brought to the Privy Council by special leave of the Privy Council and that there were no grounds for such leave being granted. Such constitutional questions, it was argued, should be dealt with exclusively by the High Court of Australia. The Privy Council did not deal with these preliminary objections in the usual way; it proceeded with the hearing of the whole appeal and finally reserved its judgment for further consideration. It was not till 6th December 1906 that the judgment of their Lordships was delivered by the Earl of HALSBURY. Instead of dealing with the preliminary objections at the outset, the judgment proceeded to deal with the main issues and questions involved namely:-Whether the respondent, an officer of the Commonwealth, was liable to be assessed for State income tax in respect of his Federal salary. After having decided that the judgment of the Supreme Court in favour of the respondent ought to be reversed, and that his salary in question was rightly included in the State assessment, the Board proceeded to deal with the preliminary objections in these words, "With respect to the objections urged both as a preliminary objection and one of substance to the hearing of the appeal, at all, by this Court, their Lordships are disposed to adopt the reasoning of the Supreme Court in giving leave to appeal. The only basis upon which the objections can be suggested to be founded is the Commonwealth Act and no direct authority under that Act has been shown." Copious extracts from the judgment of Mr. Justice HODGES were cited with approval but no expression of opinion whatever was given on the vital point raised that an appeal would not lie to the Privy Council without special leave being granted by that body. The result was that the appeal was allowed and Mr. Outtrim was required to pay State income tax. There was no order for costs of the appeal as between the appellant and the respondent, but the Commonwealth was ordered to pay the appellant the costs of its intervention: (1907) A.C. 81.

This decision of the Privy Council, given after a delay of 18 months, may be regarded as one of the most unsatisfactory deliverances on record in connection with the judicial interpretation of the Constitution of the Commonwealth. It may be justly cited as justifying the wisdom of the framers of the Constitution in taking steps to prevent the decision of Australian constitutional questions being diverted to the Privy Council except in cases where the High Court grants a special certificate authorizing such appeal.

Webb v. Outtrim in the High Court.

Flushed with a sense of victory in the result of Webb v. Outtrim in the Privy Council, the various State authorities early in 1907, proceeded to take legal proceedings against Commonwealth officers to enforce payment of State income tax. The attack was commenced in New South Wales in the case of Commissioner of Taxation v. Baxter, (1907) 4 C.L.R., 1087, and in Victoria in the case of Commissioner of Taxes v. Flint, 4 C.L.R., 1178. Mr. Baxter, an officer of the Commonwealth service, residing in Sydney, was assessed by the Commissioner and, having refused to pay taxes, he was sued in the District Court for the amount of the tax. At the hearing before District Court Judge MURRAY, Baxter contended that, on the authority of the High Court's decision in Deakin v. Webb, 1 C.L.R., 585, he was not liable. The learned Judge, however, following the decision of the Privy Council in Webb v. Outtrim, (1907) A.C., 81; 4 C.L.R., 356, decided against Baxter's contention, and found a verdict for the Commissioner for the amount claimed. From that decision Baxter appealed to the High Court.

In the High Court, a preliminary objection was taken against the appeal being entertained; it was alleged that the verdict against Mr. Baxter was given in a State Court in the exercise of State jurisdiction and therefore, no appeal would lie to the High Court in Federal jurisdiction. This was, in fact, a revival of the reasoning adopted by Mr. Justice HODGES in granting leave to appeal in Webb v. Outtrim. It was further argued that as the Privy Council had declared that the part of section 39 of the Judiciary Act purporting to take away the right of appeal was ultra vires, the whole section was invalid and therefore there was no valid section giving Federal jurisdiction to the State Courts.

In reply to this the Chief Justice (Sir SAMUEL GRIFFITH) pointed out that the Judiciary Act, section 39, had taken away State jurisdiction and had conferred on the State Courts Federal jurisdiction to deal with cases arising under the Constitution or involving its interpretation. "It was not necessary," he said, "to decide whether before the establishment of Federal Courts the State Courts were, in determining such questions, exercising Federal jurisdiction or not, for in the Judiciary Act the Parliament undertook to use the powers conferred by section 75. This they did by section 39 of that Act, which enacts in the first place that the juris

diction of the High Court, i.e., its power to exercise the judicial power of the Commonwealth, shall be exclusive of the jurisdiction of the several Courts of the States except as provided by that section. Without the proviso the jurisdiction of the State Courts would have been entirely ousted. But the Parliament might on the next day have passed another law investing the State Courts with Federal jurisdiction. And the fact that they proceeded to do so by the same Act can make no more difference in the result than the fact that a power of revocation and new appointment is exercised by one instrument instead of two. The result is that the jurisdiction of the State Courts is now derived from a new source, with all the incidents of jurisdiction derived from that new source, one of which is an appeal in all cases to the High Court."

Mr. Justice ISAACS held that State jurisdiction was the authority which State Courts possess to adjudicate under the State Constitutions and laws; Federal jurisdiction was the authority to adjudicate derived from the Commonwealth Constitution and laws. The first is that which" belongs to " the State Courts within the meaning of section 77; the latter must be vested in " them by Parliament. Now section 77 (II.) is a power to exclude jurisdiction, and this power has been exerted in this first sub-section of section 39, the result being that, so long as the provision stands unrepealed, no State jurisdiction can exist. Section 77 (III.) on the other hand, is a power to invest with Federal jurisdiction, not to restore State jurisdiction, and an exercise of that power in sub-section (2) of section 39 of the Judiciary Act is no contradiction of the deprivation contained in the prior sub-section, and works no restoration of the State jurisdiction. It is, therefore, clearly an error to say that the Federal Parliament has in the same section purported to take away and to return the same jurisdiction, with or without the power of appeal to the Privy Council, or that the conjoint effect of sub-sections (1) and (2) of section 39 of the Judiciary Act is to leave the jurisdiction of the State Courts as it previously stood. They still have jurisdiction in respect of the same subject matters, but their authority to exercise judicial power with regard to those matters springs from another source quite as much as if an Imperial Act had enacted by one section that their State jurisdiction should cease, and by the next section that henceforth they should have similar jurisdiction but should exercise it under the authority of that Statute. The authority which is given by section 39-namely, Federal jurisdic

tion-has never been taken away, because it had never belonged to a State Court; that which was taken away-namely State jurisdiction-has never even nominally been returned. Section 39 (2) confers "Federal jurisdiction" only; none other is in the power of the Commonwealth Parliament to grant, and in the result either the State Courts possess Federal jurisdiction only in these matters or they possess none at all."

"I feel no doubt that the State Courts in these cases possessed, and necessarily exercised Federal jurisdiction, and that these appeals are competent." Per ISAACS, J., 4 C.L.R., at pp. 1142-1145.

Baxter v. Commissioner of Taxation.

The preliminary objection having been over-ruled, the Court proceeded to deal with the main constitutional issues involved. namely, the liability of Commonwealth officers to State taxation. The majority of the Court, per GRIFFITH, C.J., BARTON and O'CONNOR JJ. held that the High Court was, by the Constitution, the ultimate arbiter upon all such questions, unless it was of opinion that the question at issue in any particular case was one upon which it should submit itself to the guidance of the Privy Council. It was, therefore, not bound to follow the decision in Webb v. Outtrim, (1907) A.C., 81, but should follow its own considered decision in Deakin v. Webb, (1901) 1 C.L.R., 585, in which it had refused to grant a certificate under section 74, unless upon a reconsideration of the question for whatever reason it should come to a different conclusion. Assuming the fact that the Privy Council had given a decision in direct conflict with the High Court on the same point to be a sufficient reason for a reconsideration of the whole matter by the High Court, there was nothing in the reasons of the Judicial Committee to throw any new light on the question involved, either with regard to the necessity for the implication of the rule of implied prohibition laid down in M'Culloch v. Maryland, 4 Wheat., 316, and adopted in D' Emden v. Pedder, 1 C.L.R., 91, or as to the applicability of the rule to the particular question. The rule in D'Emden v. Pedder, 1 C.L.R., 91, was therefore reaffirmed and the appeal was allowed: Baxter v. Commissioner of Taxation (N.S.W.), (1907) 4 C.L.R., at p. 1088.

Mr. Justice ISAACS was of opinion that, apart from any consideration of its history, the words of section 74 of the Constitution were clear and strong enough to lead to the conclusion that on questions coming within the section the decision of the High Court was final, and, therefore, the Court had a right to decline to follow

the decision of the Privy Council upon any such question, but the respect and weight due to the judgment of the Privy Council made it the duty of the High Court under the circumstances to re-consider the question decided in Deakin v. Webb, 1 C.L.R., 585. Further consideration, in the light of the decision in Webb v. Outtrim, (1907) A.C., 81, left the authority of D'Emden v. Pedder, 1 C.L.R., 585, unimpaired, but the Land and Income Tax Act of New South Wales, considered apart from authority, could not be regarded as an infringement of the rule of non-interference laid down in the latter case.

Mr. Justice HIGGINS held that the King in Council being still the appellate Court from the High Court, and the High Court a Court from which appeal can be brought to the King in Council, it was the duty of the High Court to accept the decision of the King in Council as the final statement of the law. The Land and Income Tax Act of New South Wales was not, in his opinion, an interference with Federal instrumentalities.

The whole Court held that even if section 39, sub-section (2) (a) of the Judiciary Act 1903 purported to take away the right of appeal to the Privy Council, and the section was to that extent ultra vires and inoperative, its failure in that respect did not affect the validity of the grant of Federal jurisdiction to State Courts contained in the rest of the section and the consequent right of appeal to the High Court. The certificate for leave to appeal to the Privy Council was refused.

Flint v. Webb.

The case of Flint v. Webb, which was a similar proceeding by the Victorian Commissioner of Taxes to recover State income tax against Arthur L. Flint, a Commonwealth officer, was argued in the Melbourne sittings of the High Court in May 1907 and the decision of the main question was given at the same time as that in Baxter's Case and was to the same effect. Consequently notwithstanding the decision of the Privy Council in Webb v. Outtrim, the whole of the Commonwealth officers, except Mr. Outtrim, by the decision of the High Court, escaped State taxation: 4 C.L.R., 1178.

Proceedings against Commonwealth or State.

78. The Parliament may make laws conferring rights to proceed against the Commonwealth 143 or a State in respect of matters within the limits of the judicial power.