Deakin v Webb [1904] HCA 57

The principle enunciated in D'Linden v. Pedder (ante p. 91, at p. 111), that 'when a State attempts to give to its legislative or executive authority an operation

which, if valid, would fetter, control, or interfere with, the free exercise of the

lative or executive power of the Commonwealth, the attempt, unless expressly Barton ane connor,

uithorized by the Constitution, is to that extent invalid and inoperative," e-aflirmed.

An Income Tax Act of a State, in so far as it attempts to tax the salaries of officers of the Commonwealth, is within the above principle.

Such an Act of a State is not taken out of the above principle by reason of he fact that the income tax is assessed on salary received during a preceding year.

Held, therefore, that the salaries of a Minister of the Crown for the monwealth and of a member of the Commonwealth Parliament, so far as they earned in Victoria, are not liable to assessment under the Income Tax Acts 0 Victoria.

Decision of the Full Court, 29 V.L.R., 748 ; 25 A.L,

Bank of Toronto v. Lambe, 12 App. Cas., 575, distinguished.

'The liability of a Commonwealth ofticer to an income tax imposed by aS Act in respect to his salary as such officer, is a question as to the limits inter the Constitutional powers of the Commonwealth and those of a State within meaning of sec. 74 of the Constitution, and, therefore, the decision of the Court as to such liability is final and conclusive unless the Court vertifies that th question is one which ought to be determined by His Majesty in Council.

'The principles applicable to the granting by the Privy Council of leave to appeal from the High Court or from the Supreme Court of a State are not appli to the granting of a certificate under sec. 74 of the Constitution.

No general rule can be laid down as to what are 'special reasons" granting such a certificate.

'The following reasons /e/d not sufficient reasons for granting a certificate 'The desire of the governments of all or some of the States that an appeal to Privy Council should be allowed; that the decision affects a large number persons in many of the States and the revenues of those States; that the deci: reverses a decision of the Supreme Court of a State.

Two cases were stated by the Commissioner of Taxes of Vieto pursuant to see. 17 of the Income Tax Act 1896, the first of which was as follows : - j

"1. The Honorable Alfred Deakin was trom and after the 9

State for the Commonwealth of Australia, and was, during ¢ year 1901, domiciled and resident in Victoria.

"2. The said Alfred Deakin received under see. 48 of th Constitution of the Commonwealth of Australia, an allowane £233 for 1901 as a member of the House of Representatives, for the same year received also as Minister of State £1,650,

of the Ministers of State under sec. 66 of the Constitution. "3. The electoral division in respect of which the said Alfred kin was a member of the House of Representatives was in the ate of Victoria.

"4, The House of Representatives sat for the first time on the 9th day of May, 1901,0n which day the said Alfred D his seat and the said House sat at all times hitherto in Victoria. "5, The work done by the said Alfred Deakin as Minister and as a member as aforesaid, and in respect of which he received the moneys hereinbefore mentioned was so far as his personal action isconcerned nearly all performed by him in and from Melbourne, although his responsibilities extended to all the Australian Com- monwealth, and as Minister he attended His Excellency the Governor-General, and met his colleagues in Cabinet on eight occasions in Sydney and on sixty-eight occasions in Victoria and corresponded (principally from Melbourne) with federal officials n the several States of the Commonwealth with regard to Customs prosecutions and other matters.

"6, The said moneys were paid to and received by the

F said "Alfred Deakin in Melbourne by payment of the said moneys into his account at the Union Bank of Australia, Melbourne.

"7, In assessing the income of the said Alfred Deakin for the "purpose of income tax I included the '£1,650. The taxpayer objected to such a 'that the said sums should not have been included. "The question for the opinion of the Court is : _ "Were the said sums of £233 and £1,650 or was either and _ which of them or any and what portion thereof rightly included in the said assessment ? "

~~ The ease set out in relation to Sir William John Lyne, a similar 'state of facts to those in the Honorable Alfred Deakin's case, the only material differences being that he was domiciled in New 'South Wales ; that during the session of Parliament he generally came to Melbourne on Tuesday and left again for Sydney on riday evening; that during adjournments of the House he

portion of the sum of £12,000 payable to the King for the salaries H. ©. oF A.

H.C. or A. generally remained in Sydney; that during the sitting of the

House he occasionally remained in Melbourne from Friday to Tuesday ; that he performed his work as Minister and as member chiefly in and from Melbourne, in Parliament House, and in rooms - provided for ministers in premises rented by the Commonwealth; - that he attended Cabinet meetings on twelve occasions in Sydney, and on more occasions in Melbourne ; that when in Sydney he did his business there in premises rented by the Commonwealth ; and that the moneys sought to be taxed were paid to and received by him in Sydney, by payment of them into his account at the Bank of New South Wales.

The Full Court (Madden, C.J., and a' Beckett and Hodges, JJ.), held that both the taxpayers were liable to income tax in respect of that portion of the sums in question which had been earned in Victoria, and the judgment of the Court is reported 29 V.LR., 748; 25 A.L.T., 245.

Higgins, K.C. (Attorney-General for the Commonwealth), and Drake, for the appellants. As to the effect of the Income Tax Acts, there is no machinery in the Acts for distinguishing between parts of the salary of an individual where his whole salary is earned partly in and partly out of Victoria, although by - sec. 10 of the Income Tua Act 1895 there is a specific provision for apportioning the profits of a foreign company. The ordinary principle that a tax is not to be levied unless by the literal con- struction of the Act it is granted must be applied. According to the Income Tax Act 1895 the only salary taxed is a salary earned in Victoria. If a subject cannot be brought within the letter of the law he is free; Partington v. Attorney-General, L.R. 4 H.L, 100, at p. 122, followed in The Queen v. Buckley's Swamp Estate - 0o., 18 V.L.R., 66. A liberal construction in favour of the tax- 7 payer must be given to taxing Acts; Armytage v. Wilkinson, 3 App. Cas., 355, at p. 369. This salary was not earned in Victoria, - but was earned in Australia. It is true the boundaries of the - Commonwealth are coincident with those of the States, but they are coincident on different planes. As to the meaning of income - "earned derived or received " in sec. 14 (3) see In re Income Taw -

ALR. (C.N.), 37. Assuming that these incomes would be other- taxable, the tax is unlawful as it interferes directly between officer of the Commonwealth and his Government. It is a tax

of the officer it is taxable. The Full Court has taken the view that income earned as well as income received must be included in returns of income under sec. 14 (3). Unless it is shown that this income was earned in Victoria, the Commissioner cannot recover anything. The whole salary must have been earned in Victoria in order to be taxable. The judgment of the Court in this case (29 V.LR., 748; 25 A.L.T., 245) follows a previous decision of the Full Court in Wollaston's Case, 28 V.L.R., 357 ; 24 LT., 63. If it is once admitted that there is any unconstitu- ality in the taxing of a federal officer, the whole case for the Commissioner is gone. The Full Court relies on the power of the Crown to disallow an Act of a State to distinguish the decisions f the Courts of the United States of America. It is a most dangerous thing to put the Crown in the position of the power that is to judge in a conflict of legislation between the States and the Commonwealth. The Supreme Court drew a distinction between the power to refuse assent and the power to disallow.

• (Grirrrru, C.J. - We can see no distinction between the power of disallowance and the power of veto.]

-[Barton, J. - In the case of Canada the power of veto is different from that in the case of the Australian States, because in the former case the Governor-General in exercising the power cts on the advice of his ministers. It was never intended that this Court should hold its hand until it was known whether the rown would exercise its power of disallowance. ]

By see. 48 of the Constitution the sum paid to members of farliament is termed an "allowance." The salaries of the Ministers of the Crown are provided for by sec. 66 in the form of

in appropriation to the Crown. It may be that this would come

Acts, 23 V.L.R., 312, at p. 316, and In re Income Tax Acts, 4 H.C. or A.

serious infringement on the immunity of federal instrumentalities.

The point is that if there is a power innocently to infringe on

that immunity there is power to noxiously do so. The only safe - line of demarcation to draw is to treat federal instrumentalities - upon one plane and State instrumentalities upon another, If - Wollaston's Case is rightly decided there is no limit to the power

of taxation, The imposition of the income tax for the year 1902 _ is authorized by Act No. 1758, which was passed after the Consti- - tution, so that the question whether the tax is or is not validated - by sec, 108 of the Constitution does not arise. Every presump- tion should be made against the application of the general words of the Income Tax Act 1895 to a class of officers of the Crown which was not then in existence. This Court has in D''Hmden v. Pedder, ante p. 91, held that the decisions of the United States Courts based on that in McCulloch v. Maryland, 4 Wheat., 316, are applicable to the Constitution. In Dobbins v. Hrie County, | 16 Peters, 435, it was held that it is not competent for a State to : tax the salary of a federal officer. In Collector v. Day, 11 Wall. 113, the same doctrine was applied to a Federal tax on the salary . of a State Judge. The question of whether the limits of the Con- - stitution have been transcended rests with this Court and with no other authority. Without dissent the principle has been established, affirmed and reaffirmed, that it is not competent for one government. to tax another. Taxing the income of a federal officer is an inter- ference with a federal instrumentality ; Dobbins v. Erie County (supra). Whatever device is adopted, if the object is to diminish the amount payable to the officer, the device fails. It may be argued _ that the prohibition in sec. 114 of the Constitution against a State taxing the property of the Commonwealth, is limited to property and does not extend to Commonwealth instrumentalities, but the - Court should not give as much weight to the eapressio wnius exclusio alterius argument in relation to the Constitution as in relation to ordinary Acts of Parliament; Legal Tender Cases, 1. Wall., 457, at 544. See also Leprohon v. City of Ottawa, Ontario App., 522. There is a certain similarity between a federal officer doing his work in a State, and an ambassad He is there not by the permission of the State but by virtue of higher authority. _

he right to exclude? A State could not exclude a federal officer rom its territory.]

_ As to the right to tax federal officers, see » also Ex parte Owen, 20 few Brunswick R., 487 ; R. v. Bowell, 4 British Columbia R., 498. sto the Bank of Toronto v. Lambe, 12 App. Cas., 575, on which Full Court relied so strongly, that was not a case of taxation of a federal instrumentality. The bank was a private bank, tho ih incorporated under federal law. As in the Municipal Cowneil of Sydney v. The Commonwealth, ante p. 208, it was held that a new kind of property had come into existence which was ot in the contemplation of the Parliament of New South Wales when passing the Sydney Corporation Act 1902, so here a new kind of person, viz., an officer of the Commonwealth, has come f existence, who was not in the contemplation of the Victorian liament when the Zncome Tax Act 1895 was passed, and, refore, he is not taxable under that Act. Whether this tax is evied under the Act of 1895 or that of 1902 it is subject to the onstitution. The Constitution was interpreted by this Court in 'Emden v. Pedder, ante p. 91, just as any other Imperial Act ld be interpreted. The cases of Dobbins v. Erie County, supra, at p. 443 ; Collector v. Day, supra; and Leprohon v. Ottawa, pra, at p. 525, and 40 Ontario Rep., Q.B., 478, were all expressed to be test cases, and the decisions were intended to apply to all ederal officers. The grant by the Constitution of express powers includes, by implication, the grant of powers without which the express powers would be useless. Hx parte Owen, supra, at p. The income of a federal officer is itself a federal instru- ntality, because it is the means by which the Commonwealth secures the services of the officer. The imposition of this tax is inconsistent with the Constitution in so far as it affects the emuneration of a minister, and of a member of parliament. The se for a member of parliament is much stronger than that for a minister, because of the language of sec. 48 of the Constitution. he tax,so far as it affects a minister, is an interference with the control of a department of the Commonwealth. Neither ministers 10r members of parliament are within the jurisdiction of a State. They also referred to National Bank v. Commonwealth, 9 Wall., 353, at p. 361.

(Grireira. C.J. - Is not the right to tax co-extensive only with H. ©. or A.

| Isaacs, K.C.,and Cussen (Bryant with them), for the respondent, - 7 The Income Tax Acts impose a tax on income, i.¢.,on money that has come in. The original Act of 1895 is a constitutional Act. The - only question now is, is each of the appellants now subject to the - Act? The Act of 1895, being a valid Act, even if it is correct that it embraces various classes of income, viz., income earned, | income derived, and income received, the appellants have, according | to the special case, received the income, and it is in respect of the income they have received that they are taxed. 'The money had been paid to the bankers of the appellants, and was a debt owing J by those bankers to the appellants. Further, the money had been | received in the year prior to that in respect of which the tax is imposed. That tax is upon the appellants, and is proportioned to | the amount of income they received in the particular year, which income is estimated by the amount of income received during the preceding year. Ifone of the appellants had ceased to hold office at the end of 1901, could he exclude from his return of income made for the year 1902 the salary he received during 1901? The Income Tax Acts do not make it unlawful for the officer to receive the whole of his salary. In that case there would - be a conflict of powers. The whole question is what has the State - Legislature done, and it is no use to say that it could do something |

illegal. There is a presumption that every Act is constitutional. : (Grurriri, C.J. - In our opinion there is no doubt that the tax - imposed by those Acta is a tax on incomes received, and Hallam appellants had received the income when the tax was imposed.) - As to the meaning of income, see Lawless vy. Sullivan, 6 App. Cas., 373. Apart from the federal aspect of the question, a salary is divisible, and may be apportioned, eg., in the case of a commer- cial traveller who travels outside as well as inside Victoria for the - purpose of earning his salary. So far as it is earned in Victoria, it is taxable. (GrirrirH, C.J. - It is not necessary to decide that.] As to the argument that a federal salary cannot be earned in Victoria, there is no Australian plane as distinct from a State. plane. Prior to federation each State had plenary powers of legislation within its boundaries. The effect of federation was to" collect certain subject matters and hand them over, not to another

to be exercised within the same territory for the same States. States themselves, with their constitutions, and legislative executive powers, remain exactly the same. The territory of ch is the same. It is a transference of existing powers and reation of new powers in the same territory. When anything described as happening, or being done, within a State, the ime meaning must be given now as before federation. O'Connor, J. - So far as the carrying out of federal functions neerned it may be that there are no State boundaries. ] Grirrirn, C.J. - Or. XXX.,r. 1, of the Rules under the High ourt Procedure Act 1903, requires actions to be tried in the State n which the cause of action arose.]

at is where a material part of the cause of action arose ; Read Brown, 22 Q.B.D., 128. The word " income" in the Income Tax must be read as "income so far as it arises in Victoria." ralia is only a geographical term. The income in question e was earned in Australia, and in that part of it called Victoria. United States v. Kagama, 118 U.S.R., 375, which dealt with the right of a State to affect Indians in the Indian Territory, the looked at the geographical limits of the State, and held hat the soil and people of the Territory were for some purposes inder the jurisdiction of the State, and for other purposes under hat of the Union. See also Klaplin v. Hausman, 93 U.S.R., at . 186 ; Turble's Case, 13 Wall., 397, at p. 406. "Earned within ictoria," means earned within the geographical limits of Victoria. \s to the place where a crime is committed, see R. v. Bamford, 901) 1 S.R., (N.S.W.), 337; R. v. Coombes, 1 Leach C.C., 388 ; t. v. Keyn, 2 Ex. D., 68, at p. 232. A federal officer working hin the Commonwealth must earn his income within a State, id within that State in which he does the work. Could a mail ntractor refuse to pay a State income tax as not being earned the State? If one of the appellants had died the day his salary was paid would not the amount of it have been ible fo probate duty? All the United States cases regard the graphical limits of the State, and recognise that within those mits there are two authorities having different spheres of action. ithe case of an Imperial officer sent to Australia to do work

rritory, but to another authority, but the powers of that authority H.C. or A.

there, he earns his salary in Australia and in that particular part of it in which he does his work. His salary is fixed by a para- mount power. Could he say he was on a different plane from an_ ordinary citizen and refuse to pay income tax whether imposed by the State or by the Commonwealth ?

(Grierirn, C.J. - Although the British Parliament is paramount the British Government does not exercise its administrative powers here. For all practical purposes Great Britain is an entirely different State from Australia. But the Commonwealth has power over the whole of Australia and continuously exercises it.]_

The power of the Imperial Parliament is the important thing. The non-user of that power is unimportant for this argument That illustration is stronger than the present ease. The State can be in no worse position in regard to the Commonwealth than. that in which the Commonwealth is in regard to the Empire. This illustration bears upon the questions of the divisibility of the salary, of the meaning of "earned in Victoria," and of federal instrumentalities. If the State is prohibited from taxing a federal instrumentality the Commonwealth and the State are both equally prohibited from taxing the income when received of an Imperial instrumentality. Neither the Commonwealth nor the State can prevent the Imperial officer from coming here, or from receiving the whole of his salary, but both can tax the income of that officer when he receives it. In the latter case no conflict of power can arise, because the tax does not arise until after the transaction between the officer and his government is at an end.

[Grirriru, C.J. - Is not this case within the decision in Dobbi v. Evie County (supra) ?]

No. The Act under consideration in that case taxed the emoluments of the office, eo nomine. The Court may well hay thought that the tax had the effect of preventing the officer receiving the whole of his salary. The Victorian income tax an entirely personal tax ; Jn re Income Tax Acts, 25 V.LR., 554 21 A.L.T., 206; ib, 28 V.LR., 338; 24 ALT, 55; ib. 29 VL 525, at p. 530; 25 A.L.T., 136. Money when paid over is in same position as land, and may be taxed; Weston v. Charle: 2 Peters, 449, at p. 468, Every person in the State is taxable b the State in respect of money that is his. An employé of tl

_ [Grieviru, C.J. - There is this distinction, that a contractor can take the tax into consideration when making his contract.]

The case of Thompson v. Union Pacifie Railroad Co., 9 Wall., 579, at p. 590, shows how far McCulloch v. Maryland (supra) lishes a principle, and the Court refused to extend that principle. The Court also said that the principle was not so wide s some of the reasoning seemed to indicate. If the principle is as wide as is contended for it must cover the case of a contractor. [Grirrirn, C.J. - Not necessarily so. The case of the contractor was not necessarily within the contemplation of the legislature.] The Courts of the United States have held that once money has become the property of a federal instrumentality it is taxable ; aston v. Lowa, 188 U.S.R., 220, at p. 230; Murray v. Charleston,

Massachusetts, 125 U.S.R., 530. 7 [Grirriru, C.J. - All those cases illustrate the distinction I have efore pointed out, viz., that if the tax is upon a person or corpor- ition as a federal instrumentality, it is bad; if otherwise, it is a] The case of Bank of Toronto v. Lambe, 12 App. Cas., 575, is a distinct decision that the principle laid down in McCulloch v. Maryland (supra) has no application to a constitution granted by the British Parliament. (GrirrirH, C.J. - That case would have been decided in the same way in the United States apart altogether from the British North America Act.) The Act under which the Bank of Toronto was constituted, 49 ict. Ch. 120, puts no public duty on the bank to perform any federal function. That is the same in the case of the National ks in the United States. See Brightley's Digest of United ites Laws, p. 56; Act of June 3rd, 1864. The later American ses say that the same principles apply to the National Banks as o the bank referred toin MeVulloch v. Maryland (supra). [Grirriru, C.J. - See. 42 of the United States Act expressly

Commonwealth is in the same position for this purpose as a H. ©. or A.

provides that shares of the National Banks may be taxed by the States. ]

Van Allen v. Assessors, 3 Wall.; 573, at p. 596, shows that that provision only adopts the exception made by Marshall, C.J. The section does notalter the position. In Bank of Toronto v. Lambe (supra), at p. 578, it was said that the maxim that the power to tax is the power to destroy, which is the foundation of the principle laid down by Marshall, C.J., has no application to a constitution under the Crown. The Australian Constitution is exactly within the words of the judgment in that case; it is an exhaustive distribution of powers between the Commonwealth and the States. The only difference between the Australian and the Canadian Constitutions is that in the former the powers of the State are not enumerated.

(Grirriru, C.J. - Is the Admiral of the Australian Station taxable by the Commonwealth, or by the States 7]

Yes, unless the taxing Act is repugnant to an Imperial Statute. The Commonwealth has power of direct taxation, and a State officer would be subject to a Commonwealth Income Tax Act. The Constitution must be dealt with in the same way as any other Imperial Act of Parliament. No prohibitions are to be implied in it. Victoria had, under her Constitution, express power, though in general words, to impose any taxation she thought fit. Of course, the power of the State Parliament does not extend now to matters as to which exclusive jurisdiction is given to the Commonwealth. The exclusive jurisdiction given by sec. 52 (ii.) of the Constitution is sufficient to support the decision in D'Hmden vy. Pedder (supra), Except as to the matters exclusively vested in the Commonwealth, the State Parliaments have the same powers as before federation.

[O'Connor, J. - Exclusive power is expressly given to the Commonwealth Parliament only as to the transferred depart-

ments, and nothing is said as to new departments, eg., the -

That may be a casus omissus. The United States Constitution is a grant by the people of the States. There is no power above them. The Australian Constitution is a grant and distribution of powers by the Imperial Parliament. The Constitutions of the States now depend on the Constitution of the Commonwealth.

wrshall, C.J., said that the powers of a State legislature, which H: ©. oF A.

re conferred by a single State, cannot over-ride the powers of he United States, which are given by the people of all the States. Phat cannot be said of the Australian States and the Common- ith. The powers of the Australian States and of the lommonwealth come from the same source. All that this Court n look at in construing the Constitution is its legal aspect. The une distinction exists between the Australian Constitution and that of the United States as between the Canadian Constitution nd that of the United States. It is a Constitution under the Crown. That of the United States is not under anything. The

ontrol them but the law. So the Supreme Court of the United es had to find a principle which would preserve the existence ff the Union. That Court, therefore, mvented the doctrine of

nd 107 of the Constitution. There are no implied restrictions in hat Constitution, but the Constitution of the United States is full { implied restrictions. As to the Canadian Constitution, see per Lord Watson in Liquidator of Maritime Bunk of Canada v. Receiver-General of New Brunswick, (1892) App. Cas., 437. The

madian Provinces stand in the same relation to the Dominion s the Australian States do to the Commonwealth. As to the ower of veto in Canada, see Todd's Parliamentary Government n British Colonies, 2nd ed., pp. 170, 527. The Crown had ways at common law the right to revoke the assent given by its gent to a Colonial Act of Parliament. The fact that the Crown ws said that that power may be exercised by the Governor-

umbe (supra) differently if it had arisen under the Australian stitution ? [Grirerru, C.J. - It was never intended that the veto should be

| | used to settle disputes between the Commonwealth and the States. Sec. 74 of the Constitution expressly provides to the contrary.] Many bills of the Dominion of Canada have not been assented. to. See Quick & Garran on the Constitution, p. 694. The right - of the Crown to disallow an Act must be regarded by this Court as an efficient power. The Crown would disallow an Act as between the Commonwealth and the States as it would in the - case of a New Zealand Act which interferes with Canada. Seo also Todd's Purliamentary Government in the Colonies, p. 527. It has been held that if there is a power granted by the Constitu- tion of a Province of Canada it does not matter if it conflicts with - a power of the Dominion; Attorney-General for Manitoba v. Manitoba Licence Holders' Association, (1902) A.C., 73, at p. 78. Similarly a Dominion Act is not bad because it conflicts with the powers of a Proyince ; Russell v. The Queen, 7 App. Cas., 829. In Brewers' and Maltsters' Association of Ontario v. Attorney- General for Ontario (1897), A.C., 231, at p. 237, it was said that if a provincial legislature were under the guise of direct taxation toseek to impose indirect taxation, the legislation might be invalid, but in this case there is no attempt under the guise of a State tax to cut down federal salaries or to affect federal operations, The effect may be the same qud the man, but it is not the same qué the Federal Government. There is no "direct impediment" placed in the way of the federal officer | see Railroad Co. v. Peniston, 18 Wall., 5, at p. 35. The taxation of a government agent is invalid only when it is the government that is attacked. Central Pacific Railroad Oo, v. California, 162 U.S.R., 91, at p. 121. (They also referred to Owensboro' National Bank vy. Owensboro', 173 US.R., 664; Davis vy. Elmira Savings Bank, 161 USR. 283.] The true test, however, of the validity of a State Act is st 107 of the Constitution. The grant of the Constitutions of the Commonwealth and of the States is based on confidence that the powers will not be abused. [They also referred to Loan Associa~ tion v. Topeka, 70 Wall., 655; Lefroy's Legislative Power im Canada, pp. xlxi., 198, 671; Providence Bank vy. Billings, Peters., 514, at p. 561; Clements on Canadian Constitution, pp. 174, 222; Glossop v. Howard, 10 Q.B., at p. 457; R. v. Mayor of London, 3 B. & A., 270.) In Canada the division of power i

different. This legislation is within sec. 108 of the Constitution.

deration does not take the case out of sec. 108. Either under sec. 107 or 108 this tax is valid. The position in McCulloch v. Maryland (supra) has been misunderstood. It

erations by the State was not permissible, and further that ation may be a form of interference. It was urged that the interference wasa small one. Murshall, C.J., answered to that it ay be very great and therefore there must be none at all. The sult is that in such a case as the present there is a preliminary question for the Court : - Does the tax interfere with the agent as ent'? The answer to it depends on the substance and effect of

he Act. That was the question in Brown y. Maryland, 12 'Wheat., 419; Railroad Co. vy. Peniston (supra). In cases like Dobbins v. Evie County (supra) and Leprohon v. City of Ottawa supra), the Courts have used the answer of Marshall, C.J., to the objection that the interference was a small one, as the ground for

ing that there was an interference. They say the power may be abused, and therefore there is an interference. The question whether there is an interference is one of fact for the Court. 'The Australian Constitution protects the Commonwealth and the States in a way that the American Constitution does not protect the Union and the States. hese officers are not picked out and taxed, but they are taxed in general with other citizens. In a general Act like these Income Tax Acts the Court should hold 'that it does not affect federal operations. None of the facts in the case show that the operations of the officers are interfered with. Ifa State Act were carried to excess or showed a discrim- 'ination, then the Imperial Government, that is the Crown, might interfere. From sec. 107 of the Constitution it is clear that it continues every power of the States Parliaments except those exclusively vested in the Commonwealth and therefore withdrawn from the States Parliaments. here are important powers eferred to in the Constitution which the States never had. One of the powers that the State of Victoria originally had was the

the same lines as in Australia, although the language used is H. ©. or A.

• power to tax every person in Victoria. That power is not subject

to any limitation. See. 107 was purposely left wider than the corresponding section in the United States Constitution in order that the States might exercise their powers during the transition period. The remedy is not to deny the existence of any power included in sec. 107, but it is under sees. 108 and 109 by the Parliament of the Commonwealth making laws. The Income Tax Acts would be protected by sec. 108 if by no other section. The Australian and the United States Constitutions have quite different histories. In the case of the former it has always been the custom for the people to trust parliament, while in the United States members of parliament have been looked on as mere delegates, and the powers of parliament were considered to be liable to abuse and therefore to be closely watched. In the Australian States we have responsible government, in America the legislative and executive parts of the government are distinctly separated, In Australia there is the protecting power of the Crown, in America there is no power above the Union, and the only protection for the Union and the States is the Supreme Court. In the circumstances of the Australian colonies it would not be astonishing to find unlimited power of taxation granted both to the Commonwealth and to the States, because it is assumed that the confidence will not be abused, and in addition there are the possibilities of suggestion by the governments, and of resery- ing Acts for the assent of the Crown, and the power of disallow- ance. In addition there is the power of this Court to say in particular cases that there is an interference with Commonwealth operations. As to the construction of the Income Tax Acts, if there is any doubt as to when the tax became operative, the Court

will hold that it became operative at such a time as would make _

it constitutional, viz., when the taxpayer has received his salary.

Higgins, in reply. There is no line separating a tax which is discriminating from one which is not.

It is consistent with the facts stated in this case that the tax was payable before the appellants actually received the money. And whether the tax is payable before or after the receipt of it does not matter. The value of the office is depreciated by the tax.

into force was Act No. 1374, Assuming that it remained in force, is tax could not be claimed by force of that Act only, and, erefore, sec. 108 of the Constitution does not help. Further, Victoria never had the power to tax federal officers, and therefore e power to do so could not be continued. For the purpose of deciding as to a conflict of powers between the Commonwealth and a State the Crown is helpless. As to the argument that the power of the Commonwealth and of the States came from the me source, that of the Union and of the States came from the same source, viz., the people.

He referred to National Bank vy. Commonwealth, 9 Wall., 353 ; Davies v. Elmira Savings Bank (supra); Attorney-General for Ontario vy. Attorney-General for Canada, (1896) App. Cas., 348, p. 366; Snyder v. Bettman, supra, at p. 254; Tennant v. Smith, (1892) App. Cas., 150.

Isaacs, K.C., referred to Windsor v. Commercial Bank of

Grirrirn, C.J. These are two appeals from decisions of the Supreme Court of Victoria upon cases stated by the Commissioner Taxes of that State, raising the question whether sums of money eceived by the appellants in respect of their remuneration for the year 1901 as Ministers of State of the Commonwealth and embers of the House of Representatives were properly included n the assessment of their income for that year for the purposes of determining the income tax payable in 1902 under the Vie- orian Income Tax Acts. The only difference between the two s is that Sir W. Lyne represented a New South Wales con- stituency, and was domiciled in that State, in which he also ided, except so far as his official and parliamentary duties wired his presence at the temporary seat of the Government Melbourne, in Victoria, while Mr. Deakin represented a Vic- an constituency, and was domiciled and resident in Victoria. Supreme Court, following their previous decision in Wollas- 's Case (28 V.L.R., 357), held that both sums were properly included in the assessment so far as they related to the earnings

(he only Income Tax Act in force when the Constitution came H.C. or A

of the appellants in. Victoria. The Court had held in Wollaston's Case that the salary of a Commonwealth officer whose duties require his presence in more than one State is apportionable in proportion to the periods spent within the several States.

The Victorian Income Taw Act 1895 (No. 1374), defines (sec. 2) the term " income derived by any person from personal exertion," or "ineome from personal exertion," as meaning "all income con- sisting of earnings, salaries, wages, allowances, pensions, super- annuations, or retiring allowances or stipends earned in or derived from Victoria, and all income arising or accruing from any trade - carried on in Victoria." The material words in the present case are "salaries . . 9." . earnedin . . . ~. Victoria." Seoum enacts that subject to the Act "there shall be charged levied - collected and paid for the use of Her Majesty in aid of the Con- solidated Revenue for each year duties of income tax at such rates as may for each year be declared by an Act of Parliament, that is to say - (a) On all incomes derived by any person from personal exertion a tax at such rates as shall be so declared." The tax is to be charged and paid upon "assessments" made under the Act. Sec. s enacts that every person shall be liable to tax "in respect of . . . income from personal exertion." For the - purpose of making the assessments returns are required to be made annually by every taxpayer to the Commissioner of Taxes - (sec. 14(1)). These returns are to be "based upon the amount of income which was earned derived or received by the taxpayer during the year ending on the 31st of December immediately pre- ceding the commencement of the year of assessment" (7b. (3)). The income tax payable in each year is, therefore, computed upon ; and payable in respect of the income received in the preceding

For the appellants it was contended that the ineume tax claimed - from them was in substance a tax upon and diminution of their remuneration for their services performed as federal officers, and that an attempt by a State to tax or diminish federal remunera- tion is an interference with an agency or instrumentality of the Commonwealth, and is therefore obnoxious to the rule laid down by this Court in D'Emden v. Pedder, (ante p. 91, at p. 111): "When a State attempts to give to its legislative or executive

terfere with the free exercise of the legislative or executive er of the Commonwealth, the attempt, unless expressly thorized by the Constitution, is to that extent invalid and inoperative." It was also objected that, having regard to the pature of the remuneration in question, it could not be said to have been earned locally in Victoria, although the recipients were bodily present in that State during a portion of the year during which it was earned, but should be considered as having been arned in the Commonwealth regarded as a whole, and not in iny special part of it. For the respondents it was contended that the tax, being payable in respect of the remuneration for a evious year which had been actually received by the taxpayer, in substance a tax on realized property, and not a tax on the income. It was further argued that the doctrine laid down in Emden v. Pedder (supra) was inconsistent with the decision of the Judicial Committee in the case of Bank of Toronto v.

ision of the Judicial Committee in that case, and to review and, in effect, to depart from our decision in D''Hmden v. Pedder

rule as stated by this Court in D''Emden y. Pedder (supra), yet that rule, being based upon necessary implication, could vot be extended beyond the necessity, and that its application to any particular case might be excluded by a contrary and controlling implication to be found in the Constitution. And it was said that, upon a consideration of the whole Constitution, it would found that it was manifestly contemplated that the powers the States to impose direct taxation should be left unimpaired $ to all persons actually found within their boundaries.

_ Inthe Supreme Court (as reported in 29 V.L.R., 748) the learned Chief Justice, who delivered the judgment of the Court, after dealing with some arguments which were not pressed before us, ed his judgment substantially upon Wollaston's Case (supra), vhich the Court thought quite consistent with the actual decision in D'Emden v. Pedder (supra).

Th the "reasons" furnished to this Court, a'Beckett, J., thus states his grounds for concurring in the decision : -

jority an operation which, if valid, would fetter, control, or H- ©. or A.

"1, That the case is not distinguishable from Wollaston's Case (28 V.L.R., 357), which binds our Court until shown to be erroneous by the judgment of a higher Court.

"2. I consider that the decision of the High Court in D'Emden v. Pedder (supra), was not based upon the reduction of the officer's income by the amount of the stamp, but on the requirement of a stamp being an interference with the conduct of federal business.

"3. My view of the effect of the American authorities appears at pp. 393, 394, 395 of 28 V.L.R., in which I state my reasons for thinking that our Income Tax Act does not offend against the rule laid down in McCulloch v. State of Maryland (4 Wheat., 316)."

Hodges, J., states that his reasons for concurring are that the case is not distinguishable from Wollaston's Case (supra). (The learned Judge was not amember of the Court which decided that case).

It will be convenient to deal first with the argument based upon Bank of Toronto v. Lambe (supra). After having had the advantage of a very full and able argument on the point, we adhere to all that we said in L'Emden v. Pedder (supra), as to the principles to be applied in interpreting the Australian Constitution, so far as regards the respective powers of the Commonwealth and the States. These principles are substan- tially the same as those laid down by Chief Justice Marshall in McCulloch v. State of Maryland (supra).

The learned Judges of the Supreme Court intimated that they did_ not consider themselves bound by the reasoning contained in the judgment of this Court in D'Zmden v. Pedder (supra), although - they agreed in the conclusion. They said that they preferred to - follow the decisions of the Judicial Committee of the Privy Coun-_ cil upon the Constitution of Canada, suggesting that this Court had - indicated a disposition to show a preference for the American over - the English decisions. This is, we think, a somewhat novel mode of dealing with a judgment of a Court of final appeal. A Court of law performs the double function of declaring the law, and of | applying it to the facts. When the legal principles which govern - the case are in controversy, it is the practice of English Courts | not to content themselves with a statement of their conclusion, - but to express their reasons, which, in the case of Courts of |

lecision is binding, as an authoritative exposition of the law on he point under consideration. If the reasons may be disregarded und treated as mere obiter dicta, because, in the opinion of the ourt, the same conclusion might have been reached by another oad, the value of judgments as expositions of the law would be ensibly diminished. The learned Judges are, however, quite in ror in supposing that we have, in any case that has yet come before us, indicated any preference for American decisions, or any lisregard for British decisions. In D'Emden v. Pedder (supra), fe pointed out, briefly, that the case of Bank of Toronto v. Lambe (swpra) had no application to the matter then before us. In deference to the learned Judges who decided the present case, d to the elaborate argument for the respondent, we proceed to al with the point again, and at some greater length.

The scheme of the Australian Constitution, like that of the Constitution of the United States, is to confer certain definite and ecified powers upon the Commonwealth, and to leave the residue of power in the hands of the States. This is expressed in our Constitution by the language of sees. 51 and 52, which confer e federal power, and sec. 107, which provides that "Every wer of the Parliament of a Colony which has become or becomes

In the American Constitution it is expressed the words of the Tenth Amendment: "The powers not dele- id to the United States by the Constitution, nor prohibited to t by the States, are reserved to the States respectively, or to the le." In our judgment the schemes of these two Constitutions in this respect, identical. In neither case is any new power onferred upon the States, nor is there any exclusive distribution of powers, except as to a limited class of cases. It was suggested argument that a distinction is to be found in the fact that in United States the ultimate source of power is the people, iz., collective people of the United States in the one case, and the eople of the several States in the other, while in Australia the

iItimate source is, in each case, the Crown or the Parliament of

\ppeal, are ordinarily accepted by other Courts upon whom the H. ©. oF A. 1904.

the United Kingdom. We are quite unable to see the relevaney of this distinction. It is a matter of common knowledge that the - framers of the Australian Constitution were familiar with the two _ great examples of English speaking federations, and deliberately | adopted, with regard to the distribution of powers, the model of ; the United States, in preference to that of the Canadian Dominion. They used language not verbally identical, but synonymous, for the purpose of detining that distribution. And a the respective powers of the Commonwealth and the States having ; been defined and distributed by the ultimate sovereign power, it appears to be quite irrelevant to the question of interpretation whether that sovereign power is one or several, or whether it is the collective people or a personal monarch or a constitutional parliament. The scheme of the Canadian Constitution, which was rejected by the framers of this Constitution, is essentially - different. An attempt was made in the British North America - Act, by which the powers of the Dominion and the Provinces are conferred, to enumerate all possible subjects of legislation, and to distribute them between the Dominion and the Provinces, giving the power in each case to the one authority to the exclusion of the other. It follows that every power of legislation must reside in one authority or the other, and if it cannot be exercised by the authority on whom it is conferred in express terms, it cannot be exercised at all. Whether the doctrine of McCulloch v. Maryland (supra) is applicable to the exercise of an express power of legis- lation apparently conferred on a Province, but repugnant to the general scheme of the instrument (the British North America Act) from which the implied restriction is sought to be inferred, - isa question which has not yet come before the Judicial Com- mittee for decision, but in the Provincial Courts it has long been held that the doctrine is applicable to such a case (Leprohon v. Ottawa, 2 Ontario App. Cas., 522; Lx parte Owen, 20 New Br. R., 487; R. v. Bowell, 4 Brit. Col. R., 498.) In the later case of Brewers and Maltsters Association of Ontario v. Attorney- General for Ontario, 1897 A.C., 231, however, the Judicial | Committee intimated that they would approach the consideration : of such a question with an open mind. | The case of Bank of Toronto v. Lambe (supra) did not raise any |

e power of the Dominion are " banking, incorporation of banks d the making of paper money ;" and amongst the matters within the exclusive power of the Provinces is "direct taxation within e Province in order to the raising of a revenue for Provincial purposes" (sec. 92 (2)). The Bank of Toronto was a bank incorporated by Dominion law. The question was whether a tax imposed under a law of the Province of Quebec was within the power of the Provincial legislature. The Act in question, which s entitled "an Act to impose certain direct taxes on certain commercial corporations," enacted that "every bank carrying on business of banking in this Province" and a number of other specified companies should annually pay the several taxes thereby imposed upon them. In the case of a bank the tax imposed raried with the paid-up capital, with an additional sum for each office or place of business. The question was whether the law osing the tax was valid under the power to impose " direct axation within the Province." It was objected that the tax was n indirect tax ; that it was not imposed within the limits of the Province, inasmuch as, although the bank carried on part of its business in the Province of Quebee, its principal place of business in the Province of Ontario, where its principal capital, which he basis for estimating the tax, was kept; that the Provincial islature could only tax that which exists by their authority or introduced by their permission ; and that if the power to tax h banks existed they might be crushed out of existence by it, ind so the power of the Dominion Parliament to create them might be nullified. The case of McCulloch v. Maryland (supra), s cited, apparently in support of the two last stated objections. The Judicial Committee first addressed themselves to the question ether the tax was a direct tax within the meaning of the sh North America Act, and came to the conclusion that it They next determined that the tax was taxation within Province. Sec. 92 (2), they thought, did not require that the sons to be taxed should be domiciled or even resident within he Province. It was sufficient if the persons were found within he Province provided that they were taxed directly. The bank s found to be carrying on business there, and on that ground

ich question. Amongst the matters within the exclusive legisla- H.C. oF 4.

• alone it was taxed. There was no attempt to tax the capital of

the bank or its profits, but the legislature had adopted its own measure of taxation by reference to facts which could be verified without doubt or delay. Their Lordships then inquired whether there was anything in see. 91, by which the legislative powers of the Dominion are defined, which would operate to restrict the meaning so assigned to sec. 92 (2), and found nothing. They thought that the power to make banks contribute to the public objects of the Provinces where they carry on business did not interfere at all with the power of making laws on the subject of banking or with the power of incorporating banks. But they said nothing to suggest that if there were such an inter- ference the Provincial law would be valid. So far there is nothing in the opinion expressed by their Lordships to affect the doctrine of McCulloch v. Maryland. With regard to the objection that the power, if existent, might be used so as to crush a bank out of existence, and so nullify the power of the Dominion Parliament to create banks, they observed that people who are trusted with the great power of making laws for property and civil rights may well be trusted to levy taxes; and added that " whatever power falls within the meaning of classes 2 and 9 is, in their Lordships' judgment, what the Imperial Parliament intended to give; and to place a limit on it because the power may be used unwisely, as all powers may, would be an error, and would lead to insuperable difficulties in the construction of the Federation Act." The foun- dation of this argument is, obviously, the fact that the power in question was conferred by the express words of the Statute. It _ is, indeed, self-evident that when a power is conferred in express terms the possibility of its abuse affords no argument against its - existence. But when an alleged power is not expressly conferred, - but the question of the existence of the power or the limits of its exercise is a matter of inference and of implication depending upon a consideration of the whole of an instrument dealing with - the relations of the several parts of a federated State, the possi- bility that the power, if existent or unlimited, might be exercised to the destruction or the impairment of the efficiency of the agencies of the general government, is very relevant in considering whether, upon the proper construction of the whole instrument,

Their Lordships then dealt with the last objection, and with the rguments based on McCulloch v. Maryland (supra), and said (12 \pp. Cas., at p. 587) - - * Their Lordships have been invited to take very wide range on this part of the case, and to apply to the struction of the Federation Act the principles laid down for e United States by Chief. Justice Marshall. Everyone would sladly accept the guidance of that great Judge in a parallel case. he was dealing with the Constitution of the United States. Inder that Constitution, as their Lordships understand, each State make laws for itself, uncontrolled by the federal power, and ibject only to the limits placed by law on the range of subjects vithin its jurisdiction. In such a Constitution Chief Justice Marshall found one of those limits at the point at which the ction of the State legislature came into conflict with the power ested in Congress. The appellant invokes that principle to support the conclusion that the Federation Act must be so con- ed as to allow no power to the provincial legislatures under . 92, which may by possibility, and if exercised in some iravagant way, interfere with the objects of the Dominion in ercising their powers under see. 91. It is quite impossible to gue from one case to the other. Their Lordships have to con- true the express words of an Act of Parliament which makes an laborate distribution of the whole field of legislative authority hetween two legislative bodies, and at the same time provides for the federated Provinces a carefully balanced constitution, under whieh no one of the parts can pass laws for itself except under e control of the whole acting through the Governor-General. nd the question they have to answer is whether the one body or the other has power to make a given law. If they find that on the due construction of the Act a legislative power falls within 92, it would be quite wrong of them to deny its existence use by some possibility it may be abused, or may limit the range which otherwise would be open to the Dominion Parlia- nent."

We respectfully agree that, so far as regards the question then under consideration, it was quite impossible to argue from one

appears that the power was intended to be conferred, either H.-C. or A.

case to the other. But it is equally impossible to argue from sees. 91 and 92 of the Dominion Constitution to the Constitution of the Australian Commonwealth. In the case of the British North America Act the function of the judiciary is "to construe the express words of an Act of Parliament which makes an elaborate distribution of the whole field of legislative authority between two legislative bodies," in one or the other of which, but never in both, every legislative power is vested. In the construction of such an Act, to deny the power to the legislature in which it is expressly and exclusively vested would be, as already said, to deny altogether the existence of the power. This, however, does not determine whether Chief Justice Marshall's doctrine is, or is not, applicable to an attempt by a Provincial legislature, under the form of direct taxation, or otherwise, to interfere with a Dominion agency or instrumentality. No such question arose in the bank case. The doctrine of McCulloch v. Maryland (supra) has never been extended in the United States so far as to cover such a case as the taxation of the Bank of Toronto, in the manner effected by the Quebec Act. Some confusion has arisen from a misconception of the reference in the judgment to the fact that under the Canadian Constitution "no one of the parts can pass laws for itself except under control of the whole acting through the Governor-General." It may, perhaps, be argued, when the time comes to argue it, that a Provincial law which interferes with the operations of the Dominion Government is not lightly to be held invalid merely for that reason, having regard to the fact that it has received the assent of that Government, which may, therefore, be said to have offered no objection to the interference ; just as it was said that laws interfering with the royal prerogative were valid on the ground that the Crown, by assenting to them, waived - the prerogative pro tanto. But, as already said, no such question - arose in the case before their Lordships in the view which they took of the operation of the Quebee Statute. And no such ques- | tion can arise under the Australian Constitution, under which the Commonwealth Government has no control over the laws of the States. There is no analogy between the control of the Dominion Government, acting through the Governor-General, over Provincial legislation, and the power of disallowance reserved

'inciples on which those powers are respectively exercised are essentially different. In the case of Canada the power is a power tended to be exercised by the Governor-General on the advice f the Dominion Ministers of State, having regard to the interests if the Dominion, while, in the case of the Australian States, it is jar to all students of constitutional law that the power is

s a trustee for the interests of the whole Empire. We are, there- , of opinion that the case of Bank of Toronto v. Lambe (supra) has no bearing upon the question now under consideration, and that we are not showing any preference for American over English decisions when we decline to accept the decisions of the Judicial Committee on the construction of the British North America Act as necessarily applicable to the Australian Constitution. If, indeed, objection were taken to the power of a State legislature to impose taxation upon the property of a bank within the State, or to impose a licence fee upon a bank estimated upon the amount of its paid up capital or the number of its branches, on the ground hat by the Australian Constitution the Parliament of the Com- monwealth has power to make laws with respect to "banking other than State banking, the incorporation of banks, or the issue paper money " (sec. 51 (xiii.) ), Bank of Toronto v. Lambe (supra) would be very much in point, and we should hesitate a ong time before declining to follow it. It is sufficient to say at that is not the present case.

We pass to the argument which seeks to establish that the tax

pellants, but a tax on realized property. In one sense income is undoubtedly a tax on property. In Italy, where it is said to have been invented, it is expressly known as the Zassa sulla ezza mobile. Indeed, all taxes except poll taxes and some licence fees, are taxes in respect of property, although payable by persons. But in considering grave constitutional questions nvolving the reciprocal powers and duties of States regard tmust be had to things and not to words, to substance and not to form. When a tax is imposed upon a person in respect of property, as, for instance, in the case of municipal taxation,

the Australian State Constitutions to the Sovereign. The H- C. or A.

H.C. or A. the substance of the matter is that the tax is imposed upon the

property. And the ordinary use of language follows this principle. We talk of land tax, income tax, customs duties on imports, excise duties on manufactures, succession duties, In each case the substance of the matter is the exaction of a fixed sum from the taxpayer, computed according to the value or quantity of the thing in respect of which the tax is payable. Nor can it make any difference in substance whether, in the case of an income tax, the tax is deducted "at the source" - to use a term applied under the English system - or collected from the tax- payer after the receipt of the income. In either case the effect, if any, of the imposition as a diminution of the net emoluments of the taxpayer is identical. The matter may be illustrated by considering a case in which the reduction of a salary is expressly _ prohibited. By the Constitution the salary of the Governor- General may not be altered during the continuance of office. If the Federal Parliament were to attempt to impose an income tax of, say, two shillings in the pound with respect to the Governor- General's salary, the result would be that the effective salary would be reduced by ten per cent. whether the tax were deducted before payment of the salary or demanded and collected after- wards. This is the accepted view in the United States (see Mr. Justice Miller's Lectures on the Constitution of the United States, pp. 247-8). This would be a case in which the payment and the deduction are made by the same hands. Or suppose the case of an employer who makes a levy upon his employés against .their will, of a sum equal to a fixed percentage of their wages. Whether the levy is deducted from each payment, or is adjusted - periodically as a matter of account, it would be in plain violation of a law which forbade any deduction from the salary. If, how- ever, the levy is not made by the same Government that makes the payment, although it is not a diminution in exactly the same { sense, the effect upon the recipient of the income is the same. His effective salary is diminished. The question in that ease is - whether the authority which makes the diminution has power to H do so so.: If it has no such power, it cannot effect the same | purpose by the use of another form of words. The corollary of - the maxim quando lex aliquid alicui concedit, concedit et id sine

judgment in D'Emden vy. Pedder (supra), is quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud. hen the law prohibits the doing of anything, the prohibition eannot be evaded by doing something which is substantially the ame, merely by using a different form of words to describe it. For example, if the taxation of income were expressly prohibited by the Constitution of a State, a law which required every citizen to pay annually a sum of money equal to an aliquot part of his income, whether for that year or for a preceding year, would be manifestly invalid. For these reasons we think that the tax now under consideration is, in substance, if valid, both a tax upon the income of the appellants, and a diminution of that income.

The next question is whether such an imposition or diminution made by the authority of a State would, if valid, fetter, control, or interfere with the free exercise of the legislative or executive power of the Commonwealth (D'Hmden v. Pedder, ante p. 91, at p.111). The question so put appears to supply its own answer. On his point the case of Dobbins v. Commissioners of Evie County (16 Peters, 435), was referred to, and relied on for the appellants. That case was decided by the Supreme Court of the United States in 1842, and its authority has never since been doubted. It has been followed in Canada for more than 25 years, and the deci- sions adopting it, and following it, have never been appealed from, sither to the Supreme Court of Canada or to the Privy Council. The question in that case was whether the salary of an officer of the United States was subject to taxation under a law of the State of Pennsylvania. The Supreme Court, after pointing out the tax was in substance a tax on the emoluments of the office, aid, in language exactly applicable to the Australian Constitu- tion, (p. 446) : " Taxation is a sacred right, essential to the existence of government - an incident of sovereignty. The right of legisla- tion is co-extensive with the incident to attach it upon all persons nd property within the jurisdiction of a State. But in our system there are limitations upon that right. There is a concur- nt right of legislation in the States and in the United States, xcept as both are restrained by the Constitution of the United tates. Both are restrained upon this subject by express prohibi-

quo res ipsa esse non potest, on which this Court mainly based H. ©. or A.

H.C. oF A. tions in the Constitution ; and the States, by such as are neces-

sarily implied, when the exercise of the right by a State conflicts with the perfect execution of another sovereign power delegated to the United States; that occurs when taxation by a State acts upon the instruments, emoluments, and persons which the United States may use and employ as necessary and proper means to execute their sovereign powers. The government of the United States is supreme within its sphere of action. The means neces- sary and proper to carry into effect the powers of the Constitution are in Congress. Taxation is a sovereign power of a State; but the collection of revenue by imposts upon imported goods, and the regulation of commerce, are also sovereign powers in the United States. Let us apply, then, the principles just stated, and the powers mentioned to the case in judgment, and see what will be the result." They then pointed out that an officer of the United States is a means for carrying out the ends of government,

just as much as ships or guns, and proceeded (p. 448): "Is not

compensation the means by which his services are procnred and retained ? It is true it becomes his when he has earned it. If it can be taxed by a State, as compensation, will not Congress have to graduate its amount with reference to its reduction by the tax ? The execution of a national power, by way of compensation to officers, can in no way be subordinate to the action of the State legislatures upon the same subject. It would destroy also all uniformity of compensation for the same service, as the taxes by the States would be different. To allow such a right of taxation to be in the States would also, in effect, be to give the States a revenue out of the revenue of the United States, to which they are not constitutionally entitled, either directly or indirectly ; neither by their own action, nor by that of Congress. The revenue of the United States is intended by the Constitution to pay the debts, and provide for the common defence and general welfare of - the United States ; to be expended, in particular, in carrying into - effect the laws made to execute all the express powers, 'and all { other powers vested by the Constitution in the Government of | the United States. But the unconstitutionality of such taxation - by a State as that now before us may be safely put (though it is | not the only ground) upon its interference with the constitutional -

United States, to carry into effect its powers to SYA and collect taxes, duties, imposts, &., and to regulate commerce." x "But we have said that the ground upon which we have just own the unconstitutionality of the tax in the case before us, is not the sole ground upon which our conclusion can be maintained. We vill now state another ground ; and we do so, because it is applic- ble to exempt the salaries of all officers of the United States from axation by the States. The powers of the national government ean only be executed by officers whose services must be compen- sated by Congress. The allowance is in its discretion. The presumption is that the compensation given by it is no more than the services are worth, and only such in amount as will secure m the officer the diligent performance of his duties. The officers execute their offices for the publie good. This implies their right of reaping from thence the recompense the services hey may render may deserve ; without that recompense being in any way lessened, except by the sovereign power from whom the officer derives his appointment, or by another sovereign power to whom the first has delegated the right of taxation over all the objects of taxation, in common with itself, for the benefit of both. And no diminution in the recompense of an officer is just and lawful, unless it be prospective, or by way of taxation by the sovereignty who has a power to impose it, and which is intended to bear equally upon all according to their estate. The com- pensation of an officer of the United States is fixed by a law 'made by Congress. It is in its exclusive discretion to determine what shall be given. It exercises the discretion and fixes the amount, and confers upon the officer the right to receive it when it has been earned. Does not a tax, then, by a State upon the office, diminishing the recompense, conflict with the law of the United States, which secures it to the officer in its entireness ? Tt certainly has such an etfect, and any law of a State imposing uch a tax cannot be constitutional, because it conflicts with a law of Congress made in pursuance of the Constitution, and which makes it the supreme law of the land."

We are not, of course, bound by this case asan authority. But the reasoning of the judgment appears to us to be unanswerable,

means which have been legislated by the Government of the H. ©. or A. 1904.

and we adopt it. Indeed the only attempt made to answer it was the contention that the principles applicable to the interpretation of the Constitution of the United States are not applicable to that of the Commonwealth, with which we have already dealt at~ sufficient length. The principles in either case are well known canons of legal interpretation applicable to the construction of written instruments.

In its application to the present cases the reasoning of the Supreme Court in Dobbins's Case (supra) derives additional weight - from the circumstance, adverted to in the judgment of this Court in D'Emden vy. Pedder (supra), that, the interpretation of the : American Constitution as to this point having been long since settled by judicial decision, it is a reasonable inference that it - was intended by the framers of the Australian Constitution, - when adopting similar language, that like provisions should - receive like interpretation.

In the case of the Commonwealth the argument from the destruction of uniformity of compensation has especial force when regard is had to the circumstances of Australia. The income taxes in the several States are unequal in their incidence. They may be of any amount which the State thinks fit to impose. In - order, therefore, to give effect to the provisions of the federal laws regulating the salaries of officers according to their duties, classification, and length of service, it would be necessary to make special provision for adjusting their incomes when transferred from one State to another. State taxation of federal salaries is | open then to two objections: (1) It in effect diminishes the recompense allotted by the Commonwealth to its officers, and so - interferes with its agencies ; and (2) It interferes with the free- dom of action of the Commonwealth in the transfer of its officers from State to State, except at the risk of doing them an injustice ; by reducing their effective remuneration - an injustice only to be - remedied by the appropriation of federal revenues for that purpose. Moreover, in the case of officers whose duties require their presence in different States at different times, their effective remuneration would, if the view of the Supreme Court in Wollaston's Case as to the apportionment of income is correct, depend in part upon the place to which from time to time their duties might call

jorizes such an interference ? It was contended that sec. 107 of the Constitution is equivalent to an express re-enactment of the provisions of the State Constitutions, and operates expressly to mfer upon the States de novo all the powers of legislation which ey had as States not forming part of the Commonwealth, spt those specially mentioned in the Constitution as with- drawn. This section does not purport to confer any new powers.

What, then, were the existing powers of taxation possessed by the ates? They included unlimited powers of taxation of all pro- within the limits of the States, and of all persons who come ithin the State by its permission. Such a power is an attribute sovereignty, and extends to all persons to whom the sovereignty if extends quoad hoc. But could such a power have been lied to a person who came within the State, not by the State's mission, but under the direction of a paramount sovereign wer, and merely for the purpose of performing duties assigned him by that paramount power? For instance, an admiral of e British fleet stationed in State waters for the whole or part of

year. An ordinary citizen has the choice of living, or refusing to live, within the State. If he elects to live there, he cannot refuse to obey the laws which preseribe the conditions of his e But, in the case of a person who is sent to live within State by a paramount sovereignty without choice on his part, is manifest that any law which imposes, as a condition of his sidence, the obligation of contributing a portion of his official to the State revenue is an interference with the freedom action of the paramount sovereignty. In practice, we know such a power has never been asserted with respect to Wernors or admirals or officers of the Imperial fleet, and it has been necessary to inquire into the legal foundation for the dmitted exemption. We can find nothing in see. 107, or any her provisions of the Constitution, to suggest the existence of ch a power. If, however, the power of taxation under the ate Constitution did, in point of law, extend to all persons

whatever found within its boundaries, we think that the power, so far as its exercise would interfere with federal agencies, is a power withdrawn from the States by the Constitution within the meaning of see. 107, We cannot accede to the argument that this withdrawal applies only to the matters specifically mentioned in the Constitution as bemg so withdrawn - a construction which, for the reasons already given, would deny to the Federal Govern- ment the freedom of action which the case of D' Hmden v. Pedder

(supra) declares it to poss: Can it, then, be said to be a matter which must have been contemplated by the framers of the Constitution ? The contrary

inference is suggested, if not, indeed, compelled, by the considera- tion that, both under the Constitution of the United States, and - that of Canada, which were considered by the framers, the power - had always been denied. It is not material that the Income Tax Act (No. 1374), was passed before, while the Act fixing the rate of income tax for the year 1902 was passed after, the establish- ment of the Commonwealth. No doubt, when the language of an Act is general, it will be construed as extending to new forms of the same subject-matter afterwards coming into existence. But, for the reasons already given, we think that the Income Tax Act (No. 1374) cannot be construed as extending to federal incomes, and that the Act of 1901, if construed as extending to them, is, to that extent, invalid.

It is not necessary to express any opinion as to the argument that the income of the appellants was not earned in Victoria within the meaning of the Income Tux Act (No. 1374), or upon - the question whether the salaries of federal officers, whose duties - require their presence in several States during the same year, - could, if they were taxable, be apportioned. But we are not to 4 be understood as assenting to the view of the Supreme Court on 3

The appeals must, therefore, be allowed, and the question in each case must be answered by declaring that no portion of either sum was rightly included in the assessment. The respondent must pay the costs in the Supreme Court, and of these appeals.

Appeals allowed with costs here und im the Supreme Court.

mder sec. 74 of the Constitution. The motion was supported by m affidavit of the respondent setting out (inter alia) that before ie Court delivered judgment, in reply to letters of the Premier of oria, the Premiers of all the other States except Tasmania, ed that, if the decision of the High Court should be against respondent, they would support the present application. On the hearing it was stated at the Bar that a telegram had been

eceived from the Premier of Tasmania to the same effect.

Isaacs, K.C., and Cussen (Bryant with them), for the respondent. he words "special reason" in sec. 74 of the Constitution are very wide, and should be very elastic. he considerations which should uence the Court in granting a certificate are not merely of law also of fact. The desire of the people of Australia is an ortant consideration. In this case the desire of the people of various States that the Privy Council should deal with the matter, has been expressed through their Ministers, and that is proper method of expressing that desire. The meaning of section is that in the matters therein referred to the decision of this Court should be final. The Court, however, is an organ of e people, and if the people desire that a matter should have further consideration, the Court should take that desire into con- sideration, and should not lightly set it aside. As to the nature of the discretion in such cases as this see In ve Solomons, (1904) 1 K.B., 106, per Vaughan- Williams, L.J., at p. 113. This Court is it large as to what it can do. The importance of the case should 10 be taken into consideration ; Clergue v. Murray, (1903) A.C.,

1. There must be a question of law of sufficient importance

justify an appeal; Canadian Pacific Ry. Oo. v. Blain, (1904) \C., 453. See also McLaughlin vy. Daily Telegraph Co. (ante, p. 479). As to what is a special reason no rule can be laid down that is exhaustive. Some of the rules that govern one Court in ranting or refusing leave to appeal from another Court do not wpply with the same force where a Court is asked to grant leave to appeal from itself to another Court. See also Annual Practice 4,p. 925; and Quick and Groom's Judicial Power of the onwealth, p. 399, as to " good cause," and In re Friezer, 27

On a subsequent day the respondent moved for a certificate H.C. or A.

HIGH COURT (1904, V.L.R., 335, at p. 343 ; 23 A.L.T., 67. This case is very important to the various States as it involves questions of revenue and general

State control. It also affects a large number of persons. Another reason that the Court should consider is that there is a difference of opinion between this Court and the Supreme Court of the State. It is impossible to say the matter is beyond all argument. It is reasonably capable of argument to the contrary. In the view of the respondent there is a difference between the principles laid down in Bunk of Toronto v. Lambe (swpra), and those laid down in this case. There was no election by the respondent to come to_ this Court. If all questions of poliey are excluded from con- - sideration it is difficult to conceive any case in which more important questions of law or of fact can arise than have arisen in this case. The combination of all the reasons already stated will affect the Court in granting or refusing a certificate. All the elements that can possibly arise under this section arise here. - [Grirriru, C.J. - Can you suggest any case in which the Court - should not grant a certificate 7] | Yes. D'Emden vy. Pedder (ante p. 91) affords an example. That was a clear case of interference by a State with a Common-

Higgins, K.C., and Drake, for the appellants. In the order granting the certificate the reasons should be stated. What - special reason could be stated here? If the desire expressed by - the State Premiers were given weight to, it would mean that more facilities for appeal to the Privy Council would be given to a State being a litigant than to a private litigant. The State Premiers do not represent the public. The wish of the public is expressed, finally, in the Constitution. The Court has laid down - the principles upon which it will act in Municipal Cowneil a Sydney v. The Commonwealth, (ante p. 242.) It would be a breach - of trust if the Court were to say that, because a question was difficult, it would shunt the responsibility on to the Privy Council. The possibility of the decision affecting other parts of the British - Empire may be a special reason, but that does not exist here. By the draft Constitution, approved of by the people, the granting a certificate was limited to matters affecting other parts of the Empire.

ion was right, but thought that the Privy Council would lecide otherwise if they had the opportunity, would that be a pecial reason ?] No. None of the other reasons put forward are " special asons" within sec. 74.

Isaacs, K.C., in reply. It is not contended for the respondent that all difficult cases should be taken out of the hands of this Court. This Court, in relation to these matters, is placed, to a large extent, in the same position as that in which the Privy ouncil is placed in applications to it for special leave to appeal, ind considerations which guide the Privy Council should guide s Court. There is no one consideration upon which this Court n conclusively act. The words of the section seem to preclude my consideration of matters affecting other parts of the Empire. question of the limits inter se of the powers of the Common- alth and those of a State can affect other parts of the Empire. e question, in its most restricted form, for the Privy Council mild, in this case, be whether the appellants were improperly sed to income tax by reason of the Victorian Income Tax s conflicting with the legislative or executive power of the Commonwealth. The Privy Council could answer that question for any reason it thought fit.

Grirritu, C.J. In this case the Court is called upon to harge a very responsible and serious duty. We were engaged some time in listening to very able arguments upon the ques- tion in issue between the parties. The question is, we think, ne as to the limits inter se of the constitutional powers of the monwealth and a State. We considered our judgment and we given it, and, by the provisions of the Constitution, our nt is final and conclusive. That is provided by see. 73. sec. 74 provides that " No appeal shall be permitted to the jueen-in-Council from a decision of the High Court upon any jon, howsoever arising, as to the limits inter se of the con- tutional powers of the Commonwealth and those of any State n States, or as to the limits inter se of the constitutional powers

(GrirritH, C.J. - Suppose that we were satisfied that our H. ©. or A.

H. C. or A. of any two or more States, unless the High Court shall certify 1904.

that the question is one which ought to be determined by Her Majesty in Council. The High Court may so certify if satistied that for any special reason the certificate should be granted,' The scheme of the Constitution plainly expressed in these sections is that for the determination of these constitutional questions this Court is to be the tribunal of ultimate appeal, unless the Court itself is satisfied affirmatively that there is some special reason which would justify it in certifying that the question ought to be determined by the Sovereign in Council. In my opinion the principles applicable to the granting by the Judicial Committee of special leave to appeal from this Court or from the Supreme Court of a State are not applicable in this case. Graye responsibility is cast upon this Court by the Constitution. We know historically that that responsibility was only cast upon us after long consideration and negotiation. Various proposals were made, and the establishment of the Commonwealth very nearly fell through in consequence of the differences of opinion upon the point. he final solemn determination of the English Parlia- ment, with the assent of Australia, was that that responsibility should be cast upon the High Court. I agree with Mr. Higgins that we should be guilty of a dereliction of duty almost amounting to a breach of trust if we were to decline to accept that responsi- bility unless we were in a position to say in intelligible language that there was some special reason, capable of being formulated, - why the Privy Council was, and why we were not, the proper

ultimate judges of the question, That seems to me the only rule - that can be applied in determining whether a certificate should be - given, What special reason has been suggested for saying that this

Court so established - established expressly for that purpose - is - not a competent Court to determine this matter finally ? Regard - must, of course, be had to the nature of the case, and though it - is not desirable to discuss a judgment which has already been | given, it is necessary to say a word or two as to what are the - questions of which it is suggested that we ought not to be the final judges.

The first question raised in the case is whether it is a doctrine

of the Australian Constitution that - I quote from the judgment -

ttempts to give to its legislative or executive authority an eration which, if valid, would fetter, control or interfere with, free exercise of the legislative or executive power of the Commonwealth, the attempt, unless expressly authorized by the stitution, is to that extent invalid and inoperative." That is the fundamental question in this case. The second question is hether the Zncome Tua Act of Victoria is such an interference is would operate in that way, viz., to "fetter, control, or interfere

¢ operation of the rule is excluded by not collecting the tax intil after the income is received? Those are the three questions, ind they are the only questions in the case. Of which of them can

at the Privy Council is a better tribunal for its decision? As to he first question, the judgment in D' Hiden v. Pedder (supra) has been objected to. I do not know now whether Mr. Isaacs con- tends that that decision was wrong. I am unable to gather from him distinctly whether he does or does not. There is no decision inany English Court on the subject, and the only dictum to be found in the English reports that I know of is that of Lord Hob- ousein The Bank of Toronto v. Lambe, 12 App. Cas., 575. In the wgument in that case, the judgment of Marshall, C.J.,in the case of McCulloch v. Maryland, 4 Wheat., 316, which is to the same effect as that in D'Hmden v. Pedder (supra), had been referred to. Phat decision laid down in regard to the American Constitution the doctrine which we expressed in D'Emden v. Pedder (supra) in the vords I have just quoted. Speaking of that case Lord Hobhouse said at p. 587 : - " Their Lordships have been invited to take a very wide range on this part of the case, and to apply to the construc- ion of the Federation Act the principles laid down for the United States by Chief Justice Marshall. Everyone would gladly ecept the guidance of that great judge in a parallel case. But he was dealing with the Constitution of the United States. Under hat Constitution, as their Lordships understood, each State may

DEmden vy. Pedder (ante, p. 91, at p. 111) - " when a State H.C. oF A.

H.C. or A. make laws for itself uncontrolled by the federal power, and sub-

ject only to the limits placed by law on the range of subjects - within its jurisdiction. In such a Constitution, Chief Justice Marshall found one of those limits at the point at which the action of the State Legislature came into conflict with the powers vested in Congress." | The only part of those observations which is applicable to the - present case are the words: "Everyone would gladly accept the guidance of that great Judge in a parallel case." How does the _ Constitution of the Australian Commonwealth correspond with - that of the United States in this particular? They are identical. - The framers of the Australian Constitution deliberately rejected the scheme of the Canadian Constitution, and deliberately accepted _ that of the United States Constitution; and we are told by the Privy Council that in a parallel case - and this is as parallel as" its framers could make it - they would gladly accept the guidance of that great Judge. If, then, that Constitution has been inter-_ preted by that Court for 80 years in a particular way, and the Privy Council tell us that in a parallel case they would accept the guidance of Chief Justice Marshall, and then this Constitution : is, admittedly, based exactly on the same lines, is it suggested that 4 this Court is not competent to say that the principle so laid down - should be accepted as the guiding principle of the Australian - Commonwealth ? I should feel myself totally unworthy of the position I occupy if I were to give a certificate to that effect. | The second question is whether the Victorian income tax imposed on the salaries of federal officers is an infringement of that rule. Reasons were given in the judgment, which I am not going to repeat - reasons which are obvious to everyone who has" had practical experience in administering such a tax - which seem to make the answer to that question self-evident. Upon that question we have the satisfaction of knowing that we merely affirmed a proposition the contrary of which has been denied by every competent authority except the Court now appealed from. We know that 60 years ago the Supreme Court of the United States held that such an income tax was an interference with federal instrumentalities ; that 25 years ago the Canadian Courts, under a different Constitution, came to the same conclusion. We

nvestigated the question for ourselves, and arrived at a conclu- jon in accord with the Courts both of the United States and of pada. None of the Canadian decisions have been appealed gainst. It is the settled accepted doctrine so far as the matter gone in Canada. Finding the law in that state, can it be id that this is a question we are not competent to decide, and ought not to decide, as the final judges of last resort? I confess cannot see any ground for certifying that that is a matter that ught to be decided not by us but by the Privy Council.

As to the third question, whether the income tax ceases to be interference with federal instrumentalities because it is not lected until the salaries have been paid, that seems to be a natter which any tribunal is competent to decide. I have dealt vith the questions involved in our judgment because it is impos- ible to consider whether there is any special reason for certifying that the question ought to be decided by the Privy Council until e knows what are the questions which it is said ought to be left to the Privy Council.

What special reasons have been given why any one of these uestions ought to be determined by the Privy Council? The reason I have listened to with some amazement. We know hat the respondent represents the Victorian Government, and we e told that, before the decision of this Court was given, five of e States agreed that, if our judgment should be against Victoria, ey would like the matter to be referred to the Privy Council. That seems to be a very singular sort of argument to address to s Court. The argument was developed as being based not only the opinion of five premiers, but on the public opinion of ustralia. I hope that the day will never come when this Court strain its ear to catch the breath of public opinion before coming to a decision in the exercise of its judicial functions. If it does so, it will be perhaps the practice, if ever there is a Court enough, to adjourn the argument in order that public meet- may be held, leading articles written in the newspapers, and pressure brought to bear to compel the Court to shirk its respon- ibility, and cast its duty upon another tribunal). We are told that the matter is one of great importance. One matter is of great importance, viz., the power of the States to interfere with the

Commonwealth. But that isa matter which we are here specially to determine. It is said that the matter affects a large number of persons. I confess that I am unable to see that that is any reason. Is our judgment to be valid only when the matter is easy and unimportant, and will affect only a few persons, and it does not matter much whether the decision is one way or the other? We are then told that there is a difference of opinion between this Court and the Supreme Court of the State. That reason needs only to be stated. The last reason is that our decision is inconsistent with Bank of Toronto v. Lambe (supra). As to that, so far as it has any bearing on this case, our decision is, as I have shown, in entire accord with the opinion expressed by the Privy Council. - I therefore think that I should be doing something entirely incon- sistent with the responsibility which I undertook when I was ; placed in the position I now occupy, if I were to say that there is any special reason why this question should be determined by the Privy Council rather than by this Court.

Barton, J. agree that this is a case in which the Court should not grant a certificate. Adopting very fully everything said by the Chief Justice, I am discharged from the necessity of making any lengthy comment on the materials put before us. But there has been much argument concerning the use of the words "any special reason," in section 74; no other section of the Constitution helps us in construing them. Therefore it is not unreasonable that I should say something about the circumstances under which - this section originated. As stated at the bar, it originally

appeared in the form adopted at the referendum, namely : -

• No appeal shall be permitted to the Queen in Council in any matter involving the interpretation of this Constitution, or of the Constitution of a State, unless the public interests of some part of Her Majesty's Dominions other than the Common- wealth or State are involved."

A delegation, consisting of men who had taken a prominent - part in the movement for federation, was authorized to proceed - to England, with a view to assisting the passage, without amend- ment, of the Constitution endorsed by the people. After their arrival in England, a lengthy controversy arose, practically con- fined to the terms of clause 74. Those who have read the State papers of the time, which are common knowledge on the subject, will know that the objection entertained by Her Majesty's Govern-

the words "public interests." It was from the first conceded, on e one hand, that those who had made this Constitution, were itled to have it, if possible, adopted with the assistance of Her jesty's Government, and of the Imperial Parliament, in so far as there was nothing in it which constituted a danger, or might pro- voke a difficulty with respect to general Imperial interests. On the other hand, it was rightly asserted that the Imperial Government ind Parliament stood in the position of trustees of the Empire, and anting the fullest autonomy and self-government to the various colonies in respect of matters purely local, were, nevertheless, charged with the responsibility of seeing that matters which concerned grave public interests outside should form a special charge of the Imperial authorities. That position was asserted y Her Majesty's advisers, and was equally conceded by the delegates. The controversy, then, as to the term " public interests" largely consisted of this, that the legal advisers of the Imperial Government thought the term was too vague to define the class 'of eases in which there should not be finality in the determinations of the High Court. After very much discussion and negotiation, and the framing of alternative propositions, the terms of the pre- it clause were agreed on, and were subsequently passed as part of the Constitution in substitution for the original clause. It will be evident to anyone who considers what the main controversy was about, that is to say, whether the clause as originally drawn 'sufficiently protected other parts of the Empire, that the intention s to substitute a provision embodying a due regard to those principles which had been asserted on each side, and conceded turn by the contending representatives or governments. And so when this provision was drawn and accepted, while I do not say that in its form it would be held, or necessarily held, by the ourt to exclude other special reasons, the term "special reasons " was devised so that, at least, those Australian constitutional cases, which involved the public interests of parts of the Empire external to this Commonwealth, might be ultimately decided by His Majesty in Council upon the grant of its certificate by this Court. Still the rm "any special reason" has not been defined in the Constitu- 'ion, and I am quite sensible of the danger of endeavouring to lay down any hard and fast rule as to cases such as this Court may

ment to the clause as framed, was largely in respect to the use of H- ©. or A.

hereafter have to deal with. I go only so far as to say that the

section, as finally found to be part of the Constitution, was de- - signed, in the first place, to safeguard the right of the people

who had framed it, and had voted upon it, to interpret it, and to

bring to an end conflicts between Commonwealth and States, by

the decision of the Court which that Constitution was calling - into existence, and in the same way to deal with cases

which arose between two or more States, because in respect

of the new self-governing powers constitutional conflicts between

two States come within the eategory of local affairs. Primarily,

then, it was intended that this Court should take the res- - ponsibility of deciding the class of questions of which that now before the Court is one, while the power of granting a certificate - safeguarded that class of cases which was not thought to be adequately protected by the clause as originally framed. It remains to consider whether any special reason has been advanced why the Court should divest itself of the responsibility constitu- tionally cast upon it, and leave the final determination to the Privy Council. The grant of power to deal with these questions constitutes a burden of which weakness might seek to discharge itself, but which Judges who know their duty will in nowise shirk. The special reasons in such cases must stand outside the common range of those recognised as sufficient to support an application for special leave to appeal, and must justify us in saying we will not take on ourselves the responsibility of final decision. Has any such reason been stated ? I must dissent from the proposition that the reasons which the Privy Council considers sufficient to justify it in granting special leave to appeal, are "special reasons" under this section of the Constitution. The very form of the section seems to preclude that argument, and nothing would have been - easier than, to use instead of the terms we find here, words which |

would have made it plain that reasons which would justify the Privy Council in granting special leave to appeal to it, should be sufficient to justify this Court in granting its certificate under this section. It was of the essence of these questions that they should provoke controversy in the country where they arose. 'Those who framed the provision must have known very well that the Court about to be constituted must often be involved in the decision of - questions which would necessitate the exercise of its independence, |

fear, and that upon such questions controversies must arise, and s between those concerned, apart from this Bench, would some- times be bitter.

_ So the thing foreseen was that there would be such controversies, and expressions of public opinion, and therefore such an occurrence annot be considered a "special reason," otherwise there is hardly any controversy, between Commonwealth and State, or between te and State, which would not afford a special reason, and the main provision would be rendered almost nugatory. A number of grounds have been given by the able counsel who argued this matter. I have disposed in what I have said the grounds that the case involves matter of great im- portance, with reference to revenue and State control. All t is of a nature to be expected by those who have to dis- harge duties such as we have to perform. The fact that the ates desire the appeal is a matter which this Court cannot ook at, unless it desires to abrogate its own functions. The question is not whether the certificate is desired, but whether it can operly be allowed. That it affects a large number of public vants is a matter which will be common to many decisions of his Court on constitutional questions. I do not think Iought to ay a word upon the ground that this Court did not agree with e State Supreme Court. There would be some loss of dignity either Court were to touch that at all. I pass to the reason that decision is in conflict with that of the Privy Council in Bank of Toronto v. Lambe (supra). It is impossible for this Court to accept it as a reason, because, having thoroughly examined that case, 'it finds no reason whatever for thinking that there is a conflict between that decision and its own in the cases just determined, nd it finds no reason whatever to apply the circumstances of that ease to this, because two cases more distinguishable could not ise. Ihave been through all the reasons, and taking them lectively or separately, they amount to no more than might given in ordinary cases. The "special reasons" are not that f reasons, but something beyond them must be disclosed to ntitle the Court to lay down its responsibilities, and ask somebody to take them up. I cannot say that any special reason has

and make the highest call upon it to discharge its duty without H.C. or A.

H.C. or A. been shown, and therefore I concur in the judgment of the Chief

O'Connor, J. Lagree with the judgments just delivered. In my opinion no ground whatever has been shown for granting the certificate asked for in this case. I do not think it necessary to refer to the historical aspect of the matter, because it appears to me we must interpret the Constitution by the same rules as would guide us in the interpretation of any other Statute, that is to say, we must take as our guide the ordinary meaning of the plain words of the Statute. It is only if we fail to adduce reasonable meaning from them that we can have resort to the history of the clause or the circumstances surrounding the framing of the Constitution. This section seems to me to place a duty upon this Court in the plainest possible language, and that duty is to see that this Court is the final arbiter of all ques- tions arising out of the Constitution, where the rights of State and State, or State and Commonwealth are concerned, unless we think for some special reason that the Privy Council, and not this Court, should be the final arbiter of the dispute. I shall deal with only one of the reasons suggested, and that is that the public opinion of Australia, as it has been called, wishes this Court to grant the certificate in order that the Privy Council may determine this question. I hold so strongly the opinion that upon this Court alone is placed the responsibility of determining the cases in which a certificate ought or ought not to be granted, that if not only the Premiers of the different States, but also the Parliament of each State, and the Parliament of the Common- wealth, all concurred in expressing the opinion that we ought to send the case to the Privy Council, and we in our own consciences believed that we ought not to do so, then we would disregard our duty if we swerved one hair's breadth from our own opinion on the matter. It was urged upon us that in this matter the views of the State Premiers embodied the will of the Australian | people. There is only one way in which the Court can know the will of the Australian people, and that is as it is contained in this instrument under which we sit to interpret the laws of the Com- monwealth. Until that will as so expressed is altered by an amendment of the Constitution, we can have no regard to any other expression of the will of the people. The will of the people

we the responsibility of determining the cases under sec. 74 which ought to be finally decided by us, and the cases which wht to be decided finally by the Privy Council. In that sense we have been made, not only the interpreters, but the guardians f the Constitution. That is to say, the duty has been placed upon us, not only to see that we interpret the Constitution according to our best judgment, but to take care, also, that, except under very exceptional circumstances, we do not allow the interpretation to fall into any other hands. So strongly do I feel that that duty has been cast on myself as a member of this Court, that I have 0 hesitation in saying, if we found that by a current of authority England, it was likely that, should a case go to the Privy Council, some fundamental principle involved was likely to be decided in a manner contrary to the true intent of the Constitu- tion as we believed it to be,it would be our duty not to allow the case to go the Privy Council, and thus to save this Constitution from the risk of what we would consider a misinterpretation of its fundamental principles. Holding these views, I am very strongly of opinion that no grounds whatever have been shown in this case for a certificate. It is impossible, and undesirable, if it were possible, to lay down any rule for the exercise of this power to issue a certificate. In the course of years many questions may arise in which this Court may have to consider whether, in the interests of the Constitution itself, a case should be remitted to the Privy Council for final determination. When those cases arise, this Court, however constituted, will, I have no doubt, pro- 'nounce its opinion to the best of its judgment. All I can now say is that that case has not arisen here, and I sincerely trust that it will never be supposed that upon grounds anything like those put forward in this case we should be asked to exercise the power of depriving ourselves of the right of being the final arbiters in disputes between State and Commonwealth, or between State

Solicitors, for appellants, George Turner & Son, Melbourne. Solicitor, for respondent, Guinness, State Crown Solicitor.

s represented in the Constitution is that we, and we alone, shall H.C. or A.