently on the construction of that part of it. But if the Assessment Act does not include any provision dealing with any subject of taxation other than land, the objection fails, whichever of the interpretations placed on the constitutional provision be the correct one. Let us see then how this matter stand.s.

Barton J.

The provisions most relevant in tliis connection are, in order, secs. 36, 39, 40 and 41. As to all of these I am of opinion that they deal only with the same subject matter as that on which the Act No. 21 imposes a tax. They may be effective or ineffective, valid or invalid. But if the subject matter of the whole legislation is one and the same, there is no violation of sec. 55. I t is said that sec. 39 imposes a tax on shareholders in companies in respect of their shares; and this must be so, it is urged, because their shares are not in law interests in real pro perty. I do not think tlie section attempts to tax shares. It is an endeavour, whether it succeeds or not, to treat the share holders as joint owners in respect of the taxable lands vested in the company. Their holding in shares is merely made the mea sure of the proportions in which they are assessable. Clearly the subject matter is land taxation, whether the section is valid or not. Sec. 41 proceeds on the principle of assessing the Australian policy holders in mutual life assurance societies as holders of beneficial interests in the taxable lands vested in the society. It treats them as equitable owmers in severalty of the lands so

12 C.L.R.] OF AUSTRALIA.

351

vested.

The measure in which they are to be assessed as sucli is H. C. or A.

proportioned to the surrender values of their policies.

I t cannot,

I think, be said that this is taxation of life policies, any more

o s b o b n e

tlian that sec. 39 is taxation of shares in companies.

Though the

lands are legally vested in the company or the society, i t is

only m o n w ea lth .

the shareholders in the one case and the policyholders in the

B av to n J .

other who benefit b}'’ their use and management. The profits yielded by the land are, it may be a t short intervals, it may be at long last, divisible among them. The principle of these and other sections appears to be to ensure the assessment of those who are in substance the owners of land or of an interest tlierein, or who derive pecuniarj^ benefit from the use of land—whether they be freeholders or leaseholders, conditional purchasers, lessees with right of purchase, perpetual lessees without re-valuation, mort gagors, shareholders in companies that own land, or policy holders in life assurance societies that own it. The principle may be faulty, or may in some instances fail in its application. Still the provisions deal only with land as the subject matter of tax ation.

Secs. 36 and 40 are condemned on grounds rather similar to those urged against 39 and 41, as attempts to treat people as owners of land in which they have no interest whatever, and this seems to me to be true of secs. 36 and 40 to a material extent. And in these cases there is not the justification of ownership in sub stance to the extent of tlie liability. Yet that is an objection which, while it may be argued to affect the validity of the pro visions, does not go to the subject matter. That is still land, and only land.

I am of opinion therefore tha t the Acts are not, nor is either of them, invalid as dealing with more subjects of taxation than one. I will conclude wdth some observations on the able arguments addressed to us upon the meaning of the second branch of sec. 55 of the Constitution. I t was strongly urged that this provision was obligatory, so that any intrusion of a provision dealing with a second subject matter of taxation into a taxing law would render the Act into which it entered invalid.

It is very plain that secs. 53, 54, 55 and 56 show a sharp distinction between “proposed laws” and “laws.” So do all the

[1911.

352 HIGH COURT

H; C. OF A. I'emaining sections of Part V. No lawyer, still less one who ha.s

1911.any acquaintance with the practice of Parliaments, can doubt

OSBOKNEthat in legislation a “proposed law ” is what is known as a Bill,

and a “law” is what is knowm as an Act or Statute.

The one is

T h e Com

m o n w e a l t h .a projet de loi, not necessarily passed even by one House of Barton J*Parliament, the other an actual law made effective by passage

through both Houses, and by the Royal assent. Up to the moment of that assent there is only a proposed law or Bill. This was not contested at the Bar. But it was contended by the plaintiff” that while secs. 53 and 54 relate, as is clear, only to the order of business between the two Homses in dealing with the progress of Bills, and are therefore, and from the necessity of the thing, merely directory, sec. 55 depends on quite different con siderations. I t is then the completed Act that is put to the test, and while the first part of the section uses clear terms to show that a violation of it can only be attended by the annulment of the offending provisions, no such qualilication is imparted to the second part. But for the concluding wmrds of the first branch, it was pointed out, th a t provision, evidently addressed to the. Court, since there was no other authority which after the Royal assent could interpret or enforce it, must have been regarded as obligatoiy, and it was still more evident from the qualification of the first part, tha t the second, which stood unqualified, was obligatory on the Court. On the other hand, the defendants strenuously contended tha t as secs. 53 and 54 were admittedly only directory, the change in designation from “ proposed law ” to “ l aw” in sec. 55 was not enough to give any part of that section a more stringent character, especially as its first braneli was expressly made only directory ; and that there was no reason why the character of the provision should be held to have changed as it passed into its second branch.

As at present advised I am impressed with the view of this question put forth for the plaintiff. But an opinion expressed on it would be merely obiter, and in no sense decisive, since even on the plaintiff s construction of the second part of sec. 5.5 the Acts do not in my view violate the Con.stitution.

I may say, however, tha t it would take strong argument to convince me that the second part is not obligatory, since that

12 C.L.R.] OF AUSTRALIA.

353

construction would remove all effective check on that which the LH- C- ov A.

section is on its face designed to prevent, namely, the tacking

together of tax Bills of different kinds and unlimited number in

o s b o b n e

one measure.

This would be to annihilate the intended powers

of the Senate, who, favouring some and dissenting from the

rest, m o n w ea lt h .

would find themselves forced either to pass the entire agglomera-

Barton j .

tion, perhaps including mucli tliat they considered an outrage on tlie interests of the States they represented; or to reject all, and thus perhaps cripple the finances of the Commonwealth. This consideration is the graver when it is remembered that the sections dealing with the powers of tlie two Houses inter se, viz. 53 and 54, contain no provi,sions whatever against the “ tacking ” of tax Bills, and only one against the tacking of extraneous matter to an appropriation Bill, and tliat, the ordinary annual one. We cannot fail to remember that the Constitution designed the Senate to be a House of greater power than any ordinary second chamber. Not only by its express powers, but by the equality of its repre.sentation of the States, the Senate was intended to be able to protect the States from aggression. And from no source could aggression be more dangerous than from measures of finance when unjustly bound together.

It seems probable, though I repeat that I do not offer a decisive opinion on the matter, tha t the omission of such pro visions as to mere Bills and their inclusion with reference to Acts, was to render obligatory that which, in relation to the position of the States under the Constitution, was regarded as vital.

I t may be added, as a further reason why the second paragraph of sec. 55 should be held to be obligatory, tha t where the tax Bill deals with more subjects than one, there is ordinarily no means, as there is in respect of Bills within the first paragraph, of casting out that which offends against the Constitution, as there is no means of knowing which subject of taxation repre sents more than the other or others the will of Parliament.

As this last reason will not exist in the case of the incidental or casual intrusion of some unimportant provision which might be held in strictness to introduce a second subject matter, there may be, as the Chief Justice has suggested, good reason why

[1911.

354 HIGH COURT

H.C. OF A. the Court should where possible place a benignant interpretation

1911.on such a provision, where two constructions are open, “ that the

O s b o r n e

matter may rather avail than perish.”

V.Again I say, however, tha t I do not attem pt to decide

T h e

C o m -

MONWEALTH. coiiclusively a question that has not become essential to the

Barton J.determination of this case.

In the result I am of opinion tha t judgment ought to pass for the defendants.

O ’C o n n o r J . read the following judgm ent:—The taxation legislation, which is the subject of this special case, is contained in two Statutes which, for the purpose of administration, must be read together. The Act first assented to, wliich I shall describe as the Tax Act, is restricted to declaring the imposition of the tax and fixing the rate. The other Act, assented to on the day after, I shall refer to as the Assessment Act. Without its provisions no tax could be collected under the Tax Act, but of itself it imposes no tax. Although by sec. 10 it enacts that, subject to the provisions of the Act, land tax shall be levied and paid, that section must be read with the interpretation of the word “ land tax ” in sec. 3. So read, it is plain that the imposition of the tax is effected by the first Act, and that sec. 10 and the other provisions of the second Act are directed merely to assessing the amount to be paid, and making it payable according to the assessment. The plaintiffs first objection is founded on sec. 55 of the Constitution which, quoting onlj’ the part material in this case, is as follows:—“ Laws imposing taxation, except laws imposing duties of Customs or of Excise, shall deal with one subject of taxation only.”

The Tox Act which, as I have pointed out, deals only with the imposition of taxation, plainly deals with only one subject of taxation—land. The Assessment Act is not in itself a law imposing taxation, and could not, if read alone, come within the words I have quoted. To make the objection at all arguable, it is necessary to embody the provisions of the Tax Act in the Assessment Act, and to read them as one enactment. The plaintifl so reading the Tax Act into the Assessment Act contends that the latter is a law imposing land tax, and that it deals with

355

12 C.L.R.]

OF AUSTRALIA.

other subjects of taxation as well as land, There are two

C. or A.

1911.

answers to the objection.First, that the

Assessment Act is not a

,___|

law imposing taxation within the meaning of sec. 55. Secondly,

OSBOKNE

that if it is, there is no section of it dealing with any subject of

taxation other than land.

m o n w ea lth .

In inquiring whether a law imposes taxation within the mean ing of sec. 55, each Act must be judged separately. No doubt, in making such an inquiry we must read each Act in accord ance with its legal operation, that is, in connection with existing laws. But it does not follow that every section of an existing Act (so read with the Act under inquiry) is to be regarded as part of it for the purposes of sec. 55. The distinction drawur in that section between “ imposing taxation ” and “ dealing with one subject of taxation ” must be always kept in view. The object of sec. 55 of the Constitution is to secure that each enactment imposing taxation shall be framed in a certain form. The frame of the enactment is important only for reasons of parliamentary procedure. The section is in the middle of a group of sections dealing wdth the legislative powers of the Senate and House of Representatives, and with the Governor’s assent to proposed laws, their reservation and disallowance. Every section of the group relating to parliamentary procedure is directed to preserving the privileges of the House of Repre sentatives with respect to appropriating moneys and imposing taxation, and to safeguarding the Senate from abuse of those privileges by the House of Representatives. To that end it provides that proposed laws which the Senate are forbidden to amend shall be framed in the manner prescribed. This Court can have no cognizance of proposed laws, nor can it in any way interfere in questions of parliamentary procedure. Its jurisdic tion arises only when the proposed law becomes a law. In enacting sec. 55, the framers of the Constitution have given the Court jurisdiction to examine the frame of a law, obviously with the object of giving a sanction to the directions of the Constitution for the framing of legislation dealing with taxa tion and the appropriation of money in accordance with the provisions of sec. 53 and the sections immediately following. From no other point of view can the form in which an Act is

O Connor }.

[1911.

356 HIGH COURT

Hi C. OF A. framed be of any moment. Sec. 55 may therefore be applied to each piece of legislation as it becomes law, just as either OsBo^E House would apply the provisions of secs. 53 and 54 of the Constitution to proposed laws as they came before them. Iinme-

T h b Com-

•

MONWEALTH. diatoly a proposed law becomes a law, it is subject to examin-

ation in the light of sec. 55. If i t is framed in accordance with tha t section, it is valid, and cannot afterwards be made to con travene it by the operation of subsequent legislation. Judged separately on these principles neither the Tax Act nor the Assessment Act is open to the objections taken. Tlie former, which is a law imposing taxation, clearly deals with one subject of taxation only—that is land—the latter, though dealing with taxation, does not, as I have pointed out, impose taxation, and is therefore not within the section. Considering both Acts to gether, to ascertain the intention of the legislature, it is quite clear that Parliament intended to impose taxation by the Tax Act and not by the Assessment Act, and that it framed the latter expressly in the form which did not impose taxation so that it might be open to amendment by the Senate. Assume, however, tha t the Acts may be read together, as the plaintiff contends, and that the Assessment Act is a law imposing taxation, the objection must still fail on another ground, namely, tha t in none of its provisions does the Act deal with any other subject of taxation than land. I propose to refer only to the sections on which Mr. Mitchell principally relied. I t was contended that, in fixing the special rate on absentees, a new subject of taxation was intro duced. I t is however quite clear that, when the provisions of the Act referring to assessing the lands of absentees are examined, land is the only subject of the tax. The fact of absence from Australia places a taxpayer in a separate class from taxpayers resident in Australia. In respect of the former class the taxable amount begins earlier and the rate is heavier, but the subject of taxation is still the taxpayer’s land. As to sec. 30, it is plain

O’Connor J.

that one subject of taxation only is dealt with. The policy of

the Act is to place liability directly on the owner. The section is directed to preventing that liability from being transferred to the lessee. The same answer may be made to a similar objection

raised to sec. 32. I was at first disposed to tliink tha t there was

366 HIGH COURT

[1911.

H. C. OF A. surrounds it with certain legal attributes and conditions, but it

does not destroy it. Lord Macnaghten’s words onh^ state very O s b o b n e tersely what other learned Judges have said on the subject. The important nature of the objection—one going to the power of

l h e OOM * • T . .

MONWEALTH. Parliament—und the strenuous reliance placed upon it, induce

me to refer to two of those judicial utterances. In Smith v. Anderson (1) James L.J. in 1880 said : “ A company or association (which I take to be synonjnnous terms) is the result of an arrange ment by which parties intend to form a partnership which is constantly changing, a partnersliip to-day consisting of certain members and to-morrow consisting of some only of those raenibers along with others who have come in, so tha t there will be a constant shifting of the partnership, a determination of the old and a creation of a new partnership, and with the intention that so far as the parties can by agreement between themselves bring about such a result, the new partner,ship shall succeed to the assets and liabilities of the old partnership. This object as regards liabilities could not in point of law be attained by any arrangement between the persons themselves, unless the persons contracting with them authorised the change by a novation, or unless by special provisions in Acts of Parliament sanction was given to such arrangements.”

Isaacs J.

And in R andt Gold M in ing Co. v. Neiu Balkis Eersteling Ltd- (2) Lord Halshury L.C. said:—“I think tha t the confusion which has arisen in some of the cases i.s due to not sufficiently observing what is meant by what we call ‘ the share ’ and the ‘ sale of the share,’ and by not recognizing that the share makes the holder of it a member of a trading partnership, and, as such, subject to all those liabilities of the partnership which the legislature has imposed upon it by what I ixiay call the statutory deed of partnership.”

ih e essence of the matter is the partnership, or in other words the co-partnership of property and enterprise by the persons forming the partnership.

The shareholders then—subject to liabilities and to securities for creditors provided by Statute—are the real and only masters of the property under the general law of the land, and the

(1) 15 Ch. 1)., 247, at p. 273.

(2) (1903) 1 K.B., « 1 , at p. 465.

367

12 C.L.R.]

OF AUSTRALIA.

Commonwealth legislature may properly lay hold of this essen-

O. or A.

tial concept, and disregarding circumstances that though not

fictitious are certainly factitious, make it the foundation or the Osb o e n e

guarantee of the tax imposed by it upon the property itself.

The^̂Com-

No legal reason therefore exists which renders either impos- m o n w ea lt h .

sible or improbable the primary import of the words of sec. 39.

Isaacs J.

The same reasoning applies to sec. 41. There may be difficul ties of construction so far as concerns the application and effect of its provisions in a given case, but none whatever as to the point now under consideration. The contention as to total unconstitutionality consequently fails.

Then partial invalidity was insisted on. Various sections were pointed to as exceeding the power of Parliament for various reasons.

Apart from merely getting rid of these sections for their own •sake, it was urged that their excision was fatal to the whole legislation. The Crown contends for their validity, but says that in any case they are separable, and when separated leave the residue substantially the same enactment. If “ substantially,” used in that connection, means identical in effect, I agree with it; but if it means “ approximately,” I am not able to adopt the expression. Parliament cannot make a valid law contrary to the Constitution, but nothing is a law unless made by Parliament. To be a law, it must be precisely, not approximately, what Parliament has declared, and whether the departure from that declaration be great or small, to that extent it is not law at a l l ; and unless the excess is itself separable, so as to leave the remainder ju.st what Parliament has directed and not a fraction more, the whole mu,st fall, because unauthorized by the organic law. If the unavoidable consequence of eliminating an invalid portion of an Act were to increase a number of taxpayers, or the burden on any of them, beyond the intention of Parliament as apparent on the face of the Act as framed, in whatever propor tion the additional taxpayers stood to those intended, and even if the additional tax wmre as small as that against which Hamp den fought, it is not the identical law passed by Parliament, and none other is authorized by the Constitution. A man not taxed by Parliam ent, at all, or as much, cannot be taxed or further

368 HIGH COURT

[1911,

H. C. or A. taxed by the Court, by eliminating a provision which, though

unauthorized, was intended to prevent or limit his liability. O s b o r n e Tliere cannot be any cy pres doctrine, as I undei'stand the matter.

And the test must, as it appears to me, come to tha t which I have

A £CS V '03M" MONWEALTH. stated in the Bootmakers’ Case (1) and the “ K alihia ” Case (2).

The latest American recognition of tha t view is in In ter national Text-hook Co. v. Pigg (3). There H arlan J., speaking for the majority said :—“ The several parts of the section are not capable of separation if effect be given to the legislative intent. I t is well settled tha t if a Statute is in part unconstitutional the whole Statute must be deemed invalid, if the parts not held to be invalid are so connected with the general scope of the Statute tha t they cannot be separately enforced, or, if so enforced, will not effectuate the manifest intent of the legislature.”

Isaacs J.

If the Court were, for instance, constrained to reject sec. 41,1 should require further time to consider whether a burden was not placed on the society and some of its shareholders different from and more serious than tha t intended by the legislature.

I deal now with the particular sections complained of. Sec. 26 was challenged as affecting Crown land, and therefore contrary to sec. 114 of the Constitution. But the expression “ land” is elastic, adapting itself to the context by virtue of the Acts Interpretation Act, sec. 22, defining “ land ” and “ estate,” and it includes the equitable interest of a purchaser.

Sec. 26 contemplates the asses,sment of persons who have ful filled every condition properly so called, and who therefore stand in the situation of absolute purchasers, payment and conveyance being concuri’ent and reciprocal rights and obligations. Speaking of the words “ conditional purchaser ” under the Acts of New South Wales, the Privy Council recently said (Chippendail v. W illiam Laidley A Go. Ltd. (4 ) ) ;—“ The payment of the stamp and the deed fee and the application for the conveyance cannot be treated as conditions, inasmuch as these are things which a purchaser is obliged to do under the most absolute form of contract of purchase.” And so is payment in exchange for conveyance.

(I) 11 C.L.R., 1, at p. 54. (3) 217 U.S., 91, at p. 113.

(•2) 11 C.L.R., 689.

(4) (1909) A.C., 199, at p. 209.

12 C.L.R.] OF AUSTRALIA.

369

Once the purchase becomes absolute, the doctrine of Shaw v. H- C. or A.

Foster (1) applies to establish the purchaser’s interest. There

Lord Cairns said ; “ I apprehend there cannot be the slightest o s b o r n e

doubt of the relation subsisting in the eye of a Court of Equity

between the vendor and the purchaser.

The vendor was a trustee m o n w ba lth .

of the property for the purchaser; the purchaser was the real

Isaacs j .

beneficial owner in the eye of a Court of Equity of the property,” and subject of course to the vendor’s right to protect his own interest. Reading sec. 26 in this way, and confirming this inter pretation by reference to sec. 13 expressly e.'jempting all land owned by a State, there appears to be no objection to the enact ment.

Secs. 27 and 28 affect Crown lands only to the extent of the interest of a perpetual lessee without re-valuation, which is substantially a fee simple for the purposes of enjoyment, and the interest of a lessee with a right of purchase, which means an absolute right of purchase bringing the case within the reason of sec. 26.

Secs. 30 and 63 were said to offend as an invasion of the State power to control general contracts. But if the Common wealth Parliament has the right to say that the lessor shall bear the burden of the tax, it has the right to insist on its will being obeyed, and its insistence may take the form of prohibiting any contractual device for shifting the burden to the lessee, who, it determined, should go free. Lord Chancellor Selborne, in Small v.S??̂ ^̂ .̂ (2), laid down the rule in these term s:—“When you have got a main purpose expressed, and ample authority given to effectuate that main purpose, things which are incidental to it, and which may reasonably and properly be done and against which no express prohibition is found, may and ought, prim d facie, to follow from the authority for effectuating the main purpose by proper and general means.”

Story in his work on the Constitution says (par. 1248):—“ To employ the means, necessary to an end, is generally understood, as employing any means calculated to produce the end, and not as being confined to those single means without which the end would be entirely unattainable.”

(1) L'.R, 5 H.L., 321, at p. 338.

(2) 10 App. Cas,, 119, at p. 129.

370 HIGH COURT

[1911.

H. C. OF A. Then in par. 1252 lie says :—“ I t is no valid objection to this

doctrine ” (that is the doctrine of liberal latitude in the selection

Osb o b n e means) “ to say, that it is calculated to extend the powers of the Government throughout the entire sphere of State legislation. MomvE.4LTH. The same thing may be said, and has been said, in regard to eveiy exercise of power by implication and construction. There is always some chance of error, or abuse of every power; but this furnishes us ground of objection against the power; and certainly no reason for an adherence to the most rigid construc tion of its terms, which would a t once arrest the whole move ments of the Government.” In par. 1253 he adverts to the meaning of the word “ proper ” apparently in the sense in which Lord Selborne used it. Judged then by this standard, sec. 30 is obviously in tra vires. Sec. 63 expressly limits the avoidance to the purposes necessary to protect the legi.slation, and is equally clear of objection.

Sec. 36 is said to be invalid as taxing a person in respect of land in which he has no interest. But it is not a tax primarily considered. I t is a penalty for doing what is intended to evade the Act, because, if the parties can .satisfy the Commissioner there was no such intention, the section has no application. Sec. 37 holds in certain circumstances both legal and equitable owners of land which has been sold, but only partially paid for, re.sponsible for the tax, but providing for equitable adjustment. Sec. 39 is attacked on the further ground that the Commonwealth Parlia ment is bound by a territorial restriction and cannot tax non resident shareholders in foreign companies which own land in Australia.

The answer given to the earlier con.stitutional objection to the same section applies with equal force to this. And so with respect to .sec. 41.

The intermediate sec. 40 is a precautionary measure, to prevent, among other things, a company owning land launching one or more offshoots with slightly different shareholders, transferring portions of its land to nominally different but practically identical owners, and so evading the progressive nature of the tax. I t is not to be overlooked that Parliament has provided for the indemnity of those not really concerned in the others’ land.

371

12 C.L.R.]

OF AUSTRALIA.

Sec. 48 is anothei section devised to secure as far as possible an H- C- or A.

honest and careful valuation by the owner in his return.

If the

discrepancy between the true value and the returned value is as o s b o r n e

much as one-fourth the former, the owner may have the burden

of satisfying a Justice of tlie honesty of his purpose.

The method m o n w ea lt h .

and means he employed and tlie care he bestowed in framing his

Isaacs J.

return are peculiarly within liis knowledge, and ought to be easy to establish. If he fails to support an honest purpose he has to forfeit his property, but gets a value he cannot complain of. He is taken at his word with respect to unimproved value, but gets full value of improvements, witli 10 per cent, added, for compul sory taking. The Commonwealth acquires the land, not as a primary or mam power, but as ancillary to the taxation power and by way of forfeiture only, and it either hands it over to the State without profit, retains for required public purposes, or dis poses of it. Those are the only possible uses. To allow the use of the word “ acquisition ” to dominate the manifest and declared purpose of the section would be to bow to mere verbal tyranny.

Sec. 71, an ordinary forfeiture clause for fraud, stands in the same position. As to secs. 48 and 71, the case of Taylor v. United States (1) may with advantage be perused. Both sections are valid.

Discrimination was mentioned but not pressed. The objection is obviously untenable, and is met by Colonial Sugar Refining Co. V. Attorney-General fo r Victoria (2).

In the result the plaintiff’s case entirely fails.

H ig g in s J. read the following judgm ent:—I concur in the opinion that this action should be dismissed. The course of a great part of the argument for the plaintiff must seem to any outsider rather grotesque. Learned counsel have taken the two Acts and have examined every nook and cranny with micro scopic care, in order to find, if possible, some provision which has transgressed the Constitution in any particular, even the most insignificant, and then they have applied great industry and ingenuity to demonstrate that if such and such a provision be treated as invalid, the remainder of the Acts would be “ substan-

(I) 3 How., 197.

(2) (1901) A.C., 544.

372 HIGH COURT

[1911.

H. C. OF A. tially different ” from \A'hat Parliament intended, and must be

1911- invalid also. I t is not pretended tha t tlie impugned provisions OsBORUE affect the plaintiff; but if the plaintiff can show that the whole of the legislation is bad because of some provision which does not

T h e Com - n i i- • i. a t

MONWEALTH, coucem him, he w ill be free from obligation to pay the tax. into

such barren intellectual gymnastics we are forced in this case, and

probably in cases to come.

In this case, however, I am glad to find that, whatever our individual opinions may be as to the proper principles of sever ability, all the members of the Court agree in the view that either no invalidity has been shown, or that, if there is any invalidity, the invalid provision can be severed from the rest of the Acts which remain valid. Substantially, I agree with the results at which my learned brothers have arrived on this subject; and it is unnecessary for me to refer to the several provisions in detail.

But there is one argument to whicli I should like to refer in particular to avoid any misapprehension. I t is urged that the Assessment Act—Act No. 22—is, either alone or in conjunction with the Act No. 21, a “ law imposing taxation ” ; that it deals with more than one subject of taxation ; and that it is therefore altogether void by virtue of sec. 55 of the Constitution (second clause). The plaintiff has to establish the three propositions in order to succeed. Personally, I am inclined to agree with the plaintiff as to the firs t; for Act No. 21 does not impose taxation Avithout the aid of Act No. 22. Act No. 21 prescribes Avhat rates of taxation shall be payable; but it does not prescribe who is to pay. Even assuming it to be possible to have a tax Avithout a taxpayer—a person under a direct obligation to pay—it is clear tha t in this case there was to be a taxpayer, and the taxpayer is fixed by Act No. 22. This essential part of the impo.sition of the tax was left for the Act No. 22. But, as to the second proposi tion, I concur with what has been said, tha t there is not from first to last, in either of the Acts, anything dealing with any subject of taxation except that subject of taxation which is indicated in the title of one Act as “ a Progressive Land Tax upon Unimproved Values,” and in the other as “ a Land Tax upon Unimproved Values.” The prohibition contained in the second

12 C.L.R.] OF AUSTRALIA.

373

clause of sec. 55 applies only to a law containing two or more H. C. op A.

subjects of taxation.

There may be as many objects of taxation

—persons to be taxed—as Parliament pleases. Here, the only

o s b o b n e

subject of taxation throughout is land, or rather land values.

The tax is based on the value of the land.

There is no tax apart m o n w e a m h .

from the value of the lan d ; although the classes of persons

Higgins J.

selected as liable to pay the tax, primarily or secondarily, seem, in some instances, to be rather artificial and arbitrary’. I t is unnecessary for me to discuss the provisions of the Acts further after what has been said by my colleagues. But, in my opinion, sec. 55, in both its clauses, allows Parliament much more freedom of action than the plaintiff is disposed to concede. The provision is not that laws imposing taxation shall only impose taxation, but that they shall deal only icith the imposition of taxation. The provision is not that laws imposing taxation shall only tax one subject of taxation, but that they shall deed ivith one subject of taxation only. The words seem to allow the insertion of any provision which is fairly relevant or incidental to the imposition of a tax on one subject of taxation.

As for the third propo.%ition, I am not at all prepared to accept the assumption of the plaintiff'that if an Act imposing taxation deals with more than one subject of taxation it is void. There are no words in the Constitution expres.sly making the Act void; and I cannot find that it is void by necessary implication. True, it is reasonable to infer from the change of language in sec. 55— law,” instead of “ proposed law,” or Bill—that there is to be a change of resu lt; but what is the change ? Why are we to infer that invalidity of the whole Act is the necessary result ? Under see. 51 Parliament has power, “ subject to this Constitution,” to make laws; but the provisions for making “ proposed laws ” are quite as much part of the Constitution as the provisions for “ laws ” ; and yet it is admitted that an infraction of the pro visions for “ proposed laws ” does not make the Act invalid. Nor can it be maintained that the secs. 53, 54, 56, &c., dealing with “ proposed laws,” deal only with directions to the Houses or directions as to the mode of handling Bills; for sec. 54 prescribes that “ proposed laws ” appropriating moneys for the ordinary annual services “ shall deal only with such appropriation. Why is

374 HIGH COURT

[1911.

H, C. OF A. an Appropriation Act not invalid reason of its substance if a

taxation Act is invalid by reason of its .substance ? Ordinarily, if

Osb o r n e ^he first part of a section prescribe a prohibition and a penalty, and the second part prescribe a prohibition only, we should say MONWEALTii. that tlio sccoud provision carries no penalty ; and why does that

principle not apply here ? The penalty of partial-invalidity con tained in the first clause of sec. 55 is in the form of an addition to the prohibition, not in the form of a reduction of penalty. The fact that there is no remedy specified for non-compliance with sec. 55 (2) does not show that the clause is imperative {Maxwell on Statutes, 4th ed., p. 567); nor the fact that the words are negative in substance (Craies on Statute Law, p. 233); and no doubt the word “ only ” implies a negative. Perhaps it was thought that, if the Senate were coerced by circumstance.s into accepting two taxes in one Bill, the power of the King could be invoked under sec. 69, and the Bill would cease to have a position from the date of disallowance. At the worst, however, the prohibition can be treated as merely directory. The theory that the whole Act was to be invalidated rests reallj^ on mere conjecture. Where are the words making the law (and a “ law ”

Higgins J .

means a valid law) invalid ? However, the point is, fortunately,

not necessary for our deci.sion.

I t was also urged by the plaintiff that the Acts, in their true nature and character, are not taxation Acts at all—that they were not passed for the pui’pose of rai.sing revenue, but in order to control matters which are essentially within the reserved powers of the States—the holding of land, the holding by absen tees, the holding of land of great value, &c. For this purpose reference was made to matters of internal evidence in the Acts themselves, which show an intention to dictate an economic policy as to lands—a policy which it is for the State to dictate. I admit that, if I were able to accept the view of the majority of the Court in Barger s Case (1), I should find much more difficulty in answering this ai’gument. But as I am sitting now in Full Court, I need only say tha t as these Acts create an obligation to pay taxes they are taxation Acts, whatever conditions they impose, whatever State subject they affect.

(1) 6 C .L .R , 41.

375

12 C.L.R.]

OF AUSTRALIA.

I can find no discrimination between States or parts of States. H- C. of A.

I concur in the opinion tha t this action should be dismissed,

and with costs.

Osb o r n e

T h e

C o m -

Juclgvient fo r the defendants, w ith costs.

m o n w ea lt h .

Hig-gins J-

Solicitors, for the plaintiflF, Norton Smith & Co.

Solicitor, for the defendants, C. Powers, Crown Solicitor for the

Commonwealth.

DiscdB. L.

W at\D^uty

Comirumoner

of Taxation

» C L R « 7

[HIGH COURT OF AUSTRALIA.]

CHAPLIN . .

A ppellant;

D efendant,

COMMISSIONER OF TAXES FOR SOUTH I ^. ^ ,

R e s p o n d e n t ,

A U S T R A L I A .................................... J

P l a in t if f ,

ON APPEAL FROM THE LOCAL COURT OF ADELAIDE.

Legidative powers of Slates—Taxation of salary of OommomsealtJi officer—Grant H. C. O F A.

hy Commonwealth Parliament to Stale of authority to tax—Commonwealth

I9 II.

Salaries Act 1907 (iVo. 7 of 190~), sec. 2.

'—.—'

̂ ̂ A d e l a id e ,

The Commonwealth Parliament may make its grants of salaries to Common-

May 18

wealth ofiBoera subject to taxation by the States.

____

, Griffith C.J.,

The Commonvmallh Salaries Act 1907 is an effective grant to the States of

Barton and

, . . . „ . . . .

O’Connor JJ.

authority to impose upon Commonwealth officers taxation in respect of their

salaries, subject to the conditions stated in tliat Act.

A ppeal by way of special case.

Osborne v The Commonwealth

31 May 1911

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