LUTON v LESSELS & ANOR

Members:
Gleeson CJ
Gaudron J
McHugh J
Kirby J
Hayne J
Callinan J

Tribunal:
Full High Court of Australia

MEDIA NEUTRAL CITATION: [2002] HCA 13

Decision date: 11 April 2002

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Gleeson J

The plaintiff has commenced proceedings in this Court challenging the validity of the Commonwealth's legislative scheme for assessment and enforcement of child support liabilities. The scheme is contained in the Child Support (Assessment) Act 1989 (Cth) (``the Assessment Act'') and the Child Support (Registration and Collection) Act 1988 (Cth) (``the Registration and Collection Act''). The first ground of challenge is that the scheme involves the imposition of taxation, and that there has been a contravention of s 55 of the Constitution. The second ground is that aspects of the legislation involve an attempt to vest the judicial power of the Commonwealth in the Child Support Registrar.

2. A case has been stated pursuant to s 18 of the Judiciary Act 1903 (Cth) raising certain questions for the decision of a Full Court. The specific questions, and my answers to them, will appear at the conclusion of these reasons.

3. The details of the legislation are set out in the reasons for judgment of Gaudron and Hayne JJ. I will refer to them only to the extent necessary to explain my reasons.

The legislative scheme

4. The objects of the Assessment Act are set out in s 4. The principal object is to ensure that children receive a proper level of financial support from their parents. To that end, the Act provides for a level of support to be determined in accordance with legislatively fixed standards, and permits carers of children to have the level readily determined without the need to resort to court proceedings.

5. There is an office of Child Support Registrar established by s 10 of the Registration and Collection Act. An application for administrative assessment of child support may be made, to the Registrar, under Pt 4 of the Assessment Act. Such an assessment is made in accordance with a statutory formula, unless the Registrar determines, or a court orders, that the provisions relating to administrative assessment of child support should be departed from (Assessment Act s 35). A parent's liability to pay child support arises on the acceptance by the Registrar of an application (s 31). The making of an assessment gives rise to a debt owing by the liable parent to the carer who is entitled to child support; the debt may be

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recovered in a court of competent jurisdiction (s 79).

6. It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of a parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child. Although it is not directly relevant to the questions raised, the legislation was enacted following a referral of matters by a number of States, and is supported by the powers conferred by s 51(xxii), (xxxvii) and (xxxix) and s 122 of the Constitution.

7. The principal objects of the Registration and Collection Act are to ensure that children receive from their parents the financial support that the parents are liable to provide, and that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis (s 3). Those objects are achieved by a system of registration and enforcement. The scheme is available to a carer who wishes to take advantage of it. Some carers may not. They can rely on private enforcement if they wish. If a liability has arisen under a child support assessment, it may be registered under the Registration and Collection Act (s 17). The effect of registration is that the carer is no longer entitled to enforce payment of the liability and, instead, there is a debt owing by the liable parent to the Commonwealth (s 30). The carer entitled to child support becomes entitled to payment of an amount equivalent to that collected by the Commonwealth from the liable parent or on account of that parent's liability (s 76). The debt owed by the liable parent to the Commonwealth must be paid in the manner prescribed by the Act, and may be collected from certain debtors of the parent. Amounts collected are paid into, and disbursed to carers out of, the Consolidated Revenue Fund. The Commonwealth does not benefit financially.

Taxation

8. The question of what constitutes a tax, or the imposition of taxation, for the purposes of the Constitution may arise in a number of contexts. Under s 51(ii), the Parliament has power to make laws with respect to taxation. The broader the meaning given to taxation, the greater the reach of that power. Section 90 provides that the power of the Parliament to impose duties of excise is exclusive, depriving the States of that form of revenue. Whether a particular exaction is to be characterised as a tax on goods may determine whether it is a duty of excise. Sections 53 to 55 deal with matters concerning the relations between the two Houses of Parliament, and reflect one of the compromises by which Federation was achieved. ^[1] See Quick & Garran, The Annotated Constitution of the Australian Commonwealth , (1901) at 675. Section 53 provides that proposed laws imposing taxation shall not originate in the Senate, and the Senate may not amend proposed laws imposing taxation. If it were possible to ``tack'' on to a law imposing taxation another law, which the Senate might wish to amend, then the power of the Senate would be diminished. To guard against that, s 55 provides that laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

9. The plaintiff argues that the Assessment Act and the Registration and Collection Act include laws imposing taxation. If they contravene s 55, the result is that any provisions in the Acts dealing with any matter other than the imposition of taxation are of no effect. That would give rise to a question whether there are any such provisions, or whether the entire Acts deal with the imposition of taxation. ^[2] cf Re Dymond; Ex parte The Debtor (1959) 12 ATD 1 ; (1958-1959) 101 CLR 11 . However, the primary submission of the second defendant, (the first defendant does not appear), and the interveners, is that no such question arises, for the reason that neither Act is, or contains, a law with respect to, or imposing, taxation. For the reasons that follow, I agree with that submission.

10. To decide whether an exaction of money or the imposition of some other financial obligation is a tax involves an exercise in characterisation. The often-quoted words of Latham CJ in Matthews v Chicory Marketing Board (Vict) ^[3] (1938) 60 CLR 263. were not offered as a definition of a tax. They were an explanation of the features of the impost under consideration that justified the conclusion that it bore the character of a tax. Latham CJ said: ^[4] (1938) 60 CLR 263 at 276.

``The levy is, in my opinion, plainly a tax. It is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered.''

He then cited a decision of the Privy Council, Lower Mainland Dairy Products Sales

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Adjustment Committee v Crystal Dairy Ltd . ^[5] [ 1933] AC 168. The factors mentioned, that is, the compulsory exaction, by a public authority, for public purposes, and legal enforceability, had been listed by the Privy Council as reasons for concluding that the adjustment levies in question should be characterised as taxes. ^[6] [ 1933] AC 168 at 175-178. They were not put forward by the Privy Council as a definitive statement of the essence of a tax. And Latham CJ's statement that the levy with which he was concerned was not a payment for services rendered was directed to the facts of that case; it was not exhaustive. Payments for services rendered are not the only exactions that stand outside the concept of a tax. Others include ``a charge for the acquisition or use of property, a fee for a privilege and a fine or penalty imposed for criminal conduct or breach of statutory obligation''. ^[7] Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467 .

11. In Parton v Milk Board (Vict) , ^[8] (1949) 80 CLR 229 at 259. Dixon J said of the contribution in question that it ``is a compulsory levy by a public authority for public purposes and that is enough to show that it is a tax''. The substantial question in that case was whether the tax was a tax on goods, and a duty of excise.

12. What constitutes a sufficient public purpose may be a matter of contention, as in Australian Tape Manufacturers Association Ltd v The Commonwealth . ^[9] (1993) 176 CLR 480. Quick and Garran, writing in 1901, said: ^[10] Quick and Garran, The Annotated Constitution of the Australian Commonwealth , (1901) at 550.

``Taxation may be now defined as any exaction of money or revenue, by the authority of a State, from its subjects or citizens and others within its jurisdiction, for the purpose of defraying the cost of government, promoting the common welfare, and defending it against aggression from without.''

That, perhaps, illustrates the risks of definition. Depending upon what is meant by ``promoting the common welfare'', it may be difficult to reconcile with the decision in the Australian Tape Manufacturers Association case. Directly or indirectly, all legislation is aimed at promoting the common welfare. The legislative powers of the Parliament are to be exercised for the peace, order and good government of the Commonwealth. A law which imposes on one person an obligation to pay money to another, or to the government, will, by hypothesis, be enacted in pursuance of some policy or purpose which is regarded by the Parliament as in the public interest. The concept of ``public purposes'' in the present context is narrower than that.

13. As was pointed out in Airservices Australia v Canadian Airlines , ^[11] (1999) 202 CLR 133 at 178 [ 90] per Gleeson CJ and Kirby J. while an objective of raising revenue for the government is not a universal determinant, the presence or absence of such an objective will often be significant in deciding whether an exaction, or the imposition of a liability, bears the character of taxation. That is the most usual form of public purpose involved; an idea reflected in what was said by Quick and Garran. Revenue raised by a government may be earmarked, formally or informally, for a specific purpose, and still be a tax. For example, Commonwealth pay-roll tax was introduced in 1941 as a means of providing revenue to finance the provision of child endowment under legislation enacted in the same year. ^[12] Victoria v The Commonwealth (1971) 122 CLR 353 at 362 per Barwick CJ. The impost in the Australian Tape Manufacturers Association case involved raising revenue from one group for the purpose of its application for the benefit of another group. The majority held that revenue was raised for a public purpose of compensating the second group. The group who were to be compensated had no prior legal right against the group from whom the revenue was to be raised. That is a point of distinction from the Registration and Collection Act. The fact that the proceeds of the exaction were not paid into, and out of, the Consolidated Revenue Fund was not regarded as decisive. I would also regard the converse as true.

14. The Assessment Act creates a private or personal obligation, in the form of a debt payable by the liable parent to the eligible carer. The debt is recoverable by the carer. The creation of a legal obligation, enforceable by private action, in a parent, to pay for the support of a child, is not taxation. It is a scheme for the creation and adjustment of private rights and liabilities. But the existence of the obligation is of significance in considering the aspect of the legislative scheme upon which the plaintiff principally relies, which is in the Registration and Collection Act. What is alleged to be taxation is in substance no more than a mechanism for the enforcement of a pre- existing private liability.

15. If a child support assessment is registered under the Registration and Collection Act the debt payable by the liable parent to the eligible carer is extinguished, and replaced by a debt payable by the liable parent to the

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Commonwealth. The Commonwealth, as necessary, collects the amount owing, and pays it into the Consolidated Revenue Fund. An amount equal to the amount collected is transferred to the Child Support Account. Payments of child support are then made to the carer from the Child Support Account. What is involved is a collection mechanism to facilitate the recovery of child support payments that a parent becomes liable to make under the Assessment Act. It enables the discharge of a personal obligation created by the Assessment Act. A multiplicity of payments may be involved, the amounts of payments are likely to be modest, and many carers would lack the means or the will to undertake private recovery proceedings. The practical advantages of such a scheme are obvious, but they do not include any financial benefit to the Commonwealth.

16. The payment of moneys collected by the Commonwealth into the Consolidated Revenue Fund, is necessitated by s 81 of the Constitution, which refers to ``revenues or moneys''. The legislation does not have either the purpose or the effect of raising revenue for the Commonwealth. Its purpose is to create, and facilitate the enforcement of, private rights and liabilities. The Assessment Act creates a personal liability in a parent to the carer of a child; the Registration and Collection Act gives the carer the facility, in exchange for extinguishment of the liability to the carer, to have the Commonwealth recover the child support payments assessed and pay an equivalent amount to the carer.

17. The legislation does not bear the character of taxation.

Judicial power

18. In order to deal with the argument that the legislation purports to confer judicial power upon the Child Support Registrar, it is necessary to make further reference to some of the provisions of the two Acts.

19. When an application is made to the Registrar under the Assessment Act for administrative assessment of child support, the Registrar must assess the annual rate of child support payable (s 31(2)). The annual rate is calculated in accordance with a formula based upon a ``child support percentage'' multiplied by an ``adjusted income amount'' of the liable parent (ss 36, 37). Following such assessment, a daily rate of child support becomes due and payable monthly.

20. Part 6A of the Assessment Act provides for departure applications, which invoke a power in the Registrar to make a determination that the provisions relating to administrative assessments of child support will be departed from in relation to a child. The grounds for such an application relate to special circumstances which may include the capacity of either parent to provide financial support for a child, the costs of maintaining a child, and a consideration of whether the application of the administrative assessment provisions, would be unjust and inequitable (s 117). A departure determination may vary the rate of child support payable, the child support percentage, or the child support income amount.

21. The fact that the Registrar makes assessments, or departure determinations, by the application of legal criteria to the facts and circumstances of a particular case does not mean that what is involved is an exercise of judicial power. The making of decisions by the application of legal criteria to facts as found is characteristic, but not distinctive, of the judicial function. It is also characteristic of many administrative functions. An obvious, and topical, example is the way in which decisions are made under the Migration Act 1958 (Cth) when persons asserting refugee status make an application for a protection visa. The criteria by reference to which such applications are determined are contained in the Migration Act which, in turn, refers to the International Convention relating to the Status of Refugees. Deciding whether a person is owed protection obligations can involve difficult questions of fact and law. Such decisions are routinely made by officers of the executive government and, if necessary, reviewed by an administrative tribunal. A large majority of applications never go past the stage of administrative decision- making. Some decisions ultimately become subject to judicial review, but most claims to refugee status are decided without the involvement of any exercise of judicial power. Another example, referred to by Windeyer J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd , ^[13] (1970) 123 CLR 361 at 398. is that of customs officials who decide whether some article is a prohibited import or, if a permissible import, whether it is dutiable and in what sum.

22. The exercise by the Registrar of the powers referred to above does not involve the determination of pre-existing rights and

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obligations. It involves the creation of new rights and obligations for the future. The acceptance of an application, the making of an administrative assessment, and the making of a departure determination constitute the factum upon which the legislation operates to fix or alter the rights and obligations of parent and carer. ^[14] cf Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 111 [ 45].

23. Furthermore, the enforceability of such rights and obligations depends upon the intervention of a court and the independent exercise of judicial power. ^[15] Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 260-261 ; Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 110-111 [ 42]- [ 43]. The Registrar cannot enforce his or her own assessments or determinations.

24. In addition, neither an assessment nor a departure determination is conclusive. In the case of an assessment, after an objection made to the Registrar has been decided, an application may be made to a court for a declaration that an applicant is or is not entitled to an administrative assessment, or to appeal against the assessment (ss 106, 106A, 107, 110). In the case of a departure determination, following the disallowance of an objection either the liable parent or the carer may apply to a court (ss 115-118). In both cases, the court exercises original jurisdiction, and the court has broad powers to override decisions of the Registrar. ^[16] cf Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 111-112 [ 46]- [ 47].

25. For those reasons, the Assessment Act does not purport to confer judicial power upon the Child Support Registrar.

26. As to the Registration and Collection Act, if a person to whom a liability in respect of child support is owed chooses to seek registration, the Registrar is required to register the liability, with the legal consequences earlier described. If a payer or payee is dissatisfied with the registration, or the particulars entered in the register, there is a right of objection, and a person aggrieved with the Registrar's decision on the objection may ``appeal'' to a court. The registration of a child support liability does not involve a binding and conclusive determination of existing rights and liabilities. It creates rights for the future. Under s 113 of the Act, debts due to the Commonwealth may be recovered in a court of competent jurisdiction at the suit of the Registrar.

27. The Registrar is involved in various ways in the collection and recovery mechanisms. These mechanisms include garnishment of wages and salaries. These functions do not involve the exercise by the Registrar of judicial power. ^[17] cf Re Registrar, Social Security Appeals Tribunal; Ex parte Townsend (1995) 69 ALJR 647 at 650 per Toohey J; 130 ALR 163 at 167 .

28. This ground of challenge to the validity of the legislation fails.

Conclusion

29. The questions should be answered as follows:

• 1. Q. Is the scheme established by the Child Support (Registration and Collection) Act 1988 (Cth) and the Child Support (Assessment) Act 1989 (Cth) for the collection and payment by the second defendant of money otherwise payable to or receivable by the first defendant a tax?
• A. No.
• 2. Q. If ``yes'' to question 1 are the Acts invalid as being contrary to s 55 of the Constitution?
• A. Unnecessary to answer.
• 3. Q. Do the Acts in purporting to authorise the second defendant to make the assessments and the determinations, to enter the particulars, to issue the notices, and to collect and apply payments in the way in which the second defendant did involve the purported exercise of judicial power by the second defendant contrary to Ch III of the Constitution?
• A. No.
• 4. Q. What orders for the further disposition of the action should be made in the light of the answers to these questions?
• A. The action should be dismissed with costs.