Contractual disputes concerning rights or entitlements created by Commonwealth regulations (such as import licences or quotas) are characterised as matters arising under federal law, engaging federal jurisdiction and precluding Privy Council appeals.
Later decisions that cite LNC Industries Ltd v BMW (Australia) Ltd
Decisions cited by LNC Industries Ltd v BMW (Australia) Ltd
L.N.C. INDUSTRIES LTD. v. B.M.W. (AUSTRALIA) LTD. [1983] HCA 31; (1983) 151 CLR 575
Constitutional Law
High Court of Australia
Gibbs C.J.(1), Mason(1), Murphy(2), Wilson(1), Brennan(1), Deane(1) and
Dawson(1) JJ.
CATCHWORDS
Constitutional Law (Cth) - Privy Council - Appeal from State Supreme Court invested with federal jurisdiction - Matter arising under law made by Commonwealth Parliament - Whether court exercising federal jurisdiction - Import licences issued under Customs (Import Licensing) Regulations - Agreement relating to benefit of licensed quota - Action to enforce agreement - Customs Act 1901 (Cth), s. 50(1) - Customs (Import Licensing) Regulations, reg. 7,9,16 - The Constitution (63 & 64 Vict. c.12), s. 76(ii) - Judiciary Act 1901 (Cth), s. 39.
HEARING
1983, March 16; October 6. 6:10:1983DECISION
October 6.
3. The statement of claim alleged that the plaintiff was the holder of
licences granted under the Customs (Import Licensing) Regulations
("the
Regulations") to import into Australia during the quota years 1978 and 1979
passenger motor vehicles to a quantity not exceeding
565 units and 1,000 units
respectively, and that by two agreements, made in September 1978 and March
1979, it agreed to cause its
quota entitlements to 345 of the said units to be
transferred to the defendant. It was alleged that it was a term and condition
of
the agreement made in September 1978, "that any benefit accruing after 1978
quota year and in particular in the 1979 quota year as
a result of or related
to the utilization of the 345 units of quota to be transferred would be held
to the benefit of the plaintiff".
It was further alleged that it was agreed
that this term and condition would also apply to the transfer made pursuant to
the agreement
of March 1979. The statement of claim went on to allege further
facts and proceeded to make the following claims:
"1. A declaration that the defendant was obliged in April 1980 to cause to
be transferred to the plaintiff units of quota for
the importation of
passenger motor vehicles totalling: -
(a) 619 units (being 89.753% of 690 units)plaintiff to the defendant which the defendant utilised before 30 June 1979
(b) (alternatively) 89.753% of so many of the 690 units transferred by the
5. Damages."By the defence it was pleaded that the agreements regarding benefits which accrued after the 1978 quota year were subject to a condition which was not in fact satisfied, and this view of the facts was accepted by Rogers J. In addition, the defence pleaded that the agreements were uncertain and that the plaintiffs were guilty of delay. (at p579)
4. To understand the nature of the proceeding, and the significance of the
plaintiff's claim, it is necessary to refer to the Regulations,
which are made
under the Customs Act 1901 (Cth) ("the Act"), as amended, and to the practice
adopted by the Department of Business and Consumer Affairs in the
administration
of the Regulations. By s. 50(1) of the Act, the
Governor-General is given power, by regulation, to prohibit the importation of
goods
into Australia; that power may be exercised, amongst other ways, by
prohibiting the importation of goods unless a licence to import
the goods or a
class of goods in which the goods are included has been granted as prescribed
by the Regulations. By reg. 7 of the
Regulations, it is provided as follows:
"The importation of any goods (not being goods which are excepted from
the application of these Regulations) is prohibited
unless -
(a) a licence under these Regulations to import the goods is in force;
and
(b) the conditions and restrictions (if any) to which the licence is
subject are complied with."
Regulation 9 provides:
"Except -exported at the date of the application for the licence,
(a) where the Minister otherwise approves; or
(b) where goods in respect of which the licence is applied for have been
5. The Minister has power to grant or refuse a licence (reg. 11), to attach
conditions to it (reg. 12) and to revoke it (reg. 15).
A licence is not
transferable (reg. 16). By administrative arrangements notified by the
Department, an importer who, by reason of
holding a licence, is entitled to
import a specified number of particular goods (his "quota") is entitled to
transfer his quota in
whole or in part. The transfer would be effected by the
original licensee surrendering his licence and by the issue to the transferee
of a new licence giving him the right to import during the remaining period of
the original licence goods to the number specified
in the original licence
less the number entered for home consumption pursuant to that licence. If
quotas were to be allocated for
a subsequent year, the transferee would be
allotted a quota calculated by reference to the extent to which the quota had
been used
by entering goods for home consumption during a period called the
"moving base period". (at p580)
6. On behalf of the applicant plaintiff it was submitted that in the proceedings in the Supreme Court the plaintiff was seeking to enforce rights which owed their existence to the fact that contracts had been made between the parties, that neither the existence of the rights nor their enforcement depended upon the Act or the Regulations, and that the defence did not raise, and the trial judge did not decide, any question that arose under the Act or the Regulations. Therefore, it was said, the proceeding did not arise under any law made by the Parliament, and the facts that the Act and Regulations formed part of the background against which the case was to be decided, and that the case might involve their interpretation or effect, were not to the point. (at p581)
7. It is true to say that a matter does not arise under a law made by the Parliament merely because the interpretation of the law is involved: Felton v. Mulligan [1971] HCA 39; (1971) 124 CLR 367, at pp 374, 382, 396, 408, 416 . On the other hand, a matter may arise under a law of the Parliament although the interpretation or validity of the law is not involved: R. v. Commonwealth Court of Conciliation and Arbitration: Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141, at p 154 . The conclusion reached by Latham C.J. in that case [1945] HCA 50; (1945) 70 CLR 141, at p 154 , and stated in a passage that has often been cited with approval, is "that a matter may properly be said to arise under a federal law if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law". Equally, there is a matter arising under a federal law if the source of a defence which asserts that the defendant is immune from the liability or obligation alleged against him is a law of the Commonwealth: Felton v. Mulligan (1971) 124 CLR, at p 408 . (at p581)
8. When it is said that a matter will arise under a law of the Parliament
only if the right or duty in question in the matter owes
its existence to a
law of the Parliament that does not mean that the question depends on the form
of the relief sought and on whether
that relief depends on federal law. A
claim for damages for breach or for specific performance of a contract, or a
claim for relief
for breach of trust, is a claim for relief of a kind which is
available under State law, but if the contract or trust is in respect
of a
right or property which is the creation of federal law, the claim arises under
federal law. The subject matter of the contract
or trust in such a case exists
as a result of the federal law. In R. v. Commonwealth Court of Conciliation
and Arbitration; Ex parte
Barrett (1945) 70 CLR 141, at p 154 , Latham C.J.
said that the view which he expressed was in accordance with Federal
Capital
Commission
v. Laristan Building and Investment Co. Pty. Ltd. [1929] HCA 36; (1929) 42 CLR
582, at pp 585-586 where Dixon
J. said:
"The Seat of Government is an integral part of the Federal System, and I
see no reason for denying the application of sec.
76 to laws made pursuant
to sec. 52(I). It would follow that a law of the Parliament conferring
jurisdiction on the High Court
is warranted by sec. 76(II), at least in
relation to matters which arise as the result of enactments of the
Parliament. It may well
be that all claims of right arising under the law in
force in the Territory come within this description, because they arise
indirectly
as the result of the Seat of Government Acceptance Act 1909 (see
sec. 6), and the Seat of Government (Administration) Act 1910 (see
secs. 4
to 7 and 12). But it is at least clear that a claim to a right conferred by
or under ordinances made by the Governor-General
in Council under sec. 12 of
the Seat of Government (Administration) Act is a matter arising under an
enactment of the Parliament."
This view conforms with what was said by Walsh J. in Felton v. Mulligan (1971)
124 CLR, at pp 402-403 and with the judgments of members
of this Court in
Moorgate Tobacco Co. Ltd. v. Philip Morris Ltd. [1980] HCA 32; (1980) 145 CLR 457, at pp
468-469, 480 . (at p582)
9. The contracts in the present matter were concerned solely with entitlements under the Regulations. The object of the plaintiff's claim was identified in the statement of claim as "any benefit accruing" after a certain time as a result of the utilization of a quota under the Regulations. It is common ground that the "benefit" mentioned is any "benefit" which might accrue under the Regulations. The subject matter of the contracts and of the action arose under and existed only by reason of the provisions of the Regulations and the Act in pursuance of which the Regulations were made. The Act was of course a law of the Parliament and the Regulations were made under it. (at p582)
10. The present case is not, to use the words of Windeyer J. in Felton v. Mulligan (1971) 124 CLR, at p 391 , one in which the Regulations are merely "lurking in the background". The very subject of the issue between the parties is an entitlement under the Regulations. In substance the plaintiff's primary claim is to the benefit of rights and privileges under the Regulations. In these circumstances the matter involved in the action arose under laws made by the Parliament. The Supreme Court was therefore exercising federal jurisdiction in dealing with it and it follows that s. 39(2)(a) of the Judiciary Act precludes an appeal to Her Majesty in Council. (at p582)
11. The application for leave to appeal to Her Majesty in Council will be dismissed as incompetent. (at p582)
MURPHY J. The Supreme Court proceedings are an exercise of federal jurisdiction. I agree with the reasons given by the rest of the Court for that conclusion. I adhere to the opinion I expressed in Southern Centre of Theosophy Inc. v. South Australia [1979] HCA 59; (1979) 145 CLR 246 that no appeal lies to the Privy Council. (at p583)
2. The application should be dismissed as incompetent. (at p583)
ORDER
Application for leave to appeal to Her Majesty in Council dismissed as incompetent.Order that the applicant pay the respondent's taxed costs of the application.
No order as to the costs reserved on 12 November 1982.