Mr Adams was a registered Tax Agent whose estate was sequestrated by order of the Supreme Court of Queensland dated 27 April 1976. Sub-section 251K(3) of the Income Tax Assessment Act 1936 requires a Tax Agents' Board to cancel the registration of an individual tax agent upon his bankruptcy. It reads:-

"(3) A Board shall cancel the registration of an individual as a tax agent upon his death or bankruptcy, or his permanently ceasing to carry on business as a tax agent."

The sub-section, unlike sub-section (2), gives the Board no discretion once it is proved that the tax agent has been adjudicated bankrupt. In this case the bankruptcy was proved by the sequestration order before the Board and was common ground before the Tribunal. The Board was bound to cancel the registration once it was proved that a sequestration order had been made. (In re Burton and Blinkhorn (1903) 2KB 300).

In the present case, the Applicant gave evidence of his good character-as a tax agent and of the circumstances which contributed to his bankruptcy. But this evidence was beside the point. The Board was not exercising a discretionary power under sub-section 251K(2); it was exercising the power conferred by sub-section 251K(3).

The Board decided that that sub-section "did not contain any discretionary provisions and ... there was no alternative but to cancel Mr Adams' registration because of his bankruptcy," That decision was clearly right.

For these reasons, the decision of the Board should be confirmed. But the grounds for review includeda ground which attacked the constitutional validity of sub-section 251K(3), and thus denied the existence of any statutory authority for the cancellation of Mr Adams' registration. The ground is:-

"That Sub Section (3) of Section 251 K of the Income Tax Assessment Act is unconstitutional and invalid in that it does not deal with the law relating to Taxation as required by Section 51 of the Constitution of the Commonwealth of Australia."

When the matter came on for hearing, counsel for the Applicant said:-

"It has been inserted as a ground. I do not wish to abandon it. On my present instructions I do not propose to argue the matter."

The question raised by the ground as to whether sub-section 251K(3) is invalid assumes that this Tribunal has the power to answer it. The assumption warrants examination. The Tribunal may, for the purpose of reviewing the Board's decision, exercise the powers of the Board (section 43(1)), and it is therefore necessary to examine also whether the Tribunal by exercising the Board's power may answer the question whether sub-section 251K(3) is invalid. Neither the Tribunal nor the Board is vested with that power to which the Constitution refers as the judicial power of the Commonwealth. It is to a Court in which the judicial power of the Commonwealth is vested that questions of constitutional 1 validity of federal legislation are submitted for decision, A definitive answer to a question of constitutional validity requires the exercise of that judicial power, and can therefore be given only by a Court in which that judicial power is vested. Rich J. in Australian Apple and Pear Marketing Board v. Tonking [1942] HCA 37; (1942) 66 C.L.R. 77 said (at p. 104):

"The questions whether an Act of the Federal Parliament is valid, and if so whether it involves any and what legal consequences, can be determined only by an exercise of the judicial power, either by this Court, by some other Federal court which the Federal Parliament has created, or by some other court which it has invested with Federal jurisdiction in that behalf, or by some court when the question arises in proceedings before it and is not removed into this Court under secs. 40 and 40A of the Judiciary Act 1903-1940. But no body but a court can be invested with such jurisdiction."

It follows that neither the Tribunal nor the Board can give a definitive answer to the question of constitutional validity. It is one thing to deny to the Tribunal and the Board the power definitively to answer the question; it is another thing to deny their competence to consider and to reach an opinion on the question. An opinion formed by an administrative body on such a question does not, however, produce any-effect in point of law. It is incapable of adding to or subtracting from any authority or purported authority conferred by the challenged statute. It is incapable of affecting any legal requirement as to the exercise of an authority actually conferred upon the administrative body. Fullagar J. stated the legal sterility of an administrative opinion as to the constitutional validity of a, provision purportedly conferring power when he said in Australian Communist Party v. The Commonwealth (1951) 83 C.L.R., 258:-

"The validity of a law or of an administrative act done under a law cannot be made to depend on the opinion of the law-maker, or the person who is to do the act, that the law or the consequence of the act is within the constitutional power upon which the law in question itself depends for its validity."

An administrative body cannot therefore lawfully exercise authority merely because it is of the opinion that it has the authority. Its opinion is not the charter of its powers and discretions. It derives its powers and discretions from and in accordance with the law. It is the court's judgement and not the administrative body's opinion which defines the extent of (as well as the constitutional support for) its statutory authority. Farwell, L.J. in Rex v. Shoreditch Assessment Committee, Ex parte Morgan (1910) 2 K.B. 859, 880 in a passage which Lord Wilberforce regarded as giving valuable guidance (see Anisminic Ltd. v. Foreign Compensation Commission [1968] UKHL 6; (1969) 2 A.C. 147, 208) said:-

"Subjection in this respect to the High Court is a necessary and inseparable incident for all tribunals of limited jurisdiction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasure - such a tribunal would be autocratic, not limited - and it is immaterial whether the decision of the inferior tribunal on the question of the existence or non-existence of its own jurisdiction is founded on law or fact."

An administrative body with limited authority is bound, of course, to observe those limits. Although it cannot judicially pronounce upon the limits, its duty not to exceed the authority conferred by law upon it implies a competence to consider the legal limits of that authority, in order that it may appropriately mould its conduct. In discharging its duty, the administrative body will, as part of its function, form an opinion as to the limits of its own authority. The function of forming such an opinion for the purpose of moulding its conduct is not denied to it merely because the opinion produces no legal effect. In The King v. Hickman, Ex parte Fox and Clinton [1945] HCA 53; (1945) 70 C.L.R. 598, Dixon J., whilst denying the power of a Local Coal Reference Board to determine judicially the meaning of a statutory phrase upon which its jurisdiction depended, distinguished the Board's function of forming an opinion upon the question. He said (at p. 618):-

"I do not mean to say that the Board may not, for the purpose of determining its own action, "decide" in the sense of forming an opinion upon the meaning and application of the words "coal mining industry." It must make up its mind whether this or that particular function on the borders of the coal mining industry does or does not fall within the conception."

Blackburn J., sitting in an administrative jurisdiction in Re Cilli's Objection (1970) 15 F.L.R. 426, 428 noted that an administrative body "must satisfy itself that all its proceedings are in accordance with the law. It must therefore receive and consider, whenever the point is taken, an argument that it has no jurisdiction. To say that is, in truth, to say no more than that it must at all times act lawfully."

When an administrative body declines' to exercise a power in consequence of its opinion as to the limits of the authority conferred upon it by statute, the administrative body thereby seeks to conform with the expressed will of the legislature. But if an administrative body declines to exercise a power in consequence of its opinion that the legislature could not confer the relevant authority upon it, the will of the legislature expressly conferring that authority would, at least for a time, be overridden. Moreover, that will would be overridden without judicial consideration. A consequence of such gravity throws doubt upon the proposition that an administrative body ought ever to consider the constitutional validity of a statute affecting its power.

The problem is one which can arise only where the power of the legislature is itself limited. It does not arise where, as in the United Kingdom, Parliament may constitutionally exercise plenary power. In the United States, however, the problem has received consideration and the view has been taken that administrative officers and agencies have "no power or authority to consider or question the constitutionality of an act of the legislature" (73 C.J.S. 393 para. 67). The arguments in support of that view (to which I shall later refer) are powerful to suggest that an administrative body ought not to refrain from acting upon a statute except in a clear case of constitutional invalidity. But at least in such a case the administrative body must surely be at liberty to refrain from acting. If it were otherwise, that is to say, if an administrative body were bound in law to assume the constitutional validity of a statute and were bound to act upon the assumption that the statute were valid (though it was not), the administrative, body would be bound to the performance of unauthorized and perhaps wrongful acts. Yet the foundation upon which the legal control of administrative bodies is based is their obligation to keep within the limits of their lawful authority. That obligation is enforced by the Courts. Under our Constitution those limits are set both by the Parliament and by the Constitution. As Latham C.J. pointed out in Arthur Yates Co. Pty Ltd v. The Vegetable Seeds Committee [1945] HCA 55; (1945) 72 C.L.R. 37, 64:-

"If ... acts are done under the supposed authority of an invalid law and those acts constitute a wrong or a breach of contract, then the invalid law does not provide any defence to the person acting in pursuance of it, and the ordinary rules of law with respect to tort or breach of contract are applicable."

The invalid law is a nullity. 'It produces no obligation to act, and it commands no obedience. Latham C.J. in South Australia v. The Commonwealth [1942] HCA 14; (1942) 65 C.L.R. 373, 408 said:-

"A pretended law made in excess of power is not and never has been a law at all. Anybody in the country is entitled to disregard it. Naturally he will feel safer if he has a decision of a court in his favour -but such a decision is not an element which produces invalidity in any law. The law is not valid until a court pronounces against it - and thereafter invalid. If it is beyond power it is invalid ab initio."

This authoritative enunciation of the theory of invalidity precludes the acceptance of the majority reasons of the Supreme Court of Florida in State ex. rel. Atlantic Coastline Railway Co. v. State Board of Equalizers (1922) 94 So. Rep. 681 where it was held that ministerial officers were bound to obey an Act unless the Act .had been declared unconstitutional by the Courts. The fallacy in the opposing view, the majority held, was "that every Act of the Legislature is presumptively constitutional until judicially declared otherwise." A peremptory writ of mandamus was issued against the State Board without considering whether the Board's opinion as to the constitutional invalidity of the statute was well founded. Under our Constitution, the judicial function is declaratory only. It effects no alteration in the legal consequences of the challenged legislation. It may be that Covering Clause 5, which provides that the Constitution binds "the people ... of every part of the Commonwealth",' ensures that "anybody in the country is entitled to disregard" an invalid statute.

In the United States, the rule which precluded a ministerial officer from challenging the constitutional validity of a statute does not deny this theory of invalidity, yet it rests on a policy which is calculated to ensure the even operation of government. It is a policy which tends to rectify any misconception as to the true meaning of the proposition that nobody is bound by an invalid statute - a proposition which does not mean that an administrative body may lawfully ignore a statute merely because it believes the statute to be invalid. In State v. Steele County Board of Commissioners 232 N.W. 737, 738 it was said:-

"This rule is based largely upon governmental policy. It rests upon the theory that the court should accept as final the acts of the Legislature and discourage attacks upon them except where necessary to protect the private interests of the individual asserting invalidity and peculiarly and particularly affected thereby. Officials acting ministerially are not clothed with judicial authority. To permit them to refuse to perform their duty on the ground that the commanding law is unconstitutional would be a dangerous practice, in that they who have only ministerial duties would be raising questions affecting the rights of third persons while they themselves would have no' direct interest in the question and could not in any event be made responsible. Under our present system, lawsuits may be prosecuted or defended by the real party in interest. Such party alone has a right to make a record which will render the question litigated res adjudicata. ...... To permit officials charged with such a duty to raise such a question may not only be a hazardous proceeding to themselves but productive of great inconvenience to the public. Their authority is the command of the statute, and it is the limit of their power."

But in the United States, exceptions have always been made where the ministerial officer might be injured in person, property or rights by the enforcement of the challenged statute. The United States rule has not passed without dissent and it seems that exceptions to the rule nay be increasing in extent (see State ex. rel. Harrell v. Cone 177 So. Rep. 854; Steele v. Freel 25 So. Rep. 2d. 501; City of Pensacola v. King 47 So. Rep. 2d. 317; Board of Education v. Allen [1968] USSC 131; 392 U.S. 236, 241 and Aguayo v. Richardson 473 F. 2d. 1090).

In Australia there is a reluctance on the part of administrative bodies to pass upon the constitutional validity of statutes: see Case D47 (72 A.T.C. 272), a decision of No. 2 Tax Board of Review. If it be allowed that there is, in Australian legal theory, a competence in an administrative body to consider and form an opinion upon the constitutional validity of a statute in order that that body may act in accordance with law, the competence to form the opinion and to be informed on the question of constitutional invalidity should not be treated as a jurisdiction invested in the administrative body to reach a conclusion having legal effect.

It is merely a means which the administrative body may adopt in moulding Its conduct to accord with the law. The formation of the opinion is not a power vested in the administrative body which the members must personally exercise. They may be guided by the competent legal advice of others and they will be held to act reasonably if they act on "the faith of a statute not yet held to be invalid" (per Dixon J., James v. The Commonwealth [1939] HCA 9; (1939) 62 C.L.R. 339, 373). As a counsel of prudence there is much to commend President Lincoln's dictum quoted in State v. State Board of Equalizers at p. 683:-

"I do suggest that it will be much safer for all, both in official and private stations, to conform to and abide by all those acts which stand unrepealed than to violate any of them trusting to find impunity in having them held to be unconstitutional."

I return now to the powers which might be exercised by this Tribunal when the question is raised before it whether sub-section 251K(3) of the Income Tax Assessment Act 1936 is constitutionally invalid. More precisely, the enquiry is whether this Tribunal has power to give some relief upon the ground that sub-section 251K(3) is invalid.

If sub-section 251K(3) be invalid, what relief might this Tribunal give? Its powers on review are contained in sub-section 43(1). Confirmation aside, it may:-

(b)

vary the decision under review; or

(c)

set aside the decision under review and -

(ii) remit the matter for reconsideration by the Board.

The invalidity of sub-section 251K(3) would deny power to vary a decision or make a substituted decision under the sub-section; and the Board would have no power to deal with the matter if the Tribunal remitted the matter for reconsideration. As at present advised, it appears to me that, when a decision maker acts in conformity with his statutory authority, a person whose interests are affected by his act may not obtain relief from this Tribunal upon the ground that the statute is ultra vires the Parliament. This Tribunal has no powers of review which it might exercise to give effect to such a ground. It has no judicial power. The relief must be sought, if at all, from a court in which the judicial power of the Commonwealth is vested.

The ground advanced by the Applicant and recited earlier in these reasons is not therefore a ground which might invoke the exercise of the Tribunal's powers. I therefore forebear from answering the question whether sub-section 251K(3) is invalid (though I note the decision of the High Court in Stuckey v. Iliff [1960] HCA 57; (1960) 105 C.L.R. 164 which might well have been a substantial obstacle to the Applicant's making out of the ground of alleged invalidity).

The decision will affirm the decision of the Tax Agents' Board.

IN THE MATTER OF AN APPLICATION

BY COLIN KEVIN RUSSELL ADAMS

TAX AGENTS' BOARD CANCELLING THE REGISTRATION OF THE APPLICANT AS A TAX AGENT

The decision of the Tribunal is that the decision of the Tax Agents' Board made on 16 July 1976 whereby the registration of the Applicant Colin Kevin Russell Adams was cancelled be affirmed.

Dated 12 November 1976.