Finemores Transport Pty. Limited v. The State of New South Wales & Ors.

Judges: Barwick CJ
Stephen J

Mason J
Jacobs J
Murphy J
Aickin J

Court:
Full High Court of Australia

Judgment date: Judgment handed down 16 May 1978.

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Mason J.: The plaintiff, Finemores Transport Pty. Limited, is engaged in the business of inter-State road haulage and operates a number of trucks registered in New South Wales exclusively for that purpose. Late in November 1976 the plaintiff applied to have registered a new Kenworth prime mover for use exclusively in the course, or for the purposes, of inter-State trade and commerce. However, the first defendant, the State of New South Wales, acting through its servants or agents, refused to register the motor vehicle until an amount of $1,000, said to be payable on account of stamp duty in respect of the certificate of registration, was paid to the third defendant, the Commissioner of Stamp Duties (N.S.W.). The plaintiff paid this amount under protest, together with $115.15 registration fees, and now seeks to recover the stamp duty and other amounts paid as stamp duty on the certificates of registration of other vehicles owned by it and used exclusively for the purposes of inter-State trade and commerce. By its statement of claim the plaintiff seeks a declaration that sec. 84G is invalid or alternatively that it is inapplicable to vehicles used or intended to be used exclusively in the course of, or for the purposes of, inter-State trade or commerce. The defendants have demurred to the statement of claim.

The stamp duty demanded by the defendants was payable under sec. 84G of the Stamp Duties Act , 1920 (N.S.W.) (``the Act''). This section was introduced into the Act in 1962 as sec. 84A, but following the inclusion of a second sec. 84A by Act No. 110 of 1974 the section with which we are concerned was renumbered sec. 84G by Act No. 75 of 1975. Section 84G(1) provides that for the purposes of the Act a ``Motor Vehicle Certificate of Registration'' means

``a certificate of registration issued in respect of a motor vehicle in accordance with the provisions of the Motor Traffic Act, 1909, as amended by subsequent Acts and the regulations thereunder whether such motor vehicle certificate of registration has been issued pursuant to a

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new registration or transfer of registration but does not include -

• (a) any such motor vehicle certificate of registration issued to the person in whose name such vehicle was last registered (whether in New South Wales or elsewhere) before the issue of such motor vehicle certificate of registration; or
• (b) a duplicate motor vehicle certificate of registration; or
• (c) a motor vehicle certificate of registration issued pursuant to a transfer of a motor vehicle under Regulation 29 of the Regulations under the Motor Traffic Act, 1909, as so amended; or
• (d) a motor vehicle certificate of registration of a class exempted under the regulations from the provisions of this section.''

Pursuant to subsec. (2) ad valorem duty is charged at a scheduled rate on a motor vehicle certificate of registration in respect of the value of the motor vehicle, subject to an exemption in favour of a person who is engaged principally in the trade or business of buying or selling motor vehicles and who is the holder of a licence under the Second-hand Motor Dealers Act , 1956. The Second Schedule contains an item for a motor vehicle certificate of registration which prescribes an amount of duty of $2 ``for every $100 and also for any fractional part of $100 of the value of the motor vehicle'', and which names ``The person in whose name the certificate is issued'' as the person primarily liable. By sec. 38(1) the person primarily liable ``is personally liable to the Crown for the payment of the duty so chargeable on such instrument immediately upon the first execution thereof, and every such person may be sued for the amount of such duty as for a debt due to the Crown'', and ``Instrument'' is defined in sec. 3(1) to include ``every written document''.

Section 84G then provides that the value of a motor vehicle is the value stated in writing by the applicant for a certificate of registration as the market value at the time of the application (sec. 84G(3)) and further provides that the Commissioner of Stamp Duties may require the applicant to furnish further evidence of value and may adjust the duty charged accordingly (sec. 84G(5)). Collection of the duty is covered by subsec. (4) which is in these terms:

``(4) An amount equivalent to the duty chargeable under this Act on a motor vehicle certificate of registration shall be forwarded with the application for the certificate of registration or transfer thereof. The duty so chargeable may be denoted by an adhesive stamp which is to be affixed and cancelled at the time of issue of such certificate.''

The effect of these provisions, if valid, was to place Finemores in a situation in which, on applying for the registration of a new truck or on the transfer of an existing registration from another person, it became liable to pay or be sued for an amount of stamp duty for the certificate of registration which issued.

Certificates of registration are issued under the Motor Traffic Act , 1909 (N.S.W.) and the regulations made thereunder. Section 5B(1) of that Act provides:

``Every motor vehicle (other than a motor vehicle exempted from registration by or under this Act) shall be registered before being used or driven upon a public street.''

It is an offence to drive or permit a motor vehicle to be driven upon a public street if the vehicle is unregistered (sec. 6(1)(c)(v)).

It is crucial to the plaintiff's argument that this section makes registration a precondition of use and that the inevitable consequence of registration is the issue of a certificate of registration which attracts the liability to duty in the manner and circumstances which I have discussed. The Commissioner of Road Transport is under a mandatory duty to issue a certificate of registration upon registering a vehicle by virtue of reg. 6 of the Motor Traffic Regulations (``the Regulations'') although the purpose or utility of such a certificate is not clear; it is not evidence of ownership and there appears to be no provision in the Motor Traffic Act or any other Act requiring the production of such a certificate by the driver of the vehicle, or any other person for that matter, at any subsequent time.

Regulation 13(1A) provides:

``The Commissioner shall not, except as provided in clause (1) of this Regulation, refuse registration or renewal or transfer of the registration of a motor vehicle used or intended to be used solely in the course and

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for the purposes of interstate trade or commerce.''

The effect of this provision is that, subject to the condition that the vehicle ``is suitable for safe use and the vehicle and its equipment comply with the conditions material in or prescribed under Schedule F'' (reg. 13(1)), the Commissioner is obliged to register vehicles used or intended for use in inter-State trade and commerce whether or not the application for registration is accompanied by an amount equivalent to the duty chargeable in accordance with sec. 84G(4) of the Act. Schedule F contains detailed regulations prescribing ``Construction and Equipment of Motor Vehicles'', including lamps and reflectors, dimensions of vehicles, trailer couplings, ground clearance, mudguards, brakes, etc.

Once registered, however, it seems that the non-payment of the stamp duty would allow the Commissioner to cancel the registration of the vehicle, whether is was to be used in inter-State trade and commerce or not, under reg. 13(3)(e). Nevertheless, this does not in any way relieve the Commissioner of the duty of first registering the vehicle and reg. 13(3)(e) is directory only; the Commissioner is not under any obligation to cancel the registration. Furthermore, the validity of the power of the Commissioner to cancel the registration of a vehicle used, or intended to be used, exclusively for inter-State trade and commerce for non-payment of stamp duty must depend on, rather than in any way be determinative of, the validity of the impost itself.

The defendants rely on the fact that the payment of the stamp duty is not a condition precedent to the issue of a certificate of registration, the fact that the Commissioner must issue the certificate if the conditions prescribed in the regulation are satisfied whether the duty is paid or not, to support an argument that the impost is too remote from inter-State trade and commerce to fall within the prohibition contained in sec. 92 of the Constitution. This argument is no answer. It is the liability to pay the stamp duty and not actual payment which on the plaintiff's case is the relevant burden. One cannot obtain a certificate of registration without attracting the liability to pay stamp duty upon it. As one cannot use the motor vehicle on a public street unless it is first registered and the issue of a certificate of registration is the inevitable consequence of registration, then it is true to say one cannot use the vehicle for inter-State trade and commerce without incurring liability for stamp duty. There is an immediate connection with use of the vehicle and the impost as long as the chain of mandatory requirements remains unbroken.

What I have said assumes that use of a motor vehicle on a public street in this context can form part of inter-State trade and commerce. It is well established that inter-State transport of persons or goods by road or air is inter-State trade and commerce. The distinction drawn in
R. v. Vizzard ; Ex parte Hill (1933) 50 C.L.R. 30 , at p. 51 between trade, commerce and intercourse itself and motor vehicles as ``aids or implements to effect the thing... not the thing itself'', that is, viewing motor vehicles as mere ``integers of traffic'', was finally rejected by the Judicial Committee in
Hughes and Vale Pty. Ltd. v. State of New South Wales (No. 1) (1954) 93 C.L.R. 1 , at pp. 22, 23 when they adopted the words and reasoning of Dixon J. in his dissenting judgment in
McCarter v. Brodie (1950) 80 C.L.R. 432 .

The plaintiff relies heavily on the decision in Hughes and Vale Pty. Ltd. v. State of New South Wales (No. 2) (1955) 93 C.L.R. 127 to support its argument that sec. 84G of the Act is invalid, at least in so far as it applies to the certificate of registration of a vehicle used exclusively in inter-State trade. In Hughes and Vale Pty. Ltd. (No. 2) , it will be recalled, two levies were imposed on the operation of (inter alia) inter-State road transport; a ton-mile tax and an annual surcharge. The levy presently under consideration in so far as it applies to inter-State trade and commerce is in my opinion indistinguishable from the annual surcharge imposed under the Motor Vehicles (Taxation) Act , 1951 and the Motor Vehicles Taxation Management Act , 1949 which was held invalid in Hughes and Vale Pty. Ltd. (No. 2) . The defendants take as one point of distinction between Hughes and Vale Pty. Ltd. (No. 2) and the present case the fact that the impost in the earlier case was an annual levy whereas in the present case the liability to stamp duty occurs only when registration is sought in a new name, usually on a change in ownership. This difference does not provide a sound basis for distinguishing Hughes and Vale (No. 2) as there is no relevant legal difference in the burden which is imposed as a

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precondition to use of the motor vehicle only once in respect of each person in whose name it is registered and a burden which is recurrent annually thereafter. A tax of the kind dealt with in Hughes and Vale Pty. Ltd. (No. 2) could not be justified simply because it was not imposed annually but, say, only every third year. The infrequency of occurrence of the liability is not in point. The basic flaw in the stamp duty imposed in the present case is that liability to pay it is a precondition to use of a vehicle intended for exclusive use in inter-State trade and commerce. The duty does not fall within the exceptions recognized by Dixon C.J., McTiernan and Webb JJ. in Hughes and Vale Pty. Ltd. (No. 2) at p. 175, where their Honours pointed out that a charge imposed as a real attempt to fix a reasonable recompense or compensation for the use of the highway and for a contribution to the wear and tear which the vehicle may be expected to make will be sustained in conformity with the freedom sec. 92 confers. Their Honours went on (at p. 182) to discuss the possibility that the tax might be justified on the ground that it was not a charge upon the commercial use of vehicles at all; that it was no more than a tax on the mere ownership of motor vehicles, a tax based on property as such. As to this, their Honours said:

``In the case of a piece of property which can have only one use and that transport, for example a use in the carriage of goods by road, that is not perhaps a basis for validity which it is easy to make out. But, be that as it may, the truth is that the incidence of the tax, though in terms it is levied on `motor vehicles', is upon their use. It is a condition of registration without which they cannot be used on roads of the State.''

Payment of the stamp duty in the present case is not, strictly speaking, a ``condition of registration''. However, liability to the tax is an inevitable consequence of registration in the appropriate circumstances.

The defendants point to the fact that the stamp duty only applies the first time that a certificate of registration is issued to a person in respect of a vehicle as supporting their argument that the duty is not imposed on use of the vehicle but on the certificate of registration per se , as a document, as indicia of title or evidence of change of ownership. This argument cannot be sustained. Although the purpose and utility of the certificate of registration remains obscure it is certainly not a document of title. The expression ``registered owner'', which is often used, has no legal significance. The certificate has no part to play in establishing the ownership or identification of a registered vehicle. The identification of a registered vehicle is covered by reg. 14, which requires number plates to be issued and affixed to the motor vehicle, and reg. 46(1) which deals with ``registration labels''. Registration labels ``shall issue to the owner of the vehicle'' under reg. 46(1) but as the applicant for registration is not necessarily the owner, and as the Act and the regulations do not provide a procedure whereby the applicant's ownership can be determined, there is no certainty that this injunction will be obeyed. The registration label must be affixed to the vehicle in conformity with the requirements of the regulations (reg. 53(2)). All this goes to show that the functions which might otherwise be performed by a certificate of registration are in fact performed by the number plate and registration label. I conclude that, as the certificate of registration has no vital role to play in the registration process independent of its liability to stamp duty, the relevant effect of its existence is only to attract liability to that duty.

The defendants seek to draw some support for their proposition that the stamp duty is legally imposed by sec. 84G simply as a duty imposed on a document from the majority decision in
Associated Steamships Pty. Ltd. v. State of Western Australia (1969) 120 C.L.R. 92 where the provisions of the Stamp Act , 1921-1968 (W.A.) requiring receipts to be issued for moneys received and imposing duty on them were held valid. McTiernan J. (at p. 107) thought that ``It is not necessary in order to say that trade is `free' that the trader should be free from an obligation imposed by a statute to give receipts to his customers or that the receipts he issues should be dutiable''. Kitto J. (at p. 109) distinguished the ``legal freedom - freedom from restraints and burdens imposed by or under laws'' which is guaranteed by sec. 92 from ``immunity from the more remote, de facto, disadvantages which may ensue when laws have operated according to their terms''. His Honour went on to say (at p. 110):

``The present case seems to me to present less difficulty than some and indeed to afford a classic example of a law to which sec. 92 has nothing to say since the only

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direct operation of the law is to impose a burden upon an inter-State act, with consequences, but no more than consequences, for inter-State trade. What, in the plaintiff's business, constitutes trade, commerce or intercourse among the States? Only the inter-State transportation of goods. To say that it is the inter-State transportation of goods for reward adds nothing, except that the plaintiff receives money for performing its acts of inter-State transportation;...''

Menzies J. agreed with Kitto J. and Windeyer J. also held the legislation under consideration valid. Windeyer J. said (at p. 112):

``But this Court has said more than once that for sec. 92 to destroy legislation, it, the legislation, must in its operation create a real and direct impediment to something which is of the essence of trade between the States, such as the movement of things from State to State.''

His Honour considered that the stamp duty under consideration was merely a fiscal burden making trade less economically profitable than otherwise it would be, which did not discriminate between inter-State and intra-State trade, and therefore ``not of itself an impairment of the freedom which sec. 92 assures''.

Barwick C.J. and Owen J. dissented. The Chief Justice considered whether the stamp duty was really a duty upon a document or instrument or a tax upon the inter-State activity. His Honour thought that in the case where the receipt which was made dutiable was a written acknowledgment brought into existence under compulsion of the Stamp Act , 1921-1968 (W.A.) and not created as a document required to be used commercially at all the duty could not be regarded as merely a duty upon an instrument but is in reality a duty upon the activity.

Owen J. (at p. 114) was of the opinion that the stamp duty under consideration was bad because, in his opinion, ``the receipt by the plaintiff of moneys charged by it for freight for carrying goods inter-State is an essential element in the inter-State trade which it carries on''.

It seems to me that nothing in the majority judgments in Associated Steamships leads to the view that sec. 84G of the Act presently under consideration validly applies to inter-State traders. The essence of the inter-State trade in this case, as in Associated Steamships , is the inter-State transportation of goods but the burden in this case is imposed on that very activity and in my opinion imposes a real and direct burden upon it.

To some it may seem surprising that sec. 92 confers an immunity on those engaged in inter-State trade from liability to a tax which is imposed without distinction or discrimination on all those who register motor vehicles, whether the vehicles are engaged in or intended to be engaged in inter-State trade or not. It is to carry the protection given by sec. 92 to the inter-State trader very far indeed and to place him in a very privileged position. I have always doubted whether sec. 92 was intended to do more than protect inter-State trade from burdens of a discriminatory kind of which
North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of New South Wales (1975) 7 A.L.R. 433 provides a convenient example. But I acknowledge that the cases have taken the section a good deal further and in conformity with the doctrine enunciated by the Court, the correctness of which has not been challenged in this case, I can only conclude that the duty imposed by sec. 84G cannot validly operate to impose a stamp duty on a certificate of registration which issues in respect of a motor vehicle used, or intended to be used, exclusively for the purposes of inter-State trade and commerce. By virtue of sec. 144 of the Act sec. 84G must be ``read and construed so as not to exceed the legislative power of the State'' and so it is clear that sec. 84G is a valid enactment of the New South Wales legislature to the extent that it operates in fields other than inter-State trade. For these reasons I would make the declaration and order sought in para. 17(2) and 17(6) of the amended statement of claim.