Australian Tape Manufacturers Assn Ltd v Commonwealth

Australian Tape Manufacturers Assn Ltd v Commonwealth - [1993] HCA 10 - HCA 1993 case summary — Zoe

[69]

The answer to the question whether a legislative imposition of an obligation to pay money involves an "acquisition of property" for the purposes of s. 51(xxxi) of the Constitution must depend upon the context in which the obligation is imposed. If, for example, a law did no more than provide that a particular named person was under an obligation to pay to the Commonwealth an amount of money equal to the total value of all his or her property, the law would effect an acquisition of property for the purposes of s. 51(xxxi), notwithstanding the fact that it imposed merely an obligation to pay money and did not directly expropriate specific notes or coins. In that regard, the comment of a majority of the Court in MacCormick v. Federal Commissioner of Taxation that a tax is "no more than the imposition of a pecuniary liability" [12] must be understood in context and does not constitute authority for a general proposition that the imposition of an obligation to pay money can never constitute an "acquisition of property" for the purposes of s. 51(xxxi). Section 51(xxxi)'s guarantee of just terms is not to be avoided by "a circuitous device to acquire indirectly the substance of a proprietary interest" [13] . In a case where an obligation to make a payment is imposed as genuine taxation, as a penalty for proscribed conduct, as compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity, it is unlikely that there will be any question of an "acquisition of property" within s. 51(xxxi) of the Constitution [14] . On the other hand, the mere fact that what is imposed is an obligation to make a payment or to hand over property will not suffice to avoid s. 51(xxxi)'s guarantee of "just terms" if the direct expropriation of the money or other property itself would have been within the terms of the sub-section. Were it otherwise, the guarantee of the section would be reduced to a hollow facade.

[72]

The constitutional provision is not limited in terms to laws providing for the acquisition of property by the Commonwealth itself. The words are general - "with respect to the acquisition of property." It is obvious that the constitutional provision could readily be evaded if it did not apply to acquisition by a corporation constituted by the Commonwealth or by an individual person authorized by a Commonwealth statute to acquire property. Further, the present case shows that the constitutional provision would be quite ineffective if by making an agreement with a State for the acquisition of property upon terms which were not just the Commonwealth Parliament could validly provide for the acquisition of property from any person to whom State legislation could be applied upon terms which paid no attention to justice. The question whether the constitutional requirement applies to acquisitions in pursuance of Commonwealth law other than acquisition by the Commonwealth itself was mentioned in the case of Real Estate Institute of New South Wales v. Blair [17] . In McClintock v. The Commonwealth [18] , Starke J. and Williams J. held that it applied in the case of acquisition of property authorized under Commonwealth law though the Commonwealth itself did not acquire the property. Williams J. applied the principle in Jenkins v. The Commonwealth [19] . See also Bank of New South Wales v. The Commonwealth [20] , per Rich and Williams JJ. I agree that, as legislation with respect to the subject of the acquisition of property can be enacted by the Commonwealth Parliament only by virtue of the power conferred by s. 51(xxxi), all such Commonwealth legislation must affirmatively provide just terms for such acquisition whether the acquisition be by the Commonwealth or by a State or by any other person. 1. See, generally, McClintock v. The Commonwealth (1947), 75 C.L.R. 1, at pp. 23, 36; Trade Practices Commission (Cth) v. Tooth & Co. Ltd. (1979), 142 C.L.R. 397, at pp. 424-425, 427, 451-452; Clunies-Ross (1984), 155 C.L.R., at p. 202. 2. (1949) 80 C.L.R. 382, at pp. 401-402. 3. (1946) 73 C.L.R. 213, at p. 224. 4. (1947) 75 C.L.R., at pp. 23, 36. 5. (1947) 74 C.L.R. 400. 6. (1948) 76 C.L.R., at p. 250.

[93]

Provided that the vendor supplies certain particulars to the collecting society, he or she is not liable to pay the royalty imposed by s. 135ZZN(1) in respect of any blank tapes that he or she sells to a prescribed organization or to an exempt body: s. 135ZZR. A "prescribed organisation" is an organization that is prescribed by regulation and, under the Copyright Regulations 1990 (Cth), includes such organizations as the Australian Broadcasting Corporation and the Special Broadcasting Service. An "exempt body" is a body or organization other than a prescribed organization that is declared by the collecting society to be an exempt body upon the collecting society being satisfied that that body or organization does not use blank tapes, or make blank tapes available to any of its members, for the purpose of making copies of sound recordings in which copyright subsists unless the body, organization or member (as the case may be) is the owner or licensee of the right to make such copies: s. 135ZZT. Further, where a prescribed organization or an exempt body purchases a blank tape from a vendor who is liable under s. 135ZZR to pay the royalty in respect of that blank tape then, on the provision by the prescribed organization or the exempt body of certain particulars to the collecting society, it is entitled to a payment from the collecting society of an amount equal to the amount of the royalty payable for the tape, whether or not that amount of royalty has been paid: s. 135ZZS(1), (2). Such an amount is also payable by the collecting society to a person or body (other than a prescribed organization or an exempt body) who purchases a blank tape from a vendor where that person or body provides to the collecting society, amongst other things, a statutory declaration that the person or body will not use the tape, or cause or permit it to be used, or make it available to any person for use, for the purpose of making a copy of a sound recording in which copyright subsists unless the person or body is the owner or licensee of the right to make a copy of the sound recording: s. 135ZZS(3).

[109]

Further, the royalties are to be paid to the collecting society declared by the Attorney-General. Copyright owners' organizations or collecting societies are a recognized means by which the individual owners of copyright, particularly where performing rights are involved, may combine to negotiate terms with those wishing to use their works, to license the use of those works and to collect the fees payable [26] . It is, therefore, not surprising that the legislation provides for a collecting society to collect the royalty which it imposes and to distribute the amounts raised to the relevant owners of copyright in sound recordings. Protection is afforded by the legislation to the relevant copyright owners in that the Attorney-General may only declare a body to be the collecting society if its rules adequately protect the interests of the copyright owner members by providing for, amongst other things, the collection of royalties and the distribution of the amounts so collected. The method by which the distribution of royalties is to be effected is otherwise left to the collecting society and must presumably entail some form of sampling or other form of analysis of the relative frequency with which individual sound recordings are copied so as to be related in some way to the infringement of copyright in those sound recordings that is, but for s. 135ZZM, presumed to occur through the use of blank tapes. The legislation provides that the Attorney-General may revoke the declaration of a body as a collecting society if he is satisfied that it is not functioning adequately or is not acting in accordance with its rules or in the best interests of those of its members who are relevant copyright owners or their agents: s. 135ZZV(a), (b). And clearly a collecting society which did not equitably distribute an adequate proportion of the royalties collected to the relevant owners of copyright would not be acting in their best interests. Moreover, the rules of the collecting society must provide for a proportion of the royalties collected to be held on trust for those copyright owners who are not members of the collecting society: s. 135ZZU(3)(d)(iv).

[128]

As we have said, the legislation is plainly prompted by the practical impossibility of controlling the copying of sound recordings or of obtaining any fee directly from those who engage in that practice. The provision in s. 135ZZM(1) that the copying of a sound recording on to a blank tape for private and domestic use does not constitute an infringement of copyright has the effect of authorizing the making of such a copy. It is not practically possible to require the person making the copy to pay a royalty to the owner of the copyright for the exercise of the right to do so without infringement, but it is possible with reasonable certainty to identify at the first point of distribution those blank tapes which will be used for copying sound recordings. At that point a levy is made which will have the tendency to be passed on in the price of the blank tape. The moneys raised by the levy are payable to a collecting society comprising relevant owners of copyright in sound recordings. A collecting society is a conventional vehicle for the collection and distribution of royalties where it is possible to charge royalties for rights such as performing rights. The moneys raised are to be distributed by the collecting society amongst the relevant copyright owners in such a way as to provide adequate recompense for the loss suffered by them by reason of what would, apart from s. 135ZZM, be an infringement of their copyright. The legislative scheme is such as to ensure that, within reasonable limits, the amount, the incidence, the collection and the distribution of the moneys exacted are all referable to the copying of copyright material. Whilst the imposition cannot, strictly speaking, be regarded as a royalty, it is exacted in lieu thereof and for the same ultimate purpose, namely, the payment to copyright owners for the use of their copyright material. Accordingly, the essential similarities are with fees for licences rather than with a tax and we would not regard the legislation as a law imposing taxation within the meaning of s. 55 of the Constitution.

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