Queensland Electricity Commission v Commonwealth

159 CLR 192
61 ALR 1

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(Judgment by: Deane J)

Between: Queensland Electricity Commission
And: Commonwealth

Court:

Judges: Gibbs CJ
Mason J
Wilson J
Brennan J

Deane JDawson J

Subject References:
Constitutional Law (Cth)

Hearing date: 19-20 June 1985
Judgment date: 5 September 1985

Adelaide (heard in Canberra)

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Judgment by:
Deane J

In the infancy of the Commonwealth, while national identity and spirit were still at a formative stage, the view prevailed that the federal nature of the Constitution gave rise, as a matter of implication, to an overriding doctrine of general immunity of the States and their instrumentalities from the reach of Commonwealth legislative and executive powers (from any "attempted invasion of the ambit" of State authority by a Commonwealth authority: see the Railway Servants' Case (1906) 4 CLR 488 , at p 537) and to a related principle of construction requiring that the content of those powers be confined by reference to what were seen as the "powers reserved to the States by sec.107 of the Constitution" (D'Emden v. Pedder (1904) 1 CLR 91 , at p 109).

That broad doctrine of immunity and that constricting principle of construction waxed strong in the first four volumes of the Commonwealth Law Reports. Thereafter, they began to wane (cf. the Steel Rails Case (1908) 5 CLR 818 , at pp.832-833, 834ff., 840ff. and 852-853; the two Engine Drivers' Cases (1911) 12 CLR 398 and (1913) 16 CLR 245 ; the Municipal Employees' Case (1919) 26 CLR 508 ). Neither survived the war-time strengthening of national identity and the associated assertion, at post-war confer ences, of independent international personality. They were rejected, in August 1920, by this Court in the Engineers' Case (1920) 28 CLR 129 .

That rejection did not, however, involve a denial of the fact that the written terms of the Constitution were predicated upon and embodied (cf., particularly, Constitution, ss 106,107) an assumption of the continued existence of the States as viable political entities. Nor did it mean that that assumption, which can be discerned in the Constitution itself, was thereafter to be ignored or that the Constitution was to be construed in this Court as if no implications at all could be recognized as flowing from it. To the contrary, it was asserted by judicial statements in a series of subsequent cases and established in Melbourne Corporation v. The Commonwealth (1947) 74 CLR 31 that, while the content of the plenary legislative powers entrusted to the Commonwealth was not to be constricted by a doctrine of implied immunity of States and their instrumentalities or by preconceptions of the identity or extent of residuary powers preserved in the States, the nature of the federal system set out in the written provisions of the Constitution led inexorably to the implication of some more limited restriction upon the exercise by the Commonwealth of those legislative powers.

In Melbourne Corporation v. The Commonwealth, there was a diversity of opinion among the members of the Court about the precise content of that more limited restriction. It has, in subsequent judgments and other writings, been the conclusions of Sir Owen Dixon about its foundation, rationale and content to which most attention has been paid. The "foundation" of the restriction was stated by his Honour (at p 81) to be the "federal system itself". Subsequently (at pp 81-82), his Honour explained:

"I do not think that either under the Constitution of the United States or The British North America Act or the Commonwealth Constitution has countenance been given to the notion that the legislative powers of one government in the system can be used in order directly to deprive another government of powers or authority committed to it or restrict that government in their exercise, notwithstanding the complete overthrow of the general doctrine of reciprocal immunity of government agencies and the discrediting of the reasoning used in its justification.

For that reason the distinction has been constantly drawn between a law of general application and a provision singling out governments and placing special burdens upon the exercise of powers or the fulfilment of functions constitutionally belonging to them. It is but a consequence of the conception upon which the Constitution is framed. The foundation of the Constitution is the conception of a central government and a number of State governments separately organized. The Constitution predicates their continued existence as independent entities."

As the above passage indicates, the rationale of such a restriction is the preservation of the federal system. The Commonwealth, unlike the States, is the creature of the Constitution. Its legislative and executive powers are limited to what the Constitution confers. Alone, those powers are inadequate to provide more than a truncated part of the functions of government. If, without constitutional amendment to fill the void, the States were to cease to exist as independent entities, an essential element of the substratum of the Federation would be gone.

The content of the restriction was expressed by Dixon J. (at pp 78ff.) in the form of three "reservations" upon the "prima-facie rule... that a power to legislate with respect to a given subject enables the Parliament to make laws which, upon that subject, affect the operations of the States and their agencies". That "prima-facie rule" was described (at p 78) as "the effect of the Engineers' Case stripped of embellishment and reduced to the form of a legal proposition". The "reservations" had been mentioned by his Honour in previous judgments (see Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 , at p 390; West v Commissioner of Taxation (NSW) (1937) 56 CLR 657 , at p 682, and Essendon Corporation v Criterion Theatres Ltd (1947) 74 CLR 1 , at pp 22-23).

As Dixon C.J. was subsequently to acknowledge (see the Professional Engineers' Case (1959) 107 CLR 208 , at p 239), they do not lie well with some of the broad statements of the majority judgment in the Engineers' Case (cf. Professor Sawer, "Implication and the Constitution", Res Judicatae, vol 4 (1948-1950), 15, at pp 21-22). Two of them, that "relating to the prerogative" and that "relating to the taxation power", were not in point in Melbourne Corporation and have not been established by subsequent cases at least to the extent that they are separate from or would expand the third. It is that third reservation which was in point in Melbourne Corporation and which should, in my view, be accepted as established by the decision in that case. Dixon J's broad enunciation of it (at pp 78ff.) must, as Walsh J. indicated in the Pay-roll Tax Case (1971) 122 CLR 353 , at pp.410-411, be understood in the context of his Honour's subsequent comments in the Bank Nationalization Case (1948) 76 CLR 1 , at p 338.

So understood, it comprises a restraint upon the exercise or use of power or authority. Its central operation is to preclude the exercise of Commonwealth legislative or executive powers "to control the States" or in a manner which would be inconsistent with the continued existence of the States as independent entities and their capacity to function as such. It is not suggested that that central operation of the reservation applies here. What is relevant to the present case is that the reservation also extends to preclude discriminatory treatment of the States in the sense of the use or exercise by the Commonwealth of such powers to single out the States to place upon them "special burdens or disabilities". In Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 , at p 93, Mason J. formulated the third reservation in terms which reflect the judgments of Dixon J. in Melbourne Corporation and of Walsh J. in the Pay-roll Tax Case:

"... the implication that should be made is that the Commonwealth will not in the exercise of its powers discriminate against or 'single out' the States so as to impose some special burden or disability upon them, unless the nature of a specific power otherwise indicates, and will not inhibit or impair the continued existence of the States or their capacity to function."

That formulation, which was accepted by Brennan J. in the Franklin Dam Case (1983) 57 ALJR 450 , at p 525, 46 ALR 625 , at p 768 is in terms apposite to what was in issue in Melbourne Corporation, namely, discriminatory treatment of the States generally. It should not, however, be read as intended to confine the operation of the restraint to such discrimination.

Plainly, the reservation has a distributive application and applies in respect of the use or exercise of legislative or executive power to discriminate, in the relevant sense, against a particular State (cf. per Mason J., the Franklin Dam Case, 57 ALJR, at p 487, 46 ALR, at p 694). Indeed, the preclusion of discrimination against a particular State is arguably a fortiori in that discrimination is likely to be most damaging if directed against a particular State alone and in that such discrimination against a particular State or its instrumentalities would also be within the preclusive scope of a related, or perhaps comprehensive, restraint upon Commonwealth powers which is arguably implicit in the written words of the Constitution.

That other arguable restraint would arise as an implication of the underlying equality of the people of the Commonwealth under the law of the Constitution. Its effect would be that the use or exercise of Commonwealth legislative or executive power to single out some of those people or their institutions for discriminatory treatment can only be justified if the nature of the relevant legislative power is such as to authorize the actual discriminatory treatment. The question of the possible existence and scope of such an implication was not explored in argument. It need not be pursued here since any such further implication would do no more than provide either a further or a more widely based foundation of the prima facie preclusion of the use or exercise of legislative or executive power to discriminate, in the relevant sense, against a particular State.

The implication precluding discrimination in the relevant sense against the States or a particular State extends to preclude such discrimination against the agencies through which the States discharge particular governmental functions. As has been said, the foundation and rationale of the implication are, respectively, the federal system itself and its preservation. That federal system involves the existence and discharge of the governmental functions of both the Commonwealth and the States. Those governmental functions have, in this country, traditionally been discharged both by the Commonwealth and the States themselves (i.e. the Crown) and through instrumentalities and agencies established and acting for public purposes. To confine the application of the reservation to the States themselves and thereby exclude from its protection the discharge of governmental functions carried out on behalf of a State by an agency established for public purposes would be to distort that foundation of the implication and to discount that rationale.

The fact that a general law imposes a particularly onerous burden upon the States (or upon a particular State) does not necessarily mean that the law relevantly discriminates against them (or it). To be caught by the reservation, the law must, as has been indicated above, discriminate in the sense that its operation involves a singling out of the States to make them "the objects of special burdens or disabilities" (cf. Melbourne Corporation, at p 81).

That is not to say that a law cannot discriminate against the States in the relevant sense if it is cast in general terms and is of apparently general application. Quite apart from the case where such a general law applies to the States in a way which would prevent them from performing their essential functions or which would impede them in so doing (cf. per Rich J., Melbourne Corporation, at p 66; per Walsh J., the Pay-roll Tax Case, at p 411), a general law may operate in the context of particular circumstances to single out the States for discriminatory treatment. The character of a law as a law of general application is ordinarily a factor, and sometimes a conclusive factor, militating against the conclusion that it discriminates against the States or a State in the relevant sense.

The question whether a law does so discriminate against the States or a particular State is however, for the purposes of the law of the Constitution, a question of substance which is not susceptible of being resolved by the mere inquiry whether, as a matter of form, the law is a general or a special one. The point may be conveniently illustrated by reference to the Pay-roll Tax Case. The decision in that case was that Commonwealth legislation imposing a general pay-roll tax to be paid by employers on wages paid to their employees validly applied to the States and their agencies. The fact that the States' pay-rolls were particularly large no doubt meant that the effect of the legislation was particularly onerous in its application to them in the sense that they paid more tax than all or most other employers. That did not, however, mean that the legislation was discriminatory against the States in the sense that it singled them out to be made objects of special burdens or disabilities.

On the other hand, if the legislation had been confined to the imposition upon all employers other than the Crown in right of the Commonwealth of liability to pay-roll tax upon wages paid to "public servants", it might still properly have been seen, as a matter of form, as a law of general application. Such confined legislation would, nonetheless, have discriminated against the States in the relevant sense for the reason that, as a matter of substance, its operation would have been, in circumstances where the States and State instrumentalities were the only non-Commonwealth employers of "public servants", to single out the States for the imposition of a special burden.

Nor is the question whether an impugned law relevantly discriminates against the States or a particular State susceptible of resolution merely by reference to whether the formal criterion of its operation satisfies the requirements of some formularized test. The fact that the formal operation of a law is to impose a burden or disability upon the States or State instrumentalities by reference to their character as such will ordinarily suffice to establish that, as a matter of substance, the law relevantly discriminates against the States. The failure of a law to operate by reference to such a formal criterion of liability will not, however, preclude a conclusion that, as a matter of substance, the law relevantly so discriminates. That question of substance must ultimately be resolved by reference to the actual operation of the law in the circumstances. If, as a matter of substance, the actual operation of the law is to discriminate against the States or a particular State in the relevant sense, it will be within the scope of the reservation regardless of how disguised the substance may be by ingenious expression or outward form (see per Rich J., Melbourne Corporation, at p 67; and, generally, Hematite Petroleum Pty. Ltd. v. Victoria (1983) 57 ALJR 591 , at p 615, 47 ALR 641 , at pp 685-686).

The nature of the reservation as a general implication of the words of the Constitution makes it subject to being overridden by the express words or plain intendment of a specific provision of the Constitution. It is unnecessary to consider whether, particularly in the context of the introductory words ("subject to this Constitution"), any of the specific grants of legislative power in s 51 could properly be construed as intended to countervail against the reservation to the extent to which it precludes the use or exercise of Commonwealth powers to destroy the States or inhibit their continued existence or capacity to function. As has been said, it is the operation of the reservation to preclude discriminatory treatment, in the relevant sense, of the States which is in point in the present case. It is clear that the nature or subject matter of a specific grant of legislative power can, in appropriate circumstances, countervail against that operation of the reservation.

The decision in Melbourne Corporation establishes that the characterization of a law as a law with respect to a subject matter of Commonwealth legislative power will not, of itself, remove it from the reach of the overriding restriction precluding the use or exercise by the Commonwealth of its legislative powers to single out the States or their instrumentalities to place upon them special burdens or disabilities. That overriding restraint will be defeated only in the exceptional case where the relevant legislative power appears, "from its content, context or subject matter", to be intended to authorize the discriminatory operation of the particular law (cf. per Dixon J., Melbourne Corporation, at p 83).

Put differently, the singling out of the States for the imposition of some special burden or disability must itself have such a real and close connection with the subject matter of legislative power as to warrant the positive conclusion that the grant of legislative power was intended to authorize such discrimination against the States in the context of such a law. An example of such an exceptional case is where the nature of the subject matter of legislative power is such that the discriminatory operation of a law may do no more than reflect a necessary ingredient of what gives the law its character.

Thus, to take the most obvious illustration, a law providing for the acquisition of property on just terms from a particular State (Constitution, s 51(xxxi)) will discriminate against that State if the acquisition is against its will. Another example of such a case is where a particular exercise of the relevant legislative power necessarily involves distinctions between different geographical areas: defence (s 51(vi)), quarantine (s 51(ix)) and medical services such as immunization (s 51(xxiiiA)) may provide illustrations. Yet another example of such a case is where the relevant legislative power authorizes the singling out of a particular identified object, activity or situation for special legislative treatment and a State or State agency is affected by reason of its relationship with that object or involvement in that activity or situation. It is argued, on behalf of the Commonwealth, that the present case falls within this category.

The legislative power of the Parliament (s 51(xxxv)) with respect to conciliation and arbitration for the prevention and settlement of inter-State industrial disputes "necessarily and by reason of the subject matter" extends "to all parties, States as well as persons, engaged in industrial disputes extending beyond the limits of any one State" (per Starke J., R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Victoria (1942) 66 CLR 488 , at p 515). It is not, in my view, confined to the enactment of legislation establishing conciliation and arbitration procedures for the prevention or settlement of disputes generally.

It extends to authorize legislation making specific provision for conciliation and arbitration for the settlement of a particular identified inter-State industrial dispute. In such a case, the legislative power obviously encompasses the enactment of some provisions which discriminate against parties to the particular dispute by, for example, subjecting them to compulsory conciliation or arbitration proceedings. If the parties to the relevant dispute include a State or State instrumentality, the legislative power will be seen as necessarily intended to authorize such discriminatory treatment of it in its character as a party to the relevant industrial dispute. Moreover, the particular circumstances of the involvement of a State or State instrumentality in a particular industrial dispute might be such that the power to legislate with respect to conciliation and arbitration for the settlement of that dispute might arguably be seen to authorize discriminatory treatment of it vis a vis the other parties to the dispute.

Such a singling out of a State or a State instrumentality for discriminatory treatment would, however, only be within the intended scope of the legislative power with respect to concili ation and arbitration if it can be seen to be justified as an integral part of a coherent legislative provision with respect to conciliation and arbitration for the prevention or settlement of the particular dispute .

The impugned legislation in the present proceedings is the Conciliation and Arbitration (Electricity Industry) Act 1985 (Cth) ("the Act"). Its provisions are set out or summarized in other judgments and it is unnecessary that I repeat them. Its purported effect is to establish, within the context of the Conciliation and Arbitration Act 1904 (Cth), a special regime in relation to the industrial disputes to which it applies. The differences between that regime and that applicable to other industrial disputes are largely procedural. To the extent to which they were intended to be of more than cosmetic significance, they would seem to be directed towards ensuring that the industrial disputes to which the special regime is applied should be dealt with expeditiously by a Full Bench of the Australian Conciliation and Arbitration Commission ("the Commission"). From the point of view of a party to a dispute however, the application of the special regime to the dispute plainly involves some disadvantage or disability since the main point of the special regime appears to be to deprive the Commission of some of the discretionary powers which a party to the dispute might otherwise invoke.

The electricity authorities of Queensland to which the Act refers ("the electricity authorities") are the agencies through which the State of Queensland discharges its traditional governmental function of supplying electricity to its residents. They are properly to be seen, for the purposes of the reservation, as agencies of that State. An analysis of the provisions of the Act discloses that, as a matter of substance, the Act has a discriminatory operation at three distinct levels in relation to those agencies. At one level, it applies the special regime to the particular dispute identified in s 6(1) and thereby subjects the parties to that dispute, including the electricity authorities, to any disadvantage or disability involved in the special regime. At the second level, it confines the s 6(2) class of dispute (as distinct from the particular s 6(1) dispute) to disputes which could result in the making of an award that would be binding on, and would establish terms or conditions of employment of employees of, such an authority. At the third level, the Act discriminates against those electricity authorities in relation to the operation of certain of the provisions which constitute that special regime. In particular, s 8(1) prevents the Commission,

"in so far as the industrial dispute exists between an organization of employees and one or more electricity authorities of Queensland",

from dismissing a matter or part of a matter or refraining from further hearing or from determining the industrial dispute notwithstanding that it appears to the Commission that the industrial dispute has been, is being, or is proper to be, dealt with by a State Industrial Authority of Queensland or that further proceedings are not necessary or desirable in the public interest. Section 9(6) has the effect that the requirement that a Full Bench of the Commission itself deals with an industrial dispute to which the Act applies is, if the hearing of the dispute is split, confined only to the part of the industrial dispute that involves an electricity authority. The critical question is whether the discriminatory treatment of the electricity authorities under the Act can properly be seen as authorized by s 51(xxxv) of the Constitution.

The discriminatory operation of s 6(2) of the Act cannot be justified as itself coming within the intended scope of the grant of legislative power contained in s 51(xxxv). The disputes mentioned in s 6(2) are not existing disputes. They could relate to a wide diversity of matters. The involvement of the electricity authorities in them could be central or peripheral. They could be centred or have their origins in Queensland or in some other State. There is nothing in their designated character which could warrant the conclusion that the discriminatory treatment of the electricity authorities in relation to them was a necessary or integral part of a coherent scheme of conciliation and arbitration for their settlement. There is nothing in the nature of that discriminatory treatment which could properly be seen as bringing it itself within what can be seen, from the content, context or subject matter of s 51(xxxv), to be the intended scope of that grant of legislative power.

Section 6(1) of the Act stands in contrast to s 6(2). It applies the provisions of the Act to a particular identified inter-State industrial dispute (see Reg. v. Ludeke; Ex parte Queensland Electricity Commission, High Court of Australia, 5 September 1985). Of itself, s 6(1) makes no distinction between the parties to the dispute. The electricity authorities are not affected by s 6(1) by reason of their being singled out for the imposition of special burdens or disabilities. They are affected by s 6(1) by reason of the fact that they are parties to the particular industrial dispute to which the legislation applies.

The same comment can be made of the provision of s 7 of the Act requiring the Commission to endeavour to settle the dispute as expeditiously as is appropriate. It affects the parties to the dispute only by reason of their involvement in it. In my view, any discriminatory treatment of the parties to the dispute, including the electricity authorities, which is involved in the provisions of ss 6(1) and 7 of the Act is a necessary ingredient of a coherent legislative provision with respect to conciliation and arbitration for the prevention or settlement of the particular inter-State industrial dispute and itself comes within the scope of the grant of legislative power contained in s 51(xxxv). In contrast, ss 8 and 9 relevantly discriminate against the electricity authorities vis a vis any other parties to the dispute.

Those two sections do that by singling out, for restrictive treatment, the dispute or a part of the dispute by reference to whether an electricity authority remains or is a party to it. That discrimination is superimposed upon any discriminatory treatment of the parties to the dispute by reason of their character as such. It cannot, in my view, properly be seen, on the material before the Court, as itself coming within the intended scope of s 51(xxxv). Consequently, it is struck down by the relevant reservation upon the use or exercise of Commonwealth legislative powers. That discriminatory treatment of the electricity authorities is central to the operation of ss 8 and 9 and the effect of its invalidity is that both those sections are wholly invalid.

In the result, I am of the view that s 6(2), (3),(4) and (5), s 8 and s 9 of the Act are all invalid. With some doubt, I have come to the view that ss 6(1) and 7, while left with little real function to perform, can be severed and do not fall with the invalid sections. The provision of s 7 requiring the Commission to proceed as expeditiously as is appropriate would seem to be a pious admonition which adds little, if anything, to the provisions of s 39(1) of the Conciliation and Arbitration Act. The section can, however, stand without ss 8 and 9 and I am prepared to accept the Parliament's enactment of it as adequate to establish that it is of some independent significance in its application in respect of the particular dispute identified in s 6(1).

I would overrule the demurrers so far as they assert the validity of s 6(2), (3), (4) and (5), s 8 and s 9. Otherwise, I would allow them.