Gazzo v. Comptroller of Stamps, ex parte Attorney-General (Vic).

Members: Gibbs CJ
Stephen J

Mason J
Murphy J
Aickin J

Tribunal:
High Court of Australia

Decision date: Judgment handed down 24 December 1981.

---

Mason J.

On 26th May 1977 the marriage of the applicant and Antonio Pietro Gazzo was dissolved by the Victorian Supreme Court under the Family Law Act 1975 (Cth.) (as amended) (``the Act'') and the husband was ordered, inter alia, to transfer his interest in certain land to the applicant as trustee for the three children of the marriage as tenants in common in equal shares. The husband executed an instrument of transfer, expressed to be in consideration of the order of the Victorian Supreme Court. The Comptroller of Stamps assessed the instrument to duty in accordance with sec. 32 of the Stamps Act 1958 (Vic.) (as amended). The Comptroller disallowed the applicant's objection that the instrument was exempt from duty under sec. 90 of the Act.

The applicant's appeal was then removed into this Court from the Supreme Court pursuant to sec. 40(1) of the Judiciary Act 1903 (as amended). The following question was referred to the Full Court: ``Is sec. 90 of the Family Law Act 1975 a valid law of the Commonwealth?''

Section 90 reads:

``A maintenance agreement, or a deed or other instrument executed by a person for the purposes of such an agreement or for the purposes of, or in accordance with an order under, this Part, is not subject to any duty or charge under any law of a State or Territory or any law of the Commonwealth that applies only to or in relation to a Territory.''

We are here concerned only with a duty or charge under the law of a State. Section 90 purports to exempt from State duties a wide range of written instruments. So much appears from the definitions of ``maintenance agreement'' and ``financial matters'' in sec. 4(1). The relevant definitions, which are expressed to be subject to any contrary intention, are:

```maintenance agreement' means an agreement in writing made, whether

---

ATC 4709

before or after the commencement of this Act, between the parties to a marriage, being an agreement that makes provision with respect to financial matters, whether or not there are other parties to the agreement and whether or not it also makes provision with respect to other matters, and includes such an agreement that varies an earlier maintenance agreement;''

```financial matters', in relation to the parties to a marriage, means matters with respect to -

• (a) the maintenance of one of the parties;
• (b) the property of those parties or of either of them; or
• (c) the maintenance of children of the marriage;''

Section 90 operates to exempt three main types of instrument:

• (a) a maintenance agreement;
• (b) a deed or other instrument executed by a person for the purposes of a maintenance agreement;
• (c) a deed or other instrument executed by a person for the purposes of, or in accordance with an order made under Pt. VIII of the Act.

The instrument of transfer was executed in accordance with an order made under Pt. VIII.

It would be a task of great complexity to decide whether sec. 90 is valid in all its possible applications. In this case it will be sufficient if we decide in the first instance whether sec. 90 can validly apply to the situation in hand. If it can, the question of severability from its invalid or potentially invalid operation must be considered.

To be valid, sec. 90 must be a law ``with respect to'' -

``Marriage''

(sec. 51(xxi) of the Constitution);

``Divorce and matrimonial causes; and in relation thereto, parental rights, and the custody and guardianship of infants''

(sec. 51(xxii)); or

``Matters incidental to the execution of any power vested by this Constitution... in the Federal Judicature...''

(sec. 51(xxxix)).

In
R. v. Lambert ; Ex parte Plummer (1980) FLC ¶ 90-904 ; (1980) 32 A.L.R. 505 I reaffirmed what a majority of the Court held in
Russell v. Russell (1976) FLC ¶ 90-0939 ; (1976) 134 C.L.R. 495 (see at FLC pp. 75,168-75 169; C.L.R. pp. 539-540 , per Mason J., with whom Stephen J. agreed, and at FLC p. 75,175; C.L.R. p. 550, per Jacobs J.): the scope of the marriage power is in no way diminished by the existence of sec. 51(xxii) in its reference to ``and in relation thereto, parental rights, and the custody and guardianship of infants''. Gibbs J., who was in the minority in Russell , after noting that it was there ``held that the power given by sec. 51(xxi)... is not limited by sec. 51(xxii)'', indicated ``powerful reasons of policy'' against overruling Russell and was not prepared to reconsider that decision.

There are no compelling reasons here to reject the normal principle that an individual grant of power under the Constitution should be accorded a full operation according to its terms. Therefore, in considering whether the removal of obligations achieved by sec. 90 is within the marriage power of Parliament there is no occasion for restricting the scope of the power by drawing restrictive implications from the existence of sec. 51(xxii) of the Constitution.

A central submission of the Solicitor-General for Victoria was that a law governing the relationship of married persons with third parties cannot be a law with respect to marriage. To fall within the marriage power, a law can only deal with the mutual rights and obligations of the parties to a marriage, including children of the marriage. If the marriage power were not so confined, so it was said, there would be virtually no limit as to laws which the Commonwealth could make affecting the relationship of married persons with third parties. It was argued ``one can give the husband rights against the wife and the wife rights against the husband but what one cannot do, at least on the basis of the marriage power, is to give either rights against someone else''.

This submission is misconceived. I accept that the legislative power with respect to ``marriage'' is not a power with respect to ``married persons'' and that the Commonwealth cannot remove disabilities or impose obligations not in any way arising out of the marriage relationship merely by

---

ATC 4710

applying laws to married persons. Even so, the argument of the learned Solicitor-General for Victoria allows no scope for exercise of the legislative power on what is incidental to the subject matter of the grant. The mutual rights and obligations of parties to a marriage do not mark the outer limits of the subject matter of the power; they coincide with what is central to that subject matter. If we were to assume that the mutual rights and obligations of the parties mark the outer limits of what is central to the power, the power extends to that which is incidental. Accordingly, a law may define the rights of one party to the marriage against a third party, if to do so is incidental to, or is reasonably necessary for, dealing with the mutual rights and obligations of the parties to the marriage. There is therefore no a priori rule that, because a law deals with the rights or obligations of one party to a marriage as against a person not a party to the marriage, it cannot be supported under sec. 51(xxi). Nor is there any absolute rule that it cannot be reasonably incidental to the main head of a power for Commonwealth legislation to provide relief from State duties or charges (see in other areas
The Commonwealth v. The State of Queensland (1920) 29 C.L.R. 1 ;
Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46 ).

In Plummer, Gibbs J., after having rejected the argument that the marriage power extends only to the definition and enforcement of mutual rights and duties between the parties to the marriage (including children) and does not permit laws providing for the definition or enforcement of rights as against other members of the community (particularly State authorities) as ``too narrow a view'', said (at FLC p. 75,691; A.L.R. p. 512):

``The crucial question, however, is whether the legislation creates, defines or declares rights or duties that arise out of, or have a close connection with, the marriage relationship. If not, the law cannot be said to be one with respect to marriage.''

For my part, I should have thought that the word ``sufficient'' more accurately expresses the degree of connexion with the subject of the power which constitutional principle requires. The word ``close'' is perhaps too limiting, suggesting too strict a nexus.

There will necessarily be differences of view as to what is incidental to the subject matter of the power or has a sufficient connexion with the marriage relationship. So much, if nothing else, emerges from Plummer. However, so long as the Court continues to accept and apply the settled standards in determining what is incidental and whether the law has a sufficient connexion with the topic, the marriage power will not give Parliament unlimited scope to affect the relationship of married persons with third parties.

By way of illustration of what has been said, a law which defines the rights of the parties to a marriage with respect to property so as to relate those rights to the marriage relationship, for example, community or joint property laws or even individual property laws, would be a valid exercise of the marriage power. It would not cease to be an exercise of the power if it went on to provide that a transfer of property by one spouse to the two spouses jointly or a transfer by one to the other should be free from all duties whether Commonwealth or State. Such a law would then be, if not a law on what is central to the subject matter of the power, a law which is incidental to the topic.

The same comment may be made of a law which provides that an instrument executed by a party pursuant to a court order shall be free from all duties. If the making of the court order for the transfer of the property by the husband to the applicant constitutes a valid exercise of the marriage power or is authorized by a legislative provision which itself is within the power, I find it difficult to perceive why the power does not extend to freeing the transfer from duty. To say that the execution of a transfer in compliance with a court order adjusting the rights of the parties to the marriage relationship shall not be made the occasion for the imposition of duties is to legislate on a matter which has, not only sufficient, but also a very close, connexion with the marriage relationship.

The application of sec. 90 to the situation here can also be justified as an exercise of the sec. 51(xxii) power. The order requiring the husband to transfer his interest in the land upon dissolution of the marriage was clearly made in relation to a ``matrimonial cause'' within para. (ca) of the definition in sec. 4(1) of the Act:

``proceedings between the parties to a marriage with respect to the property of

---

ATC 4711

the parties to the marriage or of either of them, being proceedings in relation to concurrent, pending or completed proceedings for principal relief between those parties...''

It could not have been suggested in the light of Russell that this paragraph was beyond the ambit of sec. 51(xxii). The order and instrument of transfer executed in accordance with it were incidental to resolving this ``matrimonial cause''.

Section 51(xxii) at least enables Parliament to authorize Courts to make orders for property settlement and maintenance which are ancillary to some form of principal relief (
Lansell v. Lansell (1964) 110 C.L.R. 353 ). In my view it also authorizes a law exempting an instrument executed for the purposes of, or in accordance with, such an order from State stamp duties otherwise applicable. The reasons already given for the conclusion that a provision exempting the court-ordered transfer from stamp duty is a valid exercise of the marriage power support the conclusion that such a provision is a valid exercise of the matrimonial causes power as well.

Further, it may be said that sec. 90 facilitates compliance with the order to transfer property by making the transfer simpler and cheaper. There are situations in which the liability to pay stamp duty on the transfer of, for example, a matrimonial home, may impede the completion of court-ordered transfers and decrease the capacity of a party to discharge his obligation to maintain another party to the marriage (including a child). The section therefore has a sufficient connexion with proceedings for principal relief between the parties to a marriage and the settlement of property and maintenance in relation to that principal relief.

Accepting under sec. 51(xxi) and (xxii) that sec. 90 can apply here, its many other possible applications necessitate consideration of severability of invalid or possibly invalid operations of sec. 90 from its operation in this situation. As noted, sec. 90 seeks to exempt three distinct classes of written instrument. If we were considering either (a) maintenance agreements or (b) deeds or other instruments executed for the purposes of a maintenance agreement there would be real questions as to whether the marriage power would authorize sec. 90 in its application to the whole range of such instruments. For example, the definition of ``maintenance agreement'' in sec. 4(1) of the Act is far wider than an agreement which can be related to a ``matrimonial cause'' under para. (d) of its definition in sec. 4(1):

``... proceedings between the parties to a marriage for the approval by a court of a maintenance agreement or for the revocation of such an approval or for the registration of a maintenance agreement;...''

which was held to be a valid exercise of the marriage power in Russell.

Such a case for severability purposes would be an example of the second type of provision referred to by Dixon J. in
R. v. Poole ; Ex parte Henry (No. 2) (1939) 61 C.L.R. 634 at p. 652 , and sec. 15A of the Acts Interpretation Act 1901 (Cth.) as amended, would only apply if ``the legislature intended the provision to have a distributive operation or effect''.

There may possibly be difficulties applying sec. 15A, where a reading down of the phrase ``matrimonial cause'' may be done by reference to either the marriage or matrimonial causes power, should the Court continue to follow the approach which commended itself to the majority in
Strickland v. Rocla Concrete Pipes Ltd. (1971) 124 C.L.R. 468 .

However, these difficulties do not apply to a reading down of the phrase to the third class of instrument - deeds or other instruments executed by a person for the purposes of, or, if need be, in accordance with, an order made under Pt. VIII of the Act - which sec. 90 can exempt from State stamp duties under both the marriage and matrimonial causes powers.

If the operation of sec. 90 on the first two classes of instrument be beyond power those instruments are the ``subject of distinct or separate expression'' as against the instrument being considered here. For severability purposes this can be viewed as the first type of provision which Dixon J. indicated may be saved by sec. 15A ( Ex parte Henry (No. 2) at p. 652). Applying the appropriate test, ``whether the operation or effect of the remainder of the Act upon the person or things to which it would apply would be changed'', if sec. 90 could only operate on the third class of instrument it is clear that there would be no change in the

---

ATC 4712

operation of the rest of the Act. The effect of sec. 90, if so read down, upon a deed or other instrument executed by a person for the purposes of, or in accordance with, an order made under Pt. VIII of the Act would be no different from its effect if sec. 90 were valid in all its possible applications.

There is also a question whether, having read down sec. 90 to this third class of instrument, the possible width of the exemption in sec. 90 from ``any duty or charge under any law of a State...'' requires a further consideration of severance.

A duty under any law of a State in this context refers to a tax or financial imposition required by a State law to be made to the public revenue. Examples are impositions levied on the import, export, manufacture or sale of commodities (such as customs, excise and some licensing fees) as well as impositions following the execution of documents, for example, contracts of sale (stamp duties, etc.). A charge in a general sense is a financial obligation or liability which here would be one imposed by a State law and should be understood as payable to the State or a public authority. Although the terms substantially overlap, the meaning of ``charge'' is somewhat wider, including a fee payable in response to a service provided by the State or a public authority. Examples are fees payable to a Registrar-General for registering an instrument of transfer or to a Corporate Affairs Commission for things such as incorporating a company or issuing shares.

While sec. 90 would thus exempt this third class of instrument from a wide range of financial imposts, its scope is not unlimited. For example, it does not purport to exempt transferees of licences from approval requirements under State licensing laws, nor to exempt transferees of shares from any requirement to be approved by some State body or company board. Whether this could be done need not concern us here. Section 90 would not prevent a Registrar-General from refusing to register a transfer for failure to satisfy criteria provided by State laws, except those relating to the non-payment of duties or charges such as stamp duties or registration fees.

When sec. 90 is read down to instruments executed for the purposes of, or in accordance with, an order made under Pt. VIII of the Act my view is that it can validly exempt all duties and charges under any law of a State. The reasons given above for holding that it is within the marriage and matrimonial causes powers to exempt an instrument of transfer from stamp duties apply equally to the other range of duties or charges which may be payable to public authorities under State laws in efectuating the transfer made. Therefore it is not necessary to consider the operation of sec. 15A on the phrase ``any duty or charge under any law of a State...''.

In the result, to answer the question stated: Section 90 is a valid law of the Commonwealth in its application, read down if necessary, to instruments executed by a person for the purposes of, or in accordance with, an order under Pt. VIII of the Family Law Act. The parties have agreed that there should be no order as to costs as between them irrespective of the outcome.