Chapter 5 — Major Cases 3

Chapter 5 – Major Cases 2

From The High Court of Australia 1903-2003 by Crispin Hull

Chapter 3 looked at some of the major cases in the High Court’s first half century. This chapter looks at major cases in the second half century.

The Tasmanian Dam Case

Commonwealth v Tasmania (1983) 158 CLR 1

Environmental issues were prominent in the 1983 Federal election campaign. In Tasmania a proposal by the State Government and the Hydro-Electric Commission to build a dam on the Gordon River below its junction with the Franklin River had at least qualified support of both major parties at State level and was authorised by an Act of the Tasmanian Parliament. Opponents of the dam took their campaign to the federal level. The Australian Labor Party, at the federal level, promised in the election campaign that if it won government it would stop the dam being built. Labor won. The new Parliament passed the World Heritage Properties Conservation Act 1983. This prohibited any person from constructing a dam – including preliminary works – that would inundate significant Aboriginal archaeological sites or cause damage to a wilderness area. The area was of great natural significance and satisfied the criteria for listing on the World Heritage List under the Convention for the Protection of the World Cultural and Natural Heritage. Australia was a party to the Convention and it had been ratified by the Commonwealth Parliament.

The Tasmanian Government immediately challenged the validity of the Act, asserting that it went beyond the power of the Commonwealth Parliament. The Commonwealth relied on four sources of power: external affairs, corporations, race and implied national power. The use of the external affairs power excited the most controversy.

The Act was held to be valid under the external affairs power. The case led the way for the Commonwealth to make laws to implement any international treaty, irrespective of its subject matter. The majority, Justices Mason, Brennan, Murphy and Deane held that it did not matter that the subject matter was something that had previously been regarded as solely within State power, such as dam construction or land management. It did not matter that the subject matter of the treaty had previously not been a matter of international concern. The mere fact that Australia and other countries had entered into a treaty was enough to attract the external affairs power. The only proviso was that the treaty had to be entered into in good faith and not a subterfuge by the Commonwealth to increase its power in Australia.

The case built on earlier decisions. Some maintain that in a legal sense the case represented an incremental change. Others argued that in a legal sense it was a radical departure from the accepted understanding of the external affairs power. In any event, in a practical sense, it was dramatic because the Commonwealth succeeded in stopping such a major State venture.

One of the first cases to deal extensively with the external affairs power came in 1936 with R v Burgess; Ex parte Henry (1936) 55 CLR 608. An unlicensed pilot challenged Commonwealth air navigation regulations which imposed a penalty for unlicensed flying. The High Court held that the external affairs power was not restricted to legislating for what Australia might do overseas. The power could allow the Commonwealth to make laws to regulate conduct in Australia in order to give effect to an international treaty that Australia had ratified. The external affairs power was not restricted to areas where the Commonwealth already had legislative power. But it was limited to implementing specific terms of treaties. In R v Burgess, the regulations did not implement all of the terms of the treaty and some differed from its terms of the treaty, so the regulations were held invalid.

In R v Burgess and in the 1982 case Koowarta v Bjelke-Petersen (1982) 153 CLR 168, the Court held that, to be a valid exercise of the power, the treaty which the Commonwealth law sought to implement must relate to a matter of genuine international concern. Koowarta took Burgess a step further in holding that the Commonwealth could take action to prevent State conduct.

The Tasmanian Dam Case had the effect of widening the scope of Commonwealth power. Over time, nations have entered into treaties over a range of new matters, in particular the environment, labour conditions, discrimination and a range of criminal conduct. As they did so, the Commonwealth gained wider power by entering into international obligations which were given effect within Australia by legislation.

The case drew considerable criticism from supporters of States’ rights and some constitutional lawyers who thought the Court had changed the federal compact by giving power to the Commonwealth at the expense of the States.

As it happens, in the ensuing 20 years the Commonwealth has made only infrequent use of treaties to legislate in fields where it had not other head of power, though the opportunity remains for an adventurous government to do so.

Four Justices said that the World Heritage Properties Conservation Act 1983 was supported by Commonwealth Parliament’s power to make laws with respect to trading corporations because the Hydro-Electric Commission traded in electricity. They said it was also a valid exercise of the race power because it would prevent the flooding of caves which might contain Aboriginal artwork of particular significance to people of the Aboriginal race.

They held that section 100 of the Constitution did not make the Act invalid. Section 100 says the Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation. The majority held that the prohibition applied only to laws dealing with trade and commerce whereas this Act had to be made under the external affairs, corporations and race powers.

However, Justice Deane joined Chief Justice Gibbs, Justice Wilson and Justice Dawson in holding that the Act was not supported by any inherent legislative power of the Commonwealth derived from its character as a polity – an implied national power.

Cole v Whitfield

Cole v Whitfield (1988) 165 CLR 360

In 1987 the High Court undertook an extraordinary judicial clean-up of the interpretation of one of the most litigated sections of the Constitution: section 92. Section 92 provides that, “On the imposition of uniform duties of customs, trade, commerce and intercourse among the States . . . shall be absolutely free”.

In the 1950s a series of cases over transport had brought some measure of certainty about the operation of section 92. However, section 92 decisions from the mid-1960s saw different judicial approaches which resulted in cases being decided in apparently inconsistent ways. One early theory was that the section was merely intended to secure a common market so that no internal customs duties could be imposed at State borders. But nearly every Justice in the Court’s history has considered that it has meant more than that. The States and the Commonwealth had to be prevented from interfering with the freedom suggested in section 92. That posed the questions about what activity was to benefit from the freedom, what was its extent and who was being granted the freedom.

Since Federation the High Court has grappled with these and other questions. If trade and commerce were to be absolutely free, would that prevent a State or the Commonwealth from prohibiting production or prevent them from compulsorily acquiring goods before they could be traded? If trade, commerce and intercourse were to be absolutely free did it mean a State could regulate interstate road transport with heavy registration fees to protect their railways? Did it mean a State could prevent the interstate transit of what it determined were diseased or defective goods? Could a State insist on consumer protection or environmental regulation that would prevent the sale of certain goods or demand labelling standards, even if those goods came from another State? Did section 92 confer an individual right to engage in interstate trade and commerce? Could the Commonwealth prevent the erection and maintenance of an interstate network of television transmission stations and the transmission of programs over it — forcing stations to use the Commonwealth-owned Telecom instead? These questions were posed and answered differently by different judges in 139 cases before 1988. The Court held invalid legislation to nationalise banking and airlines, at least partly on the basis that section 92 gave individuals a right to engage in interstate trade. It allowed some but not other marketing schemes for agricultural produce, particularly dried fruit and wheat. And it differed over what was a permissible level of regulation in the nature of consumer protection.

The television-transmission example cited above was litigated in Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556. The seven separate judgments, delivered in 1986, revealed a greatly divided Court and was perhaps the height of judicial disagreement over section 92. On the three questions of whether section 92 protected against prosecution for erection, maintenance and use of the network, one judge said all three, two said maintenance and use only, two said none but for incompatible reasons, one said use only and the last judge held no protection against erection and maintenance and declined to rule on use.

Justice Deane began his judgment:

“This is another case about the operation and effect of Section 92 of the Constitution. Both sides argued with apparent conviction on the basis of existing authority to support diametrically opposed conclusions. Perhaps that should not be seen as surprising since the more one becomes immersed in the decisions of the Privy Council and this Court on the subject of Section 92, the plainer the impression becomes that one has entered an area where the ordinary processes of legal reasoning have had but a small part to play and where judicial exegesis has tended to confuse rather than elucidate. Indeed, it is as if many voices of authority have been speaking differently at the same time with the result that, putting to one side some basic propositions, it is all but impossible to comprehend precisely what it is that authority has said.” (at 615-616).

Justice Mason paved the way for a change of thinking. He said that notwithstanding earlier cases saying that section 92 conferred a personal right attaching to the individual, “the section does not speak of the private right of the individual to engage in inter-state trade and commerce; instead it refers to trade and commerce as an entire and total concept.” (at 570). The section had

“predominant public character . . . and that the protection which it gives to the rights of the individual is incidental to and consequential upon the protection which is given to the entire concept of interstate trade. . . . For present purposes what is important is the divergence of views expressed by the members of the Court in Uebergang [a wheat marketing case]. The judgments in that case demonstrate in convincing fashion that there is now no interpretation of Section 92 that commands the acceptance of a majority of the Court. There is much to be said for the view that in this situation the Court has a responsibility to undertake a fundamental re-examination of the section. Nonetheless, if such a re-examination is to take place, it should be undertaken after we have had the benefit of comprehensive argument, an advantage which we have not enjoyed in this case.” (at 571).

And that is what happened in Cole v Whitfield. Tasmanian law made it illegal to possess crayfish under a certain size. The aim was to protect fisheries. A fisheries inspector found under-sized crayfish at a crayfish farm. The crayfish farm said the crayfish were from South Australia where they were of a legal size and that they were intended for sale on the mainland. It argued that section 92 should protect it from prosecution.

Every State and the Commonwealth intervened. They prepared what amounted to a joint submission summarising the previous 139 cases. After 11 months the Court delivered a joint judgment of all seven Justices. It swept away the reasoning of the previous cases and went back to the debates of the conventions that drafted the Constitution.

The judges said:

“The principal goals of the movement towards the federation of the Australian colonies included the elimination of intercolonial border duties and discriminatory burdens and preferences in intercolonial trade and the achievement of intercolonial free trade. . . . The expression ‘free trade’ commonly signified in the nineteenth century, as it does today, an absence of protectionism, that is, the protection of domestic industries against foreign competition. Such protection may be achieved by a variety of different measures – eg, tariffs that increase the price of foreign goods, non-tariff barriers such as quotas on imports, differential railway rates, subsidies on goods produced and discriminatory burdens on dealings with imports. . . .Section 92 precluded the imposition of protectionist burdens: not only inter-State border customs duties but also burdens, whether fiscal or non-fiscal, which discriminated against inter-State trade and commerce. . . . The means by which that object is achieved is the prohibition of measures which burden inter-State trade and commerce and which also have the effect of conferring protection on intra-State trade and commerce of the same kind. The general hallmark of measures which contravene Section 92 in this way is their effect as discriminatory against inter-State trade and commerce in that protectionist sense. . .

History and context alike favour the approach that the freedom guaranteed to inter-State trade and commerce under Section 92 is freedom from discriminatory burdens in the protectionist sense.” (at 392-395).

So if a law applied to all trade and commerce, inter- and intrastate, it was less likely to be discriminatory. The Court held that a blanket rule that applied to all crayfish was not discriminatory. The question of an individual’s right to trade interstate in crayfish did not arise.

Since 1988, the number of section 92 cases occupying the Court’s time each year has dropped. However, since 1988 State and Commonwealth Governments have had a less regulatory approach to trading activities so there has been less need for people and corporations to invoke section 92.

The unanimous laying down of the test brought certainty at least to how cases should be argued, but it did not guarantee certainty of result. Opinions would obviously divide occasionally on how the test would apply to particular facts. Indeed, in the very next section 92 judgment – Bath v Alston Holdings (1988) 165 CLR 411 which was argued at the same time as Cole v Whitfield – the Court divided 4-3 on how the facts fitted the test.

Native title

Mabo v Queensland (No 2) (1992) 175 CLR 1

The islands of Mer, Dawar and Waier – the Murray Islands — in the Torres Strait have been home to the Meriam people from time immemorial. In 1879 the islands were annexed by Queensland with authority of the British Government. By and large people were left to use the land as gardens and residences as they had always done. Many of the islanders moved to and from Townsville to live and work. It was there, at a land rights conference at James Cook University in 1981, that one of the islanders, Eddie Mabo, found that land he had always regarded as his was Crown land. He wanted a declaration that the islands belonged to their indigenous people and so, in 1982, began the Mabo litigation. Mabo was joined by two other islanders, James Rice and James Passi.

The case took 10 years to resolve with the handing down of the second Mabo judgment on 3 June 1992. Until then it had been assumed that at the time of European colonisation in 1788 Australia was terra nullius – not under the sovereignty of a polity recognised as a sovereign state – and that therefore the general law recognised no title in indigenous people holding land under traditional tenure. That had been the decision of Justice Blackburn in Milirrpum v Nabalco Pty Ltd (Gove Land Rights Case) (1971) 17 FLR 141 in the Northern Territory Supreme Court, though he did not use the expression terra nullius.

The Mabo case presented an opportunity to attack the application of the doctrine of terra nullius to certain Australian lands. The case was brought in the original jurisdiction of the High Court. It was a common law action, not a constitutional one. The question was whether the common law recognised that the customs, traditions and the traditional rights to land and surrounding seas of the Murray Islands gave enforceable property rights or whether those rights had not extinguished upon annexation of the islands.

In 1986, when the parties could not agree to a joint statement of facts, the case was remitted to the Supreme Court of Queensland for findings to be made upon evidence. In the meantime, the Queensland Parliament passed the Queensland Coast Islands Declaratory Act 1985 which retroactively purported to extinguish existing land rights without compensation. The validity of the Act was challenged in Mabo v Queensland (No 1) (1988) 166 CLR 186. It was held to be invalid because it was inconsistent with the Commonwealth Racial Discrimination Act 1975. This enabled the original case to be argued. The issues in the case concerned farmed arable land in three Torres Strait Islands. By a 6-1 majority, the Court held that native title to land in Australia survived the annexation of the islands. The majority went further and held that the Crown’s acquisition of sovereignty at the time of acquisition of mainland Australia had not extinguished the native title of Aboriginal people in Australia. They held that the common law of the British coloniser recognised the pre-existing land rights of indigenous people. Courts in other former British colonies had held similarly. However, the Court held that native title could be extinguished by the grant of in interest in land that was inconsistent with the continuing right to enjoy native title.

The case was major breakthrough for indigenous people seeking the recognition of native title. But some issues were unresolved. It was clear, for example, that the grant of freehold land would extinguish native title. It was left to Wik Peoples v Queensland (1996) 187 CLR 1 to determine that the grant of a grazing lease did not necessarily extinguish native title. Indigenous people would have to demonstrate a continuous use of the land to gain title and show that the rights in the grazing lease were not inconsistent with asserted native title rights. The title was inalienable – it could not be transferred or sold. It was clear that whatever extinguishment occurred in the past, future extinguishment of it would be difficult. State legislatures could not achieve it because, as Mabo (No 1) showed, they would come up against the Racial Discrimination Act. And the Commonwealth Parliament could not extinguish title without dealing with the constitutional requirement for acquisition of property only on just terms, which would involve the payment of compensation. A question remains as to the exact nature of native title, beyond a right to continue to enjoy land in traditional ways.

After Mabo, the Native Title Act 1993 (Cth) was enacted to clarify and regulate native title. In the ensuing decade the tribunal has helped indigenous people and land users – such as pastoralists and miners – to negotiate agreements about land use. But the Act has also led to a great deal of complicated litigation.

Implied freedom of speech

Nationwide News Pty Ltd v Wills (1991) 177 CLR 1

Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106

Lange v Australian Broadcasting Corporation (1997) 189 CLR 520

The Australian Constitution, unlike the Constitution of the United States, does not contain a Bill of Rights. There are some provisions that appear to give some rights: indictable offences must be tried by jury (section 80); the Commonwealth cannot establish a religion (section 116); adults allowed to vote at a State election must be allowed to vote at a Commonwealth election (section 41) and the House of Representatives must be directly chosen by the people (section 24); trade, commerce and intercourse among the States shall be absolutely free (section 92); and property may not be acquired except on just terms (section 51(xxxi)). But in most instances the Court has held that these provisions do not grant broad individual rights. The Court held that Parliament could make an offence a summary one to circumvent the right to trial by jury. It has held that the non-establishment provision for religion did not guarantee freedom of religious practice. It held that the right to vote in Commonwealth elections granted in section 41 to people who are permitted to vote in State elections applied only as at beginning of the Commonwealth, so is now virtually a dead letter, and the words “directly chosen” in section 24 did not confer a right to one vote, one value. The exceptions to these refusals to grant broad individual rights have been section 92 and property rights. Section 92 was interpreted by the Court in terms of an individual’s right to engage in interstate trade until that approach was rejected in Cole v Whitfield in 1988. And the Court has struck down many Commonwealth laws that provide for the acquisition of property without just terms.

However, in 1992, two cases arose from challenges to federal legislation that restricted free speech. The Industrial Relations Act 1988 (Cth) contained a new provision, section 299(1)(d)(ii), making it an offence to speak or write anything that might bring the Industrial Relations Commission into disrepute. Maxwell Newton wrote an article in The Australian newspaper in November 1989 referring to a “corrupt and compliant judiciary in the official Soviet-style Arbitration Commission”. Newton and The Australian were prosecuted but the Court agreed with their argument that the provision was invalid. Justices Mason, Dawson and McHugh, held in Nationwide News Pty Ltd v Wills that it was beyond the Commonwealth Parliament’s industrial relations power. Because the provision was so sweeping it could not be reasonably incidental to the power. However, the four other Justices — Brennan, Deane, Toohey and Gaudron – held the provision invalid because it was contrary to an implied freedom of political communication that could be read into the Constitution. The implied freedom arose because the Constitution provided for a system of representative government. For that to be effective electors had to be informed about political matters.

In 1991 the Commonwealth Parliament passed the Political Broadcasts and Political Disclosures Act which prohibited political advertisements on radio and television during a federal election. The Act required broadcast stations to run, for no charge, one- or two-minute broadcasts of candidates for election. Chief Justice Mason and Justices Deane, Toohey, Gaudron and McHugh in Australian Capital Television Pty Ltd v Commonwealth held the law to be invalid as a breach of the implied freedom of political communication. Justice Brennan said the freedom existed, but this law did not breach it. Justice Dawson rejected the whole concept of implied freedoms.

In 1994, the Court took the implied freedom a step further. In Theophanous v Herald and Weekly Times Ltd (1994) 182 CLR 104 and Stephens v Western Australian Newspapers Ltd (1994) 182 CLR 211, the Court held that the implied freedom of political communication would protect defamatory statements against State and Territory defamation laws if they met certain requirements. However, in Lange v Australian Broadcasting Corporation, the Court retreated from that after a five-day hearing with all Governments and media interests intervening. The Court said, “Freedom of communication on matters of government and politics is an indispensable incident of that system of representative government which the Constitution creates by directing that the members of the House or Representatives and the Senate be directly chosen by the people.” (at 559). However, the implied freedom would not lead to the invalidation of the State defamation laws or other laws enacted to achieve some legitimate end provided those laws were compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and that they were reasonably appropriate and adapted to achieving that legitimate object or end. Lange v ABC now states the extent of the implied freedom of political communication in relation to defamation law. A person who publishes defamatory material usually has to prove it is true and in the public interest. Under the test in the Lange case, people can publish information of a political kind which contains defamatory material provided the publisher is unaware of its falsity; has an honest belief in its truth; is not reckless; and the publication was reasonable. A publisher who satisfied these tests will not be held liable for the defamation even it transpires later that the material was false and defamatory. These tests are easier than proving truth.

Administrative convenience v the words of the Constitution. Incorporation, excise and cross-vesting.

Administrative convenience v the words of the Constitution: Incorporation, excise and cross-vesting

In the 1990s three legislative arrangements agreed by the Commonwealth and States as convenient ways of regulating companies, raising taxes and determining which Court should deal with particular disputes met constitutional difficulties. The arrangements were for a uniform national companies regime; a more cohesive arrangement for State and federal courts to avoid inconvenient and expensive jurisdictional disputes; and a taxation system for the States under which they could levy revenue from certain commodities. Despite the obvious convenience of permitting the schemes to go ahead or continue, each ran into fatal constitutional difficulties and each was held to be invalid by the High Court in the decade from 1989 to 1999.

The High Court did not itself draw links between the three arrangements. However, a theme does emerge. In each case, the Court was determined to hold true to the words of the Constitution irrespective of the desires of the Commonwealth and State legislatures and corporate Australia.

<B Head>Incorporation

New South Wales v Commonwealth (The Incorporation Case) (1990) 169 CLR 482

Two major issues have concerned the interpretation of the Commonwealth’s power to make laws with respect to “foreign corporations and trading or financial corporations formed within the limits of the Commonwealth”.

First, to what extent could the Commonwealth legislate about the activities of corporations? Was the Commonwealth limited to legislating only about trading and financial activity of corporations? Or could it regulate or prohibit the whole range of corporate activity — such as a corporation’s employment conditions, whether a corporation might advertise tobacco, pollute the environment or build a dam. In the Tasmanian Dam Case, the Court held that the Commonwealth could prohibit a wide range of activities by the Hydro-Electric Commission, such as the felling of trees or using explosives. However, only three Justices held that the Commonwealth could regulate any conduct whatever of a corporation. The majority decision required the support of a fourth judge’s ruling that the prohibited activities must be connected to the corporation’s trading activity – in this case the trading in electricity. It appears from the reasoning in later cases that that connection will be required. Further, the extent to which the Commonwealth can regulate the activities of holding and shelf companies, for example, remains unresolved.

The second question was whether the Commonwealth’s corporations power would support the regulation of the act of formation or incorporation itself. In the 1980s it became apparent that the various Companies Acts of the Commonwealth, States and Territories were inefficient. An increasing number of corporations had national operations and it was artificial and inconvenient to tie them to a State or Territory of incorporation for administrative and regulatory purposes. The Commonwealth legislated for a national scheme covering incorporation based on the corporations power. The scheme embraced incorporation, registration and regulation of corporations. But some States objected to elements of the scheme and New South Wales challenged its constitutionality in the High Court in New South Wales v Commonwealth (the Incorporation Case). The Court went to the words of the Constitution. It held that the Commonwealth Parliament’s power to make laws with respect to “. . . corporations formed within the limits of the Commonwealth” (section 51(xx)) meant a power with respect to corporations already created under State law. It did not mean a power over the actual creation of corporations – however convenient it might have been to have a national corporations scheme. The Court rejected the Commonwealth’s contention that the words “formed within the Commonwealth” were merely to signify a difference from foreign corporations. The Court was criticised in commercial circles for holding the national scheme invalid. Later, the Commonwealth came to an agreement with the States and Territories under which the Commonwealth legislated for the Australian Capital Territory under its Territories power and the other States and Territories passed laws adopting that legislation as their own. The nine sets of legislation provided for a national companies administration.

<B Head>Excise

Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529

Capital Duplicators Pty Ltd v Australian Capital Territory (No 2) (1993) 178 CLR 561

Ha v New South Wales (1997) 189 CLR 465

In the 1960s and 1970s the States began to look for more diverse revenue streams. A significant obstacle was section 90 of the Constitution which provided that raising excise taxes was an exclusive power of the Commonwealth. The precise meaning of the word “excise” – and with it the ambit of the Commonwealth’s exclusive power – had been long argued. State taxes in various forms on goods at various steps in the process from raw materials to final purchase for consumption might be invite an assertion that they are invalid excises and transgress the Commonwealth’s exclusive domain.

The States invented several ingenious schemes. They were extensions to the practice of liquor licensing. In Dennis Hotels Pty Ltd v Victoria the High Court held that a licence fee to sell alcohol was not an invalid excise – even if the fee was based upon the value of the alcohol sold. Based on this decision, Victoria led the way followed by other States imposing licence fees for tobacco and petrol. The fee for a licence for a future period often related to the quantity or value of the goods that passed hands in a previous period. The High Court held – with minor exceptions – that these schemes were valid in Dickenson’s Arcade Pty Ltd v Tasmania (1974) 130 CLR 177, involving tobacco, and H C Sleigh Ltd v South Australia (1977) 136 CLR 475, involving petrol. The Court held that the schemes were indistinguishable from Dennis Hotels. The States raised an increasing amount of revenue this way, assuming that the High Court would never hold that the licence fees were unconstitutional excises. The States assumed that if they applied the structure of the Dennis Hotels licensing arrangement all would be well, irrespective of the level of the licence fee. However, the reasoning Dennis Hotels was based upon the licence fees being part of a regulatory scheme for the selling of alcohol. The regulatory nature of the tobacco and petrol licence fees was questionable. In any event if the licence fee rose too high it was inevitable that its characteristic would change from a regulatory measure to a taxation measure. The time bomb sat ticking for 37 years.

The Court expressed unease about the increasing reliance by the States on these cases for their revenue. In Capital Duplicators Pty Ltd v Australian Capital Territory (No 2) the Court said it would not reconsider the Dennis Hotels and Dickenson’s Arcade cases because “federal financial arrangements have been designed and implemented on the basis of the interpretation given by this Court to s 90. To desert that interpretation now would have widespread practical ramifications and generate extraordinary confusion.” (at 590). But the Court would not allow the States and Territories to extend the licensing arrangements to categories of goods other than alcohol, tobacco and petrol. They would have to be treated as special categories when it decided what would be characterised as a legitimate licensing scheme and what would be characterised as an unconstitutional excise.

The States and Territories failed to take the hint. They kept increasing the “licence” fees. By 1995-1996, the New South Wales “licence” fee for tobacco was levied at 100 per cent of the wholesale value. The tax would raise $850 million a year. It came to a head in 1997 after some tobacco merchants who were caught selling tobacco without paying the licence fees challenged the fees as unconstitutional excise taxes in Ha v New South Wales.

A majority of the Court held that the levy in question was too high to be a mere regulatory licence fee. It was an excise duty. And therefore invalid.

The majority (Brennan CJ, McHugh, Gummow and Kirby JJ) said:

“Therefore we reaffirm that duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin. Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods. Both are taxes on goods, that is to say, they are taxes on some step taken in dealing with goods. . . .

So long as a State tax, albeit calculated on the value or quantity of goods sold, was properly to be characterised as a mere licence fee this Court upheld the legislative power of the States to impose it. But once a State tax imposed on the seller of goods and calculated on the value or quantity of goods sold cannot be characterised as a mere licence fee, the application of s 90 must result in a declaration of its invalidity.” (at 499 and 503).

Potentially, it was the end for a large revenue pool for the States, even though Dennis Hotels and Dickenson’s Arcade were not overruled. The States could not impose the taxes on alcohol, tobacco and petrol to which they had become accustomed. This was despite support from the Commonwealth and all the States and Territories for existing arrangements to continue. The words of the Constitution were more powerful than the wishes of the Governments. The upshot was that the Commonwealth (which had the constitutional power to levy excises) had to legislate to levy the taxes on the States’ behalf.

A further incidental point arose. The States asked the Court to rule that the invalidity of the taxes only take apply prospectively to allow new arrangements to be put in place and to prevent claims for repayment of the invalid tax. Again, the contest between convenience and constitutional principle arose. The Court held that convenience should not stand in the way of constitutional principle.

The Court refused the request. The majority said:

“This Court has no power to overrule cases prospectively. A hallmark of the judicial process has long been the making of binding decisions about rights and obligations arising from the operation of the law upon past events or conduct. The adjudication of existing rights and obligations as distinct from the creation of rights and obligations distinguishes the judicial power from non-judicial power. Prospective overruling is thus inconsistent with judicial power on the simple ground that the new regime that would be ushered in when the overruling took effect would alter existing rights and obligations.” (at 504).

<B Head>Cross-Vesting

Re Wakim; Ex parte McNally. Re Wakim; Ex parte Darvall. Re Brown; Ex parte Amann. Spinks v Prentice (1999) 198 CLR 511

In 1999 another matter arose in which the High Court held contrary to the joint position of the Commonwealth and all the States and Territories. The establishment of the Federal Court and Family Court in the 1970s gave rise to a number of inconvenient and expensive jurisdictional disputes. Questions arose whether these federal courts had the jurisdiction to hear certain cases which involved State law. For example, the Family Court’s initial jurisdiction over the custody of children was held to be limited to cases involving marriage. The custody of ex-nuptial children or children of deceased parents were matters for State courts. The Federal Court’s jurisdiction over trade practices did not guarantee jurisdiction over every element of a dispute that might embrace contract or tort law. The federal courts could determine related issues in a case as “pendant” jurisdiction. But the degree of relation required still caused difficulties.

In 1987 the Commonwealth and States passed the Jurisdiction of Courts (Cross-Vesting) Acts. Each State and Territory and Commonwealth gave full jurisdiction of its superior courts to each other’s courts. Each court was empowered to remove cases to the most appropriate court. Jurisdictional disputes were to be eliminated, to the convenience of the courts and litigators.

However, in Re Wakim; Ex parte McNally, a matter involving federal and State issues, the validity of the legislation was challenged. Bankruptcy is a Commonwealth power. A creditor of a bankrupt sued in the Federal Court the trustee in bankruptcy for breach of duty under the Bankruptcy Act 1966, clearly a federal matter. The creditor also sued the trustee’s legal advisers for negligence, usually a State matter. The creditor, supported by all the States and Territories and the Commonwealth, argued that the cross-vesting legislation enabled his negligence action to be heard in the Federal Court. The legal advisers contended that it must be heard in a State court.

By a 6-1 majority the Court held that neither Commonwealth nor the States could vest State jurisdiction in federal courts. The Commonwealth could vest federal jurisdiction in State courts, so the State courts could hear federal matters, under section 77(iii) of the Constitution. At the constitutional conventions, the United States model of having two separate systems of courts had been rejected and it was envisaged that State courts, and federal courts created by Parliament, would hear matters under federal law. But the Constitution did not permit the vesting of State jurisdiction in federal courts. It meant that the only way a federal court could hear a State matter would be if it was so intertwined with a federal action that the matter was a single justiciable controversy – the pendant jurisdiction. That was held to be the case in Wakim.

In Re Brown the Court held that the Federal Court could not hear civil matters arising under State Corporations Acts, such as orders for winding up and for company officers to be examined about the company’s affairs.

The decisions drew criticism from the commercial world. The complaints were that matters exclusively within State jurisdiction could not be determined at the same time as related matters of federal jurisdiction unless the pendant jurisdiction were attracted and that matters within State jurisdiction could not, for the sake of convenience, be transferred from State to federal courts. The decision also drew criticism from Commonwealth, State and Territory Governments. However, the words of the Constitution as interpreted by the High Court are more powerful than the wishes of Government. The Commonwealth and the States had been warned of the flaws in the cross-vesting scheme but went ahead regardless.

Some have suggested that such a scheme could be achieved by references of power by the Parliaments of the States under section 51(xxxvii). Others maintain suggested that it would require an amendment to the Constitution.

The development of an Australian common law

Parker v The Queen (1963) 111 CLR 610

Kable v Director of Public Prosecutions (New South Wales) (1995) 189 CLR 51

Burnie v Port Authority v General Jones Pty Ltd (1994) 179 CLR 520

Brodie v Singleton Shire Council (2001) 206 CLR 512

Australia is a common law country. Aside from legislation enacted by Parliaments, law is built up by courts following the precedents of earlier decisions and extending principles where necessary. The common law is a set of ideas. The main areas of common law are the criminal law, contract and tort.

In the first 60 years of the Australian federation, it was assumed that Australian courts would follow the precedents of English courts, for example the Australian High Court would regard as binding decisions of the House of Lords. A watershed case that changed this was decided in 1961.

It was a murder case. One of the issues was whether an accused person should be presumed to intend the natural and probable consequences of his acts. Chief Justice Sir Owen Dixon had earlier expressed concern about the presumption, saying in Stapleton v Queen (1952) 86 CLR 358 that it was “seldom helpful and always dangerous”. In 1960, the House of Lords affirmed and extended the presumption. In DPP v Smith the House of Lords held that a man who swerved a car to dislodge a policeman on the running board, killing the policeman, could be presumed to have intended that death and so was guilty of murder. Earlier Australian cases would have suggested that without actual intention of death or grievous bodily harm, such a man would be convicted of manslaughter. Dixon thought Smith’s case was wrongly decided and Australian courts should not follow it. With the concurrence of all members of the Court he said in Parker v Queen (at 632):

“Hitherto I have thought that we ought to follow decisions of the House of Lords, at the expense of our own opinions and cases decided here, but having carefully studied Director of Public Prosecutions v Smith, [1961] AC 290 I think that we cannot adhere to that view or policy. There are propositions laid down in the judgment which I believe to be misconceived and wrong. They are fundamental and they are propositions which I could never bring myself to accept . . . I wish there to be no misunderstanding on the subject. I shall not depart from the law on the matter as we have long since laid it down in this Court and I think that Smith’s Case should not be used in Australia as authority at all.”

It was a significant step in the development of Australian common law. After the abolition of the remaining rights of appeal to the Privy Council in London, the High Court became the final court of appeal in Australia on all matters, including the common law. In the United States, each State has its own common law. That is not the case in Australia. Australia has a unified common law and the High Court is its final arbiter.

The position was explained by Justice McHugh in Kable v Director of Public Prosecutions (New South Wales). He said the Constitution presumed the existence of State Supreme Courts when it stated that the “High Court shall have jurisdiction . . . to hear and determine appeals from . . . the Supreme Court of any State”. It meant State Parliaments could not abolish their Supreme Courts, nor could they remove the right of appeal from them to the High Court. He said that the Constitution intended that “Australia should have an integrated system of State and Federal courts administering a single body of common law” and “the High Court of Australia has the constitutional duty of supervising the nation’s legal system”. It means that if two or more State Supreme Courts decide a principle of law in an incompatible way, the High Court must resolve the incompatibility when a suitable case comes before it and that all the State Supreme Courts would be bound by that precedent.

An example of the drawing together of earlier decisions, including English ones, into an coherent Australian position was Burnie Port Authority v General Jones Pty Ltd . A 145-year-old English principle called the rule in Rylands v Fletcher held that landowners were liable for damage caused by any dangerous thing they brought on to their land which escaped. They were absolutely liable without the need to prove negligence. But the principle over the years had caused great difficulty in interpretation and application. In Burnie Port Authority – a case involving fire from welding operations spreading to another building — the majority (Chief Justice Mason and Justices Deane, Dawson, Toohey and Gaudron) held that “the rule in Rylands v Fletcher, with all its difficulties, uncertainties, qualifications and exceptions, should now be seen, for the purposes of the common law of this country, as absorbed by the principles of ordinary negligence” (at 556).

Another example of departing from received English common law was Brodie v Singleton Shire Council. That case rejected a long line of cases in England and Australia that applied what is referred to as the “highway rule”. The rule was that a public authority responsible for the care and management of a highway was not liable for damage to person or property in consequence of the condition of the highway. An authority might be liable for a negligent act of misfeasance, but was not liable for non-feasance – that is if the road fell into disrepair. In this case a bridge collapsed when Brodie drove a truck over it.

A majority of four Justices held there should be no special rule for highway authorities and that each case should be treated under general negligence law. They held that the council should pay damages for failing to keep the bridge in good repair.

The judicial power

Plaintiff S157 v Minister for Immigration (2003) 77 ALJR 454; [2003] HCA 2

The Australian Constitution provides for a system of government with the separation of powers. Under it, the legislature has power to make laws which usually describe rights and duties which apply universally and prospectively. The executive government administers those laws, applying them to people and property. Judicial power is the power to make binding and authoritative determinations that settle controversies about existing rights and obligations using established legal standards.

With regard to the judicial power of the Commonwealth, section 71 in Chapter III of the Constitution provides for the investing of jurisdiction in the High Court, the federal courts and the State courts. The High Court has held that these courts cannot exercise non-judicial functions. Conversely bodies which are not Chapter III courts cannot exercise the judicial power of the Commonwealth. It means that, with respect to federal matters, the exercise of judicial and non-judicial power cannot be mixed. For example, Parliament cannot legislate to require the High Court to give advisory opinions, as it was held in Re Judiciary and Navigation Acts (1921) 29 CLR 257. Parliament cannot legislate to require a federal court to take into consideration policy issues.

The fact that the judicial power can only be exercised by Chapter III courts provides an important protection because appointments to those courts must be not be subject to renewal, which helps guarantee the independence of the Justices.

In 2003 a case was brought to the High Court by Plaintiff S157 (who could not be named because of a provision of the Migration Act). The plaintiff challenged the validity of two sections of the Migration Act enacted in 2001. One said that administrative decisions (with some exceptions) made under the Migration Act were “final and conclusive and must not be challenged, appealed against, reviewed, quashed or called in question in any court.” It was a privative clause that attempted to oust or limit the jurisdiction of the courts. The other section said that any application to the High Court for relief must be made within 35 days of the decision being made. That relief would come by way of what are called writs of mandamus, or prohibition, or an injunction to order an officer of the Commonwealth to do something to comply with the law or stop doing something unlawful.

The plaintiff wanted to challenge the refusal of the Refugee Review Tribunal to give him a protection visa because it had taken account of material without giving him a chance to comment on it. But he thought he was prevented by the privative sections in the Act.

The Court held that a privative clause could not exclude a challenge to the tribunal on the ground that it exceeded its jurisdiction. This was because a tribunal could not exercise the power to determine its own jurisdiction because that would be an exercise of the judicial power of the Commonwealth which could only be exercised by a Chapter III court. The Refugee Review Tribunal was not such a court. For example, its members were appointed for a fixed term.

Chief Justice Gleeson said:

“In a federal nation, whose basic law is a Constitution that embodies a separation of legislative, executive, and judicial powers, there is a further issue that may be raised by a privative clause. It is beyond the capacity of the Parliament to confer upon an administrative tribunal the power to make an authoritative and conclusive decision as to the limits of its own jurisdiction, because that would involve an exercise of judicial power.” (at [9]).

In some circumstances, the failure of a tribunal allow an affected party the opportunity to see material upon which it was basing its decision would be to act beyond its jurisdiction and so would be reviewable by the High Court, irrespective of a privative clause.

Chief Justice Gleeson also expressed some fundamental principles about the Constitution and the rule of law in Australia.

“Section 75(v) of the Constitution confers upon this Court, as part of its original jurisdiction, jurisdiction in all matters in which a writ of mandamus, or prohibition, or an injunction, is sought against an officer of the Commonwealth. It secures a basic element of the rule of law. The jurisdiction of the Court to require officers of the Commonwealth to act within the law cannot be taken away by Parliament. Within the limits of its legislative capacity, which are themselves set by the Constitution, Parliament may enact the law to which officers of the Commonwealth must conform. If the law imposes a duty, mandamus may issue to compel performance of that duty. If the law confers power or jurisdiction, prohibition may issue to prevent excess of power or jurisdiction. An injunction may issue to restrain unlawful behaviour. Parliament may create, and define, the duty, or the power, or the jurisdiction, and determine the content of the law to be obeyed. But it cannot deprive this Court of its constitutional jurisdiction to enforce the law so enacted.” (at [5]).

He said Parliament could not curtail the High Court’s constitutional function of protecting people against any violation of the Constitution or failure by officers of the Commonwealth to apply the law.

The Court has applied the separation of powers principle in other ways that protect individual rights. It held in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 that the Commission did not have the power to impose fines or jail sentences. It can only suggest compensation or administrative penalties. Similarly tribunals like the Native Title Tribunal do not have the power to definitively declare and enforce property rights. The Native Title Tribunal and the Human Rights and Equal Opportunity Commission can mediate, make findings and recommend. But if the parties object to the rulings of either body, only a Chapter III court, such as the Federal Court, can exercise the judicial power to determine the issue.

Imposing fines and jail terms and determining rights are judicial functions which can only be undertaken by a court, not a tribunal. The difference is crucial. The exercise of judicial power comes with protections – such as judicial independence and the application of established legal standards — which are appropriate when rights, duties and penalties are being declared or imposed.

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