Australian Tape Manufacturers Association Ltd v Commonwealth of Australia

(1993) 176 CLR 480
(1993) 112 ALR 53

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(Judgment by: Mason C.J., Brennan, Deane and Gaudron)

AUSTRALIAN TAPE MANUFACTURERS ASSOCIATION LTD; BASF AUSTRALIA LIMITED and TDK AUSTRALIA PTY LTD v THE COMMONWEALTH OF AUSTRALIA

Court:

Judges:
Mason C.J., Brennan, Deane and GaudronDawson and Toohey
McHugh JJ.

Judgment date: 11 March 1993

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Judgment by:
Mason C.J., Brennan, Deane and Gaudron

We are in agreement with so much of the reasons for judgment prepared by Dawson and Toohey JJ. as supports the conclusions: (1) that Divs 3 and 4 of Pt VC and s.153E of the Copyright Act 1968 (Cth) ("the Act") are, for the purposes of s.51(xviii) of the Constitution, laws with respect to copyright; and (2) that s.135ZZM(1) is not a law with respect to the acquisition of property. However, in our view, the "royalty" levied on the vendors of blank tapes by s.135ZZP(1) is a tax and this conclusion entails the consequence that, by reason of non-compliance with s.55 of the Constitution, Pt VC of the Act is invalid. If we had not reached the conclusion that the "royalty" was a tax, we would have been of the view that the imposition of the obligation to pay it involved an unconstitutional acquisition of property on other than just terms. The legislative scheme

Part VC is a legislative scheme designed to deal with the problem presented by the widespread practice here and overseas of private and domestic taping of sound recordings. In the past, this practice has constituted an infringement of the copyright in the sound recordings. For all practical purposes, however, the owners of those copyrights were left without any effective remedy since they were unable to prove infringement and recover damages from the multitude of infringers who engaged in private taping of sound recordings. The principal elements of the legislative scheme are as follows:

(1)

A "royalty" is payable for each blank tape first sold, let for hire or otherwise distributed in Australia ((1) s.135ZZN(1)), the royalty being payable by the vendor who first sells, lets for hire or otherwise distributes the tape in Australia ((2) s.135ZZP(1)).

(2)

The amount of the royalty is determined by the application of a formula prescribed by s.135ZZN(2). One component in the formula is "the amount per minute determined by the Copyright Tribunal under section 153E". That section makes provision for the determination of the amount referred to in the formula by application to the Copyright Tribunal by any person who has a relevant interest in the determination, including the collecting society, a vendor or a relevant copyright owner. The Tribunal is to take into account all relevant matters including the extent to which blank tapes are used for the purpose of making copies of eligible sound recordings and eligible works for private and domestic use.

(3)

A vendor is bound to pay to the collecting society within 21 days of the end of each quarter an amount equal to the sum of the amounts of royalty payable on the tapes first sold, let for hire or otherwise distributed by the vendor in that quarter ((3) s.135ZZP(2)).

(4)

The collecting society is a company limited by guarantee declared by the Attorney-General to be the collecting society. All the relevant copyright owners, or their agents, must be entitled to become members. The rules of the collecting society must be such as to prohibit the payment of dividends and to ensure that the interests of the members who are relevant copyright owners, or their agents, are protected adequately, including provisions about the collection of royalties from vendors, the payment of the administrative costs of the society out of amounts collected, the distribution of amounts collected, the holding on trust of amounts for relevant copyright owners who are not members and access to society records by members ((4) s.135ZZU).

(5)

Copyright in a published sound recording, or in any work included in a published sound recording, is not infringed by making on private premises a copy of the sound recording if the copy is on a blank tape for the private and domestic use of the person who makes it ((5) s.135ZZM(1)).

The effect of the scheme is that private and domestic recording, as just described, is not an infringement of copyright. Nonetheless, the amount levied on the vendors of blank tapes is described as a royalty and is paid to the collecting society, the net proceeds being distributed to the relevant copyright owners by the society. The amount of the royalty is calculated, at least in part, by reference to the extent to which blank tapes are used for the purpose of making copies of eligible sound recordings and eligible works for private and domestic use. But the ultimate payment received by the relevant copyright owners from the collecting society is not related to any right, permission or consent granted by those owners in relation to the reproduction or purpose of their copyright work. At the risk of stating the obvious, we should say that the amounts levied on the vendors of blank tapes are not paid, and are not directed to be paid, into the Consolidated Revenue Fund. This fact is material to the validity of Pt VC. The levy is not a royalty

In the first instance, it is convenient to dispose of the suggestion that the levy imposed upon the vendors of blank tapes is a royalty or something analogous to a royalty. In the context of mineral royalties, patent and copyright royalties and royalties in respect of rights to cut and remove timber, it is of the essence of a royalty that the payments should be made in respect of the exercise of a right granted and should be calculated in respect of the quantity or value of things taken, produced or copied or the occasions upon which the right is exercised ((6) Stanton v. Federal Commissioner of Taxation (1955) 92 CLR 630 , at p 642; Federal Commissioner of Taxation v. Sherritt Gordon Mines Ltd. (1977) 137 CLR 612 , at p 626.).

It is clear that the levy imposed in respect of the sale of blank tapes does not fit this conception. The vendor receives no right, benefit or advantage in consideration of the levy or payment of the levy. The payment is not made in consideration of the grant of a licence to sell blank tapes; nor is it made in respect of the particular exercise of any right, benefit or advantage obtained by the vendor.

It is not the case that, in consideration of payment of the levy, the vendor is permitted to do something which would otherwise amount to an infringement of copyright. The sale of a blank tape does not constitute an authorization by the vendor to infringe copyright. That is principally because the vendor has no control over the ultimate use of the blank tape ((7) University of New South Wales v. Moorhouse (1975) 133 CLR 1 , at pp 12-13, 20-21; RCA Corporation v. John Fairfax and Sons Ltd. (1981) 1 NSWLR 251 , at pp 257-259; WEA International Inc. v. Hanimex Corporation Ltd. (1987) 77 ALR 456 ; CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. [1988] AC 1013 , per Lord Templeman at pp 1052-1055.). In CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. ((8) [1988] AC 1013 .) the House of Lords held that, although the vendors of hi-fi systems with facilities for recording at high speed from pre-recorded cassettes on to blank tapes might facilitate the copying by purchasers of material in breach of copyright, they did not authorize it within the meaning of s.1(1) of the Copyright Act 1956 (U.K.). Likewise, in Sony Corporation of America v. Universal City Studios Inc. ((9) (1984) 464 US 417 .), the Supreme Court of the United States rejected the contention that the sale of home videotape recorders constituted contributory infringement of the copyrights in television programmes reproduced by means of use of such recorders. In arriving at this conclusion, Stevens J. (writing for the majority) stated that there could be no infringement if the product sold was "capable of substantial noninfringing uses" ((10) ibid., at p 442). Earlier, his Honour had pointed out that, in cases in which vicarious liability had been imposed, the contributory infringer ((11) ibid., at p 437):

"was in a position to control the use of copyrighted works by others and had authorized the use without permission from the copyright owner".

It follows that manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article ((12) A and M Records Inc. v. Audio Magnetics Incorporated (U.K.) Ltd. (1978) 5 FSR 1 , at pp 7, 9-10; RCA Corporation (1981) 1 NSWLR, at pp 259-260; CBS. Songs Ltd. (1988) AC, at p 1055.). It was the absence of such control in C.B.S. Songs Ltd. that constituted the critical distinction between the decision in that case and the decision in University of New South Wales v. Moorhouse ((13) (1975) 133 CLR 1 .), where the University had power to control what was done by way of copying and not only failed to take steps to prevent infringement but provided potential infringers with both the copyright material and the use of the University's machines by which copies of it could be made ((14) ibid., at p 21). Accordingly, in Moorhouse, authorization was made out.

A second reason for rejecting the notion that the levy imposed on the sale of blank tapes is a royalty is that, although the net proceeds of the levy are distributed through the medium of the collecting society to copyright owners, that payment is not in consideration of, or associated with, the grant of a right to copy copyright work or the exercise by anyone of such a right. That is because the Act provides that home copying of sound recordings for private and domestic purposes is not an infringement of copyright.

The Commonwealth contends that the purpose of Pt VC and s.153E is to recompense copyright owners in respect of home copying of sound recordings on terms that are consistent with the public interest. So much may be accepted without acknowledging that the existence of this statutory purpose stamps the imposition of the levy with a character inconsistent with that of a tax. As we have just pointed out, the statutory purpose of recompensing relevant copyright owners does not entail the provision of compensation to them for any right granted by them. Rather, the statutory purpose is to provide compensation by means of the levy because the Act deprives the relevant copyright owners of what was formerly an exclusive right which was an element in their copyright, albeit one which was, in practical terms, incapable of enforcement. Section 135ZZM(1): no "acquisition of property"

However, as Dawson and Toohey JJ. have demonstrated in their reasons for judgment, s.135ZZM(1) is not a law with respect to the acquisition of property. The sub-section, which provides that the making on private premises of a copy of a sound recording on a blank tape for the private and domestic use of the person who makes it is not an infringement of copyright, does not acquire from the copyright owners the whole or part of the exclusive right conferred by s.31(1)(a) of the Act to reproduce the copyright work in material form. Instead, s.135ZZM(1) provides that something which was formerly an infringement of copyright is not an infringement. To that extent, the Act reduces the content of the exclusive right conferred by s.31(1)(a). It does not, however, effect an "acquisition" of property for the purposes of s.51(xxxi) of the Constitution. As Mason J. observed in The Commonwealth v. Tasmania (The Tasmanian Dam Case) ((15) (1983) 158 CLR 1 , at p 145; see also per Brennan J. at pp 247-248; per Deane J. at pp 282-283):

"To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."

It follows that the imposition of the levy and the distribution of the net proceeds through the medium of the collecting society to the relevant copyright owners does not amount to the provision of compensation for the acquisition of an interest in property which falls within s.51(xxxi). Of course, even if the distribution of the net proceeds of the levy to the relevant copyright owners could be characterized correctly as the provision of compensation for the acquisition of an interest in property, that characterization would not determine whether the levy is a tax on the vendors of blank tapes or not. There would be no antinomy in holding that the levy is a tax and that the distribution of the net proceeds to the copyright owners is compensation for the acquisition of property. After all, the imposition of a specific tax is one means of raising compensation for the acquisition of property or for some other loss which, in the judgment of the legislature, merits compensation. It is with compensation of the latter kind that we are concerned here. Section 135ZZP(1) imposes taxation

That brings us to the questions whether the levy is a tax and whether Pt VC or any part of it and s.153E constitute a law imposing taxation for the purposes of s.55 of the Constitution. The argument that the levy is not a tax rests on the broad propositions that it is not exacted by a public authority, nor is it exacted for public purposes. The two propositions are based on the influential statement by Latham C.J. in Matthews v. Chicory Marketing Board (Vict.) ((16) (1938) 60 CLR 263 , at p 276) that a tax "is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered". Although the elements in this statement have been recognized as the positive and negative attributes of a tax ((17) Browns Transport Pty. Ltd. v. Kropp (1958) 100 CLR 117 , at p 129), this Court has held that the statement is not an exhaustive definition of what is a tax and has attached important qualifications to the statement ((18) Air Caledonie International v. The Commonwealth (1988) 165 CLR 462 , at p 467).

One such qualification relates to the propositions on which the Commonwealth relies to support its contention that the levy is not a tax. In Air Caledonie International v. The Commonwealth, the Court said ((19) ibid):

"(T)here is no reason in principle ... why the compulsory exaction of money under statutory powers could not be properly seen as taxation notwithstanding that it was by a non-public authority or for purposes which could not properly be described as public".

That approach was implicit in the reasons given by Dixon J. in Vacuum Oil Co. Pty. Ltd. v. Queensland ((20) (1934) 51 CLR 108 ) for rejecting the contention that the obligation imposed upon sellers of petrol to purchase and pay for a specified quantity of power alcohol at a specified price was a tax. His Honour said with reference to the compulsory payment ((21) ibid., at p 125):

"It is not a liability to the State, or to any public authority, or to any definite body or person authorized by law to demand or receive it." (emphasis added)

It would seem to be a remarkable consequence if a pecuniary levy imposed for public purposes by a non-public authority acting pursuant to a statutory authority falls outside the concept of a tax simply because the authority which imposes the levy is not a public authority, when the amount of the levy is to be expended on public purposes, more particularly, if those purposes are Commonwealth purposes. It is scarcely to be contemplated that the character of the impost as a tax depends upon whether the authority is a public authority, unless it be a case in which the character of the authority will be relevant and influential in deciding whether the purposes on which the moneys raised are to be expended are themselves public. Of course, it is a misnomer to describe an authority as non-public when one of its functions is to levy, demand or receive exactions to be expended on public purposes. To that extent, at least, the authority should be regarded as a public authority. But the better view is that it is not essential to the concept of a tax that the exaction should be by a public authority.

The next question is whether it is necessary that the exaction should be for public purposes if the exaction is to be characterized as a tax. In the United States, it has been held that a tax is an exaction for the support of government. In United States v. Butler, Roberts J., writing for the majority, said ((22) (1936) 297 US 1 , at p 61):

"A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another. We may concede that the latter sort of imposition is constitutional when imposed to effectuate regulation of a matter in which both groups are interested and in respect of which there is a power of legislative regulation. But manifestly no justification for it can be found unless as an integral part of such regulation."

Applying this principle, the majority held that the "processing and floor-stock taxes" sought to be imposed upon processors of farm products by the Agricultural Adjustment Act 1933 (U.S.) to be expended by making payments to farmers who reduced acreage and crops were not taxes.

The Supreme Court has taken the same view of a revenue Bill within the meaning of the origination clause in the United States Constitution ((23) Art.1, s.7, cl.1, which provides: "All Bills for raising Revenue shall originate in the House of Representatives".), notwithstanding that the language of that clause differs from that of the taxing and spending clause ((24) Art.1, s.8, cl.1, which confers power "(t)o lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States".). "(R)evenue bills are those that levy taxes in the strict sense of the word, and are not bills for other purposes which may incidentally create revenue" ((25) Twin City Bank v. Nebeker (1897) 167 US 196 , at p 202, citing Story, Commentaries on the Constitution of the United States, 5th ed. (1891), vol.1, pp 642-643, Section 880.). Applying this principle, the Supreme Court has held that levies described as taxes which were imposed as part of specific development programmes, not for the general use of government, were not "taxes in the strict sense of the word" ((26) Twin City Bank v. Nebeker (a charge imposed on banking associations in proportion to the circulation of their notes in order to encourage a national currency); Millard v. Roberts (1906) 202 US 429 (a levy imposed on property owners in the District of Columbia in order to pay for railway projects in the District).). Very recently, in United States v. Munoz-Flores ((27) (1990) 109 LEd. 2 d 384), the Supreme Court rejected a challenge to the validity of a statute creating a "Crime Victims Fund" to which was paid moneys from assessments made in the sentencing of offenders. The Court did not accept the argument that there is a requirement that a Bill must benefit the payer to avoid classification as a revenue Bill. The Court said ((28) ibid., at p 399):

"(A) statute that creates a particular governmental program and that raises revenue to support that program, as opposed to a statute that raises revenue to support Government generally, is not a 'Bil(l) for raising Revenue' within the meaning of the Origination Clause".

Likewise, in Massey-Ferguson Industries Ltd. v. Government of Saskatchewan ((29) (1981) 127 DLR (3d) 513), the Supreme Court of Canada held that levies imposed to create and maintain a compensation fund to support a limited form of insurance for farmers who purchased agricultural implements were not taxes. Laskin C.J., writing for the Court, said ((30) ibid., at p 528):

"The levies, as monetary exactions, are liquidating premiums to satisfy farmers' claims ... and the policy of the Act is to relate the assessments to the compensation awards and to administrative expenses ... There is here no collection of money to go into a consolidated revenue fund which is then chargeable with satisfying awards of compensation. Although the scheme is a public one, created under a public statute, its beneficiaries and obligors are circumscribed by the particular activity or enterprise in which they are engaged."

In this passage, Laskin C.J. identifies two factors as indicative of absence of public purpose. One is the imposition of a levy to provide compensation for a circumscribed category of farmers. The other is that the levy was not paid into a consolidated revenue fund.

In Australia, the fact that a levy is directed to be paid into the Consolidated Revenue Fund has been regarded as a conclusive indication that the levy is exacted for public purposes ((31) R. v. Barger; The Commonwealth v. McKay (1908) 6 CLR 41 , per Isaacs J. at p 82: "(T)he imposition of a tax on any person or thing for the benefit of the Consolidated Revenue is taxation, and taxation within the meaning of the Constitution"; Moore v. The Commonwealth (1951) 82 CLR 547 , per Latham C.J. at p 561: "The moneys collected are paid into consolidated revenue ... The moneys can then be spent for any purpose for which the Commonwealth may lawfully appropriate money"; see also per McTiernan J. at p 572. See also Dennis Hotels Pty. Ltd. v. Victoria (1960) 104 CLR 529 , per Dixon C.J. at p 548.). But neither principle nor Australian authority provides any support for the converse proposition that an exaction is not a tax if it is not to be paid into the Consolidated Revenue Fund. The requirement imposed by s.81 of the Constitution that all revenue or moneys raised or received by the Executive Government form one Consolidated Revenue Fund is not, and cannot constitute, a criterion for what is a tax. The purpose of s.81, like that of its Imperial ancestor 27 Geo. III c.13 (1787), was to ensure that the revenues of the Crown, including taxes, were brought together in one Consolidated Revenue Fund ((32) Northern Suburbs General Cemetery Reserve Trust v. The Commonwealth, unreported, 11 March 1993 , at p 14.) under the control of Parliament. To hold that revenues or moneys that are not treated in accordance with the requirements of s.81 cannot be taxes to which s.81 applies is circuitous reasoning and deprives s.81 of any effective content.

In the present case, it was not contended that, if an exaction does not form part of the Consolidated Revenue Fund, it cannot be said that it was raised for public purposes and therefore is not a tax. But it is necessary to deal with the argument. The essence of the argument is that the expression "public purposes" is to be equated to "governmental purposes" ((33) "The primary meaning of 'taxation' is raising money for the purposes of government by means of contributions from individual persons" (emphasis added): Barger (1908) 6 CLR, per Griffith C.J., Barton and O'Connor JJ. at p 68.). It is sought by the use of the adjective "governmental" to convey the notion that the critical purposes are such that they can be effectuated only with the expenditure of moneys standing to the credit of the Consolidated Revenue Fund. If that proposition be correct, then an exaction not raised or received by the Executive Government, for example, an exaction raised and received by an independent statutory authority pursuant to a power conferred by statute, could not constitute a tax. As Parliament has power to authorize a statutory authority to levy and receive a tax, that general proposition must be rejected.

Furthermore, it is inconsistent with the passage earlier quoted from the judgment in Air Caledonie to the effect that an exaction for non-public purposes may be a tax ((34) (1988) 165 CLR, at p 467). Although that passage is to be found in the context of a general discussion of what are the attributes of a tax, the discussion and the passage related directly to the meaning of the expression law or laws "imposing taxation" as used in ss.53-55 of the Constitution. The judgment is therefore at odds with the notion that a law which levies an exaction on one group in the community to be expended for the benefit or advantage of another group in the community is not a law imposing taxation.

The only possible reason, apart from those already rejected, for holding that the provision in question in this case is not a law imposing taxation is that an expropriation from one group for the benefit of another as an incident of legislative regulation of interests on a subject-matter within power, with a view to bringing about what is conceived to be an equitable outcome, is not an exaction for public purposes and is therefore not a tax. In one sense it may be said that the purpose is private in that it concerns the interests of the two groups only. But, in truth, the legislative solution to the problem proceeds on the footing that it is imposed in the public interest. Indeed, the purpose of directing the payment of the levy to the collecting society for ultimate distribution of the net proceeds to the relevant copyright owners as a solution to a complex problem of public importance is of necessity a public purpose.

In terms of public purpose, the present case may be compared with Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. ((35) (1937) 56 CLR 390 ) where the Flour Acquisition Act 1931 (N.S.W.) purported to expropriate flour and vest it in the Crown on terms that the owners were entitled to compensation at a fair and reasonable price, a price fixed by a committee under the Act, and were entitled to buy the flour back at the standard price, a higher price fixed by the Governor-in-Council. The difference, after deduction of expenses, was to be paid into a special fund for the relief of necessitous farmers. The Flour Acquisition Act was held to impose a duty of excise and to contravene s.90 of the Constitution. Starke J. observed ((36) ibid., at p 408.):

"Here the effect and operation of the Act is to levy upon or extort from the owners of flour a sum of money or its equivalent in value, not in exchange for any service rendered to them but for a government purpose, namely, the relief of necessitous farmers. Such a charge is properly described as a tax or duty".

The case differs from the present case in that the difference between the standard price payable by the owner and the compensation to the owner was to be paid to the State and not to a body whose function it was to distribute the net proceeds to necessitous farmers. However, the difference does not amount to a relevant distinction. The question in that case, as in this case, was whether the purpose on which the moneys raised were to be expended was to be characterized as a public purpose. Just as, in that case, the relief of necessitous farmers was a public purpose so, in this case, the compensation of relevant copyright owners arising out of what has been a complex problem of public importance is a public purpose.

By the end of the seventeenth century, the Crown had lost whatever power it had had to impose taxes without parliamentary sanction ((37) Holdsworth, A History of English Law, vol.6, pp 47-49.) and, although revenue raised by taxes imposed by the Parliament was in theory vested in the Crown ((38) Halsbury's Laws of England, 4th ed., vol.8, par.1364.), its expenditure came under the control of Parliament ((39) Maitland, The Constitutional History of England, (1908), pp 309-310.). That control was facilitated by the establishment of a Consolidated Fund into which all revenue raised by taxation was to be paid and out of which no payments could lawfully be made without parliamentary sanction ((40) See Northern Suburbs General Cemetery Reserve Trust, at pp 14-15.). Subject to some exceptions, the British constitutional arrangement of fiscal power was implemented by ss.53-56 and ss.81-83 of the Constitution. In particular, the Consolidated Revenue Fund prescribed by s.81 of the Constitution is the fund "into which flows every stream of the public revenue, and whence issues the supply for every public service" ((41) Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901), p 812.).

It is essential to the validity of a law or proposed law "imposing taxation" for the purposes of ss.53-55 of the Constitution that the moneys raised by such a law shall form part of the Consolidated Revenue Fund whence they shall be appropriated by law "for the purposes of the Commonwealth". The principle adopted by the Constitution is that revenues or moneys raised shall form part of that Fund from which they can be appropriated only for Commonwealth purposes and only by law. That principle finds expression in s.81. It is supplemented by s.83 which forbids the drawing of money from the Treasury except under appropriation by law.

In that scheme of things, the Constitution plainly contemplates that revenues or moneys raised by a law which levies a tax shall form part of the Consolidated Revenue Fund, even if it be intended to distribute the moneys among a particular group in the community rather than in meeting the ordinary expenses of the Executive Government. Moneys raised by means of a tax levied by a law of the Parliament would not cease to be "revenues or moneys raised by the Executive Government" because it is desired, and because the purported law directed, that they be paid directly to an agency for a particular group in the community which Parliament wished to benefit. Equally, such a law would not cease to be a law "imposing taxation". In order to comply with the relevant provisions in Ch.IV of the Constitution, however, it is necessary that the moneys raised by the imposition of the tax form part of the Fund from which they must be appropriated by law.

The purpose of s.81 would be circumvented readily if a law which imposed a tax on one group for the benefit of another group in the community was not a law "imposing taxation" and, on that account, the moneys raised by the law were not "revenues or moneys raised or received by the Executive Government". The moneys raised would then stand outside s.81. They would also stand outside s.82, which directs that the revenue of the Commonwealth shall, in the first instance, be applied to the payment of the expenditure of the Commonwealth. They would also stand outside s.83.

The last paragraph of s.55 provides a further and persuasive indication that a law which imposes a tax to be applied for the benefit of a particular group in the community is nonetheless a law "imposing taxation". That paragraph provides:

"Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only."

The paragraph treats laws "imposing duties of customs or of excise" as laws "imposing taxation". It would be ludicrous to deny to a law imposing duties of customs or of excise that description simply because the law provided or sought to provide that the duties were to be paid, not to the Consolidated Revenue Fund, but to an agency for distribution to a particular group in the community.

In the result, we are of the opinion that the levy is a tax. It does not fall within any of the well-recognized descriptions of fees or charges which stand outside the concept of a tax. It is not a fee for a licence or privilege or for a service rendered; it is not a charge for the acquisition or use of property; and it is certainly not a fine or penalty. Moreover, it has the characteristics of an excise; it is imposed upon the vendors of blank tapes in respect of the sale of the tapes and it is a charge which the vendor will, in the ordinary course of business, pass on to the purchaser ((42) "(A) tax payable on the occasion of the sale of goods is also an internal revenue duty by way of indirect taxation amounting to an excise duty (The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (1926) 38 CLR 408 )": Homebush Flour Mills Ltd. (1937) 56 CLR, per Latham C.J. at p 401; see also Vacuum Oil Co. Pty. Ltd. (1934) 51 CLR, per Dixon J. at p 124.).

The consequence of the conclusion that the levy is a tax is that Act No.32 of 1989 which inserts Pt VC and s.153E into the Act was a law imposing taxation and therefore contravened s.55 of the Constitution. The operation of that section in relation to an amending Act which sought to introduce a law imposing taxation into an existing Act not dealing with the imposition of taxation was considered in Air Caledonie. The Court observed that, in such a case, the amending Act seeks to bring about something that the Constitution forbids. The Court went on to say ((43) (1988) 165 CLR, at p 472.):

"In such a case, one cannot disregard the barrier of the constitutional injunction against a law dealing both with the imposition of taxation and other matters on the basis that, once the result which that injunction forbids has been achieved, the second limb will rectify the breach by invalidating all the other provisions of the principal Act. The injunction of the first limb constitutes a restriction on legislative power. Its effect in the present case is to invalidate the relevant provisions of the amending Act and one never reaches the situation where the second limb operates to strike down all of the provisions of the principal Act dealing with matters other than the imposition of taxation."

Whether all the provisions in Div.3 of Pt VC and s.153E, together with so much of Div.1 as is relevant to those provisions, are to be considered as laws imposing taxation was a question not dealt with in argument. However, this difficulty may be put to one side because Div.3 of Pt VC and s.153E are, in our view, inseverable from Div.2 which deals with copying with blank tapes and Div.4 dealing with the collecting society. The provisions dealing with copying with blank tapes and the collecting society are integral elements in the legislative scheme introduced by Act No.32 of 1989. It would make no sense at all to retain the taxing provisions and give them an operation in isolation from the other provisions with which the taxing provisions were intended to operate. Indeed, it would give the taxing provisions an operation inconsistent with the expressed intention of the legislature and when that is the effect of an application of s.55, "the whole Act must fail of effect" ((44) Barger (1908) 6 CLR, per Griffith C.J., Barton and O'Connor JJ. at p 78.). Section 135ZZP(1) and Constitution, s.51(xxxi)

A law which is in truth a law imposing taxation escapes the requirement of s.51(xxxi) of the Constitution that an "acquisition of property ... for any purpose in respect of which the Parliament has power to make laws" be "on just terms" ((45) See, e.g., Federal Commissioner of Taxation v. Barnes (1975) 133 CLR 483 , at pp 494-495; MacCormick v. Federal Commissioner of Taxation (1984) 158 CLR 622 , at pp 638, 649.). The reason that this is so is that the relationship between the legislative powers conferred by s.51(ii) and s.51(xxxi) of the Constitution necessarily involves antinomy between what constitutes "taxation" (for the purposes of s.51(ii)) and what constitutes an "acquisition of property" (for the purposes of s.51(xxxi)): of its nature, "taxation" presupposes the absence of the kind of direct quid pro quo involved in the "just terms" prescribed by s.51(xxxi) ((46) See Commissioner of Taxation v. Clyne (1958) 100 CLR 246 , at p 263.). It follows that our conclusion that the "royalty" purportedly imposed by s.135ZZP(1) is in truth a tax makes it strictly unnecessary that we consider whether, if it were not a tax, its imposition would be invalid as an unconstitutional "acquisition of property" on other than just terms. It is, however, desirable that we indicate our view that it would.

It is now well established that the plenary grant of legislative power contained in s.51(xxxi) enjoys the status of a constitutional guarantee of just terms ((47) See, generally, Minister of State for the Army v. Dalziel (1944) 68 CLR 261 , at pp 276, 284-285.) and "is to be given the liberal construction appropriate to such a constitutional provision" ((48) Clunies-Ross v. The Commonwealth (1984) 155 CLR 193 , per Gibbs C.J., Mason, Wilson, Brennan, Deane and Dawson JJ. at pp 201-202.). In the context of that guarantee, the word "property", which has been said to be "the most comprehensive term that can be used" ((49) The Commonwealth v. New South Wales (1923) 33 CLR 1 , per Knox C.J. and Starke J. at pp 20-21), must be construed as extending "to every species of valuable right and interest including real and personal property, incorporeal hereditaments ... and choses in action" ((50) Dalziel (1944) 68 CLR, per Starke J. at p 290; and see also at pp 276, 284-285, 295.). In the context of s.51(xxxi), the word "property" must also be construed as extending to money and the right to receive a payment of money. If it were otherwise, money or the right to receive money could compulsorily be acquired for any purpose in respect of which the Parliament has power to make laws and without compensation, provided the money or the right to receive it was not revenue raised by taxation, a proviso which might be satisfied whenever the relevant purpose was to confer a private and direct benefit on a person or group. The guarantee which s.51(xxxi) was intended to give in protection of property would then largely be illusory.

The answer to the question whether a legislative imposition of an obligation to pay money involves an "acquisition of property" for the purposes of s.51(xxxi) of the Constitution must depend upon the context in which the obligation is imposed. If, for example, a law did no more than provide that a particular named person was under an obligation to pay to the Commonwealth an amount of money equal to the total value of all his or her property, the law would effect an acquisition of property for the purposes of s.51(xxxi), notwithstanding the fact that it imposed merely an obligation to pay money and did not directly expropriate specific notes or coins. In that regard, the comment of a majority of the Court in MacCormick v. Federal Commissioner of Taxation that a tax is "no more than the imposition of a pecuniary liability" ((51) (1984) 158 CLR, at p 638) must be understood in context and does not constitute authority for a general proposition that the imposition of an obligation to pay money can never constitute an "acquisition of property" for the purposes of s.51(xxxi). Section 51(xxxi)'s guarantee of just terms is not to be avoided by "a circuitous device to acquire indirectly the substance of a proprietary interest" ((52) Bank of New South Wales v. The Commonwealth (1948) 76 CLR 1 , per Dixon J. at p 349.). In a case where an obligation to make a payment is imposed as genuine taxation, as a penalty for proscribed conduct, as compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity, it is unlikely that there will be any question of an "acquisition of property" within s.51(xxxi) of the Constitution ((53) See, generally, Attorney-General (Cth) v. Schmidt (1961) 105 CLR 361 , at pp 372-373.).

On the other hand, the mere fact that what is imposed is an obligation to make a payment or to hand over property will not suffice to avoid s.51(xxxi)'s guarantee of "just terms" if the direct expropriation of the money or other property itself would have been within the terms of the sub-section. Were it otherwise, the guarantee of the section would be reduced to a hollow facade.

Nor does the fact that the obligation imposed by s.135ZZP(1) is to pay the levy to an entity, other than the Commonwealth, nominated by the Attorney-General preclude the imposition of the obligation to pay the levy from being an "acquisition of property" for the purposes of s.51(xxxi) ((54) See, generally, McClintock v. The Commonwealth (1947) 75 CLR 1 , at pp 23, 36; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR 397 , at pp 424-425, 427, 451-452; Clunies-Ross (1984) 155 CLR, at p 202.). As Latham C.J. said in PJ. Magennis Pty. Ltd. v. The Commonwealth ((55) (1949) 80 CLR 382 , at pp 401-402):

"The constitutional provision is not limited in terms to laws providing for the acquisition of property by the Commonwealth itself. The words are general - 'with respect to the acquisition of property.' It is obvious that the constitutional provision could readily be evaded if it did not apply to acquisition by a corporation constituted by the Commonwealth or by an individual person authorized by a Commonwealth statute to acquire property. Further, the present case shows that the constitutional provision would be quite ineffective if by making an agreement with a State for the acquisition of property upon terms which were not just the Commonwealth Parliament could validly provide for the acquisition of property from any person to whom State legislation could be applied upon terms which paid no attention to justice. The question whether the constitutional requirement applies to acquisitions in pursuance of Commonwealth law other than acquisition by the Commonwealth itself was mentioned in the case of Real Estate Institute of New South Wales v. Blair ((56) (1946) 73 CLR 213 , at p 224). In McClintock v. The Commonwealth ((57) (1947) 75 CLR, at pp 23, 36.), Starke J. and Williams J. held that it applied in the case of acquisition of property authorized under Commonwealth law though the Commonwealth itself did not acquire the property. Williams J. applied the principle in Jenkins v. The Commonwealth ((58) (1947) 74 CLR 400 ). See also Bank of New South Wales v. The Commonwealth ((59) (1948) 76 CLR, at p 250), per Rich and Williams JJ. I agree that, as legislation with respect to the subject of the acquisition of property can be enacted by the Commonwealth Parliament only by virtue of the power conferred by s.51(xxxi.), all such Commonwealth legislation must affirmatively provide just terms for such acquisition whether the acquisition be by the Commonwealth or by a State or by any other person."

Payment of the "royalty" imposed by s.135ZZP(1) would, if the sub-section were valid, involve a compulsory transfer of property (i.e., money) by the payer to the recipient for a purpose in respect of which the Commonwealth Parliament has power to make laws, namely, as compensation for disadvantage sustained under a law with respect to copyright. As has been seen, that compulsory transfer of property by the person obliged to make it is neither a quid pro quo for any benefit or advantage received by that person nor accompanied by any countervailing compensation to that person. If it were not a tax, that compulsory transfer of property would constitute an "acquisition of property" by the transferee from the transferor. Notwithstanding a submission of the Commonwealth to the contrary, the Act would not, if that were so, provide "just terms" in the sense in which that phrase is used in s.51(xxxi). That being so, the law imposing the obligation to make it and conferring the entitlement to receive it would be unconstitutional by reason of the absence of the "just terms" which the Constitution guarantees.

In the result, we would answer the questions reserved as follows:

1.

Are Divs 3 and 4 of Pt VC and s.153E of the Copyright Act 1968 (Cth) ("the Act") invalid because:

(a)

they do not constitute a law with respect to copyrights within the meaning of s.51(xviii) of the Constitution of the Commonwealth of Australia;

(b)

(i)

they constitute a law with respect to taxation within the meaning of s.51(ii) of the Constitution and a law imposing taxation within the meaning of s.55 of the Constitution; and

(ii)

the Copyright Amendment Act 1989 (Cth) and/or the Act as amended by that Act deal or deals with the imposition of taxation as well as with other matters;

(c)

they effect an acquisition of property from vendors of blank tapes:

(i)

otherwise than on just terms; or

(ii)

other than for any purpose in respect of which the Parliament has power to make laws contrary to the provisions of s.51(xxxi) of the Constitution; or

(d)

they effect a fiscal exaction from vendors of blank tapes and do not constitute a tax within the meaning of s.51(ii) of the Constitution or an acquisition of property within the meaning of s.51(xxxi) of the Constitution?

Answers:
1(a)	No.
1(b)(i) and (ii)	Yes.
1(c)	No.
1(d)	No.

2.

Are Divs 2 and 4 of Pt VC of the Act invalid because they effect an acquisition of property from copyright owners:

(i)

otherwise than on just terms; or

(ii)

other than for any purpose in respect of which the Parliament has power to make laws contrary to the provisions of s.51(xxxi) of the Constitution?

Answer:

No.

As the plaintiffs did not initially rely upon the only arguments upon which they have succeeded, the appropriate order as to costs is that the defendant pay one-half of the plaintiffs' costs of the questions reserved.