Gazzo v Comptroller of Stamps

"maintenance agreement" means an agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage, being an agreement that makes provision with respect to financial matters, whether or not there are other parties to the agreement and whether or not it also makes provision with respect to other matters, and includes such an agreement that varies an earlier maintenance agreement;

"financial matters", in relation to the parties to a marriage, means matters with respect to -

(b) the property of those parties or of either of them; or

Section 90 operates to exempt three main types of instrument: (a) a maintenance agreement; (b) a deed or other instrument executed by a person for the purposes of a maintenance agreement; (c) a deed or other instrument executed by a person for the purposes of, or in accordance with an order made under Pt VIII of the Act. The instrument of transfer was executed in accordance with an order made under Pt VIII.

It would be a task of great complexity to decide whether s. 90 is valid in all its possible applications. In this case it will be sufficient if we decide in the first instance whether s. 90 can validly apply to the situation in hand. If it can, the question of severability from its invalid or potentially invalid operation must be considered.

To be valid, s. 90 must be a law "with respect to" "Marriage" (s. 51 (xxi) of the Constitution); "Divorce and matrimonial causes; and in relation thereto, parental rights, and the custody and guardianship of infants" (s. 51 (xxii)); or "Matters incidental to the execution of any power vested by this Constitution in the Federal Judicature " (s. 51 (xxxix)).

In Reg. v. Lambert; Ex parte Plummer [38] I reaffirmed what a majority of the Court held in Russell v. Russell [39] (Mason J. with whom Stephen J. agreed, and Jacobs J.) [40] : the scope of the marriage power is in no way diminished by the existence of s. 51 (xxii) in its reference to "and in relation thereto, parental rights, and the custody and guardianship of infants". Gibbs J., who was in the minority in Russell , after noting that it was there "held that the power given by s. 51 (xxi) is not limited by s. 51 (xxii)", indicated "powerful reasons of policy" against overruling Russell and was not prepared to reconsider that decision.

1. (1980) 146 C.L.R. 447. 2. (1976) 134 C.L.R. 495, at pp. 539-540. 3. (1976) 134 C.L.R., at p. 550.

There are no compelling reasons here to reject the normal principle that an individual grant of power under the Constitution should be accorded a full operation according to its terms. Therefore, in considering whether the removal of obligations achieved by s. 90 is within the marriage power of Parliament there is no occasion for restricting the scope of the power by drawing restrictive implications from the existence of s. 51 (xxii) of the Constitution.

A central submission of the Solicitor-General for Victoria was that a law governing the relationship of married persons with third parties cannot be a law with respect to marriage. To fall within the marriage power, a law can only deal with the mutual rights and obligations of the parties to a marriage, including children of the marriage. If the marriage power were not so confined, so it was said, there would be virtually no limit as to laws which the Commonwealth could make affecting the relationship of married persons with third parties. It was argued "one can give the husband rights against the wife and the wife rights against the husband but what one cannot do, at least on the basis of the marriage power, is to give either rights against someone else".

This submission is misconceived. I accept that the legislative power with respect to "marriage" is not a power with respect to "married persons" and that the Commonwealth cannot remove disabilities or impose obligations not in any way arising out of the marriage relationship merely by applying laws to married persons. Even so, the argument of the learned Solicitor-General for Victoria allows no scope for exercise of the legislative power on what is incidental to the subject matter of the grant. The mutual rights and obligations of parties to a marriage do not mark the outer limits of the subject matter of the power; they coincide with what is central to that subject matter. If we were to assume that the mutual rights and obligations of the parties mark the outer limits of what is central to the power, the power extends to that which is incidental. Accordingly, a law may define the rights of one party to the marriage against a third party, if to do so is incidental to, or is reasonably necessary for, dealing with the mutual rights and obligations of the parties to the marriage. There is therefore no a priori rule that, because a law deals with the rights or obligations of one party to a marriage as against a person not a party to the marriage, it cannot be supported under s. 51 (xxi). Nor is there any absolute rule that it cannot be reasonably incidental to the main head of a power for Commonwealth legislation to provide relief from State duties or charges (see in other areas The Commonwealth v. Queensland [41] ; Australian Coastal Shipping Commission v. O'Reilly [42] ).

1. (1920) 29 C.L.R. 1. 2. (1962) 107 C.L.R. 46.

In Plummer , Gibbs J. after having rejected the argument that the marriage power extends only to the definition and enforcement of mutual rights and duties between the parties to the marriage (including children) and does not permit laws providing for the definition or enforcement of rights as against other members of the community (particularly State authorities) as "too narrow a view", said [43] :

The crucial question, however, is whether the legislation creates, defines or declares rights or duties that arise out of, or have a close connexion with, the marriage relationship. If not, the law cannot be said to be one with respect to marriage. 1. (1980) 146 C.L.R., at p. 456.

For my part, I should have thought that the word "sufficient" more accurately expresses the degree of connexion with the subject of the power which constitutional principle requires. The word "close" is perhaps too limiting, suggesting too strict a nexus.

There will necessarily be differences of view as to what is incidental to the subject matter of the power or has a sufficient connexion with the marriage relationship. So much, if nothing else, emerges from Plummer . However, so long as the Court continues to accept and apply the settled standards in determining what is incidental and whether the law has a sufficient connexion with the topic, the marriage power will not give Parliament unlimited scope to affect the relationship of married persons with third parties.

By way of illustration of what has been said, a law which defines the rights of the parties to a marriage with respect to property so as to relate those rights to the marriage relationship, for example, community or joint property laws or even individual property laws, would be a valid exercise of the marriage power. It would not cease to be an exercise of the power if it went on to provide that a transfer of property by one spouse to the two spouses jointly or a transfer by one to the other should be free from all duties whether Commonwealth or State. Such a law would then be, if not a law on what is central to the subject matter of the power, a law which is incidental to the topic.

The same comment may be made of a law which provides that an instrument executed by a party pursuant to a court order shall be free from all duties. If the making of the court order for the transfer of the property by the husband to the applicant constitutes a valid exercise of the marriage power or is authorized by a legislative provision which itself is within the power, I find it difficult to perceive why the power does not extend to freeing the transfer from duty. To say that the execution of a transfer in compliance with a court order adjusting the rights of the parties to the marriage relationship shall not be made the occasion for the imposition of duties is to legislate on a matter which has, not only sufficient, but also a very close, connexion with the marriage relationship.

The application of s. 90 to the situation here can also be justified as an exercise of the s. 51 (xxii) power. The order requiring the husband to transfer his interest in the land upon dissolution of the marriage was clearly made in relation to a "matrimonial cause" within par. (ca) of the definition in s. 4 (1) of the Act:

proceedings between the parties to a marriage with respect to the property of the parties to the marriage or of either of them, being proceedings in relation to concurrent, pending or completed proceedings for principal relief between those parties It could not have been suggested in the light of Russell that this paragraph was beyond the ambit of s. 51 (xxii). The order and instrument of transfer executed in accordance with it were incidental to resolving this "matrimonial cause".

Section 51 (xxii) at least enables Parliament to authorize courts to make orders for property settlement and maintenance which are ancillary to some form of principal relief (Lansell v. Lansell [44] ). In my view it also authorizes a law exempting an instrument executed for the purposes of, or in accordance with, such an order from State stamp duties otherwise applicable. The reasons already given for the conclusion that a provision exempting the court-ordered transfer from stamp duty is a valid exercise of the marriage power support the conclusion that such a provision is a valid exercise of the matrimonial causes power as well.

Further, it may be said that s. 90 facilitates compliance with the order to transfer property by making the transfer simpler and cheaper. There are situations in which the liability to pay stamp duty on the transfer of, for example, a matrimonial home, may impede the completion of court-ordered transfers and decrease the capacity of a party to discharge his obligation to maintain another party to the marriage (including a child). The section therefore has a sufficient connexion with proceedings for principal relief between the parties to a marriage and the settlement of property and maintenance in relation to that principal relief.

Accepting under s. 51 (xxi) and (xxii) that s. 90 can apply here, its many other possible applications necessitate consideration of severability of invalid or possibly invalid operations of s. 90 from its operation in this situation. As noted, s. 90 seeks to exempt three distinct classes of written instrument. If we were considering either (a) maintenance agreements or (b) deeds or other instruments executed for the purposes of a maintenance agreement there would be real questions as to whether the marriage power would authorize s. 90 in its application to the whole range of such instruments. For example, the definition of maintenance agreement in s. 4 (1) of the Act is far wider than an agreement which can be related to a "matrimonial cause" under par. (d) of its definition in s. 4 (1) -

proceedings between the parties to a marriage for the approval by a court of a maintenance agreement or for the revocation of such an approval or for the registration of a maintenance agreement which was held to be a valid exercise of the marriage power in Russell [45] . 1. (1976) 134 C.L.R. 495.

Such a case for severability purposes would be an example of the second type of provision referred to by Dixon J. in R. v. Poole; Ex parte Henry [No. 2] [46] and s. 15A of the Acts Interpretation Act 1901 Cth, as amended, would only apply if "the legislature intended the provision to have a distributive operation or effect".

There may possibly be difficulties applying s. 15A, where a reading down of the phrase "matrimonial cause" may be done by reference to either the marriage or matrimonial causes power, should the Court continue to follow the approach which commended itself to the majority in Strickland v. Rocla Concrete Pipes Ltd. [47] .

However, these difficulties do not apply to a reading down of the phrase to the third class of instrument - deeds or other instruments executed by a person for the purposes of, or, if need be, in accordance with, an order made under Pt VIII of the Act - which s. 90 can exempt from State stamp duties under both the marriage and matrimonial causes powers.

If the operation of s. 90 on the first two classes of instrument be beyond power those instruments are the "subject of distinct or separate expression" as against the instrument being considered here. For severability purposes this can be viewed as the first type of provision which Dixon J. indicated may be saved by s. 15A (Ex parte Henry [No. 2] [48] ). Applying the appropriate test, "whether the operation or effect of the remainder of the Act upon the person or things to which it would apply would be changed", if s. 90 could only operate on the third class of instrument it is clear that there would be no change in the operation of the rest of the Act. The effect of s. 90, if so read down, upon a deed or other instrument executed by a person for the purposes of, or in accordance with, an order made under Pt VIII of the Act would be no different from its effect if s. 90 were valid in all its possible applications.

There is also a question whether, having read down s. 90 to this third class of instrument, the possible width of the exemption in s. 90 from "any duty or charge under any law of a State " requires a further consideration of severance.

A duty under any law of a State in this context refers to a tax or financial imposition required by a State law to be made to the public revenue. Examples are impositions levied on the import, export, manufacture or sale of commodities (such as customs, excise and some licensing fees) as well as impositions following the execution of documents, for example, contracts of sale (stamp duties, etc.). A charge in a general sense is a financial obligation or liability which here would be one imposed by a State law and should be understood as payable to the State or a public authority. Although the terms substantially overlap, the meaning of "charge" is somewhat wider, including a fee payable in response to a service provided by the State or a public authority. Examples are fees payable to a Registrar-General for registering an instrument of transfer or to a Corporate Affairs Commission for things such as incorporating a company or issuing shares.

While s. 90 would thus exempt this third class of instrument from a wide range of financial imposts, its scope is not unlimited. For example, it does not purport to exempt transferees of licences from approval requirements under State licensing laws, nor to exempt transferees of shares from any requirement to be approved by some State body or company board. Whether this could be done need not concern us here. Section 90 would not prevent a Registrar-General from refusing to register a transfer for failure to satisfy criteria provided by State laws, except those relating to the non-payment of duties or charges such as stamp duties or registration fees.

When s. 90 is read down to instruments executed for the purposes of, or in accordance with, an order made under Pt VIII of the Act my view is that it can validly exempt all duties and charges under any law of a State. The reasons given above for holding that it is within the marriage and matrimonial causes powers to exempt an instrument of transfer from stamp duties apply equally to the other range of duties or charges which may be payable to public authorities under State laws in effectuating the transfer made. Therefore it is not necessary to consider the operation of s. 15A on the phrase "any duty or charge under any law of a State ".

In the result, to answer the question stated: Section 90 is a valid law of the Commonwealth in its application, read down if necessary, to instruments executed by a person for the purposes of, or in accordance with, an order under Pt VIII of the Family Law Act. The parties have agreed that there should be no order as to costs as between them irrespective of the outcome.

The marriage of Mr. and Mrs. Gazzo was dissolved on 26 May 1977 under the Family Law Act 1975, (the Act) by the Supreme Court of Victoria which ordered Mr. Gazzo to transfer his interest in the former matrimonial home to Mrs. Gazzo as trustee for the three children of the marriage. Mr. Gazzo was also ordered to pay all legal costs and registration fees in respect of the transfer.

Mr. Gazzo executed a transfer to Mrs. Gazzo which was presented for registration. The Victorian Commissioner for Stamp Duties claimed payment of $616.00 (stamp duty, penalty and interest) from Mrs. Gazzo on the ground that the transfer document is liable to duty as an

instrument whether voluntary or upon any good or valuable consideration other than a bona fide adequate pecuniary consideration whereby any property is settled in any manner whatsoever (Stamps Act 1958 Vict., Third Schedule, par. IX).

A maintenance agreement, or a deed or other instrument executed by a person for the purposes of such an agreement or for the purposes of, or in accordance with an order under, this Part, is not subject to any duty or charge under any law of a State or Territory or any law of the Commonwealth that applies only to or in relation to a Territory.

Proceedings in the Supreme Court of Victoria to determine whether the duty is payable have resulted in the question referred to this Court whether s. 90 of the Act is valid.

The case concerns only an instrument executed in accordance with an order under Pt 8 of the Act. Therefore, it is enough to decide whether s. 90 is valid in its application to an instrument executed in accordance with such an order.

Acts are presumed to be valid, at least where the challenge is not based on a claimed infringement of a constitutional guarantee or prohibition. The presumption of validity holds until it is demonstrated beyond reasonable doubt that the legislation exceeds the limit set by the Constitution. This presumption is applied in other common law countries and in most other systems of law. I have several times referred to its applicability in Australia (see Queensland v. The Commonwealth [49] ; Attorney-General (W.A.) v. Australian National Airlines Commission [50] .

1. (1978) 139 C.L.R. 585, at pp. 610-611. 2. (1976) 138 C.L.R. 492, at pp. 528-529.

In Federal Commissioner of Taxation v. Munro [51] , Isaacs J. stated:

It is always a serious and responsible duty to declare invalid, regardless of consequences, what the national Parliament, representing the whole people of Australia, has considered necessary or desirable for the public welfare. The Court charged with the guardianship of the fundamental law of the Constitution may find that duty inescapable. Approaching the challenged legislation with a mind judicially clear of any doubt as to its propriety or expediency - as we must, in order that we may not ourselves transgress the Constitution or obscure the issue before us - the question is: Has Parliament, on the true construction of the enactment, misunderstood and gone beyond its constitutional powers? Nullification of enactments and confusion of public business are not lightly to be introduced. Unless, therefore, it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the Constitution, it must be allowed to stand as the true expression of the national will. On appeal the Privy Council specifically expressed its agreement with Isaacs J. that unless it is clear beyond reasonable doubt that challenged legislation transgresses the limits in the Constitution, it must be allowed to stand (Shell Co. of Australia Ltd. v. Federal Commissioner of Taxation [52] ). 1. (1926) 38 C.L.R. 153, at p. 180. 2. (1930) 44 C.L.R. 530, at p. 545.

In Attorney-General (Vict.) (Ex rel. Dale) v. The Commonwealth [53] Dixon J. said:

In discharging our duty of passing upon the validity of an enactment, we should make every reasonable intendment in its favour. We should give to the powers conferred upon the Parliament as ample an application as the expressed intention and the recognized implications of the Constitution will allow. It seems to me that, recently, the presumption of validity has been ignored, and, particularly in family law cases, replaced in practice by a presumption of invalidity. The history of judicial hostility to remedial social legislation is well documented. (See Robert Stevens, Law and Politics, The House of Lords as a Judicial Body, 1800-1976, London (1979); Robert H. Jackson,The Struggle for Judicial Supremacy, a Study of a Crisis in American Power Politics, New York (1979); G. Edward White, The American Judicial Tradition, Profiles of Leading American Judges, New York (1976), esp. Ch. 9.) The word hostility may appear over-strong, but history here and overseas shows that it is not. Legislative policies are often defeated by judicial policies which are rationalized as constitutional requirements. In his work Robert H. Jackson (former United States Solicitor-General and later United States Supreme Court Justice) wrote of the Supreme Court (pp. 315-316): This conservative institution is under every pressure and temptation to throw its weight against novel programs and untried policies which win popular elections. Its plain duty to enforce explicit constitutional provisions even in opposition to the majority is easily rationalized into enforcing its own views of good policy. To the extent that it does so, it defeats government by representative democracy. 1. (1945) 71 C.L.R. 237, at p. 267.

As the United States experience shows, the cure will come when the other branches of government and the public understand the real, as distinct from the apparent, role of the judiciary.

Parliament is authorized by s. 51 of the Constitution to make laws for the peace, order and good government of the Commonwealth "with respect to" specified subjects including marriage and divorce. The legislative powers of the Parliament are stated in broad and liberal terms. They are plenary, to be construed with all the generality allowed by the words used. The broad nature of the laws authorized by s. 51 is extended by the opening words of the section. The phrase "with respect to" requires only "a relevance to or connexion with the subject assigned to the Commonwealth Parliament" (Grannall v. Marrickville Margarine Pty. Ltd. [54] ; see also Kitto J. in Herald and Weekly Times Ltd. v. The Commonwealth [55] ). In Bank of New South Wales v. The Commonwealth [56] Latham C.J. stated "No form of words has been suggested which would give a wider power" than the form "with respect to".

1. (1955) 93 C.L.R. 55, at p. 77. 2. (1966) 115 C.L.R. 418, at p. 436. 3. (1948) 76 C.L.R. 1, at p. 186.

From time to time, observations have been made which would in effect remove the words "with respect to" from the Constitution and replace them with words significantly different which would severely restrict the Parliament's legislative powers. Thus in Worthing v. Rowell and Muston Pty. Ltd. [57] , Walsh J. referred to "a direct and substantial connexion". In Reg. v. Lambert; Ex parte Plummer [58] Gibbs J. stated that a "close connexion" must be shown between a challenged law and the legislative power. In my opinion, a "close connexion" is not required by the Constitution. A recent example where no close connexion was required between the challenged law and the legislative power is Reg. v. Bowen; Ex parte Amalgamated Metal Workers' and Shipwrights' Union [59] where provisions which were incidental to what was itself incidental to the legislative power were held valid. Another is Storey v. Lane [60] . A classic older example is Jumbunna Coal Mine, N. L. v. Victorian Coal Miners' Association [61] . See also O'Sullivan v. Noarlunga Meat Ltd. [62] .

1. (1970) 123 C.L.R. 89, at p. 136. 2. (1981) 146 C.L.R. 447. 3. (1980) 144 C.L.R. 462. 4. (1981) 147 C.L.R. 549. 5. (1908) 6 C.L.R. 309. 6. (1954) 92 C.L.R. 565; (1956) 95 C.L.R. 177.

The phrase "with respect to" not only applies to marriage and divorce but to all the other powers in s. 51. There is no justification for singling out marriage and divorce for special adverse treatment. But if the requirement of a close connexion is applied to all, this will mean a cutting back of what until recently have been understood to be the powers of the national Parliament.

The once-discredited doctrine of reserved powers of the States, is having a triumphant, if unacknowledged, resurgence, at least in the areas of marriage and divorce (see Plummer's Case), and emerged in this case.

Every federal law requiring or authorizing acts or transactions in Australia outside Commonwealth places and territories enters areas of State law. The Constitution s. 109 provides for resolution of any conflict. The notion that federal law must end where State law begins or that some areas of law are reserved to the States is erroneous. That notion was advanced early this century and decisively rejected in Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. [63] . However it persists. I leave aside the special case where the claim is that the federal law if valid would undermine the existence of a State; it is of no relevance here. It would be absurd to suggest that a federal Act exempting from State tax transfer of property interests on divorce threatened the existence of the State.

The only question is whether the challenged law is one with respect to the subject of federal power. Victoria contends that simply because a law applies to married persons or bankrupts, that does not make it in the constitutional sense a law with respect to marriage or bankruptcy. That is correct. The familiar and acceptable example is of a federal law which exempted all married persons or all bankrupts from the observance of the State traffic laws. Such a law would have no real connexion with marriage or bankruptcy and would be beyond power. However the national Parliament may for federal purposes exempt persons or transactions from the operation of State laws (R. v. Brisbane Licensing Court; Ex parte Daniell [64] ; The Commonwealth v. Queensland [65] ; Pirrie v. McFarlane [66] ; West v. Commissioner of Taxation (N.S.W.) [67] ; Australian Coastal Shipping Commission v. O'Reilly [68] . A federal Act to exempt members of the defence forces or federal police from traffic laws where necessary or desirable for the carrying out of their duties would be valid. In Pirrie v. MacFarlane an army driver was held subject to State traffic laws, there being no federal law exempting him. In that case, Knox C.J. said [69] :

The Commonwealth Parliament has, in my opinion, undoubted power, by legislation with respect to a subject which is within the ambit of its legislative powers, to override the provisions of any State law, but in the absence of any such enactment the State law must be given its full effect. The Bankruptcy Act 1966, s. 60 validly provides for setting aside of orders for imprisonment of debtors under State law (see Storey v. Lane [70] ). Ambassadors and officers of the United Nations Organisation may be exempted from criminal proceedings and taxes (see Diplomatic Privileges and Immunities Act 1967 particularly ss. 6 and 7 and Art. 34 of the Schedule). 1. (1920) 28 C.L.R. 23. 2. (1920) 29 C.L.R. 1. 3. (1925) 36 C.L.R. 170. 4. (1937) 56 C.L.R. 657, at p. 670. 5. (1962) 107 C.L.R. 46. 6. (1925) 36 C.L.R., at p. 183. 7. (1981) 147 C.L.R. 549.

The argument that a federal law protecting a transaction arising under federal law (or particularly under a federal judicial order) may prevail against a State law directed specifically to transactions under the federal law, but not against a State law of general application which "randomly" affects the transaction, is fallacious. It is the approach condemned in the Engineers' Case. If laws of two States impose a tax on such transfers pursuant to Family Courts' orders, how can the validity of the federal law depend on the fact that the law of one State does, but the other does not, affect other transactions unrelated to federal law? The State traffic laws in Pirrie v. McFarlane, and the State laws in Storey v. Lane were of general application. It would rarely be otherwise. The focus must be on the federal law, not on the State law, if the reserved powers trap is to be avoided.

In The Commonwealth v. New South Wales [71] (the " Royal Metals Case ") the Court held that the land transfer laws of the States are immune from interference by federal law. In my opinion that is incorrect. The s. 84 of the Act interferes with and overrides the State Acts in an important respect. Under it, the Family Court may appoint an officer or other person to execute a deed or other instrument in the name of a person who has neglected or refused the Court's direction to execute it, and that execution has the same force and validity as if it had been executed by the person directed to execute it. This section interferes with the operation of State Acts including the land transfer and registration Acts. Yet it is clearly valid, as a law with respect to marriage, and in its application to divorce, as a law with respect to divorce.

The property aspects of the marriage and divorce powers.

It is elementary that marriage is an economic as well as a social institution (see for example, Westermarck, The History of Human Marriage, pp. 26-27; Lucy Mair, Marriage, New York (1971); Bohannan, Social Anthropology, New York (1970), Ch. 5, 6; Krupinski and Stoller (ed.), The Family in Australia, Sydney (1974); I. W. P. McCall, Dissolving The Economic Partnership of Marriage , paper delivered to Queensland Family Law Practitioners Association Conference on Family Law, Queenstown, New Zealand, July 1980; A. Kiralfy (ed.), Comparative Law of Matrimonial Property, Leiden (1972)). There is a wealth of anthropological and legal material establishing that in virtually every society, ancient or modern, primitive or civilized, law on property of the parties is an integral part of the law of marriage.

Australian marriage and divorce laws were, until recently, closely based on English law. The common law (as well as the civil law) system made extensive provision for bringing together of real and personal property at the commencement of the marriage; the administration of property during the marriage; a division or allocation of property at the end of marriage; and generally, the financial obligations of each party towards the other during and after the termination of the marriage. In general, the common law provided that a husband has the ownership and control of his wife's property (as well as his own) during marriage. This was qualified by emergence of legal and equitable doctrines of ante-nuptial and post-nuptial settlements and restraints upon anticipation. The statutory modifications of the common law have been directed towards ameliorating the subordinate position of the wife. These included abolition of the law of dower (finally abolished in the U.K. in 1925); the Married Women's Property Acts; Testators' Family Maintenance and Guardianship of Infants Act. The fact that in modern times the law has developed in the direction of separate property of the spouses controlled separately, does not mean that laws about property are not central to marriage.

Whatever the merits, the establishment of a community property law or other regime for the administration of property of spouses during marriage and for distribution on termination of marriage by death or dissolution would be a law with respect to marriage. Equally, a law for distribution of the property of the spouses on or in anticipation of divorce, would be a law with respect to divorce in the Constitution s. 51 par. (xxii). If the law provided for such distribution by judicial process, it would also be a law with respect to "matrimonial causes" in the same paragraph of s. 51. An example from the previous law is the Court's power to order settlements of property including property dealt with by ante-nuptial or post-nuptial settlements and to make orders to apply the property for the benefit of parties to the marriage or either of them or the children (Matrimonial Causes Act 1959, s. 86).

The development of Australian and English law relating to the settlement and transfer of property on divorce recognizes that when the economic unit formed by the marriage partners and children (if any) is broken, the property may and often does, need to be redistributed. Parliament is entitled to act on the view that marriage and divorce law cannot be neutral in the break-up of marriage. Because divorce converts one economic unit into two economic units, such a redistribution is almost invariably a necessary consequence of divorce, whether by direct legislative provision, judicial order, or agreement. Changes in legal title and equitable interests in property are part of the process of divorce (see Lansell v. Lansell [72] ). The power to regulate the ownership or division of matrimonial property on divorce or during marriage is thus at the heart of the legislative powers to make laws with relation to marriage, divorce and matrimonial causes. Parliament may authorize judicial orders for maintenance and transfer of property interests and as part of this prevent extraneous financial impediments such as State taxes on the implementation of the orders. Section 90 of the Act is thus relevant to the marriage and divorce powers; the connexion is real not fanciful. Parliament, in passing the proposed law without dissent, on this aspect, considered that the provision was desirable, if not necessary, for the carrying out of the legislative policies in relation to marriage and divorce.

The high cost of divorce was one of the mischiefs at which the Family Law Act 1975 was aimed. Section 90 tends to promote the legislative policy directly. It also facilitates the exercise of the Family Court's powers, by enabling the Family Court to make orders free of concern about the impact of duties or taxes on the conveyances or other instruments which may be necessary or desirable for implementing the Court's order in respect of property or maintenance. It also facilitates the operation of s. 81 of the Act which imposes a duty on the Court as far as is practicable to make "such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them".

Imposition of State taxes upon real estate (which amount now to about 2 per cent of the value of property affected) may present a heavy burden. For many families the only property of substance is the matrimonial home. In Sydney for example transfer of a typical suburban home from one spouse to the other may unless exempt, attract State stamp duty of $1,000 or more. This would be equivalent to more than one month's after-tax earnings for many wage earners. It would be equivalent to more than six months maintenance for one child under a typical order. If such sums had to be paid to implement a judicial order it would often be a severe burden on the resources already strained to meet the needs of two economic units instead of one. The hardship which might be caused by payment of such sums is demonstrated by the fact that numerous applicants for relief under the Act each year seek and are granted exemption from paying the filing fee of $100 on the grounds of substantial hardship and many more seek and are granted legal assistance although the conditions are stringent (see reg. 34A; Family Law Council, Third Annual Report 1979, pp. 38-40; Fourth Annual Report 1980, pp. 29-31).

If Family Courts, faced with often critical financial problems of the parties, see that implementation of their proposed orders will attract burdensome State taxes, it is likely and almost inevitable that they will be under pressure to devise arrangements which may be less convenient or less suitable to the circumstances than those which they would order if there were no incidence of State or other taxes. This will tend to frustrate the implementation of federal policies reflected in the Act.

This case illustrates the problems facing courts administering the Act. Apparently if the judicial order had been simply to transfer the property, no stamp duty would have been imposed even if s. 90 were invalid (see Family Law Council, Third Annual Report 1979, pp. 28-32; Nygh and Turner's Family Law Service, pp. 2246; "Victorian Stamp Duty and the Family Law Act ", I. C. Kennedy, Law Institute Journal, vol. 51 (1977), pp. 578-587). The practice has been to treat simple transfers pursuant to any judicial orders as outside the net of the Stamps Act. But because the Court ordered the transfer to the wife in trust for the children, the Commissioner considered that it was an instrument whereby property is settled, (and liable to duty under paragraph 1 of Heading IX of the 3rd Schedule to the Stamps Act).

It seems to be accepted that the Parliament could prevent imposition of heavy State taxes approaching the value of the property ordered to be transferred. If Parliament can do that, it is difficult to see why it can not prevent the imposition of lesser taxes, in the same circumstances. The argument for invalidity asserted that the imposition of the State taxes would not impair the operation of the federal policies intended to be promoted by the Act. Obviously the Family Law Council (see Fourth Annual Report 1980, p. 21) and the national Parliament think otherwise. At most, the question of the effect of State taxes upon Family Court orders and upon the implementation of legitimate federal policy is debatable, and therefore one on which the Parliament is entitled to form a legislative judgment.

Where the constitutional validity of a statute depends upon the existence of facts, courts must be cautious about reaching a conclusion respecting them contrary to that reached by the legislature; and if the question of what the facts establish be a fairly debatable one, it is not permissible for the judge to set up his opinion in respect of it against the opinion of the lawmaker. (Radice v. New York [73] .) Denial of federal power to exclude State taxes in respect of transactions relating to marriage or divorce may have curious consequences. It would be within the Commonwealth Parliament's power over marriage, to introduce a community property régime which would on marriage require transfer into joint names of certain property of the parties. If a State could impose a tax on such transfer (despite a federal Act prohibiting it) it would mean that immediately on marriage the parties would face a bill for State tax. If the marriage certificate were the instrument evidencing the entitlement, a State tax on instruments would be a tax upon the marriage certificate myself. In my opinion, Parliament can prevent such a financial impediment on or interference with the carrying out of its policies. 1. (1923) 264 U.S. 292, at p. 294 [68 L. Ed. 690, at p. 694].

Victoria contended that in respect of carrying out of agreements in relation to maintenance s. 90 could be misused to provide exemption for transactions which were related only indirectly or slightly to the marriage relationship. Of course, there must be a rational connexion between the law and the subject matter of legislative power; provided this exists the validity of the law is not affected by an indirect operation. If the connexion between the law and the legislative power is extremely slight and indirect the law will fall outside the scope of the power and be invalid. Also if the connexion between a particular transaction and the legislative power is only slight and indirect, that transaction will fall outside the scope of the law. These problems do not affect the present case.

When s. 90 in its application to judicial orders only is considered, its validity may be sustained on a narrow basis. The Parliament is entitled to protect from State taxation the implementation of valid orders made in the exercise of the judicial power of the Commonwealth.

Further, although the question was not argued, in my opinion, s. 90 comes within the power in s. 51 par. (ii) to make laws with respect to taxation. In the circumstances, it is inappropriate to develop this.

This Court's decision to invalidate s. 90 is attributable to what can fairly be described as a revival of the States' reserved powers doctrine. I believe that the revival will be transient and that the doctrine will be re-interred. Regrettably, in the meantime there will be hardship to many thousands of Australians, including children, involved in the breakup of marriage. Against the national will, as enacted by the national Parliament without a single dissentient on this provision, they will be exposed to substantial State taxes during a critical period of their lives.

The answer should be Yes, s. 90 of the Family Law Act in its application to stamp duties imposed under the Stamps Act 1958 Vict. on transfers of land executed by a person in accordance with an order under Pt VIII of the Family Law Act is a valid law of the Commonwealth.

This matter was removed into this Court upon application on behalf of the Attorney-General for the State of Victoria under s. 40 (1) of the Judiciary Act 1903 Cth and it was ordered that there be referred to the Full Court the following question: "Is section 90 of the Family Law Act 1975 a valid law of the Commonwealth?"

The question arises from the dissolution of the marriage of Filippina Gazzo ("the wife") and Antonio Pietro Gazzo ("the husband") by an order of the Supreme Court of Victoria made under the Family Law Act 1975 Cth on 26 May 1977. By a further order of the Supreme Court of Victoria made on that day it was ordered that the husband transfer his interest in certain land in Victoria to the wife as trustee for Santo Francesco Gazzo, Maria Carmela Gazzo and Giovanni Sebastian Gazzo, the children of the marriage. The order further provided that the Petitioner (the husband) should pay all legal costs and registration fees in respect of the transfer. The husband and wife executed an instrument of transfer of the land pursuant to that order and that instrument was submitted to the Comptroller of Stamps for his opinion under s. 32 (1) of the Stamps Act 1958 Vict.. The Comptroller of Stamps assessed the transfer for stamp duty under that Act. The wife objected to the assessment of duty on the ground that the transfer was exempt from duty by virtue of s. 90 of the Family Law Act but the Comptroller disallowed that objection. On 31st August 1979 the wife, pursuant to s. 33B of the Stamps Act, requested the Comptroller to treat the objection as an appeal and to cause it to be set down for hearing in the Supreme Court.

A maintenance agreement, or a deed or other instrument executed by a person for the purposes of such an agreement or for the purposes of, or in accordance with an order under, this Part, is not subject to any duty or charge under any law of a State or Territory or any law of the Commonwealth that applies only to or in relation to a Territory. The term "maintenance agreement" used in s. 90 is defined in s. 4 (1) of that Act and the term "financial matters" used in the definition of maintenance agreement is likewise defined in s. 4 (1). Those definitions are as follows: "maintenance agreement" means an agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage, being an agreement that makes provision with respect to financial matters, whether or not there are other parties to the agreement and whether or not it also makes provision with respect to other matters, and includes such an agreement that varies an earlier maintenance agreement;

"financial matters", in relation to the parties to a marriage, means matters with respect to -

(b) the property of those parties or of either of them; or

It will be noted that the term "maintenance agreement" is not limited to agreements made between the parties to a marriage but includes agreements to which there are other parties and agreements which also make provision for matters other than financial matters. Section 90 itself operates in respect not only of maintenance agreements as defined but also in respect of deeds or other instruments executed by a person for the purposes of such an agreement or of Pt VIII of the Family Law Act or in accordance with an order made under that Part.

An examination of the interaction of those two definitions demonstrates that the prima facie operation of the expression "maintenance agreement" is extremely wide and goes far beyond what would be the ordinary meaning of the term "maintenance agreement" as between the parties to a marriage, whether in respect to a period when the marriage was still on foot or in respect to a period after the marriage had been dissolved. Although the question referred to the Full Court is expressed in very general terms and relates to the whole of the operation of s. 90, it does not appear to me to be desirable that the Court should examine all the possible situations in which the section might operate within the whole reach of the definitions of "maintenance agreement" and of "financial matters" unless it is necessary to do so in order to decide whether it validly applies to the instrument of transfer in the present case. The case before us is concerned with an instrument of transfer of land executed in accordance with or pursuant to an order of a court exercising jurisdiction under the Family Law Act.

It was however submitted by the Solicitor-General for the State of Victoria that the section was wholly invalid and that there was no occasion for consideration whether any part of it might none the less be valid. As I have said it seems that it is undesirable that the Court should attempt to deal with the validity of all possible applications of s. 90. An examination of that section and the definitions demonstrates clearly that the application of s. 15A of the Acts Interpretation Act 1901 Cth would enable the question of the validity of the section to be determined in respect of its operation on an instrument of transfer of land under the Transfer of Land Act 1958 Vict. "executed by a person for the purposes of, or in accordance with an order under, this Part" without necessarily having to consider the validity of the section in relation to maintenance agreements as defined. The former provision might be valid and the latter invalid, or vice versa, and in each case the invalid provision would be severable.

The question so narrowed is whether such a legislative provision is to be regarded as a law with respect to marriage within s. 51 (xxi) of the Constitution, or a law with respect to divorce and matrimonial causes and in relation thereto parental rights and the custody and guardianship of infants within s. 51 (xxii) or as coming within s. 51 (xxxix).

It was submitted by the Solicitor-General for the State of Victoria that the power to make laws with respect to marriage must be concerned with laws which govern the relationship of married people as between themselves and with their children and that it did not authorize the making of a law which concerned the relationship between the parties to a marriage or one of them and third persons. This proposition is in my opinion too general.

Differing views have been expressed as to the extent of the power with respect to marriage but in my opinion the formulation to be preferred is that contained in the judgment of Gibbs J. in Reg. v. Lambert; Ex parte Plummer [74] where he said:

The crucial question, however, is whether the legislation creates, defines or declares rights or duties that arise out of, or have a close connexion with, the marriage relationship. If not, the law cannot be said to be one with respect to marriage. This was, I think, recognized by the majority of the Court in Russell v. Russell [75] . Similarly in Dowal v. Murray, the judgments emphasized that the right defined by s. 61 (4) arose out, of or was intimately concerned with, the marriage relation: see per Stephen J. [76] per Jacobs J. [77] and in my own judgment [78] . He then said: I adhere to the view that I expressed in Reg. v. Demack; Ex parte Plummer [79] , that an enactment is not a law with respect to marriage simply because it has some operation with respect to the custody of a child of the marriage, or, I would add, with respect to married persons. He concluded by saying: The question whether a law is one with respect to marriage is one of degree. The answer to it depends on the closeness of the connexion between the law and the marriage relationship. Barwick C.J. [80] agreed generally with Gibbs J.'s reasons but added that he was of the view that the decision in Russell v. Russell [81] should be strictly confined and not used as a base for any extension of what is comprised within the concept of a law with respect to marriage. Wilson J. was of a similar view. He said [82] that the decision in Russell v. Russell demonstrated "the necessity of a close relationship between the law and the marriage relationship" for such a law to be within s. 51 (xxi). In my opinion the observations of Gibbs J. which I have quoted above appear to be equally applicable to the divorce power. 1. (1980) 146 C.L.R., at pp. 456-457. 2. (1976) 134 C.L.R., at pp. 524, 538, 552-553. 3. (1978) 143 C.L.R., at p. 423. 4. (1978) 143 C.L.R., at pp. 426-427. 5. (1978) 143 C.L.R., at p. 417. 6. (1977) 137 C.L.R., at p. 46. 7. (1980) 146 C.L.R., at pp. 450-451. 8. (1976) 134 C.L.R. 495. 9. (1980) 146 C.L.R., at p. 487.

Taking the formulation proposed by Gibbs J. the "crucial question" in this case is whether s. 90 creates, defines or declares rights or duties that arise out of, or have a close connexion with, marriage or divorce or matrimonial causes. The rights and duties in question are primarily but not exclusively those as between the parties to a marriage, including rights and duties in respect of the children of a marriage. The extent to which the two legislative powers extend to the relationship of the parties or their children with third parties has been the subject of some discussion in cases to which Gibbs J. referred in his judgment in Ascot Investments Pty. Ltd. v. Harper [83] . He there referred to two cases which arose under the Matrimonial Causes Act 1959 Cth, viz. Sanders v. Sanders [84] and Antonarkis v. Delly [1] . I do not need to quote in full his discussion of those cases but he concluded that discussion by saying [2] :

It is apparent that neither of these decisions provides authority for the view that any right or interest of a third party may be adversely affected by an order made in the exercise of matrimonial jurisdiction, although Antonarkis v. Delly suggests that a court in the exercise of that jurisdiction may treat as null a pretended claim of right made by a third party in collusion with one spouse for the purpose of defeating matrimonial proceedings brought by the other spouse. Gibbs J. then referred to Reg. v. Ross-Jones; Ex parte Beaumont [3] as to which he said "it appears from the judgments that the majority of the Court considered that the Family Court, in making orders with respect to the interests of the parties to a marriage in partnership property could not affect the interests of third parties". 1. (1981) 148 C.L.R. 337. 2. (1967) 116 C.L.R. 366. 3. (1976) 51 A.L.J.R. 21. 4. (1981) 148 C.L.R., at p. 351. 5. (1979) 141 C.L.R. 504.

He concluded his review of those cases by saying [4] :

The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of ss. 80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform. It is one thing to order a party to a marriage to do whatever is within his power to comply with an order of the court, even if what he does may have some effect on the position of third parties, but it is quite another to order third parties to do what they are not legally bound to do. If the sections had been intended to prejudice the interests of third parties in this way, it would Have been necessary to consider their constitutional validity. What Gibbs J. there said is expressed in terms of the proper construction of the Family Law Act but the constitutional problems of any wider construction are obvious. 1. (1981) 148 C.L.R., at p. 354.

In Reg. v. Lambert; Ex parte Plummer [5] is a case in which the majority of the Court held that it was beyond constitutional power to empower the Family Court to make orders for custody which would override the provisions of the Children's Services Act of 1965 Q. giving the Director certain powers and duties with respect to the care and protection of children.

Section 90 of the Family Law Act, so far as presently material, purports to ensure that certain instruments executed by married or divorced persons pursuant to an order of the Family Court shall be exempt from duties imposed upon them by State or Territorial laws. Section 122 of the Constitution leaves no doubt as to the validity of that provision so far as laws of the Territories are concerned but in relation to the laws of the States its validity must be based on the marriage or divorce powers, or the two in combination. It does not however create, define or declare rights or duties in the relevant sense at all. It purports to destroy an obligation placed by State law on persons seeking to register transfers of land executed by them pursuant to an order of the Family Court and in that sense to destroy rights in a "third party", i.e. the State of Victoria, having no connexion with the marriage or the divorce. That is not to create, define or declare rights or duties arising out of the marriage or the divorce. In the present case there is obviously some connexion between s. 90 and marriage and divorce in that the existence of a marriage or of the dissolution of a marriage is an essential prerequisite to its operation, but that is neither a close nor a sufficient connexion with either of those powers. If it were, it would make them equivalent to powers to make laws with respect to married persons or divorced persons, a view of s. 51 (xxi) and (xxii) which is not tenable.

It was argued for the wife that s. 90 is authorized by s. 51 (xxi) and/or s. 51 (xxii) and by what has come to be called, somewhat inaptly, the "implied incidental power". I say inaptly because that expression suggests that there is some additional power over and above that given by the paragraphs of s. 51. It is of the nature of all the heads of power in s. 51 that there is granted by the words describing the power itself everything which is incidental to its main purpose - see per Knox C.J., Rich and Dixon JJ. in Le Mesurier v. Connor [6] and per Dixon C.J. in Burton v. Honan [7] . It is necessary to draw attention to this because of the tendency to regard, or at least to speak of, that which is incidental to a head of power as though it were something separate from and additional to the power itself. Such a tendency is calculated to mislead in that it is sometimes the basis for a search for something beyond the head of power itself. This is not to say that the heads of power in s. 51 are to be read narrowly; the whole course of authority, at least since 1920, is to the contrary. Moreover the concept of that which is incidental being already embraced within a head of power points to a wide rather than a narrow construction.

1. (1929) 42 C.L.R. 481, at pp. 497-498. 2. (1952) 86 C.L.R. 167, at pp. 177-178.

It was also argued that s. 90 was authorized by s. 51 (xxxix). This power is concerned with matters incidental to the execution of a power, not with matters incidental to its subject matter. It cannot be used to expand the subject matter of any of the enumerated legislative powers. Illustrations of the operation of par. (xxxix) are not numerous but it is necessary to consider whether the section now in question can be supported on this basis.

The argument for the wife was that the legislative powers given by pars. (xxi) and (xxii) were wide and plenary. No doubt this is so but the question remains whether they are wide enough to support the specific provision in s. 90 now in question. The passages which I have quoted above from the judgment of Gibbs J. in In re Lambert; Ex parte Plummer demonstrate both the positive and the negative aspects of the extent of the power with respect to marriage, the former requiring the close connexion with the marriage relationship and the latter demonstrating that it is not enough that the law has some operation on children of a marriage or on married persons. The present section seems to me to have no close or relevant connexion with marriage. I have already given my reasons for rejecting the contention that there is a sufficient connexion by reason of its being a prerequisite to the operation of s. 90. The present case is one of divorce. The power to make orders altering the property interests of the parties is given by sub-s. (1) of s. 79. That power arises only in "proceedings with respect to the property of the parties to a marriage or either of them". Proceedings in this context refers to proceedings in which the Family Court is exercising jurisdiction under s. 39 which itself requires that there be a "matrimonial cause" as defined (see the definitions of proceedings and court in s. 4 (1)). The relevant parts of that definition are pars. (c) and (ca). After Russell v. Russell [8] it is clear that par. (c) is restricted in its operation to proceedings of the type there mentioned which are ancillary to proceedings for principal relief, that is, relief within pars. (a) and (b) of the definition of matrimonial cause. Paragraph (ca) by its express words is similarly restricted. Compare the position under s. 86 of the Matrimonial Causes Act as explained by Kitto J. in Lansell v. Lansell [9] where he treats that section as an exercise of the divorce power; see also per Taylor J. [10] who suggests that it may also be supported under the marriage power; and also per Mason J. in Russell v. Russell [11] . In both the Matrimonial Causes Act and in the Family Law Act the power to alter property interests was limited to proceedings in which there was a claim for "principal relief". Thus the divorce power requires examination. There is no doubt power in the Family Court upon the dissolution of a marriage to order alterations to the property interests of the parties. However the question is whether the divorce power goes beyond giving the Family Court jurisdiction to order one party to transfer property, or an interest in property, to the other (Lansell v. Lansell and Russell v. Russell).

1. (1976) 134 C.L.R. 495. 2. (1964) 110 C.L.R. 353, at p. 359-360. 3. (1964) 110 C.L.R., at p. 365. 4. (1976) 134 C.L.R., at pp. 538-542.

It was said, partly in reliance on a combination of pars. (xxii) and (xxxix) of s. 51, that the material part of s. 90 was valid because it gives effect to a law providing for dissolution and settlement of property rights. The connexion was said to be in facilitating transfers by making them cheaper and easier. In my opinion it cannot be said to make transfers easier except in the sense that they would be cheaper if no stamp duty were payable. It does not appear to me that relieving the parties from part of the cost of transferring property pursuant to a Family Court order has a close relationship to divorce, any more than prohibiting the charging of fees by practitioners for appearing in the Family Court would be within the divorce power. The latter may have a connexion with divorce but not one which is close enough. Proceedings for dissolution are of course a condition precedent but as I have already said that is not a sufficient basis to provide power to enact this section. It is not in my opinion possible to regard s. 90 as incidental to the execution of the legislative power under par. (xxii). No doubt orders for the transfer of property may be enforced by appropriate orders against a party or by instituting contempt proceedings; legislation on such matters may be incidental to the execution of the legislative power, though they would seem more appropriately to fall within the ordinary meaning of the power itself as being "incident" thereto. However as Dixon C.J. said in Burton v. Honan [12] :

But this distinction is for present purposes immaterial because it produces the same result, namely, that the Parliament may in the exercise of any of the substantive powers given by s. 51 make all laws which are directed to the end of those powers and which are reasonably incidental to their complete fulfilment. Moreover no satisfactory basis was suggested for regarding s. 90 as incidental to the execution of the legislative power with respect to divorce, however widely one views that power. 1. (1952) 86 C.L.R., at p. 178.

Counsel for the wife also sought to support the validity of s. 90 on the basis of s. 51 (xxxix) as being "incidental to the execution of any power vested by this Constitution in the Federal Judicature". It was argued that the expression "the Federal Judicature" included the Family Court as being one of "such other federal courts as the Parliament creates" within the meaning of s. 71 of the Constitution. In the alternative it was argued that judicial power is vested in the Family Court by ss. 31 and 39 of the Family Law Act and s. 90 is incidental to the execution of the power so vested. Against these submissions, the Solicitor-General for the State of Victoria submitted that s. 71 says nothing about the content of the jurisdiction which it empowers the Parliament to vest in federal courts; that content must be filled out by another law which itself must fall within the legislative competence of the Parliament. On that view s. 51 (xxxix), if it has any relevance at all, it can only be in relation to the powers in s. 51 (xxi) or (xxii).

It is clear that the Constitution vests neither power nor jurisdiction in the Family Court so that the power to make orders within Part VIII is not a power vested in the Family Court by the Constitution. However that of itself does not determine the question for it remains open whether the words "vested by this Constitution" in s. 51 (xxxix) apply to matters incidental to the execution of judicial power conferred by legislation. It is unnecessary for me to attempt a resolution of that problem for I consider that the observations of Dixon and Evatt JJ. in R. v. Federal Court of Bankruptcy; Ex parte Lowenstein [13] apply to this case. They said [14] :

"But, assuming that it" [s. 51 (xxxix)] "does apply to Federal and State courts exercising jurisdiction in bankruptcy in respect of offences against the bankruptcy laws, it would not authorize the Parliament to make a provision which departed from or was at variance with the purpose of the main power, the power vested in the Federal judicature. In other words, a law with respect to a matter incidental to the execution of judicial power, must, in order to answer that description, deal with something arising in the course of exercising judicial power, something attendant upon or incidental to the fulfilment of powers truly belonging to the judicature." It cannot be said, in my opinion, that s. 90 of the Family Law Act is in any way incidental to the fulfilment or exercise of the powers vested in the Family Court. It says nothing as to the fulfilment of the powers of the Family Court to make orders as to transfers of property between parties. Those orders stand complete and operative in themselves to bind the parties to do that which has been ordered and which, when done, will operate under State law. Section 90 however is directed to the obligations of the parties under State law governing (in this case) transfers of land from one to another. In my opinion it cannot be regarded as incidental to the execution of judicial power. Perhaps procedures for enforcement of the orders of the Family Court could properly be regarded as "incidental to the fulfilment of powers truly belonging to the judicature". The judicial power is however spent upon the making of an order (including an order as to costs) and its enforcement. I do not exclude from the judicial power the reopening of some matters, e.g. maintenance. 1. (1938) 59 C.L.R. 556. 2. (1938) 59 C.L.R., at p. 587.

Some reliance was placed on the decision of this Court in Australian Coastal Shipping Commission v. O'Reilly [15] . In that case the Australian Coastal Shipping Commission Act 1956 provided in s. 36 (1) that the Commission (which was a body corporate established under that Act) was to be subject to taxation under the laws of the Commonwealth but was "not subject to taxation under laws of a State to which the Commonwealth is not subject". By virtue of s. 114 of the Constitution a State may not, without the consent of the Parliament of the Commonwealth, impose any tax on property of any kind belonging to the Commonwealth. It was held that the section was within the powers of the Parliament and that the Commission was therefore not liable under the Stamps Act 1946 Vict. to stamp receipts given by it in the course of its trading activities. The basis of the decision appears from the judgment of Dixon C.J. (with whom Kitto, Taylor and Owen JJ. agreed) when he said [1] :

The fact that a government agency is set up at all brings under consideration the question whether its operations should or should not be exposed to State taxes. How that question should be decided is a matter of policy. But the legislative power under which, ex hypothesi, the agency is validly set up must surely be enough to enable the legislature to decide it. The various taxes of the six States the liability for which might otherwise be incurred in the course of the activities of what is called the National Shipping Line may have been considered something to which it is desirable that the Commonwealth Line should not be exposed. Once that view is taken it appears to be sufficiently clear that the legislative power must extend to excluding the imposition upon the activities of the Commonwealth Line of such taxation. It is however one thing to legislate so as to exempt an instrumentality of the Commonwealth from the incidence of a State tax conditioned upon the doing by that instrumentality of something which it is set up to do or which is an ordinary or necessary incident of that which it is set up to do. It is quite another thing for the Commonwealth to legislate to exempt transactions between citizens from the incidence of State taxation upon transfers of land. The fact that the transfer is one directed by a federal court in the exercise of jurisdiction to provide for the maintenance of spouses or children is not a sufficient basis for such an enactment. Such a transfer is no doubt consequential on the order but it is an instrument to which only State law can give effect. The connexion with marriage or divorce is too remote to support the legislation. In my opinion no assistance can be obtained by the wife or the Commonwealth from that decision. 1. (1962) 107 C.L.R. 46. 2. (1962) 107 C.L.R., at p. 56.

The operation of the laws of the States with respect to the nature, incidents and mode of transfer of property appear to me to stand outside the range of the legislation which may be enacted pursuant to s. 51 (xxi), (xxii) or (xxxix) notwithstanding that such laws apply to married persons and divorced persons and transfers of property between them, whether beneficially in favour of a transferee or to a transferee upon trust for children of a marriage, and whether by voluntary transfer or by transfer pursuant to orders of the Family Court. The same is true of State laws with respect to taxation save that, as suggested in argument, a State tax on marriage certificates might perhaps be excluded by a section such as s. 90. It is plain that a law is not one with respect to marriage or divorce merely because it applies to married or divorced persons and in my opinion the relevant part of s. 90 has no other link with the marriage or the divorce power. If s. 90 on its proper construction purports to extend to the fees payable under the Transfer of Land Act for the registration of dealings, the connexion with marriage or divorce would be equally remote. This view of the operation of s. 90 was however urged by counsel for the wife, though not supported by the Solicitor-General for the Commonwealth. In my opinion such an operation could not validly be given to s. 90 and if that is its proper construction it is pro tanto invalid.

The same conclusion follows from a somewhat different approach which requires first some short examination of both the Stamps Act and the Transfer of Land Act.

Section 37 of the Stamps Act provides that unstamped instruments shall not be received by any person under a duty to enrol, enter or receive any original instrument. Sub-sections (1) and (2) are as follows:

(1) Where a person is under a duty to receive enrol enter or record any original instrument or a copy of any original instrument he shall not if the original instrument is chargeable with duty under this Act or would be chargeable with duty under this Act if it were in Victoria receive register enrol enter or record any such original instrument or copy unless he is satisfied that the original instrument has been duly stamped or is deemed to have been duly stamped.

(2) Any such person may refer any question as to the dutiability of an original instrument or copy to the Comptroller of Stamps.

Similar provisions are to be found in equivalent legislation in each of the States.

By s. 17 of the Stamps Act it is provided that "there shall be charged for the use of Her Majesty upon the several instruments specified in the said [Third] Schedule the several duties and additional duties therein specified."

The Stamps Act imposes an ad valorem stamp duty on every conveyance or transfer of land (s. 70 (3)) and provides that the consideration for such transfer shall be stated "fully and truly" therein (s. 70 (5)). Section 70 (6) provides that in the case of a sale of real property the burden of the duty is to be borne by the purchaser and that any contract or agreement by which he seeks to relieve himself from that liability or to impose that liability upon any other person or any obligation to indemnify him in respect thereof shall be ineffective.

The Third Schedule provides that "there shall be charged and paid for the use of Her Majesty upon and for the several instruments hereinafter specified the several stamp duties hereinafter specified " Heading VI (b) provides for the rate of duty payable on "LAND TRANSFER - Under the Transfer of Land Act 1958 " upon (inter alia) "every transfer of land on a sale thereof" a specified rate of ad valorem stamp duty. Heading VI(a) deals in a similar way with conveyances under the general law.

The transfer of land with which these proceedings are concerned is not a transfer on a sale, and therefore the provisions to which I have referred have no application. The Comptroller of Stamps took the view that the transfer constituted a "deed of settlement" within Heading IX of the Third Schedule which deals with deeds of settlement or gifts and assessed it to stamp duty accordingly. It imposes an ad valorem duty on:

Any instrument, other than a will or codicil, whether voluntary or upon any good or valuable consideration other than a bona fide adequate pecuniary consideration and whether revocable or not whereby any property is settled or agreed to be settled in any manner whatsoever or is given or agreed to be given or directed to be given in any manner whatsoever. The Stamps Act provides that stamp duty on a deed of gift is to be payable by the donee and on a deed of settlement by the settlor. Whether the Comptroller was right or wrong in that view is not material to the question before this Court. We are concerned only with the validity of s. 90 of the Family Law Act.

The Transfer of Land Act is the legislation which embodies the Torrens system of registration of title (or of title by registration) in Victoria. It does not differ materially from the Real Property Act 1900 N.S.W. or from corresponding legislation in other States of the Commonwealth. The relevant sections of the Victorian Act are:

(1) Subject to this Act no instrument until registered as in this Act provided shall be effectual to create vary extinguish or pass any estate or interest or encumbrance in on or over any land under the operation of this Act, but upon registration the estate or interest or encumbrance shall be created varied extinguished or pass in the manner and subject to the covenants and conditions specified in the instrument or by this Act prescribed or declared to be implied in instruments of a like nature.

(2) Every instrument when registered shall be of the same efficacy as if under seal and shall be as valid and effectual to all intents and purposes as a deed duly executed and acknowledged or other the appropriate form of document.

26. No Crown grant or certificate of title under this Act shall be impeached or defeasible by reason or on account of any informality or irregularity in any application or instrument or in any proceedings previous to the registration of the certificate; and every Crown grant or certificate of title registered under this Act shall be received in all courts as evidence of the particulars therein and of the entry thereof in the Register Book, and shall be conclusive evidence that the person named in such grant or certificate as the proprietor of or having any estate or interest in or power to appoint or dispose of the land therein described is seised or possessed of such estate or interest or has such power.

(1) A registered proprietor may transfer his estate or interest in land by an instrument in or to the effect of the appropriate form in the Sixth Schedule.

(2) Upon the registration of the transfer the estate or interest of the proprietor as set out in such instrument or which he is entitled or able to transfer or dispose of under any power, with all rights powers and privileges thereto belonging or appertaining, shall pass to the transferee; and such transferee shall thereupon become the registered proprietor thereof.

The corresponding sections of the New South Wales Act are ss. 41 (1), 36 (11), 40, 46 and 51.

Thus real property in Victoria which is governed by the Torrens system (as is the land now in question) is capable of transfer only by an instrument in the form required by the Act but the instrument alone does not effect the transfer of title. This is effected only by and upon registration of the instrument and the making of appropriate entries in the Register. This is of the essence of the Torrens system and it governs not merely the mode of transfer but also the nature of an interest in registered land. Accordingly it is a characteristic of land, the title to which is registered under the Transfer of Land Act, that the legal estate therein is transferable only by an instrument of transfer in accordance with that Act. Such a transfer must under s. 37 of the Stamps Act bear the appropriate duty stamp or be denoted non-dutiable before it can be registered, and that too is a characteristic of the property itself. It is of course otherwise with equitable interests, but we are not here concerned with such interests.

The approach to which I referred above is to be found in two earlier decisions of this Court, one a very recent decision and the other by no means recent. The first is Ascot Investments Pty. Ltd. v. Harper [2] to which I have already referred. That was a case in which the Family Court purported to order a proprietary company to register a transfer of shares notwithstanding the absence of approval by the directors as required by its articles of association. That restriction complied with s. 15 of the Companies Act 1961 Vict. which requires that the memorandum or the articles of association of a proprietary company must place a restriction on the transfer of shares in such a company. In that case Barwick C.J. said [3] :

In my opinion, the appellant and its directors could not be ordered to do something in relation to the shareholding which the husband by dint of his shareholding could not compel the appellant or its directors to do. Nor could the court alter the nature, incidents or extent of the property which the court could command the husband to transfer. It could only require him to deal with, that is, to transfer, what in point of property he had. To conclude otherwise would be unauthorizedly to enlarge the rights inherent in the shareholding.

It is said by counsel for the wife that until registration, the transfer signed and delivered by the husband was ineffective. But this clearly is not so. The tranfer was effective to create equitable rights. No doubt registration would convert the equitable title into a legal title: and the absence of a right to compel registration of a transfer reduced the ambit of the equitable interest in the shares. In truth, the transfer already signed on behalf of the husband and delivered to his wife is as effective a transfer of the property in the shares as the husband as a matter of right could make.

Gibbs J. said [4] : But the question for our decision is whether the Family Court had power to order Ascot Investments to register the transfer from the husband to the wife of the 7,000 "A" class shares. The restrictions contained in cl. 4 (a) of the Memorandum and art. 143 of the Articles, which satisfy the requirements of s. 15 (1) (a) of the Companies Act 1961 Vict., as amended, confer on the directors of the company a wide discretion to refuse to register a transfer. The directors are bound to exercise their discretion bona fide in what they consider to be in the interests of the company, and not for any collateral purpose, but subject to that qualification their discretion is absolute and uncontrolled: In re Smith & Fawcett Ltd. [5] ; Charles Forte Investments Ltd. v. Amanda [6] ; Australian Metropolitan Life Assurance Co. Ltd. v. Ure [7] . This rule is an application of the general principles governing the exercise by directors of their powers; those principles are discussed in Ngurli Ltd. v. McCann [8] . The cases cited establish that the onus of proving that the directors in refusing registration did not act in good faith in what they considered to be the interests of the company lies on those who challenge their decision.

In the present case it was not proved that the directors of Ascot Investments acted in bad faith or for an ulterior purpose; indeed the transfers of the shares have not been submitted for registration and the directors have not been called upon to exercise their discretion to register or decline to register them.

It may be accepted that the orders fall within the literal words of s. 80 and s. 114 (3), and that they were made in aid of the jurisdiction of the Family Court. The question that then arises is whether the powers conferred by those sections, wide as they admittedly are, extend to enable the Family Court to make an order which will impose new duties on persons who are not parties to the marriage (third parties).

He then referred to Sanders v. Sanders [9] ; Antonarkis v. Delly [10] ; Reg. v. Dovey; Ex parte Ross [11] and Reg. v. Ross-Jones; Ex parte Beaumont [12] . He then said [13] : Except in the case of shams, and companies that are mere puppets of a party to a marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it. To take two obvious examples, the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party. Thus, in the present case, the Court must deal with the husband's shares in Ascot Investments as they in fact are, that is, as shares in a company whose Memorandum and Articles contain a restriction on transfer. 1. (1981) 148 C.L.R. 337. 2. (1981) 148 C.L.R., at p. 344. 3. (1981) 148 C.L.R., at pp. 348-350. 4. [1942] Ch. 304, at pp. 306-308. 5. [1964] Ch. 240, at pp. 252-254, 260-261. 6. (1923) 33 C.L.R. 199, at pp. 205-206, 217-220, 223. 7. (1953) 90 C.L.R. 425, at pp. 438-440. 8. (1967) 116 C.L.R. 366. 9. (1976) 51 A.L.J.R. 21. 10. (1979) 141 C.L.R. 526. 11. (1979) 141 C.L.R. 504. 12. (1981) 148 C.L.R., at p. 355.

Stephen J., Wilson J. and I agreed with Gibbs J. Mason J. said that, assuming without deciding, that the Family Court was empowered to make orders of the kind sought the facts did not disclose appropriate circumstances for the making of such orders. Murphy J. took a contrary view.

In Ascot Investments the question of the constitutional validity of a provision of the Family Law Act did not directly arise but none the less the scope of the marriage power and of the divorce power was involved. The order made by the Family Court in that case was invalid and inoperative because no power existed to authorize such an order on the proper reading of the provisions of the Family Law Act. Any specific legislative provision for such a purpose would in my opinion have been invalid. The nature and incidents of the property of a party to a marriage, including the means of transfer of such property, are governed by State law and there is no power in the Family Court or in the Parliament of the Commonwealth under s. 51 (xxi), (xxii) or (xxxix) to alter such nature and incidents.

The earlier decision of this Court to which I referred was The Commonwealth v. New South Wales [14] ("the Royal Metals Case "). That case dealt with a number of matters, only one of which is presently material. The relevant matter was the validity of s. 20 of the Lands Acquisition Act 1906. That Act provided for compulsory acquisition of land by the Commonwealth and the term "land" was defined to include "Crown land", which in its turn was defined as meaning "any land the property of a State, whether reserved or dedicated for any public purpose or not". The process of acquisition provided for in s. 15 was that the Governor-General might direct that land be acquired by the Commonwealth from the owner by compulsory process. It provided that the Governor-General might "by notification published in the Gazette, declare that the land has been acquired under this Act for the public purpose therein expressed". Section 16 provided that:

(1). Upon the publication of the notification in the Gazette, the land described therein shall, by force of this Act -

(b) be freed and discharged from all trusts, obligations, estates, interests, contracts, licences, charges, rates, and easements,

to the intent that the legal estate therein, together with all rights and powers incident thereto or conferred by this Act, shall be vested in the Commonwealth.

(2). Where the land described in the notification is Crown land of a State, or is by virtue of any law of a State vested in any person on behalf of the Crown or for any public purpose, the notification shall also have the effect of cancelling any dedication or reservation to which the land was subject at the date of the publication of the notification.

Section 20 provided: If a copy of the notification in the Gazette, certified under the hand of the Attorney-General, is lodged with the Registrar-General or Registrar of Titles or other proper officer of the State or part of the Commonwealth in which the land is situated, he shall register it in the register and in the manner as nearly as may be in which dealings with land are registered, and shall deal with and give effect to the notification as if it were a grant or conveyance or memorandum or instrument of transfer of the land to the Commonwealth duly executed under the laws in force in that State or part of the Commonwealth. In their joint judgment Knox C.J. and Starke J. said [15] : The power conferred by s. 51 (xxxi.) and (xxxix.) of the Constitution is to make laws with respect to the acquisition by the Commonwealth of property, including land, and with respect to matters incidental thereto; and the question is whether a provision entitling the Commonwealth to insist on the registration under the Real Property Act of its title to land acquired under the Lands Acquisition Act, without complying with the conditions imposed by State law on such registration, is incidental to the complete exercise of the power of acquisition. Effective acquisition of (inter alia) land by the Commonwealth is the object to be attained, and the power is completely exercised by enabling the Commonwealth to vest absolutely in itself the land which it desires to acquire. The object is attained by the method provided by s. 16 of the Act, namely, that upon the publication of a notification of acquisition the land described therein shall "by force of this Act be vested in the Commonwealth". This section, the validity of which is not, and cannot be, disputed, confers on the Commonwealth a statutory title to the land required which must, by force of s. 109 of the Constitution and of s. V. of the covering Act, be paramount to any title dependent on a law of the State. The Commonwealth acquires the land and a statutory title to it under a law of the Commonwealth independently of any State law. But it does not follow that the Commonwealth Parliament is entitled to insist upon the State registration of its title to the land acquired unless upon compliance by the Commonwealth with the conditions imposed by State law. The provisions of the Real Property Act 1900 which stand in the way of the Commonwealth in this case in no way prevent or interfere with the acquisition by the Commonwealth of any land in New South Wales: they do no more than prescribe the conditions on which the State will permit the registration of title to land; and in our opinion the Commonwealth, if it desires to obtain registration of its title under the Real Property Act, must comply with the conditions imposed by that Act. As our brothers Isaacs and Rich said, in Commonwealth v. New South Wales [16] , "if it" (i.e., the Commonwealth) "seeks to obtain the registration provided by the statute, it must take it on the terms of the Act which it invokes". Gavan Duffy J. agreed with that view. Isaacs J. said [17] : On this occasion a much more radical question was propounded, namely, whether the Registrar-General, as a State officer acting under and by virtue of the State enactment - the Real Property Act, - could be called upon to register any devolutions of title other than those effected as that Act requires, that is, by State Crown grant in the first instance, and then by the various instruments prescribed by the statute as the Registrar's authority to register the new proprietorships. This question, in my opinion, so presented, admits of no doubt. The Commonwealth Parliament has, by s. 20 of the Lands Acquisition Act 1906, purported to require the State Registrar to register a copy of the Governor-General's notification as if it were a grant or conveyance or memorandum or instrument of transfer duly executed under the laws in force in the State. Section 64 also declared that the acquisition under s. 85 of the Constitution shall for the purposes of the Act be deemed an acquisition and vesting under the Act. But as to this there is not even a declaration that any document is to be regarded as a grant, &c., as in s. 20, and I take this provision to be one for compensation in accordance with the Constitution, s. 85. In any case s. 20 of the Act, purporting to require the State officer to treat the copy notification as a State instrument, is invalid. It is, of course, not pretended that, unless expressly authorized, the Commonwealth Parliament can directly repeal or amend State legislation. Where competent, either by concurrent or exclusive powers, Commonwealth Acts repugnant to any State law prevail (see Attorney-General (Ontario) v. Attorney-General for the Dominion [18] ). Section 20, however, is really an amendment of the Real Property Acts of the States, and is a command to a State official as such in the performance of his State functions to disregard the conditions of his statutory authority and to act in accordance with Commonwealth directions. Higgins J. dissented on this point. 1. (1923) 33 C.L.R. 1. 2. (1923) 33 C.L.R., at pp. 27-28. 3. (1918) 25 C.L.R. 325, at p. 340. 4. (1923) 33 C.L.R., at pp. 53-54. 5. [1896] A.C. 348.

That case did not directly involve any question as to the incidence of stamp duty on the documents which had been brought into existence or on those which, according to the decision, would be necessary to enable the Commonwealth's title to be registered under the Real Property Act.

In my opinion if the Commonwealth empowers the Family Court to order compulsory transfers of land registered under State systems of registered title, or for that matter, of land not brought under the Torrens system, then it must take each of those systems as they stand. The price of the advantage of having the rights and the protection accorded by registered title under State law is compliance with the requirements of that law, by the owners and transferees, whether married or single or divorced or the children of the married or divorced parents. In my opinion the present case is not distinguishable from that part of the Royal Metals Case which deals with the registration of the title of the Commonwealth in respect of lands compulsorily acquired from the States.

I would therefore answer the question in the Case Stated as follows: No, so far as it relates to stamp duties on transfers of land under the Transfer of Land Act 1958 Vict. executed pursuant to an order of the Family Court exercising jurisdiction under Pt VIII of the Family Law Act 1975, and fees payable on the registration thereof in accordance with the Twentieth Schedule of the Transfer of Land Act.