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.

---

Gibbs C.J.

On 26th May 1977 the Supreme Court of Victoria pronounced a decree for the dissolution of the marriage between Antonio Pietro Gazzo (the petitioner) and Filippina Gazzo (the respondent). On the same day, the Supreme Court made an order in the following terms:

``THAT the Petitioner shall within sixty days of the date hereof transfer his right title and interest free of all encumbrances in the property known as and situate at 4 Third Avenue, Aspendale in the State of Victoria being the whole of the land more particularly described in Certificate of Title Volume 4728 Folio 401 to the Respondent as Trustee of Santo Francesco Gazzo, Maria Carmela Gazzo and Giovanni Sebastian Gazzo otherwise known as John Gazzo as tenants in common in equal shares. The Petitioner to pay all legal costs and registration fees in respect of such Transfer.''

The order was made under Pt. VIII of the Family Law Act 1975 (Cth.) as amended. In accordance with the order an instrument of transfer of the land was executed by Mr. Gazzo; the transferee, Mrs. Gazzo, also signed it. The Comptroller of Stamps of the State of Victoria, acting under the Stamps Act 1958 (Vic.), assessed the transfer to stamp duty. Mrs. Gazzo objected to the assessment on the ground that the transfer is exempt from duty by virtue of the provisions of sec. 90 of the Family Law Act, but the Comptroller disallowed the objection, asserting that in so far as sec. 90 purports to exempt the transfer from duty it is invalid as beyond the power of the Parliament of the Commonwealth. Mrs. Gazzo then requested the Comptroller to treat the objection as an appeal and to set it down for hearing in the Supreme Court. The matter became cause No. V.T.A. 11 pending in the Supreme Court of Victoria, but on application made by the Attorney-General for the State of Victoria this Court ordered that the cause be removed into this Court and that there be referred to a Full Court the following question:

``Is sec. 90 of the Family Law Act 1975 a valid law of the Commonwealth?''

Section 90 of the Family Law Act is in the following terms:

``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 expression ``maintenance agreement'' is defined in sec. 4 to mean -

``... an agreement in writing made, whether 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.''

The term ``financial matters'' is defined by sec. 4 as follows:

```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 appears in Pt. VIII of the Family Law Act. There are a number of provisions of that Part of the Act for the purposes of which deeds or other instruments may be executed, or under which orders may be made in accordance with which deeds or other instruments may be executed. By sec. 72 and 73 an obligation is cast on a party to a marriage to maintain the other party in certain circumstances, and to maintain children under the age of 18. By sec. 74 and 77, the Court may make orders for the provision of maintenance for a party to the marriage or for the children of the marriage. By sec. 78(1), in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the

---

ATC 4701

Court may declare the title or rights, if any, that a party has in respect of the property, and, by sec. 78(2), where a Court makes a declaration under subsec. (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession. Section 79(1) provides that in proceedings with respect to the property of the parties to a marriage or either of them, the Court may make such order as it thinks fit altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either or both of the parties to make, for the benefit of either or both of the parties or a child of the marriage, such settlement or transfer of property as the Court determines. In exercising its powers under Pt. VIII, the Court may (inter alia) order that any necessary deed or instrument be executed: sec. 80(d).

In so far as sec. 90 exempts instruments from a duty or charge under a law of a Territory or a law of the Commonwealth, it is clearly valid. However, in so far as it refers to a duty or charge under a law of a State, the section can only be sustained as valid if it is a law with respect to marriage (sec. 51(xxi) of the Constitution) or with respect to divorce and matrimonial causes (sec. 51(xxii)) or with respect to matters incidental to the exercise of the powers vested by the Constitution in the Parliament or in the Federal Judicature (sec. 51(xxxix)). Before it is possible to consider whether sec. 90 does answer any of those descriptions, it is necessary to consider its effect. The section applies to exempt from any duty or charge under any law of a State three classes of instruments - (1) maintenance agreements, (2) deeds or other instruments executed by a person for the purposes of a maintenance agreement and (3) deeds or other instruments executed by a person for the purposes of Pt. VIII, or in accordance with an order under Pt. VIII. The definition of ``maintenance agreement'' has already been mentioned. To be understood it must of course be read together with the definition of ``financial matters''. It is very wide in its scope, and includes many agreements that could not be described as ``maintenance agreements'' in the ordinary sense. Although an agreement will not fall within the definition unless it was made between the parties to a marriage (which includes a person who was a party to a marriage that has been dissolved or annulled: sec. 4(2)), such an agreement may have other parties as well. Although a maintenance agreement must make provision with respect to ``financial matters'', it may also make provision with respect to other matters. Even if the agreement is made only between parties to a marriage, and is made only with respect to ``financial matters'', it may not arise out of, or be concerned with, the matrimonial relationship. For example, one former spouse may agree to buy from the other property which was never matrimonial property, and such transaction may have been purely a business transaction which had nothing to do with any obligation on the part of one spouse to maintain the other. If the agreement, in so far as it is made between the spouses, does concern matters arising out of the matrimonial relationship, it may nevertheless include an agreement with some other person who has no connexion whatever with the marriage. For example, if the spouses agree to sell the matrimonial home and divide the proceeds equally, the agreement to that effect may be embodied in a document which contains also an agreement between the spouses and the purchaser of the property. The second class of instruments to which sec. 90 applies - those executed for the purposes of a maintenance agreement - may have even less connexion with the matrimonial relationship. It is not necessary that a party to a marriage should be a party to such an instrument or that it should relate to ``financial matters''. If the spouses agreed that the husband should buy a home for the wife, the agreement between the husband and the vendor would fall within this description. The third category of instruments within sec. 90 has two sub-classes - instruments executed for the purposes of Pt. VIII, and those executed in accordance with an order under Pt. VIII. The last-mentioned sub-class comprises the only documents within sec. 90 that are necessarily connected with a matrimonial cause.

Before passing from the construction of the section, it should be observed that sec. 90 exempts the instruments to which it applies not only from any duty, but also from any charge. The word ``charge'' is wide enough to include a price demanded for services, and the question may arise whether the exemption afforded by the section extends to fees for services provided in connexion with

---

ATC 4702

some dealing with the documents, as well as to imposts of the general nature of duties. However, in the present case we are concerned only with the attempted imposition of a stamp duty, and not with any attempt to enforce a charge.

It is apparent from what has been said that the question stated for the opinion of the Full Court is wider than is necessary for the purpose of deciding the case. For present purposes, it is enough to decide whether sec. 90 is a valid law of the Commonwealth to the extent that it provides that a deed or other instrument executed by a person in accordance with an order under Pt. VIII of the Family Law Act is not subject to any duty under any law of a State. That in itself involves two questions - first, whether sec. 90 would be valid if its operation were confined to exempt from duty any deed or instrument executed in accordance with an order under Pt. VIII, and, secondly, whether it is possible to treat sec. 90 as severable, so that the provision which exempts from duty a deed or instrument executed in accordance with an order under Pt. VIII may be given effect notwithstanding that other parts of the section may be held to be beyond power.

The first question then is whether the Commonwealth may validly enact that a deed or other instrument executed in accordance with an order made under Pt. VIII is not subject to any duty under any law of a State. Would a law having that effect be a law with respect to marriage, or with respect to divorce and matrimonial causes, or with respect to matters incidental to the execution of any power vested by the Constitution in the Parliament or in the Federal Judicature?

In
Attorney-General (Vic.) v. The Commonwealth (1962) 107 C.L.R. 529 at p. 560 , Taylor J. said that the power to make laws with respect to marriage ``extends not only to laws prescribing the form and requisites of a valid marriage but also to laws defining and regulating the respective rights duties and obligations of the parties inter se ''. In
Russell v. Russell (1976) FLC ¶ 90-039 ; (1976) 134 C.L.R. 495 , it was accepted that this statement was correct, and that a law defining the duty of one party to the marriage to support and maintain the other, or to support and maintain the children of the marriage, was a law with respect to marriage. That case also decided that the scope of para. (xxi) of sec. 51 is not limited by the concluding words of para. (xxii) and that the power of the Parliament to make laws with respect to the rights of the parties to a marriage to the custody of a child of the marriage does not depend on the existence of a matrimonial cause. In
Dowal v. Murray (1978) FLC ¶ 90-516 ; (1979) 22 A.L.R. 577 , and
R. v. Lambert ; Ex parte Plummer (1980) FLC ¶ 90-904 ; (1980) 32 A.L.R. 505 , it was held that legislation under sec. 51(xxi) is not limited to the definition and enforcement of rights as between the parties to the marriage; rights and duties which arise from the marriage relationship may be enforced against other persons. However, a law is not a law with respect to marriage simply because it has some operation with respect to married persons: see R. v. Lambert; Ex parte Plummer, at FLC pp. 75,691-75,692; A.L.R. p. 512 and
R. v. Demack ; Ex parte Plummer (1977) FLC ¶ 90-244 at p. 76,312; (1977) 137 C.L.R. 40 at p. 46 . In R. v. Lambert; Ex parte Plummer I said, at FLC pp. 75,691-75,692; 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... The question whether a law is one with respect to marriage is one of degree. The answer to it depends on the closeness of the connection between the law and the marriage relationship.''

The question in each case is whether the connexion between the law and the marriage relationship is sufficiently close to enable it to be said that the law is in truth one with respect to the relationship. It is not enough that the law incidentally touches upon marriage, or that the Parliament has seized on the fact of marriage as a justification for the enactment of a law which really deals with some other topic.

It is clear that a law that simply provided that a married person should not be liable to a State tax would not be a law with respect to marriage. Such a law would be concerned with the relationship which exists between citizens and the State, and would have no connexion with the marriage relationship except that it was rendered applicable to a married person - a connexion too slight and remote to give the law the character of a law with respect to marriage. Nor would such a

---

ATC 4703

law be with respect to matrimonial causes - it would have no necessary connexion with a legal proceeding arising out of the marriage. However, the provisions of sec. 90 with which we are now concerned have some connexion both with marriage and with matrimonial causes - they exempt from State duty an instrument executed in accordance with an order made in a matrimonial cause in which Pt. VIII is applied. Again the connexion is only a remote one, since the object of the section is to destroy a liability that would otherwise be owed by a person (albeit a married person) to a State, under a law which does not take as the criterion of the liability anything related to the marriage or the matrimonial cause. If such a provision is to be held valid, its validity must depend on the established principle that ``every legislative power carries with it authority to legislate in relation to acts, matters and things the control of which is found necessary to effectuate its main purpose, and thus carries with it power to make laws governing or affecting many matters that are incidental or ancillary to the subject matter'':
Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 C.L.R. 55 at p. 77 ; see also
Wragg v. State of New South Wales (1953) 88 C.L.R. 353 at p. 386 . In accordance with that principle, the power to make laws with respect to marriage, and with respect to matrimonial causes, ``carries with it authority to make such provisions as are incidental to the effectuation of the purpose described by the express words of the power'':
Federated Ironworkers' Association of Australia v. The Commonwealth (1951) 84 C.L.R. 265 at p. 277 . Both the power given by para. (xxi), and that given by para. (xxii), enable the Parliament to legislate for the enforcement in legal proceedings of the rights which one party to a marriage has against the other, and which arise out of the matrimonial relationship. Obviously in such proceedings the Court may proceed to make an order, and the power given by para. (xxi) and (xxii) must carry with it authority to make any such order effective. Further, the Parliament may, as incidental to the subject matter of sec. 51(xxi) and (xxii), ``provide against any impairment of the operation and practical efficacy'' of orders made by the Court in the exercise of the jurisdiction and powers conferred on it by legislation made under those paragraphs: cf.
Australian Boot Trade Employees' Federation v. The Commonwealth (1954) 90 C.L.R. 24 at p. 43 .

A distinction is traditionally drawn between the operation of the doctrine that everything which is incidental to the main purpose of a legislative power is contained within the grant itself and that of sec. 51(xxxix) which relates to matters incidental to the execution of a power. The distinction is said to be between a matter incidental to a subject to which the power is addressed and a matter which is incidental to the execution of a power, that is, something which attends or arises in its exercise: see
Le Mesurier v. Connor (1929) 42 C.L.R. 481 at pp. 497-498 , and
Australian Coastal Shipping Commission v. O'Reilly (1962) 107 C.L.R. 46 at p. 54 . When sec. 51(xxxix) is sought to be given an application in relation to matters incidental to the execution of a legislative power, it is not at all clear what it adds to the principle that the grant of legislative power carries within it everything necessary to effectuate its main purpose. However, in this case it is enough to say, as was said in
Burton v. Honan (1952) 86 C.L.R. 169 at p. 178 , that ``the distinction is for present purposes immaterial because it produces the same result, namely, that the Parliament may in the exercise of any of the substantive powers given by sec. 51 make all laws which are directed to the end of those powers and which are reasonably incidental to their complete fulfilment''. The operation of sec. 51(xxxix) in relation to matters incidental to the execution of a power vested in the Federal Judicature is in some respects easier to understand. Assuming that the powers of the Court under Pt. VIII can be regarded as powers vested by the Constitution in the Federal Judicature within the meaning of sec. 51(xxxix), that paragraph gives the Parliament power to make laws incidental to the fulfilment of those powers. But again, in the circumstances of the present case, para. (xxxix) would give to the Parliament no relevant power that it would not already have under para. (xxi) and (xxii). It is therefore convenient to speak of the operation of those paragraphs, rather than of para. (xxxix).

It is then necessary to consider whether sec. 90 can be regarded as a law which renders effective orders made by a Court under the powers given by Pt. VIII of the Family Law Act. If it can be so regarded, and is therefore incidental to the subject matter of the power given by para. (xxi) and (xxii), the fact that it exempts from State tax instruments that would otherwise attract it

---

ATC 4704

will not render it invalid. That is shown by two decisions of this Court. In
The Commonwealth v. State of Queensland (1920) 29 C.L.R. 1 it was held that a Commonwealth law, which provided that interest derived from stock or Treasury bonds should not be liable to income tax under a law of a State unless it was declared to be so liable by the prospectus relating to the loan on which the interest was payable, was a valid enactment under sec. 51(iv) of the Constitution. That paragraph empowers the Parliament to make laws with respect to ``borrowing money on the public credit of the Commonwealth'', and it was held that it gave power to fix the conditions on which a borrowing was to be made, including the condition that the interest was to be tax free (see at pp. 11; 21; 26). Isaacs and Rich JJ. said, at p. 21:

``The loan is a transaction outside the jurisdiction of the States; the interest is an income of the lender created by the Commonwealth. And, being created by the Commonwealth for its own purpose, it may be surrounded with such characteristics as to secure to the Commonwealth the full benefit it desires to obtain. If States could tax Commonwealth bonds in the hands of the holder or the interest he receives, notwithstanding Commonwealth legislation to the contrary, the financial operations of the whole nation might be frustrated by the action, and possibly divergent action, of portions of the nation.''

In Australian Coastal Shipping Commission v. O'Reilly the Court upheld the validity of sec. 36(1) of the Australian Coastal Shipping Commission Act 1956 (Cth.). That Act, which set up the Australian Coastal Shipping Commission, by sec. 36(1) provided that the Commission is not subject to taxation under a law of a State to which the Commonwealth is not subject. Dixon C.J. pointed out that the Commission which the Act created was a corporation ``established for the purposes of the Crown in right of the Commonwealth'' and that the Parliament was entitled to exclude the activities of a government agency of that kind from State taxation (see pp. 55-57). These cases establish that under a legislative power of the Commonwealth the operation of State taxing laws can be directly and expressly excluded. Of course they do not deal with the situation that would arise if the Commonwealth legislation so impaired the power of a State to impose taxation that the very existence of the State was threatened; that question, upon which I touched in
Victoria v. The Commonwealth (``the Pay-roll case'') (1971) 122 C.L.R. 353 , does not arise in the present case. However, these cases do not throw any light on the question whether the provisions of sec. 90 can be regarded as incidental to the subject matter of the power given by para. (xxi) and (xxii); the reasons for the decisions, to which reference has been made, show that they are quite distinguishable from the present case.

An order made under Pt. VIII is none the less effective because an instrument executed in accordance with its commands is subject to stamp duty under the general law. The liability to pay the duty does not prevent or impede the person to whom the order is directed from complying with it, or the person in whose favour it is made from enforcing it, nor does it affect the operation of the order. The purpose of such an order can be fully achieved whether or not duty is payable on an instrument made in accordance with it. It is true that if the person bound by the order is liable to pay the duty, the order may be more burdensome to him financially. Exoneration from the duty will ease his burden and to that extent make it easier for him to comply with the order. Similarly, an order for the payment of maintenance, or the making of a settlement of property, might be more easily complied with by a party who was relieved of his liability to pay costs to the solicitor who was acting for him, or for that matter of his liability to pay for his medical care of his groceries, but a law exempting a party to a marriage from liabilities of that kind would not be within the power of the Parliament. The question whether a law is reasonably incidental to the subject matter of the power is always one of degree, and it depends to some extent on the nature of the power. Thus the Parliament might, under the defence power, exempt soldiers travelling on duty from the necessity of complying with the traffic regulations of a State, but it could not validly grant a similar exemption in favour of a married person travelling to avail himself or herself of an order for access made under the Family Law Act. Although the power given by para. (xxi) and (xxii) enables the Parliament to legislate for the creation, variation and enforcement of rights to property which one party to a marriage has

---

ATC 4705

against the other, that does not mean that the Parliament can, as incidental to that power, legislate with regard to the law of property generally in its application to married persons. If the Parliament empowers the Court to order a transfer of property to be effected, and the Court acting under that power makes such an order, and the transfer is intended to take effect within the system of State law, it must comply with the requirements of that system. For these reasons, although the provisions of sec. 90 which exempt an instrument from the duty which it would attract under the general law have some connexion with the subject matter of the power granted by para. (xxi) and (xxii) when the instrument exempted is one executed in accordance with an order of a Court under the Family Law Act, those provisions cannot in my opinion be said to be necessary to render the order effective or to be reasonably incidental to the power. The position might well be different if the State law constituted a practical barrier to the execution of instruments in accordance with such an order, for example if the amount of the impost equalled or exceeded the value of the property transferred by the instrument, but that is not the present case.

The conclusion at which I have arrived is reinforced by two decisions of this Court. In
The Commonwealth v. New South Wales (``the Royal Metals case'') (1923) 33 C.L.R. 1 the Court held invalid sec. 20 of the Lands Acquisition Act 1906 (Cth.) which provided that if a copy of a notification of acquisition of land, duly Gazetted, was lodged with the Registrar-General of the State he should register it in the register and deal with it and give it effect as if it were a grant or conveyance or memorandum or instrument of transfer of the land duly executed under the laws in force in the State. The majority of the Court held that this provision was not incidental to the complete exercise of the power of acquisition, and ultra vires. Knox C.J. and Starke J. said, at pp. 27-28:

``Effective acquisition of (inter alia) land by the Commonwealth is the object to be attained, and the power is completely exercised by enabling the Commonwealth to vest absolutely in itself the land which it desires to acquire. The object is attained by the method provided by sec. 16 of the Act, namely, that upon the publication of a notification of acquisition the land described therein shall `by force of this Act be vested in the Commonwealth'.

...

But it does not follow that the Commonwealth Parliament is entitled to insist upon the State registration of its title to the land acquired unless upon compliance by the Commonwealth with the conditions imposed by State law. The provisions of the Real Property Act 1900 which stand in the way of the Commonwealth in this case in no way prevent or interfere with the acquisition by the Commonwealth of any land in New South Wales: they do no more than prescribe the conditions on which the State will permit the registration of title to land; and in our opinion the Commonwealth, if it desires to obtain registration of its title under the Real Property Act, must comply with the conditions imposed by that Act. As our brothers Isaacs and Rich said, in Commonwealth v. New South Wales (1918) 25 C.L.R. 325, at p. 340, `if it' (i.e., the Commonwealth) `seeks to obtain the registration provided by the statute, it must take it on the terms of the Act which it invokes'.''

In The State of Victoria v. The Commonwealth (``the Second Uniform Tax case'') (1957) 99 C.L.R. 575 it was held, by a majority, that sec. 221(1)(a) of the Income Tax and Social Services Contribution Assessment Act 1936-1956 (Cth.), which provided that a taxpayer should not pay State income tax until he had paid his Commonwealth tax, was not incidental to the power to make laws with respect to taxation conferred on the Parliament by sec. 51(ii). Dixon C.J. said, at p. 614:

``To support s. 221(1)(a) it must be said to be incidental to the federal power of taxation to forbid the subjects of a State to pay the tax imposed by the State until that imposed upon them by the Commonwealth is paid and, moreover, to do that as a measure assisting to exclude the States from the same field of taxation. This appears to me to go beyond any true conception of what is incidental to a legislative power and, under colour of recourse to the incidents of a power expressly granted, to attempt to advance or extend the substantive power actually granted to the Commonwealth until it

---

ATC 4706

reaches into the exercise of the constitutional powers of the States.''

These decisions show that a provision cannot be said to be incidental to the subject matter of a power simply because in a general way it facilitates the execution of the power. They also show that in considering whether a law is incidental to the subject matter of a Commonwealth power it is not always irrelevant that the effect of the law is to invade State power; that of course would not be relevant if the law were clearly within the substantive power expressly granted.

For these reasons in my opinion the relevant provisions of sec. 90 were beyond the power of the Commonwealth Parliament to enact. It therefore becomes unnecessary to consider whether those provisions, had they been valid, could have been treated as severable from the remaining provisions which clearly go far beyond power.

For these reasons I would answer the question submitted for our opinions as follows:

• Section 90 of the Family Law Act 1975, in its attempted application to any duty or charge under any law of a State, is not a valid law of the Commonwealth.

I would remit the matter to the Supreme Court of Victoria but in accordance with the agreement reached between the parties would make no order as to costs.