The Secretary, Prime Minister’s Department, has forwarded the following memorandum for advice:

The attached copy of a letter No. B.1288 of the 27th January received from the Premier of New South Wales is referred in connection with Opinion No. 142 of the 23rd October, 1930,⁽¹⁾ concerning Harbour dues on goods imported by the Commonwealth.

All Commonwealth Departments concerned were advised by this Department on the 31st July, 1931, that consideration had been given to the question of payment of port charges by the Commonwealth and that the Government had decided to accept liability for the payment of wharfage dues, harbour dues and other port charges on goods imported or exported by the Commonwealth or shipped between Australian ports, except in cases where an exemption from such charges was granted to Commonwealth goods under the Acts of a State. The Departments were further notified on the 12th October, 1931, that the above decision would take effect from the 31st July 1931. This date was fixed with a view to protecting the Commonwealth against claims for retrospective payments.

The New South Wales Government now asks for payment of amounts of £665 for shipment of coal and oil fuel between 2nd December 1929 and 31st July 1931, and £27.16.8 for explosives during the same period.

Advice is desired as to whether, in view of the opinion of the Acting Solicitor-General which was published in the Auditor-General’s report for the year ending June 1930 and to which the Honourable the Premier refers in his letter, it is considered the Commonwealth should pay claims for all port charges in respect of periods prior to the 31st July, 1931.

In the above connection, your attention is invited to Sir Robert Garran’s minute dated 18/12/26,⁽²⁾ which was approved by the Acting Attorney-General on the 11th January, 1927, in which the opinion is expressed that the claim of the Melbourne Harbour Trust for wharfage charges incurred during the previous 13 years was without legal foundation.

I have read Sir Robert Garran’s Minute dated 18/12/1926.2 The opinion expressed in that Minute appears to be applicable only to the circumstances of the case then under consideration, namely, that during the period of 13 years mentioned the Commonwealth had always obtained the Commissioners’ authority for the free delivery of Commonwealth goods, and the Commissioners had no power under their Regulations to recover wharfage dues after the delivery of the goods.

So far as I am aware, it has never been decided by any competent court that the Commonwealth is liable for the payment of port charges. It appears, however, that in 1929 the Commonwealth Government decided to accept liability for the payment of wharfage dues, and this decision was communicated to the State Authorities by the following letters dated respectively 22 November 1929, and 2 December 1929, from the Secretary, Prime Minister’s Department, to the Chairman, Interstate Conference of Australian Harbour Authorities:

With reference to your letter of the 13th November, No. L.224/29 and previous correspondence in regard to the question of the payment of port charges on goods for the Commonwealth, I desire to inform you that the matter has received consideration, and approval has been given for the acceptance of liability for the payment in future of wharfage dues at the port of Melbourne on goods imported by the Commonwealth Government.

With reference to your letter of the 26th November, L. No. 242/29 in regard to the question of the payment of port charges on Commonwealth goods, I desire to inform you that under the approval given such charges will in future be paid at all ports in Australia on goods imported by the Commonwealth.

These letters should be regarded, I think, as a statement of intention made by the Government of the day rather than an undertaking imposing a legal obligation on the Commonwealth. In the absence of any intimation to the contrary, however, I think the Harbour Authorities are justified in looking to the Commonwealth for payment of wharfage charges as from the date of the second letter, i.e., 2 December 1929. In the absence of any claim by those Authorities, however, it would not appear to be necessary for the Commonwealth to raise the question of retrospective payments. I note that the first letter related to wharfage dues only, and, as the second letter merely extended the application of the decision communicated in the first letter, it must also be read as relating to wharfage dues only.

In support of the Harbour Trust Commissioners’ claim, the Premier of New South Wales quotes portion of an Opinion given by the Acting Solicitor-General, which was published in the Auditor-General’s report of 1930.3 This extract is somewhat misleading when read apart from the preceding portion of the Opinion. The whole of the relevant portion of the Opinion reads as follows:

In my opinion of 22.9.1926 (No. 164 of 1926), I advised the Secretary to the Prime Minister’s Department that wharfage rates were charges for services rendered and did not constitute a tax within the meaning of section 114 of the Constitution.

If, as I assume, harbour dues or tolls are charges for services rendered, they are not taxes and are not an obstruction to the freedom of commerce: vide Quick and Garran, Constitution of the Australian Commonwealth, p. 853. The Commonwealth, therefore, in my opinion, is liable to pay harbour dues with respect to goods the property of the Commonwealth which are landed at any port in a State of the Commonwealth, except where an exemption can be claimed under the Act imposing the payment of such harbour dues.

It will be seen that the view expressed in relation to harbour dues is based on the assumption that harbour dues or tolls are charges for services rendered.

In a memorandum dated 3 July 1930, the Secretary, Department of Defence, stated that the stores referred to were delivered direct to Garden Island and no wharfage facilities were provided by the Sydney Harbour Trust.

He also stated that charges, other than wharfage rates, had not previously been paid in cases similar to those in respect of which the present claims are being made, and that harbour rates had been ‘considered as constituting a tax, and therefore not payable by the Commonwealth’.

In a memorandum dated 18 October 1930, the Acting Solicitor-General pointed out that the Privy Council had decided that the State of New South Wales was entitled to the possession of Garden Island, and expressed the view that ‘the Commonwealth is liable to pay wharfage and harbour dues on coal and oil fuel landed at the wharf at Garden Island.’⁽³⁾

The Premier of New South Wales states that ‘the rates in question are payable under sections 3 and 5 of the Sydney Harbour Trust (Wharfage and Harbour Rates) Act, 1914, as amended by sections 3 and 4 of the Sydney Harbour Wharfage and Tonnage Rates (Amendment) Act 1920’. The relevant portions of these sections read as follows:

3. The following sections are inserted in the place of sections sixty-eight and sixty-nine of the Sydney Harbour Trust Act, 1900:

68. The Commissioners shall demand, collect, and receive, subject to the exemptions and deductions hereinafter in this Act specified, inward and outward wharfage rates to be fixed as hereinafter provided, upon all goods including goods the property of the Crown–

1. unshipped from any vessel berthed at a wharf, dock, pier, jetty, landing-stage slip, or platform in the port, vested in the Commissioners; or
2. received on any such wharf, dock, pier, jetty, landing-stage, slip, or platform for shipment on a vessel ....

5. The following sections are inserted in the place of sections three and four of the Sydney Harbour Rates Act, 1904:

3. Towards meeting the expenditure annually incurred in dredging, lighting, improving and maintaining the port of Sydney, the Commissioners may demand, collect and receive inward harbour rates on all goods including goods the property of the Crown brought by sea into the said port, and outward harbour rates on all goods including goods the property of the Crown shipped on any vessel in the said port…

The liability of the Commonwealth for the payment of such rates depends on whether the amount claimed is a tax or a charge for a service. In Transportation Company v. Parkersburg (107 U.S. 691), it was held that wharfage is the compensation which the owner of a wharf demands for the use thereof. This decision would, I think, be accepted by the High Court though it is not actually binding on the Court. I am of opinion, therefore, that the wharfage rates claimed should be regarded as a charge for the use of a wharf or other similar property vested in the Commissioners.

In the case submitted, however, it is not clear that the wharf used was vested in the Sydney Harbour Trust Commissioners. Garden Island was expressly excluded from the lands vested in the Commissioners by the Sydney Harbour Trust Act 1901 (See Schedule two). Under section 27 of that Act the Governor has power to vest further lands in the Commissioners, but I have no information as to whether this power has been exercised in relation to Garden Island. If the Island was not vested in the Commissioners at the date on which the goods in respect of which wharfage rates are claimed were unshipped, it would appear that the Commissioners are not entitled under the State Act (quoted above) to demand wharfage rates in respect of those goods.

The obligations of the Commonwealth in regard to harbour rates are not so clear as those in regard to wharfage rates, because it is not so easy to connect the liability for the payment with the service rendered. The Premier of New South Wales claims that the rates are levied for services rendered such as dredging, lighting, maintaining and improving the port, and the State Act provides that the rates may be imposed for these purposes. Such services are provided for the benefit of navigation and shipping generally, and harbour rates imposed to meet the cost of such services are somewhat analogous to the rates imposed by a municipal council to enable the council to maintain roads and footpaths and other public utilities, which rates have been held to be taxes. (See Municipal Council of Sydney v. the Commonwealth, 1 C.L.R. 208). Although the cases are not quite analogous, I am inclined to the view that they are sufficiently similar in principle to justify the view that the harbour rates in question are taxes on property belonging to the Commonwealth, within the meaning of section 114 of the Constitution, and that the Commonwealth is, therefore, not liable for the payment of such rates.

In my opinion, therefore, the amount claimed by the Sydney Harbour Trust Commissioners in respect of harbour rates should not for the present be paid by the Commonwealth.

If the State presses for payment and it is desired by the Commonwealth to strengthen its position in refusing to make the payment, it might be advisable to consider the question of extending the provisions of section 70 of the Defence Act.

[Vol. 25, p. 718]

(1) Opinion [Vol. 24, p. 764] by Mr Knowles; published in Commonwealth of Australia Parliamentary Papers, (General), Vol. IV (1929–31), p. 3027.

(2) Opinion not found.

(3) Opinion not found.