D'Emden V Pedder - Arguments

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:

1. 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";
2. 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;
3. That the stamp duty legislation, to the extent that it purported to apply to salary receipts from the Postmaster-General's Department, was a law with respect to that department, and was thus invalid under section 52 of the Constitution, which granted power over the department exclusively to the federal parliament;
4. 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, in which the Supreme Court of the United States held that the U.S. states may not impede valid constitutional exercises of power by the United States Government, and argued that a similar interpretation should apply to the Australian Constitution. Justice O'Connor noted that the Australian Constitution already contains express provisions in Chapter V dealing with the relationship between the state and federal governments, and asked whether it was not so that as a result "any State law which does not conflict with the express provisions of Commonwealth law must be held good?" To this, Drake responded that the inconsistency provision in section 109 should be regarded as applying not only to federal statutes but to the Constitution itself, including to implied powers under it. Drake then dealt with a number of decisions of American and Canadian courts in which McCulloch v. Maryland had been distinguished or held not to apply, and argued that they all involved questions distinct from the one in this case.

With respect to the second argument, regarding inconsistency, Chief Justice Griffith questioned whether the federal legislation setting D'Emden's salary was not simply intended to have effect "with reference to the local conditions prevailing in the particular State, such as local taxation, house-rent, prices of food and clothing" and so on, to which Drake replied that the stamp duty legislation was in conflict with the federal legislation because the effect was to diminish D'Emden's salary before he received it, unlike the examples Griffith mentioned of things which would affect it after he received it.

On the third argument, Drake argued that, like American courts had done in similar cases, the High Court should look to the substantive effect of the Tasmanian legislation in considering whether it interfered with an exclusive power of the federal parliament. Justice O'Connor asked Drake whether his argument applied to D'Emden because he was an officer of the Department, or merely because he had performed services for the Department, and Drake responded that his reasoning was not based on the person but on the fact that the salary receipt was a departmental record.

The respondent Pedder was a Superintendent of Police in Tasmania, and he was represented by the Attorney-General of Tasmania, Sir Herbert Nicholls. Nicholls conceded that it was a necessary consequence of a federal system of government that there were limits on the powers of the state and federal governments with respect to each other, and that the states "have no power by taxation or otherwise to retard or burden or in any other manner control the operation of the constitutional laws of the Commonwealth Parliament", but argued that such a doctrine should not be taken without limitation, and that the degree of interference should be considered.

Nicholls emphasised that the stamp duty applied to D'Emden personally, as a private citizen: that while D'Emden "earns his salary as an officer, receives and enjoys it as a private citizen", and that the legislation did not infringe the federal parliament's exclusive powers over the Postmaster-General's Department since "in giving the receipt, is not serving the Commonwealth, but only dealing with it." Nicholls also conceded that if the stamp duty was levied only on agents of the federal government then it would be unconstitutional, but stressed that it was a general tax applying to all persons in Tasmania.

Nicholls then engaged with Griffith in an exchange about the relationship between the Australian and United States Constitutions. Griffith challenged Nicholls to identify any differences between the two which would make the principles from American cases such as McCulloch v Maryland inapplicable, Nicholls pointing out section 107, which preserves or "saves" the powers of the state parliaments (except for powers given exclusively to the federal parliament). Griffith 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 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.