High Court of Australia|1992-10-15|Before: McHugh JJ

Capital Duplicators Pty Ltd v Australian Capital Territory [1992] HCA 51; (1992) 177 CLR 248 (15 October 1992)

Capital Duplicators Pty. Ltd. v. Australian Capital Territory

Capital Duplicators Pty Limited and Another Plaintiffs;

Mason C.J., Brennan , Deane , Dawson , Toohey , Gaudron and McHugh JJ.

This demurrer raises the question whether s. 90 of the Constitution applies to legislation enacted by the legislature of a self-governing territory. The plaintiffs have commenced an action in this Court in which they seek declarations as to the invalidity of the Business Franchise ("X" Videos) Act 1990 (A.C.T.) ("the Act") and certain consequential orders. The first plaintiff is a wholesaler, and the second plaintiff is a retailer, of "X" videos within the meaning of the Act. The first defendant is a body politic established under the provisions of the Australian Capital Territory (Self-Government) Act 1988 (Cth) ("the Self-Government Act"). The second defendant is the Commissioner for Australian Capital Territory Revenue Collections.

The Act prohibits the wholesaling of "X" videos(42), except by persons who hold a wholesale licence under the Act and their employees and agents (s. 24(1)), and the wholesaling of "X" videos by such persons except in accordance with the licence (s. 24(2)). The Act prohibits the retailing of "X" videos except in accordance with a retail licence held under the Act(43).

Section 5(2) of the Act provides for the grant of a wholesale or retail licence on the making of an application to the second defendant, who:

"shall grant a licence of the type applied for, ... if [he or she] is satisfied on reasonable grounds in the circumstances that the applicant is a fit and proper person to hold a licence of that type."

An application is required to be accompanied by the basic fee(44), an amount equal to the estimated advance fee (s. 5(1)(b)), and details of the information relied on in making that estimate (s. 5(1)(c)).

The advance fee is, in the case of a wholesale licence, "an amount equal to 40 per cent of the total wholesale value of the 'X' videos supplied by wholesale by the licensee in the month for which the licence is granted or renewed" (s. 19(1)). In the case of a retail licence, it is "an amount equal to 40 per cent of the total wholesale value of ... the 'X' videos manufactured by the licensee ... and ... the 'X' videos supplied to the licensee otherwise than in accordance with a wholesale licence" and which are offered for retail sale by the licensee in the month for which the licence is granted or renewed (s. 19(2)).

Section 9 provides that a licence may be renewed on payment of the basic fee and, in the case of the first renewal, the advance fee calculated in accordance with s. 19 or, in the case of a subsequent renewal, the franchise fee calculated in accordance with s. 20. The franchise fee is calculated according to the same formulae as s. 19 provides for the advance fee, except that the amount used in the calculation is the total wholesale value of the "X" videos dealt with in the manner prescribed by s. 19(1) or (2) in the month two months preceding that for which renewal of the licence is sought.

The plaintiffs who, between July and September 1990, held wholesale and retail licences respectively under the Act seek a declaration that the Act is invalid in so far as it imposes a duty or duties of excise on the plaintiffs contrary to s. 90 of the Constitution. In the alternative, they seek a corresponding declaration in relation to ss. 5, 18, 19 and 20 of the Act.

The defendants demur to the whole of the statement of claim on the ground that the facts do not disclose any cause of action, in that: (i) the licence fee is not a duty of excise within s. 90 of the Constitution; or, in the alternative, (ii) the exaction of the licence fee by the defendants does not contravene s. 90 of the Constitution. On application for directions, Mason C.J. ordered that the question:

"Does s. 90 of the Commonwealth Constitution operate so as to preclude the Legislative Assembly of the Australian Capital Territory from exercising the power to impose duties of excise within the meaning of that section?"

be reserved for the consideration of the Full Court. On the hearing of this demurrer, the question was amended so that it commenced: "Does Ch. IV of the Commonwealth Constitution ..." The question so amended should be reframed so that it reads:

"Does Ch. IV of the Commonwealth Constitution operate so as to preclude the Legislative Assembly of the Australian Capital Territory from exercising the power to impose duties of excise within the meaning of s. 90 of the Constitution?"

It is necessary first to consider the scheme of self-government established for the Australian Capital Territory by the Commonwealth Parliament.

The Self-Government Act establishes the first defendant ("the Territory") as a body politic under the Crown (s. 7) and constitutes a Legislative Assembly ("the Assembly") (s. 8(1)) with "power to make laws for the peace, order and good government of the Territory" (s. 22(1)), subject to Pt IV of the Self-Government Act and to the exclusion of various subject matters (see s. 23), none of which is presently relevant. Section 36 establishes the Australian Capital Territory Executive ("the Executive") and s. 37 confers on it responsibility for the government of the Territory with respect to the matters specified in Sch. 4; for the execution and maintenance of enactments and subordinate laws; and for the exercise of such other powers as are vested in the Executive by laws in force in the Territory or by agreement with the Commonwealth, a State or another territory. The Assembly's power to make laws "extends to the power to make laws with respect to the exercise of powers by the Executive" (s. 22(2)).

"(1) A provision of an enactment has no effect to the extent that it is inconsistent with a law defined by subsection (2), but such a provision shall be taken to be consistent with such a law to the extent that it is capable of operating concurrently with that law.

(a) a law in force in the Territory (other than an enactment or a subordinate law); or

(b) an award, order or determination, or any other instrument of a legislative character, made under a law falling within paragraph (a)."

(a) a law (however described or entitled) made by the Assembly under this Act; or

(b) a law, or part of a law, that is an enactment because of section 34."

Section 34(2) provides that each of the laws of the Commonwealth specified in Sch. 2 shall be taken to be an enactment, and that each of them may be amended or repealed as such by the Assembly. Section 34(4) makes like provision with respect to those Ordinances, Acts of the New South Wales Parliament and Imperial Acts which were in force in the Territory immediately before the commencement of s. 22 of the Self-Government Act. Section 34(5) excepts from the operation of that sub-section those Acts and Ordinances that are set out in Sch. 3. Section 34(7) provides that, after 1 July 1992, those laws not omitted from Sch. 3 by regulation made under s. 34(6) (other than the laws referred to in Sch. 5) are also notionally converted to enactments and may be repealed or amended accordingly.

The Self-Government Act reserves to the Commonwealth two separate powers of disallowance of enactments of the Assembly, notwithstanding the grant of self-government. One is general. It is to be found in s. 35 which provides that the Governor-General may disallow any enactment or part of an enactment within six months after it is made. The other is limited and less significant. It is to be found in s. 29 which provides that either House of the Commonwealth Parliament may by resolution disallow any enactment or part of an enactment in its application to that House or its members or in the Parliamentary precincts.

The plaintiffs submit that the word "exclusive" in s. 90 means "exclusive of any State or Territory legislature" and that the section is aimed at conferring on the Commonwealth the ability to enact a uniform fiscal policy with complementary control of customs, excise and bounties. The plaintiffs contend that the Parliament may legitimately, and consistently with that underlying object, delegate its power to impose duties of excise to a legislative body which is its delegate but not otherwise. That proposition is said to derive some support from the decision of this Court in Nott Bros. & Co. Ltd. v. Barkley(45), to which we shall refer later. The final step in the argument is that, in conformity with the principles established in the long line of cases commencing with Reg. v. Burah(46), the Assembly, as the legislature of a self-governing territory, is not an agent or delegate of the Commonwealth Parliament.

The case for the defendants is that "exclusive" in s. 90 means "exclusive of the powers of the States" and that the section is directed to ensuring Commonwealth control over the economy to the exclusion of the States. According to the defendants, the conferral on the Assembly of power to impose duties of customs and of excise does not derogate from Commonwealth control of the imposition of such duties. The Parliament can repeal the conferral of power. It can also invalidate any enactment imposing such duties. And, as noted previously, the Governor-General may, pursuant to s. 35 of the Self-Government Act, disallow any such enactment within six months after it is made.

"Exclusive" power to impose duties of customs and of excise

On the establishment of the Commonwealth, the departments of customs and of excise of the several States were transferred to the Commonwealth by s. 69 of the Constitution, and the power of the Commonwealth to make laws with respect to matters relating to these departments became exclusive by force of s. 52(ii). At the same time, s. 86 passed the collection and control of duties of customs and of excise to the Executive Government of the Commonwealth. That section manifests the framers' intention that the Commonwealth should be solely responsible for the control and collection of duties of customs and of excise, a manifestation of intention which is reinforced by ss. 87, 89, 93 and 94.

However, these sections do not touch the power to impose duties of customs and of excise. That is the function of s. 51(ii), which confers the general power to make laws with respect to taxation, and s. 90. Section 90 provides that, on the imposition of uniform duties of customs, the power of the Parliament to impose duties of customs and of excise shall become exclusive. What the section does is to make the power of the Parliament on the topic exclusive of other powers which are not themselves part of, referable to or derived from the power of the Parliament. The section is not directed to constrain Parliament by inhibiting it from conferring upon a territory legislature or other body its power or part of its power to impose duties of customs and of excise. It would be strange indeed to constrain Parliament's freedom of action in this way; to do so would achieve nothing in securing to Parliament exclusive control over the imposition of such duties for Parliament has power at any time to repeal such statutory authority as it may have conferred on a territory legislature or other body to impose such duties and to invalidate such duties as may have been imposed in the exercise of that authority.

What we have said accords with the approach taken by Barwick C.J. in Reg. v. Phillips(47) to the grant of exclusive power in s. 52(i) of the Constitution (48). That case concerned the application of s. 184 of the Criminal Code Act 1913 (W.A.) to the Pearce Aerodrome at Bullsbrook in Western Australia. The aerodrome was a place acquired by the Commonwealth in 1935 for the purposes of an air force base. Barwick C.J. said(49):

"Once the place is acquired and as and from the date of its acquisition, the only statutory laws which, in my opinion, can validly operate to regulate or control the conduct of persons in the place acquired are laws which derive their authority from the Commonwealth. In other words, no statutory provisions operating to regulate or control the conduct of persons in that place can have validity unless they emanate directly or indirectly from the Parliament, the possessor of the relevant exclusive legislative power."

Adoption of this part of his Honour's reasoning does not necessarily entail acceptance of the conclusion which he and the majority reached in that case.

In Nott Bros. & Co. Ltd. v. Barkley, Isaacs J. (with whom Rich and Starke JJ. agreed) observed with respect to s. 90(50):

"It was framed for a well-known purpose, which appears on the face of the section read in its collocation. The word 'exclusive' means simply exclusive of State Parliaments, 'exclusive' as opposed to concurrent, 'exclusive' in the sense in which that word is found in ss. 52 and 107."

His Honour was saying in effect that the power of the Parliament was exclusive of the powers inhering in the State Parliaments, those being the only powers, other than those conferred upon the Commonwealth Parliament, which could conceivably be exercised so as to impose duties of customs and of excise. That was his Honour's answer to the submission in that case that the Minister had imposed duties of customs and of excise contrary to s. 90. To the extent that the Minister had imposed such duties, he was exercising a part of Parliament's power in accordance with the authority conferred upon him by s. 8 of the Customs Tariff (Industries Preservation) Act 1921 (Cth).

It follows that the imposition by a territory legislature, pursuant to a grant of legislative power by the Parliament, of duties of excise in the territory is not prohibited by s. 90. That is because the territory legislature, in imposing such duties, would be exercising legislative power which is referable to, derived from and part of the power of the Parliament which is made exclusive by s. 90.

The plaintiffs do not contend - and rightly so - that the power conferred by s. 122 of the Constitution to legislate for the government of a territory does not extend to establishing a legislature for a self-governing territory armed with general legislative authority. The Judicial Committee had expressed a reservation about this proposition in Reg. v. Burah(51) and in In re The Initiative and Referendum Act(52), a reservation which was later recognized by Dixon J. in Victorian Stevedoring & General Contracting Co. Pty. Ltd. and Meakes v. Dignan(53).

In In re The Initiative and Referendum Act, Viscount Haldane expressed the reservation in these terms(54):

"No doubt a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a Provincial Legislature in Canada, could, while preserving its own capacity intact, seek the assistance of subordinate agencies, as had been done when in Hodge v. The Queen, the Legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relating to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence. Their Lordships do no more than draw attention to the gravity of the constitutional questions which thus arise."

"It should also be noticed that, in the opinion of the Judicial Committee, a general power of legislation belonging to a legislature constituted under a rigid constitution does not enable it by any form of enactment to create and arm with general legislative authority a new legislative power not created or authorized by the instrument by which it is established. (R. v. Burah(56); see also In re Initiative and Referendum Act(54)."

In the same case, Evatt J. expressed the view(57) that the Parliament "is not competent to 'abdicate' its powers of legislation". His Honour went on to explain(57) that this is:

"because each and every one of the laws passed by Parliament must answer the description of a law upon one or more of the subject matters stated in the Constitution. A law by which Parliament gave all its law-making authority to another body would be bad merely because it would fail to pass the test last mentioned."

Likewise, in Giris Pty. Ltd. v. Federal Commissioner of Taxation, Barwick C.J. said(58):

"No doubt whilst the Parliament may delegate legislative power it may not abdicate it."

There are very considerable difficulties in the concept of an unconstitutional abdication of power by Parliament. So long as Parliament retains the power to repeal or amend the authority which it confers upon another body to make laws with respect to a head or heads of legislative power entrusted to the Parliament, it is not easy to see how the conferral of that authority amounts to an abdication of power. And, in the present case, Parliament not only retains its power of repeal, but also provides, by means of ss. 29 and 35, for the disallowance of enactments of the Assembly. Moreover, as will appear, the nature of the plenary power conferred by s. 122 of the Constitution is such that it necessarily extends to the making of such arrangements for the Territory as are contained in the Self-Government Act.

To return to the point raised in In re The Initiative and Referendum Act. It is clear from a reading of that part of the judgment of Dixon J. in Victorian Stevedoring which follows the passage previously quoted that his Honour considered that the separation of powers effected by the Constitution does not make the Parliament the exclusive repository of the legislative power of the Commonwealth and does not preclude the delegation of a legislative power by the Parliament to the Executive in such terms that the repository of the power is free to exercise its own discretion and judgment(59). Roche v. Kronheimer(60) and Huddart Parker Ltd. v. The Commonwealth(61) had established that very proposition. It was subsequently confirmed by Radio Corporation Pty. Ltd. v. The Commonwealth(62). At the same time, his Honour acknowledged(63) that the distribution of powers could be relevant to the problem suggested in In re The Initiative and Referendum Act. That is because the distribution of powers could conceivably have a bearing on the question whether the "new legislative power" referred to by Viscount Haldane was created or authorized by the instrument establishing the legislature seeking to create that power.

But when it comes to s. 122 of the Constitution, there can be no doubt that the section confers power to endow a territory with the institutions appropriate to self-government. Hence the Legislative Assembly for the Australian Capital Territory, as established and constituted by the Self-Government Act, is a "new legislative power" authorized by s. 122 within the contemplation of the statements made in In re The Initiative and Referendum Act and Victorian Stevedoring. We repeat what Mason J. said in Berwick Ltd. v. Gray(64):

"The power conferred by s. 122 is a plenary power capable of exercise in relation to Territories of varying size and importance which are at different stages of political and economic development. It is sufficiently wide to enable the passing of laws providing for the direct administration of a Territory by the Australian Government without separate territorial administrative institutions or a separate fiscus; yet on the other hand it is wide enough to enable Parliament to endow a Territory with separate political, representative and administrative institutions, having control of its own fiscus."

Barwick C.J., McTiernan J. and Murphy J. agreed with that judgment.

Section 122 forms part of Ch. VI of the Constitution which bears the heading "New States". Section 121 enables the Parliament to admit to the Commonwealth or establish new States. Plainly enough, Ch. VI, in particular ss. 121 and 122, contemplates that a Commonwealth territory may advance to Statehood. In the course of its evolution towards Statehood, it is natural, indeed inevitable, that a territory will be progressively endowed with institutions appropriate to self-government. That has been the history of democratic development in this country and in many parts of what was formerly the British Empire and is now the Commonwealth of Nations. Section 122 was and is the source of legislative power for the advancement of the territories along this path towards the final step of Statehood, at which point s. 121 becomes the relevant source of power.

Whether the Territory, containing as it does the seat of government, could be admitted to the Commonwealth or established as a new State is open to question. But the existence of that unresolved question provides no reason to doubt the scope of the power conferred by s. 121 as we have explained it. Nor does it provide any reason to doubt that s. 122 is a source of legislative power for the establishment of institutions appropriate to self-government in the Territory. Spratt v. Hermes(65) decided that s. 122 is a general source of legislative authority for the Territory and that s. 52(i) of the Constitution does not supply any relevant limitation on that authority. In that case, and in Worthing v. Rowell & Muston Pty. Ltd. (66), different views were expressed about the scope of the power conferred by the first limb of s. 52(i) with respect to the seat of government of the Commonwealth. One view was that the first limb does not confer a power to make general laws having an operation within the seat of government but a power to make laws having as the subject matter the seat of government as a separate topic of legislation to be distinguished from the more general topics which may affect the territory in which the seat of government is situated(67). Another view is that the power is wider and is with respect to the place of the seat of government(68). But, even on that view, it is conceded that s. 122 is the source of power for the Territory(69).

In the course of argument, the question was raised whether the provisions of ss. 81 and 86 would prevent the Parliament from providing for a separate territory fiscus. However, those provisions have not been regarded as an obstacle to the establishment of such a fiscus or public treasury. Indeed, a distinction has been drawn between the Consolidated Revenue of the Commonwealth and the revenues of a territory, at least in circumstances in which the Parliament has provided for the separate administration of a territory on the footing that it raises its own revenue. Thus, in Fishwick v. Cleland, the Court said(70):

"Apart from all other considerations the two measures deal with entirely different taxes. The Income Tax and Social Services Contribution Assessment Act 1936-1959 concerns a tax imposed as a contribution to the Consolidated Revenue of the Commonwealth of Australia. The Income Ordinance 1959 is concerned with a tax forming a contribution to the revenues of the Territory."

See also Faithorn v. Territory of Papua(71) and Berwick Ltd. v. Gray (72).

In the result we would answer the question reserved for the consideration of the Full Court in the negative. We would allow the demurrer and dismiss the action with costs.

The plaintiffs in these proceedings by their statement of claim allege that they are respectively the holder of a wholesale licence and the holder of a retail licence under the Business Franchise ("X" Videos) Act 1990 (A.C.T.) ("the Business Franchise Act") and that they paid under protest the licence fees exigible in respect of the licences they hold. The plaintiffs claim, inter alia, a declaration that the sections of the Business Franchise Act which impose the licence fees are invalid in so far as they impose a duty or duties of excise contrary to the provisions of s. 90 of the Constitution. The defendants seek to uphold the validity of the challenged provisions. The Chief Justice made an order reserving for the consideration of the Full Court a question which, having been amended, now reads as follows:

The Business Franchise Act is an enactment of the Legislative Assembly for the Australian Capital Territory, a legislature provided for by s. 8(1) of the Australian Capital Territory (Self-Government) Act 1988 (Cth) ("the Self-Government Act"). Part VIII of the Self-Government Act provides for the members of the Legislative Assembly to be elected by the electors of the Territory in a general election. The legislative powers of the Assembly are prescribed by s. 22 of the Self-Government Act:

"(1) Subject to this Part, the Assembly has power to make laws for the peace, order and good government of the Territory.

(2) The power to make laws extends to the power to make laws with respect to the exercise of powers by the Executive."

The "Executive" in s. 22(2) is the Australian Capital Territory Executive. Section 23 excludes from s. 22 power to make laws with respect to certain subjects, none of which is presently material. An enactment of the Legislative Assembly may be disallowed by the Governor-General (s. 35) but the Parliament of the Commonwealth has not reserved to itself any power of disallowance. Although an enactment of the Legislative Assembly does not bind the Crown in right of the Commonwealth unless regulations under the Act otherwise provide (s. 27), an enactment evidently applies to the Houses of Parliament, the members of those Houses and to the Parliamentary precinct unless and until either House of Parliament passes a resolution that the enactment should not apply: s. 29. However, an enactment is denied effect to the extent that it is inconsistent with a law in force in the Territory or with any instrument of a legislative character made under a law in force in the Territory: s. 28. (The term "law in force in the Territory" excludes enactments or subordinate laws.)

The defendants, supported by the Northern Territory and the Commonwealth, submit that the Constitution and the provisions of the Self-Government Act establish the validity of the impugned provisions of the Business Franchise Act. On analysis, there are four steps in this argument: (i) s. 122 empowers the Parliament to enact a law creating an independent and elective legislature for a territory and vesting in it power to make laws for the peace, order and good government of the territory; (ii) the power so conferred on the Parliament is unqualified by s. 90 of the Constitution; (iii) the Self-Government Act is a valid exercise of the power conferred on the Parliament by s. 122; (iv) the Business Franchise Act is enacted in exercise of the power conferred by the Self-Government Act.

An alternative argument is that a duty of excise, imposed by an enactment of the Legislative Assembly, is in truth imposed by a permissible delegation of the Parliament's power in conformity with s. 90. The critical issues are the scope of s. 122, its possible qualification by s. 90, and delegation of the power to impose duties of excise.

The width of the territories power was stated in broad terms by the Court in Teori Tau v. The Commonwealth(73):

"Section 122 of the Constitution of the Commonwealth of Australia is the source of power to make laws for the government of the territories of the Commonwealth. In terms, it is general and unqualified."

"The grant of legislative power by s. 122 is plenary in quality and unlimited and unqualified in point of subject matter."

Though s. 122 confers on the Parliament a power not expressly limited as to its subject matter, it does not follow that that power authorizes the Parliament to vest a general legislative power in a legislature created to receive and exercise it. It is one thing to say that the Parliament's power over territories is general; it is another to say that Parliament may create another legislature with general power over a territory. Under the Indian Councils Act 1861 (Imp.) (75), the Governor-General in Council possessed general legislative powers in India, but the Privy Council held in Reg. v. Burah(76) that "the Governor-General in Council could not, by any form of enactment, create in India, and arm with general legislative authority, a new legislative power, not created or authorized by the Councils' Act." The difference between legislative power and the power to create a legislature to exercise it was alluded to by the Privy Council in In re The Initiative and Referendum Act (77):

"No doubt a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a Provincial Legislature in Canada, could, while preserving its own capacity intact, seek the assistance of subordinate agencies, as had been done when in Hodge v. The Queen(78), the Legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relating to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence. Their Lordships do no more than draw attention to the gravity of the constitutional questions which thus arise."

This caveat was noted by Dixon J. in Victorian Stevedoring & General Contracting Co. Pty. Ltd. and Meakes v. Dignan(79):

"It should also be noticed that, in the opinion of the Judicial Committee, a general power of legislation belonging to a legislature constituted under a rigid constitution does not enable it by any form of enactment to create and arm with general legislative authority a new legislative power not created or authorized by the instrument by which it is established. (R. v. Burah(76); see also In re Initiative and Referendum Act(77))."

In that case Dixon J., after holding that the separation of powers does not prevent the Parliament from making a valid law delegating a legislative power to the Executive, added that that proposition does not mean(80) "that the distribution of powers can supply no considerations of weight affecting the validity of an Act creating a legislative authority. For instance, its relevance is undeniable to the particular problem suggested in In re Initiative and Referendum Act(77)."

A legislature which derives a plenary legislative power from a written Constitution does not necessarily have power to create another legislature to exercise a corresponding plenary legislative power either in substitution for, or concurrently with, its own exercise of such power. A concurrent exercise of legislative powers over the same territory by different legislatures - especially when concurrent laws authorize the exercise of executive power - creates a legal and administrative regime far different from the regime created by the exercise of power by a single legislature having sole legislative power over and responsibility for that territory.

But the power conferred by s. 122 is to make laws "for the government of any territory", not for the peace, order and good government of a territory. Though the power is no less than the power which would have been conferred if the "peace, order and good government" formula had been used(81), the terminology of s. 122 emphasizes that the Parliament may prescribe the constitutional arrangements for the government of a territory. That the power so extends is manifest when reference is made to the constitutional context of s. 122, its history and the territories to which it was foreseen that it might apply.

Section 122 is found in Ch. VI of the Constitution - "New States". Section 121, which provides for the admission of new States to the Commonwealth, relates not only to territories which are parts of existing States (ss. 123 and 124) but also to "such colonies or territories as may be admitted into or established by the Commonwealth as States"(82). These latter colonies and territories were not part of the Original States(82). In the Convention Debates, the forerunner of s. 122 was seen primarily, though not necessarily, as designed to provide for the provisional government of territories as they moved towards Statehood(83). When the Commonwealth was established(84) there were no Commonwealth territories. At that time the territories which were foreseen as possible territories of the Commonwealth included not only the northern territory of South Australia but also the Fiji Islands and British New Guinea (85). The possibility of territories of magnitude and importance being admitted to the Commonwealth as new States after a period of political development must have been contemplated(86). There is thus no reason to construe s. 122 as precluding the creation of a representative legislature for a territory as a step in its political development with a view to its ultimate admission as a new State. We would respectfully agree with what Mason J. said in Berwick Ltd. v. Gray(87) in a judgment with which Barwick C.J., McTiernan and Murphy JJ. agreed:

"[The power] is wide enough to enable Parliament to endow a Territory with separate political, representative and administrative institutions, having control of its own fiscus."

But the scope of s. 122 may be qualified by other provisions in the Constitution. Although the territories power has been said to be "a disparate non-federal matter"(88), it is necessary to adopt "an interpretation which will treat the Constitution as one coherent instrument for the government of the federation, and not as two constitutions, one for the federation and the other for its territories"(89). It would therefore be erroneous to construe s. 122 as though it stood isolated from other provisions of the Constitution which might qualify its scope. In Spratt v. Hermes(90) Barwick C.J. said that the power conferred by s. 122:

"is as large and universal a power of legislation as can be granted. It is non-federal in character in the sense that the total legislative power to make laws to operate in and for a territory is not shared in any wise with the States.

But this does not mean that the power is not controlled in any respect by other parts of the Constitution or that none of the provisions to be found in chapters other than Ch. VI are applicable to the making of laws for the Territory or to its government. It must remain, in my opinion, a question of construction as the matter arises whether any particular provision has such an operation, the construction being resolved upon a consideration of the text and of the purpose of the Constitution as a whole."

"No doubt some of the powers of the Commonwealth are appropriate to the rule of non self-governing possessions whilst others, though federally disposed, are truly those of a self-governing people. But this neither means that the Constitution is divisible into two parts without any mutual interaction nor that the power to govern dependent territories is in no respect controlled by any other part of the Constitution."

Although s. 122 would be construed, unless "controlled by [an]other part of the Constitution", as authorizing the creation of a representative legislature for an internal territory with power to make laws for the peace, order and good government of that territory, this case raises a question whether its scope is qualified by s. 52(i) or by s. 90 of the Constitution.

Section 52(i) confers on the Parliament exclusive power to make laws for the peace, order and good government of the Commonwealth with respect to the seat of government and there are some considerations of history and principle which might affect the scope of s. 122 in its application to a territory containing the seat of government(92). Dixon J. described the seat of government as "an integral part of the Federal System", considering s. 122 to be dealing "at least primarily, with Territories which do not form part of the Federal System" (93). It would be surprising if laws made by an independent legislature for the seat of government of the Commonwealth, or executive action taken pursuant to those laws, could affect the performance of any function of the government of the Commonwealth, any facility used in the performance of such a function or any otherwise lawful provision - legislative or executive - which the organs of that government wished to make for the performance of any of its functions. In our view, the Australian Capital Territory, unlike the Northern Territory, cannot become a new State. Section 52(i) precludes that possibility. However, as Fox J. noted in Golden-Brown v. Hunt(94), "[t]he relationship between s. 52(i) and the Territories power in s. 122 has not yet been worked out". It need not be worked out in this case. The plaintiffs have not sought to challenge the validity of the Self-Government Act, and this case falls to be decided on the footing that, unless the operation of s. 90 of the Constitution precludes the Parliament from conferring on a representative legislature for the Australian Capital Territory the powers mentioned in that section, the vesting of general legislative powers in the Legislative Assembly by the Self-Government Act supports the imposition of duties of excise by that legislature.

The operation of s. 90 of the Constitution

The Constitution was enacted to give effect to the agreement reached by the people of New South Wales, Victoria, South Australia, Queensland, Tasmania and Western Australia to unite "in one indissoluble Federal Commonwealth"(95). The Constitution is no ordinary statute; it is the instrument designed to fulfil the objectives of the federal compact and, as this Court held in Cole v. Whitfield(96), the history of the Constitution may be referred to in order to identify the contemporary meaning of its language, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged. A meaning should not be attributed to the language of the Constitution which would frustrate the objectives of the compact where an alternative meaning, conducive to the fulfilment of those objectives, is reasonably open.

As Cole v. Whitfield showed, one of the objectives of the federation was the creation of a free trade area embracing the geographical territory of the uniting Colonies, that is, the territory of the Colonies which became the Original States of the Commonwealth on its establishment on 1 January 1901. The territory of the Commonwealth at that time embraced the whole of the territory of those States, including the northern territory of South Australia(97). The Commonwealth of Australia Constitution Act ensured that the territory of the Commonwealth was coterminous with the aggregate of the territories of the Original States. A colony or territory which was not then a part of a State did not become a part of the Commonwealth. It is unnecessary to consider whether an external colony or territory which was not then a part of a State can become part of the Commonwealth unless it be admitted into or established by the Commonwealth as a State pursuant to s. 121 of the Constitution or is included within the limits of a State pursuant to s. 123 of the Constitution(98). However, it is clear that the geographical areas which have become mainland Commonwealth territories were parts of States as at 1 January 1901 and are parts of the Commonwealth now.

Except in s. 128 of the Constitution, where the term "Territory" is specially defined by reference to representation in the House of Representatives, the term "territory" in the Constitution is used to describe a geographical area: see ss. 104, 122, 123, 124, 125 and the definition of "Territory" in s. 128. It follows that, when "territory" in s. 122 is used in reference to a mainland territory, it means an area that has been surrendered by a State to, and accepted by, the Commonwealth or an area acquired by the Commonwealth. The Australian Capital Territory was surrendered by New South Wales to, and accepted by, the Commonwealth. Did the Australian Capital Territory, by ceasing to be part of New South Wales, cease to be part of the free trade area which the Constitution was intended to create? Dixon C.J. correctly observed in Lamshed v. Lake(99) in reference to the Northern Territory that s. 92 does not in terms protect trade between a State and a Territory. Nevertheless, as this Court held in Cole v. Whitfield(1), the purpose of s. 92 was "to create a free trade area throughout the Commonwealth and to deny to Commonwealth and States alike a power to prevent or obstruct the free movement of people, goods and communications across State boundaries." The trade, commerce and intercourse to which s. 92 related in 1901 was the trade, commerce and intercourse passing between the six territories which were the six parts of the Commonwealth. Treating the entirety of the Commonwealth as a free trade area, the Constitution made provision to ensure that the Parliament, and the Parliament alone, should have legislative power to impose duties of customs and excise and to grant bounties on the production or export of goods.

The Constitution conferred the legislative power of the Commonwealth on the Parliament (s. 1) and, subject to the Constitution, continued the Constitutions of the respective States: s. 106. The powers of State Parliaments were continued: s. 107. The Constitution did not provide for legislative power over any part of the Commonwealth to be exercised by any legislature save the Parliament of the Commonwealth or the Parliaments or other repositories of State legislative power established under the respective Constitutions of the States(2). To create and maintain a free trade area embracing all parts of the Commonwealth, the Constitution provided, inter alia, that uniform duties of customs should be imposed (s. 88) and that, on the imposition of uniform duties of customs, all State laws imposing duties of customs or excise or offering bounties on the production or export of goods should cease to have effect and the power of the Parliament - that is, the Parliament of the Commonwealth - to impose duties of customs and excise and to grant bounties on the production or export of goods should become exclusive (s. 90) and, further, that trade, commerce and intercourse among the States should be absolutely free: s. 92. When ss. 88, 90, 92 and 99 are read, as they were read on 1 January 1901, in the context of a Constitution dealing with the distribution of the entirety of Australian legislative power - Imperial power apart - which might be exercised over the territory of the Commonwealth, those provisions can be seen to effect the objective of creating a free trade area embracing the whole of that territory. The collection and control of duties of customs and excise and the control of the payment of bounties were so central to the fulfilment of the objective of creating a free trade area that, on the establishment of the Commonwealth, those powers passed to the Executive Government of the Commonwealth (s. 86) and the departments of customs and of excise in each State were transferred to the Commonwealth: s. 69. The executive functions mentioned in s. 86 are the functions appertaining to the exercise of the legislative powers mentioned in s. 90. It would frustrate the manifest purpose of s. 86 if, after uniform duties of customs were imposed, part of the functions of collecting and controlling duties of excise or controlling the payment of bounties were to pass from the Executive Government of the Commonwealth to the Executive of a territory government whose legislature might be empowered to impose its own duties of excise or to grant its own bounties on the production or export of goods.

It would be surprising if the surrender of part of a State to the Commonwealth and its acceptance by the Commonwealth pursuant to s. 111, whilst leaving the territory as part of the Commonwealth, removed it from the operation of the constitutional provisions designed to create and maintain the free trade area. When the Commonwealth was established, the economic interests of all parts of the Commonwealth were protected, inter alia, by the exclusive power conferred on the Parliament by s. 90 and the restrictions on any discriminatory exercise of that power imposed by ss. 51(iii) and 99. The prohibition in s. 99 against the Commonwealth giving legislative preference to any State or part thereof over another State or part thereof would be undermined if the Parliament, upon creating subsidiary legislatures pursuant to s. 122 for territories carved out of the territories of the States, were able to confer on those legislatures power to create preferences that the Parliament could not have created had those territories remained parts of the territories of the respective States.

In terms, s. 90 makes the legislative power of the Parliament in respect of duties of customs and excise and in respect of bounties exclusive of any other legislative power. It is true to say that, when the Constitution took effect, the only legislatures possessing powers to impose such duties or to grant bounties were the legislatures of the Commonwealth and the States. It is therefore right to say - but as a matter of history, not of construction - that exclusive meant exclusive of State Parliaments, as Isaacs J. said in Nott Bros. & Co. Ltd. v. Barkley(3). By denying that legislative power to the States, s. 90 identified the Parliament as the sole repository of the power. As Dixon J. said in Parton v. Milk Board (Vict.)(4):

"In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it was intended to give the 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."

McTiernan J. attributed to s. 90 the object of effecting "a uniform fiscal policy for the Commonwealth"(5). Even if these propositions are too wide, as Gibbs C.J. thought they were in Hematite Petroleum Pty. Ltd. v. Victoria (6), the object of s. 90 was at least to prevent frustration of the tariff policy of the Parliament. It is a mistake to regard s. 90 as doing no more than allocating the legislative powers to which it refers as between the Commonwealth and the States. It confined to the Parliament the power to impose duties of customs and excise and to grant bounties as a necessary part of the constitutional mechanism for achieving an essential objective of the federal compact: the creation and maintenance of a free trade area throughout the Commonwealth and uniformity in duties of customs and excise and in bounties. As Deane J. said in Hematite Petroleum Pty. Ltd. v. Victoria (7):

"[T]he provision of s. 90 of the Constitution that the power of the Commonwealth Parliament to impose duties of excise shall be exclusive cannot properly be seen as part of a merely arbitrary division of legislative powers between the Commonwealth and the States. To the contrary, that provision - or some other means of ensuring uniformity of excise duties throughout Australia - was a necessary ingredient of any acceptable scheme for achieving the abolition of internal customs barriers which was an essential objective of the Federation and for ensuring that the people of the Commonwealth were guaranteed equality as regards the customs and excise duties which they were required to bear and the bounties which they were entitled to receive."

Duties of excise are taxes which are likely to be borne by the consumer(8). Wherever they be imposed, they are likely to be borne where the goods are acquired for consumption. It is one thing to predicate of the people of the uniting Colonies that, agreeing to live in a free trade area, they were prepared to vest exclusive power to impose duties of excise in a Parliament composed in the manner prescribed by the Constitution and required, when passing a law imposing taxation, to follow the procedures spelt out in ss. 53, 55 and 57; it is another to predicate of the people of the uniting Colonies that they were prepared to bear the burden of duties of excise imposed by a legislature purportedly created by the Parliament without responsibility to the Parliament for the laws imposing such duties and without being bound to follow any procedure which would permit the representatives of the people of the States to consider the desirability of those laws.

If s. 90 is to play its part in achieving the "essential objective" of abolishing internal customs barriers and in guaranteeing equality as regards the customs and excise duties which the people of the Commonwealth are to bear, it must be construed as restricting to the Parliament the sole legislative power to impose duties of customs and excise and to grant bounties on the production or export of goods. As we shall see, the restriction of that legislative power to the Parliament is consistent with a power to delegate its exercise, but it is not consistent with the possession of a corresponding legislative power by a new representative legislature possessed of power to make laws for the peace, order and good government of a territory. Unless s. 90 qualifies s. 122, such a legislature could grant bounties on the production or export of goods and the Parliament could not effectively ensure that bounties are uniform throughout the Commonwealth as s. 51(iii) requires. Once it is accepted that the Constitution contemplated, in s. 122, that new legislatures might be created for territories within the Commonwealth, s. 90 can no longer be seen as relating to the distribution of legislative powers solely between the Parliament and the States. The exclusivity of power secured by s. 90 ensures that the Parliament, to the exclusion of the legislatures of both States and internal territories, may exercise the powers to which that section refers. If s. 122 authorized the creation of a legislature for an internal territory with the powers referred to in s. 90, it would be a Trojan horse available to destroy a central objective of the federal compact and to defeat the express requirements of s. 51(iii). Therefore, s. 122 should not be construed as authorizing the Parliament to create a new legislature for an internal territory with power to make laws that might impose duties of customs or excise or to grant bounties on the production or export of goods.

It is not to the point that, if the Parliament could validly confer legislative power to impose duties of customs and excise and to grant bounties upon the Legislature of a self-governing internal Territory, it might subsequently legislate to withdraw the power or to override its exercise. The exclusivity provision of s. 90 was incorporated in the Constitution not for the protection of the Parliament but for the protection of the people of the Commonwealth, including those who resided in an area of a State which was subsequently to become an internal Territory. They, no less than the other people of the Commonwealth, were and remain entitled to the maintenance of the free trade area throughout the Commonwealth which, in the context of other provisions of the Constitution to which reference has been made, the exclusivity provision of s. 90 of the Constitution was intended to ensure.

It follows that s. 90 operates to preclude the vesting in the Legislative Assembly of the Australian Capital Territory of an independent power to impose duties of excise. There remains the question whether the Self-Government Act purports to vest an independent power in the Legislative Assembly authorizing the imposition of duties of excise or whether an enactment imposing such duties is properly to be characterized as an exercise of the power conferred on the Parliament.

Although the legislative power of the Commonwealth is confided to the Parliament by s. 1 of the Constitution, it has been an accepted doctrine, at least since Victorian Stevedoring, that the separation of powers does not restrain the power of the Parliament to make a law "conferring upon the Executive a power to legislate upon some matter contained within one of the subjects of the legislative power of the Parliament"(9). Consistently with this doctrine, Isaacs J. in Nott Bros. & Co. Ltd. v. Barkley upheld a provision of an Act committing to a Minister power to apply a special customs duty to imports from a country if the Minister was satisfied that the exchange value of the currency of the country had depreciated. After pointing to the control which Parliament had over the Minister's exercise of power, his Honour said in reference to s. 90(10):

"The word 'exclusive' was relied on to support the view that no administrative act whatever can be made a factor in creating liability to customs duties. So impracticable a position is not within the contemplation of s. 90. It was framed for a well-known purpose, which appears on the face of the section read in its collocation. The word 'exclusive' means simply exclusive of State Parliaments, 'exclusive' as opposed to concurrent, 'exclusive' in the sense in which that word is found in ss. 52 and 107. It was not intended to limit the ambit of Commonwealth parliamentary power but to make that power exclusive on the subject matter. It has no function of hampering the Parliament in utilizing the necessary offices of the Executive Department as an aid in effecting its objects."

The justification of the doctrine that legislative power may be exercised by the Parliament by "utilizing the necessary offices of the Executive Department" is not to be found in the text of the Constitution. Dixon J. explained the justification in Victorian Stevedoring(11):

"It may be acknowledged that the manner in which the Constitution accomplished the separation of powers does logically or theoretically make the Parliament the exclusive repository of the legislative power of the Commonwealth. The existence in Parliament of power to authorize subordinate legislation may be ascribed to a conception of that legislative power which depends less upon juristic analysis and perhaps more upon the history and usages of British legislation and the theories of English law. In English law much weight has been given to the dependence of subordinate legislation for its efficacy, not only on the enactment, but upon the continuing operation of the statute by which it is so authorized. The statute is conceived to be the source of obligation and the expression of the continuing will of the Legislature. ... Major consequences [of such a doctrine] are suggested by the emphasis laid in Powell's Case(12) and in Hodge's Case(13) upon the retention by the Legislature of the whole of its power of control and of its capacity to take the matter back into its own hands. After the long history of parliamentary delegation in Britain and the British colonies, it may be right to treat subordinate legislation which remains under parliamentary control as lacking the independent and unqualified authority which is an attribute of true legislative power, at any rate when there has been an attempt to confer any very general legislative capacity."

By contrast with the regulations whose validity was upheld in Victorian Stevedoring, enactments of the Legislative Assembly under s. 22 of the Self-Government Act do not lack "independent and unqualified authority". Enactments are made under a power to make laws "for the peace, order and good government" of the Australian Capital Territory. Such a power has been recognized as a plenary power, as this Court pointed out in Union Steamship Co. of Australia Pty. Ltd. v. King(14), "even in an era when emphasis was given to the character of colonial legislatures as subordinate law-making bodies". The terms in which s. 22 confers power on the Legislative Assembly show - to adapt the language of Powell v. Apollo Candle Co.(15) - that the Parliament did not intend the Legislative Assembly to exercise its powers "in any sense [as] an agent or delegate of the ... Parliament, but ... intended [the Legislative Assembly] to have plenary powers of legislation as large, and of the same nature, as those of Parliament itself" (emphasis added). In Reg. v. Toohey; Ex parte Northern Land Council(16) Wilson J. said of s. 6 of the Northern Territory (Self-Government) Act 1978 (Cth), a provision corresponding with s. 22 of the Self-Government Act:

"Section 6 invests the Legislative Assembly with power to make laws for the peace, order and good government of the Territory, a power which in my opinion, subject to the limits provided by the Act, is a plenary power of the same quality as, for example, that enjoyed by the legislatures of the States. The constitution of the Territory as a self-governing community is no less efficacious because it emanates from a statute of the Parliament of the Commonwealth than was the constitution of the Australian colonies as self-governing communities in the nineteenth century by virtue of an Imperial statute."

The Legislative Assembly of the Australian Capital Territory has been erected to exercise not the Parliament's powers but its own, being powers of the same nature as those vested in the Parliament. The Governor-General's power to disallow an enactment under s. 35 of the Self-Government Act does not alter the independent character of the legislative power which s. 22 purports to confer on the Legislative Assembly. A similar power of disallowance was vested in the Queen in Council to disallow laws made by the Indian Legislature under the Indian Councils Act (s. 21) yet the Privy Council in Burah(17), in the first of the historic cases defining the independent character of colonial legislatures, held that the Indian Legislature's powers were, within their prescribed limits, "as large, and of the same nature, as those of Parliament itself".

Although subordinate legislation on a subject within the exclusive power of the Parliament, made under and in conformity with a law of the Parliament, is valid, the doctrine of Victorian Stevedoring does not extend to legislation enacted by a legislature in exercise of its own plenary power, albeit that power was conferred by the Parliament. In Burah itself, as we have seen(18), the impugned law would not have been upheld had it "arm[ed] with general legislative authority a new legislative power". And in Cobb & Co. Ltd. v. Kropp (19) where the Privy Council rejected an attack on fees imposed by the Commissioner for Transport under Transport Acts of the State of Queensland, their Lordships distinguished between fees imposed by the authority of the legislature and fees imposed by a new legislative authority. Lord Morris of Borth-y-Gest said(20):

"The legislature were entitled to use any agent or any subordinate agency or any machinery that they considered appropriate for carrying out the objects and purposes that they had in mind and which they designated. They were entitled to use the Commissioner for Transport as their instrument to fix and recover the licence and permit fees. They were not abrogating their power to levy taxes and were not transferring that power to the commissioner. What they created by the passing of the Transport Acts could not reasonably be described as a new legislative power or separate legislative body armed with general legislative authority (see R. v. Burah). Nor did the Queensland legislature 'create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence' (see In re The Initiative and Referendum Act). In no sense did the Queensland legislature assign or transfer or abrogate their powers or renounce or abdicate their responsibilities. They did not give away or relinquish their taxing powers. All that was done was done under and by reason of their authority. It was by virtue of their will that licence and permit fees became payable."

It cannot be said that the duties imposed by the Business Franchise Act were imposed by virtue of the will of the Parliament. Those duties were imposed solely by the "independent and unqualified authority" of the Legislative Assembly in exercise of that "general legislative capacity" which, as Dixon J. said(21), distinguished an independent exercise of power by a subordinate legislature from an exercise by that legislature of a power retained in the control of a superior legislature. The question is not whether the Parliament has abdicated its legislative powers: it cannot abdicate(22) and it has not abdicated its powers under s. 122 of the Constitution. Nor is the problem whether Parliament could delegate its legislative powers: it can(22), but it has not done so. The question is whether the Parliament has purported to create a legislature with its own legislative powers concurrent with, and of the same nature as, the powers of the Parliament: that is what the Parliament has done, and what it has done is of a radically different constitutional character from either abdication or delegation. The Parliament has no power under the Self-Government Act to disallow any duty imposed by the Legislative Assembly; the Parliament must, if it wishes to override the enactment, pass a new law to achieve that result. It cannot repeal or amend the enactment. Unlike the fees imposed by the Commissioner for Transport considered in Cobb & Co., the duties imposed by the Business Franchise Act were imposed by "a new legislative power or separate legislative body armed with general legislative authority".

As we are of the opinion, for reasons earlier stated, that the power to impose duties of excise resides exclusively in the Parliament, and as the Legislative Assembly is not a delegate of the Parliament's powers, we would hold that the Business Franchise Act cannot validly impose a duty of excise.

We would answer the question reserved for the opinion of the Full Court: Yes.

The following question, in its amended form and as it should be reframed, has been referred for the consideration of the Full Court:

The facts and the provisions of the Business Franchise ("X" Videos) Act 1990 (A.C.T.) ("the Business Franchise Act") which give rise to that question are set out in other judgments. I need not repeat them.

Section 90 of the Constitution relevantly provides:

"On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive."

By s. 88 uniform duties of customs were required to be imposed within two years of the establishment of the Commonwealth and, that having been done, the powers referred to in s. 90 have, since then, vested exclusively in the Parliament of the Commonwealth.

The first issue that arises is whether the Legislative Assembly of the Australian Capital Territory is the delegate or legislative agent of the Parliament of the Commonwealth so that the Business Franchise Act is, for the purposes of s. 90 of the Constitution, an exercise of the power of the Parliament of the Commonwealth. I agree with Brennan, Deane and Toohey JJ., for the reasons that their Honours give, that the Business Franchise Act was, in terms used in Cobb & Co. Ltd. v. Kropp(23), enacted pursuant to "a new legislative power" by a "separate legislative body armed with general legislative authority" and, thus, cannot be regarded as an exercise of the legislative power of the Commonwealth.

The second issue is whether, pursuant to s. 122 of the Constitution, the Commonwealth can create Territory legislatures with power to impose duties of excise. That question necessitates a consideration of the relationship between s. 90 and s. 122 which authorizes laws for the government of Commonwealth territory. That relationship can only be ascertained by having regard to the Constitution as a whole, for the meaning and operation of s. 90 necessarily depend on the meaning given to s. 122 and vice versa. More precisely, if s. 122 is to be construed as standing apart from the rest of the Constitution, "exclusive" in s. 90 will mean "exclusive of the States"; but, if "exclusive" is to be construed to mean "exclusive of the States and Territories", the power conferred by s. 122 will, to that extent, be limited by s. 90.

Notwithstanding the need to look at the Constitution as a whole, it is convenient to begin with s. 122. The power conferred by that section is a power that applies to territory in the geographic sense. It covers, on the one hand, "territory surrendered by [a] State" and, on the other hand, "territory placed by the Queen under the authority of ... the Commonwealth, or otherwise acquired by the Commonwealth". And, of course, special provision is made in s. 125 with respect to the grant or acquisition of territory "in the State of New South Wales" for the seat of government. The power conferred by s. 122 is a general one to make laws "for the government of any territory", but it does not follow that the content of that power is the same regardless of the way the particular territory was acquired.

Although s. 122 operates generally and with respect to territory in the geographic sense, it is relevant to observe that Australia's internal territories, the Australian Capital Territory and the Northern Territory ("the Internal Territories"), are historically and geographically different from other territory with which the section deals(24). The Australian Capital Territory exists as such by virtue of a grant by the State of New South Wales pursuant to s. 125 of the Constitution(25); the Northern Territory owes its existence as a Territory to the surrender of territory by the State of South Australia(26). They and any future Territory brought into existence by separation from one or more of the States are necessarily constituent parts of the Commonwealth of Australia, both geographically and politically. Other territory might become part of Australia if, for example, the limits of a State are increased to include it(27), and some territory may be part of the Commonwealth even though it was not in 1901 and is not now within the limits of any State(28). But, as is apparent from the external Territories which were held under mandate from the League of Nations and, later, under trusteeship from the United Nations, the mere acquisition of territory does not, of itself, make that territory a constituent part of the Commonwealth either in a political or in a geographic sense(29).

The fact that the Internal Territories are, geographically and politically, constituent parts of the Commonwealth of Australia is obvious. Indeed, the Australian Capital Territory, comprising territory in which the seat of government is located, is the political centre of the Commonwealth. Even so, the precise relationship of the residents of the Internal Territories ("Territorians") with the Australian body politic has not been fully explored in the decided cases. Nor has it featured significantly in constitutional discourse. It has been held(30) that the concluding words of s. 122(31) authorize laws permitting Territorians to elect senators and members of the House of Representatives with the same powers and privileges as senators for and representatives from the States. It has also been held(32) that they are not included in the "people of the Commonwealth" for the purposes of s. 24 of the Constitution(33). But the decisions with respect to those issues are by no means definitive of the relationship. One thing is clear: those persons who resided in the areas of New South Wales and South Australia that became the Australian Capital Territory and the Northern Territory respectively, did not, on grant or surrender of the area concerned, lose their membership of the body politic which the Constitution brought into existence as the Commonwealth of Australia. Of course, there was an immediate "change in the status of the area and of its residents"(34), but that change was not one involving exclusion from membership of the body politic. Similarly, persons who later become residents of the Internal Territories did not suffer any change in that regard, although, as with the original residents, their political rights differed(35) from those of other Australians by reason of the different constitutional regime established by s. 122.

On a number of occasions s. 122 has been construed on the basis that it is unaffected by limitations expressed or to be discerned in other provisions of the Constitution. It has been held that the power conferred by s. 122 is not confined by s. 72(36) which governs the appointment, tenure and remuneration of the members of the federal judiciary, or by s. 80(37) which provides for trial by jury in all cases involving indictable offences against the laws of the Commonwealth. It was also held in Teori Tau v. The Commonwealth(38) that the power is unaffected by s. 51(xxxi)(39) and, in Buchanan v. The Commonwealth(40), that a law under s. 122 imposing taxation is not subject to s. 55 of the Constitution(41). In Capital T.V. & Appliances Pty. Ltd. v. Falconer(42) it was held that the Supreme Court of the Australian Capital Territory is not a federal court for the purposes of s. 73 of the Constitution with the consequence that this Court has no jurisdiction under that section to entertain an appeal from it. And, of course, the effect of the decisions in Western Australia v. The Commonwealth and Queensland v. The Commonwealth is that the meaning of the concluding words allowing for Territory representation in either House of the Commonwealth Parliament(43) is not cut down by provisions in Ch. I of the Constitution dealing with the composition of the Senate and House of Representatives.

The power conferred by s. 122 is of a different order from that conferred by s. 51(44) but, as I pointed out in Australian Capital Television Pty. Ltd. v. The Commonwealth(45), it does not follow from that or from any of the decisions concerned with its relationship with particular constitutional provisions that its meaning and operation are uninfluenced by other provisions in the Constitution(46). Indeed, as this case makes clear, the question of the relationship between s. 122 and other provisions of the Constitution can only be determined by having regard to the Constitution as a whole.

One constitutional consequence of the fact that the Internal Territories form part of the geographical area that is the Commonwealth of Australia is that s. 122, as it relates to them, must yield to a constitutional provision which mandates a situation for the whole of the Commonwealth. Thus, for example, s. 122 must yield to s. 118 which requires that "[f]ull faith and credit ... be given, throughout the Commonwealth to the laws, the public Acts and records, and the judicial proceedings of every State."(47)

The constitutional significance of the political relationship between Territorians and the body politic of the Commonwealth of Australia is, perhaps, not as obvious as that which flows from the fact that the Internal Territories are part of the geographical area that is Australia. However, it is arguable that that relationship requires that s. 122 be interpreted in a way that secures to Territorians the same basic rights that the Constitution confers on other Australians, unless the contrary is clearly indicated(48).

Given that the Internal Territories are constituent parts of the Commonwealth, both geographically and politically, it is also arguable that, as s. 122 appears in Ch. VI which is concerned with the admission and establishment of new States, it only authorizes the alteration of their status from dependent Territory to that involving a separate body politic with separate organs of government, on the basis that, as separate bodies politic, they are subject to the same restraints as the Constitution imposes on the States. That is not to suggest that s. 122 should be construed differently in the case of internal and external Territories; it is to suggest that the power conferred by s. 122 is qualified by the nature of the body politic which the Constitution established as the Commonwealth of Australia - a qualification that is significant for territory which, geographically and politically, is a constituent part of the Commonwealth, but one that may lack significance in other cases.

The agreement recited in the preamble to the Constitution, namely, "to unite in one indissoluble Federal Commonwealth" may well require that some distinction be made for the purposes of s. 122 between territory which, geographically and politically, is a constituent part of the Commonwealth and territory which is not. At least that is so with respect to territory surrendered by an original State pursuant to s. 111 of the Constitution(49). If no distinction is made, s. 122 would seem to allow for the Commonwealth to be broken up by the grant of independence to the Northern Territory or, for that matter, to any other Territory brought into existence by surrender by one or more States pursuant to s. 111. That is not a matter that requires present exploration for, in this case, it is not necessary to look beyond the fact that the Internal Territories are part of the geographical area that is the Commonwealth of Australia.

The powers referred to in s. 90 are powers "to impose duties of customs and of excise, and to grant bounties on the production or export of goods". The powers are conferred by s. 51(ii) and (iii), not by s. 90. The function of s. 90 is to make them exclusive. The power conferred by s. 51(ii) is a power to make laws with respect to taxation, and that conferred by s. 51(iii) is a like power with respect to bounties on the production or export of goods. In each case the power is conferred subject to a condition, being, in the case of taxation, that it not "discriminate between States or parts of States" and, in the case of bounties, that they "be uniform throughout the Commonwealth". The latter condition bears on the power conferred by s. 122, at least so far as it concerns territory that forms part of the geographical area that is the Commonwealth of Australia.

The requirement in s. 51(iii) that bounties be uniform throughout the Commonwealth is an absolute requirement. And it is one that is only secured constitutionally if legislative power with respect to bounties is vested in the Commonwealth to the exclusion of all other legislatures within the Commonwealth. Thus, for s. 51(iii) to have effect according to its clear terms, "exclusive" in s. 90 must be read as exclusive of any legislature within the Commonwealth, be it a State legislature or a legislature created pursuant to s. 122. As s. 90 also renders the power to levy duties of customs and of excise exclusive, that power is also exclusive of any other legislature within the Commonwealth, including one created pursuant to s. 122 of the Constitution. Accordingly, the legislature of the Australian Capital Territory can exercise no power to impose duties of excise.

Some of the cases concerned with s. 90 contain statements to the effect that that provision was concerned to effect a division of legislative power between the Commonwealth and the States(50). And in Nott Bros. & Co. Ltd. v. Barkley(51) Isaacs J. said that "exclusive" in s. 90 meant "exclusive of State Parliaments". As Brennan, Deane and Toohey JJ. observe in this case, that and like statements are correct, "but as a matter of history, not of construction". And none of the cases containing statements to the effect that s. 90 was concerned to limit the powers of the States raised or was concerned with the issue in this case, namely, the relationship between s. 90 and s. 122 of the Constitution.

The question reserved for the consideration of the Full Court should be answered "Yes".

Answer the question reserved for the opinion of the Full Court (as amended) as follows:

Question: Does Ch. IV of the Commonwealth Constitution operate so as to preclude the Legislative Assembly of the Australian Capital Territory from exercising the power to impose duties of excise within the meaning of s. 90 of the Constitution?

Solicitors for the plaintiffs, Macphillamy Cummins & Gibson.

Solicitor for the defendant, M. H. Peedom, Chief Solicitor, Australian Capital Territory.

Solicitors for the interveners, Australian Government Solicitor; Solicitor for the Northern Territory.

(1) Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938), 60 C.L.R. 263, at pp. 296, 298-299, 300; Whitehouse v. Queensland [1960] HCA 11; (1960), 104 C.L.R. 609, at p. 618.

(2) Nott Bros. & Co. Ltd. v. Barkley [1925] HCA 11; (1925), 36 C.L.R. 20.

(3) Berwick Ltd. v. Gray [1976] HCA 12; (1976), 133 C.L.R. 603.

(4) Reg. v. Burah (1877), 3 App. Cas. 889; Hodge v. The Queen (1883), 9 App. Cas. 117; Powell v. Apollo Candle Co. Ltd. (1885), 10 App. Cas. 282; Reg. v. Toohey; Ex parte Northern Land Council (1981), 151 C.L.R., at p. 279; The Commonwealth v. Carkazis (1978), 23 A.C.T.R. 5, at p. 10.

(5) Hematite Petroleum Pty. Ltd. v. Victoria [1983] HCA 23; (1983), 151 C.L.R. 599, at pp. 632, 661-662.

(7) [1933] HCA 18; (1933) 49 C.L.R. 382.

(8) [1921] HCA 26; (1921) 29 C.L.R. 305.

(9) Worthing v. Rowell & Muston Pty. Ltd. (1970), 123 C.L.R. 89, at pp. 97, 114, 124; Spratt v. Hermes [1965] HCA 66; (1965), 114 C.L.R. 226, at pp. 241, 258, 262- 263, 282.

(10) Reg. v. Holmes (1988), 93 F.L.R. 405, at p. 410; Rose, "The Commonwealth Places (Application of Laws) Act 1970", Federal Law Review, vol. 4 (1971) 263, at p. 268.

(12) Parton v. Milk Board (Vict.) [1949] HCA 67; (1949), 80 C.L.R. 229, at p. 260; Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974), 130 C.L.R. 177, at p. 238; Hematite Petroleum Pty. Ltd. v. Victoria (1983), 151 C.L.R., at p. 631; Philip Morris Ltd. v. Commissioner of Business Franchises (Vict.) [1989] HCA 38; (1989), 167 C.L.R. 399, at p. 426; Western Australia v. Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970), 121 C.L.R. 1, at p. 17; Gosford Meats Pty. Ltd. v. New South Wales [1985] HCA 5; (1985), 155 C.L.R. 368, at p. 387.

(13) Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960), 104 C.L.R. 529, at p. 547.

(14) Nott Bros. & Co. Ltd. v. Barkley (1925), 36 C.L.R., at p. 29.

(16) Powell v. Apollo Candle Co. Ltd. (1885), 10 App. Cas., at p. 291; Cobb & Co. Ltd. v. Kropp, [1967] 1 A.C. 141, at p. 157.

(17) [1904] USSC 141; (1904) 194 U.S. 486.

(18) [1938] USSC 178; (1938) 305 U.S. 306.

(20) Worthing v. Rowell & Muston Pty. Ltd. (1970), 123 C.L.R., at p. 109.

(21) Berwick Ltd. v. Gray (1976), 133 C.L.R., at p. 607.

(22) Golden-Brown v. Hunt (1972), 19 F.L.R. 438, at p. 444.

(23) Berwick Ltd. v. Gray (1976), 133 C.L.R., at p. 607.

(24) Philip Morris Ltd. v. Commissioner of Business Franchise (Vict.) (1989), 167 C.L.R., at p. 427; Mutual Pools & Staff Pty. Ltd. v. Federal Commissioner of Taxation [1992] HCA 4; (1992), 173 C.L.R. 450.

(25) Nott Bros. & Co. Ltd. v. Barkley (1925), 36 C.L.R., at p. 29; Golden-Brown v. Hunt (1972), 19 F.L.R., at p. 444; Quick and Garran, Annotated Constitution of the Australian Commonwealth (1900), p. 656; Municipality of Delhi v. Birla Cotton Mills, [1968] All I.R. (S.C.), at p. 1266.

(26) Spratt v. Hermes (1965), 114 C.L.R., at p. 243; Teori Tau v. The Commonwealth [1969] HCA 62; (1969), 119 C.L.R. 564, at p. 570; Northern Land Council v. The Commonwealth [1986] HCA 18; (1986), 161 C.L.R. 1, at p. 6; Berwick Ltd. v. Gray (1976), 133 C.L.R., at p. 607; Attorney-General (W.A.) v. Australian National Airlines Commission [1976] HCA 66; (1976), 138 C.L.R. 492, at p. 512.

(27) Worthing v. Rowell & Muston Pty. Ltd. (1970), 123 C.L.R. 89; Attorney-General (N.S.W.) v. Stocks & Holdings (Constructors) Pty. Ltd. [1970] HCA 58; (1970), 124 C.L.R. 262; Reg. v. Phillips [1970] HCA 50; (1970), 125 C.L.R. 93.

(28) [1958] HCA 14; (1958) 99 C.L.R. 132, at p. 141.

(29) Philip Morris Ltd. v. Commissioner of Business Franchises (Vict.) (1989), 167 C.L.R., at p. 426; Cole v. Whitfield [1988] HCA 18; (1988), 165 C.L.R. 360, at p. 398.

(32) [1978] HCA 2; (1978) 138 C.L.R. 276, at p. 276.

(34) Berwick Ltd. v. Gray [1976] HCA 12; (1976), 133 C.L.R. 603; Golden-Brown v. Hunt (1972), 19 F.L.R. 438; Porter v. The Queen [1926] HCA 9; (1926), 37 C.L.R. 432; Namatjira v. Raabe (1958), N.T.J. 608, at pp. 614-617; Reg. v. Lampe; Ex parte Maddalozzo (1963), 5 F.L.R. 160, at pp. 167-170; Kean v. The Commonwealth (1963), 5 F.L.R. 432, at p. 437; Milirrpum v. Nabalco Ltd. (1971), 17 F.L.R. 141, at pp. 284-286.

(35) Nott Bros. & Co. Ltd. v. Barkley (1925), 36 C.L.R., at p. 29; Reg. v. Phillips (1970), 125 C.L.R., at p. 103; Co-operative Committee on Japanese Canadians v. Attorney-General (Canada), [1947] A.C. 87, at pp. 106- 107.

(36) Ffrost v. Stevenson [1937] HCA 41; (1937), 58 C.L.R. 528, at p. 558.

(37) Cobb & Co. Ltd. v. Kropp, [1967] 1 A.C. 141; Giris Pty. Ltd. v. Federal Commissioner of Taxation [1969] HCA 5; (1969), 119 C.L.R. 365, at p. 374.

(38) Breavington v. Godleman [1988] HCA 40; (1988), 169 C.L.R. 41, at p. 115.

(39) Berwick Ltd. v. Gray [1976] HCA 12; (1976), 133 C.L.R. 603.

(40) Attorney-General (N.T.) v. Minister for Aboriginal Affairs (1989), 25 F.C.R. 345, at pp. 365-366.

(41) Nott Bros. & Co. Ltd. v. Barkley (1925), 36 C.L.R., at p. 29; Quick and Garran, op. cit., pp. 656, 838.

(42) For the purposes of the Act, an "X" video is a video classified as an "X" film under the Classification of Publications Ordinance 1983 (A.C.T.): s. 4(1). Section 25(2) of the Ordinance provides that a film which:"(a) depicts, expresses or otherwise deals with matters of sex, drug misuse or addiction, crime, cruelty, violence or revolting or abhorrent phenomena in a manner that is likely to cause offence to a reasonable adult person; ordepicts, expresses or otherwise deals with matters of sex, drug misuse or addiction, crime, cruelty, violence or revolting or abhorrent phenomena in a manner that is likely to cause offence to a reasonable adult person; or(b) is unsuitable for viewing by a minor"is unsuitable for viewing by a minor"shall be classified as an "R" film or an "X" film. Section 35(3) of the Ordinance provides that an "X" film shall not be sold, let on hire or delivered to a minor other than by his or her parent or guardian, shall not be exhibited or displayed, except in a restricted publications area, shall bear prescribed markings, shall not be delivered to a person who has not made a direct request for it, and shall be delivered in a plain opaque package.

(43) s. 25. "Wholesale" and "retail" are given extended meanings by s. 4(1) of the Act.

(44) s. 5(1)(a). Sections 4(1) and 18 have the effect of setting this fee at $50 for each premises in respect of which the licence is to be held.

(45) [1925] HCA 11; (1925) 36 C.L.R. 20.

(46) (1878) 3 App. Cas. 889, at pp. 903-906; see also Hodge v. The Queen (1883), 9 App. Cas. 117, at p. 132; Powell v. Apollo Candle Co. Ltd. (1885), 10 App. Cas. 282, at pp. 288-291.

(47) [1970] HCA 50; (1970) 125 C.L.R. 93.

(48) Section 52(i) vests in the Parliament exclusive power in relation to places acquired by the Commonwealth for public purposes.

(53) [1931] HCA 34; (1931) 46 C.L.R. 73, at pp. 95-96. See generally on this subject the Honourable David Malcolm, "The Limitations, If Any, on the Powers of Parliament to Delegate the Power to Legislate", Australian Law Journal, vol. 66 (1992) 247.

(58) [1969] HCA 5; (1969) 119 C.L.R. 365, at p. 373.

(60) [1921] HCA 25; (1921) 29 C.L.R. 329.

(61) [1931] HCA 1; (1931) 44 C.L.R. 492.

(62) [1938] HCA 9; (1938) 59 C.L.R. 170.

(64) [1976] HCA 12; (1976) 133 C.L.R. 603, at p. 607.

(65) [1965] HCA 66; (1965) 114 C.L.R. 226.

(67) Spratt v. Hermes (1965), 114 C.L.R., at p. 258, per Kitto J.; p. 263, per Taylor J.; Worthing v. Rowell & Muston Pty. Ltd. (1970), 123 C.L.R., at p. 106, per McTiernan J.; pp. 111-112, per Kitto J.; p. 134, per Owen J.

(68) Worthing v. Rowell & Muston Pty. Ltd. (1970), 123 C.L.R., at p. 97, per Barwick C.J.; pp. 114-115, per Menzies J.; p. 124, per Windeyer J.

(70) [1960] HCA 55; (1960) 106 C.L.R. 186, at p. 199.

(71) [1938] HCA 54; (1938) 60 C.L.R. 772, at p. 792, per Dixon J.

(73) [1969] HCA 62; (1969) 119 C.L.R. 564, at p. 570.

(74) ibid. See also Northern Land Council v. The Commonwealth [1986] HCA 18; (1986), 161 C.L.R. 1, at p. 6.

(79) [1931] HCA 34; (1931) 46 C.L.R. 73, at pp. 95-96.

(81) Spratt v. Hermes [1965] HCA 66; (1965), 114 C.L.R. 226, at p. 242.

(83) See Official Record of the Debates of the Australasian Federal Convention (Adelaide, 20 April 1897), p. 1012; Official Record of the Debates of the Australasian Federal Convention (Melbourne, 8 February 1898), pp. 698- 699.

(85) Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901), p. 376.

(86) See Mr. McMillan, Official Record of the Debates of the Australasian Federal Convention (Adelaide, 20 April 1897), pp. 1013-1014; Messrs Deakin and Barton, Official Record of the Debates of the Australasian Federal Convention (Melbourne, 28 January 1898), p. 257.

(87) [1976] HCA 12; (1976) 133 C.L.R. 603, at p. 607.

(88) Attorney-General (Cth) v. The Queen, [1957] A.C. 288, at p. 320.

(89) Lamshed v. Lake [1958] HCA 14; (1958), 99 C.L.R. 132, at p. 154, per Kitto J.

(92) See Sir Robert Garran, The Coming Commonwealth (1897), pp. 180-181; Official Record of the Debates of the Australasian Federal Convention (Melbourne, 28 January 1898), pp. 256-257, 259-261; Sir Samuel Griffith's Notes on Australian Federation: Its Nature and Probable Effects (Government Printer, Brisbane, 1896), pp. 21-22; Quick and Garran, op. cit., p. 941.

(93) Federal Capital Commission v. Laristan Building & Investment Co. Pty. Ltd. [1929] HCA 36; (1929), 42 C.L.R. 582, at p. 585. The description is apposite, though we do not stop to consider the problem there addressed.

(95) Preamble to the Commonwealth of Australia Constitution Act 1900 (Imp.) and Covering cl. 3.

(96) [1988] HCA 18; (1988) 165 C.L.R. 360, at p. 385.

Capital Duplicators Pty Ltd v Australian Capital Territory [1992] HCA 51;

At a glance

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Judgment (240 paragraphs)

Capital Duplicators Pty Ltd v Australian Capital Territory [1992] HCA 51; (1992) 177 CLR 248 (15 October 1992)

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Legislation Cited (15)

Cases Cited (1)