Luna Park Ltd v Commonwealth [1923] HCA 49; (1923) 32 CLR 596 (31 October 1923)

HIGH COURT OF AUSTRALIA

Luna Park Limited Plaintiff; and The Commonwealth of Australia Defendant.

H C of A

31 October 1923

Knox C.J., Isaacs, Higgins, Rich and Starke JJ.

Latham K.C. and Owen Dixon K.C. (with them Spicer), for the plaintiff.

Sir Edward Mitchell K.C. and C. Gavan Duffy, for the defendant,

Knox C.J.

In this case I do not think it is necessary to consider whether the Court has jurisdiction to make a declaration, for, even if it had, I do not think the case is one in which the application for a declaration should be entertained. The state of facts on which the claim is based is purely hypothetical—"If the company elects to carry on its business in a certain way, will it be liable to pay a certain tax?" It has always been the rule that the Court does not answer questions based on a hypothetical state of facts. If authority were needed for that, it will be found in the case of Glasgow Navigation Co. v. Iron Ore Co.[1], where Lord Loreburn L.C. stated that it was not the function of a Court of law to advise parties as to what would be their rights under a hypothetical state of facts. If this declaration were made, it would have no binding effect in the true sense at all. It would be no more than an abstract opinion in the nature of advice that, if the company did certain things, it would or would not become liable to pay a certain tax. None of the cases we have been referred to, I think, goes as far as that, and in my opinion the questions should not be answered.

Isaacs J.

I agree.

Higgins J.

In concurring with the judgment of the Court I wish to add a few words; because in the previous cases on which Mr. Latham and Mr. Dixon rely I had the misfortune to differ from the majority of the Court. In the McArthur Case[2] and in the case of Commonwealth v. Queensland[3] my personal opinion was, as stated in the reports, that the action did not lie. But I am bound by the decision of the majority, and I loyally accept it. However, I am glad to find that in this case a limit is being put upon this class of actions. There certainly is a difference here from the former cases, and it is regarded by my colleagues as indicating a sufficient limit. Some effect, too, must be given to the additional words inserted in our Order IV., r. 1—words which are not in the corresponding English rule—"the Court may make binding declarations of right in an action properly brought." In my opinion this action is not properly brought. It is all the more important for the Court to watch jealously the limits of its powers when it finds that the Commissioner does not take the point. We might soon be led into a ridiculous position.

I agree that the questions should not be answered.

Rich J.

I agree.

Starke J.

I agree. I would only add that the case of Automatic Totalisators Ltd. v. Federal Commissioner of Taxation[4], to which Mr. Dixon referred, is the nearest to this case, and I am by no means sure that that case does not require further consideration.

Questions not answered.

Solicitors for the plaintiff, Arthur Robinson & Co.

Solicitor for the defendant, Gordon H. Castle, Crown Solicitor for the Commonwealth.

[1] (1910) A.C., 293, at p. 294.

[2] [1920] HCA 77; (1920) 28 C.L.R., 530.

[3] [1920] HCA 79; (1920) 29 C.L.R., 1.

[4] [1920] HCA 25; (1920) 27 C.L.R., 513.