Matthews v. Chicory Marketing Board (Victoria)
60 CLR 263(Judgment by: STARKE J)
Between: MATTHEWS
And: CHICORY MARKETING BOARD (VICTORIA)
Judges:
Latham CJ
Rich J
Starke JDixon J
McTiernan J
Subject References:
Constitutional Law
Duties of excise
Freedom of inter-State trade
State marketing legislation
Legislative References:
Constitution (Cth) - s 90; s 92
Marketing of Primary Products Act 1935 (Vic) No 4337 - s 4; s 6; s 7; s 16; s 19; s 26; s 32
Judgment date: 9 August 1938
SYDNEY
Judgment by:
STARKE J
The respondent, the Chicory Marketing Board, sued Matthews, the appellant, in the Court of Petty Sessions for a sum of PD11, being the amount of a levy made by it under s. 32 of the Marketing of Primary Products Act 1935 (No. 4337 of the State of Victoria). Judgment was entered against the appellant for the amount claimed, and an appeal is brought to this court by means of an order to review. The grounds of appeal are that the Act contravenes the provisions of s. 92 of the Constitution and is, therefore, invalid.
The Marketing of Primary Products Act is of the type now familiar. Amongst other provisions it enables the Governor in Council to proclaim various primary products to be a product for the purposes of the Act (s. 4 (2)); to declare that such product shall be a commodity under the Act (s. 6 (1)); to appoint marketing boards (s. 7); to declare that a commodity shall be divested from the producers and be vested in and be the absolute property of the board, whereupon the commodity becomes the absolute property of the board freed from all contracts and encumbrances affecting the same and the rights and interests of every person in the commodity are converted into a claim for payment in accordance with the Act (s. 16). The Act also empowers a board so appointed, after ensuring the supply of any commodity at reasonable prices to consumers thereof in Victoria, to sell or arrange for the sale of any commodity vested in or delivered to it and do all such matters and things necessary in that behalf accordingly (s. 18); and it also provides that a board shall out of the proceeds of any commodity disposed of by it and out of any other moneys (except a levy) received by it make payments to each producer of the commodity delivered to the board on the basis of the net proceeds of the sale of all the commodity of the same quality or standard delivered to the board, subject to certain deductions (s. 23). Then s. 32 provides that, a board (a) with the approval of the Governor in Council, may from time to time make a levy on and to be paid by the producers of any commodity in relation to which the board is constituted in such amount or at such rate on and to be paid by such persons and on such basis and for such period or otherwise as the board, with the approval of the Governor in Council and by notification in the Government Gazette, specifies, and (b) may in any case where it thinks fit retain the amount of such levy out of the funds in its hands arising from the sale or pledge of the commodity.
It is settled, I think, by authority that these provisions, standing alone, involve a contravention of s. 92 of the Constitution. It would be a compulsory marketing scheme entirely restrictive of any freedom of action on the part of producers in trade, domestic, inter-State or foreign (James v Cowan; [F30] Peanut Board v Rock-hampton Harbour Board [F31] ). But these provisions do not stand alone. In s. 16 (3) it is expressly enacted:
"Nothing in this section and no proclamation under this section" (the vesting section) "shall affect such portion of any commodity as is the subject of trade commerce and intercourse between the States or as is required by the producers thereof for the purpose of such trade commerce or intercourse or as is intended by the producers thereof to be used for such trade commerce or intercourse."
The effect of the section is to remove from the operation of the Act any portion of a proclaimed commodity that a producer desires to engage in inter-State trade. The object of the section is to avoid any contravention of s. 92 of the Constitution. And it should be construed so as to give effect to that intention. Consequently, the provision is coextensive with the requirement of the Constitution and enacts in effect that trade, commerce and intercourse among the States in respect of the proclaimed commodity shall be absolutely free. It thus leaves the producers and the commodity free to pass the frontiers of the States and to engage and be engaged in inter-State trade without any hindrance or restriction so far as the Act is concerned (James v The Commonwealth [F32] ). The Act does not, therefore, contravene s. 92 of the Constitution.
A more difficult question is raised under s. 90 of the Constitution. The power of the Commonwealth Parliament to impose duties of customs and of excise and to grant bounties on the production or export of goods is now exclusive. The question is whether the levy sued for is a duty of excise which the State of Victoria can neither impose nor authorize. The Chicory Board made a levy with the approval of the Governor in Council in the following form: -
"Every producer of chicory shall in and for the year ending on the 31st of August, 1937, pay to the Chicory Marketing Board, a levy at the rate of PD1 for every half acre, or part thereof, of the area planted by such producer with chicory during the year ending the 30th June, 1937. For the purposes of determining the amount of such levy the area planted by a producer shall be deemed to be the area registered by him with the Chicory Marketing Board, pursuant to and in accordance with a regulation made"
under the Act. The levy so made is a tax (Lower Mainland Dairy Products Sales Adjustment Committee v Crystal Dairy Ltd [F33] ). "Excise," however, is not a technical term of the law, and the popular meaning is not rigid (John Fairfax & Sons Ltd and Smith's Newspapers Ltd v New South Wales, [F34] per Higgins J.). But the meaning of the words "duties of excise" in the Constitution has been the subject of several decisions in this court (Peterswald v Bartley; [F35] The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia; [F36] John Fairfax & Sons Ltd and Smith's Newspapers Ltd v New South Wales; [F37] Attorney-General (N.S.W.) v Homebush Flour Mills Ltd [F38] ). An excise duty within the meaning of the Constitution is "a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured and not ... a direct tax or a personal tax" (Peterswald v Bartley [F39] ). In Attorney-General for British Columbia v Kingcome Navigation Co [F40] Lord Thankerton, delivering the opinion of the Judicial Committee, observed:
"In their Lordships' opinion the customs or excise duties on commodities ordinarily regarded as indirect taxation ... are duties which are imposed in respect of commercial dealings", [F41]
such as, he explains, "their import or sale or production for sale". [F42] These observations are dealing with the question of the test that should be applied in determining what is "direct" or "indirect" taxation for the purposes of the Canadian Constitution (British North America Act 1867). The leading characteristic of an indirect tax is that it is susceptible of being passed on, and customs and excise duties ordinarily exhibit this characteristic (Attorney-General (British Columbia) v McDonald Murphy Lumber Co Ltd [F43] ). The case under the Canadian Constitution are descriptive rather than definitive of a customs and an excise duty, and they are no authority for the proposition that a tax cannot be an excise duty unless it has the characteristics of an indirect tax. Substantially, the interpretation given to the words "duties of excise" in the decisions of this court accord with the views expressed by the Judicial Committee. It would follow, as Griffith C.J. observed in Peterswald v Bartley, [F44] that personal taxes, such as fees for brewers' licences, etc, are not excise duties (Cf. Bank of Toronto v Lambe; [F45] Brewers and Malsters' Association of Ontario v Attorney-General for Ontario [F46] ). But "in every case the first requisite is to ascertain the real nature of the tax" (Cf. R. v Caledonian Collieries, [F47] at p. 362; Attorney-General for British Columbia v McDonald Murphy Lumber Co, [F48] at p. 363). It does not depend upon the name given to the tax or levy in the taxing Act, but upon its operation and effect, as gathered from the language of the Act itself (The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia; [F49] Attorney-General (N.S.W.) v Homebush Flour Mills Ltd [F50] ).
The levy is imposed by s. 32 on the producers of any commodity. A producer, under the Act, s. 4, means "a person by whom or on whose behalf a product is actually grown produced obtained or prepared (otherwise than by any process of manufacture) for sale; and, where the product is so grown produced obtained or prepared pursuant to any share-farming or partnership agreement (whether express or implied), includes any party or parties to such agreement; but does not include a person engaged as an employee on wages or salary or piece-work rates." A product means (a) "any product (other than wool fresh fruit not being pears or appeals or citrus fruit and hay) of agriculture horticulture viticulture grazing poultry-farming bee-keeping or fishing operations and any dairy produce (including bacon and pork); and (b) any other article of commerce prepared (otherwise than by process of manufacture) from the produce of agriculture horticulture viticulture grazing poultry-farming bee-keeping or fishing operations" (s. 4). The levy itself prescribes that every producer of chicory shall pay the levy to the board. So far I should think that the Act imposes an excise duty, for the levy is imposed upon producers in respect of proclaimed commodities produced by them for sale within Australia: namely, in the State of Victoria. It is true that the levy is not imposed "in relation to the quantity or value" of the commodity produced but at the rate of PD1 for every half acre or part thereof planted by such producer with chicory. Still, that merely prescribes the basis of the levy, to use the language of s. 32, and does not alter the nature of the tax. It remains a tax in respect of the commodity produced for sale. It is not a land tax nor a tax upon the producer irrespective of the production of the commodity. Unless a product is actually grown, produced, obtained or prepared for sale within the terms of the Act no levy can be made on or be payable by the producer. But, further, it is argued that the tax or levy "is not susceptible of being passed on" and cannot, therefore, be an excise duty. The Act no doubt vests the commodity in the board (s. 16), gives it power of sale (s. 18), and prescribes in s. 23 the compensation that producers shall receive. It may be that the board does not consider the tax or levy in disposing of the commodity. But that is because of the terms of the Act, just in the same way as in the case of an ordinary sale the "question whether it is to be borne by the purchaser or the seller is determined by the bargain made" (See Attorney-General for British Columbia v Kingcome Navigation Co, [F51] at pp. 58, 59). The nature or effect of the tax or levy is not, however, altered. It still remains a tax or levy upon production for sale. Such a tax or levy is usually and normally susceptible of being passed on, which assists the conclusion that it is an excise duty. In my opinion the provisions of s. 32 of the Marketing of Primary Products Act are not within the competence of the Victorian Parliament and are, therefore, void.
The grounds of the order nisi do not attack the levy on the ground that it is beyond the powers contained in the Act. I do not suggest any doubt on the matter but merely point out that the objection is not taken and therefore cannot be considered in the present proceeding.
The order nisi should be made absolute.