Dennis Hotels Pty Ltd v Victoria
[1960] HCA 10104 CLR 529
(Decision by: Fullagar J)
Dennis Hotels Pty Ltd
vVictoria
Judges:
Dixon CJ
McTiernan J
Fullagar JKitto J
Taylor J
Menzies J
Windeyer J
Subject References:
Constitutional Law (Cth)
Duties of excise
Exclusive power of Commonwealth Parliament
Victualler's licence fee imposed under State law
Fee equal to six per cent of gross amount paid or payable for all liquor purchased for the licensed premises during the twelve months preceding application for renewal of licence
Temporary victualler's licence fee imposed under State law
Fee to include sum equal to six per cent of gross amount paid or payable for all liquor purchased for sale or disposal under such licence
Validity
The Constitution (63 & 64 Vict. c. 12), s. 90
Licensing Act 1958 (Vict.) (No. 6293), ss. 7, 19 (1) (a), (b).
Case References:
Parton v Milk Board (Vict) - [1949] HCA 67; (1949) 80 CLR 229
The Commonwealth and Commonwealth Oil Refineries v South Australia - [1926] HCA 47; (1926) 38 CLR 408
Matthews v Chicory Marketing Board (Vict) - (1938) 60 CLR 263
Meredith v Fitzgerald - [1948] HCA 11; (1948) 77 CLR 161
R v Caledonian Collieries - (1928) AC 358
Griffith v Constantine - [1954] HCA 80; (1954) 91 CLR 136
Browns Transport Pty Ltd v Kropp - [1958] HCA 49; (1958) 100 CLR 117
Peterswald v Bartley - [1904] HCA 21; (1904) 1 CLR 497
Crothers v Sheil - (1933) 49 CLR 399
Hartley v Walsh - [1937] HCA 34; (1937) 57 CLR 372
Hopper v Egg and Egg Pulp Marketing Board (Vict) - [1939] HCA 24; (1939) 61 CLR 665
Atlantic Smoke Shops Ltd v Conlon - (1943) AC 550
Brewers and Maltsters' Association of Ontario v Attorney-General for Ontario - (1897) AC 231
John Fairfax
&
Sons Ltd and Smith's Newspapers Ltd v New South Wales - (1927) 39 CLR 139
Browns Transport Pty Ltd v Kropp (1958) - [1958] HCA 49; 100 CLR 117
Hughes and Vale Pty Ltd v State of New South Wales - [1953] HCA 14; (1953) 87 CLR 49
Bank of Toronto v Lambe - (1887) 12 App Cas 575
Jones v Whittaker - (1870) LR 5
Attorney-General for British Columbia v Kingcome Navigation Company - (1934) AC 45
Bergin v Stack - [1953] HCA 53; (1953) 88 CLR 248
Meredith v Fitzgerald (1948) - [1948] HCA 11; 77 CLR 161
Attorney-General (NSW) v Homebush Flour Mills Ltd - [1937] HCA 3; (1937) 56 CLR 390
John Fairfax
&
Sons Ltd v New South Wales - [1927] HCA 3; (1927) 39 CLR 139
Henriksen v Grafton Hotel Ltd - [1942] 2 KB 184
Attorney-General for Manitoba v Attorney-General for Canada - (1925) AC 561
Brewers and Maltsters' Association of Ontario v Attorney-General for Ontario - (1897) AC 231
Sharpe v Wakefield - (1891) AC 173
Reg v Flintshire County Council County Licensing (Stage Plays) Committee Ex parte Barrett - (1957) 1 QB 350
Lancashire v Staffordshire Justices - (1857) 26 LJMC 171
Judgment date: 26 February 1960
Melbourne
Decision by:
Fullagar J
I do not think that the argument for the plaintiff in this case is fully met by saying that the Victorian legislation which requires licences for the sale of liquor to be held, and requires fees to be paid for licences, is no more than an exercise of the general power to control trading in liquor which belongs to the States under the Constitution. It is true that, under the Constitution, the States have, and the Commonwealth has not, that general power, and that the State power is specially safeguarded by s. 113. It is true also that the elaborate State licensing systems are designed to effectuate a strict general control of the trade, and not as mere machinery for the collection of revenue. In this respect they differ from the licensing systems which exist under the excise legislation of the Commonwealth, and which are designed for, and justifiable only as incidental to, the effective collection of revenue: see Griffith v. Constantine [1954] HCA 80; (1954) 91 CLR 136 . But these considerations are not decisive. A licence required in the first place alio intuitu may be made obtainable only on payment of what is found to be a duty of excise within the meaning of s. 90 of the Constitution. (at p550)
2. In Browns Transport Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 CLR 117 , the Court observed that the definition of a duty of excise propounded by Griffith C.J. in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497, at p 509 had been found to be somewhat too narrow (1959) 100 CLR, at p 128 . In saying this we had - or at any rate I had - mainly in mind the case of Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229 . The Kropp Cases (1958) [1958] HCA 49; 100 CLR 117 seemed to me to be very clear cases. To have decided them in the appellants' favour would have meant, in substance, attributing to the term "duties of excise" in the Constitution that loose and wide meaning which they had for administrative reasons acquired in England, and the rejection of which in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 has never been questioned. No critical examination of the later decisions was required. The present case, however, does call for a consideration of some of those decisions and for a brief critical inquiry into the whole subject. (at p551)
3. In delivering the judgment of the Court in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 Griffith C.J. quoted the statement of Quick and Garran that "The fundamental conception of the term" (duties of excise) "is that of a tax on articles produced or manufactured in a country" (1904) 1 CLR, at p 508 . His Honour then observed that in some of the States before Federation, "there were in existence for many years 'duties of excise' properly so called, imposed upon beer, spirits and tobacco" (1904) 1 CLR, at p 509 . He then said: "There were other charges which were never spoken of as excise duties, such as fees for publicans' licences, and for various other businesses, such as slaughtermen's, auctioneers', and so forth, but these were not commonly understood in Australia as included under the head of excise duties" (1904) 1 CLR, at p 509 . Then came what we referred to as a "definition". The learned Chief Justice, speaking of the word "excise", said: "the conclusion is almost inevitable that, whenever it is used, it 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" (1904) 1 CLR, at p 509 . (at p551)
4. Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 has always been regarded as the leading case on duties of excise, and the exclusion from the category of the wide range of charges to which the term has been applied in England and in America has, as I have said, never been questioned. The words "analogous to a customs duty", though I would myself attach considerable importance to them, are descriptive rather than definitive, and in any case the famous exposition of Griffith C.J. cannot be treated as having the force of a statutory definition. The words, however, are carefully chosen and precise, and they do purport to state the essential elements which, for the purposes of s. 90, distinguish a duty of excise from other duties and taxes. They have always, I think, either expressly or tacitly, provided the starting point for any discussion of the subject. But two of the essential elements stated in the definition have not received universal acceptance. It has not been universally accepted either that, in order to be an excise duty, a charge must be "imposed in relation to quantity or value of goods", or that it must be imposed upon goods "when produced or manufactured" - which I take to mean "on or in respect of their production or manufacture". I proceed to consider the essential elements of a duty of excise within the meaning of s. 90. (at p552)
5. When it is necessary to characterize an exaction for the purpose of s. 90, it is usual to begin by asking: "Is it a tax?". It might have been thought more correct to ask: "Is it a duty?". Section 90 speaks of "duties of excise", not "taxes of excise", and the word "tax" is of wider import than the word "duty": see Encyc. Brit., 11th ed. s.v. "duty". We speak of "customs duty", "excise duty" and "estate duty", but of "income tax", "land tax" and "sales tax". It is probably correct to say that every duty is a tax, but not every tax is a duty. But, however, this may be, we do advance one step on the road if we can say that a particular exaction is a tax, and then proceed to inquire whether it is that particular kind of tax which is called a duty of excise. This seems better than asking (1) "Is it a duty?" and (2) "Is it an excise?". (at p552)
6. I am prepared to concede that the fees imposed by s. 19 of the Licensing Act 1958 (Vict.) are, for the purpose in hand, "taxes". It is true that in each case the fee is exacted as the price of a licence to do something which is otherwise prohibited, and it falls only upon those who choose to apply for a licence or the renewal of a licence. But it is a compulsory exaction by a public authority, and is rightly regarded, I think, as a tax payable by a class of persons. It is not necessary in this connexion to consider the line of cases decided in recent years under certain "marketing" legislation of certain States. In these cases producers of particular commodities were required in one way or another - by direct levy or by "pool deduction" - to contribute to the cost of a marketing scheme intended for their benefit. As to these cases I have difficulty in reconciling Crothers v. Sheil (1933) 49 CLR 399 ; Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 and Hopper v. Egg and Egg Pulp Marketing Board (Vict.) [1939] HCA 24; (1939) 61 CLR 665 on the one hand with Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 and Parton v. Milk Board (Vict.) (1949) [1949] HCA 67; 80 CLR 229 on the other hand. But the Licensing Act of Victoria has nothing to do with any marketing scheme: it is concerned (inter alia) with the raising of revenue for certain purposes, and the exactions which it makes for those purposes are, I think, properly regarded as "taxes". (at p552)
7. When it has been decided that the particular exaction in question is a tax, the question is then sometimes asked whether it is a "direct" tax or an "indirect" tax. As to this, I would say that, with the greatest respect, I think it a pity that this distinction was ever raised or mentioned in relation to s. 90. I do not think it is capable of throwing any light on s. 90. Attention to it may be thought to have been invited by the concluding words of the "definition" of Griffith C.J. in Peterswald v. Bartley (1904) 1 CLR, at p 509 . His Honour's words were "and not in the sense of a direct tax or personal tax" (1904) 1 CLR, at p 509 . But I understand his Honour to have intended by those words not to add anything by way of definition to what he had already said, but merely to give an example, by way of contradistinction, of something which would not be a duty of excise. I gather from a recent article Judicial Review under Section 90 of the Constitution - An Economist's View - Pt. 1 by Professor H.W. Arndt (1952) 25 ALJ 667, at p 674 that the distinction between "direct" and "indirect" taxes is now discredited among economists. But in any case I do think that the whole subject of s. 90 and duties of excise has been clouded by reference to a number of decisions of the Privy Council, which have interpreted and clarified s. 92 (II) of the Canadian Constitution but have no real bearing on s. 90 of our own. Section 92 (II) of the British North America Act gives to the legislatures of the Provinces exclusive power to make laws in relation to "direct taxation within the Province". This provision was adopted with conscious and deliberate reference to John Stuart Mill's distinction between "direct" and "indirect" taxation, and Mill himself probably had some influence in the matter. In Atlantic Smoke Shops Ltd. v. Conlon (1943) AC 550 , Viscount Simon L.C. said: "It has been long and firmly established that, in interpreting the phrase 'direct taxation' in head 2 of s. 92 of the Act of 1867, the guide to be followed is that provided by the distinction between direct and indirect taxes which is to be found in the treatise of John Stuart Mill. The question, of course, as Lord Herschell said in Brewers and Maltsters' Association of Ontario v. Attorney-General for Ontario (1897) AC 231, at p 236 , is not what is the distinction drawn by writers on political economy, but in what sense the words were employed in the British North America Act. Mill's Political Economy was first published in 1848, and appeared in a popular edition in 1865. Its author became a member of parliament in this latter year and commanded much attention in the British House of Commons. Having regard to his eminence as a political economist in the epoch when the Quebec Resolutions were being discussed and the Act of 1867 was being framed, the use of Mill's analysis and classification of taxes for the purpose of construing the expression now under review is fully justified". (1943) AC, at p 563 . There can be no such justification for "the use of Mill's analysis", or for the use of Canadian precedents, when we come to interpret our own s. 90, which was adopted in a quite different setting and employs much more specific terminology, (at p554)
8. When we have found that an exaction which is in question is a tax, and when we have put aside the Canadian Constitution and the decisions on it as irrelevant, we come to the critical questions. These may be stated as being three in number - (1) Must it be a tax "upon goods"? - (2) Must it be imposed upon the production or manufacture of goods? - (3) Must it be imposed by reference to quantity or value of the goods? The questions so stated raise for consideration, though not in the same order, the three elements regarded by the Court in Peterswald v. Bartley (1904) [1904] HCA 21; 1 CLR 497 as essential. (at p554)
9. Probably no one would dissent from the broad proposition that it is an essential element in the character of a duty of excise that it should be a tax "upon goods". But the whole weight of that expression is carried by, and ambiguity lurks in, the humble preposition, for which is sometimes substituted a prepositional phrase such as "in respect of", or "in relation to". Taxes may be charged upon property, real or personal, in the sense that there is a direct remedy against the property for recovery of the tax. But nothing of that kind is meant when we speak, in the present universe of discourse, of a tax "upon goods". Goods as such cannot pay taxes: there must be a person to pay them. And what is meant by saying that a tax is a tax upon goods is that the person by whom the tax is payable is charged by reason of, and by reference to, some specific relation subsisting between him and particular goods. A tax will be rightly regarded as a tax upon goods if the person upon whom it is imposed is charged by reason of and by reference to the fact that he is the owner, importer, exporter, manufacturer, producer, processor, seller, purchaser, hirer or consumer of particular goods. This list may not be exhaustive. (at p554)
10. Duties of customs and duties of excise are particular classes of taxes "upon goods". The relation of taxpayer to goods which characterizes a duty of customs is found in the importation or exportation of goods. The taxpayer is taxed by reason of, and by reference to, his importation or exportation of goods. The relation is implicit in the term itself, which has acquired an established meaning, so that difficulty is seldom felt as to whether a particular exaction is or is not a duty of customs. It has often been observed that the meaning of the term "duty of excise" is not so well established, and the crucial question in the present case, as I see it, is: What is the relation of taxpayer to goods which characterizes a "duty of excise" as that term is used in the Constitution and particularly in s. 90? (at p555)
11. The answer to this question given by the Court in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 was that the necessary relation is to be found in the manufacture or production of goods - that what characterizes a duty of excise is that the taxpayer is taxed by reason of, and by reference to, his production or manufacture of goods. The relation is treated as implicit in the term itself. As to the scope of the terms "manufacture" and "production" see Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229 per Latham C.J. (1949) 80 CLR, at pp 245, 246 . After full consideration, and necessarily with the greatest respect for the contrary view, I am of opinion that the answer given in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 was right and should be applied in the present case. (at p555)
12. The reasons which support this conclusion are stated in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 itself and in later cases. They appear to me to be convincing. I will state them briefly as they appear to me. In the first place, there is the reference in s. 93 to "duties of excise paid on goods produced or manufactured in a State". The words "produced or manufactured" seem clearly to refer to the occasion of the imposition of the duty, and to be intended to cover all duties of excise and not merely a particular class of duties of excise. Then there is the repeated collocation in the Constitution of the term "duties of customs" with the term "duties of excise". The collocation occurs in ss. 55, 86, 87, 90 and 93. This seems amply to warrant the view of Griffith C.J. that the duty intended by the term "duty of excise" is a duty "analogous to a customs duty", and this view fits in with what one would suppose to be the policy behind the relevant provisions of the Constitution. I would myself respectfully agree with the observations of McTiernan J. in Parton v. Milk Board (Vict) [1949] HCA 67; (1949) 80 CLR 229 . His Honour said: - "Duties of customs on imported goods have a relationship to the price paid by the user or consumer of the goods similar to that which duties of excise imposed upon goods produced or manufactured in the country have to the price paid by the user or consumer of those goods. There is an important relationship between duties of customs and duties of excise levied upon production or manufacture. . . . It may be inferred from the event mentioned in s. 90 and the inclusion of customs, excise and bounties in the section that the duties of excise to which it refers have this relationship to duties of customs and that the object of the section is a uniform fiscal policy for the Commonwealth" (1949) 80 CLR, at pp 264, 265 . (at p556)
13. Again, importance attaches, I think, to the nature of the duties of excise in force in most of the States under that name before the enactment of the Constitution Act. That nature is illustrated by the Customs and Excise Act 1890 of the Colony of Victoria. The duties of customs and duties of excise contemplated by the Constitution are, I think, alike duties which are imposed as a condition of the entry of particular goods into general circulation in the community - of their introduction into the mass of vendible commodities in a State. When once they have passed into that general mass, they cease, I think, to be proper subject-matter for either duties of customs or duties of excise. (at p556)
14. On the view which I take of the proper answer to the second of the questions I have propounded, it is not necessary, for the purposes of this case, to answer the third. I will only say that I am not satisfied that it is an essential element of a duty of excise that it should be measured by quantity or value of goods. The fact that a tax is so measured tends, of course, to support the view that it is a tax "upon goods", but in Matthews v. Chicory Marketing Board (Vict.) (2) a levy was held (Latham C.J. and McTiernan J. dissenting) to be a duty of excise although it was not measured by quantity or value of goods. It was imposed on a producer as such, and might well be regarded (if a tax at all) as a tax on production, but it was measured by acreage planted and not quantity or value of commodity produced. If a State were to impose a tax of 100 pounds per month on all distillers of spirits, I should feel difficulty in saying that the tax was not a duty of excise. It would be payable by reason of, and by reference to, the production or manufacture of goods. I should feel the same difficulty, if the same tax was imposed on importers of spirits, in saying that it was not a duty of customs. So, in the present case, I have difficulty in saying that a tax imposed upon retailers of liquor as such is a duty of excise if it is measured by quantity of liquor purchased, but is not a duty of excise if it is measured by annual value of licensed premises. (at p556)
15. I do not think that there is any actual decision of the Court which is inconsistent with the view which I have expressed on the second of the three questions which I have raised, although I am aware, and am, of course, very much pressed by the fact, that it is inconsistent with the view expressed by Dixon C.J. in Matthews's Case [1938] HCA 38; (1938) 60 CLR 263 and in Parton's Case [1949] HCA 67; (1949) 80 CLR 229 . The cases are reviewed very fully in the judgment of Menzies J., which I have had the advantage of reading. The case of John Fairfax & Sons Ltd. and Smith's Newspapers Ltd. v. New South Wales (1927) 39 CLR 139 was a very clear case of a tax imposed on a producer or manufacturer by reference to what he produced or manufactured. The two difficult cases are The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1926] HCA 47; (1926) 38 CLR 408 and Parton's Case [1949] HCA 67; (1949) 80 CLR 229 . In the former case (the Petrol Case) there were several complicating factors, and the reasons given by the six Justices who formed the majority were not altogether in accord. But I think it clear that Knox C.J., Isaacs, Powers and Starke JJ. accepted the exposition in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 and regarded the exaction as a tax on producers within the meaning of that exposition: see especially the judgments of Knox C.J. (1926) 38 CLR, at pp 419, 420 , of Isaacs J. (1926) 38 CLR, at pp 426, 430 and of Starke J. (1926) 38 CLR, at p 439 . (at p557)
16. In Parton's Case [1949] HCA 67; (1949) 80 CLR 229 the levy in question was imposed upon "dairymen". Dairymen were not producers or manufacturers of milk, but it was held by a majority of five Justices that the levy was a duty of excise. Latham C.J. and McTiernan J. dissented. Latham C.J. said: "In my opinion an examination of the cases upon which the plaintiff relies shows that in each of them a tax payable upon the occasion of the sale of a commodity was held to be a duty of excise because the tax was a tax payable by the producer of the commodity and therefore was truly a tax upon the production of goods. If a tax is imposed upon the producer of goods when he sells the goods the tax is a tax upon production. If, however, the tax is imposed at a later stage after the producer has disposed of the goods, it is a tax merely upon sale and not upon production" (1949) 80 CLR, at pp 245, 246 . The majority consisted of Dixon J. (as he then was), Rich and Williams JJ. The view of Dixon J. was, as I have observed, directly opposed to that which I have expressed: his Honour repeated, with a very slight modification, what he had said in Matthews's Case [1938] HCA 38; (1938) 60 CLR 263 . But Rich and Williams JJ. who delivered a joint judgment, were of opinion that a duty of excise "must be imposed so as to be a method of taxing the production or manufacture of goods" (1949) 80 CLR, at p 252 . This is my view, and I cannot therefore regard their judgment as inconsistent with that view. Their Honours proceeded: " . . . 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" (1949) 80 CLR, at p 252 . With this I am, with respect, unable to agree. The "tax" payable by the dairyman was not imposed on production or manufacture; it did not affect production or manufacture in any way: what was done was a taxing of the dairyman, or of what the dairyman did with milk, not a method of taxing production or manufacture. (at p558)
17. It remains only to apply the general propositions which I have formulated to the facts of the present case, and this can be very briefly done. The two classes of licence in question are the victualler's licence and the temporary licence. In each case the licence fee is payable by the licensee, and it is quantified by reference to past purchases of liquor by him. It does not fall upon any producer or manufacturer, and it does not in any way affect production or manufacture. The quantification is arrived at by taking into account all purchases of liquor made in the relevant period, whether produced or manufactured in Victoria or imported from abroad or from another State by the vendor or by the licensee himself. The exaction is not, in my opinion, a duty of excise within the meaning of s. 90, and I think that the demurrer should be allowed. (at p558)