Attorney-General (NSW) Informant; and Homebush Flour Mills Limited [1937] HCA 3

Attorney-General (NSW) Informant; and Homebush Flour Mills Limited [1937] HCA 3 - HCA 1937 case summary — Zoe

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and expense until the Crown should think fit to sell it to someone else, when he would become entitled to the net proceeds or the committee's price, whichever was the lower. In my opinion statutory provisions which create these alternatives and leave none other really penalize a failure to pursue the course which the legislature desires. On the face of the statute it is evident that its purpose was to obtain 30s. per ton on the flour gristed in order to apply it to the relief of distressed farmers. Because sec. 90 of the Constitution prevents the New South Wales legislature from saying in terms to millers: " You shall pay 30s. per ton on all flour you grist and sell" and from giving all the usual remedies for the recovery of a debt due to the Crown, a complicated set of provisions is adopted producing the result that unless the miller does pay 30s. a ton to the Crown he encounters very unpleasant consequences quite capable of proving his ruin. I think it would be absurd for a court to say that because the consequences of failure to pay the money are a more unpleasant alternative which the party is free to choose and payment is not enforced by means familiar as legal remedies, therefore the actual constraint which they effectually impose to pay the money may be ignored and the payment treated as voluntary or contractual and not as an exaction. Of course when the miller sells the flour and so avoids the unpleasant alternative he does incur a legal duty to pay the excess of the one price over the other, viz., the thirty shillings. The substance of the legislation is to impose a tax subject to a means of escape which no one would adopt if he considered the business and the pecuniary consequences. This in my opinion is taxation. Indeed, it is more clearly taxation then the levies which in the Wool Tops Case (1) were held to constitute taxation. The case has no resemblance to Crothers v. Sheil (2) where an ordinary statutory pool of a commodity - milk - was upheld. There, as it came into existence, the commodity was made the property of a board. The board sold it and distributed amongst the suppliers the net proceeds in proportion to the supplies. In arriving at the net proceeds, expenses of administration, contributions to sinking fund and interest on advances or loans were to be deducted. It was contended that because of these deductions there was a levy on milk. In

[107]

language. Here the effect and operation of the Act is to levy upon or extort from the owners of flour a sum of money or its equivalent in value, not in exchange for any service rendered to them but for a government purpose, namely, the relief of necessitous farmers. Such a charge is properly described as a tax or duty (See Attorney- General v. Wilts United Dairies Ltd. (1) ; The Commonwealth v. Colonial Combing, Spinning and Weaving Co. Ltd. (2) ). But is it a tax or duty of excise? Excise duties have often been described as inland imposts levied upon articles of manufacture or sale, and also upon licences to pursue certain trades or deal in certain commodities. But this court, in Peterswald v. Bartley (3), denied that the words were used in this extended sense in the Constitution : the Constitution limited the words to duties charged upon goods produced or manufactured in Australia itself or upon a sale of such commodities. Thus Griffith C.J. (4) said of the term "excise duty": "Tt is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax." (See also The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (5).) Crothers v. Sheil (6) was relied upon during the argument. But upon the true con- struction of the legislation there involved, the court held that it did not impose any liability in respect of ownership, transfer, sale or production of goods, but merely carried into effect a scheme for the compulsory acquisition of milk and the payment of the price or compensation out of the proceeds arising from its resale by the milk board. But the Flour Acquisition Act 1931 and its amendments levy a charge upon flour coming into existence in New South Wales, amounting to the difference between "the fair and reasonable price" and the "standard price" or its equivalent in value. In my judgment such an imposition is properly described, and operates, as an excise duty. The demurrer should be allowed.

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Arrorvey- illustration of this qualification upon the general power of expro- Gan . priation was provided by James v. Cowan (1), which shows that such Homsnusn POWer cannot be used to infringe sec. 92 of the Constitution (Cf. sett woe, R.v. Vizzard ; Ex parte Hill (2) ). And what is true of sec. 92 is also true of sec. 90 or any other over-riding constitutional provision, During argument, I inquired whether any miller had, during the period of the operation of the Act, failed to exercise the option of repurchase. It was stated at the Bar that no such case had ever been known. This is not surprising, because the Act and regulations contemplate that no such case shall ever occur. I am strongly of opinion that, where the court has to investigate the question whether a State enactment imposes a duty of excise, it may be necessary to enquire into the actual operation of the enactment. In such cases, a demurrer may be a very inconvenient form of proceeding. It is to be noted that in the Privy Council case of Attorney-General for British Columbia v. McDonald Murphy Lumber Co. (3), Lord Macmillan, dealing with a question in some respects analogous to the present, referred to the actual way in which the relevant enactments operated as "the best evidence that the tax was intended to be to all intents and purposes an export tax." Had the present question been, in my view, susceptible of doubt, I would have favoured an investigation into the operation of the present Act upon the milling business - an investigation which this court could have directed. The annual reports of the Auditor- General of New South Wales would have found a place upon such a hearing. By way of illustration, in the report for the financial year ending 30th June 1932, the Auditor-General thus referred to the results of the Flour Acquisition Act: "To 31st December 1931, the charge collected was at the rate of £2 15s. per ton; from. Ist January 1932, the rate was reduced to £1 10s. per ton" (p. 63). In the report of the financial year ending 30th June 1933 the accounts were set out with the comment that " the original levy of £2 15s. per ton was reduced as from 1st January 1932" (p. 191).

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Judgment (171 paragraphs)