PART II.

LEADING CASES REVIEWED.

The important case of The Commissioner of Taxes of Victoria v. Wollaston (Wollaston's Case), (1902) 8 V.L.R., 57, was the first of a long series of Federal cases decided in Australia after the establishment of the Commonwealth involving the interpretation of the Constitution, and particularly raising the question of the Constitutional powers inter se of the Commonwealth and the States and the contested immunity of State and Federal means and instrumentalities of government from Federal or State interference. The Commissioner of Taxes of Victoria sued Dr. Wollaston, the ComptrollerGeneral of the Commonwealth Customs Department, to recover income tax on his federal salary earned in Victoria. The Full Court of Victoria (per MADDEN, C.J., and Justices WILLIAMS and A'BECKETT) held that the defendant was liable to pay State income tax. It was held that the principle laid down by the Supreme Court of the United States (per Chief Justice MARSHALL) in the case of Mc Culloch v. Maryland, (1819) 4 Wheat., 316, "that a State has no right to tax any of the constitutional means employed by the Government of the Union to execute its constitutional powers or by taxation or otherwise to retard, impede, burden, or in any manner control the operation of the laws passed by Congress to carry into effect the powers vested in the national government," was not applicable to the interpretation of the Constitution of the Commonwealth.

The decision in Wollaston's Case was referred to and in effect over-ruled by D'Emden v. Pedder, (1904) 1 C.L.R., 91, the first great constitutional case decided by the High Court of Australia. It was there held, in consonance with the principle of McCulloch v. Maryland, that the provisions of the Tasmanian Stamp Receipt Act requiring every receipt given for a payment of money exceeding £2 to bear a stamp duty of 2d. could not be construed so as to apply to a receipt given for his salary by a federal officer in Tasmania ; the ground being that such a tax, if enforced, would be an interference with a federal agent or instrumentality in the performance of his duty, and such agents and instrumentalities are entitled to absolute freedom from state interference or control except that prescribed by the Constitution: D'Emden v. Pedder, (1904) 1 C.L.R.,

91.

Notwithstanding the decision of the High Court in D'Emden

v. Pedder, which they distinguished, the Full Court of Victoria, (per MADDEN, C.J. and Justices A'BECKETT and HODGES) in Webb v. Deakin, (1904) 29 V.L.R., 748, re-affirmed Wollaston's Case and held that the remuneration of a member of the Parliament of the Commonwealth and that of a Minister of State for the Commonwealth are salaries, so far as they are earned in Victoria, were subject to taxation under the State Income Tax Act 1895, as income of such member or minister.

The case of Webb v. Deakin subsequently came before the High Court on appeal (sub nomine) Deakin v. Webb, (1904) 1 C.L.R., 585. The principle enunciated by the High Court in D' Emden v. Peddar was applied by the same Court to exempt the salaries of Federal ministers and members from the operation of State income tax laws : Deakin v. Webb, (1904) 1 C.L.R., 585. The decision of the State Full Court of Victoria in Wollaston's Case was thereby distinctly over-ruled.

In Webb v. Outtrim, (1905), another action to recover State income tax from a federal officer, the Full Court of Victoria followed the ruling of the High Court in Deakin v. Webb, and gave judgment for the defendant. Leave to appeal to the Privy Council was granted by the Supreme Court to the Commissioner. The Privy Council, (1906) App. Cas., 71, allowed the appeal; held that an officer of the Commonwealth, resident in Victoria where he earns and receives his salary, as such officer, is liable to be assessed under the Income Tax Act of Victoria. The Privy Council gave judgment for the Commissioner of Taxes, refusing to follow the decision of the High Court in Deakin v. Webb.

This constitutional controversy was by no means settled by the decision of the Privy Council in Outtrim's Case. The State Governments of New South Wales and Victoria at once commenced actions against federal officers and members to recover State income tax. The State Courts, following the ruling of the Privy Council, gave judgments for the enforcement of the state taxes. In 1907 two of these cases came before the High Court on appeal: Baxter v. Commissioner of Taxes, N.S.W., 4 C.L.R., 1087, and Flint v. Webb, Commissioner of Taxes, Victoria, idem, 1178. The High Court set aside the verdicts given by the State Courts in favour of the State Tax Commissioners and entered judgment for the defendants in both cases; re-affirming its decision in Deakin v. Webb and refusing to follow that of the Privy Council in Webb v. Outtrim. So that

there are now on record two conflicting judgments on the same question of constitutional law, one by the Privy Council and the other by the High Court. See notes to covering clause v.

On the lines of D'Emden v. Pedder the High Court decided, in The Commonwealth v. The State of New South Wales, (1905) 3 C.L.R., 807, that a State Stamp Duty Act could not be applied to deeds and instruments of title by which lands are transferred to the Commonwealth; such documents are duty free.

A further application of the same principle of immunity on a different ground was made by the High Court in Roberts v. Ahern, (1904) 1 C.L.R., 406. In that case the appellant, a Commonwealth Government contractor, had been convicted in a Victorian Court of Petty Sessions for having carried soil from a post office at Inglewood, without having a licence so to do, and without having given security to the Borough Council as required by the Police Offences Act 1890, section 5. The High Court decided that the State Act does not purport to bind or affect the Government of the Commonwealth or its agents or contractors, in the conduct of operations in connection with federalized departments.

An interesting illustration of the meaning of the expression State Rights" is to be found in the decision of the High Court in Peterswald v. Bartley, (1904) 1 C.L.R., 497, where the Court sustained the continued validity of the New South Wales Liquor Act 1898, under which persons engaged in the manufacture of beer were required to take out and pay for brewers' licences. It was contended by the defendant (the brewer) that as he paid to the Commonwealth excise duty on the manufacture of beer and as the right to impose excise duties was, by the Constitution, sections 86 and 90, exclusively vested in the Commonwealth, the exclusive federal power superseded the State brewer's licence law. But the Court considered that brewers' licence fees are not excise duties but regulation fees within the police powers of the States and therefore that the State liquor laws authorizing such licence fees continued in operation.

The rule laid down in D'Emden v. Pedder, 1 C.L.R., p. 111, declaring invalid and inoperative any State law, which would, if enforced, fetter, control, or interfere with the Federal Government, its officers and agents, is not restricted to Commonwealth rights, it is reciprocal. It is equally applicable to cases of attempted interfer

L. P.

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It was,

ence by the Commonwealth with State instrumentalities. therefore, held by the High Court in the Federated Amalgamated Government Railway and Tramway Service Association v. New South Wales Railways Traffic Employees' Association, (1906) 4 C.L.R., 489, that the Commonwealth Conciliation and Arbitration Act 1904, so far as it purports to affect State railways, is ultra vires and void, and, consequently, that an organization consisting solely of employees on State railways was not entitled to be registered under that Act.

In two remarkable and important cases, The King v. Barger and The Commonwealth v. Mc Kay, (1908) 6 C.L.R., 42, the High Court held that the Commonwealth Excise Tariff Act 1906 was not, in reality, an Act imposing duties of customs, as it purported to be, but was an Act designed to regulate the conditions and remuneration of labour in the manufacture of agricultural implements in Australia. As such it was an attempt to interfere with the internal, industrial and domestic affairs of the States. The Federal Parliament is not authorized to control such matters, and what is not authorized is forbidden, either expressly or by necessary implication. The power of taxation cannot be exercised so as to operate as a direct interference with such affairs. The pretended taxing Act was therefore declared to be ultra vires and void.

The power of the Federal Parliament does not extend to trade and commerce within a State. Consequently the power to legislate as to internal trade and commerce is reserved to the States by section 107, to the exclusion of the Commonwealth. When the intention to reserve any subject matter to the States, to the exclusion of the Commonwealth clearly appears, no exception should be admitted to that reservation which is not expressed in clear words. In accordance with these principles, Part VII. of the Commonwealth Trade Marks Act authorizing the registration of and giving proprietary rights in a "workers' label" is, in substance, an attempt to regulate.the internal trade of the States, not within or incidental to any of the expressed powers conferred on the Parliament to regulate that trade. That part of the Act is therefore ultra vires, and, though its provisions, if limited to trade and commerce between the States, would be within the competency of the Commonwealth Parliament, it was impossible to separate that which was within from that which was without the power, and so the whole was declared invalid. So held, per GRIFFITH, C.J. and Justices BARTON

and O'CONNOR; Justices ISAACS and HIGGINS dissenting: The Attorney-General of New South Wales v. The Brewery Employees' Union of New South Wales, (1908) 6 C.L.R., 469.

The provisions of the Australian Industries Preservation Act, sections 5 and 8, so far as they attempt to regulate and restrict the powers of foreign corporations and trading and financial corporations formed under State laws in making contracts in restraint of trade and business carried on within the limits of a State and not extending to inter-state or external trade are invalid. The Federal Parliament cannot pass laws for the creation or dissolution of corporations. Such power is at present vested only in the States. Huddart Parker & Co. Ltd. v. Moorehead, (1909) 8 C.L.R., 330.

The Commonwealth Conciliation and Arbitration Court cannot legally make awards in inter-State industrial disputes inconsistent with the determination of State Wages Boards (such as those of Victoria) empowered by State statute laws to fix the minimum wages in certain trades and callings. Such Boards are subordinate legislative bodies and federal awards repugnant to the rates of pay fixed in advance by such Boards are void to the extent of repugnancy. Federated Saw Mill Employees' Union v. Moore and others, (1909) 8 C.L.R., 466; The Australian Boot Trade Employees' Federation v. Whybrow and others (special case), (1910) 10 C.L.R., 267.

The Commonwealth Court of Conciliation and Arbitration can only settle actual disputes between defined and ascertained parties, in judicial proceeding brought before it on summons or notice and cannot make a common rule or regulation enforcing labour conditions binding, like a by-law, absent parties or a trade or industry generally. Sub-section (f) of section 38 of the Conciliation and Arbitration Act 1914 (common rule) is therefore ultra vires and void. Such rules can only be made either directly by laws or by subordinate legislative bodies empowered so to do by State statute laws : The King v. Commonwealth Court of Conciliation and Arbitration ; Ex parte Whybrow and others (prohibition case), (1910) 11 C.L.R., p. 1; Australian Boot Trade Employees' Federation v. Whybrow and others (special case), (1910) 11 C.L.R., 311.

The provisions of the Seamen's Compensation Act 1909, section 4, so far as they attempt to regulate the civil liability of the owners of ships engaged in trade or navigation from port to port within a State and not engaged in inter-state or external trade are ultra vires