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

Judges: Gibbs CJ

Stephen J
Mason J
Murphy J
Aickin J

Court:
High Court of Australia

Judgment date: Judgment handed down 24 December 1981.

---

Stephen J.

In this case the question is whether the reach of the Commonwealth's legislative power extends to the enactment of sec. 90 of the Family Law Act. That section 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.''

The only sources of legislative power relied upon as supporting the validity of sec. 90 are the marriage power - sec. 51(xxi) and the divorce and matrimonial causes power - sec. 51(xxii), including their penumbras of incidental powers, supplemented as may be necessary by the incidental power - sec. 51(xxxix).

When the validity of sec. 90 is sought to be supported by reference to these heads of power what becomes immediately apparent is its slender nexus with them. The concern of sec. 90 is to exempt certain instruments from State and Territorial duties and charges. To describe sec. 90 no more fully than this reveals no closer connexion with these two heads of power than with any other head of Commonwealth legislative power. Any fuller description of the section can only be derived from the character of the instruments it exempts from duty, maintenance agreements and instruments associated with them or with orders made under Pt. VIII of the Family Law Act. Only when such a fuller description is given does the possibility of any connexion with these two heads of power emerge. The question, then, is whether the additional characteristic of sec. 90 which this fuller description reveals, that the documents which it exempts from duties and charges are of a kind associated with Pt. VIII of the Family Law Act, is enough to bring it within power.

Section 90 has no direct concern with the marriage relationship itself nor with relations between spouses, nor with children of the marriage. Its function is to exclude the operations of certain State laws, being laws which impose duties or charges on instruments. These laws are of their nature wholly remote from the heads of power conferred by sec. 51(xxi) and (xxii). Only when such laws, in the course of laying imposts upon the generality of instruments falling within their reach, happen to encounter, quite randomly, a particular document which is in some way related to marriage or to divorce and matrimonial causes will there occur any connexion with those subject matters.

It might be very different were sec. 90 directed to the exclusion of the application of discriminatory State taxing laws, discriminatory in the sense of imposing some special impost upon some aspect or manifestation of marriage or of divorce or matrimonial causes: as, for example, a tax upon marriage certificates. Were sec. 90 so restricted it might readily enough be seen to be within power as incidental to the marriage power. But sec. 90 is instead expressed quite at large and operates upon any State Stamps Act the perfectly general provisions of which happen to attract liability for duty to any of the particular instruments which it describes.

---

ATC 4707

It was in
Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46 that this Court encountered a provision in some respects analogous to sec. 90. A section of the Commission's constituting enactment subjected the Commission to taxation under the laws of the Commonwealth but exempted it from taxation under State and Territory laws to which the Commonwealth itself was not subject. That section was held valid, Dixon C.J., with whose judgment Kitto and Taylor JJ. agreed, squarely basing himself upon the one feature in the circumstances of that case which immediately distinguished it from the present; namely that what was thus protected from State taxes was the very entity which the Commonwealth had created, the Commission itself, which his Honour described as a corporate agency of the Crown, acting ``in the interests of the Crown in right of the Commonwealth'' - p. 54, and as a ``federal governmental corporation'' - p. 56. Because of that circumstance his Honour did not doubt the Commonwealth's ability ``to protect the Commonwealth Government body (the Commission) from what may be considered the embarrassment of taxation by the various States'' - at p. 55. The ambit of the grant of legislative power under which the Commission was created was ample both to create it and, when created, to permit Parliament to decide that its creation should not be exposed to State taxes.

Of the other members of the Court it was only Menzies J. who found it necessary to consider the validity of the exemption from State duties without regard to the special character of the Commission which the legislation had created. He approached the question of validity by reference only to the ambit of the Commonwealth's particular grant of legislative power, which he described as being in that case power ``with respect to or incidental to what can compendiously be described as overseas, inter-State or territorial trade'' - at p. 62. On that approach his Honour's first task was to determine ``whether a law protecting the Commission from all taxation laws of the State is, having regard to the Commission's functions, a law with respect to overseas, inter-State and territorial trade'' - at p. 62. His Honour accordingly posed the question whether the obvious advantage which exemption from State exactions conferred upon the Commission was enough of itself to bring the law within power as a law with respect to trade. His Honour's answer, at p. 63, was in these terms:

``... it must of course be conceded that a Commonwealth law exempting the Commission from State taxation would tend, by reducing its outgoings, to make its business more profitable. The immunity is therefore an advantage. Such an advantage, if given to a private trader, would also undoubtedly constitute an encouragement to trade and I am prepared to assume - although it is probably not the case - that this could also be true of the Commission. But every law which gives a trader an advantage, and even such an advantage as encourages trade, is not a law with respect to trade. This can, I think, be made to appear without going beyond immunities of the kind conferred upon the Commission by s. 36(1). If, for instance, the State law to be considered were to be one imposing income tax, notwithstanding that immunity from its exaction could properly be said to be an encouragement to trade, a law providing an immunity to traders carrying on business within Commonwealth power would not seem to me to be a law with respect to the various trades producing income. The same would be true of freedom from State land tax or municipal rates. A law imposing income tax is not to be regarded as a law with respect to the variety of activities which produce income and a law imposing tax or rates upon land, whether or not it is land used for the purposes of trade, does not seem to me to be a law with respect to the various trades that are in fact carried on upon some of the land in respect of which tax is imposed.''

The analogy to the present case is close. The very respect in which sec. 90 may be seen to have some nexus with the heads of power said to support its validity is the exemption from State duties which it confers upon those engaged in effecting a proper redistribution of property as between the parties to a marriage or in providing maintenance for a spouse or children of a marriage. Yet, as his Honour points out, a law which provides such an advantageous immunity is not a law with respect to what is rendered immune. In the present case it is not a law with respect to such property redistributions or maintenance as Pt. VIII of the Act contemplates; and this despite the fact that such immunity may to some extent increase the amount of property

---

ATC 4708

or income available for disposition or payment by making available to that end moneys which would otherwise be spent on stamp duty. Just as his Honour said, at p. 64, that it was going too far to say ``that a Commonwealth power over trade authorizes a law protecting a trade from State tax imposed by a law which does not take anything to do with trading as the criterion of tax liability'', so here it goes too far to say that Commonwealth powers conferred by sec. 51(xxi) or (xxii) authorize a law protecting those concerned with marriage or with divorce and matrimonial causes from State tax imposed by a law which does not have anything to do with marriage or with divorce and matrimonial causes as the criterion of tax liability.

The extent of implied incidental power will depend upon the particular head of power which is in question; matters of history and of long usage play their part in the case of some powers, as with the forfeiture and seizure provisions of customs legislation -
Burton v. Honan (1952) 86 C.L.R. 169 per Dixon C.J. at p. 179. But, as the Chief Justice remarked in that case, at p. 178, the extent of an incidental power is a matter of degree. A reasonable connexion must be shown before a law can be sustained as incidental to the relevant power - at p. 179. Here there is, in my view, no such connexion. Apart from all else, the fact that sec. 90 operates, at best, as between a party to the marriage and a third party, being the State revenue authorities, itself serves to distance it from the relevant heads of power. I say ``at best'' because it may be that the person liable to duty will not himself be any party to a marriage or to the divorce proceedings or other matrimonial cause.

Again, the fact that the operation of sec. 90 ``reaches into the exercise of the constitutional powers of the State'' -
The State of Victoria v. The Commonwealth (1957) 99 C.L.R. 575 per Dixon C.J. at p. 614, is of itself sufficient to require that its validity be carefully scrutinized, as Menzies J. pointed out in Australian Coastal Shipping Commission at p. 67. In my view sec. 90 does not survive that scrutiny. I regard it, on the contrary, as an instance of Commonwealth legislation upon a matter, the incidence of stamp duty upon instruments, which is ``prima facie within the province of the States upon grounds of a connection with Federal affairs that is only tenuous... or remote'' - per Dixon J. in
R. v. Sharkey (1949) 79 C.L.R. 121 at p. 151 .

The question referred to the Full Court was ``Is sec. 90 of the Family Law Act 1975 a valid law of the Commonwealth?''. I would give the answer that, in its purported application to any duty or charge under any law of a State, it is not a valid law.