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Some Problems of Commonwealth Immunity and Exclusive Legislative Powers

Published online by Cambridge University Press:  24 January 2025

Colin Howard
Colin Howard*
Affiliation:
University of Melbourne
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Extract

There is a well-known obscurity in the law relating to Commonwealth immunity from State legislative power. It is that whereas the High Court has laid down in clear terms that the Commonwealth is not subject to State legislative power at all, it has at the same time said that the Commonwealth may be “affected by” State laws but has not explained what is meant by “affected by”.

There is also a less well-known obscurity in the law relating to State taxation of Common\vealth public servants. The High Court has held that general State tax laws apply to Commonwealth public servants in the same way as to other subjects of the State, unless the Commonwealth enacts legislation exempting the payments which it makes to its public servants by way of salary or pension from State taxation. The obscurity is that a Commonwealth law prescribing salaries for its own public servants appears to be an exercise of exclusive legislative power; that a law exempting such salaries from State taxation appears to be incidental to that power, and therefore itself an exercise of exclusive power; but that if this is so, the State tax law also, in its application to Commonwealth salaries, appears to be an exercise of Commonwealth exclusive power and therefore invalid in the first place.

Type
Research Article
Information
Federal Law Review , Volume 5 , Issue 1 , March 1972 , pp. 31 - 58
Copyright
Copyright © 1972 The Australian National University

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References

1 Commonwealth v. Cigamatic Pty Ltd (1962) 108 C.L.R. 372; Commonwealth v. Bogle (1953) 89 C.L.R. 229. For relevant passages see nn. 5-8, 12 infra. Cf. Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46. 62 per Menzies J.

2 For relevant passages see nn. 10-13 infra.

3 This expression is taken from dicta of Dixon J. in Federal Commissioner of Taxation v. Official Liquidator of E. O. Farley Ltd (1940) 63 C.L.R. 278, 308, and of Fullagar J. in Commonwealth v. Bogle (1953) 89 C.L.R. 229, 260.

4 West v. Commissioner of Taxation (N.S.W.) (1937) 56 C.L.R. 657.

5 (1953) 89 C.L.R. 229.

6 Id., 249, 255, 274 respectively.

7 See his observations, id., 284.

7a Reproduced in text following n. 14 infra.

8 Id., 259-260.

9 Infra n. 26.

10 (1940) 63 C.L.R. 278, 308.

11 (1947) 74 C.L.R. 508.

12 (1962) 108 C.L.R. 372.

13 (1947) 74 C.L.R. 508, 528.

14 Id., 529.

15 Commonwealth v. Limerick Steamship Co. Ltd (1924) 35 C.L.R. 69, 86; Commonwealth v. Kreglinger & Fernau Ltd (1926) 37 C.L.R. 393, 405; Bailey, K. H., “The Federal Jurisdiction of State Courts” (1940) 2 Res Judicatae 109, 111Google Scholar.

16 (1925) 36 C.L.R. 170

17 Knox C.J., Higgins and Starke JJ; Isaacs and Rich JJ. dissenting.

18 Infra n. 65.

19 (1962) 108 C.L.R. 372.

20 Supra n. 12.

21 Pedersen v. Young (1964) 110 C.L.R. 162; Re Young's Horsham Garagli Pty Ltd [1969] V.R. 977.

22 Province of Bombay v. Municipal Corporation of Bombay [1947] A.C. 581 (P.C.). For a discussion of the scope of this rule with Australian references see Hogg, Liability of the Crown (1971) 166-175.

23 Essendon Corporation v. Criterion Theatres Ltd (1947) 74 C.L.R. 1; Commonwealth v. Bogle (1953) 89 C.L.R. 229, 259.

24 (1953) 89 C.L.R. 229,259.

25 Although neat, this is not a persuasive way of stating the argument, for it invites the sterile response that the Crown is supposed to be one and indivisible. The substance of the matter is legislative power, not formal assents by the Crown.

26 (1953) 89 C.L.R. 229, 259.

27 Supra n. 8.

28 (1953) 89 C.L.R. 229, 258.

29 Excellent recent contributions to the question of Commonwealth capacity contract and liability in contract are E. Campbell: “Commonwealth Contracts” (1970) 44 A.L.J. 14; “Federal Contract Law” (1970) 44 A.L.J. 580; “Agrements about the Exercise of Statutory Powers” (1971) 45 A.L.J. 338; and P. W. ogg, “The Doctrine of Executive Necessity in the Law of Contract” (1970) 44 A.L.J. 154; but these are not concerned with the immunity problems discussed 10 the text. Cf. P. W. Hogg, “Suits against the Commonwealth and the 51tates in the Federal Jurisdiction” (1970) 44 A.L.J. 425; P. W. Hogg, Liability of the Crown (1971) Ch.9.

30 (1953) 89 C.L.R. 229, 232. The present writer was in error on this point in Howard, C., Australian Federal Constitlltional Law (1968) 98Google Scholar.

31 In the conflict of laws it is not yet clear what law or laws, determine capacity to contract but this obscurity does not in principle affect the argument in the text.

32 Melbourne Corporation v. Commonwealth (1947) 74 C.L.R. 31, reaffirmed, with a marked divergence of opinion as to what it means, in the Payroll Tax case: Victoria v. Commonwealth (1971) 45 A.L.J.R. 251.

33 As in Parker v. Commonwealth (1965) 112 C.L.R. 295 and Suehle v. Commonwealth (1967) 116 C.L.R. 353.

34 Constitution s. 51(xxxi.).

35 Constitution s. 52(i.); Worthing v. Rowell and Muston Pty Ltd (1970) 44, A.L.J.R. 230; The Queen v. Phillips (1970) 44 A.L.J.R. 497; Attorney-General (N.S.W.) v. Stocks and Holdings (Constructors) Pty Ltd (1970) 45 A.L.J.R. 9.

36 Australian National Airways Pty Ltd v. Commonwealth (1945) 71 C.L.R. 29; Bank of New South Wales v. Commonwealth (1948) 76 C.L.R. 1; Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46.

37 Re Readers Digest Association Pty Ltd (1969) 43 A.L.J.R. 116.

38 (1953) 89 C.L.R. 229.

39 Inglis v. Commonwealth Trading Bank of Australia (1969) 119 C.L.R.' 334: and see further the references therein to Bank of New South Wales v. Commonwealth (1948) 76 C.L.R. 1.

40 The judgments in the Readers Digest case supra n. 37, proceed to some extent on this basis.

41 (1947) 74 C.L.R. 31.

42 (1953) 89 C..L.R. 229.

43 A diversity of views was expressed in the Pharmaceutical Benefits case: Attorney-General for Victoria v. Commonwealth (1945) 71 C.LR. 237. Cf. Wynes, W. A., Legislative, Executive and Judicial Powers in Australia (4th ed. 1970) 337-8Google Scholar.

44 Grants for the promotion of the arts for instance. Expenditure on departmentsi of state not mentioned in the Constitution no doubt falls within necessarily implied legislative power.

45 It is clear that objection cannot be taken on the ground that this is a non–governmental function and therefore beyond power. If the Commonwealth can run an airline, a trading bank and a shipping line (supra n. 36) it car run a bus service. The question is not whether it can do so but whether when it does so intra–State, it is subject to State law. The Clothing Factory case: Attorney–General for Victoria v. Commonwealth (1935) 52 C.L.R. 533, may be against the assumption in the text but the case is so concerned with the defence power that it is hard to tell. Moreover the Commonwealth has extended its activities in many ways since 1935.

46 West v. Commissioner of Taxation (N.S.W.) (1937) 56 C.L.R. 657. The following discussion of the problems suggested by this decision departs to some extent from the views expressed by the writer in Howard, op. cit. 89-91.

47 West v. Commissioner of Taxation (N.S.W.) (1937) 56 C.L.R. 657,669, 681.

48 (1947) 74 C.L.R. 31.

49 Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd (1920) 28 C.L.R. 129.

50 Baxter v. Commissioners of Taxation (N.S.W.) (1907) 4 C.L.R. 1087. For an account of the course of events see Howard, op. cit. 34-35.

51 (1911) 12 C.L.R. 375.

52 (1937) 56 C.L.R. 657.

53 Latham C.J. and Starke J., id., 673, 677 respectively, held that the Commonwealth could exempt its payments from State taxation and that therefore the only question was whether there was an inconsistency between Commonwealth and, State legislation which produced this result. Rich, Dixon and McTiernan JJ. did not expressly hold that the Commonwealth could do this but they quite clearly proceeded on the basis that it could, because they joined with Latham C.J. and Starke J. in looking for an inconsistency.

54 Commonwealth v. Queensland (1920) 29 C.L.R. I (interest on Commonwealth securities); Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46 (payment received by a Commonwealth statutory corporation in the ordinary course of trade).

55 The reference by Latham C.J. at (1937) 56 C.L.R. 657, 668 to Constitutions. 52(ii.) was not for this purpose but to support his argument that the States have no legislative power to discriminate against the Commonwealth.

56 Id., 678.

57 As Latham C.J. demonstrates, id., 668-9.

58 The King v. Burgess; Ex part Henry (1936) 55 C.L.R. 608, 672; Federal Commissioner of Taxation v. Official Liquidator of E. O. Farley Ltd (1940) 63 C.L.R. 278, 315; Burton v. Honan (1952) 86 C.L.R. 169, 177-8; Wragg v. New South Wales (1953) 88 C.L.R. 353, 386; Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46, 54.

59 (1937) 56 C.L.R. 657, 668.

60 Supra n. 35.

61 (1911) 12 C.L.R. 375.

62 Flint v. Webb (1907) 4 C.L.R. 1178, 1194 per Higgins J. Cf. West's case (1937) 56 C.L.R. 657, 695, 700 per Evatt J.

63 This statute was enacted in consequence of the decisions on federal places referred to nn. 35, 60 supra. For comment see Lane, P. H., “The Law in Commonwealth Places—a Sequel' (1971) 45 A.L.J. 138, 142Google Scholar; O'Brien, case note (1971) 8 M.U.L.R. 320, 327-8.

64 (1925) 36 C.L.R. 170.

65 Supra n. 18. In Howard, op. cit. 97, n. 50, the writer expressed the opinion that the decision in this case on the immunity point must now be regarded as wrong. He has changed his mind.

66 Knox C.J., Higgins and Starke JJ; Isaacs and Rich JJ. dissenting.

67 This reasoning is adopted also by Menzies J. in Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46, 62

68 Cf. id., 59 per McTiernan J.

69 (1937) 56 C.L.R. 657, 686-7.

70 (1920) 29 C.L.R. 1.

71 (1937) 56 C.L.R. 657, 687.

72 (1962) 107 C.L.R. 46.

73 McTiernan J. held that it was only incidental to the power. Menzies J. found himself obliged to read the statute down.

74 South Australia v. Commonwealth (1942) 65 C.L.R. 373. This was the case in which the High Court upheld a statutory scheme the object and effect of which was effectively to exclude the States from the field of income tax. See further Howard, op. cit. 80-83.

75 (1920) 29 C.L.R. 1.

76 (1962) 107 C.L.R. 46.

77 (1937) 56 C.L.R. 657.