Parton v Milk Board

[1949] HCA 67

High Court of Australia|1949-07-01|Before: Williams JJ

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Court

High Court of Australia

Decision date

1949-07-01

Before

Williams JJ

Source

Original judgment source is linked above.

Judgment (64 paragraphs)

[1]

For the reasons which I have stated I am of opinion that the allegations in the statement of claim, if taken to be true, (as is proper upon demurrer), do not constitute a cause of action, and that therefore the demurrer should be allowed.

[2]

This is a demurrer to an action, the purpose of which is to obtain a declaration that s. 30 of the Milk Board Act 1933 as amended and certain regulations and determinations made thereunder and set out in the statement of claim with respect to the payment of contributions under this section and each of them are and is and have and has at all material times been invalid. Section 29 of the Act provides that the Minister shall cause the Board to prepare for every year an estimate of the probable expenditure for that year to be incurred in the administration of the Act and in carrying out the powers and duties of the Board thereunder. Section 30 (1) (a) of the Act provides that towards the expenditure so estimated there shall be contributed by (i) every dairyman (other than the owner of a milk shop) who sells or distributes milk in the metropolis; and (ii) every owner of a milk depot who sells or distributes milk to any person in the metropolis such sum as is determined by the Board in accordance with the regulations, but such sum shall not in the case of any such dairyman or owner exceed a sum equal to one-fourth of a penny per gallon for every gallon of milk so sold or distributed. The section provides that no contribution shall be made by these persons in respect of certain sales and distributions, that the contributions payable under the section shall be assessed and paid at such times and in such manner as may be prescribed by regulations, and that if any such sum is not paid as and when the sum becomes payable the amount thereof may be recovered in a Court of Petty Sessions as a civil debt recoverable summarily or in any court of competent jurisdiction by the Board. The regulations made under the Act and determinations of the Board complained of are set out in the statement of claim and in the judgment of the Chief Justice and we shall not repeat them. Their effect is to levy a contribution upon dairymen and owners of milk depots in one case of one-eighth of a penny and in the other of one-tenth of a penny per gallon for every gallon of milk sold or distributed by them in the metropolis during the period ending in the one case 30th June 1949 and in the other 30th June 1950. It is claimed that s. 30 and these regulations and determinations impose a duty of excise contrary to the provisions of s. 90 of the Constitution and that for this reason they are invalid.

[3]

The purpose of the levy is to contribute to the expenditure incurred in the administration of the Act and in carrying out the powers and duties of the Board thereunder. Mr. Sholl submitted in the first instance, and we agree, that the present legislation is indistinguishable in substance from the legislation passed on by this Court in Hartley v. Walsh [1] . In that case it was held by three members of the Court that the legislation did not impose such a duty. But we are unable to reconcile this decision with the later case of Matthews v. Chicory Marketing Board (Vict.) [2] . In that case the majority of the Court held that the legislation did impose such a duty. In this conflict of opinion we prefer to follow Matthews v. Chicory Marketing Board (Vict.) [2] . We do so because the charge in Hartley's Case [1] was considered by the Justices concerned to be of a similar nature to that in Crothers v. Sheil [3] . But the two charges were not, in our opinion, of the same nature because in Crothers v. Sheil [1] the Board acquired the property in the milk and then deducted certain charges from the proceeds of sale which were its property before distributing them amongst the dairy farmers in accordance with the Act. The fact that such proceeds are subject to deductions would not convert the scheme into one for taxation. This is made clear in the passage from the judgment of Rich J. in Crothers v. Sheil [1] cited by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [2] and from the judgment of Starke J. in Hopper v. Egg & Egg Pulp Marketing Board (Vict.) [3] , a similar case to Crothers v. Sheil [1] . The present levy is in the words of Latham C.J. in Matthews v. Chicory Marketing Board (Vict.) [4] "plainly a tax. It is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered." In the same case [5] , Rich J. said: "As to the fact that it (the tax) is to be applied to meet the expenses of a marketing scheme and for purposes connected with chicory growing, the statute treats these as public purposes to be undertaken by a public body in the public interest. If the State authorizes a levy upon a commodity which in other respects is an excise, I think it is difficult to see how the purpose for which the money is obtained can affect the question whether it comes within an excise."

[5]

In our opinion the present levy must, like the levy there discussed, be an excise unless Mr. Sholl's alternative submission is correct that the contributions are not imposed in respect of or in relation to the production or manufacture of milk, or even in respect of or in relation to the first sale after production, and no imposition is a duty of excise within s. 90 of the Constitution unless it is so imposed. In connection with this submission Mr. Sholl supplied the Court with a valuable list of extracts from the judgments of this Court on the meaning of such duties of excise in Peterswald v. Bartley [6] ; R. v. Barger [7] ; Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [8] ; John Fairfax & Sons Ltd. v. New South Wales [9] and the cases which we have already mentioned. The lack of unanimity in these judgments indicates the difficulty of the problem. The views there expressed must, of course, be read in the light of the facts of each particular case, and there is not, in our opinion, any decision of this Court that a levy is only a duty of excise within the meaning of s. 90 of the Constitution if it is imposed in respect of the production or manufacture of goods or in respect of the first sale of such goods by the producer or manufacturer. In Peterswald v. Bartley [1] Griffith C.J. for the Court said that excise in s. 90 is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured and not in the sense of a direct tax or personal tax. At [2] he said that the term "duties of excise" as used in the Constitution is limited to taxes on goods in process of manufacture. If the latter statement is accepted literally, a levy on the first sale of goods produced or manufactured in Australia is not an excise duty. But it has been decided that such a levy is an excise: Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [3] ; John Fairfax & Sons Ltd. v. New South Wales [4] . It is submitted this is because the first sale of the goods is usually a sale by the producer or manufacturer, so that such a tax is in effect a tax on their production or manufacture. But we can see no reason why a levy should not be a duty of excise within the meaning of s. 90 of the Constitution although it is imposed at some subsequent stage. It must be imposed so as to be a method of taxing the production or manufacture of goods, but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer. As Higgins J. said in Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [3] , "it matters not whether the duty is imposed at the moment of the actual sale or not, or sale and delivery, or consumption." Then there is the definition of excise duties cited by Rich J. in John Fairfax & Sons Ltd. v. New South Wales [5] , "an inland imposition, and one imposed sometimes on the manufacturer or dealer, sometimes on the commodity itself or the retail sale."

[10]

It begins by establishing as a body corporate a Milk Board consisting of a chairman and two members. The Board is entrusted with wide powers for the control of the trade by which Melbourne and its suburbs are supplied with milk. But the Acts also contain provisions directly regulating the trade. The legislation provides for the distinct parts played by the dairy farmers who produce milk, the milk depots which obtain it and mix or treat it and the dairy where milk is kept for sale or dairy produce is prepared for sale and whence milk is distributed in the metropolis. There is one particular kind of dairy, the milk shop, which is registered as a shop, licensed as a dairy and sells milk only for delivery at the premises. For some purposes it is dealt with specially. "Dairyman" and "metropolitan milk distributor" are equivalent terms. Milk for sale or distribution in the metropolis must be purchased by the dairyman either from a dairy farm, a milk depot or another dairyman. Milk depots must keep records of the milk purchased from a dairy farm and must not mix it with milk received for purposes of manufacture. Milk purchased for sale or distributed in the metropolis whether from dairy farms, milk depots or by one dairyman from another can be purchased only under and in accordance with contracts the Board has approved. Both the dairyman and the owner of the dairy farm must make returns to the Board of what they buy and sell and their records may be examined by officers of the Board. The minimum price to be paid for milk to owners of dairy farms and to milk depots is fixed by the Board and also the maximum price at which milk may be sold by retail. The Board may specify the dairies from which milk may be distributed by retail in the metropolis. It may specify dairies which are to be restricted to selling milk for delivery at the dairy premises. When a dairy is not specified as one from which milk may be so sold by retail and when a dairy is restricted to sale "over the counter" it may be compensated. The Board assesses the compensation. A licensed dairy may not be transferred without the approval of the Board and without that approval no new licence may be granted. Annually the maximum quantity of milk to be forwarded by a milk depot to the metropolis in the ensuing year may be fixed by the Board. Another duty of the Board is to license carriers who transport milk by road to the metropolis or to railheads for consignment to the metropolis. It has wide powers, and indeed duties, of inquiry. The extensive field covered by its functions necessarily means a great deal of administration. To the ordinary expenses of administration are added the liability to pay compensation and an authority to expend money on promoting and encouraging by advertisement or otherwise the consumption of milk. The Milk Board Fund is established by the statutes as the fund from which the Board will meet its expenditure. Out of the fund there is to be paid what it expends in promoting the consumption of milk, the compensation and the costs of assessing it, and all costs and expenses of administration. Any advance the Treasurer makes to the Fund is to be repaid thereout. Lastly the Governor in Council may fix annual contributions from the Fund towards recouping expenditure incurred (sc. by the Treasury) under the Milk and Dairy Supervision Acts in improving the quality of milk for consumption in the metropolis.

[11]

The fund is fed by contributions exacted under s. 30 of the Milk Board Act as amended. Section 29 directs the Board to prepare for every year an estimate of the probable expenditure of the year in administering the Acts and carrying out the duties of the Board. It must not exceed a limit fixed by the Minister and it must obtain the approval of the Governor in Council. The method of raising the money is then dealt with by s. 30, the material sub-sections of which are as follows: - "30. (1) (a) Towards the expenditure so estimated there shall be contributed by - (i) every dairyman (other than the owner of a milk shop) who sells or distributes milk in the metropolis; and (ii) every owner of a milk depot who sells or distributes milk to any person in the metropolis - such sum as is determined by the Board in accordance with the regulations but such sum shall not exceed a sum equal to one-quarter of a penny per gallon for every gallon of milk so sold or distributed. (b) Notwithstanding anything in the last preceding paragraph no contribution shall be payable by - (i) any dairyman (other than the owner of a milk shop) in respect of milk sold or distributed to another dairyman; (ii) any owner of a milk depot in respect of milk sold or distributed to a dairyman (other than the owner of a milk shop); or to any person for use in the manufacture of any prescribed article or commodity to be sold by such person by wholesale; (iii) any person in respect of milk sold or distributed to such charitable institutions as are prescribed by the regulations. (2) The contributions payable under this section shall be assessed and be paid at such times and in such manner as may be prescribed by regulations. (3) If any such sum is not paid as and when the same becomes payable the amount thereof may be recovered in a court of petty sessions as a civil debt recoverable summarily or in any court of competent jurisdiction by the Board; and if such sum is not so paid the licence of the dairyman or of the owner of the milk depot (as the case may be) may be cancelled by the Minister and shall thereupon cease to have any further force or effect." It should be noticed that the owner of a milk shop is specifically excluded from liability to make a contribution. Why it is important that this should be noticed is that it forms the foundation of the contention that the contribution has been levied on too wide a class. The regulation by which it is levied is said to be bad because it ignores the exception. It will be seen that it is left to the Board in accordance with regulations to determine the sum to be contributed. The Governor in Council is given a regulation-making power. It is expressed to extend to making regulations for or with respect to contributions payable under the Act by dairymen other than the owners of milk shops and by owners of milk depots. It will further be seen that a limitation is placed upon the sum to be exacted of a farthing a gallon. The limitation suggests that the contribution is to be at a rate per gallon or is to be measured by the quantity sold. All three exclusions made by par. (b) of sub-s. (1) are based on this assumption and they would not be workable unless the levy was calculated upon the amount of milk sold or distributed. For the exclusions are "in respect of milk sold or distributed" to the particular class of customer specified by the sub-paragraphs. But the actual words "such sum as is determined by the Board" occurring in par. (a) of sub-s. (1) do not expressly relate the sum to the quantity sold or restrict it to a rate per gallon. It is significant however that neither these words nor the limitation which follows limiting the levy to a farthing per gallon refer to a period of time. It is true that the budget under s. 29 is of course for a year and the rate of contribution must be determined every year. But the provision reads as if it contemplated only a contribution according to quantity, such as a rate per gallon, so that there was no need to calculate the amount per month or per annum. It would be impossible to discover whether a contribution of a sum fixed in any other manner exceeded the farthing a gallon unless the contribution was fixed according to an interval of time and over the same time the quantity of milk sold was taken and the amount at a farthing per gallon was reckoned in order to ascertain whether the limit had been exceeded. I do not think that the section authorizes the levying of a contribution otherwise than according to the quantity of milk sold or distributed.

[12]

The existing general regulations under the Milk Board Acts were made on 25th March 1947. Clause 6 is as follows: - " Contributions - Any determination by the Board under or pursuant to s. 30 of the Milk Board Acts shall be made at a meeting of the Board called for that purpose. In arriving at a determination the Board shall have regard to the probable revenue for the year based on the estimated quantity of milk to be sold or distributed in the metropolis. The contributions payable under and pursuant to s. 30 of the Milk Board Act 1933 as amended by the Milk Board Act 1936 and any determination made thereunder shall be assessed on the quantity of milk sold or distributed in the metropolis during each month by every dairyman and owner of a milk depot liable to pay such contributions and every such dairyman or owner of a milk depot shall pay to the Milk Board by the twenty-first day of each month the contributions payable by him in respect of the milk so sold or distributed during the preceding month." Two determinations of the Board in purported pursuance of this clause are involved in the demurrer, one adopting a rate of an eighth of a penny a gallon the other of one-tenth of a penny. These determinations, as they are alleged in the pleading, determined that the sum to be contributed by every dairyman who sold or distributed milk in the metropolis until the end of the year for which the determination was made should be in the one case one-eighth and the other one-tenth of a penny per gallon. No mention was made of a dairyman who was an owner of a milk shop. The pleading does not state that owners of milk depots were included in the determination as I think that s. 30 (1) (a) requires. The validity of the imposition was not attacked on this ground and I imagine the pleader omitted the words as immaterial. The Governor in Council made a regulation in each case to give effect to the determination. Again the owner of a milk shop was not expressly excepted. But owners of milk depots are included. Each of the two regulations required that the dairyman and owner of a milk depot should "under and pursuant to s. 30 of the Milk Board Act 1933 as amended by the Milk Board Act 1936 and the Milk Board Act 1939 and (pursuant) to a determination made thereunder by the Milk Board contribute in accordance with the Regulations made under the Milk Board Acts the sum of" &c.