Philip Morris Limited & Ors v Commissioner of Business Franchises & Anor; Coastace Pty Limited & Anor v State of New South Wales & Ors; Harper v Minister for Sea Fisheries
[1989] HCATrans 45
..
' 'I
• ',/~~
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M87 of 1987 B e t w e e n -
PHILIP MORRIS LIMITED, STATEWIDE
TOBACCO SERVICES LIMITED and
G.P.M. CIGARETTE DISTRIBUTORS
(AUSTRALIA) LIMITED
Plaintiffs
and
COMMISSIONER OF BUSINESS FRANCHISES
and THE STATE OF VICTORIA
Defendants
Case stated
Registry No C8 of 1987 B e t w e e n -
COASTACE PTY LIMITED
First Plaintiff
ROGER WILLIAM PETERS
Second Plaintiff
and
Philip Morris STATE OF NEW SOUTH WALES
First Defendant
ANTHONY DANIEL CLYNE , CHIEF CXM1ISSIONER
FOR BUSINESS FRANCHISES LICENCES
(TOBACCO) OF NEW SOUTH WALES
Second Defendant
WAYNE DUESBURY
Third Defendant
IAN P SMITH
Fourth Defendant
Case stated
ClT2/l/SDL 1 7/3/89 Office of the Registry
Melbourne No Ml0 of 1988 B e t w e e n -
GEOFFREY ALAN HARPER
Plaintiff
and
MINISTER FOR SEA FISHERIES,
DIRECTOR OF SEA FISHERIES AND
THE STATE OF TASMANIA
Defendants
Demurrer
MASON CJ
BRENNAN J
DEANE J
DAWSON J
TOOHEY J
GAUDRON J
McHUGH J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 7 MARCH 1989, AT 10.28 AM
Copyright in the High Court of Australia
MR S.P. CHARLES, QC: In Philip Morris Limited and Others, I appear with MR N.J. YOUNG, on behalf of each of
the three plaintiffs. (instructed by Arthur Robinson
& Hedderwicks)
In the third matter, again I appear with
MR N.J. YOUNG, on behalf of the plaintiff, Harper.
(instructed by Freehill Hollingdale & Page)
ClT2/2/SDL 2 7/3/89 Philip Morris MR H.C. BERKELEY, QC, Solicitor-General for Victoria: If
the Court pleases, in the first matter I appear
with my learned friend, MRS S.M. CRENNAN, for
the defendants. (instructed by P.M. Fogarty,
Solicitor to Comptroller of Stamps and of BusinessFranchises and G. Lewis, Victorian Governmmt Solicitor)
In the second matter, I appear with my learned
friend, MRS S.M. CRENNAN, to intervene for the
Attorney-General for the State of Victoria.
(instructed by G. Lewis, Victorian Government
Solicitor). And also in the third matter. May I say, Your Honours, in the first matter,
if the plaintiffs seek to reargue DENNIS HOTELS,
we would oppose the granting of leave for that
purpose.
MASON CJ: Yes. MR D.F. JACKSON, QC: May it please the Court, I appear with my learned friend, MR P.J. McEWEN, for the
plaintiffs in the second matter. (instructed
by Glasheen & Quilty)
So far as the procedure to be followed by
the Court is concerned, may I say something, perhaps,
Your Honours, at the conclusion of the appearances?
MASON CJ: Yes. MR K. MASON, QC, Solicitor-General for New South Wales:
If the Court pleases, in the second matter I appear with my learned friends, MR R. SACKVILLE and
MR B.W. WALKER, for the defendants. (instructed
by the Crown Solicitor for New South Wales)
In the other two matters, I appear with the
same persons for the Attorney-General for New
South Wales intervening. (instructed by the Crown
Solicitor for New South Wales)
We take the same attitude as my learned friend,
the Solicitor-General for Victoria, about the
reopening of DENNIS HOTELS.
MASON CJ: Yes, Mr Solicitor. MR W.C.R. BALE, QC, Solicitor-General for Tasmania: May
it please the Court, in the third matter, that
is Harper, I appear with my learned friend,
MR M.A. STODDART, for the defendants. (instructed
by the Acting Crown Solicitor for Tasmania)
C1T2/3/SDL 3 7/3/89 Philip Morris I also appear with MR M.A. STODDART, intervening
in the first two matters, on behalf of the Attorney-
General of Tasmania. (instructed by the Acting
Crown Solicitor for Tasmania).
We are intervening in support of the interests
of the defendants in each of those cases and,
should it become relevant to do so, I would also
seek to make submissions to Your Honours opposing any application for leave to reopen DICKENSON
or DENNIS HOTELS.
MASON CJ: Yes, Mr Solicitor. MR G. GRIFFITH,QC, Solicitor-General for the Commonwealth:
If the Court pleases, I apne~~ with my learned
friends, MR D.J. ROSE and: ROBERTSON, in the Philip Morris matter; - 1ppear with my learned friends, MR A. ROBERTSON and .~RS. GAEGLER, in
the Coastace matter; and I appear with my learned friends, MR A. ROBERTSON and MR T. CONNOLLY in
the Harper matter, on behalf of the Attorney-General for the Commonwealth. (instructed by the Australian
Government Solicitor)
We intervene, if the Court pleases, to support the status quo to the extent of not reopening
DENNIS HOTELS. If DENNIS HOTELS is to be reopened
our position is that reconsideration should be
confined to the correctness of the DENNIS HOTELS
exception.
MASON CJ: Yes, Mr Solicitor. MR K.H. PARKER, QC, Solicitor-General for Western Australia:
If it please Your Honours, I appear with my learned
friend, MSC. WHEELER, in each of the matters
on behalf of the Attorney-General for the Stateof Western Australia to intervene. (instructed
by the Crown Solicitor for Western Australia) We would take the position of my learned
friend, the Solicitor for Victoria, with respect
to DENNIS HOTELS. If leave is granted for that
to be reargued, we would be submitting that it
is necessary to consider the fundamental question
of the meaning of a duty of excise. We would be arguing for a narrower view than has prevailed
in recent times and generally, in each of the
matters, we would be seeking to support the validity
of the impugned legislation.
MASON CJ: Thank you, Mr Solicitor.
ClT2/4/SDL 4 7/3/89
Philip Morris (Continued on page 4A) MR J.J. DOYLE, QC, Solicitor-General for South Australia:
If the Court pleases, I appear with my friend,
MR B. SELWAY, for the Attorney-General for the
State of South Australia in all three matters.
(instructed by the Crown Solicitor for South Australia)
Your Honours, our respectful submission is that this is an appropriate case for the Court
to give leave for argument to be presented; that
certain previous decisions of the Court are wrong
and that reasoning contained in a number of judgments
is unsound. So we would seek leave, in due course, to put that submission. However, it is also our submission that it would be inappropriate for
the Court in any event to confine its attention
to the correctness of DENNIS HOTELS. In our respectful submission, the Court should either
reconsider the matter as a whole or not at all
and we would also, at some convenient stage, seek
leave to put that submission. If the Court pleases.
MASON CJ: Thank you, Mr Sol-icitor. MR G.L. DAVIES, QC: May it please the Court, I appear with my learned friend, MR J. DOUGLAS, to intervene
for the Attorney-General for the State of Queensland
in all three matters, in support of the defendants
in each case. (instructed by the Crown Solicitor
for Queensland)
We would oppose leave being granted to reopen
DENNIS HOTELS.
MASON CJ: Thank you, Mr Davies. Mr Jackson?
(Continued on page 5)
C1T2/5/SDL 4A 7/3/89 Philip Morris
MR JACKSON: Your Honours, may I say just this, in so far as the case with which we are concerned is
concerned, the question whether the DENNIS HOTELScase and the other cases in that line should be
reopened may or may not be dealt with by the
Court as a separate point. To the extent to which the Court proposes to deal with that
point in the case advanced by my learned frien4Mr Charle~ before coming to our case,
if that is the course which the Court proposes to
adopt,we would seek leave to be heard on that
question in those cases.
MASON CJ: Yes. It does seem to the Court that that is a matter that we should confront at this stage.
After all, there is EVDA NOMINEES
and it is a matter of determining what
attitude the Court should take, particularly
in the light of the fact that a number of counselappearing have indicated that they propose to argue that the matter should not be reopened.
MR JACKSON: Yes. Your Honour, I have indicated my application, but perhaps I could deal with our
submissions on the substantive point in that
regard after my learned friend.
MASON CJ: It might be convenient to deal with it at this stage, Mr Jackson.
MR JACKSON: Certainly, Your Honour. Your Honours,
may I hand to the Court copies of our - - -
MASON CJ:
Mr Jackson, if it would be more convenient, in the light of what you said, for Mr Charles
to precede you on this issue, by all means. MR JACKSON: Your Honour, that is what I had proposed. MASON CJ: Yes.
MR JACKSON: I am neutral on the point, but that might seem a more convenient course as far as we are
concerned.
MASON CJ: Yes, well, if that has been arranged between
counsel and that is your preference, by all means
Mr Charles can precede you.
MR JACKSON: Yes, very well, Your Honour. MR CHARLES: If the Court pleases, I understand from
what has been just said that the Court would wish to
hear argument first on the question of whether
DENNIS HOTELS should be reopened. Your Honours,
may I hand up copies of our summary of argument.
I have nine copies here, which may be an unnecessary ex_travagance.
CIT3/l/JM 5 7/3/89 Philip Morris
MR CHARLES: I hope that all members of the Court will have copies of the Victorian leglislation with which the
first matter deals, the Philip Morris matter.
Your Honours, the BUSINESS FRANCHISE (TOBACCO) ACT
of 1974 - - -
MASON CJ: We have that, Mr Charles. MR CHARLES: Your Honours, I should say at the outset that so far as the PHILIP MORRIS case is concerned, at
least so far as two of the plaintiffs - I should
say this, the legislation is for practical purposes
identical with the legislation dealt with by
this Court in DICKENSON'S ARCADE. My learned friend, the Solicitor for Victoria, has some matters
to put to the Court, Your Honours.
MR BER.."t(ELEY: It is only. this, Your Honour: what I have got my instructor to do is to paste up a copy of the Act as at December 1987 when
the r«it was issued. It has been arrended several tir:rx::s. It oight be convenient for the Court to have the Act as at that date. -
MASON CJ: Yes , thank· 'you. MR CHARLES: I was putting to Your Honours that the legislation was dealt with by this Court in DICKENSON'S ARCADE.
In EVDA NOMINEES the Court will recall that some
five years ago the Court refused to hear argument
in relation to the reopening of DENNIS HOTELS. We would submit, Your Honours, that there are six reasons why the Court should now be prepared to reconsider the question whether DENNIS HOTELS is good law. In the first place, Your Honours, this Court has
very recently in COLE V WHITFIELD reviewed the whole
of the law concerning section 92. Your Honours, the
reference to COLE V WHITFIELD, 72 ALJR 303 and 78 ALR 42.
We would submit that in the light of the fact that
the Court did embark on that wholesale review of
the law relating to section 92, this is an entirely
appropriate time to resolve disputed questions as to
the interpretation of section 90.(Continued on page 7)
ClT4/l/BR 7/3/89 Philip Morris MASON CJ: w1iat, merely because we did it in relation to
section 92?
MR CHARLES: Not necessarily, Your Honour. We would say that the fact that the Court embarked on that
approach resulted in a difference of approach
to sec t i on 9 2 . That m i g ht , in i ts e 1 f , have repercussions in relation to the approach the
Court would take to our related section, we
would say.
MASON CJ: That is the important point, is it not, if
it does have such repercussions?
MR CHARLES: Yes, I accept that, Your Honour. The second matter, Your Honours, is that in PHILIP MORRIS,
the first of the plaintiffs is a producer.
In DENNIS HOTELS the tax was levied upon and
paid by someone other than a producer. Wes bmit,
accordingly, there is significant distinction,
in fact. That that is regarded as a significant distinction, in fact, we would submit is to
be found in the judgments of the decision GOSFORD
MEATS V NEW SOUTH WALES, 155 CLR 368, and in
relation to the judgments in that case,
Your Honours, we would submit that it is plain
from the judgments of three members of the majority
that the fact that the plaintiff there was a
producer was a matter of very considerable
consequence.
We would submit that those members of the
Court were disinclined to permit the reasoning in DENNIS HOTELS to apply to a producer rather
than to someone who entered the relevant chain
relating to the commodity after production,
as such, had ceased. The next matter, in relation to GOSFORD MEATS, Your Honour, and, really,
this is the fourth point - - -
DEANE J: Was not PHILIP MORRIS a party in DICKENSON? MR CHARLES: I apologize, Your Honour. If that is so, 'the point has escaped me.
DEANE J: I am going on vague recollection. MR CHARLES: It was, in any event, Your Honour, in relation
to the tax as falling on the retailer and, for
that purpose, therefore, the position of PHILIPMORRIS as a producer may not have been relevant to the argument in those proceedings.
ClT5/l/ND. 7 7/3/89 Philip Morris
MASON CJ: Well, Dickenson's Arcade was the sole plaintiff in the case and the defendants were the State of
Tasmania and the Treasurer of the State.
MR CHARLES: Yes. Your Honours, I will return to these
matters in slightly more length if I may do so. of the Court who formed the minority in GOSFORD
The next matter, Your Honours, in relation toMEATS each took the view, in our submission,
that DENNIS HOTELS, on its proper interpreation,
applied and governed the decision in that case.
Their Honours, we would say, stated quite
categorically that it would require the overturning
of DENNIS HOTELS to arrive at the decision that
members of the majority reached in GOSFORD MEATS.
If that be so, then those members of the Court
are f4ce4 with the fact that on their view DENNIS
HOTELS has been overruled. We would say next, Your Honours, that the decision is wrong in itself,
that the corect approach in DENNIS HOTELS would
properly have been that arrived at by
Sir Owen Dixon at pages 539 to 540 of the report.
We would put it next, Your Honours, that the result
of the differing interpretation that has been
arrived at in these various ways producesinconvenience and uncertainty both for State
legislatures and businesses that are required to
comply with State legislation. We say next to Your Honours that the fact - - -
MASON CJ: Can you develop that point a little more? It is not patently obvious to me that the decision
produces inconvenience and uncertainty to governmentsand to business people.
MR CHARLES: I was proposing to develop all of these points to some slight degree further, Your Honour, shortly,
in any event, if I may save my argument for that
point. Just to indicate to the Court an outline we would say that particularly in the light of the
- fact that there has recently been the addition of three new members to the Court comparatively recently,
there is now a question -
MASON CJ:
They are productive of inconvenience, are they, or uncertainty?
MR CHARLES: I am sorry, Your Honour, I was moving to the next point, which is simply this, that the fact that there
are now three new members of the Court, new in the
sense that their views on questions relating to
section 90 are not, if I may say so, known. The result is that the question arises whether the decision in
DENNIS HOTELS now commands the acceptance of a
maiority of members of this Court.
ClT6/l/HS 8 7/3/89 Philip Morris
MASON CJ: This is to adopt a very peculiar view about decisions of this Court, that in a sense they are "up
for grabs" when the composition of the Court
changes.
MR CHARLES: Your Honour, that is emphatically not my point,
if I may say so. The Court has said from time to time that the fact that a decision no longer corrrrnands
the acceptance of the Court is a ground upon which
that earlier decision should be reviewed. Now, I simply say, Your Honour, because the views of some
members of the Court are not known, I cannot now
advance to the Court an argument as to whether or not the decision cormnands the acceptance of a majority of
the Court. If the fact were ~ 1t a majority of this
Court no longer now acceptec - ~ decision in
DENNIS HOTELS as good law, tL· would, in our submission, be a matter upon which the Gour~ might fasten in
deciding to review the case.
MASON CJ: It does not sound one of your stronger points. MR CHARLES: I accept that, Your Honour. That is right, but it is sixth rather than first.
MASON CJ: Or even seventh. MR CHARLES: Your Honours, I should mention the matter of JOHN V COMMISSIONER FOR TAXATION, which was
decided by judgment of this Court handed down on
8 February 1989. At pages 21-23 of the print in
that case the Court referred to a number of matters
which would be appropriate to look at in deciding
whether or not to review a past decision of the Court.
At page 21, point 9, the Court said that the first of the
four matters which justified departure was that:
the earlier decisions did not rest upon a
principle carefully worked out in a
significant succession of cases.
It would certainly be our submission that DENNIS HOTELS is not entitled to be described as a "principle
carefully worked out". The second, Your Honour: was a difference between the reasons of the
Justices constituting the majority in one
of the earlier decisions.
We would say that there was a relevant difference in
Thirdly, that: the reasons of the majority in DENNIS HOTELS. the earlier decisions had achieved no useful
result but on the contrary had led toconsiderable inconvenience.
ClT7/l/JH 9 7/3/89 Philip Morr:is We would certainly argue,for reasons I will develop
shortly, that that is so, Your Honours. And the fourth is that: the earlier decisions had not been
independently acted on in a manner which
militated against reconsideration.
I must accept, Your Honours, without question, that
the States have certainly acted upon the basis of
the correctness of DENNIS HOTELS. The case stated
in the PHILIP MORRIS case shows the extent and theincreasing extent to which the States have relied
upon that decision. We would say that the States
have, in effect, attempted to force an estoppel
on this Court - legislation by estoppel - and we
would say that in so far as they are at tempting to rely
on estoppel their grounds are somewhat uncertain.
We would submit that the States have been very well
aware, at least since the judgment in GOSFORD MEATS
was handed down, that their foundation was an
insecure one, at least in so far as the position of
a producer was concerned.
Your Honours, may I turn now to the question of the decision in DENNIS HOTELS itself?
BRENNAN J: Are you now coming to your fourth point? MR CHARLES: Your Honour, I am moving, if I may say so, away from the summary of argument in the light of the
course that the Court has invited us to take. I do not propose to deal with the facts referred to as to either the Victorian legislation or the Tasmanian
legislation, which the Court will see on pages three
and four. I would wish to direct certain short submissions to the Court in relation to DENNIS HOTELS
itself in an attempt to make good the proposition
that the judgments differ within themselves as to the
basis upon which the case was to be applied. Then I would wish to take the Court shortly through the cases
that have followed it in an attempt to show the Court
how the status of DENNIS HOTELS has shifted over the years.
(Continued on page 11)
ClT7/2/JH 10 7/3/89 Philip Morris
MR CHARLES (continuing): Your Honours, if I may ask the Court to look at the decision in GOSFORD MEATS V
NEW SOUTH WALES; I think I have given members of the
Court a reference to that: 155 CLR 368. Your Honours will see in the judgment of the Chief Justice
Sir Harry Gibbs, at pages 378 to 379, that His Honour
said, near the top of page 378 that:
The question in -
that -
case therefore is whether the licence fee is
a tax on the µ-oduction of the meat and meat
products produced by the abattoir or whether,
to use the words of Mr Justice Kitto in
DENNIS HOTELS ..... it "has no closer connexion
with production or distribution than that it is
exacted for the privilege of engaging in the
process at all".
Then His Honour said, at page 379 point 6:
In my opinion it cannot be held, consistently
with the authority of DENNIS HOTELS,
DICKENSON'S ARCADE, H.C. SLEIGH and
EVDA NOMINEES, that the impost in the present
case is an excise. There is no logical
ground on which it is possible to distinguish
a case where the licence fee is calculated
according to sales and purchases in a past
period from that in which the fee is calculated
according to production or manufacture in a
past period.
Referring to the decision in HEMATITE, Sir Harry said
in the last two lines on page 379:
If a licence fee quantified by reference to past
sales or purchases of goods is not a tax upon
the sale or purchase, there seems to be no reason
for saying that a licence fee quantified byreference to past production is a tax upon
production. Exactly the same reasoning applies in both cases.
Then, Your Honours, to the same effect, we would say,
is the judgment in dissent of Mr Justice Wilson
at page 399. His Honour said at point 9 of that page:
It seems to me, therefore, that the actual
decision in DENNIS HOTELS requires the
conclusion in the present case that the
licence fee imposed upon the plaintiff ..... .is not a duty of excise. It is not suggested
that there is any ground of distinction
between the legislation here and that which
ClT8/l/VH 11 7/3/89 Philip Morris
was considered in DENNIS HOTELS.
and Mr Justice Dawson at page 420 said at point 2
that:
The fee is calculated by reference to animals
slaughtered in a period which precedes the
period of the licence and, even assuming that
the slaughter can be identified as a step inthe production of the ultimate products, to
my mind the result is necessarily dictated
by the principle which lies behind the
decision in DENNIS HOTELS, accepted as it was
by this Court in DICKENSON'S ARCADE,
H.C. SLEIGH and EVDA NOMINESS. I am unable to accept that those decisions involved no
principle and that their application is to be
confined to those cases in which an exact
parallel can be drawn between the factual
situation and legislation with which the
previous cases dealt.
(Continued on page 13)
ClT8/2/VH 12 .. 7/3/89 Philip Morris
MR CHARLES (continuing): Your Honours, may I mention, before turning to the three members of the
present Bench who were parties to the case,
Mr Justice Murphy, at page 389 referred to
His Honour's view previously stated that:
There is no magic about the financial or
calendar year but the reasoning of DENNIS
has forced on the States a narrow and
inefficient means of collecting revenue.
"Why not" by reference "to the previous month
or the previus week?" His Honour had twice
previously referred to DENNIS HOTELS as a "blot
on our constitutional jurisprudence".
So far as the other three members of the
majority were concerned, Your Honour the Chief Justice
and Justice Deane dealt with this matter at pages
384 to 385 pointing to the fact that - this is at
page 384, point 7:
the defendants have placed particular reliance
on what they submit to be a general proposition
to be derived from the majority judgments in
DENNIS HOTELS PTY LTD V VICTORIA namely, that a tax is excluded from characterization as a
duty of excise if it takes the form of a
retailer's licence fee calculated by
reference to goods sold during a period prior to the period in respect of which the licence
fee is payable. The submission that DENNIS
HOTELS V VICTORIA is decisive of thepresent
case fails however at every s:ep. First, the
judgment of Fullagar J in Dr:.;:ns HOTELS makes
clear that the decision in DEJNIS HOTELS would
almost certainly have gone the other way if
the plaintiff had been a manufacturer or
producer rather than a retailer. Upon analysis, it is reasonably clear that a majority of the
justices either denied the proposition
altogether or considered that it could not be
applied generally to a manufacturer or producer.
Secondly, it has been made clear enough in
subsequent cases that the reasoning underlying
the decision in DENNIS HOTELS cannot be accepted
as being of general application. Thirdly,in the recent case of HEMATITE PETROLEUM
PTY. LTD. V. VICTORIA, three of the majority
justices adopted, as the basis of their respective
judgments, reasoning which is quite inconsistent
with the extension of the DENNIS HOTELS' formula
into the heartland of duties of excise, namely
the manufacture and production of goods. Finally, a general proposition that a tax cannot be a
duty of excise if it takes the form of a licence fee
that is quantified by reference to goods produced,
manufactured or sold during some period prior to
CIT9/1/JM 13 Philip Morris the actual period of the licence is simply
inconsistent with the well established and
fundamental principle to which reference has
already been made, namely, that the question
whether a tax is a duty of excise must be
determined by reference to substance rather than
form. Although DENNIS HOTELS has been allowedto stand as an authoritative decision on its
own facts, it would fly in the face of both
principle and authority to accept it asestablishing a general proposition that can be
applied to a tax made payable, in the form of
a licence fee, by a manufacturer or producer of
goods.
Your Honours, I should not leave GOSFORD MEATS
without referring to the judgment of Justice Brennan
where, at pages 409 and 410, Your Honour came to
conclusions which, we would say, are not identical
with those just referred to but which do not
differ substantially from those just referred to
and certainly place importance on the position of
a producer. In particular, Your Honour, at page 410
point 9, said that:
Although the authority of DENNIS HOTELS
and DICKENSON'S ARCADE is to be maintained in
respect of legislation imposing fees for licences
to sell goods calculated by reference to purchases
or sales in preceding periods, those cases do not require the conclusion that a tax payable
by a producer of goods and calculated by
reference to steps in the production of goods
taken in a preceding period is not a duty ofexcise.
Your Honours, if I may go back briefly now to
DENNIS HOTELS, assuring the Court as I do so, that
I do not propose to read substantially from the
judgments in that case.
(Continued on page 15)
CIT9/2/JM 14 Philip Morris MR CHARLES (continuing): The case is reported, Your Honours,
104 CLR 529~ I have put to the Court that our submission would be that the correct position was stated by Sir Owen Dixon at pages 539 to 540 but,
of course, did not find favour with the majority
in that case. We would put it, Your Honours, that the reason why it can be said that there was a
difference in the reasoning of the Judges in that
case follows firstly, from the fact that one member
of the majority, Justice Fullagar, in the passage to
which I have just referred from Your Honour the
Chief Justice and Justice Deane in GOSFORD MEATS, made plain that his decision, not inevitably but
might very well have been different had the person
paying the tax been a producer.
We would say secondly, Your Honours, that
those who supported the principle in DENNIS HOTELS,
as it has now been stated i~ later cases, might be
said to be particularly, Sir Frank Kitto and
Sir Douglas Menzies. It would be our submission that when one goes to the judgment of Mr Justice Taylor
in DENNIS HOTELS and in particular, Your Honours,
at pages 575 to 578 one is able to extract from
Sir Alan's reasons for judgment, a very significant factor in the conclusion to which His Honour came, namely, that this was liquor licensing legislation,
a matter in which the sale of liquor was prohibited
except on particular terms and for a long time
historically had been so. That in that context
the licensing legislation might well be seen as
giving a particular value to the business and thatin that context therefore the scheme for finding
a value of the business by reference to past sales
was an entirely understandable one.
In particular, Your Honours, we point to the
passage at page 576 point 6 where Sir Alan said:
Examination of the character and incidence of the legislation leads me to conclude that the
fee payable for a victualler's licence is not
a duty of excise. Though a system of licensing may frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties, this is not the part played by the system of licensing erected by the LICENSING ACT for the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words
the requirement that liquor shall not be sold
or disposed of without a licence appears as a
substantive provision and not merely as an
adjunct to a revenue statute.
ClTl0/1/BR· 15 7/3/89 Philip Morris And similar passages, in our submission, are to be
found on pages 577 and 578 and in particular,
Your Honours, at page 578 point 4 where His Honour
said:
there is, I think, ample in the considerations
to which I have already adverted to displace
any prima facie impression which the formula
for the calculation of the fees payable by
licensed victuallers may tend to produce.
There can be little doubt that the annual
purchases made by a licensed victualler are,
in practice, a reliable and well-established
guide to the annual value of his licensed
premises and to me there is no significant
difference between a fee which is calculated
by reference to that value and one which is
calculated directly by reference to past
purchases.
We would say, Your Honours, consequently that the
fact that the fee was assessed in relation to past
purchases was a matter which bore comparatively
little consequence with Justice Taylor in arriving
at His Honour's ultimate conclusions; that
His Honour was far more concerned with the unique
position of liquor licensing legislation and the
value that premises gain in consequence of a licence
under that legislation.
(Continued on page 17)
ClTl0/2/BR 16 7/3/89 Philip Morris
MR CHARLES (continuing): We would, if necessary, ccntrast
the position that obtains in relation to the
tobacco legislation where one has, among other
thing, a monthly licence and where we would
submit that, on no view, could one conceivably
say that premises gained a particular value
or that an attempt was being made to seek a
value for premises by reference to earlier periods
of tobacco sales.
In our submission, the legislation with
which the Court is here concerned is quite plainly
a piece of legislative machinery for the imposition
and collection of a sales tax. Your Honours, it is upon that basis that we say that the Court,
at least in the majority, in DENNIS HOTELS,
arrived at its conclusion by differing and to
some extent inconsistent reasons.
Your Honours, may I add a reference to what
Sir Wilfred Fullagar put at page 556 and
Sir Wilfred said, at point 4:
On the view which I take of the proper
answer to the second of the questions I
have propounded, it is not necessary, for
the purposes of this case, to answer the
third. I will only say that I am not satisfied that it is an essential element of a duty
of excise that it should be measured by
quantity or value of goods. The fact that a tax is so measured tends, of course, to
support the view that it is a tax "upon
goods", but in MATTHEWS V CHICORY MARKETING
BOARD a levy was held to be a duty of excise
although it was not measured by quantity
or value of goods. It was imposed on a
producer as such and might well be regarded
(if a tax at all) as a tax on production,but it was measured by acreage planted and
not quantity or value of commodity produced.
If a State were to impose a tax of $100 per month on all distillers of spirits, I should feel difficulty in saying that the tax was not a duty of excise. Your Honours, the history of what followed
is that DICKENSON'S ARCADE was next decided
relevantly, the judgment being given on 1 April
1974. We, if I may say so, would adopt, with
respect, the passage from the argument of
Your Honour Justice Deane at page 179 because
we would say that in arguendo it makes the points
we have been seeking to make in relation to
the differing reasons arrived at by the majority
in DENNIS HOTELS, accepting, Your Honours, of
course, that our views may change when counsel
ClTll/1/ND 1 7 7/3/89 Philip Morris reach the bench and, turning to the judgments.
We would refer to what His Honour the Chief Justice
said at page 188 and Sir Garfield Barwick there
said that:
considerable reliance was placed by the
defendant on the Court's decision in DENNIS
HOTELS -
that there was, at point 4:
There was, however, no reason for that decision
common to the members of the Court who fcrmed
the majority in favour of the conclusion.
And then, at point 7, Your Honours:
There being no reason for decision common
to the majority of the Justices, the Court's
decision in DENNIS HOTELS PTY LTD V VICTORIA,
in my opinion, is authority only in relation
to the statutory and factual situation it
resolved and in relation to a case which
has, if not precisely, at least substantially
and indistinguishably the same statutory
and factual situation.
Sir Douglas Menzie~ Your Honours, at pag$ 211
to 212, took the view that:
(Continuing on page 19)
ClTll/2/ND· 18 7/3/89 Philip Morris MR CHARLES (continuing):
tbere is no conflict between the two
parts of the decision ..... and this case
is governed by the first. The fees here are entirely different from the fees
for temporary licences which were
invalidated.
Then at page 212 point 5:
In any event I would not reopen either
part of the decision in DENNIS HOTELS.
It is an important decision upon the
faith of which States have ordered their
affairs for some thirteen years.
Sir Harry Gibbs, Your Honours, at page 226, after stating the question, said at point 3, that:
D6NNIS HOTELS is authority for the
proposition that legislation which
provides for the grant of a licence
to sell goods, on payment of a licence
fee, the quantum of which is based on
the value of the goods purchased for thepremises in a previous year, does not
impose a tax directly related to the goods.
The majority of the Court held that under
such legislation no purchase in the earlier
year and no sale during the currency of
the licence attracts a liability to tax.
Then at point 5:
The case is authority for what was
decided, namely, that a licence fee
quantified by reference to the amount
paid or payable for goods purchased
during a period preceding that in respect
of which the licence was granted was not a duty of excise.
Sir Ninian Stephen dealt with the matter at
pages 235 to 236 and I do not desire to take
Your Honours to those parts of the judgment, other
than simply to draw them to the Court's attention,
and Your Honour the Chief Justice dealt with the
matter at page 240 as being that:
DENNIS HOTELS is not authority for the
universal proposition that, in order
to constitute an excise, a licence fee
must be calculated by reference to the
quantity of goods sold under the licence,
thereby enabling the duty to be passed on
to a purchaser and that it is not enough
ClT12/l/HS 19 7/3/89 Philip Morris that the licence fee is calculated
by reference to the quantity of goods
sold by the licensee or on the premises
before the licence commenced to operate.
The decision related to fees prescribed
for a licence to sell liquor by retail;
it has no necessary application to fees
prescribed for a licence to manufacture
or process goods to which in my opinion
different considerations apply.
Your Honour said in the next paragraph that:
The decision has been accepted as
authoritative in later cases. The narrowness of the majority and the manner
in which it was composed are not enough towarrant a reconsideration of the decision.
Your Honours, following DICKENSON'S ARCADE, the
Victorian legislation with which this Court is
now concerned was introduced later thAt year.
It came into operation on 26 November 1974.
Earlier in that year the decision in KAILIS
had been decided by this court, M.G. KAILIS (1962)
V WESTERN AUSTRALIA, 130 CLR 245.
MASON CJ: When you say earlier that year, the two cases were decided on the same day, that is DICKENSON'S
and KAILIS.
MR CHARLES: My recollection, Your Honour, is that the
jadgment in DICKENSON was given on 1 April; the judgment in KAILIS on 10 May. I may be wrong, Your Honour.
MASON CJ: Yes, you are wrong. It is a little confusing when you look at the marginal note, but the date
of hearing was May 10~ 1973. Judgment was delivered on 1 Anril 1974, the same day as
judgment delivered in DICKENSON.
(Continued on page 21)
ClT12/2/HS 20 ·7/3/89 Philip Morris
MR CHARLES: I see. Well, Your Honour, I was misled by the side-note, indeed.
MASON CJ: Yes, it is because"l974"appears immediately - or "May 10" appears immediately before "1974."
MR CHARLES: Yes. It makes no difference for the purposes of argument, Your Honour.
MASON CJ: No. CHARLES: So far as KAILIS is concerned, may I give the Court short references to what the Court had to say about
DENNIS HOTELS •. _ Sir Edward McTiernan made no
reference to DENNIS HOTELS in his judgment at all.
Sir Douglas Menzies dealt with the matter at
page 254, saying that K.AILIS's case was:
distinguishable from DENNIS HOTELS.
At page 259, Sir Harry Gibbs said that:
On the authority of DENNIS HOTELS -
at the bottom of the page -
the fee was not a tax on the goods acquired
for processing or on the processing itself
and was not an excise.
Sir Ninian Stephen dealt with the matter at page~ 262
and 263 and concluded, in the last words of His Honour's -
judgment:
Apart from the basis for assessment of licence fees there is no other feature of the present
legislation which can arguably be said to give
those fees the character of a duty of excise -
and -
on the authority of DENNIS HOTELS they are not such a duty.
Your Honour the Chief Justice dealt with the matter
at slightly more length at pages 265 to 266 and,
after pointing to the way in which the licence feeswere assessed, near the top of page 265, Your Honour
said:
The distinction between the two methods
of assessing the licence fee, despite the
decision in DENNIS HOTELS does not seem tome to be of importance. That decision, as
I have said in DICKENSON'S ARCADE PTY LTD
should not be regarded as authoritative in
relation to the prescription of fees for
Cl Tl3 / 1 /VH · 21 7/3/89 Philip Morris
licences to manufacture or produce goods.
To hold that DENNIS HOTELS is decisive of the
present case would, I think, give the
constitutional prohibition contained in
section 90 a formal operation, having little
substantial importance. It would enable the
States to impose a tax on the manufacture or production of any goods by the simple expedient of a compulsory licensing scheme
under which production and manufacture are
taxed by prescribing licence fees to be assessed,
not by reference to the quantity of goods
produced under the licence, but by reference to
the raw materials used in the process ofproduction in a period ending before the licence
commenced to operate.
Such a result would be quite inconsistent
with the view that the object of section 90
was to repose in the Commonwealth Parliament
"a real control of the taxation of commodities
and to ensure that the execution of whatever
policy it adopted should not be hampered or
defeated by State action", as Justice Dixon
expressed in PARTON V MILK BOARD or, as
Mr Justice McTiernan expressed it in the same case, to secure" uniform fiscal policy for
the Commonwealthn. It would concede to the
Commonwealth an exclusive power to grant
bounties on the production of goods, yet enable
the States to hamper that production by taxing
it indirectly.
When attention is given to the fee prescribed by the FISHERIES ACT for a processor's licence, it
seems to me that it has the characteristics of
an excise. First, it is a tax; it is not not
merely a fee charged for a service provided.
Secondly, it is a tax levied at the point of production - processing is prohibited without the benefit of a licence. ,It is a.tax upon the
goods in that it is calculated by reference to
process. It is a tax which in the normal course the quantity of materials used in the production of events will be added to the price of the goods and ultimately paid by the consumer or retail buyer. It is therefore a tax which directly affects the price of goods and has an impact upon the consumption, and the consequent demand for the production, of goods on which the
tax is imposed.
ClT3/2/VH 22 7/3/89 Philip Morris
MR CHARLES (continuing): Then, Your Honours, in H.C. SLEIGH PTY LTD, decided in February 1977, the
question there whether fees paid for licensing
of persons engaged in the business of selling
petroleum products and may I respectfully invite the
Court's attention to page 488 where Sir Garfield Barwick said that:
The Court has now decided to maintain the
decision of DENNIS HOTELS PTY LTD V VICTORIA,
for what, upon its facts and relevant
legislation, it decides -
And, Sir Garfield said -
This course does not commit the Court to
accept the reasoning in that case. The result, as I think, tends to put a premium
on drafting ingenuity and is a disregard
of substance. Further, the practical
distinction between a licence fee rated on
the sale of a former period and such a fee
rated on the sales of the licensed period,
vis-a-vis the effect of the imposition of the
fee upon the movement of goods into
consumption, is difficult to see, particularly
in the case of a continuing business
operating over a period of years.
But, Sir Garfield was:
unable to find any substantially distinguishing
feature.
Then, Your Honours, Sir Harry Gibbs dealt with the
matter at pages 492-493 maintaining the view that
DENNIS HOTELS covered this case also and at the
top of page 494:
No valid reason has been advanced for reopening
a question decided recently and by a substantial
majority. ·
Sir Ninian Stephen, at page 496 point 5, could: find no valid ground for distinction in relation to DICKENSON's case or DENNIS HOTELS.
Your Honour the Chief Justice at page 501 again said that
DENNIS HOTELS should be maintained and in particular:
Since DENNIS HOTELS it has been accepted that
liquor licensing fees calculated by reference
to past sales are not an excise and the States
have continued to rely on liquor licensing
fees as an important source of revenue.
Likewise, since DICKENSON's ARCADE States have
relied on tobacco licensing fees, similarly
ClT14/l/JH 23 7/3/89 Philip Morris calculated, as an additional source of
government revenue. It would, I think, lead
to great uncertainty in government and
commerce if the Court were now to hold that
DENNIS HOTELS or DICKENSON's ARCADE was
wrongly decided. Such a course would disturb legislative and financial arrangements made
on the faith of the existing decisions of
this Court.
A departure from these decisions can be
justified only in the event that the Court is
convinced that they are wrong.
We would respectfully submit that the Court should, by
now, be so convinced. I have referred Your Honours to
what Justice Murphy has said about these decisions.
Justice Murphy's passage relevantly appears at page 527
and Justice Jacobs at page 526, the second line on
that page, said:
The attempted effectuation of the idea that
by setting up a licensing system in respect
of dealing in any cotm:I1odity at all, the States
can overcome the s.90 embargo on imposition
of excise duties is of comparatively recent
origin. It must be curbed now before the Court
is faced either with the virtual supersession
of s.90 or a need at some later time to cry
halt.
(Continued on page 25)
C1T14/2/Jij 7/3/89 Philip Morris 24 MR CHARLES (continuing): Then, at the previous page, Your Honours, at page 525 point 8, Justice Jacobs
said:
What has happened is that decisions that
a licence fee is not necessarily a duty of
excise where the amount of the fee is
calculated on the basis of dealings in a
commodity for a preceding period has been
taken by the legislature to be a decision
that a licence fee cannot be a duty of excise
provided that the fee is so calculated.
This has been treated as a so-called "logical"
consequence and the State has chosen to pass
legislation accordingly.
Then, Your Honours, in the PIPELINE case, HEMATITE
PETROLEUM PTY LTD V VICTORIA, where the Court
found that the $10m licence fee was a duty of
excise, there is no passage in the judgment of
Sir Harry Gibbs to which I desire to refer the
Court. Justice Murphy, again, said that "these
decisions were a blot" at page 639. Your Honour the Chief Justice dealt with the matter at
pages 630 to 631 where Your Honour said:
Applied literally, as the decision in
DENNIS HOTELS PTY LTD V VICTORIA convincingly demonstrates, the criterion of liability
leads to the result that a licence fee charged
on a step in production or distribution,calculated by reference to the quantity or
value of goods produced or sold in the period
for which the licence is held, is an excise,
but not if the fee is calculaed by reference
to the quantity or value of goods produced
or sold in the previous licencing period.
The distinction between the two licence fees just mentioned is a mere matter of form.
It leaves the State free to levy licence
production, manufacture sale or distribution fees and other duties in respect of the of goods in any form except that which is caught by the BOLTON V MADSEN strict criterion of liability. What, one might ask, was the high
constitutional purpose intended to be served
by prohibiting the States from imposing a
tax in this very limited form? To prohibit the States from imposing a tax having an
arithmetical relationship with goods produced
or sold during a licence period, while leaving
the States free to impose any other form
of tax in respect of goods produced or sold,
achieves nothing. If this be the effectof s.90 it certainly adds nothing to the
Commonwealth's economic and financial powers.
ClTlS/1/SDL 25 7/3/89 Philip Morris
McHUGH J: Mr Charles, at page 621, the Chief Justice relied on the reasoning of DENNIS HOTELS, did he not? MR CHARLES: Yes, Your Honour, in the middle of that page. I had not treated that, Your Honour, as being
a matter of great consequence in His Honour's
reasons for judgment.
Your Honour Justice Brennan dealt with the
matter at page 659 in terms that we would respectfully
submit amounts to something of a dis-inclination
to accept the wider application of DENNIS HOTELS
where Your Honour said:
However, for the reasons expressed
by Mason J., I prefer the broader approach.
It leads to no different conclusion, for
it invites consideration of the same
determinative fact, namely, that the tax
is imposed upon the operation of the pipelines.
Finally, Your Honours, Your Honour Justice Deane,
after having dealt between pages 660 and 664 with
questions relating to the history of section 90
and the meaning of duties of excise, Your Honour
then said, at the bottom of page 664, that:
(Continued on page 27)
C 1 T 1 5 / 2 / 26 7/3/89 Philip Morris
MR CHARLES (continuing):
While the judgment in BOLTON V MADSEN plainly
provides important guidance in formulating
the indicia of a duty of excise, it does not,
in the light of these subsequent cases,
compel acceptance of the proposition that,
in the interests of desirable certainty in
the law of the CONSTITUTION, the question
whether a tax is a duty of excise is to be
answered conformably with whether the
legal effect of the impugned legislative
provisions is such as to satisfy the formal requirements of some formularized criterion of liability. For myself, I decline, in
the absence of compelling authority, to
accept any such proposition.
Then, some short way down the page:
It is, however, established by the cases
that a tax on goods which is imposed at a
point which is either preliminary or
subsequent to actual manufacture or production,including a step in the acquisition of raw
materials and a step in the distribution of
the finished product, may be a duty of excise.
It is also established that a tax may be a
duty of excise notwithstanding that it is
not calculated by reference to the quantity
or value of the goods manufactured or produced.
Your Honours, I do not propose to take the
Court to EVDA NOMINEES. The Court will be well aware of what was said in that case at page 316
when the plaintiffs were refused leave to reopen
DENNIS·HOTELS. We would submit, Your Honours, that having regard to the varying judgments that
reference has now been made to, including the
most recent and, we would say, most significant
for present purposes, decision in GOSFORD MEATS,
that members of the Court will see that so far as at least three members of the present Bench are
concerned, we would say with great respect, that
there is a disinclination to apply the decision in DENNIS HOTELS outside a very restricted area of business. Certainly it appears to be the case
that in relation to the licensing of the sales of
petrol, and tobacco, then plainly - and liquor -
it may be said that the Court has upheld the decision
in DENNIS HOTELS, a decision, we would put, not
arrived at by the majority in that case. The question, Your Honours, arises here whether that situation
should be extended to the position of a producer
who is also a wholesaler. If members of this Court
were to take the view that DENNIS HOTELS should not
be extended to a producer, the Court will then be
fa~ed with the situation that the Court would not
CIT16/l/JM 27 Philip Morris on that view be prepared to uphold the imposition
of the licence fee against a producer wholesaler,
but might be prepared to uphold it as not being
an excise in relation to a wholesaler who is not
a producer, which is, of course, the third plaintiff
in the first case now before this Court.
BRENNAN J: Is there a shift in the concepts from tax on
production to tax on producers?
MR CHARLES: There could indeed be, Your Honour. I accept that that might be so. It is, if I may say so,
difficult to be positive ultimately about any of
the matters which the Court is asked to deal.
DAWSON J: But that is the point, is it not, Mr Charles, that there are no absolute truths in this area?
11R CHARLES: I accept that, Your Honour. DAWSON J: And when the Court has decided something, and it has been acted on for a long time, to depart
from it is merely to divert to uncertainty.
Whilst one can point to the imperfections in the
various decisions such as DENNIS HOTELS, it is
very much more difficult to suggest something
better?
MR CHARLES: Your Honour, that, of course, depends upon whether one accepts that the constitutional provision
in section 90was intended to have real meaning in
relation either to permitting a Connnonwealth tariff
policy, or some matter of that kind.
DAWSON J: Whether it has real meaning or not, or in order
for it to have real meaning, one has to draw lines
and that is the difficulty in drawing a line at
a particular point. Once one departs from cases such as DENNIS HOTELS, one is left in a position where one can draw no certain line.
(Continued on page 29)
CIT16/2/JM 28 Philip Morris MR CHARLES: We would say, Your Honour, that the decision in DENNIS HOTELS has meant really that a line cannot be drawn anywhere and, indeed, has led the Court
into a situation in which at least a number of
members of this Court have made plain that they
find the reasoning behind what is said now to be
the application of DENNIS HOTELS most unsatisfactory.
DAWSON J: Undoubtedly, they do not like the line that is
drawn but have recognized the importance of
observing a line that has been drawn in default of
something better.
MR CHARLES: Your Honour, I accept that there is an importance
in drawing lines. We would respectfully submit that the evolution of the cases following DENNIS HOTELS
as the Court has now just seen has demonstrated that
the line drawn has not been a satisfactory one. It has been entirely satisfactory to the States who
have acted upon it by imposing increasing licencefees each year as the case stated before this Court
now presently demonstrates.
Equally, Your Honours, what one finds the
position in the third case where the plaintiff,
Harper, has found that over a period of years - the
person Harper, of course, Your Honours, is quite
plainly a producer on any view of the matter there -
an abalone fisherman. His licence over the last
few years has increased from something like $8000
to $17,000 and in the new system that is presently
offered this year he has been offered a contract for
a licence at $40,000. Your Honours, what might be a line regarded as satisfactory in some circumstances
may cease to be to the - - -
DAWSON J: But, you see, what you have got to do really to
fulfil your argument - I do not say that you should
do it at this stage - is to be able to say where the
line is to be drawn, which is something you have
carefully avoided from what you have said so far.
unless you point to where the line should be drawn, ~ do not blame you for carefully avoiding it, but that is, another definition of an excise, then it is not possible with force to criticize the decisions
which have been made or of equal force. I mean, it is a sort of a Zen method of reasoning to say, "Not there, not there", without saying where.
MR CHARLES: If I may say so, Your Honour, I have not attempted
to draw lines at this stage because it has not been
necessary for the purpose of my argument.DAWSON J: No, no, I understand that. MR CHARLES: I am quite prepared to attempt to do so if the Court wishes me but that really is a matter for later argument.
C1Tl7/l/BR.- 29 7/3/89 Philip Morris
DAWSON J: I agree, but that is the difficulty.
MR CHARLES:
I accept, Your Honour, it is a very real difficulty indeed.
We would say that the
difficulty occurred after the decision in MATTHEWS
case when Sir Owen Dixon set out his historical
excursus into the meaning of excise, into the way
it had been understood in Europe and elsewhere in
times preceding the conventions in which the
matter was discussed. We would say that those considerations would properly have led the Court
to the conclusion that an excise relevantly could
be imposed at any stage in dealing with goods from the
point of first production up to the point of
consumption.
Your Honours, that leaves a difficult question
which is very much one open as to whether or not
a consumption tax is properly included within the
definition of "excise" and plainly, there - - -
DAWSON J: It really leaves a problem at the other end, too, as
to whether any tax upon a producer has to be
characterized as an excise tax: land tax, for instance_.
MR CHARLES: Your Honour, we would say, with respect, that a land tax is quite plainly in a different context and
one that on no view could be regarded as an excise.
DAWSON J: We are now getting to an argument that is not perhaps appropriate at this stage.
MR CHARLES: Yes, I accept that, Your Honour. DAWSON J: But those are my difficulties abouQ it. There are
no absolute truths and so one clutches at the
certainties one has rather than to send back into
the morass.
MR CHARLES: If I may say so, Your Honour, the States have
certainly clutched with increasing vigour and one
might even say rapacity to the lines that have been drawn. They have found it a very satisfactory line. We would say, with respect - - -
DAWSON J: I think that is unfair, Mr Charles. The States have taken the decisions of this Court... ·Jthey have to
provide in their budgets for the financial management
of the State, and what more can they do than take
the decisions of this Court and act on them.
MR CHARLES: There are other ways, Your Honour, in which the States can obtain money: either by agreement with the Commonwealth or alternatively, by different types
of taxation.
GAUDRON J: They could tax barristers quite easily without
offending section 90, though.
ClT17/2/BR 30 7/3/89 Philip Morris
MR CHARLES: I can assure Your Honour that they do. We would say, Your Honours, that the difficulties which flow from the drawing of the present line
have resulted in absolutely unreal distinctions
being drawn where one can find someone who maybe classified as a producer, on the one hand, exempt from taxation of this kind because an
excise, someone of the other side who may be
in doubt as to whether the exercise being conducted is properly regarded as that of a producer or production.
We would say, Your Honours, that it is wholly
unreal distinction to attempt to make in the
first place, that someone engaged in an act
of sale can be taxed without any effect occurring
on production. We would submit, respectfully,
that an operation of that kind inevitably will
end up traditionally as part of the price .
And it was for that reason that, from the very
earliest decisions before this Court, the PETROL
. case, PARTON V MILK BOARD, that it was very
readily seen that attacks on sales had to be
an excise, otherwise there would have been no
point in the constitutional veto.
Your Honours, time and agai~ members of
this Court have pointed to the fact that the
difficulty arising from DENNIS HOTELS is that
by the exercise of ingenuity, by following some
particular form of device, one can achieve a
position where the veto in section 90 is wholly
set at naught and, we would submit, the intention
of those who framed the CONSTITUTION is plainly
being bypassed.
I accept, Your Honours, that it may be thought
that drawing a line is something which produces
a result with some certainty and therefore is
a position to be maintained. We would submit, Your Honours, that drawing the line in that way takes away from the intention of those who
framed the CONSTITUTION, produces a result where
one has effectively nullified section 90 completely.
We would say, in those circumstances, that the
Court is not bound to maintain a series of decisions
which do not command the acceptance of Judges
in this Court. As to whether it does or not I cannot say but we would respectfully submit
that the decision is quite plainly wrong and
that if the Court accepts that then it should
not attempt to maintain it.
McHUGH J: Mr Charles, if your distinction between producer and seller is correct, it makes no difference
from the first plaintiff's point of view, does
it?
ClTlS/1/ND 31 Philip Morris 7/3/89 MR CHARLES: So far as the first plaintiff is concerned, Your Honour, we would say that the tax imposed on Philip Morris is an excise and if the rest
of the Court, or a majority, were of the view
that GOSFORD MEATS covered ~-and that person -
yes, Your Honour, that is so. So far as the
third plaintiff is concerned - - -
DEANE J: But is not the tax imposed on Philip Morris
imposed upon it in its capacity as a wholesaler?MR CHARLES: Yes, Your Honour. DEANE J: And it is.just, as it were, a coincidence that
it is also a producer?
MR CHARLES: Your Honour, it is a coincidence 1n one sense save for the fact that unless a producer
is able to sell the goods he has produced he
comes to an immediate end of his commercial
enterprise.
DEANE J: What, "wholesaler" is defined in a way which
would catch every producer, is it?
MR CHARLES: It must catch every producer, Your Honour,
unless the producer engages in retail selling.
To that extent they. might be outside but we would submit that every producer who sells the
goods produced or does not give them away is
engaged in wholesaleing for that purpose.
DEANE J: It may still be though, may it not, that you
are not quite so far away from DENNIS HOTELS
as you implied in answer to Justice McHugh,
you have to take a further step before you
excape it?
MR CHARLES: Yes, I accept that, Your Honour, and, indeed,
Justice Brennan 1 s view were accepted which requires I am one further step away still if Your Honour not merely the imposition of a tax on a producer
.but also that it be by reference to an act of
production as well. Your Honoor~, what we say is that the consequence of all these matters can only be to leave people in the business community in doubt as to their liability to pay these taxes as to whether or not they are
duties of excise. If I may say so, that was what I was seeking
to put to the Court before when Your Honour
the Chief Justice asked me what I meant by confusionand uncertainty.
ClT18/2/ND 32 7/3/89 Philip Morris
MR CHARLES (continuing): It may be said at the States
are not confused, that they will 'mpt to push the DENNIS HOTELS-decision as fa. , they can. To that extent they are not confused, but we would
say that those who are being taxed, Your Honours,
are certainly in a state of confusion as to what
is the proper extent of DENNIS HOTELS and particularly,
if I may say so, in the light of the fact that
the minority in GOSFORD MEATS took the view that
that decision could only be arrived at by an
overturning.
McHUGH J: But since then in ALLSTON V BATH the majority again reasserted, although by way of dictum, that
this particular tax is not an excise duty.
MR CHARLES: We would say, Your Honour, that that was very much a throw-away line, if I may respectfully say
so! It was not, in any respect, central to the
Court's decision which was directed to other things.
That was a matter which involved the Court looking
at the Court's new approach to section 92 to
deciding whether there was discrimination. We would respectfully put it, Your Honour, that that
was a matter per incuriam.
DAWSON J: But at least the business community would be less confused and uncertain if DENNIS HOTELS was
affirmed.
MR CHARLES: It remains, Your Honour, to see whether, if DENNIS HOTELS is affirmed, in how many other
industries that may apply, it remains to see whether
someone like Mr Harper, the abalone fisherman,
whether DENNIS HOTELS has any application to his
situation which is quite plainly a tax on a
producer - - -
DAWSON J: That is true, but it still would be less confused if DENNIS HOTELS was confirmed, not as
happy, but less confused.
MR CHARLES: With respect, Your Honour, we would say that if this Court were, for example, to take the view that
a tax on commodities at any stage from the first
moment of manufacture up to the point of retail
sale to the consumer, if that were the view taken
by this Court there would be very much less
uncertainty.
BRENNAN J:
Mr Charles, bearing in mind that we are addressing at the moment the problem of reopening
DENNIS HOTELS, are you able to point to any decision of this Court since DENNIS HOTELS which proceeds on a principle that is inconsistent with
the maintenance of DENNIS HOTELS within the narrow
confines in which the majority held it in GOSFORD
ClT19/l/HS 33 7/3/89 Philip Morris MEATS, because if not, the problem seems to me to be a problem of saying what is the limit
of the DENNIS HOTELS doctrine, and that is a_
usual kind of problem in the development in anv
field of the law, is it not?
MR CHARLES: I do not say, Your Honour, that that is not
a usual approach. I would accept that is an entirely possible approach. It is one approach that this Court may wish to take. I cannot, Your Honour, point to any decision which is
inconsistent with the application of DENNIS HOTELS
in the confined area in which it has been said to
be applied. I do say, Your Honour, that the reasoning of nearly all the cases after DENNIS
HOTELS is wholly inconsistent with the application
of DENNIS HOTELS in any area or - - -
BRENNAN J: You mean the reasoning in DENNIS HOTELS? MR CHARLES: Yes, Your Honour, or with any view other than that that reasoning is quite wrong. In other words,
Your Honour, the reasoning of the later cases requires this Court to say that we should maintain, for · reasons of certainty and stare decisis in a
particular area of taxation a ruling which we
th ink that the hypothesis is simply wrong.
BRENNAN J:
Putting it another way around, does the maintenance of DENNIS HOTELS, within its narrow
confines, present any difficulty to the application or development of any other doc~rine of
constitutional law? I am thinking particularly of your reference to COLE V WHITFIELD. (Continued on page 35)
ClT19/2iHS 34 7/3/89 Philip Morris
MR CHARLES: I have difficulty answering that, Your Honour, because the Court's approach to section 92 in the
light of COLE V WHITFIELD, if I may say so with
great respect, cannot be predicted with certainty
in the light of the immediate difference of opinion
which followed it in BATH V ALSTON HOLDINGS.
One view of what the Court said in BATH V ALSTON
HOLDINGS might well lead this Court to say that it
was attracted by the reasoning of Mr Justice Murphy
in a number of the excise cases, that it required, in
a sense, discrimination against the local producer
before the tax could be characterized as an excise.
I am, therefore, not able to answer Your Honour with
precision but we do submit that the fact that the
Court has recently embarked on that re-examination
of section 92 provides a convenient time for the Court
to re-examine section 90 at large. The very difference of facts in the cases now before the Court, we submit,
go some way to indicating why it is that the Court
may recognize difficulties in the community, the fact
that someone in Mr Harper's position plainly must be
in some difficulty in knowing what his position is.
I have told the Court that the legislation in relation
to Mr Harper has been changed this year so that now
Mr Harper is faced with a request being made to him to
enter into a contract with the ~inister to purchase a licence, the sum being a very substantial sum and, I
might add, Your Honours, in circumstances whereas when
Mr Harper sought to pay that amount under protest, he was informed that in that situation there had been no contract, he either had to make the contract or he would receive no licence and would be acting illegally
in fishing.
Now, Your Honours, there are real difficulties in
a variety of different areas in knowing how to apply
section 90 and particularly because the differences
of opinion between members of this Court as to the true
meaning of an excise must, we would say, engender
uncertainty in the community.
Your Honours, I do not propose to go through this in detail but my learned junior has reminded me that
the reasons why we would respectfully submit that
DENNIS HOTELS was wrongly decided are dealt with in
our summary of argument in paragraph Don page 4 in
paragraphs 14 to 24. I thought I had said at the outset of my argument, Your Honours, that we accept
that there is no relevant distinction between thelegislation that is in question now before this Court
and the legislation in DICKENSON's ARCADE. I am certainly not seeking to suggest that differences in
the legislation, in relation to the present case,entitle me to invite the Court to argue the matter
again. I should say, Your Honours, that the consequence of BATH V ALSTON HOLDINGS, as we follow it, has led to
other amendments being made by the legislature to the
ClTZ0/1/JH 35 7/3/89 Philip Morris legislation,matters which, as we follow it, an
attempt to remove such discrimination as was
previously seen to exist in the legislation. I suppose it might be argued that that is a further
reason why the Court could now, when the legislatureis amending its legislation to deal with the Court's
decision in BATH V ALSTON HOLDINGS, is possibly
another reason for the Court looking again at this
legislation in the light of section 90.
BRENNAN J: That is a chicken and egg argument, is it not? MR CHARLES: Well, Your Honours, when Parliament is having to amend to deal with one matter, it might as well
get it right.
(Continued on page 37)
ClT20/l/JH 36 7/3/89 Philip Morris
MR CHARLES (continuing): Your Honours, it is for those reasons that we would submit that the Court ought now
to permit a reopening of DENNIS HOTELS. Unless I can answer any question the Court has for me -
if the Court pleases.
MASON CJ: Thank you, Mr Charles. Yes, Mr Jackson.
MR JACKSON: Your Honours, may I hand to the Court copies of our outline of submissions? Your Honours, the part
relevant to the present matter appears on thesecond page and over to the third page, and the
first page contains a summary of the two enactments
in question.
MASON CJ: Yes.
MR JACKSON: Your Honours, may I say something in response to Yomr Honour Justice McHugh before moving on to
our submissions? That relates to Your Honour's
reference to BATH V ALSTON HOLDINGS: the reason, perhaps the occasion, for the reference to the
earlier case on excise in that was, one might,we would
suggest, the fact that the question of excise had
originally been raised in those proceedings but it was
not proceeded with. Whether it was not proceeded
with in the sense of it being abandoned or whether
it was not proceeded with, although remaining part
of the formal proceedings of the Court, I do not nowrecall, but that issue was not argued before the
Court. But it had been an issue in the proceedings
and that may provide the occasion for the referance
to it.
Your Honours, the present legislation is
summarized on the first page of the outline of
submissions. What it does do is to impose the
relevant tax upon a person who is a tobacco
wholesaler and it does so in each case. If I could just say one other thing about it: the legislation is legislation which is entirely of a revenue nature in each case; it is not legislation for the purpose of, say, suppresion of smoking or to regulate the activities of those who participate
in the sale of tobacco by wholesale in any way.
It is simply a statute which is of a revenue
nature and the provision for a licence is in order that the licence may provide the occasion for the imposition of the tax.
Your Honours, one other thing.perhaps, I should say. It differs as a factual matter, if I could use
that term, in reference to the terms of the statute,
from DICKENSON'S ARCADE in this way: that the time,
which is the prior time, by reference to which the
ClT21/l/VH . 37 7/3/89 Philip Morris licence fee is to be calculated, has become
truncated, whereas, it was in DICKENSON'S ARCADE
a period of the average ~f the transactions over
the past six months. The position, in relation to the two enactments in question is such that it
is now the month before the month in question and
the time has become much shorter.The position, of course, is that the tax in question is one which relates, in the_present case,
to the position of a wholesaler. A wholesaler may, of course, be a producer, but it relates, in form,
to the position of a wholesaler and is not a tax
on production directly.
(Continued on page 39)
ClT21/2/VH 38 7/3/89 Philip Morr~.s MR JACKSON (continuing): Your Honours, what that means, we ¼UU.ld accept
is that it the principle is stated as stated in the
earlier cases, then the only basis of distinction
between the present cases and the earlier cases,
particularly DICKENSON'S ARCADE, would be that
perhaps the Court might take the view that the line had been drawn too close, if I can put it
that way, by the adoption of the two-month period
rather than some longer period, but we would
expect some difficulties in relation to that submission.
Your Honours, having said that, it then
becomes imperative that the earlier cases be
reopened, and, Your Honours, the reasons why
essentially we would submit that that should
occur are - and I will come to them in a moment -
summarized in paragraphs 2, 3 and 4 on pages 2 and 3
of our outline of submissions. May I say one thing,
Your Honours, dealing with the first of them,
and that is something which we would seek to use as
the base for making these submissions, and that is
that the limitation on the nature of the duty of
excise which is imposed by the earlier cases is
one which the Court has recognized, in our submission,as allowing the application of section 90 to become
a matter of form. Your Honours have already had the references from my learned friends, but I will give them to Your Honours again: HEMATITE, 151 CLR at the pages referred to in paragraph 2 and
also GOSFORD MEATS V NEW SOUTH WALES, 155 CLR at
the pages again referred to in paragraph 2.
Your Honours, that is a matter of some
importance as being the base in terms of the
context in which the submissions are made, that is
that the effect of the decisions is that the
legislation can escape the constitutional prohibition
of section 90 simply by reason of the fact that it
is framed by reference to a past period although it
is no more than a taxing statute which otherwise
might be a duty of excise.
DAWSON J: Could I put to you my difficulty, as I put it
to Mr Charles? That would be so if there was some
clear meaning as to the prohibition imposed by
section 90, but once one departs from the decisions
of the courts which have laid down what an exciseis, I do not know what an excise is. In other words,
it is a term which really has no meaning except
in so far as this Court puts meaning into it.
MR JACKSON: Yes, Your Honour. No doubt there is some meaning to be given to it and no doubt one might
be able to describe that as being a line. There
has been a line - - -
DAWSON J: Until you describe it I cannot, for myself
anyway, say that there has been any evasion of
the intent of section 90.
CIT22/l/JM 39 Philip Morris MR JACKSON: Your Honour, what we would submit is that there is another line to be drawn: there is a
different line and a better line to be drawn.
It may be that the Court cannot decide whether
that line is in the end better until one comes to
the end of hearing the argument substantively
about the case.
DAWSON J: Yes, I follow that. MR JACKSON: But there is another line and, Your Honour, without going into the detail of the argument in
support of that, we would submit that the true
position should be that set out in the last
paragraph of our outline of submissions, thatis, an excise is any tax upon or in respect of
goods at any point as those goods pass to
consumption. Your Honours, that may be good, it may be bad; it may be right or wrong so far
as one can be in this area, but it does provide, in our submission, an appropriate test and it is
a test which is a better test than the formalism
of the test introduced by DENNIS HOTELS and
followed in a number of other cases. Why we would submit that it is time to consider whether
the existing line should remain where it isis for the reasons I am about to advance, if I may.
What I was simply submitting first of all
was that inherent in the nature of the test which
presently exists is that it is one which is,
and I say so with respect, a tribute to formalism
in that it selects a particular method of legislation
which does not turn upon the nature of the tax, but
simply upon the way in which the legislation
enacting it is drawn and says if it passes that test
of formalism, then leaving aside the substance of it,
it is something which is not a duty of excise.
If, on the other hand, it is done another way than
it is, and the State cannot utilize that power.
(Continued on page 41)
CIT22/2/JM" 40 MR JACKSON, QC 7/3/89 Philip MOrris
McHUGH J : Bu t th e de f i n i t i on th a t you form u 1 a t e i n th a t 1 a s t paragraph does not really add very much, does
it? I assume it is intended to cover a consumption
tax but in case, for example, like HEMATITE,
Chief Justice Gibbs accepted the definition in
PARTON's case but it is a question of how you
apply it.
MR JACKSON: Yes. Your Honour, undoubtedly that is right and the fact that the adoption of a new test may
mean that differences of view result in the application
of that test in particular cases does not mean,
w i th respect, that the new t es t sh o u 1 d not be ado p t e d . Your Honour, may I support that by saying two
things: the first is that the two cases, COLE
V WHITFIELD and BATH V ALSTON HOLDINGS, demonstrate
that, in our submission because what happened,
of course, was that the Court adopted a new principlewith a difference of view in relation to its application
in a particular case. That will always happen.
But it does not mean, with respect, that the principle
itself adopted by the Court is worse - or shouldnot have been adopted, if I can put it that way.
What I am endeavouring to say, Your Honours,
is that if it be that the test adopted in DENNIS
HOTELS and DICKENSON'S ARCADE is a test which
is unsatisfactory, then the fact that a new test
which might be adopted will not result in unanimous
judgments of the Court is not a reason for not
reconsidering the earlier decision.
BRENNAN J: Mr Jackson, the real problem, though, is perhaps
not to identify excise in some general description
as in your last paragraph because, obviously,
the sea of excise is very broad. But there is this island of DENNIS HOTELS in the middle of
it and it does not really add anything, does it,
to use a somewhat emotional term, as it has come
to be in this Court, of "formalism", to describe
DENNIS HOTELS. DENNIS HOTELS, formal though it be, be preserved The question simply is: should as an island within this sea of excise? And, if so, what is the low water mark of the island?
MR JACKSON: Well, Your Honour, I do not want to use erootional terms, with respect, but one might wonder whether
it was an island or tabula in naufragio.
BRENNAN J: Well, the question is whether it is stable,
I suppose, answers that question.
MR JACKSON: Yes. Your Honour, could I just say this,
first of all. Your Honour has used the expression, "formal as it is". It is, of course, a matter
to be borne in mind that the nature of the result
achieved by the present decisions is that the
test which has been adopted is one which does
C 1T23/l /SDL 41 7/3/89 Philip Morris
place importance on matters of form. Your Honour, I was not, I must say, personally seeking to use
the term in an emotive way but that is what it
does do and one must wonder, in our submission,
whether that is the true, the best, approach to
a constitutional provision of this kind bearing
in mind that the question of what is meant by
a duty of excise was not, one would think, intended
by the CONSTITUTION to be one to be resolved purely
by determining whether the legislation impugneddoes or does not follow a particular form, recognizing
that the form is based upon a principle established
by the Court.
Having said that, Your Honours, one comes
then to the question whether that test or some
other one should be adopted. Your Honours, there is no doubt that the present test is one which
is capable of operation and there is no doubt
that it has a degree of certainty about it. Having said that, Your Honours, one of the features which
emerges, in our submission, is that because it
is a matter of form, it does not, in our submission
I am sorry, may I start that again. Because it does have the elements of form about it and because
the way in which the base of it can be seen to
enlarge what members of the Court have thought
should be a fairly narrow area, that the time
has come, we would simply submit, to say: is
this test one which should, be continued or is
it one which should be replaced by a test which
does not depend on the question of form?
Could I move, Your Honours, to the submission
we would make in paragraph 3 of our outline of
submissions,and that is - what Your Honours
would have seen in the passage of Justice Murphy
in GOSFORD MEATS, 155 CLR, at pages 388 and 389 -
I wonder if I might take Your Honours to that
for just a moment.
(Continued on page 43)
C1T23/2/SUL 42 7/3/89 Philip Morris
MR JACKSON (continuing): Your Honours will have seen, at the top of page 389 that His Honour said:
The notion of a fee based on a previous
period being valid, but not a fee based
on a current period -
being valid, might give rise to a situation
where the previous period selected was a month
or the previous week, or why might it not be
a shorter period. An~ Your Honours, to the same effect is the observation of
Justice Jacobs in SLEIGH's case at page 526.Your Honours, the fact of the matter is, of course, that time has shown and this legislation has shown that the time gap is becoming shorter
and, no doubt, if the decisions are not overruled
in the present case, having been reviewed, then
the time gaps may become shorter yet.
One must bear in mind, of course, that taxes of this kind, one would expect to be imposed
in arrears and if the gap between the relevant
time and the time in question become shorter
then the unreality, if I might use that
expression, with respect, does become more apparent.
The second feature is, Your Honours, that
it is apparent from the figures which appear
in the case stated in respect of the PHILIP
MORRIS case that the States have utilized the principle in those cases with some enthusiasm and
that the percentage of the State tax which is
attributable to taxes of this kind, except,
I think, in the case of Queensland, has risen dramatically and the percentages have increased -
more than doubled in most cases.
Your Honours, what that does mean, of course, is that if the decisions in the earlier cases
are to be overruled, then, with respect, they should be headed off at the pass before it becomes impossible to do so.
McHUGH J: But the figures - I just made a rough count but
the total revenue raised from the liquor, petrol
and tobacco taxes by the States and territories
is about 13 billion.
MR JACKSON: Yes, a lot of money. McHUGH J: It is a large step to ask the Court to overrule
a previous decision where the States are raising
13 billion a year, in reliance on decisions
that have stood for 25 years.
ClT24/l/ND 43 7/3/89 Philip Morris
MR JACKSON: Your Honour, 1 think, might have added up the years, it is suggested.
McHUGH J: ls it the total of years, was it?
MR JACKSON: Yes, 1 think so. Your Honour, the other - but, of course, the States, no matter how much
they choose to impose by way of taxation, are
inherently in a weaker position than the
Commonwealth and the duties imposed by the
States are always more fragile, as it were,
than those imposed by the Commonwealth - meaning
by that the Commonwealth may, in fact, impose
taxes covering the same area which makes it
impractical.
So, Your Honour, we will accept it is a
lot of money if one looks at it in absolute
terms but if the true position is that the States
should not, as the Court might view it, in our
submission, be imposing those taxes because
of section 90, then the higher law, as it were,
is the CONSTITUTION rather than the inconvenience
that might be caused by the fact that the States
cannot impose taxes of that nature notwithstanding
that they might be able to recoup the revenue
lost in other ways.
Your Honours, the final thing we would say
is this, that the decisions on section 92 now,
in our submissio~ have made it apparent that
there are areas of taxation open to the States
which earlier would have been thought to contravene
section 92.
(Continuing on page 45)
ClT24/2/ND· 44 7/3/89 Philip Morris
MR JACKSON (continuing): There are areas of commerce and areas of trade which are capable of being the
subject of taxation which might have been thought
before not to have been capable of being taxed by
reason of a tax upon them being an imposition on
the burden of interstate trade and commerce; so
that, Your Honours, whilst that is not an answer,
of course, to say you can tax one thing if you
cannot tax the other, what it does mean is that the
question of the review or reopening of the earlier
cases is something that takes place in a contextwhere the State's taxation powers are rather wider
than might have been thought to be the case before.
Your Honours, those are our submissions.
DEANE J: Mr Jackson, do you not really need to address the majority iudgment in EVDA NOMINEES, and particularly the
last sentence; bearing in mind that what was
involved there was not whether the decision should
be overruled, but whether argument should even be
heard about whether they were right or wrong as a
matter of principle?
MR JACKSON: Yes, meaning by that, Your Honour, that the question whether we should be permitted to argue the - in our submission, the Court's approach in
EVDA NOMINEES was one that was related, as it were,
to the circumstances of the particular case. I am conscious in saying that that Your Honour took
the view - - -
DEANE J: It does not matter what view I took.
MR JACKSON: No, Your Honour. I was using it impermissibly perhaps to reflect what was being
decided by the majority. What the Court said in the majority was that the Court would not hear full
argument on every occasion when counsel wishes to
contend that a previous decision was wrongly
decided. We would submit, Your Honours, that the circumstances in which the decisions ?resently in ·question are sought to be reconsidered is a case
where the Court ought to proceed to do so, that the
rule referred to, in so far as it be one, is one
of self-restraint by the Court and it is one that
can be lifted or imposed as the Court thinks itappropriate to do so.
DEANE J: Except if you look at the last sentence, we are four years further on and we are informed that the
States have not only placed continuing but greater
reliance on the correctness of those decisions. What is the relevance in terms of principle of that reliance and to what extent should we look
at what it is difficult for counsel to discuss
and that is whether this is an area which, if it
were reopened, the Court could speak with one
ClT25/l/HS 45 7/3/89 Philip Morris
definitive voice as it did in section 92 as a matter of principle, or whether it is a case where
a transient majority might have insuperable
difficulties with DENNIS HOTELS.
MR JACKSON:
Your Honour, perhaps if I could deal with the last matter first.
Your Honour, one cannot,
of course, predict what would happen until after
there is a full argument, predict what view a
court might take and how many of the court would
take it until after the case has been argued.
That is a real difficulty, Your Honours, with
stopping the argument at the start, and one could
understand a view being taken by some members of
the Court that the argument at the end of it wasnot sufficiently persuasive for them to take the
view that whatever might be their own view, if it
were a matter of first impression, that the earlier
cases should be disturbed.
Now, Your Honours, that might have the result
that the position would be as it is, as it were,
with a majority taking the view, for whatever reason,that the earlier cases should remain.
(Continued on page 47)
ClT25/2/HS 46 7/3/89 Philip Morris MR JACKSON (continuing): If that is the case then it may be
that the Court would deal with the matter in, I
suppose, one of two ways. One would be that in the end the majority would say no more than that the
arguments did not satisfy them that DENNIS HOTELS
and so on should be overruled or should be
reconsidered, that is what I meant to say,
Your Honours. The other view would be that the members of the Court might think that DENNIS HOTELS
was right. Now, it is not possible to say at this point whether the result of the proceedings would
be a unanimous judgment of the Court or largely aunanimous judgment of the Court or precisely the
basis on which it might happen. I do not know that I can take it nruch further than that,
Your Honour, in relation to that point.
In relation to the fact that the States have
organized their financial affairs upon them,
Your Honours, could I say two things. The first
is that the observations of members of the Court
have, in our submission, made it apparent, though
not necessarily certain, that at some poin4 at an
appropriate point the decisions in DENNIS HOTELS
and so on may be reconsidered. Your Honours, I am conscious of the fact in saying that that the
decision in EVDA NOMINEES, for example, expressed aview that that should not happen at that stage,
but the various observations of members of the Court
have indicated that perhaps because of the slightly
unattractive, with respect, formalism of the earlier
decisions that they had the potentiality of being
reconsidered at a later point.
So that means that reliance on them in
organizing the financial affairs of the State is
reliance upon something that has the possibility of
disappearing later. I put it no higher than that, Your Honours. The second thing about that is this: it is one thing, of course, for States to organize
their financial affairs on a particular view of the CONSTITUTION albeit a view which the Court have
espoused. But there are from time to time engineers' cases and in the end, in our submission, it is the
CONSTITUTION which should prevail rather than the
view of the States.
The third feature about it, Your Honours, is this: that the time
is apt, we would submit,
for the Court to reconsider it~ apt because they
are perhaps, if I can put it this way, going a little
too far. On the other hand, there are further avenues
open which might replace the lost reverrues. Your Honours,
those are our submissions.
MASON CJ: Mr Solicitor for South Australia, I think you are
the next, are you not, in line to support reopening?
Cl T26 / 1 /BR. 47 7/3/89 Philip Morris
MR DOYLE: If the Court pleases, I hand up an outline of the
submissions on the question of reopening.
DEANE J: Do they have black balls in the Solicitors-General's ..... ? MR DOYLE: Your Honour, it looks like being a lonely week
for me. And, Your Honours, I also wish to hand up some appendices to those submissions. They are, with just one or two exceptions, collections of
references to cases where particular views have been
expressed or reliance has been placed upon pa~ticular
approaches. So to save me going through them they have been put in separate appendices.
(Continued on page 49)
ClT26/2/BR 48 7/3/89 Philip Morris
MASON CJ: Yes, Mr Solicitor. MR DOYLE: If the Court pleases, our submission is, as indicated
in paragraph l, that the Court should permit argument
to be presented dealing with, perhaps I might say,
fundamental nature of the term or the concept, excise,
should permitargument as to the correctness of previous
decisions and as to the reasoning which has been followed
in decisions. As I indicated,when I announced my appearance, it is also our submission that if the Court rejects that approach then the Court should
not permit the correctness of DENNIS HOTELS to be reargued because, in principle, that itself gives rise to no issue of principle; it only involves the
approach to be taken to the detailed application of
one aspect of what could be said to be the broad,
current view taken and, that therefore, having regard
to the reliance by the States upon the decision in
DENNIS HOTELS, if the whole matter is a&e to be
reconsidered, there is no sound basis for reconsidering
that particular decision.
As to the submissions why it is appropriate to permit argument to be presented, our first submission,
as is in indicated in paragraph 2(a) of the outline
is that, in effect, there is no settled interpretation
of section 90 and that in recent cases there have
been, or continue to be, significant differences
of approach. I would seek to develop that point a little later although not in any great detail and
I. refer there to COLE V WHITFIELD and to RE COLDHAM
simply as cases where the Court has relied upon
differences of approach as a factor supporting a
decision to reconsider those cases.
Our second submission in support of reopening
is that the reasoning in the judgments is unsatisfactory,
that is, the judgments referred to. There is, of
course, an element of bootstraps here because, in a sense, unless I could develop that point in detail, it stands as a mere assertion. So what I will seek to do is to indicate very-briefly-why we submit, in three broad respects, the reasoning which has led
the Court from PETERSWALD V BARTLEY, a relatively
narrow view of excise, to the current, we submit,
relatively broad view of excise; why, in three b~oad
respects, that the approach to that broader view
may be seen to be unsatisfactory and, at least, to
warrant the conclusion that it would be appropriate
to re-examine the matter.
ClT27/l/VH 49 7/3/89 Philip Morris
MR DOYLE (continuing): The third matter, if Your Honours please, upon which we rely is set out in
paragraph 2(c), the practical result of the currentapproach, and could I just give the Court two
other references to cases where the practical result
and in particular, at pages 57, 64-65 and 72-73.
has been seen as relevant on the question of
reopening? The first is COLE V WHITFIELD, in
particular, at page 315, column 1 letter E and at page
315, column 2 letters B-C and also THE COMMOffi.iEALTH VIn our submission, if one looks at the practical resulc in a broad sense of the current approach to
excise, it can be seen to have left the States with a
very narrow tax base in respect of taxes on goods
leading to what has been called the vertical imbalance
within the Federation, namely the relatively narrow
tax basis available to the States and the inadequacyof that in relation to their expenditDre requirements.
Once again, of course, there is an element of
bootstraps in that argument also, because if it were
said, "Well, that was the intention of the founding
fathers, or of those who framed the CONSTITUTION",
then, of course, all I am pointing to is the very
result which was intended.
But, in our respectful submission, when one
considers as a preliminary issue whether the Court
should hear argument as to the rightness of the presentapproach, it is permissible to point to this position
which has been regarded by many as unsatisfactory and
as simply warranting the Court embarking upon the task
of reconsidering the present basis. It does not mean,
of course, that it would be an argument for changing
the law, but what it is is an argument in favour of
reconsidering whether the present law is satisfactory.
So, in short, our submission, and I acknowledge the
circularity in this, is that the States have, in fact,
been excluded from a field of taxation which it was
not the intention of the framersof the CONSTITUTION
that they should be excluded from. (Continued on page 51)
ClT28/l/JH 50 7/3/89 Philip Morris
MR DOYLE (continuing): The fourth matter which the Court has in other cases had regard to in
considering whether reopening or whether leave
should be given for argument to be put in
support of reopening is the effect of a change
of approach. If the submissions which we would
seek to advance were to be accepted, then thetaxing powers of the States would be widened
and to that extent Commonwealth control in that
field would be limited, subject, of course, to the
question which has been alluded to in previous
decisions of the operation of section Sl(ii)
coupled with section 109.
So, of course, there are going to be effects
on the Commonwealth in that sense if the broader
view is taken. If, having reopened the whole
matter the Court came to a - sorry, there would
be effects on the Commonwealth if a narrower view
of excise were taken. If the Court gave leave
to reopen and concluded that either the present
meaning was right, or an even broader meaning
then in the latter event, of course, there will
be effects on the States. From my point of view all I can submit to the Court is that
a time is reached sometimes when it is necessary,
if the Court considers that on a broad view
the present doctrine is sufficiently unsatisfactory,to take those risks and to re-examine it in a
fundamental sense.
We would, however, make one point which may
be obvious, but I make it so it is not overlooked.
In our submission, it cannot be said that any
private parties could have ordered their affairs
on the basis of the present law in the broad sense
because if "excise" is given a wide meaning
then the Commonwealth can impose them and the States
cannot. If it is given a narrow meaning, Statescan impose them. It is not something where by
changing the meaning, the Court will in any sense
expose private parties to liability to taxation to which in no sense could they have been liable
before.
BRENN.AN J: It could have considerable effects on the
economy, I suppose, could it?
MR DOYLE: Yes, Your Honour, and, of course, the relevance of that is bound up with what one conceives to be the
purpose of section 90. Again, I will not try
to develop that in any detail but our submission
would be that section 90 is very much tied to
tariff policy, not to national control over the
taxation of goods.
Your Honours, it is our respectful submission,
therefore, that on those broad bases, the first two
of which I will seek in a moment to develop in alittle more detail, if in the end, having heard
CIT29/l/JM 51 7/3/89 Philip Morris these submissions, the Court comes to the conclusion
there is sufficient cause simply to re-examine the
matter, then it is appropriate to do so and thatthat is all we are concerned with: whether there
is sufficient cause to re-examine the matter.
In our respectful submission, the significance of
the application which I now make should not be
overstated.
(Continued on page 53)
CIT29/2/JM 52 7/3/89 Philip Morris MR DOYLE (continuing): While it is, of course, time
consuming for the Court to hear detailed argument,
going back to what may seem at times to be
fundamentals, in our respectful submission,
if adequate reason can be demonstrated then
the Court should be relatively willing to doso, otherwise there is a risk that because it
does not hear the full argument it will ultimately
fail to perceive that the current doctrine is
not, in truth, consistent with the true meaning
of the CONSTITUTION.
Your Honours, the submission we make as to the meaning of excise is stated concisely -
I hope concisely - in paragraph 4 of the outline. It might be helpful to the Court if, rather
than try to develop it, because that would take
me into the argument which would come if leaveis given, if I tried to indicate, just in
substance, what difference it would make to
the present law.
DAWSON J: Could I just ask you, before you do that, in
practical terms it is referring to a tax by
a State within the State on the production of
goods because the Commonwealth is not concerned
with the ..... , of course?
MR DOYLE: Yes. In a practical sense, Your Honour, because we would acknowledge it is difficult to see
how a State could validly impose a tax on production
taking place elsewhere, yes.
DAWSON J: It comes close to what Justice Murphy was
suggesting?
MR DOYLE: Yes, Your Honour, although, in some respects it differs, although because he did not fully
elaborate his views, in some respects, perhaps
it would be fairer to say there may be some respects
in which this view differs from his but it would come close to it.
Your Honours, the main change, in our respectful
submission, if the submission in paragraph 4
were accepted as to the true meaning of excise,
is that the States would be able to impose taxes
on steps subsequent to production and we would
submit production does not include sale and
so the States would be able to impose taxes
on wholesale sales, retail sales, sales generally.
What the States would not be able to do would be
to tax a step in production, something that
was identified as a step in production, nor
would they be able to impose a tax say on retail
sales but by reference to Australian production.
So a tax on only Australian wine. In our respectful sul:mission, that would indicate that, in substance, that was a tax
·on production within Australia.
ClTJ0/1/ND 53 7/3/89 Philip Morris
MR DOYLE (continuing): So, in a broad sense, our submission would lead to the States being able
to impose what I might call non-discriminatory
taxes on dealings with goods once production is
complete and, in our submission, production does
not include sale. So in that sense our submission would lead, without elaborating any
further, to a significantly narrower meaning of
the term and one which, we submit, is very close
if not the same as that supported in PETERSWALD
V BARTLEY but one cannot be certain of that because
obviously in PETERSWALD V BARTLEY all the possibilities
were not canvassed and one cannot be sure just wherethe Court in that case would have gone on some
of the issues that have subsequently arisen.
As to decisions which we would submit are
wrong, Your Honours, moving to paragraph 5 of
the outline, I have indicated there the three
decisions which, on our approach, would be wrong
in the result. I understand from my learned friend, the Solicitor foc Victoria, that when the
legislation under consideration in PARTON is
closely examined, which I confess I have not done,
it may well appear that the tax t:iere could, on its
terms, only fall on Victorian-produced milk, and
if that is in fact correct, then it may be that
PARTON is correct on a quite different Dasis from
the reasoning applied by the Court; in other words, it might appear, when the facts were closely
examined in PARTON, that it was a tax which
discriminated in respect of the place of production
and if it does, then we would not be submitting
that PARTON was wrongly decided.
McHUGH J: That is contrary to Mr Justice Murphy's approach, is it not?
MR DOYLE: Your Honour, just at the moment I cannot quite
rec a 11 what he said ab o u t d i s c r i m in a t or y t axe s a t
the stage of later dealings with goods, but I thought he did indicate that such taxes would be
bad. That is my recollection. Your Honours, we would also submit, although I overlooked including
it in the outline, that CHAMBERLAIN V WESTERN
AUSTRALIAN and HAMERSLEY V WESTERN AUSTRALIA were
wrongly decided because, again, they were taxes
on sale or on transactionssubsequent to production
which made no reference to the place of production. So we would also be submitting that those decisions are wrong.
Turning then, Your Honours, to the two points
which I would seek to elaborate just in a little
detail - they are paragraphs 2(a) and 2(b). First
of all the continuing differences of approach to
the interpretation of the section.
ClT31/l/HS 54 7/3/89 Philip Morris MR DOYLE (continuing): It is our respectful submission that
since the decision in KAILIS V WESTERN AUSTRALIA,
there has been a fairly consistent division of
approach within the Court, with a majority taking
the view that the test in DENNIS HOTELS is notapplicable to a tax on production and with the
minority taking the different view.
I have referred to GOSFORD MEATS, and the
page references there are simply illustrations
of that difference of opinion. But it is our
respectful submission that underlying that difference,
namely the applicability of DENNIS HOTELS to taxes
on production, there is a more significant difference.
In recent decisions and also some not so
recent, some members of .the Court have consistently
decided cases in terms of the legal operation
or effect of the law disregarding the label applied
by the law to the tax or the way in which thelaw describes the tax but, on the other hand, confining their attention to the legal effect
and operation of the law. Their approach has
been loosely described as the criterion of liability
approach. Other members of the Court have
consistently rejected that approach and have looked
to the practical effect and operation of the law. In our respectful submission, that continuing
division of approach is significant because what
it means is that to some members of the Court
an excise is something which is identified by
reference to the existence of a criterion of liability
and that criterion of liability is itself defined
reasonably precisely. To other members of the Court, who take the substance and effect approach,
in our submission, an excise is a tax which hasthe same effect as an exise and then those members
of the Court also have a particular view as to
what effect an excise has.
It is our respectful submission that when
you stand back and look at that position, that
in truth there really are two quite different
meanings within the Court as to excise although,
as Chief Justice Sir Harry Gibbs said in GOSFORD
MEATS, that in the end all members of the Court
are inquiring, is the tax upon or in respect of
a step in production, manufacture, sale or
distribution.
But, in our respectful submission, when you
look more closely at what the two different approaches
involve, it can be said that there are in truth
two different approaches to the meaning of excise.
ClT32/1/SDL 55 7/3/89 Philip Morris MR DOYLE (continuing): In our respectful submission, it is not
a case where one can say these two different approaches
are, while differing leading to the same result. As
the cases demonstrate, these different approaches
are leading to different results in the cases and so
that is why we submit that underlying the issue over the
applicability of DENNIS HOTELS to taxes on production,
is a more fundamental difference and that, in truth,
one can say there are two different views current
in recent judgments of the Court.
BRENNAN J: In what case do you suggest the differing views have
led to the difference in result?
MR DOYLE: Well, Your Honour, I refer there to the fact that there
are consistently dissentients and, perhaps I could take GOSFORD MEATS as an illustration, that on the approach of the then Chief Justice Mr Justice Gibbs
and Mr Justice Wilson, one result would have been
reached; on the other in-substance approach, a
different result was reached.
BRENNAN J: By reason of that approach? By reason of the difference between substantive and non-substantive approach?
MR DOYLE: Well, Your Honour, of course, both of the Judges I
have mentioned went on to say that, even applying the approach of the majority, they would have come to the
same conclusion but, in my respectful submission, that
does not deny the fact that, when one does stand back
and look at the respective approaches, you have one
line which says an excise is a tax which is imposed
by reference to a certain specified criterion andanother says an excise is a tax which has a certain
effect and the relevant effect is so-and-so. Even
though they argued, applying the majority app~oach,
that they would come to the same conclusion, Isubmit nevertheless they were, in substance, supporting
what is, in truth, a different approach to the
fundamental issue and that their, as I call it,
fall-back position, simply demonstrated that even
when you take the in-substance approach, you will
not always necessary come to the same conclusion - that is, all members of the Court - but at least then
the approach - and, I would submit, the fundamental
concept - becomes uniform.Your Honours, in our submission, to some extent the Court appears to have accepted what we submit is,
in truth, a difference of approach on the basis that
in this area there is, as Your Honour Justice Dawson
said in GOSFORD MEATS, no ultimate truth.
ClT33/l/VH 56 7/3/89 Philip Morris MR DOYLE (continuing): It is our respectful submission that
when leave-is sought to put argument that there may
be an ultimate truth, that the Court should be
cautious in saying, "Well, there is no ultimate
truth so we won't permit the argument to be put.",
once again one gets back to the problem that unless
the argument is heard one cannot be confident whether
or not there is any ultimate truth there. So, in our respectful submission, while we have to acknowledge if a member of the Court is satisfied
that without the Court being troubled by the hearing of argument, ultimate truth can never be arrived at,
well, then so be it but, in our respectful submission,
that is an approach which should be adopted with
great caution in case, in truth, after much toil
and effor4 someone produces that ultimate truth for
which people have been seeking for so many years.
So, Your Honours, that is the only elaboration
I would seek to make of proposition 2(a), that there are continuing differences of approach which are
more than mere differences of approach but in truth
reflect different views as to the meaning of an excise.
The second issue as to paragraph 2(b) is as to whether
the reasoning in the judgments is satisfactory and in
paragraph 8 of the outline I have identified what,
in our submission, the three separate bases on which
the Court gradually moved to the position that was
expressed in BOLTON V MADSEN and then has been applied
since. And I would just seek to make some brief submissions as to each of those three.
The first of them is, we submit, the identification of a purpose for section 90 which is not its true
purpose and it appears that a number of judgments have
identified that purpose as Commonwealth control over
taxation of goods. Your Honours, in the volume of
appendices, in appendix 2 we have simply collected
judgments which appear to rely upon that broad purpose
for section 90. And could I add that in appendix 1
we have simply taken a number of the more significant
decisions in this area and identified which Judges
in those decisions relied upon which of the three bases which we say have ultimately led the Court to
this broader test.
Your Honours, we submit, that when one looks at
the judgments which are referred to in appendix 2
it can be said, in our submission, and we do submit
that those who relied upon that broad purpose of
section 90 have not identified it by reference to
contemporary historical material nor by reference to
the convention debates nor by reference to constitutional
context, by which we mean, nor is it something which
they have been able to draw from the construction of
the particular constitutional provisions which arerelevant.
ClT34/l/BR· 57 7/3/89 Philip Morris MR DOYLE (continuing): It our respectful submission
that, in truth,no such broad implication can be
drawn from the constitutional provisions and
judgments which have supported that view are
set out in appendix 3. It is also our respectful
submission, and the point we would seek todevelop if leave were given - - -
McHUGH J: Mr Solicitor, is there not some support for that in the form of the draft bills? Was
not the 1891 bill amended in a way which might
give some support for that view?
MR DOYLE: Is Your Honour referring to the deletion of the provisions about excise on items which were
already the subject of customs?
McHUGH J: Yes, together with the mentions in the debate.
MR DOYLE: Your Honour, in our respectful submission, when one looks at the convention debates dealing
with this, what emerges reasonably clearly is that
a certain amount of confusion had descended upon
the assembly at that stage, and section 90 in
that stage of confusion was looked upon not as
a prohibition directed to the States, but they
began to look on it as a source of power for
the Commonwealth to impose the relevant taxes
and so,thinking of it that way, they began to
think, because of the link to tariff policy, that
there should be power to impose an excise only
on goods which were the subject of customs.
In our respectful submission, they were,in truth,
at that stage themselves misconceiving in a
very fundamental way the purpose of section 90
and it would be our submission that when one goes
to the debates dealing with that particular
amendment, it does appear that those who spoke
on the matter were seeing it as a source of power
for the Commonwealth rather than as a prohibition
directed to the States.
Your Honours, we would seek in due course,
if given leave, to refer to the convention debates
to establish the purpose behind section 90 and
our submission is that its purpose was no more
than giving the Commonwealth control over tariff
| BR | policy and preserving the quality of trade as between the States and that it had nothing to do with giving the Commonwealth control over the prices of goods, |
| nothing to do in the broad sense with giving the | |
| Commonwealth control over the taxation of commodities | |
| which it may be thought is simply another way of making | |
| the former point. |
ClT35/l/JM' 58 7/3/89 Philip Morris
MR DOYLE (continuing): The submission which we would seek to develop is that if we have correctly identified
the purposes as tariff policy and equality of trade
between the States, then neither of those
purposes would suggest or support a meaning forexcise as wide as that expounded in BOLTON V
MADSEN and applied in recent decisions. So that is the use which we would seek to make of the
convention debates and certain historical material
| BR | as denying the purpose attributed to section 90. | ||||||
| The second basis which, in our submission, has led to the current view being taken lies in | |||||||
| the use made of the English meaning of the term "excise" and on the drawing of some analogies or | |||||||
| some reliance upon the cases under the British | |||||||
| NORTH AMERICA ACT dealing with the concept of indirect | |||||||
| tax in relation to the Canadian constitution. | |||||||
| |||||||
| |||||||
| notes cases which are also deal with the purposes of section 90. |
Your Honours, in appendix 5 we have listed
cases where attention has been paid to the meaning
in history of the term "excise in England" and
in those decisions, in our submission, at leasttwo English meanings for the terms "excise" were
identified was :1 a tax at any stage upon home produced identified. First of all, one meaning which was goods" and by "at any stage" I mean up to and clearly including consumption. The second English meaning was "an internal
tax upon goods" which meant that it was an excise
on that approach whether they were home produced
or not home produced, simply that it be an internal
tax. And, Your Honours, the cases in appendix 6 are the cases which advert, not always with great
precision, to those two different English meanings.
In appendix 7, Your Honours, we have referred to
cases where reliance has been placed upon the meaning
·of direct and indirect taxation under the British NORTH AMERICA ACT.
Your Honours, in our submission, this reliance
upon the English and, to a lesser extent, Canadian
meaning of the term has been significant. His
His Honour Justice Dixon relied quite significantly
both upon the English meaning and the British NORTH
AMERICA ACT cases in developing his test in MATTHEWS
V CHICORY BOARD.
ClT36/l/BR 59 7/3/89 Philip Morris
MR DOYLE (continuing): That test was in turn in substance
adopted by the majority in PARTON and, in our
submission, the decision in PARTON in substance
formed the basis for the test ultimately adopted in
BOLTON V MADSEN. So we do submit that that reliance upon the English and Canadian meanings has been
quite significant.
However, Your Honours, a number of judgments have
held that the term "excise" did have a particular or
special meaning in the Australian colonies in 1901 and
in appendix 9 we refer to judgments where there is
at least an acknowledgement that there was a distinct
Australian meaning. It is our respectful submission
that if that is acknowledged then the t:as'.( of the
Court is to ascertain what the Australian meaning was and if in truth the Court can be persuaded that in Australia in 1901 the term "excise" had a
particular meaning then that is the meaning which
should be given to it in interpreting the CONSTITUTION
and the English and Canadian meanings can in truth be
put aside as either not relevant at all or as of so
little weight that they can be disregarded.
If, of course, in the end the Court concludes
that the English and Canadian meanings wepe so infused
into the whole concept that no distinct Australian
meaning can be discovered, then so be it. But the
submission we would seek to put, if leave is given,
is that when one looks at the position in 1900 a quite
clear picture emerges of what was meant in the
Australian colonies by an excise and that it meant a
tax on the local production of goods and nothing else
and,in particular, was almost uniformly - I think
perhaps uniformly - a tax on the production of tobacco,
beer and spirits. And that in truth, colonial practice
and examination of it will demonstrate a relatively
precise and relatively narrow meaning for the term and,
in our submission, it .is the task of the Court to
endeavour to discover that meaning.
MASON CJ: It may be a convenient time to adjourn now,
Mr Solicitor.
MR DOYLE: If Your Honour pleases.
MASON CJ: We will resume at 2.15. AT 12.54 PM LUNCHEON ADJOURNMENT
ClT37/l/BR: 60 7/3/89 Philip Morris UPON RESUMING AT 2.18 PM:
MASON CJ: Yes, Mr Solicitor. MR DOYLE: If the Court pleases. Just in answer to the point
Your Honour Mr Justice McHugh raised this morning,
I notice that in H.C. SLEIGH V SOUTH AUSTRALIA,(1977) 136 CLR 475, in particular at page 527,
about point 6, Justice Murphy said, referring to
the power of the States:
A non-discriminatory tax on sales or
distribution or consumption is neither
a duty of customs nor or excise.
So I take him to mean, by inference, that a discriminator
tax would be.
McHUGH J: Yes, why I was asking you was that I thought you said that, in PARTON the legislation would survive - MR DOYLE: Well, I said it might because I understood from
Mr Berkeley that when you, in fact, read the relevant
Victorian Act closely, you will find that it could
apply only to Victorian. milk on its terms, and therefore
there would at least be an argument that it was a
taxing act which singled out Victorian milk and
if it did, well then, I acknowledge, maybe it would
be a discriminatory tax and it may be valid.
Your Honours, I dealt with the English meaning
of the term "excise" and our submission is, as I put
in closing, that was significant in the reasoning of
Justice Dixon and that reasoning, in turn, was
significant in leading to the view adopted in
BOL'IO,N V MADESEN. Could I just give the Court three references which I am not going to read from but
just tracing through how Justice Dixon and subsequently,
Chief Justice Dixon's views were influential and
reliance upon the English meaning. They are BROWN'S TRANSPORT V KROPP, (1958) 100 CLR 117 at 129; DENNIS HOTELS at pages 540, 559, 567 to 568, 574 and
592 to 593; and WHITEHOUSE VQµEENSLANIJ~ (1960)
104 CLR 604 at page 618.
(Continued on page 62)
ClT38/l/VH 61 7/3/89 Philp Morris_
MR DOYLE (Continuing): The only other point we would make in relation to the English meaning is that, in our
submission, while in some of the earlier cases heavvreliance was placed on the English meaning to arri~e
at what I would loosely call "the current approach".
Then, subsequently, the other two approaches, which we
identify in paragraph 8 of our outline, the purpose
approach and the economic-effect approach, are called
in aid and, to some extent, the reliance upon theEnglish approach drops out of sight.
But, in our submission, without wanting to seem
flippant, the reliance upon the English approach had,
as it were, already done its damage - it had got this
wider meaning established - and then these otherapproaches were called in aid. So we submit the Court should look to establish the Australian meaning of the
term in 1901.
Your Honours, the third basis which we submit led to the current broader test and which is unsound, is
the argument that a tax upon a step in the distribution of goods has the same effect as a tax upon production or
manufacture, namely, it seems, increasing the price to
the consumer and, accordingly, having that same effectis equally a tax on production or manufacture and so,
in turn, is an excise. Judgments which have relied upon the effect of a tax to decide that it is an excise,
are set out in appendix 10 in the book of appendices
and judgments which have identified the relevant effect
a little more precisely, are set out in appendix 11. Your Honours, it is our submission that thatanalysis also is, with respect, fundamentally unsound.
If Your Honours would look at appendix 12, that is a
report from a New South Wales task force reviewing the
State tax system, but it has a very useful, in our submission, and quite brief discussion of the
incidence of taxes. At page 21 in the book of appendices, in the lower part of the page, the writer
distinguishes between "legal incidence", which isunderlined, which is the legal obligation to pay, and
then, a few lines further down: The effective (or economic) incidence of a tax - which, he says:
describes who ultimately bears the tax after
all the shifting behaviour has been worked
through.
ClT39/1/SDL 62 MR'DOYLE, 7/3/89 Philip Mor'ris
MR DOYLE (continuing): Over the page, Your Honours, at the top of the page he makes the point of any given tax, and he takes there payroll tax which many might
say would prima facie be a direct tax. 1~ may be,
as he says:
backward shifted on to labour -
by, in effect, producing lower wage rates -
forward shifted to purchasers -
by producing higher output prices or -
not shifted at all (reducing profits,
share values and, probably, dividends)
coming from the manufacturer. And, Your Honours, I will not go through the other parts of the report but
what they demonstrate is that of any given tax,
whether it is backward shifted, forward shifted or not
shifted at all, wiil depend upon a variety of factors.
lam not suggestin~ that this has not been acknowledged in the cases but what, in our submission,··
it does demonstrate quite convincingly is that
reliance upon the fact of a tax entering the price of the
commodity is a rather shaky basis if we know that in
truth whether that happens will depend upon a whole range
of factors. One could even go so far as to say that one cannot confidently talk of a tendency of the tax t0
enter the price of the commodity; it will or it will
not, depending on a range of market factors and even i
it does, as he demonstrates, some of it may be backwar
shifted, some may be forward shifted, some may not be
shifted at all. But that concept of a tax entering t~
price of goods, in our submission, this report tends
to indicate is economically more or less meaningless.
All one can say is that, given certain circumstances,
some of it may enter the price, some of it may be borne
by the person who legally pays, some of it may bebackward shifted.
McHUGH J: · But, Mr Solicitor, may it not depend upon the particular tax, the particular goods and whether or
not there is economic evidence which indicates that it
does have an effect on the - - -
MR DOYLE: Yes. In our submission, in the end, you could only answer an incidence question by knowing the details of
the tax, the details of the goods and the
circumstances of the economy at the time and so we submit that it is a rather weak reed to re1y upon.
Your Honours, the materials in appendix 7, which I
touched on earlier, which relate to the terms "direct"
and "indirect tax" in the BRITISH NORTH AMERICA ACT
as is noted in the very brief resume of the position
there, about the middle of page 11, it was accepted
relatively early in relation to the Canadian cases
that this test of direct and indirect tax:
C 1T40 / 1 / JH 6 3 7 / 3 / 8 9
Philip Morris (Continued on page 63A) cannot be applied in an economically
meaningful way.
But, when you really get down to it, you cannot
distinguish indirect and direct taxes in terms of
effective incidence.
(Continued on page 64)
ClT40/2/JH 63A 7/3/89 Philip Morris
MR DOYLE (continuing): As is noted over the page, this led the courts to then talk of a "general tendency" of the
tax. We have a brief comment there from a Canadian writer. As that writer says: Modern economic analysis has largely stripped
Mill's distinction of meaning. But the courts have not abandoned it.
We submit, to begin with, it is a weak reed, but more importantly, in our respectful submission, to a
large extent this notion of effective incidence, the
tendency of the tax to be passed on, has been used
to indicate that a tax is an indirect tax, rather
than a direct tax and therefore to indicate that it isan excise. In our submission, incidence analysis
tells you nothing in answer to the question: "Is this
a direct tax or an indirect tax", because a direct
tax, income tax or land tax is equally likely to
enter the price, or to be backward shifted or not
shifted at all, or equally unlikely. In other words,
this incidence analysis is of no assistance in
distinguishing an indirect tax from a direct tax.
So, even in that respect, the use which has been made
of it in reasoning towards the meaning of excise is,
in our submission, of no assistance.
So, Your Honours, we submit that for those
reasons, which if leave was given we would develop
more fully, the approaches which have led to the
current meaning at least are sufficiently open tocriticism to warrant the Court reconsidering whether
the current meaning is sound. I would make one final
point in that area. In BOLTON V MADSEN the Court made
the point that the mere fact that the taxpayer could
mathematically, knowing how much tax he had to pay,
allocate it across the goods he was carrying - sothey are the tonne mile tax. He knew what it was that he had to pay; he knew how many items he was
paying. He could, if he chose, distribute it either per item or per pound weight of each item.
(Continued on page 65)
CIT41/l/JM 64 7/3/89 Philip Morris MR DOYLE (continuing): The Court said that did not
indicate that it was an excise. Nevertheless
the Court has said, in that same case, that
the tendency of the tax to enter the price of
goods is an indicator that it is an excise.
And once it is accepted that you cannot say,"The tax simply enters completely the price of the goods and then is passed on", in our submission, the contrast between the two
positions in BOLTON appears as a non-existent
contrast; in other words, there is, in truth,
no difference in terms of incidence, between
the man in BOLTON V MADSEN who is not paying
an excise but could if he chose calculate how
to spread it over his goods and the position
that would have been arrived at if, in truth,it was an excise. It is just an analysis which
does not help.
So we submit that does warrant g1v1ng
leave for argument to be presented. We would
also submit that the decision of the Court in
COLE V WHITFIELD is another reason why it may
be appropriate for the Court to give that leave.
In that case the Court, in our submission, recognized the central importance to Federation
as a whole of a uniform external tariff being
established and recognized, as was obvious,
the importance of the Commonwealth having control
of that uniform external tariff. And the Court's
concept, in our submission, of the protectionist
burden was a concept of a burden operating on
trade among the States but within a country
around which was a uniform external tariff.
In our submission, if one goes from there
to say, "The two arms of tariff policy are customs
and excise", it is at least compatible with
what is in COLE V WHITFIELD to suggest that,
in truth, that is the role of section 90. Simply, external tariff policy and, to the extent that excises can affect equality of trade among the
-States, equality of trade. And that, in turn, suggests that seeing section 90 as directed to control over taxation of goods generally
is to give it a purpose that at least does notsit easily with the purpose that COLE V WHITFIELD suggests it may well have had. Again, that is an argument that would have
to be developed but, in our submission, COLE for saying.it is appropriate to reconsider the
existing law. Our final submission, Your Honours, is that if leave is not given to reconsider
the basis of the law generally the Court should
not give leave to reargue the correctness of
DENNIS HOTELS.
ClT42/l/ND 65 7/3/89 Philip Morris
MR DOYLE (continuing): In our respectful submission, 1t the present law is in substance to remain as it
is, then what DENNIS HOTELS addresses is the issue
of when is a tax on someone who sells also a tax
on goods, and the answer is that if it is not
sufficiently related to quantity and value it is not and, in our submission, that is in no sense, in the context of the present law, a fundamental
issue. It is a question to which clearly different
answers can be given on a given set of facts but, in our submission, one cannot say that the answer given in DENNIS HOTELS, as it were, destroys the
central concept of excise as espoused in BOLTON
V MADSEN and subsequent cases, nor can one say -
and this is in answer to a point raised by Your Honour Justice Brennan this morning - in our
submission, that the answer given in DENNIS HOTELS
then produces problems in other areas of
constitutional law. In our respectful submission, it illustrates, as was said a number of times this
morning, particularly by Your Honour Justice Dawson,
that under any test lines will have to be drawn.
In our respectful submission, this is the
sort of line as to which one can say, "Whatever
your test is some sort of line will have to be
drawn",; and unless one came to the cone lus ion that
the drawing of the line at a particular point
was compellingly the right answer, in our
respectful submission, then, if you have a
decision as to where the line should be drawn,
the decision has stood for a reasonable number of
years, it has been significantly relied upon, it
is satisfactory to say, "We won't attempt to
redraw the line because there is no compellingly
correct point at which to draw it". So, in that situation, in our respectful submission, and which
we submit is the situation here, it is not
appropriate to embark upon redrawing the line, and
if it was, then it would be equally appropriate in
10 years time for someone to try to persuade the
Court to draw it back again where DENNIS HOTELS
did. That would be an endless process and, in
our submission, would not lead to any elucidation
of underlying principle. It would just lead to
continued argument over where to draw that particular
line.
ClT43/l/HS 66 7/3/89 Philip Morris
MR DOYLE (continuing): It is also our submission, Your Honours,
in relation to DENNIS HOTELS, that the submissions
advanced this morning to some extent appear to misapply
it. In our respectful submission, DENNIS HOTELS is a
decision which is applicable to taxes on sales. It is
not a decision which is applicable only to taxes on
sales when made by a retailer and so, on that basis,
as we understand the decision in SLEIGH, DENNIS HOTELS
was applied even though at least one of the plaintiffs
in SLEIGH was a manufacturer, because the point was
made and, in particular, by Your Honour Justice Mason -
this is H.C. SLEIGH V SOUTH AUSTRALIA, (1977) (1977) 136 CLR 475 and in particular at page 503,
Your Honour Justice Mason said, having referred to the
argument:
There is in all this nothing to distinguish
the licence fee from that which was dealt
with in DICKENSON'S ARCADE. Although some
attempt was made to suggest that the plaintiff
was engaged in manufacturing operations in that
it included one or more additives in thepetroleum products which it obtained from
refiners, the prohibition is against carrying
on the business of selling petroleum products
without a licence, that is against selling.
not against manufacturing. The case is, therefore, governed by DICKENSON'S ARCADE.
So the case was seen as applying, although it was a
manufacturer, because the relevant licence and the
relevant fee related to selling not manufacturing
and that, again, is why, in our submission, GOSFORD
and LOGAN DOWNS were capable of being distinguished
because there the relevant licence and fee related
to production, not to selling. So, in our respectful submission, in so far as the submissions
this morning have suggested that in some way
DICKENSON'S ARCADE produces problems in that particular
area, we submit there is a clear and evident
distinction to be drawn and that is between fees
related to sale and fees related to production.
Of course, the big issue is, in a sense, was
it a valid distinction to draw? It is one thing to
say it is there; it is another thing to say it is
valid and that, of course, is a matter on which,again,
differing views can be expressed and we submit that-there
is nothing to be achieved by going to the question
of which is the right view. So, for those reasons, we would submit that leave should be given
to present the argument and the bottom line of what
we are submitting is that there is a sufficient
prospect of some clarity coming from all this to warrant the Court hearing the argument and then our
second submission is that if the Court is against us
on that, it should indicate that the matter will be
ClT44/l/VH 67 7/3/89 Philip Morris decided in terms of the existing case law and it
will not look simply at the correctness of
DENNIS HOTELS and nothing else. If the Court pleases.
MASON CJ: Thank you, Mr Solicitor. Mr Solicitor for Victoria.
MR BERKELEY: The question before the Court is not whether DENNIS HOTELS is right or wrong but whether it should
be reargued. I will, first of all, comment briefly on the observations made by counsel who have gone
before me and then we will add some observations of
our own. In COLE V WHITFIELD, Your Honour Justice Brennan said to me, "Can you really reconsider section 92
without reconsidering section 90?" And in my
s imo le-minded dogmatism, I said, "Yes, you can."
Wel~ I have to confess, Your Honour, you were right and I was wrong.
BRENNAN J: I did not have a view. MR BERKELEY: Well, we always do that, sir, every time a judge
asks a question, all the barristers start writing
furiously and spoil their lunches, but there we are.
The fact is, COLE V WHITFIELD does illuminate what
is the true purpose of section 92 and to some extent,
it does illuminate the true purpose of section 90.
(Continued on page 69)
ClT44/2/VH 68 7/3/89 Philip Morrt8
MR BERKELEY (continuing): But that does not mean that DEN0IS HOTELS should be reconsidered because, however
much illumination you get upon the sea of
section 90, you still find floating in the middle of it the little island of DENNIS HOTELS. I will amplify it in this way: that if the Court
reconsidered the law on excise and came to the
conclusion that a retail sales tax was not an
excise, that would not involve overruling DENNIS
HOTELS - it would just wither on the vine; it would not be needed.
If, on the contrary, on a reconsideration
of the law as to section 90 the Court came to the conclusion that a retail sales tax was an
excise, there would be no change in the law as
far as is relevant to the facts of this case.
You would just have the existing situation; there
might be some other basis for it but that would
still leave standing DENNIS HOTELS which somejudges may think of as an anomaly, and some judges may think of not as an anomaly but there it stood, for 29 years, as a permissible tax for States
to levy notwithstanding what is clearly the law -
and that is that a direct and general retail sales
tax would be an excise.
So that it does not advance the argument
for the olaintiff to say that the matter ought
be reconsidered · in the light of COLE V WHITFIELD
because this Court is not sitting here to give
advisory opinions and we will be relying on COLE
V WHITFIELD when it is suggested by the plaintiffs
that you can distinguish the case of a producer.
We will be relying on what light COLE V WHITFIELD
throws upon the purpose of section 90 to suggest
that as far as DENNIS HOTELS is concerned you
cannot distinguish the case of a producer. But
that, in itself, the fact that COLE V WHITFIELD
has something general to say about section 90,
is not of itself reason for looking again at
DENNIS HOTELS and nor is the fact put by my learned friend, the Solicitor for South Australia, that
there is a difference of opinion as to the application
of DENNIS to producers because the fact that the first plaintiff is a producer is, again, not
a ground for reconsidering DENNIS HOTELS. It is a ground for distinguishing DENNIS HOTELS.
It is a ground for asking this Court to say, "What
are the limits of what was actually decided in
that case?" But it is not a ground for allowing
the plaintiff to say the case was wrong.
If, on what it actually decided, it applies
to producers, so be it; and if, on what it actually decided, it does not apply to producers, so be
it. But it is not a ground for overruling or allowing the plaintiffs to reargue the case itself.
ClT45/1/SDL 69 7/3/89 Philip Morris BRENNAN J: Mr Solicitor, I am not sure that I follow precisely
what you were saying about COLE V WHITFIELD.
Are you saying that the decision in COLE V WHITFIELD, or the reasons for the decision in COLE V WHITFIELD
are, on analysis, inconsistent with the decision,
for example, in GOSFORD MEATS?
MR BERKELEY: No, Your Honour. BRENNAN J: So that the distinction of DENNIS HOTELS from the situation in GOSFORD MEATS can stand consistently
with COLE V WHITFIELD?
MR BERKELEY: Yes, Your Honour. I do not want to be misleading about this but I do not want to fall - well, I
do not want to do what some other counsel have
already done, and that is argue my case at this
stage. I just want to limit myself, if I may, to the question presently before the Court. But when I put my full argument, what I say will be
consistent with the decision in GOSFORD MEATS
being good law.
BRENNAN J: Yes. DEANE J: That is an in terrorem point, is it?
MR BERKELEY: No, I am a vegetarian myself, Your Honour. It was said that, in some way, DENNIS HOTELS was
inconsistent with or overruled by what was said
in GOSFORD MEATS but it was done by a rather strange
mode of argument.
(Continued on page 71)
ClT45/2/SDL 70 7/3/89 Philip Morris
MR BERKELEY (continuing): The three Judges in the minority who relied upon what they decided, they relied upon
DENNIS HOTELS as good authority for deciding what
they did as the three Judges in the minority and in
the course of doing that they said on the facts of
this case you could not distinguish DENNIS HOTELS,
and then because the majority did distinguish
DENNIS HOTELS, it was said the effect of GOSFORD MEATS
was to overrule DENNIS. It was nothing of the sort: you had three Judges in the minority that said DENNIS was good law, the actual decision, and four Judges in
the majority said it was good law. So, we have got all of the Judges of this Court in the most recent
case on excise saying DENNIS HOTELS, however narrow or
wide an application you give it, for what it actually
decided is good law.
Your Honour the Chief Justice and Justice Deane
at page 385 in the passage read by Mr Charles,
Mr Justice Murphy, for reasons of his own which have
not so far been shared by the other members of the Court, has always been of the view that the actual
decision in DENNIS HOTELS was right, and Your Honour
Mr Justice Brennan at page 410. So that so far from GOSFORD MEATS being against us on this point,
it is very much in our favour. It is said that the decision provides uncertainty for business and governments.
I doubt whether anybody here representing one of the
governments of a State is going to be heard
to complain about that. With respect to my learned friends, I did not understand how it was inconvenient
for business.
It is not of itself a good reason that there
is a difference of opinion in the Court about this
matter, or that somewhere, as my learned friend,
Mr Doyle said, there is an ultimate truth. It may be on a Sunday morning to a different audience that argument or statement would bear some attraction but, as Your Honour Mr Justice Dawson said, in this area of
the law there is no ultimate truth and we ought to
accept that what the Court has actually decided show
the limits of where the truth is in respect of excises. I want to go, if I may, to SLEIGH's case in
136 CLR, at page 501, in the judgment of Your Honour
the Chief Justice.
MASON CJ: We have already been referred to this, have we not, during the morning?
MR BERKELEY: I am almost certain it was not read,
Your Honour. The page might have been mentioned, but if Your Honour tells me the page has been read
out I will not read it again, but my own recollection
is that it has not been read.
MASON CJ: No, I do not think it has been read word for wprd.
CIT46/l/JM 71 7/3/89 Philip Morris MR BERKELEY: Yes. I can take the hint, Your Honour. We rely upon what Your Honour says there for
not now departing from DENNIS.
MASON CJ: But I suppose you would say the case is stronger because the reliance has been placed - - -
MR BERKELEY: Of course it is, Your Honour. MASON CJ: - - - on these arrangements over the years and they now, according to the evidence, form
such a large part of State revenue.
(Continued on page 73)
CIT46/2/JM · 72 7/3/89 Philip Morris
MR BERKELEY: And also, from what Your Honour said in LOGAN DOWNS, 137 CLR 77, where Your Honour pointed
out it was in - where we get to the borderline
of what is or is not an excise. It is reallyimpossible to say that a particular case in
any absolute or ultimate sense is right or wrong,
any particular decision:
Quite apart from what has been decided
and what has been said in DICKENSON'S ARCADE
and KAILIS, it needs to be emphasized thatDENNIS HOTELS, BOLTON V MADSEN and for that
matter DICKENSON'S ARCADE ..... were cases
involving impositions levied at a time when
goods were in course of sale or distribution,
after the process of ·manufacture or production
had been completed. It has always been
recognized that before these impositions
can be characterized as an excise a direct
relationship between the tax and the goods
must be shown.
It is obvious from the stated case, the large extent to which the States have relied upon franchise fees and that appears at paragraphs 23
and 26 and the following paragraphs and it is
enough to say that in the case of Victoria the
rate of tax has risen between 1974 and 1988
from 5 per cent to 30 per cent and the revenue
from franchise fees as a percentage of the total
tax revenue of the State has risen from 5½ per cent
to over 11 per cent and there are similar figuresin the cases of other States but it is to be noted that in the case of the smaller States
such as Western Australia and Tasmania the percentage
is particularly high, 18 per cent and 24 per cent,
and that is, of course, because those States
have a smaller taxable base from which to levy
other taxes and that has been the case ever
since Federation and when one reads the convention
debates one sees complaints from the smaller
States as to the great difficulty they will
-face when they are deprived of revenues from customs and excise because of the small scope
they had for substituting other taxes. And that is still the situation today. If, in fact, this source of revenue is not
available to the States, that is, franchise
fees, and the reason why their reliance upon
it is so important is that franchise fees have equity and they have inbuilt into them natural growth; that is, the amount of revenue received
grows with the growth in the economy. And that
if States are deprived of this form of tax they
will be driven in two ways: one, they will have
to impose more severely taxes which are generally
ClT47/l/ND 73 7/3/89 Philip Morris recognized as being harmful to the community,
such as payroll tax which discourages employment
or stamp duties which are regarded as lacking
equity. And also, they will be driven to, if
not subterfuge, further attempts to get around
the constitutional prohibition, for instance,
by way of consumption taxes. And also, there
will be an increased lack of accountability
on the part of States.
Australia is the Federation in the world where the States raise the least amount of the
money they spend. It is about, I think, under
50 per cent; in the case of Canada and Germany
it is almost 100 per cene, But this aspect of
the difficulty States face at the moment and
which would be made worse by reconsidering DENNIS
HOTELS and overruling it is referred to in a
document called The Report of the Fiscal Powers
Subcommittee to the Standing Committee of the
Australian Constitutional Convention and there is a section of that which deals with taxation
under section 90 which I have had photocopied
and I hand up photocopies to the Court. And I would like to read out as relevant to our submission and adopt as our own some of the
matters put by that committee and I will also
refer to some of the figures which they set
out.
(Continuing on page 75)
ClT47/2/ND 74 7/3/89 Philip Morris
MASON CJ:
But you cannot take these too far, can you? The States have vacated the field of income tax.
That is one of the contributing factors to this imbalance that you talk about.
MR BERKELEY: Yes, Your Honour.
BRENNAN J: And death duties.
MR BERKELEY: Yes. I do not know what the figures are there, Your Honour, but the fact is that - that
is so, Your Honour. One doubts whether they would go back to income tax. I mean, the fact is there is so much to be squeezed out of the lemon
in that respect and one assumes that at the moment
the Commonwealth is doing the squeezing but it
is also obviously doing it on behalf of the States,
so whether there is further scope for additional
income tax in the current economic climate, or the
economic climate as it exists from time to time is
perhaps a matter for some doubt. I certainly hope
it has gone as far as it can go.
MASON CJ: But the problem is that there the deficiency or shortfall is a matter of political arrangement.
I do not see why what is a matter of political
arrangement should constitute further pressure
for interpretation of a constitutional provisionin a way which would favour the States ~evenue
raising capacity.
MR BERKELEY: Your Honour - I am talking about income tax at the moment - it is true that it is a
_pQlitical
ma.tter·for arrangement between the income tax which provides the funds available to both the Commonwealth and to the States. Thatis true, Your Honour, but one cannot infer from
that that if the States resumed levying income taxes
that that would increase the tax.base available
to the States. The particular passage, Your Honour - I will not read them - it is paragraph 2.12 and then paragraph 2.17 down to the
end of paragraph 2.22. The learned authors point out, and we woula also submit to the Court
the desirability or at least the harmful effects
of the great discrepancy between the amount of
money raised by the States and the amount of
money spent by them.Now, I understand what Your Honour says about income tax, but the question which is raised
by this case is whether what - you see, we have
an existing situation, no doubt brought about by
political considerations, but in considering
whether to reopen DENNIS HOTELS or not the question
which faces the Court is whether that decision
ClT48/l/HS 75 7/3/89 Philip Morris ought to be made more extreme that it presently
is. In· my submission, that is a matter that the Court can take into account. Your Honours will see from the table on page 13, that sets
out the total amount raised by States and local
government as a percentage of the whole of the
revenue earned by those bodies from public,that is the total taxation, and the comparative
figures for various federations are set out
there.
(Continued on page 77)
ClT48/2/HS 76 7/3/89 Philip Morris
McHUGH J: Are these revenues raised by way of taxation or
do they include other revenues - - -
MR BERKELEY: I understand the revenues are raised by taxation, Your Honour - - -
McHUGH J: As opposed to? MR BERKELEY: It is a total of all public taxation. McHUGH J: As distinguished from matters such as royalties and matters of that nature?
MR BERKELEY: I am only talking from hearsay. I got it from Dr Saunders and I did not go to the original
work; this is taken from Mr Musgrove's book on
Tax Assignment and Revenue Sharing but I understand it is a sense of all taxation. For those reasons, in our submission,
Your Honours, nothing has happened since EVDA which would indicate that it is appropriate to depart from what was said in EVDA, except COLE V WHITFIELD,
and for reasons we have stated that in itself is not
a reason from departing from what the Court said in
EVDA. If the Court pleases.
MASON CJ: Thank you, Mr Solicitor. Mr Solicitor for New South Wales?
MR MASON: The brief reasons why we oppose the reopening are
as follows. We submit that DENNIS HOTELS involves a question of the application of an exception to an
uncertain rule. Whether that application is arrived
at by a formal or substantive approach is a matter
of debate. What the width of the rule to which it is an application may be a matter of dispute upon which
the States would certainly wish to be heard in support of the outline adumbrated by my learned
friend, the Solicitor for South Australia. But that has little bearing upon the question whether the Court
should reopen DENNIS HOTELS which itself is an
~xceptional situation.
Secondly, DENNIS HOTELS is not, in our submission,
demonstrably wrong, that being the test suggestea
by Your Honour the Chief Justice in SLEIGH's case
at 50~ and we would seek to support that proposition
by pointing to the support which DENNIS HOTELS, in its
reasoning, has from Justices of this Court.
Thirdly, there has been no indication of a clear
view of an alternative approach.
Fourthly, this Court has consistently refused to reopen the matter. Some mention has been made about
the GOSFORD MEATS case; that was decided only 10 months
after EVDA by the same Bench of the Court that
decided EVDA and there was no suggestion there of an
intention to reconsider DENNIS itself.
CIT49/1/JH 77 7/3/89 Philip Morris Fifthly, the States have relied increasingly upon
DENNIS as a source of revenue and with respect to my
friends for the plaintiffs, that cannot convert the
States action into some sort of demerit that should
be used against them any more than the increased
Cormnonwealth reliance upon this Court's interpretation
of section 96 can itself be used as a basis for a
reopening of that situation.
Sixthly, we would submit that reopening would
seriously disturb the already precarious financial
position of the States, vis-a-vis the Cormnonwealth,
and the undesirable fiscal imbalance to which mention
has already been made.
In the material that my learned friend from
Victoria handed up just a minute ago, there is on
pages· 9 and 10 a reference to the fact that: in 1981-82 the Commonwealth raised
approximately 81 per cent of total taxation
revenues while Commonwealth expenditure for
its own purposes was approximately 51 per
cent.
We would submit that as a very general matter of
principle that is an undesirable fiscal imbalance from
the point of view of federalism.
(Continued on page 79)
ClT49/2/JH 78 7/3/89 Philip Morris
McHUGH J: Mr Solicitor, your submissions about this assume that if DENNIS HOTELS - if the reasoning is reopened and the decisions are reopened, you will be worse off but if you adopt the submissions of the Solicitor-General for South Australia, you may have your cake and be able to eat it as well.
MR MASON: Well, that is right, but we would like to, perhaps,
eat our cake when the question arises. What my learned friend, Mr Doyle, was directing his argument
alrnost entirely at was the need to narrow the rule to
which DENNIS is an exception. Now, when the States
pass a sales tax Act or a consumption tax Act, that
will be the time to be concerned about that. Why reconsider the exception when it will not be involved
in the present case? That is my submission.
Eighthly, we would rely upon the attitude of the Commonwealth which supports the stance which the States, except for South Australia, are putting
to the Court here. If section 90 has some purpose
and there is debate about what that purpose is, it
all seems to be related in some way to Commonwealth
control of something. Now, if the Commonwealth is content at the present state of affairs concerning
licensing fees, that is a ground, in our submission,
to be taken into account in considering whether to
disturb the status quo.
Ninethly, we submit there is no confusion about
the present law at least until a taxpayer went to
see his barrister and that is not the basis upon
which the question of confusion should be examined
from the point of view of the taxpayer. Tenthly, we
submit that nothing has changed since EVDA except
greater reliance by the State upon what the Court
has declared to be law. The real question here is whether leave should be given to reopen EVDA. There has been discussion about reopening DENNIS but the
very issue which turned upon the correctness of
DENNIS and the reliance factor was addressed by the
Court in EVDA and the Court spoke there very clearly.
We would submit there is nothing in the section 92
cases which throws any doubt upon the DENNIS cases. COLE V'.'WHITFIELD may be of assistance to the States in arguing a narrower interpretation of the concept of duties of excise but, in my submission, that is
not involved directly in the DENNIS line itself.
Finally, we would submit, in the light of what fell from some discussion this morning, DENNIS HOTELS does
not involve any impairment of development of
constitutional doctrine.
Your Honours, so far as the COASTACE case is
concerned, the plaintiffs there are solely in a
ClTS0/1/VH 79 7/3/89 Philip Morris position of wholesalers, so if the Court were of the view that there was some distinction between the position of a manufacturer and a wholesaler.
which we would deny as being relevant, but if that
were the Court's view, in the COASTACE case it issolely a wholesaler situation and therefore DENNIS,
even on its narrower view, is clear authority for
the position of the validity of the tax. If the
Court pleases.
MASON CJ: Thank you, Mr Solicitor. Mr Solicitor for Tasmania.
MR BALE: If it please the Court, may I hand up a brief outline? MASON CJ: Yes, Mr Solicitor. (Continued on page 81)
ClTS0/2/VH 80 7/3/89 Philip Morris
MR BALE: May it please the Court, I believe it would be apparent from the outline that what I had proposed to say has already been said in
substance by my learned friends, the Solicitorsfor Victoria and New South Wales, and at the outset may I say I adopt and support what they have said. There are only two points that I would
like to emphasize in relation to those submissions.
The first is that each of the four points which
the Court in JOHN recently considered as appropriate
to take into account when determining whether or
not a prior decision should be reviewed are all to a greater or lesser extent satisfied in this
case in support of the argument against reopening.
The first is that there is not just one case, but there are four cases in fact in a line which would
necessarily be opened: DENNIS, DICKENSON, SLEIGH and EVDA NOMINEES. It is our contention
that they have now, for a period of close to
29 years, provided the basis upon which every
State of Australia has determined its funding,
rmre so - and I will come to this in a moment -
dramatically in the last decade.
Secondly, although there have been some
differences in the reasoning of the Judges
who formed the majority of the two first cases
in that line, those differences, in my submission,
are in matters of principle relatively minor and
they save consistently, and almost unanimously,
been applied in the two more recent cases in the
line, SLEIGH and EVDA. Thirdly, the decisions
have indeed produced a useful practical result.
They have provided, so far as the States are
concerned, a relatively certain, and not just
a stable, but a gradually increasing source of
revenue so that the States have been able to
maintain at least some semblance of independence
in relation to their taxing powers.
Fourthly, they have indeed been acted upon by all States in a way which is fundamental to
their economies, and this is the second point
that I wish to emphasize. Your Honours will
see in the case stated in PHILIP MORRIS a number of tables, starting on page 9 of the
case stated and going through to the bottom of
page 12, setting out the incomes of the various
States from the three traditional and major
excise fees, and then in the last column,
indicating the percentage of/the total of those
fees bears to the total amount of tax revenue.
In answer to Your Honour Justice McHugh, I would
believe it is in relation to tax revenue only
and not to total State revenues. I would understand
CITSl/1/JM 81 7/3/89 Philip Morris that there are three components to State
revenues generally. There are tax revenues
which in broad figures are 25 per cent of their
total revenue; revenue from the Commonwealth,
which is about 50 per cent; and other revenues
which total approximately 25 per cent. Theseare expressed as percentages of tax revenue.
Your Honours will quickly see there that
there has been a dramatic increase in the 1980s
in the reliance by States on revenues from the
franchise source, and that reliance is particularly
marked in the cases of those States, particularly
Western Australia and Tasmania who have fewer
alternative sources of revenue to the extent
that in Tasmania in 1987/88 almost 24 per cent
of its total tax revenue came from franchise fees
and, you will see on the preceding page, in relation to Western Australia, nearly 18 per
cent, although in the previous year it had been
almost 22 per cent.
It is our submission that where the States
have come over a period of time, relying upon
the decisions of this Court, to construct their
revenues in a way which necessitates the continued
acceptance by the Court of its previous decisionsthat provides an even stronger base for not
putting at risk - and I do not presume to indicate
what the Court's decision might be were DENNIS and
these other cases reopened - but the revenue base
should not be put at risk by the Court reopening
those decisions.
DEANE J: Except in one sense the States are trying to say black and white at the same time in that
they are trying to push the DENNIS HOTELSanomaly into production and at least some of
them are submitting that the rule to which
DENNIS HOTELS is an exception should be narrowed,
but what they are saying is, "Entertain both arguments,
but do it in a way which does not raise up the
fundamental question whether DENNIS HOTELS can be allowed to stand consistently with principle in
these circumstances".
(Continued on page 83)
CIT 51 / 2 / JM · 82 7/3/89 Philip Morris
MR BALE: I hope that I am not trying to wheel two barrows,
Your Hono0r.DEANE J: Well, you are trying to push it into the field
of production.
MR BALE: I am certainly not trying to say that the
fundamental rule should be narrowed for the purposes
of this argument.DEANE J: I thou9ht your submission was that the DENNIS HOTELS exception applied to your tax on a fisherman's production. MR BALE: Not at all, Your Honour, no. DEANE J: I see. Well, I have misunderstood that.
MR BALE: No. I do not begin on HARPER and that will not be one of the arguments that I will be advancing
in HARPER.
DEANE J: You will not be relying on DENNIS HOTELS? MR BALE: No, I will not. All I am saying in this particular
area is that DENNIS HOTELS can be and should be
confined to within its limits as accepted and
pronounced by the Court at this time. I contend for no extension.
DEANE J: That completely answers what I put in relation
to production. It does not completely answer
the proposition that the States are trying - or
some of them are trying - to attract the rule
but saying that you must leave the exception as
if it cannot even be examined.
MR BALE: Yes, for the purposes of this argument, Your Honour, I do not seek to contract the rule. I simply say the reliance has come to be such, through practice over a long period of time, that the
States would be sorely prejudiced were that reliance, or the ability to have that reliance, now to be removed. The only other thing I should add is that
if the Court were to decide that this line of
authorities should be reviewed, I would certainly
strongly support the argument by the learned Solicitor
for South Australia that, in that situation, the
entire question of excise should properly be made
subject to review. May it please the Court.
MASON CJ: Is that attitude generally shared by the States?
ClT52/l/SDL 83 7/3/89 Philip Morris MR BALE: I would believe it is, Your Honour. I would not wish to speak for them but I believe that would
be generally accepted. Perhaps those who follow me might confirm my understanding that that is
the position.
MASON CJ: That was my impression from your predecessors,
that is the Solicitors for Victoria and New South
Wales, although they did not state it as explicitly
as you have done.
MR BALE: I would believe that is a generally accepted view
amongst the States, Your Honour.MASON CJ: Thank you.
MR BALE: May it please. MASON CJ: Yes, Mr Solicitor for the Commonwealth? MR GRIFFITH: If the Court please, we have short contentions
to hand up on the reopening issue.
MASON CJ: Thank you. MR GRIFFITH: If the Court pleases, they are somewhat short
and perhaps pragmatic. In paragraph 2 we make the short point that in COLE V WHITFIELD one might
say that there was then uncertainty as to meaning of section 92 to the extent that it was suggested
that there was no accepted meaning. Whereas,
with respect to DENNIS HOTELS, our submission
is that it has repeatedly been allowed to standas authority on its own facts but no more than
its own facts.
In paragraph 3 we make the point that has
already been referred to by my learned friend,
Mr Doyle, that in H.C. SLEIGH there does seem
to be a reference in the judgments of four of
the Court to the fact that one of the plaintiffs
was engaged in production - and we give the page
references there, including page 503 of Your Honour the Chief Justice which was read by my learned
friend, Mr Doyle.
Our general submission is that if leave is
given to reopen any question decided by authority,
that leave should be confined to reopening the
DENNIS HOTELS decision but we would, perhaps,
accept the gloss made of by my learned friend,
the Solicitor-General for New South Wales, that
one is really referring to the EVDA decision as
well.
ClT52/2/SDL 84 7/3/89 Philip Morris Our general submission about DENNIS HOTELS is
that that decision is not fundamental, in our
submission, to the meaning of "excise". We can test this in two ways: firstly, we would submit
that my learned friend's, the Solicitor-General
for South Australia, general proposition made
in paragraph 4 on page 2 of his contentions, is
one which can be made absent any DENNIS HOTELS
situation. In this obvious case, if it was desired
to test that proposition, a State tax on a licence
referable to current sales would be sufficient
to throw up all the issues which my learned friend,
Mr Doyle, seeks to embrace as to what is the
ultimate meaning of "excise".
(Continued on page 85)
ClT52/3/SDL 85 7/3/89 Philip Morris MR GRIFFITH (continuing): We would submit that iE one
regards DENNIS HOTELS as an island in a sea
or perhaps in a lake - we think of it as being
where the carillon is in the lake- the question
of where the low watermark is of that lake
is something, for example, examined in the GOSFORD
decision. But that issue has nothing to say about what are the bounds of the lake. In our submission the question of what are the bounds
of excise are issues to be addressed quite
independently of whether or not DENNIS HOTELS
should remain as an anachronism in that lake,
i n t ha t s e a , a ri d i f th a t i s s u e we r e t es t e d my learned friend, Mr Doyle, in his submissions,
engages in a proposal as to what he says is
the proper meaning.
My learned friend, the Solicitor-General for Victoria, quite wisely disengaged himself from seeking to put any postulation to the Court
meaning of excise" but notwithstanding the at this sta8e as to what would be a general
wisdom of that approach, it does seem to us
that Mr Doyle having, as it were, put his foot
in the waters of that sea or in the lake, itis appropriate for us to hand to the Court now,
as part of our submission, what are our contentions in respect of the meaning of 11 excise 11 to indicate that there is an answer in cases to the meaning of "excise" which we desire to put in the event that that were reopened for reconsideration by this Court. And if I could hand the Court our contentions as to that. These contentions take the broad issue that
excise should be regarded as an impost on goods,
whether imported or whether produced within
the Commonwealth, whether on their production,
manufacture, distri~ution, sale or consumption.So that our general_ submission would be the measure of what is an impost is whether it is an impost on goods. If it is on goods, on the
act of importation or exportation it is a customs duty, if it is otherwise on goods, in our submission,
it would be an excise. And our submission is that without seeking in an unqualified way to say that that is the ultimate truth which
lies concealed in the phrase as it was referred
to by Justice Stephen in DICKENSON at page 231,there awaiting recognition by the judicial fossicker; whether it is the sort of meaning that Your Honour Justice Dawson referred to at page 411 in the GOSFORD MEATS case, in our
of 11 excise 11 which does meet its constitutional submission, it is possible to articulate a meaning purpose which applies a broad meaning in answer
to the narrow meaning which my learned friend,Mr Doyle, postulates.
ClTSJ/1/ND 86 7/3/89 Philip Morris Having said that, in our submission, DENNIS
HOTELS deals only with the negative, it does not deal with the positive. It says nothing about the bounds of the ambit of excise and
it says nothing about issues of definition which
the Court has to face in situations which are
not embraced by the DENNIS HOTELS principle
of impost by reference to sales of prior period
Although in our contentions we have foreshadowed
what our approach is to that issue, so far as
the present issue before the Court is concerned,
our submission is that it is confined to the
narrow issue of the, as it were, the low watermark
of DENNIS HOTELS.
In our submission, in that case, it 1s
appropriate for the Court, for the reasons which
have been put, not to reopen its consideration
of DENNIS HOTELS. The general issues of definition can be examined by the Court as may arise in
a particular case by reference to other imposts
not drawn by reference to sales of prior periods
and one can see from the contrast of our contentions
with those of the Solicitor-General for South of approach as to definition of excise" in Australia what might be the two 8eneral lines
that context.
So having referred to our contention in that light, perhaps we should say, in answer to our learned friend, the Solicitor-General
for New South Wales, perhaps he can rely in
some little part on our submission that DENNIS
HOTELS should not be reopened but we would perhaps
cavil and say, "Well not too much". In our submission, if leave is given to reargue DENNIS
HOTELS, we will submit that the decision is
plainly wrong and should be overruled and if
the Court is to reopen DENNIS HOTELS our submission
is that the Court should limit leave to reconsideration
.of DENNIS HOTELS and not for the moment grant leave as to these broader questions which are thrown up by my learned friend, the Solicitor-
General for South Australia's contentions orthrown up by the contentions which we have handed to the Court.
(Continuing on page 88)
ClT53/2/ND· 87 7/3/89 Philip Morris
MASON CJ: Thank you, Mr Solicitor. Mr Solicitor for Western Australia.
MR PARKER:
If it please Your Honours, in view of what has been said so far my submissions can be quite
brief. It is submitted that it has not been shown that there is not general acceptance of the
decision in DENNIS HOTELS for the proposition that
a licence fee imposed in respect of wholesale or
retail sales and calculated by reference to past
sales is not the duty of excise. The fact thatthe party engaging in such selling by wholesale
or retail is also the manufacturer does not appear
to directly affect the validity of that propositionand my learned for South Australia has already referred to the decision in SLEIGH's case with respect to that. It has been contended that there is a
significant doubt, particularly in the business
community. In our respectful submission, especially were leave refused to re argue DENNIS
HOTELS in this case there would be very little
room for doubt in the business community. There would be very little scope for any serious confusion in respect of taxes dealing with
wholesale and retail sales_ and they, of course,
form the very, very subs tan t ia 1 proportion of any existing taxation schemes that could be
affected.
There may be some need to work out more fully
the position of any State franchise scheme that
might deal directly with production. They are not numerous, they are not significant, and it
may be, I think, seen that the writing is prettyclearly on the wall with respect to those.
So that, in our respectful submission, there is
not to be seen any great uncertainty in this
area arising from the continued existence of
DENNIS HOTELS understood in the way in which we
believe it is now so understood. If I could turn briefly to matters of constitutional principle: we would submit that the
course of decisions subsequent to DENNIS HOTELS
including DICKENSON, EVDA NOMINEES and BATH V
ALSTON HOLDINGS has not proceeded on a principle which is inconsistent with the decision in DENNIS.
It is not, in our submission, a telling
criticism that that decision may draw heavily
on formalism, especially in a context where,
despite some 90 years of struggle to discern
a satisfactory definition of the duty of excise
there has not been obvious success in that
struggle.
ClT54/l/HS 88 7/3/89 Philip Morris We would underline and put for ourselves
what has already been said about the extent of
reliance on the decision and may I just confirm
the point raised this morning by Your Honour
Justice McHngh that the total in the last
financial year was $13.4 billion raised by the
States, excluding the Northern Territory, that
is assuming that a billion is an American billion
as is the general accepted understanding these davs.
McHUGH J: That is the total revenue? MR PARKER: The total revenue, yes. McHUGH J: Yes, but the various taxes I think are only one-and-a-half billion.
MR PARKER: Yes. The collections are growing, both as a matter of growth in the economy, and also
because the one State that had not franchised
tax on tobacco has, since the figures that
Your Honours have, introduced such a tax and my learned friend for Queensland will no doubt
make particular reference to that in due course.
(Continued on page 90 )
ClT54/2/HS 89 7/3/89 Philip Morris
MR PARK.ER (continuing): But that will then produce something that is of some particular significance. Queensland,
with the introduction of that tax would be seen, in
our submission, to fall naturally into what is the
general order of the scale of relevance of thesefranchise fees to taxation revenue-raising in that
it will then fit generally into the scale of size
of population of State, it being the position that
the smaller the State, the greater is the reliance
upon franchise fees, because of other matters mentioned
by my learned friend for Victoria, affecting the
alternative taxes available.
If I could look for a moment, then, beyond this.
We would agree with the submissions of my learned friend for South Australia that it is not possible
just to reopen DENNIS. In truth, in our submission, the dissatisfaction raises fundamental questions
about the meaning of a duty of excise and the purpose
of section 90. If leave were granted to reargue,
our submissions would be substantially those already
outlined by South Australia and we believe, in
answer to a question put a moment ago, that that is
the position that would be adopted by all States.
Western Australia, however, is more impressed
than South Australia with what it sees to be sound objections to the reopening and disturbance of the
presently-established position for the reasons that
have already been canvassed. Given those objections, Western Australia submits that the preferable course
is not to disturb the present position. May it please Your Honours .
MASON CJ: Thank you, Mr Solicitor. Mr Davies. MR DAVIES: May it please the Court. May I hand up some outlines of our submissions?
MASON CJ: Yes.
MR DAVIES: May it please the Court. Your Honours will have seen that we have done in. ·our written outline is
taken the four criteria which were considered by
three of the Justices of this Court in COMMONWEALTH V
HOSPITAL CONTRIBUTION FUND and by this Court in
JOHN V COMMISSION OF TAXATION and seen the application
of those to this case. We then dealt with them in paragraph 3 of our outline. As to the first of them, whether decision rested on a principle worked out in
a succession of cases, we submit that DENNIS HOTELS
followed MATTHEWS and PARTON, but gave the test in
those cases a more certain operation by reference to
the criterion of liability. We say it was a naturalsuccession, at least with respect to taxes on sales
ClTSS/1/VH 90 7/3/89 Philip Morris and perhaps we should add, as others have, that,
of course, the later cases are further cases in
that succession. By that, we mean DICKENSON, SLEIGH and EVDA. Secondly, we submit, with respect, contrary to submissions which were made earlier that,
in fact, there is no difference between the reasons
of the Justices constituting the minority; that the
majority as to the principle, indeed, there is no difference among the Justices as to the principle
except in respect to Justice Fullagar. The difference between them lies only in the application of that
principle to the facts of that case and we giveYour Honours the page references which demonstrate
that.
Thirdly, we say it has achieved a useful result
and that is, the result of certainty, again in the
area of taxes upon sales and allows the States to
order their affairs accordingly. Fourthly, we havemade the submission that, in fact, they have been
independently acted upon and that submission has
been made and elaborated upon earlier. We do not wish to say anything about that except with respect
to two matters mentioned in subparagraph (iv) of
paragraph 3 of our outline. The first is a matter of fact. As our learned friend, the Solicitor-General for Western Australia, mentioned, the facts are slightly different from those which are set out in paragraphs 27 and 28 of the stated case because
of the changed situation in Queensland. That is set
out in an affidavit of Mr Hall. Could I hand up to Your Honours some copies of that?
MASON CJ: Yes. (Continued on page 92)
ClTSS/2/VH 91 7/3/89 Philip Morr~s
MR DAVIES: ~t brings into·account, Your Hono~rs, the revenue from the 1988 TOBACCO PRODUCTS
LICENSING ACT, estimated revenue, and Your Honours
will see that it is estimated to be $45 million
for the remaining portion of 1988/89 and
$100 million from a full year operation of the scheme.
The only other matter to which we refer in that
last subparagraph, Your Honours, which we perhaps
should mention - we do not say it is a major factorbut it is perhaps something that should be borne in
mind - and that is the enactment of the STATE GRANTS
(GENERAL REVENUE)ACT 1988. Could I hand up some copies
of that Act to Your Honours - I do not want to take
Your Honours to it now. But the effect of it is that by section 7 the Commonwealth has imposed global
borrowing limits on the States and, if in the opinion
of the Treasurer, a State has exceeded its global
borrowing limit, the Treasurer may reduce payment to
the State under the Act by an amount equal to that
which the Treasurer determines is the amount of the
excess. Of course, the States have traditionally financed capital works by borrowing; this limit will
have the effect of the States having to call on their
revenue resources more than they have previously.
MASON CJ: It is an entirely irrelevant question, but how is it that Victoria has a higher borrowing limit than
New South Wales?
MR DAVIES: I do not know the answer to that question, Your Honour: MASON CJ: That is because you are a Queensland - - MR BERK.ELEY:_ I am an expensive Solic~to~~General.
MR DAVIES: I should have known. Your Honours, the only other matter I should mention is, like our learned friends
the Solicitor-Generals for the other States, if the
question is to be reopened we submit, with respect,that the whole question srould be reopened not simply
the correctness of DENNIS HOTELS. They are our submission:
MASON CJ: Thank you, Mr Davies. Yes, Mr Charles? MR CHARLES: . May it . · please the Court, some very short
matters in reply. Firstly, may I respectfully remind
the Court that the third case, HARPER, does notrequire reconsideration of DENNIS HOTELS on any view. My learned friend, the Tasmanian Solicitor-General, said
that he was not going to argue it in any event. But may I remind the Court that my learned friend the Victorian Solicitor has said that one cannot distinguish in relation to his legislation, as I follow it, the position of a producer. It will, therefore, presumably
be argued for Victoria that the fact that the firstplaintiff is a producer does not prevent the tax from being levied against it, notwithstanding what has been ClT56/1/JH 7/3/89 Philip Morris
said in earlier cases. The point we are simply seeking to make, Your Honours, is this. The States have made it plain that they rely very substantially
on the excise levies for a large part of their revenue.
These matters are not static. The Court will have
seen from the case stated that one has a substantial
body of revenue being raised for Victoria of the
order of $112 million, in New South Wales, something
like $170 million - obviously people smoke more in
New South Wales.
One question, Your Honours, that must obviously
arise in the near future is whether people will continue
to be allowed to smoke in the light of possible risks
to health. In relation to petroleum, the rate atwhich one is using petroleum - how much longer will
that survive? How long will it be before we exist with electric cars? Now, the only short point I am
seeking to make, Your Honours, is that it may seem
fanciful at this stage to suggest that one will not
have tobacco and petroleum into the far future as
available sources of revenue; the States will be
searching for other means to raise the same revenue .
or the larger amounts of revenue they are going to want
in those years to come.If I can pursue that, Your Honours, what that means in relation to Your Honour Justice Brennan's question of DENNIS HOTELS as an island. We would
submit that that island can only continue toexist if this Court props it up. We would submit, with
respect, that it has an inherent potential to silt up
or worse, like Krakatoa for volcanic eruption.
We would submit that in the light of the submission
made by the Solicitor-General for New South Wales,
DENNIS HOTELS is an exception to an uncertain rule
that simply demonstrates that the States will seek as
far as they can to extend the operation of that
exception. We would submit it is already clearly inconsistent with the decisions in cases both before and after it
and that is going to leave this Court with the very
uncertain position and those who are forced to comply with the law, with the very uncertain position, of
what happens when the States seek to apply an
extension of DENNIS HOTELS as the legislation in
Tasmania in HARPER's case might well be thought to have
been, what then is the Court going to do faced with
that exten·sion; what is the Court going to do when
faced with the question of the producer in relation tothe tobacco legislation in PHILIP MORRIS.
ClT56/2/JH 93 7/3/89 Philip Morris
MR CHARLES (continuing): Your Honours, the cases that are now before this Court squarely raise at
least three questions. The first of them is: does DENNIS HOTELS extend to persons who are
producers? The second is: if "Yes", then
what is the position of producers or production
when taxed on sales,rather than merely in the
case of a tax relating to licences to sell?
Thirdly: if DENNIS HOTELS does not extend to
permit taxes of this kind, then is that an
appropriate or satisfactory distinction to
make? Fourthly, we would say, should DENNIS HOTELS
and its supposed logical extension in those cases
which have applied it, be overturned on the
ground that they are incompatible with the
purpose and intent underlying section 90 of the
CONSTITUTION?
Your Honours, the Solicitor-General for
South Australia, in dealing with the line at
which DENNIS. HOTELS is drawn, suggested that one
should not change that line unless one could
see that a different line was compellingly the
right answer. In relation to the threshold
question which Your Honour Justice Deane raised,
the EVDA NOMINEES question, we would say this,
the course of argument has demonstrated, Your Honours,the impossibility for the Court to answer these
questions now before it, the question whetherDENNIS HOTELS should be reopened, until the Court has heard full and complete argument both for
and against these questions. Your Honour Justice Dawson put to me that it is a question of
drawing lines; one has a line and one should stick
to it. We would say, with the very greatest of respect, one cannot tell whether that is an
appropriate line until one has seen precisely what
the alternative to it is. If one can see that
there is another alternative line, say, for
example, that put forward by the Solicitor-General
for the Commonwealth, then the Court would be in
a position, having heard argument upon those points, to say whether a line drawn in that
fashion would be both a more appropriate compliance
with the original constitutional guarantee,
whether it would provide certainty to those who
are both legislating and forced to comply with
legislation. We would say, Your Honours, that
it is really impossible to decide
whether or not DENNIS HOTELS is now ripe to
be overturned unless one has heard full and
complete argument on those questions.
CIT57/l/JM 94 7/3/89 Philip Morris
BRENNAN J: So the real question is whether all the cases that have been decided on section 90 should be
re-examined?
MR CHARLES: Yes, indeed, Your Honour. Much has been made in argument, Your Honours, of the difficulties
that the States face. We would say that there offered by DENNIS HOTELS and have pushed that eKceptiontotbeuncertainrule, as it was said, to
really is much to be said for the view that the
the very limit and they will no ~oobt seek to push
it further. Now, Your Honours, in those circumstances, if the ultimate truth is that
DENNIS HOTELS was clearly wrong, as the
Solicitor-General for the Commonwealth may
well argue, if this Court permits to happen, then what has happened for the last 29 years
is that the States have been levying taxes which
they were simply not entitled to do.
If that be so, there is a perfectly simple
remedy for the future. The constitutional provision would presumably then be that those taxes,
if they are to be levied by anyone, would be levied
by the Commonwealth, and if the Commonwealth were
to take the view that the levying of those taxes
was consistent with its Commonwealth federal
policy, then no doubt taxes of that kind can be
collected on behalf of the States by the
Commonwealth. No doubt, for those who are forced
to comply with the law the administration from the
viewpoint of a person in the p0sition of the
plaintiffs will be six times less expensive
through having to deal with one overall taxing
agency rather than six or seven.Your Honours, the final point we would seek to make is simply this, that the Court has before
it plaintiffs who wish to argue that DENNIS HOTELS
was wrongly decided. If the Court permits that question to be argued, then it has also before it presumably those who would seek to argue the widest possible definition of excise and the narrowest possible definition of excise. We
would respectfully submit the Court could not have
a better vehicle for a full discussion and
an exposition by the Court of the proper meaning
of section 90. If the Court pleases. .
ClT58/l/HS 95 7/3/89 Philip Morris
MASON CJ: Mr Charles, can I ask you this question: on
the assumption, and it is only an assumption
at the moment, that this question is resolved
against you, what would then be the outstanding
issues in the two cases in which you appear
for the plaintiff?
MR CHARLES: In the first case, Your Honour, we would seek to argue that DENNIS HOTELS should have
a narrow application that, accordingly, at least
in so far as the first plaintiff is concerned,
that it would follow that the tax was an excise.
That would then mean the Court would be faced
with the question of whether a consequence such
as CHAMBERLAIN INDUSTRIES indicated should apply,
which is that the tax cannot be valid in one
situation and not valid in the other. The question would therefore arise for the Court in the light
of the fact that the first plaintiff is a producer,
of whether this is now a case within or withoutthe DENNIS HOTELS'exception to the uncertain
rule. And we would put that argument, Your Honours,
on the basis that it is the narrow view of DENNIS
HOTELS that should apply.
In relation to the third case, Your Honours,
that is HARPER, we would be arguing that as
we have heard DENNIS HOTELS does not apply and
therefore we would say that the matter is then
open and shut, the question is clearly one of
excise. If the Court pleases.
MASON CJ: Mr Jackson. MR JACKSON: Your Honours, may I say three things in addition to those said by my learned friend, Mr Charles.
The first is that the new Queensland Act which
my learned friend, Mr Davies, has referred makes,
to a degree, the point which we sought to make
earlier, namely, the low watermark, if I could
use that expression, is expanding outwards -
the island looks a bit like Lake George at the moment.
Your Honours, the second point is this:
reference has been made to a line - and perhaps
I should have said earlier that what we submit, of course, is that the line should not be there
at all in the present case.
The third thing is, Your Honours, that there
is not, in our submission, any particular reason
why the whole question of section 90 should
be reopened. However, if to do so supports
the contention that the DENNIS HOTELS' line of cases should be reopened then we support
that contention also.
ClT59/l/ND 96 7/3/89 Philip Morris
MR JACKSON (continuing): Your Honours, the short fact, in
our submission, is that the DENNIS HOTELS cases
simply turn on the question whether the backdatingdevice gives rise to something that is or is not
a duty of excise - and that is a narrow point.
Your Honours, perhaps I should answer the
question that Your Honour the Chief Justice put
also to my learned friend. We would be left, as I intimated earlier, with a very narrow issue
on the question of excise and that is whether
the proximity of the period in relation to which
the tax is calculated to the period in respect
of which - that is the extent to which there is
a backdating is a backdating which is sufficient
to bring it within the rule in DENNIS HOTELS.There are other issues in the case not presently before the Court.
MASON CJ: Thank you, Mr Jackson. The Court will consider this question overnight.
AT 3.51 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 8 MARCH 1989
ClT6O/l/SDL 97 7/8/89 Philip Mor-ris
Key Legal Topics
Areas of Law
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Administrative Law
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Constitutional Law
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Statutory Interpretation
Legal Concepts
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Judicial Review
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Standing
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Statutory Construction
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Jurisdiction
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Procedural Fairness
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