D'Emden V Pedder - Judgment

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, saying that the section was intended to prohibit state taxes on property per se (the stamp duty was effectively a personal tax). It then proceeded to consider the bulk of the case.

The court found that the legislation governing salary receipts for employees of federal departments (then contained within the Audit Act 1901) was clearly to do with "the conduct of the departmental affairs of the Commonwealth Government", an area over which, under section 52 of the Constitution, was within the exclusive authority of the federal government, and thus was immune from state authority. The court expressed the principle in this way:

"In considering the respective powers of the Commonwealth and of the States it is essential to bear in mind that each is, within the ambit of its authority, a sovereign State, subject only to the restrictions imposed by the Imperial connection and to the provisions of the Constitution, either expressed or necessarily implied... a right of sovereignty subject to extrinsic control is a contradiction in terms. It must, therefore, be taken to be of the essence of the Constitution that the Commonwealth is entitled, within the ambit of its authority, to exercise its legislative and executive powers in absolute freedom, and without any interference or control whatever except that prescribed by the Constitution itself... It follows that when a State attempts to give to its legislative or executive authority an operation which, if valid, would fetter, control, or interfere with, the free exercise of the legislative or executive power of the Commonwealth, the attempt, unless expressly authorized by the Constitution, is to that extent invalid and inoperative."

On the use of United States case law, from which the doctrine had largely been drawn, the court acknowledged that decisions of the Supreme Court of the United States were of course not binding in Australia, but given the similarities between the American and Australian Constitutions, such decisions "may well be regarded... not as an infallible guide, but as a most welcome aid and assistance." The court went on to discuss the method by which the Constitution was formed, at the Constitutional Conventions, and said that "we think... we are entitled to assume — what, after all, is a fact of public notoriety — that some, if not all, of the framers of the Constitution were familiar, not only with the Constitution of the United States, but with that of the Canadian Dominion and those of the British colonies", and that when provisions of the Australian Constitution are in substance the same as those in other constitutions, and those other provisions have been interpreted by courts in a certain way, "it is not an unreasonable inference that framers intended that like provisions should receive like interpretation." Griffith, Barton and O'Connor were capable of speaking for at least some of the framers of the Constitution, having each "assisted in the actual drafting of the constitutional documents."

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 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.