Sydney Municipal Council v Commonwealth [1904] HCA 50;

Sydney Municipal Council v Commonwealth [1904] HCA 50; - HCA 1904 case summary — Zoe

In this action the Municipal Council of Sydney claims to recover from the Commonwealth municipal rates in respect of land situate within the City of Sydney, and occupied by the defendants for the purposes of the Departments of Customs, Posts and Telegraphs, and Defence, the land having become vested in the defendants by virtue of sec. 85 (1) of the Constitution upon the transfer of those departments to the Commonwealth. The defendants claim that the rates in question, which were made since the date of transfer, are within the prohibition of sec. 114, which provides that "a State shall not without the consent of the Parliament of the Commonwealth ... impose any tax on property of any kind belonging to the Commonwealth." For the plaintiffs it is contended, first, that a municipal rate is not a tax within the meaning of sec. 114, and, secondly, that, if it is, the provisions of the Sydney Corporation Act 1879 , by which (sec. 103, re-enacted as sec. 110 of the Sydney Corporation Act 1902 ) (1902 No. 35) Crown lands were expressly declared to be liable to rates, were continued in force by sec. 108 of the Constitution until the Parliament of the Commonwealth should think fit to legislate in a contrary sense, when, it is said, the provisions of sec. 109 of the Constitution would come into operation, and the State law, being inconsistent with the Federal law, would cease to have effect. No such Federal law has yet been passed. A subsidiary contention was that, in determining whether the rate, assuming it to be a tax within the meaning of sec. 114, was valid or not, regard should be had to the date of the passing of the New South Wales Statute, and not to the dates when the particular rates in question were made, and that, therefore, the rates for 1901 and 1902, made under the Act of 1879, which was passed before the establishment of the Commonwealth, were valid, even if those made under the Act of 1902 were invalid, which, however, was not conceded. There can be no doubt that the right of taxation is a right of sovereignty. It may be exercised upon all persons, and in respect of all property, within the jurisdiction of the sovereign power which exercises it. Municipal taxation springs from this sovereign right, and is an exercise of it by delegation to the municipality. No other origin for it can be suggested. It follows that if the authority which assumes to create such a delegation does not itself possess the power, the delegation is void, since the spring cannot rise higher than its source. A municipal corporation, therefore, cannot have any greater power to impose taxation than the State by which it is created, and by which its own powers are conferred. It is true that the word "tax" is sometimes used in the limited sense of an enforced levy for the purposes of the general government, but, if a State itself has no power to make such a levy, it cannot confer the power under another name. In a constitutional instrument, therefore, defining and limiting the power of constitutional authorities, the word "tax" must be construed in the wider sense, and a prohibition of the imposition of a tax must be held to include a prohibition of any such imposition by a delegated authority, by whatever name the tax is called. The Sydney Corporation Act does not, of itself, purport to impose rates, but merely requires the Municipal Council to make an annual assessment of the values of land within the municipality, and to make an annual rate of such amount as they think proper, within prescribed limits. The grant of the power, which is the act of the State, and the exercise of the power, which is the act of the corporation, are essentially different. The Statute operates as a delegation of the taxing power of the State, coupled with a direction when and how to use it. The assessment of land and the striking of a rate together operate as municipal legislation in exercise of the power. It is clear, therefore, that under this Act the imposition of a rate is the act of the corporation, and not of the State, and that the tax is imposed from time to time when the rate for the year is made. It follows that the prohibition of sec. 114, if applicable, applies to the rate for every year in which it is sought to levy it.

[16]

It is argued, however, that a general rate imposed under the Sydney Corporation Act of 1879 , consolidated in the Act of 1902, is not a tax within the meaning of sec. 114. That contention has been fully disposed of by the Chief Justice. It is further contended that the State Act is protected by sec. 108 of the Constitution . As a municipal rates Act does not "relate to any matter within the powers of the Parliament of the Commonwealth," sec. 108 can hardly apply. But, independently of sec. 108, the State Act is valid and uninterfered with by the Constitution in respect of all the subject-matter to which it can properly apply. Is this property part of the subject-matter? When lands are by the operation of the Constitution taken from a State and vested in the Commonwealth they are, with the department which uses them, transferred from State to Commonwealth, from the one government to the other. They may still be called lands of the Crown, but the sense in which they are Crown lands is not the same. If this were otherwise, it would have been absurd to provide, as the Constitution does in sec. 85 (iii.), that "the Commonwealth shall compensate the State for the value of any property passing to it under this section," and that "if no agreement can be made as to the mode of compensation, it shall be determined under laws to be made by the Parliament." One can understand the Commonwealth compensating the State, or agreeing with it as to the mode of compensation. But compensation made by the Crown to the Crown, or an agreement made by the Crown with itself, is in either case an operation which baffles comprehension. Similarly if the argument for the plaintiff corporation were followed, sec. 85 (iv.) would become meaningless, for how can the Crown relieve the Crown by assuming its own current obligations? And many other provisions of the Constitution would in like manner lose all sense and meaning. I am of opinion, therefore, that, upon the properties in question becoming vested in the Commonwealth, they ceased to be part of the subject-matter of the Corporation Act , and so ceased to be rateable under that Act as lands of the Crown, and that the Act did not and could not subject them as lands of the Commonwealth to the liability which it could and did place upon them when they were lands of the State.

[17]

But the argument on the part of the plaintiffs goes to the length that the Corporation Act of 1879 operated on those properties because it was passed in the exercise of a power which existed before Federation, and was preserved by sec. 107, and that the Consolidation Act of 1902 , similarly operates as a renewed exercise of the same power. Now as no power to tax property of the Commonwealth existed before Federation, it is hard to see how any such power "continues" within the meaning of sec. 107, which was framed for the purpose of ensuring that certain powers should be kept alive, not for the purpose of creating new ones. So that I do not see how sec. 107 helps the plaintiff corporation. Indeed I fail to perceive how any of the arguments as to the "continuance" of powers and of laws under secs. 107 and 108 can avail to establish the claim for these rates, for I agree in thinking that it is not the Corporation Act itself which imposes the rate, i.e., the tax. The Act gives power to impose it, and directs an annual assessment and rate. It is not until a property has been included in an assessment, and a rate has been struck, that the rate can be held to be imposed on that property. The assessments and rates, i.e., taxes, with which the Court is now concerned, relate to periods following the 1st January, 1901, when the people of these States became united in a Federation. The taxes, therefore, which are claimed in this case, were "imposed" after Federation, and even if we concede the plaintiff's contention that sec. 114 was intended to prohibit only that taxation which at the date of Federation was in the future, these taxes come within the express prohibition, and are quite unentitled to any protection under sec. 107 or sec. 108, while it seems to me, for the reason given by the Chief Justice, that the condition of obtaining the consent of the Parliament of the Commonwealth has in no way been performed. Holding the view that the "imposition" of taxation with which we are at present concerned has taken place since Federation, I consider also that, apart from the express prohibition of sec. 114, the arguments of Marshall, C.J., in McCulloch v. Maryland , could if necessary be urged with much force in this case. At any rate, I venture for myself to adopt the statement and the reason of Field, J., in the passage cited at the outset of my opinion. I wish to avoid any implication which might be drawn from my silence that I agree with Mr. Wise's argument that the maxim "expressio unius est exclusio alterius" can be so applied to sec. 114 as to defeat the operation of what are called the implied powers of the federation. Such admission would be disastrous to the very existence of this Commonwealth, and is the last intention of all to be imputed to its framers. Most of its expressed power would at once become subject to swift destruction or gradual attrition within the several States in proportion to the extent to which a judicial license to invade the sphere of the general government might be acted on, with motives however laudable, under cover of State legislation. In my view the prohibition in sec. 114 was for greater emphasis and for unmistakeable clearness, and was in no sense inserted for the purpose of stifling the reasonable and obvious inference that the grants of power to the general government carried with them every right necessary to their preservation and defence - rights not to be mistaken for any authority to usurp or destroy.

[18]

Here I am led, before concluding, to refer to a suggestion which came from the Attorney-General for New South Wales in the course of his able argument. He rather disputed the applicability, in point of reason, to our circumstances, of some of the opinions of American jurists on questions of the interpretation of constitutional enactments. He pointed out that in some judgments reference was made to the possible consequences of decisions which would give license to invasions of the sphere of the Federal Government, the consequences of which might amount to the dissolution of the American Union. He inferred that the judgments of the time were given in fear that contrary decisions might bring about that result, with its dreaded attendant, in the shape of civil war. Attentive perusal of these great deliverances will dispel the notion that consequences which were pointed out as possible, were the impelling reasons of their utterance. In discussing questions of the relative powers of the Union and the State, the exposition of their Constitution by American jurists, whether in their judgments or their commentaries, has always been founded on those principles of construction which have been equally adopted as guides by British lawyers. This truth cannot be better stated than as Professor Dicey puts it in the introduction of his Law of the Constitution , 5th ed., at p. 5: "The American lawyer has to ascertain the meaning of the Articles of the Constitution in the same way in which he tries to elicit the meaning of any other enactment. He must be guided by the rules of grammar, by his knowledge of the common law, by the light (occasionally) thrown on American legislation by American history, and the conclusions to be derived from a careful study of judicial decisions. The task, in short, which lay before the great American commentators, was the explanation of a definite legal document in accordance with the received canons of legal interpretation. Their work, difficult as it might prove, was work of the kind to which lawyers are accustomed, and could be achieved by the use of ordinary legal methods." None of us will dispute the weight of these words. Justly applied as they are to the work of a Story or a Kent, they are no less striking in their application to the even greater labours of a Marshall.

At a glance

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Decision date

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Judgment (32 paragraphs)

Sydney Municipal Council v Commonwealth [1904] HCA 50; (1904) 1 CLR 208 (26 April 1904)

Parties

Legislation Cited (2)

Cases Cited (1)