D'Emden v Pedder

As with the allocation of powers to the United States Congress under the United States Constitution, the Constitution of Australia grants a number of specified powers to the Parliament of Australia, while leaving unassigned powers to the state parliaments. Most of the powers granted to the federal parliament can also be exercised by the state parliaments, though because of section 109 of the Australian Constitution federal laws will prevail in case of inconsistency. This arrangement resulted in a constitutional dispute as to whether the federal government could be subject to state laws, and vice versa. The factual circumstances giving rise to this case began on 31 March 1903 when Henry D'Emden, who was employed by the federal government as the Deputy Postmaster-General for Tasmania, gave a receipt for his salary to a federal official without paying the Tasmanian stamp duty on it. While agreeing that in fact he had not paid the stamp duty, D'Emden argued that at law he was not obliged to pay the state tax, and made the same basic argument in an appeal to the Supreme Court of Tasmania. That appeal was rejected, and D'Emden appealed to the High Court. ==Arguments==

Arguments were heard on 24 February 1904. D'Emden was represented by the Attorney-General of Australia, Senator James Drake, who put forward four arguments for D'Emden's case: • That, in its application to D'Emden, the stamp duty was a tax on the agencies or instrumentalities of the federal government, and was "by necessary implication forbidden by the Constitution"; • That the stamp duty legislation, to the extent that it purported to affect the salary of federal agents, was inconsistent with the federal legislation setting the salary, and was thus invalid under section 109 of the Constitution; which granted power over the department exclusively to the federal parliament; • That, to the extent that the stamp duty applied to federal salary receipts, it constituted a tax on the property of the Commonwealth, and was thus prohibited by section 114 of the Constitution. Drake argued that, because of the similarities between the Australian and United States Constitutions in this respect, it was useful to look at decisions of American courts in United States constitutional law when interpreting the Australian Constitution. Drake referenced the 1819 decision of McCulloch v Maryland, which preserves or "saves" the powers of the state parliaments (except for powers given exclusively to the federal parliament). Griffith CJ suggested that there was no material difference between this provision and the Tenth Amendment, but Nicholls argued that section 107 was far clearer, and further suggested that "the contention that the implied powers of the Commonwealth can over-ride State laws seems hardly consistent with it." Griffith CJ then said: "The framers of the Australian Constitution had before them decided cases in which certain provisions of the United States Constitution had received definite and settled interpretation. With these cases before them they used in many of the sections of our Constitution almost identical language. Does not this raise a strong presumption that they intended the same interpretation to be placed upon similar words in our Constitution?" Nicholls agreed, but maintained that as far as the provisions for the relationship between the states and the federal government were concerned, the Australian Constitution was quite different from the United States Constitution. ==Judgment==

A unanimous opinion was handed down by the court, delivered by Chief Justice Griffith. After laying out the facts the court promptly rejected D'Emden's fourth argument, that the salary receipt was property within the meaning of section 114 of the Constitution, was clearly to do with "the conduct of the departmental affairs of the Commonwealth Government", an area which, under section 52 of the Constitution, The court then quoted extensively and with approval from the judgment of Chief Justice John Marshall in McCulloch v Maryland, specifically from a passage discussing the ideological basis of taxation, the relationship between the various American states and the Union, and the implications of the Supremacy Clause. The court went on to note that the principles enunciated in that case had been met with approval subsequently in United States cases, and also in cases in the Canadian provinces of Ontario and New Brunswick, and thus rebuffed an argument raised by the majority of the Supreme Court of Tasmania that the doctrine did not have support. The court rejected another argument raised by the majority of the Supreme Court: that it is necessary in every case to consider whether the attempted exercise of power by a state actually inhibited or interfered with the workings of the federal government, instead deciding that any claimed power which has the potential for such interference will be invalid, and consideration of whether there was actual interference would be irrelevant. In a final point, the court said that, applying the basic principle of statutory construction that a piece of legislation "should, if possible, receive such an interpretation as will make [it] operative and not inoperative", the Tasmanian legislation imposing the stamp duty should be interpreted so as not to apply to federal officers in circumstances such as that of D'Emden, but it would otherwise be valid. ==Consequences==

The High Court proceeded to apply the implied immunity of instrumentalities doctrine in a range of cases, many of which also involved taxation and were similarly controversial. In the case of Deakin v Webb, decided later in 1904, the Court held that Alfred Deakin was not liable to pay Victorian income tax on his salary as a member of the Australian House of Representatives, and as Attorney-General of Australia and later Prime Minister of Australia, based on the principles in ''D'Emden v Pedder. but in Baxter v Commissioners of Taxation (NSW)'', the High Court held that the Privy Council had decided the case without jurisdiction, and upheld the doctrine. settled the issue of state taxation by making all federal salaries subject to state taxes. In the Railway Servants' case, the High Court held that the doctrine worked both ways, that is, it held that the states were also immune from Commonwealth laws, in finding that a trade union representing employees of the Government of New South Wales could not be registered under federal industrial relations legislation. The doctrine was challenged by the appointment of Higgins and Isaac Isaacs to the High Court in 1906, and they regularly dissented from Griffith CJ, Barton and O'Connor JJ in implied immunities cases. The doctrine, along with the doctrine of reserved State powers, would ultimately be overturned in the Engineers' case of 1920. Writing in 1939, H. V. Evatt (at the time a Justice of the High Court) discussed ''D'Emden v Pedder'' and the other implied immunity of instrumentalities cases and suggested that the High Court in the Engineers' case may have taken too drastic an approach to ''D'Emden''. The court in the Engineers' case did not overturn the result of ''D'Emden since they would have arrived at the same result based on an application of section 109 of the Australian Constitution, which deals with inconsistency between state and federal legislation by specifying that the federal legislation will prevail. Evatt argued that the court had introduced a notion of supremacy which led to them misinterpreting the decision in D'Emden'', saying that Griffith CJ "regarded the rule... as one of mutual non-interference, and certainly not as perpetrating the absurdity of 'mutual supremacy'", that being the epithet with which the court in the Engineers' case had rejected any place for a doctrine of mutual immunity of instrumentalities. However, Evatt did concede that the Engineers' case showed that if any principle of immunity were to be revived, it "must have a far narrower operation in Australia than was first supposed by Griffith CJ"; indeed, it has been said that the principle as laid down in ''D'Emden was of even broader application than that set out by Chief Justice Marshall in McCulloch v Maryland''. ==References==