D'Emden V Pedder - Consequences

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 many of which 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. The Judicial Committee of the Privy Council overruled the decisions in D'Emden and Deakin in the 1907 case of Webb v Outtrim, but in Baxter v Commissioners of Taxation (New South Wales), the High Court held that the Privy Council had decided the case without jurisdiction, and upheld the doctrine. The Commonwealth Salaries Act 1907 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.

H.B. Higgins, an opponent of the implied immunities doctrine who would be appointed to the High Court himself in 1906, wrote in response to the decisions in this and several other cases that "The man in the street is startled and puzzled. He sees a public official, enjoying a regular salary in the postal department, paying the Victorian income-tax until federation, and then suddenly exempted from the tax because the post-office has passed over to federal control."

The doctrine became increasingly unpopular, and when Higgins and Isaac Isaacs were appointed to the High Court in 1906, they regularly dissented from Griffith, Barton and O'Connor in implied immunities cases. The doctrine, along with the doctrine of reserved State powers, would ultimately be overturned in the famous 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 "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"; 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.