Dennis Hotels Pty Ltd v Victoria
[1960] HCA 10104 CLR 529
(Decision by: Taylor J)
Dennis Hotels Pty Ltd
vVictoria
Judges:
Dixon CJ
McTiernan J
Fullagar J
Kitto J
Taylor JMenzies 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:
Taylor J
This demurrer raises for our consideration the question of the true character of fees paid by the plaintiff for a victualler's licence and for a number of so-called temporary victualler's licences issued pursuant to the provisions of the Licensing Act 1928 (Vict.) as amended. For the purposes of convenience we were referred by the parties to the consolidation of the previous legislation now to be found in the Licensing Act 1958 (No. 6293). In this Act sub-ss. (1) (a) and 1 (b) of s. 19 are in the same terms as the provisions referred to in the statement of claim as sub-ss. (1) (a) and 1 (b) of s. 19 of the previous legislation. For the plaintiff it is contended that the fees for which those sub-sections provide are, in truth, duties of excise and that since the imposition of duties of customs and excise is, by virtue of s. 90 of the Constitution, within the exclusive legislative jurisdiction of the Commonwealth Parliament, those provisions are invalid. (at p569)
2. The Licensing Act contains a great many provisions with respect to the regulation of the liquor trade and it is an offence for any person to sell liquor (as defined) unless he is the holder of an appropriate licence under the Act (s. 154). This section is, as Fullagar J. described it in Bergin v. Stack [1953] HCA 53; (1953) 88 CLR 248 , "the keystone of the whole licensing system" (1953) 88 CLR, at p 260 . Perhaps, it may be said, it is the "keystone" invariably employed in the regulation of a trade which, traditionally, has been thought to require regulation and supervision in the public interest. It is unnecessary to refer in detail to the provisions of the Act but particular mention should be made of ss. 8, 9, 19 (1) (a), 19 (1) (b) and 19 (3). By s. 8 it is provided that a victualler's licence shall authorize the licensee to sell and dispose of liquor in any quantity on the premises therein specified between the hours of nine in the morning and six in the evening. A temporary victualler's licence is, by virtue of s. 9, issued for any specified period not exceeding seven days and it authorizes the licensee (being also the holder of a victualler's licence) to sell and dispose of liquor between the hours of ten in the morning and six in the evening at any fair agricultural or horticultural show military encampment races regatta rowing cricket football golf tennis or polo match or circus or other public sports games or amusements subject to such restrictions and conditions as the licensing court granting the application may impose. The fees to be paid for such licences are prescribed by s. 19 (1). By sub-s. (1) (a) the fees payable for a victualler's licence "shall be equal to the sum of six per centum of the gross amount (including any duties thereon) paid or payable for all liquor which during the twelve months ended on the last day of June preceding the date of the application for the grant or renewal of the licence was purchased for the premises". By the succeeding paragraph of the sub-section the fees payable for a temporary victualler's licence are specified as "One pound for each day during which the licence will be in force in respect of each booth, stall, bar or place from which liquor will be sold", together with "a further fee equal to the sum of six per centum of the gross amount (including any duties thereon) paid or payable for all liquor purchased for sale or disposal under such licence". Provision is made by s. 19 (3) to enable a licensed victualler who holds a victualler's licence for any premises of which he is not the owner and who pays the annual licence fee to recover from the owner of the premises by way of deduction from the rent payable or otherwise a sum equal to three-eighths of the amount of the fee paid by him. Licences, with the exception of temporary licences, remain in force to the end of the year for which they are granted and applications for renewal are made annually (s. 7). Fees payable under the Act on a percentage basis are fixed by the licensing court and the court is empowered to fix such sum as it thinks reasonable in any case where no information is produced to the court, or where the information produced is incomplete or insufficient to enable the court to determine the gross amount paid or payable for liquor purchased, or where information covering a period of twelve months cannot be produced (s. 20). All fees for licences, certificates, permits or authorities under the Act and all fees, fines, penalties, forfeitures and moneys incurred or accruing thereunder are to be paid to the credit of the Licensing Fund, and subject to certain prescribed payments to the municipalities specified in the second schedule to the Act and to the Police Superannuation Fund, that fund is to be applied towards carrying out the provisions of the Act including the payment of all compensation payable to owners and occupiers of licensed premises deprived of licence under the Act (ss. 288-290). (at p571)
3. Victuallers' licences are issued for annual periods ending on 30th June in each year and it will be seen from the above provisions that the fee payable in respect of each renewal is determined by the application of the specified percentage to the gross expenditure for liquor which was purchased for the premises during the immediately preceding annual period. But, quite clearly, the fee is not payable in respect of the purchase of such liquor nor in respect of the period during which such purchases were made; it is paid for the licence in respect of the annual period for which the renewal is granted (Meredith v. Fitzgerald (1948) [1948] HCA 11; 77 CLR 161 ). Accordingly if the licence is not renewed the fee is not payable whilst if the licence should be transferred prior to the application for renewal the fee payable by the applicant for renewal will be based upon purchases of liquor made, either wholly or in part, by the previous holder of the licence and not by the applicant. (at p571)
4. Much has been said concerning the meaning of the expression "duties of . . . excise" in s. 90 of the Constitution since it was decided in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 that the fees payable by brewers for licences under the Liquor Act 1898 (N.S.W.) were not duties of excise. In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (1926) [1926] HCA 47; 38 CLR 408 it was held by a majority of the Court that a tax imposed by an Act of the South Australian legislature of threepence per gallon on any first sale of motor spirit in that State, so far as it related to motor spirit produced, refined or manufactured locally, was a duty of excise and that, so far as it related to motor spirit brought into the State from other places, it was a duty of customs. The conclusion that the Act operated to impose a "duty of excise" was consistent with the view expressed concerning that expression in the following passage in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 "Bearing in mind that the Constitution was framed in Australia by Australians, and for the use of the Australian people, and that the word 'excise' had a distinct meaning in the popular mind, and that there were in the States many laws in force dealing with the subject, and that when used in the Constitution it is used in connexion with the words 'on goods produced or manufactured in the States', 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 . Indeed, in the later case Isaacs, Higgins and Starke JJ. expressly accepted the definition of "excise" contained in this passage and the conclusions of Knox C.J. and Powers J. necessarily involved acceptance of the view that "excise" denotes a tax imposed upon goods produced or manufactured locally. This view was again affirmed by Starke J. in Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [1937] HCA 3; (1937) 56 CLR 390, at p 408 . But in Browns Transport Pty. Ltd. v. Kropp (1958) [1958] HCA 49; 100 CLR 117 this Court felt constrained to say that the definition in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 "has been found in several later cases to be somewhat too narrow" (1958) 100 CLR, at p 128 and, no doubt, this circumstances has given rise to the present litigation in which it is sought to establish, in the face of the decision in Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 to the effect that brewers' licence fees payable under the Liquor Act 1898 (N.S.W.) could not be regarded as duties of excise, that victuallers' licence fees ought now to be so regarded. I should mention, for what it is worth, that the fees payable under the legislation in question in the last-mentioned case were of fixed amounts. But the fact that in later years it has become common practice to fix them by reference to a percentage of purchases in an earlier year did not deter Starke J. in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 from observing "that personal taxes, such as fees for brewers' licences, etc., are not excise duties" (1938) 60 CLR, at p 285 . Nor did that circumstance appear significant to Dixon J. (as he then was) when he said: "Before leaving Hartley v. Walsh (1937) [1937] HCA 34; 57 CLR 372 it is perhaps desirable to refer again to the character of the levy in that case. Not only was the imposition upon the proprietor of the packing shed and one measured, at least as to the maximum, by the fruit handled, but the fruit was the fruit of the previous year. This appears to me to place the imposition more in the category of a licence fee in respect of a business calculated on past business done; something like the licence fee of a licensed victualler calculated on the amount expended by him in the previous year in purchasing liquor, which I should not regard as an excise": Parton v. Milk Board (Vict.) (1949) 80 CLR, at p 263 . (at p572)
5. In the cases which were decided between 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 there has been considerable discussion concerning the question whether the expression "duties of excise", as used in the Constitution, was intended to denote taxes of a particular character levied upon goods of local manufacture or production or whether it embraces taxes levied in respect of goods generally and irrespectively of their place of origin. A further question debated from time to time was whether "excise" is limited to taxes directly levied upon production or manufacture or whether it extends also to taxes imposed upon the sale and distribution of goods or merchandise at any time before reaching the consumer and irrespectively of any other considerations which might colour or give a particular character to the tax imposed. But it must now, I think, be taken to be decided by a majority of the Court in Parton's Case [1949] HCA 67; (1949) 80 CLR 229 , that a tax upon the sale of goods at any stage before they reach the consumer must, in some circumstances at least, be regarded as a duty of excise. This conclusion is stated in the following passage from the joint reasons of Rich and Williams JJ., in Parton's Case (1) where, after expressing the view that the Court had never decided "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" (1949) 80 CLR, at pp 251, 252 , they said: "In Peterswald v. Bartley (1904) 1 CLR, at p 509 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 (1904) 1 CLR, at p 512 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 (1926) 38 CLR 408 ; John Fairfax & Sons Ltd. v. New South Wales [1927] HCA 3; (1927) 39 CLR 139 . 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". (1949) 80 CLR, at p 252 . Thereafter their Honours accepted the definition proposed by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 - "To be an excise the tax must be levied 'upon goods', but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce" (1938) 60 CLR, at p 304 . In the last-mentioned case Dixon J. fully discussed the meanings which had from time to time been assigned to the expression "excise" in England and, for himself, expressed the view that its history "does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production" (1938) 60 CLR, at p 299 . But Parton's Case (1949) 80 CLR 229 was concerned with a local product and I do not read the observations of Rich and Williams JJ. as conclusive of the proposition that "duties of excise" are concerned with all goods whatever their origin. However, it is unnecessary in this case to pursue the point for if the fee payable in respect of a victualler's licence can, in some way, be regarded as the aggregate of direct levies upon individual sales then, as in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1926] HCA 47; (1926) 38 CLR 408 , the legislation applies with equal force to both locally produced and imported goods. But the difficulties in the way of so regarding the licence fee are, it seems to me, insuperable. (at p574)
6. The actual decision in Parton's Case [1949] HCA 67; (1949) 80 CLR 229 , in my view, carries the concept of "excise" a little further than the earlier cases. The tax under consideration in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1926] HCA 47; (1926) 38 CLR 408 was, so far as any locally produced or manufactured goods were concerned, bound to fall in the first instance upon the manufacturer or producer. Likewise, in John Fairfax and Sons Ltd. and Smith's Newspapers Ltd. v. New South Wales (1927) [1927] HCA 3; 39 CLR 139 the impost fell directly upon the proprietor or publisher of the newspaper upon which the tax was imposed. Again in Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [1937] HCA 3; (1937) 56 CLR 390 the impost fell initially upon the flour manufacturer whilst in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 it fell directly upon the grower. But in Parton's Case [1949] HCA 67; (1949) 80 CLR 229 we have the pronouncement of Rich and Williams JJ. that although, in order to constitute a duty of excise, the tax must be imposed "so as to be a method of taxing the production or manufacture of goods . . . 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 . Whether this proposition affords a safe and exhaustive guide in determining whether a tax upon the sale of a commodity constitutes a method of taxing the production or manufacture of that commodity is, I think, open to question but for reasons which will appear it is unnecessary in this case to pursue the problem. (at p575)
7. When we pass to a consideration of the character of the fees payable for a victualler's licence it is seen that they are quite dissimilar in many respects to imposts which this Court has held to be "duties of excise". In the first place, they are not, as was suggested by the plaintiff, either in form or substance a tax upon the production or manufacture of liquor. Nor do they constitute a tax upon the liquor sold during the currency of the licence. In truth, they constitute fees payable by the licensed victualler for the right which his licence confers upon him. That is, the right to sell and dispose of liquor, in the course of his business, upon the premises specified in the licence. And the amount payable for this privilege will be the same whether he sells more or less liquor than he or his predecessors purchased during the previous year, or indeed, even if he sells none at all. In these circumstances, it will be seen that the charge lacks the characteristic of a tax upon a commodity or upon the sale of a commodity such as may be "passed on" to the consumer or other purchaser. No doubt the fact that a licence fee must be paid by a licensed victualler may have some economic effect on the price at which he disposes of his stock but this is far from saying that the fee represents a tax upon a commodity which it is expected will be "passed on" to the consumer. Indeed, unlike the imposts considered in the earlier cases, it is impossible for a licensed victualler to "pass on" the amount of the licence fee to the purchasers from him during the annual currency of his licence for, although that amount may be known in advance, the extent of his sales cannot be ascertained until the end of the trading period. To attempt, in those circumstances, to estimate the amount by which his sales prices ought to be increased to cover the expenditure on the licence fee for any particular period could not, on any view, be regarded as a method of "passing on" to the purchasers from him taxes which had been imposed upon the relevant sales. The substance of the matter is that the fee payable for his licence represents but one item of expenditure in the conduct of a licensed victualler's business and, although it may, as such a factor, affect the prices at which he sells his stock - and, no doubt, the prices charged for other services provided by him in the course of his business - it is not a tax either upon his sales or upon the subject matter of his sales. (at p576)
8. Nor, as was suggested during the course of the argument in the Queensland case which was heard immediately after this case, can the licence fee be said to constitute a purchase tax upon the purchases made, or upon the stock purchased, during the year prior to the renewal, or issue, of the licence. It is not the purchase of stock from time to time which creates the relevant liability, for the fee is not payable unless and until an application for the renewal of the licence is made. And, indeed, there must be many cases in which the licence fee is payable by an applicant for renewal who made none, or some only, of the purchases during the preceding year. (at p576)
9. Examination of the character and incidence of the legislation leads me to conclude that the fee payable for a victualler's licence is not a duty of excise. Though a system of licensing may frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties, this is not the part played by the system of licensing erected by the Licensing Act for the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words the requirement that liquor shall not be sold or disposed of without a licence appears as a substantive provision and not merely as an adjunct to a revenue statute. But this very requirement necessarily means that partial monopolies will be enjoyed by licensees and that licensed premises will, as such, achieve an enhanced value. So much is recognized by the provisions of s. 19 (3) to which reference has already been made. Where the licensee is a lessee of the licensed premises he may recover from his landlord a sum equal to three-eighths of the licence fee for each year. Such a provision is not only inconsistent with the suggestion that the licence fee is an impost intended to be passed on directly to purchasers from licensed victuallers but recognizes the advantage which accrues to the owner of premises by the issue and continued subsistence of the licence. One may, of course, readily assume that any increase in value which so accrues to the owner will be reflected in the rent obtainable for his premises and that this, in turn, may affect the prices generally charged for liquor on licensed premises. But, again, this does not mean that the licence fee is "passed on" or is intended to be "passed on" to customers who purchase liquor on licensed premises. It is, as I have already said, but an item of cost which may, and probably does, constitute a factor in determining retail prices for liquor. (at p577)
10. In substance the fee payable for a victualler's licence bears some resemblance in character to the payments required by English legislation as a condition of the grant of justices' licences. These payments are required in order to secure to the public any monopoly value that is represented by the difference in value which the relevant premises bear when licensed and the value of the premises unlicensed. Some difference may be found in the fact that under the local legislation licences fall due for renewal and the appropriate fees are payable annually but both here and in England "the effect of the licensing laws is to grant to a licensee what for practical purposes and in respect of a particular area is in truth a monopoly" and that what the legislation requires the licensee to do "is, so to speak, to purchase the monopoly rights for a sum equal to their value" (1942) 2 KB, at p 189 or, if I may add, for a sum to be determined according to a formula specified by the legislature (see per Lord Greene M.R. in Henriksen v. Grafton Hotel Ltd. (1942) 2 KB 184, at p 189 ). A payment partaking of this character in no way resembles the imposts in the cases to which reference has been made and, in my view, it is in no sense, a "duty of excise" within the meaning of the Constitution. It is, I think, fair to say that the argument to the contrary is substantially based on the fact that the fee payable in respect of the renewal of the licence for any particular licensed premises is calculated by applying the prescribed percentage to the amount expended for purchases by the licensee of those premises during the preceding year. Indeed, it was common ground that if, instead of a fee so calculated, a fee of a fixed amount, or a fee varying with the assessed annual value of the premises, were payable as a condition of renewal it could not be characterized as a duty of excise. A review of the history of the legislation shows that, in Victoria, until 1916 licensed victuallers were required to pay fees determined by reference to the assessed annual value of their premises though from 1906 to 1916 they were required, in addition, to pay a "compensation fee" calculated by reference to a percentage of past purchases. Then in 1916 provisions not dissimilar to those now in force came into operation. In these circumstances it is said that there was a change from an impost which was not a duty of excise to one which is, the ground for the assertion being that the fee has changed from a fixed fee to one that is calculated by the application of a percentage to past purchases. With respect to those who entertain the contrary view I am unable to see that this change had the effect of transforming the character of the fee and of making it a duty of excise. Even if one is prepared to accept fully - which, as at present advised, I am not - that a tax payable by a trader and measured by the amount of the commodities which he buys or sells in the course of his business is, prima facie, a duty of excise there is, I think, ample in the considerations to which I have already adverted to displace any prima facie impression which the formula for the calculation of the fees payable by licensed victuallers may tend to produce. There can be little doubt that the annual purchases made by a licensed victualler are, in practice, a reliable and well-established guide to the annual value of his licensed premises and to me there is no significant difference between a fee which is calculated by reference to that value and one which is calculated directly by reference to past purchases. In these circumstances to say that one is a duty of excise and the other is not is, I think, to attach far too much significance to the manner in which the fee is calculated and to pass by what I regard as the decisive considerations. (at p578)
11. The same considerations also determine the question which has been raised with respect to the fees payable for temporary victuallers' licences and, accordingly, the demurrer should be allowed. (at p578)