Sydney Municipal Council v Commonwealth

[1904] HCA 50
(1904) 1 CLR 208
10 ALR (CN) 29

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(Judgment by: Griffith CJ)

Sydney Municipal Council
vCommonwealth

Court:

Judges:
Griffith CJBarton J
O'Connor J

Legislative References:
Sydney Corporation Act 1879 - The Act
Sydney Corporation Act 1902 - s 110

Hearing date:
Judgment date: 26 April 1904

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Judgment by:
Griffith CJ

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.

It is manifest from the whole scope of the Constitution that, just as the Commonwealth and State are regarded as distinct and separate sovereign bodies, with sovereign powers limited only by the ambit of their authority under the Constitution, so the Crown, as representing those several bodies, is to be regarded not as one, but as several juristic persons, to use a phrase which well expresses the idea. No better illustration can be given than is afforded by the lands now sought to be rated, which, having originally been "property of the State," i.e ., lands of the Crown in New South Wales, have become "vested in the Commonwealth," i.e ., vested in the Crown in right of the Commonwealth. The change in constitutional ownership is accurately and unmistakeably denoted by the language of sec. 85 in which it is expressed.

The term "the Crown" as used in the Sydney Corporation Act must be taken to mean the Crown in its capacity as representing the State of New South Wales. In the Act of 1879, passed before the establishment of the Commonwealth, it obviously had that meaning, and no wider one can be given to it in the re-enactment of 1902. The argument, therefore, sought to be founded upon the assent of the Crown, given through the Governor of New South Wales, to the taxation of Crown lands, fails, since land vested in the Commonwealth or in the Crown in right of the Commonwealth is not Crown land within the meaning of the Sydney Act. Nor, in my judgment, can the liability of the land, while Crown land of New South Wales, to municipal taxation be regarded as a liability running with the land, any more than if the land had afterwards been granted for a purpose which would exempt it from such liability.

It was pointed out in the argument that under the Sydney Act the municipal rates are not, as in some municipal Acts, such as that which we had to consider in Borough of Glebe v. Lukey (ante , p. 158), made a charge upon the land, but are a personal liability of the owner or occupier, and may be levied by distress upon the chattels found upon the land. But this distinction does not affect the substantial character of the imposition, which is a tax in respect of property. All such taxes primarily impose a personal liability upon individuals, and it is, in my opinion, immaterial whether the land does or does not itself become subject to a charge in the nature of an encumbrance. In either case the tax is in substance a "tax on property" in the sense in which these words are commonly understood, and certainly in the sense in which they are used in sec. 114 of the Constitution .

With regard to the argument founded on sec. 108, it is to be remarked that the section by its express terms applies only to laws of a State "which relate to matters within the powers of the Parliament of the Commonwealth." These matters are, in my opinion, those enumerated in secs. 51 and 53. The law in question is one relating to the imposition of municipal taxation under the authority of the State. I am quite unable to see how such a matter can, in any sense, be regarded as one within the powers of the Parliament of the Commonwealth. It is true that one of the powers of that Parliament is to make laws with respect to taxation. But the taxation referred to is federal taxation for federal purposes. It was, however, suggested that, as the State may with the consent of the Commonwealth Parliament impose taxes on the property of the Commonwealth (sec. 114), their consent may be regarded as a matter "within the powers of the Parliament," seeing that it may be either given or withheld. In my judgment, however, the consent intended by sec. 114 is a consent expressed by some positive action on the part of the Parliament, not one to be tacitly inferred from its inaction. Parliament, which is a legislative body, ordinarily expresses its will by a legislative Act, and there is nothing in the section itself to suggest that the prohibition, which is direct and explicit, can be withdrawn in any other way. While, however, the consent required to validate State taxation, as such, of Commonwealth property must be given by Statute, the same practical result, in a pecuniary sense, might, no doubt, be effected by the appropriation of money to an amount equal to the rates which would be imposed on the same property if it were liable to taxation.

The Act of 1879 continued therefore in force "subject to the Constitution," that is to say subject to the prohibition of sec. 114, and the Act of 1902 is subject to the same prohibition.

If the tax is considered as merely a tax upon the Commonwealth regarded as a juristic person, or upon its officers as persons?a view which for reasons already given I think erroneous?other considerations would arise. In that view, the question for discussion would be whether a State, or a delegated authority within a State, has power to affect the Commonwealth or its officers in the performance of the duties cast upon them by the Constitution or by the laws of the Commonwealth. The answer to this question depends upon the further question whether, under the Constitution of the Commonwealth, the jurisdiction of the States extends to the Commonwealth regarded as a juristic person, or to its officers in the performance of their duties as such officers. On this point my opinion is sufficiently expressed in the judgment in the case of D'Emden v. Pedder (ante , p. 91.)

For these reasons I am of opinion that the rates sought to be recovered in this action are taxes within the meaning of sec. 114 of the Constitution , that they are taxes imposed upon property, and that the imposition of them upon property of the Commonwealth is prohibited by the express words of sec. 114 of the Constitution . I am of opinion further, for the reasons given in that case, that sec. 110 of the Sydney Act of 1902 should be construed as not applying to the lands in question.

Judgment must therefore be given for the defendants.