The Governor of the Commonwealth Bank has forwarded the following memorandum for advice:

I have the honour to hand you herewith rate notice from the Brisbane City Council, in respect to the Bank's property in Queen Street, Brisbane, which also includes a claim for arrears of rates for 1913 and 1914 for that portion which the Bank occupies.

The Bank has two tenants in the building, Messrs Johns & Co. and the Federal Land Tax Commissioner, but previously Johns & Co. also occupied the portion now tenanted by the Land Tax Branch, and under the lease given to Johns at that time, the Bank was bound to refund to him the amount of his rates.

No rates have been paid in respect to the portion occupied by the Bank, as the Honourable the Attorney-General advised on 23 March 1913⁽¹⁾, that the Bank was not liable.

The City Council now state that their Counsel advise that the Bank is liable on the whole property, and I shall be glad if you will kindly get the opinion of the Attorney-General as to whether the Bank is liable to pay rates on the portion occupied by-

1. Johns & Co.;
2. the Federal Land Tax Commissioner;
3. the Commonwealth Bank of Australia.

The question as to whether the Commonwealth Bank was an instrumentality of the Commonwealth was dealt with by the High Court in Heiner v. Scott 19 C.L.R.381. In that case Griffith C.J. said at p. 393:

It may be conceded that it is a function of government to raise money by way of loan for governmental purposes and to make provision for the custody and management of the public funds, whether raised by taxation or loan, but it does not follow that it is a function of government to carry on a trade for the purpose of raising revenue. In my opinion the carrying on of ordinary banking business is not a function of the executive Government of the Commonwealth conferred by the Constitution.

... I am of opinion that the operations of the Commonwealth Bank, as between itself and its customers, are not the discharge of a function of the executive Government of the Commonwealth, and that no privileges can be claimed in respect of them.

Isaacs J., in delivering judgment for himself, Gavan Duffy and Rich JJ., said at p. 400:

We do not think the Act constitutes the Bank universally the agent of the Commonwealth in the sense necessary to make all its acts the acts of the Commonwealth itself-in other words Sovereign Acts. In respect of sub-sec. (c) of sec. 7, its personality is kept distinct from that of the Commonwealth. In respect of some of its functions and obligations, it may or may not be identified with the Commonwealth-a matter for possible future consideration.

The position of the Bank appears to be that in so far as it carries on the ordinary business of banking it is not an instrumentality of the Commonwealth.

In so far as the Bank acts as the custodian of and keeps the Public Account of the Commonwealth or raising money on loan for the Commonwealth, I think it is carrying out an executive function of government and is to be regarded as an instrumentality of the Commonwealth.

The levying of rates on the property of the Bank is not an act which affects one aspect of its operations as against the other aspect of its operations, but affects the operations of the Bank as a whole.

The Bank in carrying out its functions as an instrumentality of the Commonwealth is not subject to any Act of the State or an executive authority under the State which would interfere with the free exercise of these functions.

The fact that the Bank also carries on other functions in which it is not an instrumentality of the Commonwealth cannot, I think, deprive it of the privileges attaching to it as an instrumentality of the Commonwealth, where the act in question applies to the Bank as a whole and not to one aspect only of its operations.

The levying of rates, by a municipal authority constituted by a State, on property owned by an instrumentality of the Commonwealth, is, I think, an interference with the free exercise by the instrumentality of its functions. The occupation of land and buildings is essential for the Bank to carry out its operations as an instrumentality of the Commonwealth, and to make the use and occupation of the land dependent upon the payment of rates to a State authority is, to my mind, an interference with the free exercise of the Bank's operations as an instrumentality of the Commonwealth.

It may be contended that under section 114 of the Constitution the property is exempt from rates. Section 114 of the Constitution forbids a State levying any tax on property of any kind belonging to the Commonwealth. I do not think, however, that the property of the Bank is the property of the Commonwealth within the meaning of that section. The Bank is created a personality distinct from the Commmonwealth so far as regards the ownership of land (vide sections 6 and 10 of the Commonwealth Bank Act 1911), so that the Bank could not claim the advantage of section 114 of the Constitution.

In my opinion, the Commonwealth Bank is not liable to the Municipal Council of Brisbane for rates on its property in Brisbane.

Although the Bank is not liable for rates, Johns & Co. as occupiers of a portion of the building are liable to the Council for rates, but the Bank under the terms of the lease to Johns & Co. are liable to repay that firm the amount paid by it in rates (vide my opinion of 24 December 1913⁽²⁾).

[Vol. 15, p. 149]

(1)Opinion No.508, the correct date of which is 23 May 1913.

(2)Not published in Vol. 1[Vol. 12,p. 56].

(3)This opinion is unsigned in the Opinion Book, but it is attributed to Sir Robert Garran.