'Mutual Pools Murual Pools 'Mutual Pools v Suburbs Gen- 'Austen 'Nedlicr

'Mutual Pools Murual Pools 'Mutual Pools v Suburbs Gen- 'Austen 'Nedlicr - [1911] HCA 19 - HCA 1911 case summary — Zoe

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first part of sec. 55, and the penalty is that the provisions deali with the other subject matter shall be void, and it eannot hi been intended that in dealing with the former position, whiel presents the lesser offence, the penalty should be more sever namely, the invalidity of the whole Act. [They referred | Howard v. Bodington (1)]. Even if such an Act is rendere invalid, there is no inclusion of more than one subject of taxati in the Land Yaa Act, which is the Act that imposes taxatio Without sec. 2 that Act would have imposed a tax on the owne! ship of land, but there might be some difficulty in carrying out, but with sec. 2 it is to have operation when something come into existence which will make it quite plain, namely, the Lane Tax Assessment Act. Even if the latter Act is to be read witl the Land Taw Act, the whole is an attempt to impose a land and no other tax. But the Lund Tax Act is the Act which imposes the land tax, and the Land Tux Assessment Act provide: the machinery for carrying the former Act into effect and tains nothing which makes it a law imposing taxation. Secs. to 29 follow out sec. 14(b). The word "land" in them me: an interest in land: Acts Interpretation Act 1901, see. 22. Sec 26 provides for the taxation of persons having certain intere: in Crown lands, and sec. 29 makes provision exempting certai leasehold estates which would be inconsistent with sec. 26 for the exception in it. The effect of sec. 56 as applied to sees. 26 to 29 is to make the tax a first charge on the interest of the person sought to be taxed. Those secs. do not purport to tax, Jand of the Crown. Even if they did they are severabl the rest of the Act. Sec. 30 is clearly severable, and, in addi isa proper exercise of the power to impose a land tax, bei ancillary to that power. Although the divisions of interests in Jand may be different in different States, the Commonweall Parliament may make its own estimate of who are interested in land apart altogether from the laws of the different States. See. 37 is an attempt to tax the owner of land where there has bee! asale. As to secs. 39 and 41, it is essential in imposing taxation to see that no change of appearance shall have the effect o: destroying a man's real interest in land. A shareholder of a (1) 2P.D., 203. 4

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taxation is necessarily a law imposing taxation. But that is n so. The terms are not synonymous. An Act imposing taxatio may, like the English annual Finance Acts, both impose taxes and contain a complete scheme for their collection. Or the Act may impose taxation ¢0 nomine, leaving its collection to b regulated by other laws. Now, Act 22, when examined, does not on its face purport to impose taxation at all. Sec. 10, which is : the foundation of the whole structure, provides that - (1) Subject to the provisions of this Act, land tax shall be levied and | paid upon the unimproved value of all lands within the Common. wealth which are owned by taxpayers, and which are not exempt from taxation under this Act." The term "land tax" is define in sec. 3 as meaning "the land tax imposed as such by any Act, as assessed under this Act." Now if you substitute the words given in the interpretation clause for the words, "land tax" sec. 10, you get this: - " Land tax imposed as such by any Ac shall be levied and paid" &c. The Act then goes on to mak provision for assessing and levying the tax, which it assumes to have been imposed by another Act. That, however, does no' dispose of the objection, for, if Act No. 22 itself deals with m than one subject of taxation, though under a single name, 21 by incorporating it is guilty of the same offence and obnoxious to sec. 55 of the Constitution. So that point must examined. On the question whether a transgression of the provisions of - the second paragraph of that section is fatal to the validity of the Act, I would remark that the change of language im sec. 55 from that in secs. 53 and 54 primarily imports a change of - intention. Sees. 53 and 54 deal with "proposed laws" - that is, Bills or projects of law still under consideration and not assented to - and they lay down rules to be observed with respect to proposed laws at that stage. Whatever obligations are im by these sections are directed to the Houses of Parliament whi conduct of their internal affairs is not subject to review by Court of law. See. 55, on the other hand, deals with pl posals which have received the Royal assent, and which can reviewed by Courts of law, if they offend against constitutio provisions. I should hestitate very much before holding that

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per: In re Bridgewater Navigation Co. Ltd. (1), were referred to : - " Every person who becomes a member of a company lim: by shares of equal amount becomes entitled to a proportionat part in the capital of the company, and, unless it be otherwii provided by the regulations of the company, entitled, as_ necessary consequence, to the same proportionate part in all th property of the company, including its uncalled capital." learned Lord in that case was speaking of the rights of members of a compauy when all its objects are completed and it is simply a question of distributing its assets, but as a proposition of law it - cannot be assailed. The contention is that this is an erroneous view, and that members have in the eyes of the law no interest in the land. If the case is considered apart from the positive lay relating to the juridical relations inter se of joint stock com- - panies and their members, the assumption is in accordance witl the actual facts. It is true that members have no legal estate im the land, but why should not Parliament act on the basis of their substantial beneficial interest in the land? The only ground fi saying that Parliament cannot do so is that it is extra vires interfering with a matter pertaining exclusively to the State: Reduced to its naked form the objection is that Parliament has attempted to make persons who are not owners of land liable pay land tax in respect of it. Suppose they have. The subject of - taxation is still land, but an attempt is made to make person: pay tax in respect of it who have no connection with the land. It is, therefore, not necessary to express any opinion as to the © validity of the provision, which is an attempt to make persons liable to land tax who are not formally the legal owners of © land, but I do not encourage anyone to act upon the assumption - that it is invalid. I will deal next with sec. 41, which provides that : - * Land owned by a Mutual Life Assurance Society (not being land of which the society is mortgagee in possession, or which the society

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a method to be prescribed." Reference is made implicitly to secs. 33 and 62. Sec. 33 provides that : - " Any person in whom land is vested asa trustee shall be assessed and liable in respect of land tax as if he were beneficially entitled to the land: "Provided that where he is the owner of different lands in severalty, in trust for different beneficial owners who are not for any reason liable to be jointly assessed, the tax so payable by him shall be separately assessed in respect of each of those lands," &, The result of that is that each policy holder is deemed to be the holder of a separate piece of land of a value proportionate to the surrender value of his policy, and that the society is to be deemed to be a trustee for him of that piece of land in severalty. It follows that if the land is taxable as property of the policy holder, that is, if the value is such that, with or without other land of which he is the owner, it is liable to the tax, the society is responsible for the tax, but in one event only, namely, if it has property of the policy holder in its hands and disposes of it without providing for the tax, but not otherwise. That is the effect of see. 62 (f). If for any reason the land is not taxable as property of the policy holder, no question arises. If it is, he must pay the tax. The general funds of the society are not liable in respect of the tax except by way of penalty. Whether the policy holders can be made liable in this way is substantially the same question as that which I have discussed under sec. 39 and must be resolved in the same way. It may be that the pro- vision may be ineffectual to reach the policy holders or some of them, for instance, holders of non-participating policies, but in any view the subject matter of taxation is land and nothing else. Secs. 36 and 40, the other sections relied upon, raise substan- tially the same question. Sec. 36 provides that if a husband transfers land to his wife or a wife to her husband, in certain events they are to be deemed to be joint owners of the whole of the land owned by either. Sec. 40 provides that two or more companies which consist substantially of the same shareholders are to be deemed to be a single company and shall be assessed and liable accordingly, and that two companies are to be deemed to consist of substantially the same shareholders if not less than three-fourths of the paid up capital of each is held by or on behalf

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and it must fail unless it can be supported as an exercise of some - other law-making power. If it is really an attempt to exercisea power reserved exclusively to each State, such, for instance, as _ the control of its lands, its domestic trade or its industrial affairs, then it is not a law at all, decked though it may be in the garb - of a tax; for styling an Act a tax does not make it one, if the substance shows it to be something else. That this matter of - clear sense is the law of the Constitution was declared by the case of The King v. Barger (1). The Judicial Committee of the Privy Council had already applied the same principle in the - Canadian case of Attorney-General for Quebec v. Queen Insur- - ance Co. (2). The plaintiff relies mainly on these decisions to - support his contention that what is intended is not in substan taxation. But he must show that the terms of the legislation - entitle him to rely on them. This, I think, he has not done. A law must be construed by its terms, and by these alone. is only when it plainly appears from them, of course including any - clear inference from them, to be in substance an attempt to deal with a matter outside the ambit of the power conferred that the Court is entitled to declare it invalid on that ground. Conceding this, the argument for the plaintiff is that it is apparent on thi face of the Acts that the object is to exercise powers reserved to the States. One proof of this, he says, is that the land tax is and is designated a "progressive" one - that is, a graduated one; since the increase of the sum payable is not merely in proportion to the value assessed but by grades of rate progressing with grades of value. This, he says, indicates that the object is, in effect, to make the burden of large estates intolerable to the holder, and thus "to prevent persons resident in the Common- wealth from holding and owning large areas of land." The - plaintiff further argues that the exemption from taxation of land of an unimproved value of £5,000 when owned by a resident of Australia, an exemption not granted where the land is owned by i an absentee, not only goes to emphasize the purpose stated, b to show that the legislation is also designed to prevent land- holders from residing out of Australia or to prevent others than - residents from owning lands within the Commonwealth. Now,

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this legislation has nothing in its terms which dictates who shall hold land and who shall not, or how much land any person shall hold. Assuming that the taxation which it imposes is drastic, as it is alleged to be, still it is not the function of the Court to say that drastic taxation on landed interests will prevent residents from owning large areas, or prevent landholders from residing out of Australia, or prevent absentees from holding land within the Commonwealth. Nor is it our function to say what degree of inducement to abstain from doing these things amounts to a prevention of the doing of them. The alleged objects are not to be collected from the terms of this legislation. Even assuming that such designs existed, they would not alter the construction of an Act or make it less an exercise of the taxing power. They may be the motive or even the ultimate object. We have not to do with either of these things. The arguments, in effect, predict, certain results as consequences of the oppressive operation of the tax. These predictions are not for us to examine, because they are not relevant to the question of lawful authority. Conceding, for example, that in some cases a heavy tax may when administered operate, by the pressure of its severity, to destroy an industry which a State alone has power to control, or to force holders of large landed estates to sell them, or to remain in this country when they would rather live elsewhere, these are questions of the policy or wisdom of the tax, and belong to the people, directly or through their representatives, and not to the Court. And this is true even if the tax is so heavy and so carefully adjusted as to appear intended to produce the results foreboded. Questions of the abuse of power are for the people and Parliament. We can only determine whether the power exists, and if so, whether Parliament has in fact and in substance acted within it. It is of the essence of the taxing power that when exercised to the full it may destroy the interest or the industry taxed. But even so, interference would involve the Court in the political function of deciding in what degree Parliament is justified in using a power on the exercise of which the Constitution itself places no limit. As was said by the majority of this Court in The King v. Barger (1): - "The (1) 6C.LR., 41, at p. 67.

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In inquiring whether a law imposes taxation within the mean- ing of sec. 55, each Act must be judged separately. No doubt, in making such an inquiry we must read each Act in accord- ance with its legal operation, that is, in connection with existing laws. But it does not follow that every section of an existing Act (so read with the Act under inquiry) is to be regarded as part of it for the purposes of sec. 55. The distinction drawn in that section between "imposing taxation" and "dealing with one subject of taxation" must be always kept in view. The object of sec. 55 of the Constitution is to secure that each enactment imposing taxation shall be framed in a certain form. The frame of the enactment is important only for reasons of parliamentary procedure. The section is in the middle of a group of sections dealing with the legislative powers of the Senate and House of Representatives, and with the Governor's assent to proposed laws, their reservation and disallowance. Every section of the group relating to parliamentary procedure is directed to preserving the privileges of the House of Repre- sentatives with respect to appropriating moneys and imposing taxation, and to safeguarding the Senate from abuse of those privileges by the House of Representatives. To that end it provides that proposed laws which the Senate are forbidden to amend shall be framed in the manner prescribed. This Court can have no cognizance of proposed laws, nor can it in any way interfere in questions of parliamentary procedure. Its jurisdic- tion arises only when the proposed law becomes a law. In enacting sec. 55, the framers of the Constitution have given the Court jurisdiction to examine the frame of a law, obviously with the object of giving a sanction to the directions of the Constitution for the framing of legislation dealing with taxa- tion and the appropriation of money in accordance with the provisions of sec, 53 and the sections immediately following. From no other point of view can the form in which an Act is

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framed be of any moment. Sec. 55 may therefore be appli to each piece of legislation as it becomes law, just as © House would apply the provisions of secs. 53 and 54 of Constitution to proposed laws as they came before them. I diately a proposed law becomes a law, it is subject to examin ation in the light of see. 55. If it-is framed in accordance with that section, it is valid, and cannot afterwards be made to con- travene it by the operation of subsequent legislation. Judg separately on these principles neither the Tax Act nor Assessment Act is open to the objections taken. The former, which is a law imposing taxation, clearly deals with one sul of taxation only - that is. land - the latter, though dealing wit taxation, does not, as I have pointed out, impose taxation, is therefore not within the section. Considering both Acts | gether, to ascertain the intention of the legislature, it is qui clear that Parliament intended to impose taxation by the Act and not by the Assessment Act, and that it framed the lat expressly in the form which did not impose taxation so thi might be open to amendment by the Senate. Assume, how that the Acts may be read together, as the plaintiff contends, that the Assessment Act is a law imposing taxation, the objection must still fail on another ground, namely, that in none of : provisions does the Act deal with any other subject of taxati than land. I propose to refer only to the sections on which Mitchell principally relied. It was contended that, in fixing # special rate on absentees, a new subject of taxation was inti duced. It is however quite clear that, when the provisions of 1) Act referring to assessing the lands of absentees are examin land is the only subject of the tax. The fact of absence fr Australia places a taxpayer in a separate class from taxpay: resident in Australia. In respect of the former class the taxal amount begins earlier and the rate is heavier, but the subj of taxation is still the taxpayer's land. As to sec. 30, it is pl that one subject of taxation only is dealt with. The poli r the Act is to place liability directly on the owner. The secti is directed to preventing that liability from being transferred the lessee. The same answer may be made to a similar ebjection raised to sec. 32. I was at first disposed to think that there w:

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something in Mr. Mitchell's contention that in sec. 39 the subject of taxation was shares, not land. But an examination of the section makes it clear that it is the shareholder's interest in the Jand of the company, not his shares in the company, which is the subject of taxation. ' Technically, no doubt, the holder of shares in a company has no interest in the lands of the company. But, looking at the substance of the matter, every owner of a share is interested in the land of a company proportionately to the number of his shares, just as a partner is interested in the lands of a partner- ship. The legislature, disregarding the provisions of company law, imposes the tax according to the real interest of the share- holder taking the number of his shares as the measure of his interest. It may be that the section is open to objection on the ground that it is not a valid exercise of the power of taxation. But whether the legislature could or could not carry out its intention validly, it is quite clear, from the language of the section, that it intended to tax land and nothing else. Similarly, on reading secs. 40, 41 and the other sections to which Mr. Mitchell directed his arguments, it is apparent on the face of them, whatever objections may be raised to them on other grounds, that the only subject of taxation with which they deal is land. That, indeed, may be said of all the sections against which this objection has been urged. After a careful examination of their provisions, I am of opinion that none of them are open to the criticism that they deal with subjects of taxation other than land. . For these reasons, therefore, 1 am of opinion that the Acts under consideration, whether taken separately or together, deal with no subject of taxation other than land, and therefore do not contravene the directions of sec. 55 of the Constitution. Holding that view, it is unnecessary to consider the very important question, raised during the argument, as to whether an Act contravening the provisions of sec. 55 of the Constitution was thereby rendered absolutely void. Upon that section I reserve my opinion until an occasion arises when it becomes necessary to determine the matter.

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Dominion revenue, with' trades licensed under Dominion law, indirectly at least with business operations beyond the limits the Province. This decision is very much to the point because Canada the residual power is in the Dominion, and yet 1] provincial Act was held valid. The same principle obtains America. The words of Chief Justice Fuller in In re Kollock are : - " The Act before us is on its face an Act for levying tax and although it may operate in so doing to prevent deception in the sale of oleomargarine as and for butter, its primary obj tb must be assumed to be the raising of revenue." The Act there was avowedly passed for the purpose of pi venting public deception in the sale of the article, but as imposed a tax for the purpose, the Court was bound by what #] legislature did, and was not entitled to regard the purpose of tl legislative action. This ruling in Kollock's Case (2) was followed and re-affirmed in McCray's Cuse (8). And still more recently, 1908, the present Chief Justice of tl United States in Hammond Packing Co. v. Arkansas (4), sp ing of a State Statute impeached on the ground of its purpose, said : "the mere incident or purpose for which the law! power was exerted affords no ground to deny its existence." In my opinion, therefore, the Court is entitled only to a the ordinary principles of construction to a legislative Act, after thus ascertaining its true legal effect, is bound to say, irrespective altogether of any collateral purpose, whether it fall within or beyond the scope of the asserted power. For tl : Court to go further as it has been invited to do would be to s itself up as a censor of Parliament, and not the interpreter of the law. Then another reason was advanced also for total invalidit) The Acts, it is said, have dealt with more than one subject of taxation, in violation of the second part of sec. 55 of the Constitution. The strongest provisions in favour of this conten: tion are contained in secs, 39 and 41 of the Assessment Act No. 22.

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