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High Court of Australia |
BRENNAN CJ,
AND
THE COMMONWEALTH OF AUSTRALIA DEFENDANT
1. Answer the question reserved as follows:
Is section 31(1) of the Financial Transaction Reports Act 1988 a valid law of the Parliament of the Commonwealth?
Answer: Yes.
2. The plaintiff pay the defendant's costs of the question reserved.
5 November 1996
Solicitors for the Plaintiff: Farmer Campbell Edmunds
Solicitor for the Defendant: Australian Government
Solicitor
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Stephen Arthur Leask v The Commonwealth of Australia
Money and Currency - Offence to be party to certain non-reportable transactions which avoid obligation to report - Nature of mens rea.
Commonwealth Constitution s 51(ii), (xii).
Financial Transaction Reports Act 1988 (Cth), ss 3, 4, 7, 9, 10, 16, 24, 27, 31, 34, 35, 38.
BRENNAN CJ. Section 7 of the Financial Transaction Reports Act 1988 (Cth) ("the Act") imposes on a "cash dealer" an obligation to report certain transactions to which the cash dealer is a party. The report is made to the Director of AUSTRAC (a statutory acronym for the Australian Transaction Reports and Analysis Centre[1]). Section 7 reads as follows:
" (1) Where a cash dealer is a party to a significant cash transaction, the dealer shall, before the end of the reporting period:
(a) prepare a report of the transaction; and
(b) communicate the information contained in the report to the Director;
unless:
(c) the transaction is, at the time when it occurs, an exempt transaction; or
(d) the transaction is, at the time when it occurs, eligible for exemption and becomes, before the end of the reporting period, an exempt transaction; or
(e) the cash dealer is an approved cash carrier.
(2) The report shall be prepared in the approved form, contain the reportable details of the transaction and be signed by the cash dealer or otherwise authenticated by the cash dealer in a way approved by the Director.
(3) The communication shall be made to the Director:
(a) by giving the Director a copy of the report; or
(b) in such other manner and form as is approved by the Director, in writing, in relation to the cash dealer or to a class of cash dealers that includes the cash dealer.
(4) In this section:
"reportable details", in relation to a transaction, means the details of the transaction that are referred to in Schedule 1."
The definition of "cash dealer"[2] covers financial institutions and a large number of other persons whose business involves or is likely to involve "cash transactions". As counsel described the categories, they extend "from the banking chamber to the racecourse". Section 3(1) defines the term "cash transaction" to mean "a transaction involving the physical transfer of currency from one person to another" and the term "significant cash transaction" to mean "a cash transaction involving the transfer of currency of not less than $10,000 in value". "Currency" is defined by s 3(1) to mean:
"the coin and paper money of Australia or of a foreign country that:
(a) is designated as legal tender; and
(b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue."
The reporting obligation imposed by s 7 thus relates to transactions to which the cash dealer is a party involving the transfer of $10,000 or more in Australian currency or of overseas currency of the value of 10,000 or more Australian dollars. Moreover, the Act imposes a reporting obligation in respect of a transaction which a cash dealer has reasonable grounds to suspect may be relevant to investigation of an evasion or attempted evasion of a taxation law or to the investigation of an offence against a law of the Commonwealth or a Territory or which may be of assistance in enforcing the Proceeds of Crime Act 1987 (Cth)[3]. Some significant cash transactions to which a financial institution is a party or between a futures broker and a clearing house are "exempt transactions"[4] and do not attract the obligation to report[5].
Information obtained by the Director (known as FTR information[6]) is available to the Commissioner of Taxation as of right and to the Attorney-General for the purpose of dealing with requests for assistance made by a foreign country to which the Mutual Assistance in Criminal Matters Act 1987 (Cth) applies[7]. On the written authority of the Director, access to FTR information can be given to a law enforcement agency and to the Australian Customs Service[8].
The objects of the Act are stated by s 4:
" (1) The principal object of this Act is to facilitate the administration and enforcement of taxation laws.
(2) A further object of this Act is to facilitate the administration and enforcement of laws of the Commonwealth and of the Territories (other than taxation laws).
(3) Without prejudice to the effect of this Act by virtue of subsections (1) and (2), a further object of this Act is to make information collected for the purposes referred to in subsection (1) or (2) available to State authorities to facilitate the administration and enforcement of the laws of the States."
Section 4(1) indicates a legislative belief that the administration and enforcement of taxation laws would be facilitated by giving to the Commissioner of Taxation information of the occurrence of, and parties to, transactions involving the transfer of currency to the value of $10,000 or more.
A cash transaction involving the transfer of currency of a value less than $10,000 does not attract an obligation to report, unless it is a suspect transaction falling within s 16. Suspect transactions apart, a person who wishes to use the services of cash dealers for the transfer of more than that amount can avoid enlivening a dealer's obligation to report by splitting the total amount into sums less than $10,000 and transferring currency to the value of those lesser sums in a series of distinct transactions. Section 31 seeks to prevent this and similar means of avoiding the operation of ss 7 and 16. Section 31 provides:
" (1) A person commits an offence against this section if:
(a) the person is a party to 2 or more non-reportable cash transactions; and
(b) having regard to:
(i) the manner and form in which the transactions were conducted, including, without limiting the generality of this, all or any of the following:
(A) the value of the currency involved in each transaction;
(B) the aggregated value of the transactions;
(C) the period of time over which the transactions took place;
(D) the interval of time between any of the transactions;
(E) the locations at which the transactions took place; and
(ii) any explanation made by the person as to the manner or form in which the transactions were conducted;
it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that:
(iii) would not give rise to a significant cash transaction; or
(iv) would give rise to exempt cash transactions.
(2) A person commits an offence against this section if:
(a) the person conducts 2 or more non-reportable transfers of currency; and
(b) having regard to:
(i) the manner and form in which the transfers were conducted, including, without limiting the generality of this, all or any of the following:
(A) the value of the currency involved in each transfer;
(B) the aggregated value of the currency involved in the transfers;
(C) the period of time over which the transfers occurred;
(D) the interval of time between any of the transfers;
(E) the locations at which the transfers were initiated or conducted; and
(ii) any explanation made by the person as to the manner or form in which the transfers were conducted;
it would be reasonable to conclude that the person conducted the transfers in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that no report in relation to the currency involved in the transfers would be made under section 15.
(3) A person who commits an offence against this section is punishable, upon conviction, by:
(a) if the offender is a natural person - a fine not exceeding $10,000 or imprisonment for a period not exceeding 5 years, or both; or
(b) if the offender is a body corporate - a fine not exceeding $50,000."
The plaintiff challenged the validity of s 31(1) and McHugh J reserved for the consideration of the Full Court the following question:
"Is section 31(1) of the Financial Transaction Reports Act 1988 a valid law of the Parliament of the Commonwealth?"
The Commonwealth seeks to support the validity of s 31(1) in reliance on the legislative powers conferred by s 51(ii) ("taxation ...") and s 51(xii) ("currency, coinage, and legal tender"). The plaintiff contends that the provisions of s 31(1) are not supported by either of those powers and are invalid.
The Parliament's definition of the principal object of the Act does not by itself establish its validity as a law with respect to taxation. It is not the declared object but the operation and effect of the Act which can give it the character of a law with respect to a head of power. The character of an Act is determined by its operation and effect[9]: its operation by reference to the rights, duties, powers or privileges that the Act creates or affects[10]; its effect by reference to its operation in the circumstances to which it applies[11]. The statutory declaration of the object of an Act is relevant to the construction of a provision the construction of which would otherwise be ambiguous[12], but the declaration is not sufficient by itself to affect the operation and effect of the Act. The Parliament cannot legislate a measure into power merely by declaring its measure to be enacted for a valid object.
When the operation and effect of an Act are ascertained, its connection or lack of connection with the subject matter of a head of power can be determined. Sometimes, as I pointed out in Cunliffe v The Commonwealth[13], "a connexion with a head of power may be revealed more clearly by stating the purpose or object which the law is appropriate and adapted to achieve than by describing the law's effect and operation on particular rights, duties, powers and privileges". But, as Dawson J points out, "purpose" in this context refers to the purpose of the law, not the purpose of the head of power[14]. The purpose of a law is the end or object which a law achieves or, putting it another way, it is the effect of a law expressed by reference to a field of activity, relationship or status. As Dawson J says, the purpose of a law is an aspect of "what the law does in fact" so that the basic test of validity remains one of sufficient connection between the operation and effect of the law on the one hand and the head of power on the other. If the head of power is itself purposive (for example, the defence power), the existence of a connection may be determined more easily by comparing the purpose of the law and the purpose of the power. But if the relevant head of power is non-purposive (as the taxation and currency powers are non-purposive) the validity of the law is more likely to be determined by reference to its operation and effect.
The question for determination is therefore whether s 31(1), by its operation and effect, reveals a sufficient connection with either "taxation" or "currency, coinage, and legal tender". The operation of s 31(1) must be collected from its terms.
The two paragraphs of s 31(1) contain distinct elements of the offence created by the sub-section. Paragraph (a) prescribes the elements constituted by the conduct of the offender; par (b) prescribes the quality of the cash transactions to which the offender became a party. The plaintiff points to the clause "it would be reasonable to conclude" in par (b) to show that the elements of that paragraph may be satisfied irrespective of the actual purpose of the offender in conducting the cash transactions referred to in par (a) in the manner and form in which they were conducted. As the actual purpose of an alleged offender is not an element of the offence created by s 31(1), it is said that s 31(1) purports to create an offence of strict liability without the ordinary requirement of mens rea[15] and that, in the absence of an intent to impair the effectiveness of the taxation laws, the connection between such an offence and the subject of taxation is too tenuous or remote to attract the support of s 51(ii) of the Constitution. This submission was supported by an argument that s 31(1) is not "reasonably proportionate" to the purpose of preventing tax fraud or money laundering. The submission encounters a number of difficulties which, for reasons presently to be mentioned, need not be finally decided. But as some stress was laid on the supposed absence of mens rea and the notion of proportionality, I refer to these points.
The term "mens rea" may be used to connote not only the voluntary doing of an offender's act but his concurrent knowledge of the circumstances in which it is done, his appreciation of the nature and quality of his act done in those circumstances and a specific intention that any result of his conduct prescribed as an element of the offence should be achieved. But the mens rea required for criminal responsibility for the commission of a statutory offence has to be ascertained by reference to the text which creates the offence[16]. The mens rea required by s 31(1) is confined, in my opinion, to the elements of the offence prescribed in par (a). A person who engages in the conduct mentioned in s 31(1)(a) is liable to conviction only if he voluntarily conducted the two or more "non-reportable cash transactions" therein mentioned and knew the facts which gave the transactions the character of "non-reportable cash transactions". In my opinion, the mens rea of the offence does not extend to a specific intention to achieve "the sole or dominant purpose" referred to in par (b) of s 31(1). Paragraph (b) requires the relevant transactions to have a particular objective quality, that is, they must exhibit such of the features mentioned in sub-par (b)(i) as would lead a reasonable person to conclude that the offender's sole or dominant purpose in conducting the transactions was one of those specified in par (b). But as to these elements, the mental state of the alleged offender is irrelevant except as a factor in an explanation offered by the alleged offender which precludes (by raising a doubt) a finding that an hypothetical reasonable person would reach the conclusion stated in par (b). It is immaterial whether the offender knew that his conduct was unlawful or that a court might, in the absence of any explanation by the offender, find that it would be reasonable to reach the conclusion stated in par (b). Section 31(1) is not a provision imposing strict liability but the mens rea of the offence is extremely limited.
It does not follow from the limitation of the required mens rea that s 31(1) is not a law with respect to taxation. If the effect of s 31(1) were found to be the facilitation of the administration or enforcement of the taxation laws - or, to put it another way, if that were found to be the purpose of s 31(1) - it would not lose the character of a law with respect to taxation by reason of its harsh or draconian impact on a taxpayer or a cash dealer. The argument based on proportionality seemed to assume that the severity of the impact was unnecessary and that that severity made the law "disproportionate" to the taxation power. If that was the assumption, it mistook the appropriate test of characterisation of laws claiming the support of the taxation power.
Proportionality is another expression for "appropriate and adapted", as I attempted to explain in Cunliffe[17]. In the context of a challenge to a law on the ground that its operation and effect do not reveal a sufficient connection to the subject of a head of power, proportionality is a concept used to ascertain whether an Act achieves an effect or purpose within power[18]. So used, proportionality has nothing to say about the appropriateness, necessity or desirability of the law to achieve an effect or purpose or to attract the support of the power.
However, "proportionality" may be used in a second sense in the context of a challenge to a law on the ground that it infringes a constitutional limitation, express or implied, which restricts a head of power. That is, when an impugned law has an operation and effect within a field described by a head of power but the law affects an immunity of the kind that the limitation is designed to protect (hereafter "an immunity"). The head of power is confined, and the field it describes is correspondingly narrowed, by the limitation. If the law's operation and effect are outside the confines of any available power, it is invalid. The boundaries of a power confined by a limitation are not easily defined. A reconciliation between the power and the limitation must be made by treating the limitation as a qualification on the power[19]. The qualification leaves within the power the capacity to support a law that affects an immunity if an exercise of the power to achieve the legitimate effect of the law necessitates an affection of the immunity and the affection of the immunity is merely incidental to the achievement of the legitimate effect. That criterion involves matters of judgment and degree. In assessing these matters the terms "proportionality" and "appropriate and adapted" have been used[20]. In Cunliffe 21, I stated the approach in these terms:
"A law will not be supported by a power if it infringes the limitation on the power unless the infringement is merely incidental to the achievement of a legitimate (that is, non-infringing) purpose or object and the provisions of the law are reasonably appropriate and adapted (proportionate) to that end[22]. Again, in determining whether the law is reasonably appropriate and adapted to the achieving of a legitimate purpose or object and any infringement is merely incidental, the court may inquire into the proportionality of the means adopted by the law to achieve the postulated purpose or object[23]. Thus in Castlemaine Tooheys where a State law imposed a levy on the sale of beer in non-refillable bottles to the disadvantage of interstate traders, the Court said[24]:
'If we accept, as we must, that the legislature had rational and legitimate grounds for apprehending that the sale of beer in non-refillable bottles generates or contributes to the litter problem and decreases the State's finite energy resources, legislative measures which are appropriate and adapted to the resolution of those problems would be consistent with s 92 so long as any burden imposed on interstate trade was incidental and not disproportionate to their achievement.' (Emphasis added.)"
That the term "proportionality" may be used in the second sense was accepted by Dawson J in ACTV[25]:
" But if the real object of a law is not the restriction of movement across State borders, the fact that such restriction occurs incidentally will not offend s 92, provided that the means adopted to achieve the object are neither inappropriate nor disproportionate."
When "proportionate" is used in the second sense, the context is similar to that in which the European Court of Justice employs the concept of proportionality, as Dawson J demonstrates in the present case.
I accept both his Honour's exposition of the jurisprudence of the European Court of Justice in relation to the concept of proportionality and his Honour's view that that concept has no application to the determination of the character of a law under our Constitution where the law does not affect an immunity of a kind which a limitation on legislative power is designed to protect. But if a law does affect such an immunity, it is appropriate for the court to recall that, in selecting the means of achieving an effect or purpose within power, the Parliament has what the European Court of Human Rights has called a "margin of appreciation"[26].
Despite this excursus on the notion of proportionality, it is unnecessary further to consider the taxation power. The support of the taxation power would depend upon the effect of the disclosure of FTR information to the Commissioner of Taxation upon the administration and enforcement of taxation laws. That effect cannot be determined with the same clarity as the issues that arise in determining the validity of the Act by reference to the power to make laws with respect to currency. The power extends to the making of laws with respect to foreign currency as well as to Australian currency, as this Court held in Watson v Lee[27]. Currency consists of notes or coins of denominations expressed as units of account of a country and is issued under the laws of that country for use as a medium of exchange of wealth[28]. It is characteristic of currency that effect is given to an intention of the transferor and transferee to transfer property in the notes or coins by physical delivery of the notes or coins[29]. The transfer leaves no record. Sections 7 and 16 of the Act are designed to ensure that the use of currency to transfer wealth does have a record by requiring, in the prescribed circumstances, a report of the transaction to the Director of AUSTRAC. Section 31 prohibits the use of currency to transfer wealth in the circumstances prescribed. A legislative power which can be exercised validly to permit the transfer of wealth by the use of currency can be exercised validly to impose a qualified prohibition on the use of currency to transfer wealth. The qualified prohibition operates directly on the physical transfer of currency from one person to another. That is sufficient to characterise s 31(1) as a law with respect to currency and thus supported by s 51(xii) of the Constitution. It is unnecessary to consider the objects of the Act or its effect on fields of activity other than the actual transfer of currency. It is also unnecessary to determine whether s 31(1) finds support in s 51(ii).
The answer to the question reserved is: yes. The plaintiff should pay the defendant's costs of the question reserved.
DAWSON J. In this case the Court is required to answer a question reserved for its consideration by McHugh J, namely, whether s 31(1) of the Financial Transaction Reports Act 1988 (Cth) ("the Act") is a valid law of the Parliament of the Commonwealth. Section 31(1) provides that a person commits an offence against the section if the person is a party to two or more non-reportable cash transactions and, having regard to a number of specified matters, including the manner or form in which the transactions were conducted, it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that would not give rise to a significant cash transaction or would give rise to exempt cash transactions.
The terms used in the sub-section need some explanation. Under s 7, where a cash dealer is a party to a significant cash transaction, he must report the transaction to the Director of AUSTRAC unless, amongst other things, the transaction is an exempt transaction. AUSTRAC is the Australian Transaction Reports and Analysis Centre[30]. A "cash dealer" includes a bank and other specified financial institutions or persons dealing in money[31]. A "significant cash transaction" means a cash transaction involving the transfer of currency of not less than $10,000 in value[32]. "Currency" means the coin and paper money of Australia or of a foreign country that is designated as legal tender and circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue. Under s 9 certain significant cash transactions are exempt transactions. In particular, a significant cash transaction between a financial institution and a customer is in certain specified circumstances, an exempt transaction so far as the institution is concerned if the transaction has been entered in the institution's exemption register. The information obtained by the Director of AUSTRAC is called "FTR information"[33] and he is required to compile, analyse and disseminate it and, amongst other things, to provide advice and assistance to the Commissioner of Taxation[34]. The Commissioner of Taxation is entitled to access to FTR information and the Director may authorise a law enforcement agency and the Australian Customs Service to have access to it[35]. "Law enforcement agency" is defined to mean the National Crime Authority, the Australian Federal Police and the Australian Securities Commission[36].
That is sufficient for present purposes to indicate the general scheme of the Act and the context in which s 31(1) must operate. The mischief with which the Act was designed to deal is identified in the Second Reading Speech to the Cash Transaction Reports Bill[37] as being "the underground cash economy, tax evasion and money laundering". It was intended to "give law enforcement agencies the ability to monitor the movement of large amounts of cash and thus to identify tax evaders and the recipients of proceeds of crime"[38].
Under s 4 the principal object of the Act is said to be the facilitation of the administration and enforcement of taxation laws. Notwithstanding this, the Commonwealth in its argument did not rely primarily upon the power of the Parliament to make laws with respect to taxation[39], but upon its power to make laws with respect to currency. Section 51(xii) of the Constitution confers power upon the Parliament to make laws with respect to "[c]urrency, coinage, and legal tender". Of course, if that head of power is sufficient to support the law, then it is unnecessary to consider such other heads of power as might also be relied upon for that purpose.
The plaintiff submitted that s 31(1) has an insufficient connection with currency for it to be described as a law with respect to it. He also submitted that the offence created by s 31(1) imposes strict or absolute liability because a person might be found guilty upon the basis that "it would be reasonable to conclude" that the person conducted the cash transactions in question for the prohibited purpose. That submission would appear to relate to the contention contained in the plaintiff's written argument that the law is not reasonably capable of being seen as appropriate and adapted to achieving an object or purpose within power and is not reasonably proportionate to some object or purpose within power.
The Commonwealth submitted that s 31(1) does not create an offence of absolute or strict liability. It pointed to the fact that the circumstances to which regard must be had in reaching the required conclusion include "any explanation made by the person as to the manner or form in which the transactions were conducted"[40]. Moreover, the Commonwealth submitted, the required conclusion is that the person concerned conducted the transactions for a specified purpose, namely, the sole or dominant purpose of ensuring that the transactions would not give rise to a significant cash transaction or would give rise to exempt cash transactions. Upon this basis the Commonwealth argument was that the sub-section requires proof that the person charged with an offence knew of the nature of a significant cash transaction or of exempt cash transactions and intended by structuring his or her transactions in the manner or form alleged to ensure that they would not give rise to a significant cash transaction or exempt cash transactions. The only effect of the words "it would be reasonable to conclude" is, the Commonwealth contended, to lower the standard of proof from that of beyond reasonable doubt to that of a reasonable conclusion.
There is no doubt that the wording of s 31(1) leaves it far from clear whether intention, or mens rea[41], is an ingredient of the offence which it creates and, if so, the nature of the intention required. In that situation, it is my view that the Commonwealth submission should be accepted. In He Kaw Teh v The Queen[42] I drew attention to the divergence of view as to whether there is still a presumption that, in creating a criminal offence, the legislature intends a guilty intent appropriate to the offence to be an ingredient of the offence. I did not find it necessary in that case to express any concluded view, but Gibbs CJ[43] applied the rule in Sherras v De Rutzen[44] in the light of its reaffirmation in Lim Chin Aik v The Queen[45], R v Warner[46], Gammon Ltd v Attorney-General (Hong Kong)[47] and Cameron v Holt[48]. That rule is as follows:
"There is a presumption that mens rea, an evil intention, or a knowledge of the wrongfulness of the act, is an essential ingredient in every offence; but that presumption is liable to be displaced either by the words of the statute creating the offence or by the subject-matter with which it deals, and both must be considered".
In He Kaw Teh v The Queen[49] Brennan J also affirmed the rule in Sherras v De Rutzen and said that "[e]arlier doubts as to the existence of the presumption or as to its strength (see, eg, Proudman v Dayman[50]) have now been removed."[51] Brennan J pointed out that "for practical purposes knowledge of the circumstances which give the act its character when an act is voluntarily done is the ordinary form of an intent to do it"[52]. The reference to "wrongfulness" in the passage I have cited from Sherras v De Rutzen must be read in that light; mens rea does not require knowledge of the illegality of the act.
I would apply the presumption in the case of the offence created by s 31(1) of the Act and would do so with increased confidence because of the ambiguity inherent in the wording of the sub-section. Even if with some statutory offences the nature of the offence may indicate that the presumption operates weakly, if at all, the nature of the offence created by s 31(1), gleaned from the way in which it is worded, indicates that it is not an offence of that kind. That means that I adopt the submission made by the Commonwealth that the words "it would be reasonable to conclude" go to the standard of proof to be applied and do not rebut a presumed requirement of mens rea as an ingredient of the offence.
Even if s 31(1) did create an offence of absolute or strict liability, I do not think that the argument which the plaintiff seeks to put would be available to him. To say that a law is not reasonably capable of being seen as appropriate and adapted to achieving an object or purpose within power or is not reasonably proportionate to some object or purpose within power is to posit a proposition or propositions which do not assist in determining the validity of the law. The expressions are borrowed from other jurisdictions and their usefulness is limited; indeed, it may be thought that they confuse rather than clarify the processes by which the validity of a law under our Constitution must be determined.
The words "appropriate" and "adapted" appear to have their origin in the judgment of the United States Supreme Court delivered by Marshall CJ in McCulloch v Maryland[53], where the following passage appears:
"Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."
But the context in which those words were uttered make it plain beyond argument that they did not envisage a restriction upon the powers of Congress[54]. On the contrary, they were spoken in rejection of an argument that Congress was restricted in the exercise of the powers otherwise vested in it by the constitution by the addition to its enumerated powers of the power to make "all laws which shall be necessary and proper, for carrying into execution the foregoing powers, and all other powers vested by this constitution, in the government of the United States, or in any department thereof"[55]. Of that clause, Marshall CJ said[56]:
"To waste time and argument in proving that, without it, congress might carry its powers into execution, would be not much less idle, than to hold a lighted taper to the sun. As little can it be required to prove, that in the absence of this clause, congress would have some choice of means. That it might employ those which, in its judgment, would most advantageously effect the object to be accomplished. That any means adapted to the end, any means which tended directly to the execution of the constitutional powers of the government, were in themselves constitutional. This clause, as construed by the state of Maryland, would abridge, and almost annihilate, this useful and necessary right of the legislature to select its means. That this could not be intended, is, we should think, had it not been already controverted, too apparent for controversy."
Notwithstanding that Marshall CJ intended the words "appropriate" and "adapted" to signify anything but a requirement that the means adopted by the legislature to achieve a constitutionally valid end must be proportionate to that end, they have been taken up and used, in conjunction with a so-called principle of proportionality, to suggest just such a requirement. For example, in Cunliffe v The Commonwealth[57] Mason CJ said:
"[I]n those cases in which the validity of a law depends upon its being characterised as a law directed to carrying out the relevant head of power by providing for a matter incidental to its subject matter, it may be material to ascertain whether the law is capable of being 'reasonably considered to be appropriate and adapted' to that purpose or object, that is, whether the law satisfies the criterion of reasonable proportionality."
The concept of reasonable proportionality has its origin in Europe, where it was developed as an instrument for the review of legislative and administrative acts[58]. In the jurisprudence of the European Court of Justice the principle of proportionality emerged from the legal systems of member states of the European Community as a general principle of European Community law. The principle was written into the Treaty establishing the European Economic Community (the Treaty of Rome) by the Treaty on European Union (the Maastricht Treaty), in an amendment which also gave formal recognition to the principle of subsidiarity (of which there is no Australian equivalent), in the following terms[59]:
"Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty."
The inappropriateness of such a concept in Australian constitutional law where legislative power is with few exceptions conferred by reference to subject-matter rather than aims or objectives is immediately apparent. It is even more apparent when regard is had to the manner in which the principle is applied. For example, in a case involving a challenge to a prohibition by a directive of the European Council upon the use in agriculture of a certain substance[60], it was submitted that the prohibition infringed the principle of proportionality. The European Court of Justice stated the principle as follows[61]:
"[T]he lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures are appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued."
In deciding whether the measure in question satisfied that test, even whilst recognising that as an exercise of discretionary economic powers by the Council the measure had to be "manifestly inappropriate" for it to be declared invalid, the Court considered the practicability of the measure, the possibility that it might lead to a black market, the relative merits of prohibition and the dissemination of information and advice, and the appropriateness of causing financial hardship to certain traders[62]. When considering whether a law is with respect to a particular head of power in our Constitution, such matters are not relevant. They are essentially political rather than judicial considerations.
The fact that the legislative powers conferred upon the Commonwealth Parliament by s 51 of the Constitution are expressed to be with respect to subject-matters means that a law is within power if the acts, facts, matters or things upon which it operates fall within the description of one or more heads of power. As McHugh J said in Re Dingjan; Ex parte Wagner[63]:
"In determining whether a law is 'with respect to' a head of power in s 51 of the Constitution, two steps must be taken. First, the character of the law must be determined. That is done by reference to the rights, powers, liabilities, duties and privileges which it creates[64]. Secondly, a judgment must be made as to whether the law as so characterised so operates that it can be said to be connected to a head of power conferred by s 51. In determining whether the connection exists, the practical, as well as the legal, operation of the law must be examined[65]. If a connection exists between the law and a s 51 head of power, the law will be 'with respect to' that head of power unless the connection is, in the words of Dixon J[66], 'so insubstantial, tenuous or distant' that it cannot sensibly be described as a law 'with respect to' the head of power."
Establishing the requisite connection is often a matter of degree, but once it is established, it does not matter that the legislature has chosen a means of achieving its aim which goes further than is necessary or desirable. That is a matter for the legislature. As Dixon CJ said in Burton v Honan[67]:
"[O]nce the subject matter [of the law] is fairly within the province of the Federal legislature the justice and wisdom of the provisions which it makes in the exercise of its powers over the subject matter are matters entirely for the Legislature and not for the Judiciary".
Or as Kitto J said in Herald and Weekly Times Ltd v The Commonwealth[68]:
"[T]he fact that the Parliament has chosen to go to great lengths - even the fact, if it be so, that for many persons difficulties are created which are out of all proportion to the advantage gained - affords no ground of constitutional attack."
To introduce the concept of proportionality, whether it be via the notion that a law must be reasonably appropriate and adapted to some end in view or by any other route, is to introduce a concept which is alien to the principles which this Court has hitherto applied in determining the validity of laws passed by the Commonwealth Parliament. Putting purposive powers to one side, so far as I am able to discern the attempt to do so has been made only in relation to the incidental power which is to be implied as an aspect of each of the substantive heads of power in s 51, that is to say, the power to legislate with respect to all those things which are reasonably incidental to the complete fulfilment of the power. In this context it is important to appreciate that, whilst it is correct to speak of implied incidental powers, each head of power is but one grant of power. As Brennan J said in Cunliffe[69]: "the core and incidental aspects of a power are not separated; the power is an entirety". No doubt as one moves closer to the outer limits of a power, the purpose of a law which lies at "the circumference of the subject [matter of the power] or can at best be only incidental to it"[70] becomes important, because "by divining the purpose of a law from its effect and operation, its connection with the subject of the power may appear more clearly"[71]. "Purpose" in that connection is merely an aspect of what the law does in fact[72] and the test remains one of sufficient connection. If that connection is established, it matters not how ill-adapted, inappropriate or disproportionate a law is or may be thought to be[73].
The purpose of a law passed pursuant to a head of power is a different thing from the purpose of the head of power. In Cunliffe[74] Mason CJ, whilst recognising that most of the heads of power in s 51 are not of a purposive nature, thought that:
"that does not mean that faithful pursuit of purpose is a relevant or critical element only in those cases in which one is concerned with the reach of an implied incidental power in conjunction with a specific power which is truly purposive"[75].
However, to speak of the purpose of a non-purposive power is merely to speak of its subject-matter. To take this case, the purpose of the power to make laws with respect to currency can be nothing more than the authorisation of legislation upon the subject of currency. Nevertheless, Mason CJ continued[76]:
"Faithful pursuit of purpose is necessarily a relevant consideration when the validity of a law is sought to be sustained on the ground that it is designed to achieve an end within power, even though it operates on a subject matter beyond power. In cases of this kind, in considering whether there is a substantial or sufficient connection between the impugned provision and the relevant law, it may be material to inquire whether the provision is capable of being reasonably considered to be appropriate and adapted to the end in view. The requirement that there be an affirmative answer to that inquiry implies that 'a reasonable proportionality must exist between the designated object or purpose and the means selected by the law for achieving that object or purpose'".
I must confess that I have some difficulty with that passage. I assume that in speaking of "a substantial or sufficient connection between the impugned provision and the relevant law", his Honour was speaking of a substantial or sufficient connection between the impugned provision and the relevant head of power. And if that is so, "the end in view" must mean the end or purpose of the head of power. But as I have said, most heads of power do not have an end or purpose other than the authorisation of legislation upon their subject-matter and whether a law is upon a subject-matter depends upon its connection with that subject-matter. If, on the other hand, "the end in view" to which his Honour refers is the end of the legislation, this is only a relevant consideration if it assists in determining whether the requisite connection between the law and the subject-matter of a head of power is established. If it is established, the proportionality or appropriateness of the means selected by the Parliament to achieve the end in view are matters for it alone.
In Cunliffe Mason CJ suggested that whether a law is reasonably considered to be appropriate and adapted to the purpose or object of a head of power and whether it satisfies the criterion of reasonable proportionality are tests which "have been employed in determining whether a law which seeks to implement an international convention to which Australia is a party is within the external affairs power"[77]. He said that this is so because (and the words are those of Dixon J in R v Burgess; Ex parte Henry[78]) "the nature of [the] power necessitates a faithful pursuit of the purpose". However, the purpose to which Dixon J was referring in R v Burgess; Ex parte Henry was not the purpose of the external affairs power - it is not a purposive power[79] - but the purpose of implementing an international convention, namely, the 1919 convention for the regulation of aerial navigation. The faithful pursuit of that purpose was necessary because the fact that the legislation in question purported to give effect to an international convention was what, upon a particular view, brought it within the external affairs power. That is to say, it was the fact that the legislation in question purported to implement an international convention that, upon that view, established a connection between the law and the external affairs power.
Subsequently, in The Commonwealth v Tasmania (the Tasmanian Dam Case)80 it was held that the implementation of a bona fide international convention was of itself sufficient to establish the requisite connection between the law effecting the implementation and the external affairs power. No doubt it is necessary to examine whether such a law does in fact implement the convention, and in doing so it has been thought relevant to ask whether the law is appropriate and adapted to the task or whether it exhibits a reasonable proportionality. But the implementation of international conventions is not a head of power under s 51. "External affairs" is, and the question to be asked in relation to that power is whether there is a sufficient connection between its subject-matter and a law which seeks to rely upon it.
Similarly, in my view, Deane J can have meant no more in the Tasmanian Dam Case[81] when he said that a "law must be capable of being reasonably considered to be appropriate and adapted to achieving what is said to impress it with the character of a law with respect to external affairs". In the context, what impressed a law with the character of a law with respect to external affairs was the fact that it implemented a treaty. What Deane J was saying was no more than that to establish the requisite connection between the subject-matter of external affairs and the law, the law must implement the treaty. If I may say so with respect, it adds little, if anything, to say that it must be appropriate and adapted and not disproportionate to that purpose[82].
For these reasons, it is my view that the relevant test of the validity of a law made under one of the substantive heads of power in s 51 of the Constitution is that of sufficiency of connection with its subject-matter. That is so whether or not in characterising the law it is necessary to invoke the implied incidental power. As I said in Cunliffe[83], the disproportion of a law to an end asserted to be within power may suggest that the law is actually a means of achieving another end which is beyond power. And no doubt there is a question of judgment involved in deciding whether a law exhibits a sufficient connection with the subject-matter of a head of power. But that does not involve a judgment as to the desirability of legislation, and the danger with expressing the test in terms of proportionality is that it suggests that the Court is concerned with the desirability of legislation. The Court does not for the purpose of determining validity under s 51 inquire into whether a law either is necessary to achieve an end or infringes fundamental values in a manner not justified by the pursuit of that end[84]. That is not, of course, to deny that, before construing a law as interfering with basic common law freedoms, the Court requires the clearest expression of intent[85]. Whatever the position may be in other legal systems, the terms "appropriate and adapted" and "reasonable proportionality" are best avoided when enunciating a test to determine whether a law exceeds a non-purposive head of power under s 51 of our Constitution.
The situation may be different where the purpose of a law is a crucial determinant of validity, as it is where a power is conferred in purposive terms. Taking the defence power for example, a court must ask whether a law is for the purpose of defence. There is no subject-matter as there is with other powers - lighthouses[86] or external affairs[87], for example - and it is therefore not possible to delineate the boundaries of the power by reference to subject-matter: the acts, facts, matters or things upon which a law with respect to defence may operate are, at least in war-time, virtually without limits[88]. To determine the validity of a law said to be supported by a purposive power, a court must ask whether it is a law for the specified purpose, and the court may have to inquire into whether the law goes further than is necessary to achieve that purpose. That is an exercise in proportionality.
The situation is also different where a law is said to fall foul of a constitutional limitation on legislative power. As Brennan CJ points out in this case, and as I accepted in Australian Capital Television Pty Ltd v The Commonwealth[89], it may be within power to legislate in a way that affects an immunity conferred by a limitation on power where to do so is merely incidental to the achievement of a legitimate end. In such a situation one is concerned with the resolution of a tension between two principles and notions of proportionality may be relevant.
Neither of those situations is germane to this case. The power to make laws with respect to currency is not a purposive power and there is no suggestion that the law infringes any constitutional immunity. If there is a sufficient connection between that head of power and s 31(1) of the Act for it to be a law with respect to currency, it is of no consequence, so far as validity is concerned, that it operates harshly[90]. Thus, it would be of no consequence for that purpose if it were to impose absolute or strict liability. That would be a matter for the legislature, not the Court.
Section 31(1) is clearly incidental to the performance by a cash dealer of the duty imposed by s 7 of the Act to report significant cash transactions. The evident intention of the sub-section is to deter the structuring of a cash transaction so as not to constitute a significant cash transaction or so as to give rise to exempt cash transactions. It is the carrying out of a significant cash transaction to which a cash dealer is a party which imposes upon him the duty of reporting under s 7. To require significant cash transactions to be reported is plainly a means of gathering information upon the movement of currency. A law imposing that requirement imposes an obligation upon those dealing in currency with respect to their dealings. There is a clear connection between the subject-matter of currency and the imposition of that obligation and the connection extends to matters incidental to the performance of the obligation. In my view s 31(1) of the Act is a valid law of the Commonwealth and I would so answer the question reserved.
TOOHEY J. The circumstances giving rise to this appeal and the terms of the Financial Transaction Reports Act 1988 (Cth) ("the Act") appear in other judgments. I shall avoid undue repetition. The question before the Court is whether s 31(1) of the Act is a valid law of the Parliament.
The Act
The Act's long title expresses it to be inter alia "for the reporting of certain transactions and transfers". Sub-section 4(1) asserts as the principal object of the Act, "to facilitate the administration and enforcement of taxation laws". Sub-section 4(2), somewhat cryptically, asserts as a further object of the Act, "to facilitate the administration and enforcement of laws of the Commonwealth and of the Territories" and s 4(3) asserts as yet a further object, "to make information collected for the purposes referred to in subsection (1) or (2) available to State authorities to facilitate the administration and enforcement of the laws of the States".
The key provision to the means by which these objects are sought to be achieved is s 7 which requires that, subject to some exceptions, where a "cash dealer"[91] is a party to a "significant cash transaction"[92], the dealer must report the transaction to the Director of AUSTRAC[93]. The principal exception is an exempt transaction. A significant cash transaction is eligible for exemption if it falls into one of the categories in s 10. These may loosely be described as including transactions between one financial institution and another and between a financial institution and an established customer who meets the requirements of the section.
Section 31, which falls within Pt V - Enforcement, then comes into play. Sub-section (1) reads:
"A person commits an offence against this section if:
(a) the person is a party to 2 or more non-reportable cash transactions; and
(b) having regard to:
(i) the manner and form in which the transactions were conducted, including, without limiting the generality of this, all or any of the following:
(A) the value of the currency involved in each transaction;
(B) the aggregated value of the transactions;
(C) the period of time over which the transactions took place;
(D) the interval of time between any of the transactions;
(E) the locations at which the transactions took place; and
(ii) any explanation made by the person as to the manner or form in which the transactions were conducted;
it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that:
(iii) would not give rise to a significant cash transaction; or
(iv) would give rise to exempt cash transactions."
Notwithstanding the language of s 4(1), the Commonwealth justified s 31(1) primarily by reference to the power of the Parliament conferred by s 51 of the Constitution to make laws with respect to "(xii) Currency, coinage, and legal tender". The Commonwealth also pressed the power of the Parliament to make laws with respect to "(ii) Taxation ..."
The currency power
Section 31(1) can only be supported under s 51(xii) of the Constitution if it can properly be characterised as a law with respect to currency. (It is unnecessary to say anything about coinage or legal tender; the sub-section is clearly not a law with respect to coinage or legal tender[94].) To be so characterised, "it must appear that there is a relevant and sufficient connexion with the subject matter of the power"[95]. Or, to put it in different language, the words "with respect to" require "a relevance to or connection with the subject assigned to the Commonwealth Parliament"[96]. As I commented in Re Dingjan; Ex parte Wagner[97]:
"The cases make clear that each paragraph of s 51 can support not only laws which operate directly on the subject matter of the paragraph in question but also laws which ... can be seen as incidental to the power."
The plaintiff argued that while s 31(1) and some other sections of the Act used the term "currency", the provision in question had no legal effect in relation to currency. The Act gives rise to an obligation to report transactions involving at least $10,000 to a government agency; any connection the creation of an offence for structuring transactions in a particular way may have with "currency", it was said, is no more than tenuous or remote. The plaintiff made a specific attack on the terms in which s 31(1) imposes criminal liability; consideration of that attack can await determination of the general challenge.
The Commonwealth's response to the general challenge was in these terms. "Currency" is defined as meaning
"the coin and paper money of Australia or of a foreign country that:
(a) is designated as legal tender; and
(b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue"[98].
Sub-section 31(1) attaches criminality to conduct which involves the physical transfer of currency in the circumstances identified in the sub-section. Hence, the sub-section is clearly a law with respect to currency.
The plaintiff's rejoinder was that s 31(1) exists simply to support the reporting requirement dealt with in s 7. Section 7 requires a cash dealer to a significant cash transaction to prepare a report of the transaction and to communicate the information contained in the report to the Director of AUSTRAC. The section does no more than require a report; it does nothing to prohibit or inhibit a reportable transaction. Hence, the argument ran, a provision such as s 31(1) which purports to make it an offence to be a party to two or more non-reportable cash transactions, where it would be reasonable to conclude that the person conducted the transactions for the sole or dominant purpose of ensuring that the transactions would not give rise to a significant cash transaction or would give rise to exempt cash transactions, can have no sufficient connection with s 51(xii) of the Constitution.
The general challenge mounted by the plaintiff must fail. A requirement that cash dealers report significant cash transactions, that is, cash transactions "involving the transfer of currency of not less than $10,000 in value" is clearly a law with respect to currency. In the same way, in Watson v Lee[99] Mason J, with whom Gibbs J relevantly agreed, accepted that s 51(xii) included "power to control and regulate the receipt and use of foreign currency in Australia". Section 31 of the Act, which attaches certain consequences to persons who structure currency transactions in a manner designed to avoid the obligation to report, is likewise a law with respect to currency. If the Act is valid in so far as it requires that certain transactions be reported (and the plaintiff did not challenge that part of the Act), it is hard to see why a provision that attaches consequences to the non-reporting of relevant transactions is not equally valid. Indeed, if s 31 is not a law with respect to currency, it is hard to see why s 7 itself would qualify as such a law or, for that matter, other provisions of the Act. In putting the matter that way, I am concerned only with the general challenge to s 31(1), not the particular attack on the basis on which criminal liability is identified, nor the question of proportionality upon which the plaintiff relied as well. It should be said also that if the provision is a law with respect to currency, it does not lose that character because the Act's principal object is expressed by reference to taxation laws[100].
The basis of liability
It must be acknowledged that the manner in which s 31(1) goes about establishing criminal liability is unusual. It avoids the conventional means by which an offence is created, that is, simply by the proscription of identified conduct. The sub-section creates an offence, but not just by reference to conduct. Rather, if the manner and form in which the non-reportable cash transactions were conducted make it reasonable to conclude that they were conducted for the sole or dominant purpose of ensuring, or attempting to ensure, that the reporting requirements of the Act were inapplicable, then the person has committed an offence.
The obligation to report a significant cash transaction is cast upon the cash dealer by s 7 and it is the cash dealer who commits an offence under s 28 by refusing or failing to communicate information to the Director when and as required. However, a person who is not a cash dealer may commit an offence under s 31. This does not destroy the validity of the provision if it is otherwise a law with respect to currency. The experience in the United States is relevant in this regard. In Ratzlaf v United States[101] a prosecution under the Money Laundering Control Act of 1986 failed only because the Government did not prove that the defendant "wilfully" violated an antistructuring provision. But the constitutional validity of the antistructuring provision itself was not in doubt. Indeed, before there was such an express provision, conduct aimed at evading the reporting requirements by such means was held to be in breach of the Act[102]. However, some later decisions took a different view[103]. The difference was resolved by the introduction of an express provision.
A number of other things can be said about s 31(1), whether as to the element of mens rea, proof beyond reasonable doubt or the onus of proof. But the plaintiff's attack is on the constitutional validity of the provision and it is on that footing that s 31(1) must be judged. On that footing there is no reason to conclude other than that the necessary connection exists between the sub-section and a constitutional head of power. As Gibbs J observed in Milicevic v Campbell[104]:
" The parliament may, when legislating with respect to a subject within the ambit of its powers, validly enact laws prescribing the rules of evidence and procedure to be observed in any legal proceedings, whether criminal or civil, arising in relation to that subject matter and may in particular cast the onus of proof upon either party to those proceedings ... Of course, the parliament may not, by enacting legislation which purports to be merely procedural, extend the operation of its laws to subjects beyond its power; it cannot, in other words, expand the boundaries of its powers by its own enactments."
There is nothing in s 31(1) which offends any of the principles enumerated by Gibbs J. The sub-section adopts an unusual approach to the standard of proof but the standard is not subjective; it must "be reasonable to conclude" in terms of par (b) of the sub-section that the accused conducted the transactions in a manner or form for the sole or dominant purpose referred to.
Taxation power
Reference was made earlier in these reasons to s 4(1) of the Act which reads: "The principal object of this Act is to facilitate the administration and enforcement of taxation laws."
The Act is not overly forthcoming in express provisions identifying its connection with taxation laws. However s 16(1) requires a cash dealer, who has reasonable grounds to suspect that information the dealer has concerning a transaction "may be relevant to investigation of an evasion, or attempted evasion, of a taxation law", to report the transaction to the Director of AUSTRAC. The dealer must then, if required to do so by the Director, by a relevant authority (which includes the Commissioner of Taxation) or by an investigating officer (which includes a taxation officer) "give such further information as is specified in the request to the extent to which the cash dealer has that information"[105]. Section 27 entitles the Commissioner of Taxation and any taxation officer to access to "FTR information", a term which is defined by s 3(1) to mean information obtained by the Director under Pt II - Transaction Reports. Part VI - Administration contains s 38 which includes as a function of the Director "to provide advice and assistance to the Commissioner in relation to FTR information"[106].
It is apparent that there is a close link between AUSTRAC and the Commissioner of Taxation, in relation to financial transactions which attract the attention of the Act. The reason for this is explained by Doyle CJ in Rogers v The Queen107 where there was a challenge to the validity of s 24 of the Act under which the appellant was charged. Section 24 is in Pt III - Accounts and makes it an offence to open or operate an account with a cash dealer in a false name. His Honour concluded[108]:
"But once one accepts, as I do, that the 'cash economy' and the operation of accounts in false names are significant means of evading liability to pay Commonwealth tax, it seems to me that a measure which prevents the operation of accounts in a false name does disclose a sufficient connection to the power to make laws with respect to taxation."
Certainly, the Minister introducing the Bill which became the Act saw the legislation as representing:
"one of the most significant initiatives to counter the underground cash economy, tax evasion and money laundering"[109].
The reasoning in Rogers v The Queen leads irresistibly to the conclusion that a provision, designed to ensure that what are in truth reportable cash transactions are reported discloses a sufficient connection with the subject of taxation. Leaving aside the terminology employed to achieve its end, s 31(1) may fairly be regarded as an integral part of a legislative scheme directed to the collection of tax and, incidentally thereto, to the concealment of assets or income. As to the terminology employed, what I have said earlier in regard to the currency power applies equally to the taxation power.
Reasonable Proportionality
The plaintiff had a further string to his bow in his challenge to the constitutional validity of s 31(1). It was an argument that went to the validity of the sub-section, whether justification turned on par (xii) or (ii) of s 51 of the Constitution. The argument basically was that a reasonable proportionality must exist between the designated subject or purpose of the challenged provision and the means selected by the Parliament for achieving that object or purpose. It was then said that the means selected through s 31(1) are disproportionate to the object or purpose of the Act.
In my view concepts of proportionality have no part to play in this appeal[110]. In Cunliffe v The Commonwealth[111] I said something about the role of proportionality in determining the constitutional validity of legislation of the Parliament. In view of the present attack, it is desirable to say something more on the subject.
The terms "proportionate", "reasonably proportionate", "proportionality" have in recent years become part of the vocabulary of constitutional law. The way in which they have been employed, at least in argument before this Court, is illustrated by Cunliffe where Pt 2A of the Migration Act 1958 (Cth) was challenged. In that regard I repeat the following passage from my judgment[112]:
" As the plaintiffs presented their case, the concept of reasonable proportionality was germane to each of the three bases on which Pt 2A was challenged. As to the first basis, they argued that Pt 2A does not have a direct legal operation upon the subject matter of any relevant paragraph of s 51 and that it can be supported only as being incidental to the subject matter of any such paragraph, or within the incidental power itself. In that event, they said, the validity of Pt 2A is dependent upon a reasonable connexion between the law and a purpose or object within power. And for that connexion to exist the law must have an operation of reasonable proportionality to its legitimate purpose. As to the second basis, the contention was that the implied freedom of communication is not absolute but that any law impinging upon the freedom must be reasonably proportionate to the purpose of legislation otherwise operating within power. As to the third basis, the plaintiffs said that the freedom of intercourse demanded by s 92 is limited only in that it is not infringed by a law providing for a legitimate purpose which is reasonably proportionate to the curtailment of that freedom."
The relevance of proportionality as a criterion of validity is perhaps expressed most broadly by Mason CJ in Nationwide News Pty Ltd v Wills[113] where his Honour said that:
"in characterising a law as one with respect to a permitted head of power, a reasonable proportionality must exist between the designated object or purpose and the means selected by the law for achieving that object or purpose. The concept of reasonable proportionality is now an accepted test of validity on the issue of ultra vires."
In Nationwide News Dawson J adopted a narrower view, confining the concept of reasonable proportionality to a purposive power. His Honour said[114]:
"Then the question is what the legislation operates for, not what it operates upon. That is to say, purpose rather than connexion with any particular subject matter must then be the test."
The matter was mentioned again in Re Director of Public Prosecutions; Ex parte Lawler[115] where the role of proportionality in the process of characterisation seemed to be accepted by some members of the Court[116]. It should also be noted that "reasonable proportionality" and "reasonably and appropriately adapted" have been treated on occasion as synonymous[117].
However I remain of the view that the place of reasonable proportionality in the characterisation of a law is where there is a tension between two operative principles. This is mostly likely to arise as between an express grant of power under s 51 of the Constitution and some implied freedom, for instance an implied freedom of communication. To repeat something said in Cunliffe[118]: "The implied freedom does not override the express grant of power. Rather, it points to the likely limits of the express grant." I respectfully agree with the observation of Brennan J in Cunliffe[119]:
"It is not for the court to evaluate the proportionality of the law to a head of power: a question in such diffuse terms is not justiciable."
In expressing that agreement, I understand his Honour to be addressing the question whether there is a sufficient connection between the law challenged and the subject of the power relied upon to support the law[120]. The well accepted language of reasonably adapted will ordinarily suffice where characterisation is involved[121], as will the expression "reasonably capable of being considered appropriate and adapted"[122].
While the concept of proportionality is not unknown to the common law, its use in constitutional cases in this country derives, I think, from the European Court of Human Rights in its interpretation of the European Convention on Human Rights and Fundamental Freedoms and also from the European Court of Justice[123]. Considerations of proportionality have entered into the approach of the European Court of Human Rights because "inherent in the whole of the Convention is a search for a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights"[124]. In those Articles of the Convention which expressly allow restrictions upon the rights they contain, for instance that a state may restrict the protected right to the extent that this is "necessary in a democratic society", the formula has been interpreted as meaning that the restriction must be "proportionate to the legitimate aim pursued"[125]. Again, the concept has been employed when setting the limits to an implied restriction that had been read into a Convention guarantee[126]. In the European Court of Justice proportionality has been used to determine the validity of subordinate legislation[127].
Of course this Court is not tied to the use of terminology by other courts. But more and more we draw on the learning of other judicial institutions. In the case of the European Court of Human Rights it is enough to refer to Nationwide News[128], Dietrich v The Queen[129], Theophanous v Herald & Weekly Times Ltd[130] and, most recently, Grollo v Palmer[131]. In that event the use of similar terminology may carry or may be thought to carry with it overtones of the concept which gave rise to the terminology in another court. But the concept itself may not necessarily be appropriate in this country, particularly in a constitutional context. If reasonable proportionality were to become a general touchstone of constitutional power, the Court would be drawn inexorably into areas of policy and of value judgments. I would confine its use in the way indicated earlier in these reasons.
Conclusion
It follows from what has been said earlier that the question reserved should be answered "Yes".
GAUDRON J. I agree with Toohey J that the concept of proportionality has no part to play in this appeal. As others have expressed their views with respect to proportionality, it is appropriate that I state my adherence to what I said in Nationwide News Pty Ltd v Wills[132], namely, that it is one of several considerations that may be taken into account in determining purpose, whenever that is in issue and for whatever reason, and, also, in determining whether a law is relevantly connected with a particular subject or with a head of constitutional power.
Proportionality aside, I agree with the judgment of Toohey J and his proposed answer to the question reserved.
McHUGH J. If there is a sufficient connection between a subject of federal power and the subject matter of a federal law, it matters not that the federal law is harsh, oppressive, or inappropriate or that it is disproportionate or ill adapted to obtain the legislative purpose. As soon as it can be seen that the "subject matter is fairly within the province of the Federal legislature the justice and wisdom of the provisions which it makes in the exercise of its powers over the subject matter are matters entirely for the Legislature and not for the Judiciary."[133] Where, however, the dominant subject matter of an impugned law is not itself a head of federal power, but that law has ostensibly been passed to achieve some purpose falling within a subject of Commonwealth power, the sub-test of proportionality may sometimes prove helpful in determining whether the subject matter of the impugned law is sufficiently connected to the subject of federal power. Thus, in Nationwide News Pty Ltd v Wills[134], I thought that the test of proportionality assisted in determining whether a law making it an offence to publish words calculated to bring the Industrial Relations Commission or any of its members into disrepute was a law with respect to "conciliation and arbitration". However, it needs to be firmly kept in mind in such a case that proportionality is nothing more than a guide to sufficiency of connection. As Dawson J pointed out in Nationwide[135]:
"No doubt a law which is inappropriate or ill-adapted for the purpose of achieving a legitimate end may fail for want of a power. But it fails not because the Court considers the law to be inappropriate or ill adapted but because the very fact that the law is inappropriate or ill adapted prevents there being a sufficient connexion between the law and a relevant head of power. The question is essentially one of connexion, not appropriateness or proportionality, and where a sufficient connexion is established it is not for the Court to judge whether the law is inappropriate or disproportionate."
Subject to the foregoing remarks, I agree for the reasons given by Dawson J that s 31(1) of the Financial Transaction Reports Act 1988 (Cth) is a valid law of the Parliament of the Commonwealth.
GUMMOW J. A Justice of the Court has reserved for consideration of the Full Court the following question:
"Is section 31(1) of the Financial Transaction Reports Act 1988 a valid law of the Parliament of the Commonwealth?"
Section 51(xii)
The plaintiff denies and the Commonwealth asserts that s 31(1) of the Financial Transaction Reports Act 1988 (Cth) ("the Act") is supported by s 51(xii) of the Constitution. This provides that the Parliament shall, subject to the Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:
"Currency, coinage, and legal tender"[136].
The Commonwealth also seeks to characterise s 31(1) as a law with respect to taxation, within the meaning of s 51(ii) of the Constitution. In my view, the law is supported by s 51(xii) and it is unnecessary to consider whether it also is supported by s 51(ii).
Section 8(1) of the Currency Act 1965 (Cth) ("the Currency Act") states that the monetary unit, or unit of currency, of Australia is the dollar; s 9(1), so far as is material, requires every transaction, dealing, matter or thing relating to money or involving the payment of, or a liability to pay, money to be made, executed, entered into or done according to the currency of Australia, unless the currency of some other country is used; and s 11(1) requires that every payment, unless made according to the currency of some other country, be made according to the currency of Australia.
Section 16 of the Currency Act treats as legal tender a tender of payment in coins issued thereunder. Section 36(1) of the Reserve Bank Act 1959 (Cth) ("the Reserve Bank Act") renders Australian notes issued pursuant to Pt V (ss 32-45) of that statute, and other statutes (s 32), legal tender throughout Australia[137].
The Financial Transaction Reports Act 1988 (Cth)
Before turning to s 31(1) of the Act, it is appropriate briefly to refer to certain other provisions. There is established by s 35 an agency by the name of the Australian Transaction Reports and Analysis Centre ("AUSTRAC"). Part II of the Act (ss 7-17H) imposes obligations to make to the Director of AUSTRAC various "transaction reports".
In particular, s 7 obliges a "cash dealer" who is a party to a "significant cash transaction" to prepare a report of the transaction and communicate the information contained in the report to the Director of AUSTRAC, unless, to put it shortly, the cash dealer is "an approved cash carrier" declared as such by the Director under s 8, or the transaction is an "exempt transaction". Detailed provision is made in respect of exempt cash transactions by ss 9-13. The phrase "cash dealer" bears the meaning spelled out in pars (a)-(n) of the definition in s 3(1). In particular, it includes a financial institution (being a bank, building society or credit union), an insurer, a securities dealer, a futures broker, a bullion dealer, a person who operates a gambling house or casino, a bookmaker and an operator of a totalisator betting service.
The report required by s 7 must contain the "reportable details" which are specified in Sched 1 to the Act. These include the nature and date of the transaction and details of each person conducting the transaction with the cash dealer or on whose behalf the transaction was conducted, together with the type and identifying number of any account with the cash dealer affected by the transaction and the total amount of currency involved in the transaction.
The term "cash transaction" is of primary significance for this case. It is defined in s 3(1) as meaning a transaction involving "the physical transfer of currency from one person to another". A "significant cash transaction" is a cash transaction "involving the transfer of currency of not less than $10,000 in value". The term "currency" is defined as follows in s 3(1):
"'currency' means the coin and paper money of Australia or of a foreign country that:
(a) is designated as legal tender; and
(b) circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue".
One of the functions given by s 38(1) to the Director of AUSTRAC is the provision of advice and assistance to the Commissioner of Taxation in relation to information obtained by the Director under the transaction reporting provisions of the Act.
"(1) The principal object of this Act is to facilitate the administration and enforcement of taxation laws.
(2) A further object of this Act is to facilitate the administration and enforcement of laws of the Commonwealth and of the Territories (other than taxation laws)."
The phrase "taxation law" is given by s 3(1) the same meaning as it has in s 2 of the Taxation Administration Act 1953 (Cth). This includes any statute of which the Commissioner of Taxation has the general administration.
Regard is to be had to the statement of principal object in s 4 when resolving issues of construction (Acts Interpretation Act 1901 (Cth), s 15AA). But s 4 does not mean that the validity of the legislation cannot be supported by any other available head of legislative power. Doyle CJ pointed this out in Rogers v The Queen[138].
I return to the provision in contention, s 31(1). In broad outline, it resembles the United States provision, 31 USC SS5324, introduced as part of the Money Laundering Control Act of 1986[139], but no assistance for present purposes is to be derived from consideration of that law. Section 31(1) states:
"A person commits an offence against this section if:
(a) the person is a party to 2 or more non-reportable cash transactions; and
(b) having regard to:
(i) the manner and form in which the transactions were conducted, including, without limiting the generality of this, all or any of the following:
(A) the value of the currency involved in each transaction;
(B) the aggregated value of the transactions;
(C) the period of time over which the transactions took place;
(D) the interval of time between any of the transactions;
(E) the locations at which the transactions took place; and
(ii) any explanation made by the person as to the manner or form in which the transactions were conducted;
it would be reasonable to conclude that the person conducted the transactions in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the currency involved in the transactions was transferred in a manner and form that:
(iii) would not give rise to a significant cash transaction; or
(iv) would give rise to exempt cash transactions."
The phrase in s 31(1) "non-reportable cash transactions" means a cash transaction to which a cash dealer is a party but which is not a significant cash transaction or which is an exempt cash transaction. This follows from the definition in s 3(1). A person who commits an offence against s 31(1) is, by force of s 31(3), punishable upon conviction, if a natural person, by a fine not exceeding $10,000 or imprisonment for a period not exceeding five years or both, and, if a body corporate, by a fine not exceeding $50,000.
I have referred to the general reporting requirement in s 7 as regards significant cash transactions, to the special treatment of exempt transactions, and to the definition of "cash transaction" as one involving the physical transfer of currency. From the foregoing it will be apparent that the mischief to which s 31(1) is directed is the generation of two or more non-reportable cash transactions (being cash transactions each involving transfer of currency of less than $10,000 in value or being exempt cash transactions) where it would be reasonable to conclude that the transactions were conducted in that manner or form for the sole or dominant purpose specified in s 31(1). This purpose is the ensuring or attempting to ensure that the currency involved in the transactions be transferred in a manner and form that (i) will not give rise to a cash transaction involving the transfer of $10,000 in value or more, or (ii) will give rise to exempt cash transactions.
Put broadly, s 31(1) might be characterised as an anti-avoidance provision. That against which it is directed, and in respect of which criminal liability is created, is transactions performed with the sole or dominant purpose of ensuring, or attempting to ensure, that currency involved in the transactions is transferred in a particular manner and form. At the heart of the section is the physical transfer from one person to another of currency, meaning the coin and paper money of Australia or of a foreign country that is designated as legal tender and circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue.
Is s 31(1) a law "with respect to" currency?
The first question is whether s 31(1) is a law with respect to "Currency" within the meaning of s 51(xii) of the Constitution.
In R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd[140], it was said in the joint judgment of Dixon CJ, Kitto, Taylor, Menzies, Windeyer and Owen JJ that such an issue was to be approached as follows:
"The simplest approach, however, to the problem is simply to read the paragraph and to apply it without making implications or imposing limitations which are not found in the express words. We must remember that it is part of the Constitution and go back to the general counsel to remember that it is a constitution we are construing and it should be construed with all the generality which the words used admit. See per O'Connor J in the Jumbunna Case[141]."
More recently, in Re Dingjan; Ex parte Wagner[142], McHugh J said:
"In determining whether a law is 'with respect to' a head of power in s 51 of the Constitution, two steps must be taken. First, the character of the law must be determined. That is done by reference to the rights, powers, liabilities, duties and privileges which it creates. Secondly, a judgment must be made as to whether the law as so characterised so operates that it can be said to be connected to a head of power conferred by s 51. In determining whether the connection exists, the practical, as well as the legal, operation of the law must be examined. If a connection exists between the law and a s 51 head of power, the law will be 'with respect to' that head of power unless the connection is, in the words of Dixon J [in Melbourne Corporation v The Commonwealth[143]], 'so insubstantial, tenuous or distant' that it cannot sensibly be described as a law 'with respect to' the head of power."[144]
It should also be recalled that a single law can possess more than one character, in the sense that it can properly be characterised as a law with respect to more than one subject-matter and that it suffices for validity that any one or more of those characters is within a head of Commonwealth legislative power. Moreover, as Mason and Deane JJ explained in Re F; Ex parte F[145]:
"In determining validity, it is not necessary to single out the paramount character. It is enough that the law 'fairly answers the description of a law "with respect to" one given subject-matter appearing in s 51' regardless of whether it is, at the same time, more obviously or equally a law with respect to some other subject-matter: see Actors and Announcers Equity Association v Fontana Films Pty Ltd[146]. In a case where a law fairly answers the description of being a law with respect to two subject-matters, one of which is and the other of which is not a subject-matter appearing in s 51, it will be valid notwithstanding that there is no independent connexion between the two subject-matters."
In Watson v Lee[147], Mason J, with whom Gibbs J agreed, held that s 51(xii) gave the Parliament power "to control and regulate the receipt and use" in Australia of foreign currency. Barwick CJ and Stephen J (with whom Gibbs J also agreed) spoke to the same effect[148]. By parity of reasoning, the power also supports laws to control and regulate the receipt and use of coin and paper money in Australia, being the medium of exchange in Australia.
Stephen J and Mason J also emphasised that, while "coinage" and "legal tender" involved quite specific and narrow concepts, the former being concerned with coins as money and the latter with the prescription of that which at any particular time may be a lawful mode of payment, "currency" was a broader expression. This is exemplified by the provisions of the Currency Act to which I have referred earlier in these reasons. They illustrate the proposition that currency is a universal means of exchange, designated by a particular unit of account[149].
Counsel for the plaintiff accepts that the power conferred by s 51(xii) supports laws which control and regulate the receipt and use of coin and paper money of Australia as the medium of exchange in this country. Nor is there any challenge to the power of the Parliament to enact a criminal law within the limits as to subject-matter prescribed by the Constitution.
However, the plaintiff contends that the offence created by s 31(1) operates "simply to support a reporting requirement", found, principally, in s 7. The submission continues that s 7 does not itself prevent or regulate any transaction in relation to currency, and that, rather, it requires a reporting once currency in a particular amount has been used in a particular species of transaction. The result is said to be that s 31(1) has an insufficient connection with the head of power.
The provisions of the Currency Act and the Reserve Bank Act to which I have referred legislatively ordain the function of Australian paper money and coins as legal tender which circulates as, and is customarily used and accepted as, a medium of exchange. The definition of "currency" in s 3(1) of the Act adopts this central constitutional conception of currency and adds to it, as Watson v Lee indicates may validly be done, foreign coin and paper money which so operates in its country of issue.
A law such as s 7 which selects as a criterion of operation a transaction involving the physical transfer of currency from one person to another is a law with respect to currency. This is nonetheless so if the obligation created by the law is to report to an agency of government details of the transaction, as specified in Sched 1 to the Act. The law operates to qualify the uncontrolled and unregulated use of the currency employed in the reportable transaction as a medium of exchange. It does so by imposing the reporting requirement. Therefore, the law is one with respect to currency in the constitutional sense.
This obligation to report is enhanced by the offence created in s 31(1) against avoidance or evasion by the use of means to ensure or to attempt to ensure that currency is so transferred as to create non-reportable transactions. The law operates upon cash transactions involving the physical transfer of currency from one person to another and qualifies the uncontrolled or unregulated use of that currency as a medium of exchange in those transactions. Accordingly, s 31(1) also is a law with respect to currency. In the scheme of the Act, s 31(1) operates in aid of the reporting provisions, but as a matter of characterisation to assess validity, it has its own direct link with the head of power.
However, the submissions for the plaintiff stressed the presence in s 31(1) of the phrase "it would be reasonable to conclude". This was said to indicate an insufficient connection between s 31(1) and the head of power. In a given case, it may still be reasonable to conclude that the transactions were conducted in a particular manner for the sole or dominant purpose spoken of in the section, even though this be contrary to the fact. The suggestion was that s 31(1) would then rise above its constitutional source.
The submissions for the plaintiff should not be accepted. Even if, in particular circumstances, the reasonableness of the conclusion was contradicted by the absence in fact of the relevant sole or dominant purpose, nevertheless the law, however unfairly it may then have operated, would remain a law with respect to currency. There would remain as a criterion of liability the engagement of the person in question in two or more "cash transactions" involving the physical transfer of currency from one person to another, albeit in "non-reportable" form.
The head of legislative power is not confined to dealings in currency of a particular description or with a particular purpose. Strict liability might have been imposed. The subject-matter being fairly within the province of a legislature, the justice and wisdom of the provisions made by the Parliament in exercise of its power over the subject-matter is for the Parliament itself[150].
Section 51(xii) of the Constitution confers a head of legislative power which is non-purposive, to use the phrase adopted by Mason and Deane JJ in Re F; Ex parte F[151], with reference to the analysis by Dixon J in Stenhouse v Coleman[152]. Consideration of validity thus turns upon whether the legislation operates upon or affects the subject-matter of currency. Validity does not turn upon the end or objective for the attainment of which the legislation operates[153]. No recourse to ancillary or incidental legislative power is necessary to sustain validity[154].
The legislation rests upon a "non-purposive" power. The concept of "proportionality" has no part to play here. In a case such as the present, "proportionality" is an inappropriate and impermissible tool of constitutional interpretation. The issue is not whether the concept of "proportionality" may be seen as useful, it is whether its application is permissible in dealing with non-purposive powers.
In my view, such an application is impermissible, and a phrase such as "reasonable proportionality" is to be avoided when propounding criteria for the determination of whether a law of the Commonwealth exceeds a "non-purposive" grant of power. Each head of power is but one grant and the criterion of validity is sufficiency of connection. I agree, with respect, with the analysis by Dawson J in his reasons for judgment[155] in the present case both of the European origins of the concept of "proportionality" and its development in the jurisprudence of the European Court of Justice. I also share the difficulties Dawson J expresses[156] with the passage he sets out from the judgment of Mason CJ in Cunliffe[157].
Other issues of construction of s 31(1)
There are difficulties in the construction of s 31(1), but before turning to them it is appropriate to refer to authority in a comparable field. In Milicevic v Campbell[158], the Court held s 233B(1)(ca) of the Customs Act 1901 (Cth) to be a law with respect to trade and commerce with other countries, within the meaning of s 51(i) of the Constitution. This law provided, inter alia, that any person who "without reasonable excuse (proof whereof shall lie upon him) has in his possession any prohibited imports to which this section applies which are reasonably suspected of having been imported into Australia in contravention of this Act ... shall be guilty of an offence". By s 233B(1B), it was a defence to a prosecution to prove that the goods were not imported into Australia or were not imported in contravention of the statute. The prohibited imports to which s 233B applied were narcotic goods. The Court rejected a submission that s 233B(1)(ca) legislated with respect to goods which, although reasonably suspected of having been imported, need not in truth have been imported and, in that way, went beyond power.
Gibbs J[159] held that, upon its true construction, s 233B(1)(ca) created no offence if it were proved that the goods were not imported or were not imported in contravention of the statute. His Honour stated:
"What the parliament has done is to render it unnecessary for the prosecution to prove anything more than that the prohibited imports (being narcotic goods) in the possession of the accused were reasonably suspected of having been imported into Australia in contravention of the Act, and once that has been proved the accused person, in order to escape conviction, must establish (if he does not rely on reasonable excuse) that the goods were not imported or were not imported in contravention of the Act. If at the conclusion of all the evidence it appears that the goods were not imported no offence is committed."
Mason J said[160]:
"Traditionally the onus of proof is an element in the judicial determination of a fact. Ordinarily the onus rests with the party alleging the existence of the fact, but this circumstance supplies no reason for saying that when the scope of a legislative power does not extend beyond a certain fact, the power does not authorize a provision casting the onus of proof on the party who seeks to deny the existence of this fact. Then a law which makes it an offence for a person to have in his possession narcotics imported into Australia does not cease to be a law with respect to trade and commerce with other countries merely because it contains a provision casting upon the defendant the onus of proving that the goods were not so imported. The provision, though procedural in character, is a law with respect to trade and commerce with other countries; as much so, indeed, as would be a provision which explicitly casts the onus of proof on the prosecution."[161]
Section 31(1) of the Act gives rise to various issues of construction. The elements of the offence which it creates appear to be (a) engagement as a party to two or more non-reportable cash transactions and (b) conduct of those transactions in the particular manner or form specified in the section for the sole or dominant purpose identified therein. As to (b), it is sufficient for the prosecution to satisfy the tribunal of fact that "it would be reasonable to conclude" that the person conducted the transactions in that manner or form for that sole or dominant purpose, "having regard to" (i) the manner or form in which the transactions were conducted, including the matters identified under (A)-(E) of s 31(1)(b)(i), and (ii) any explanation made by the person as to the manner or form in which the transactions were conducted.
It is not immediately apparent what is the temporal element in the phrase "any explanation made". One possibility is that regard is to be had to any explanation made before or at the time of the completion of the conduct of the non-reportable cash transactions in question. Another is that the phrase is not so limited and that, it not being an element of the offence itself, regard is to be had to an explanation at any time, up to and including the tender of evidence at the trial.
There is no need to resolve these questions.
This is because, in any event, no offence has been committed unless, at the conclusion of the evidence, "it would be reasonable" for the tribunal of fact to conclude that the accused conducted the transactions in the manner and form specified in s 31(1) for the sole or dominant purpose referred to therein. Nor is it necessary for present purposes to identify the level of satisfaction, and standard of proof, which is involved in the phrase "it would be reasonable to conclude". This is because, even if the reasonableness of the conclusion does not have to rise to satisfaction beyond reasonable doubt, s 31(1) would remain a law with respect to currency.
Counsel for the plaintiff also referred in argument to s 34 as throwing some light upon the construction, and thus the validity, of s 31(1). Sub-sections (1) and (2) of s 34 deal with the establishment, for the purposes of the Act, of the state of mind of a body corporate, by reliance upon the conduct of certain individuals and their states of mind. Sub-sections (3) and (4) are vicarious liability provisions, as regards persons other than a body corporate. The operation of s 34 does not detract from the conclusion already expressed that s 31(1) is a law supported by s 51(xii) of the Constitution.
It is unnecessary to decide whether validity also is to be drawn from the taxation power.
Conclusion
The question reserved should be answered "Yes". The costs of the question reserved should be borne by the plaintiff.
KIRBY J. By order of McHugh J, there was reserved for consideration of the Full Court the question whether s 31(1) of the Financial Transaction Reports Act 1988 (Cth) ("the Act") (formerly the Cash Transaction Reports Act 1988 (Cth)) is a valid law of the Commonwealth.
The point in issue
On 18 February 1993 Mr Stephen Leask was committed for trial in Sydney on 54 counts alleging offences against s 31(1) of the Act.
Before his committal, but after being charged, Mr Leask filed a statement of claim in the original jurisdiction of this Court seeking a declaration that the sub-section was not a valid law of the Commonwealth. His pleading referred to various provisions of the Act, including s 31(1), and to the fact that charges had been brought against him. It contended that neither s 51(ii) (taxation), nor any other provision of the Constitution (including s 51(xii)(currency)), empowered the Parliament to legislate in terms of s 31(1) of the Act.
The Commonwealth contended that the proper interpretation of s 31(1) was that there was no offence if the person did not, in fact, conduct the transactions for the sole or dominant purpose referred to in s 31(1)(b) and that the sub-section was, in any case, a valid law. In support of its contentions before this Court, the Commonwealth called in aid a number of inquiry reports, reports of the Senate Standing Committee on Legal and Constitutional Affairs, the Ministerial Second Reading Speech introducing the Bill which became the Act and other documents. Such material was placed before the Court without objection.
The statutory provisions relevant to the disposal of the point in issue are set out in the opinions of the other members of the Court. I will not repeat them.
Arguments of the parties
In support of his contention that s 31(1) of the Act was constitutionally invalid, Mr Leask relied, in his written submissions, upon a number of arguments. Although these were formally adopted in the oral submissions of counsel, they were not further referred to. Argument was confined to the comparatively narrow point that s 31(1)(b) of the Act creates an offence of strict liability, without the need for the prosecutor to prove mens rea on the part of the accused. It was contended that a law, so expressed, went beyond any of the enumerated powers of the Parliament, conferred by the Constitution. It was also outside the express and implied incidental power and beyond the powers inherent in the express grants of power. Specifically, it was submitted that the sub-section could not properly be characterised as a law with respect to taxation (s 51(ii)), currency, coinage and legal tender (s 51(xii)) or banking (s 51(xiii)), nor one with respect to financial corporations formed within the limits of the Commonwealth (s 51(xx)) or any combination of the above read in conjunction with the express and implied incidental powers.
If, contrary to this principal submission, it was held that the sub-section could, on its face, be characterised as being with respect to any of the foregoing powers, it was then submitted that the terms of the sub-section deprived it of the requisite proportionality[162] between the constitutionally valid subject-matters of the Act and the means selected by the Parliament for legislating on those subject-matters[163]. The purported enactment of a law in such terms could not reasonably be classified as appropriate and adapted to the achievement of any object or purpose within power[164]. Nor was it reasonably proportionate to the attainment of such an object or purpose[165].
For the Commonwealth, it was argued that, to make good a charge under s 31(1)(b) of the Act, the prosecutor would be obliged to establish mens rea on the part of the accused. But whether this was so or not, the Commonwealth supported the validity of the challenged paragraph. It did so by reference to the enumerated heads of power and the incidental powers. Various other heads of power were also suggested. But, principally, the Commonwealth relied upon the currency power which, it asserted, was sufficient to sustain the whole Act and the sub-section within it.
Background to the Act
The legislative history of the Act throws some light upon its subject-matter and that of s 31(1). It is convenient to start by looking at this.
In 1970 the Congress of the United States of America enacted the Currency and Foreign Transactions Reporting Act[166] (sometimes called the Bank Secrecy Act). That Act introduced the concept of cash transaction reporting as an exception to the normal confidentiality and secrecy expected of, and observed by, banks with respect to the banking affairs of their customers. For a time there was no move to copy that Act in Australia.
However, in 1984, the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union (the Costigan Royal Commission) reported its findings and recommendations[167]. As a means of countering the "money trail" of illegal and corrupt transactions, the Royal Commissioner recommended that account holders in various financial institutions, including banks, should be required to verify their identity. He also recommended that financial transactions with overseas agencies should be monitored[168]. The Royal Commissioner was alert to the sensitivities involved in the establishment of a substantial computer data base. He suggested that information derived from taxation records should be expressly exempted. He concluded that financial institutions were frequently aware of when accounts held by them were being used to process ("launder") illicit profits[169]. He found that the staff of financial institutions sometimes engaged in dishonest dealings with corporate criminals and with other customers involved in illegal gambling. He reported that a serious trend of money being "laundered" through accounts bearing false names had been uncovered. The focus of the Royal Commission's report was not taxation law as such, still less the currency. It was what might be described as organised crime. To that extent it is misleading to describe the Costigan Royal Commission report as the principal inspiration for the Act[170].
Ostensibly in response to the Royal Commission report, the Australia Card Bill was introduced into the Parliament[171]. The universal identifier proposed by that Bill (to be known as the "Australia Card") was justified (amongst other grounds) by its suggested utility as a means of verifying banking and like financial accounts[172]. However, the Bill failed to pass the Senate. This led to the introduction of the Bill which, under a new title, subsequently became the Act in question in these proceedings. That Bill was presented to the Senate by the Minister for Justice in November 1987.
In December 1987 the Senate resolved to refer the Bill to the Standing Committee on Legal and Constitutional Affairs. The resulting report reflected continuing anxiety about the privacy aspects of the Bill, its effectiveness to reduce the "unlawful cash economy"[173] and the need for such a measure, given that no other comparable country had enacted similar legislation, following the United States precedent. A call was made for a review of the Act "not longer than 3 years, and that the review include the economic, taxation, privacy and law enforcement implications"[174]. The Government accepted this recommendation. The Bill then passed through the Parliament[175]. Under its original name the Act first came into effect, in part, in June 1988. Substantially, the Act did not commence to operate until 1990.
In 1993, the Senate Committee produced its follow-up report[176]. This recorded the activities of the Australian Transaction Reports and Analysis Centre (AUSTRAC) established by s 35 of the Act. With specific reference to s 31, which is challenged in these proceedings, the Senate Committee reported a number of suggested difficulties which had been brought to its attention. These included one submission calling for s 31 to be amended[177]:
"so that it only applies when there is an intention on the part of the alleged offender to evade the provisions of the Act. It is argued that the present formulation creates a strict liability offence and that this represents a departure from currently accepted criminal law principles."
According to the report, the Attorney-General's Department's submission recommended "the inclusion of mental elements in all the offences in the ... Act where there is presently none specified[178]." The Senate Committee accepted the foregoing submissions. It concluded[179]:
"[A] strict liability offence can infringe unacceptably upon the personal rights and liberties of individuals. The present formulation of section 31 creates a strict liability offence because it is not necessary to prove the guilty mind of the defendant."
The Senate Committee made a recommendation (number 17) that "there should not be strict liability under section 31". It suggested that the section be amended. No such amendment has been enacted.
The history of s 31 of the Act can thus clearly be traced to a provision in the United States Act designed to prevent the structuring of transactions with a "purpose of evading the reporting requirements ..."[180]. In the Supreme Court of the United States in Ratzlaf v United States[181], Ginsburg J, writing for the majority, explained "structuring" as:
"[T]o break up a single transaction above the reporting threshold into two or more separate transactions - for the purpose of evading a financial institution's reporting requirement."
As originally enacted by the Congress, the offence in the United States required proof that the accused was guilty of "wilfully violating" the anti-structuring provisions. Only then could a person be convicted of the offence[182]. Various appellate courts had divided on the question whether, under the United States law, a defendant's purpose to circumvent reporting obligations sufficed to sustain a conviction for "wilfully violating" the provision. The majority of the Supreme Court (Ginsburg J; with Stevens, Scalia, Kennedy and Souter JJ concurring) held that the prosecution had to prove that the defendant acted with knowledge that his conduct was unlawful. Blackmun J (with whom Rehnquist CJ, O'Connor and Thomas JJ joined) held to the contrary. As a result of the decision in Ratzlaf the United States Congress amended the section to delete the reference to "wilfulness". However, the section remains a penal one. It still talks of "the purpose of evading". It provides penalties for violations of the section.
Before the Australian Parliament the Minister, on the introduction of the Bill, described the types of conduct to which he asserted the measure was directed[183]:
" The Bill represents one of the most significant initiatives to counter the underground cash economy, tax evasion and money laundering. It is notorious that the underground cash economy provides great scope for tax evasion both domestically and internationally. It is clear that traditional investigative techniques have been ineffective in identifying financiers of major crime, because of the ease with which such persons are able to distance themselves from the actual criminal conduct. However, experience both in Australia and overseas has shown that criminal financiers associate more closely with the profits of crime. That experience also shows that cash is an important part of financing criminal activity.
...
The legislation is consistent with calls by a number of royal commissions and other inquiries in recent years for stronger measures to deal with the widespread abuse of the facilities of financial institutions in relation to tax fraud and other criminal activities."
Commentary on the Act has ranged from the sceptical and hostile[184] to the laudatory[185]. If the Act be within power, this Court is not concerned, as such, with the merits of the legislation, with its wisdom, the need for it or the reasonableness of its provisions. Those questions are for the Parliament. However, debates concerning the merits of a law may sometimes help to cast light upon a suggestion that a provision of the law is outside the scope of the constitutional grant of power or is so disproportional to the achievement of any constitutionally authorised subject-matter as to take it beyond power. These were the bases upon which Mr Leask challenged the validity of s 31(1) of the Act.
Applicable constitutional principles
The constitutional validity of s 31 of the Act has not been the subject of examination by this or any other Court. However, in August 1995, the Court of Criminal Appeal of South Australia upheld the constitutional validity of s 24 of the Act dealing with offences relating to false bank accounts. In Rogers v The Queen[186] that Court held that, although the requirements of the section were sweeping, the constitutionality of s 24 of the Act was established. Doyle CJ said[187]:
"I am conscious of the fact that it is not sufficient to support the law to assert that it will assist in or remove impediments to the collection of Commonwealth taxation. More than that is required. But once one accepts, as I do, that the `cash economy' and the operation of accounts in false names are significant means of evading liability to pay Commonwealth tax, it seems to me that a measure which prevents the operation of accounts in a false name does disclose a sufficient connection to the power to make laws with respect to taxation. I have already explained why it does not seem to me that the law is not reasonably proportionate to the end in view."
Should a like conclusion be reached by this Court in respect of s 31? The principles which guide the approach of the Court in considering the constitutional validity of such a provision include, relevantly:
1. The primary task is the characterisation of the law in question. That is why it is useful to study the Act as a whole and to seek to understand its history and intended operation. Windeyer J once described the word characterisation as "uncouth for grammarians and those who care for English undefiled"[188]. However, it is now too late to extirpate it from this realm of discourse. The fact that a law may have several characters will not deprive it of constitutional validity if the impugned provision can fairly be characterised as a law with respect to one or more of the designated heads of legislative power contained in the Constitution[189].
2. In determining the characterisation of the law, it should be remembered that the words "with respect to" in s 51 of the Constitution are words of very wide connection and deliberately so[190]. Furthermore, as well as the express incidental power, account must be taken of the implied grant of legislative power inherent in the very fact that the heads of power appear in a constitution[191].
3. Whether it is alleged that the impugned law falls within the "core" of a grant of power under s 51, or within the incidental scope of the power, there is but a single grant[192]. The basic test for validity is still the same, viz whether a sufficient connection has been shown between the law in question and the subject-matter of the head of power[193].
4. In order to assess the sufficiency of the connection, the Court may begin by analysing how the impugned law would operate "by reference to the nature of the rights, duties, powers and privileges which [the law] changes, regulates or abolishes"[194]. In judging such sufficiency, it is not necessary to demonstrate an express link between impugned law and the power. Nor is it sufficient that the law expressly refers to the head of power or affects it in passing. It is enough that the practical effect of the law is accepted as having sufficient connection and thus the requisite character[195].
5. The connection between the law and the subject-matter of the power will not be sufficient if it is remote, tenuous, insubstantial, exiguous or fortuitous[196]. The enactment of the law as a "peg" upon which to hang legislation which, properly analysed, is really a law with respect to a different subject-matter, will on that ground fail the test of sufficient connection required to support constitutional validity[197];
6. Whilst the title to an Act, its preamble and statement of objects may sometimes be usefully referred to in aid of a task of constitutional characterisation, they may not usurp the function of the courts[198]. Neither by the title and preamble nor by any statutory statement of an Act's objects can the Parliament cure constitutional invalidity where the Court finds such invalidity to exist. Nor can a Ministerial statement speak the Act into constitutional validity where such validity is missing. The duty of the Court is to scrutinise the purpose of Parliament as expressed in the words enacted, not in the Minister's statement or other documents[199].
7. In considering the sufficiency of the suggested connection between the law, so characterised, and the constitutional head of power relied on, some recent observations in this Court have remarked that it may be useful to apply a test of "proportionality" to the impugned provision[200]. This test has not enjoyed universal favour. Behind the expressed doubts lies more than resistance to a legal concept with an origin outside the common law. The risk that assessments of proportionality may take a court into evaluation of policy and judgment on the desirability of the means employed by the law occasions the hesitation to embrace the notion of proportionality as a universal criterion for constitutional validity. Distinctions have been drawn (repeated in this case) between the value of the concept in cases where the constitutional power is conferred in purposive terms, cases where the power is expressed as restricted by a limitation and other cases[201]. Such distinctions find no reflection in the concept of proportionality in the legal systems from which that concept was originally derived. They were not mentioned in the authorities by which the concept originally found its way into the jurisprudence of this Court. They are difficult to reconcile with the essential idea of proportionality. They are not universally accepted by the opinions expressed within the Court. It is difficult, in principle, to embrace the proposition that proportionality might be an appropriate criterion for some paragraphs of s 51 of the Constitution yet impermissible in respect of others. The same basic question is in issue in every case: namely where the boundary of federal constitutional power lies. Whilst there is no settled doctrine on the use of the concept of proportionality in resolving constitutional disputes, recent cases suggest a growing acceptance of the notion as a useful test of general application[202]. It may provide a means to help the mind of the decision-maker to answer the question whether the impugned law is "in truth" one with respect to a designated grant of power, as mandated by Kitto J in Fairfax v Federal Commissioner of Taxation[203]. That question is not readily answered by repeating, as a mantra, the puzzle: "Does the law have sufficient connection with the constitutional head of power?" In the words "sufficient" and "connection" lie much room for differences of opinion. Such well-worn phrases merely state what the judicial task is. They do not really elucidate how it is to be performed. That is why the attempt has been made by some members of the Court to find a subsidiary or additional test which, because of its functional nature, may be useful in the task of characterisation. Proportionality is certainly a concept of growing influence on our law more generally[204]. I consider that it may sometimes be helpful in the context of constitutional characterisation.
8. Consistent with the function of this Court, neither the task of characterisation nor the application of the concept of proportionality affords any authority for judging the desirability of the law or the means employed by the lawmaker. Provided the law is within power, the means adopted will not ordinarily be a matter for the Court. In this regard McHugh J's remarks on an analogous problem are appropriate[205]:
"[T]he fact that the Parliament has chosen to make liability to forfeiture independent of the fault of the owner does not make [the section impugned] unreasonably disproportionate to the purpose which it seeks to achieve. The section is not invalid because, among a range of reasonable measures to combat breaches of the Act, the Parliament has chosen a particularly drastic one."
Courts may, for good reason, be reluctant to construe legislation, especially criminal legislation, as reversing the onus of proof[206] or creating an offence without need to establish a guilty intention[207]. However, such provisions certainly exist in legislation enacted by the Parliament and undoubtedly within power. Of themselves, these features of a law will not deprive it, if otherwise within power, of constitutional validity. They merely show that the Parliament has chosen a drastic remedy for an attack on the problem which is the subject of the enactment. Of course, a point may eventually be reached where the drastic turns into the invalid. The law, or part of it, may lose the quality of sufficient connection with the constitutional head of power. Put another way, it may be so disproportionate to the legitimate attainment of the subject-matter of the grant of power as to take it outside that grant. When that happens the boundary of constitutional validity will have been passed. This Court is the ultimate guardian of that boundary[208]. By the Constitution it has been entrusted with the responsibility of identifying where the boundary lies.
Verbal formulae, such as those collected above, are offered in the hope of supporting a principled, consistent and predictable decision in a disputed case of constitutional characterisation. Yet, in the end, such formulae can only go so far. Unavoidably, such decisions involve an exercise of judgment. It is futile to pretend that words and phrases are sufficient, without more, to yield the solution in every case. Were it so, there would be no dissenting opinions in cases of constitutional characterisation. Disagreement exists because different judicial minds see the boundaries of constitutional power differently located. The verbal tests afforded by the Court's past authority are not precise enough to command a single, simple solution. The most that they can offer are techniques by which to test the impugned law. They provide expressions which point the decision-maker in the direction of some of the considerations which, in the past, have been found to be useful for the ultimate judgment which has to be made.
Application to the present case
I turn to the application of these principles to the present case.
The Act does not, in s 31, any more than in s 24, expressly relate its provisions to the purposes of taxation[209]. However, once it is accepted (as I am willing to do) that, for the enforcement of taxation laws enacted by the Parliament, the problem of the "cash economy" is one fairly and reasonably justifying legislative attention, the enactment of a law such as the Act and of a provision such as s 31, are revealed as sufficiently connected with the taxation power. Put another way, a provision such as s 31 of the Act cannot be said to be unreasonably disproportionate to the achievement of the effective administration and enforcement of federal taxation laws. It may not be directed to the "core" of the grant of taxation power. But it is certainly within the matters reasonably incidental to the reach of that power.
Without a provision such as s 31, it would be comparatively easy, if sometimes a trifle inconvenient and time-consuming, for a determined cash operator, wishing to escape the operation of the Act, to do so. Such a person would need do no more than Mr Ratzlaf did in the case in the United States Supreme Court already referred to[210]. As disclosed by the report, he ran up a debt of $160,000 at a casino in Reno, Nevada. He was given a week to pay the debt. He returned with cash of $100,000 in hand. He was told that transactions involving more than $10,000 in cash would have to be reported to State and federal authorities. If he presented bank cheques for less than that amount he would not trigger any reporting requirement. The casino "helpfully" (to use Ginsburg J's description) placed a limousine at his disposal. It assigned an employee to accompany him to banks in the vicinity so that he could secure cheques for less than $10,000, each from a different bank. Based on this endeavour, when it came to the notice of the authorities, he was charged with "structuring transactions" ("smurfing"[211]). Without a provision such as s 31, a determined cash operator in Australia could easily evade the reporting obligations of the Act in the same way. An important means of ensuring that the "cash economy", which facilitates and promotes the evasion of liability to taxation, would be lost.
If the Act, looked at as a whole, can fairly be characterised as having a sufficient connection with the administration and enforcement of taxation laws, the provision of the sanction in s 31(1), to prevent evasion, is likewise sufficiently within that connection. Given that questions of degree are always involved and that complete precision is impossible, a practical approach should be taken. Approaching the sub-section in that way it is sufficiently connected to the administration and enforcement of federal taxation laws. The sanction in the sub-section may be seen as reasonably proportionate to the achievement of the object which the Parliament, by the legislation, has validly pursued.
I do not, by the foregoing, mean to suggest that any law which might make the task of tax gathering easier would necessarily fall within the grant of power provided to the Parliament by s 51(ii) of the Constitution, properly understood. Otherwise, a network of informers and draconian provisions for intrusion into personal privacy would be condoned when such was clearly not the purpose of the grant of power nor within its contemplation. It remains in every case of challenge to submit the impugned provision to characterisation by the test of sufficiency of connection. Proportionality may sometimes help in the application of that test. The Act in question here passes both those tests so far as s 31(1) is concerned. It is a valid law of the Commonwealth.
It is not necessary for me to determine the question whether s 31(1) of the Act, properly construed, requires proof of mens rea or not. The Commonwealth accepts that it does. Certainly there are a number of indications to support that conclusion. Conformably with its concession in this case, it may be expected that the prosecutor for the Commonwealth will accept the obligation to establish mens rea in the prosecution of Mr Leask. Certainly, the concession, if it be correct, helps in this case to meet Mr Leask's principal criticism that the removal of a requirement to establish mens rea involved the Act in a wholly disproportionate response to the problem being tackled and one which infringed the values traditionally protected by the common law[212]. It is not necessary to determine the point of construction in order to decide the challenge to constitutional validity. Either way the law is valid. It may be drastic. But it is not outside the scope of a sufficient connection with the taxation power. Nor is it a disproportionate exercise of that power. It is within the permissible ambit of the Parliament's judgment in giving effect to its valid purpose.
Having reached this opinion, it is also unnecessary for me to decide whether the other heads of power relied on by the Commonwealth, or any of them, support the impugned provision. However, I express some doubts as to whether the power granted by s 51(xii) of the Constitution to make a law with respect to "currency", supports s 31(1) of the Act. It is not the currency, as currency, that is the object of the Act or of the sub-section. I am inclined to think that the currency power has quite a different purpose and will not support any law simply because it is expressed to refer to cash, money or other forms of currency or uses the word "currency" itself, as s 31 does[213]. Were it otherwise any subject referred to by its money value might arguably come within this head of power whose ambit I take to be much narrower. But I do not need finally to resolve this point nor the relevance of other heads of power invoked by the Commonwealth. I will therefore refrain from doing so.
Orders
I agree in the orders proposed by Brennan CJ.
[7] s 27(1)(a) and (d).
[8] s 27(1)(b) and (c).
[9] Bank of NSW v The Commonwealth [1948] HCA 7; (1948) 76 CLR 1 at 186; see also Actors and Announcers Equity Association v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR 169 at 216; The Commonwealth v Tasmania. The Tasmanian Dam Case [1983] HCA 21; (1983) 158 CLR 1 at 152.
[10] Fairfax v Federal Commissioner of Taxation [1965] HCA 64; (1965) 114 CLR 1 at 7.
[11] The Tasmanian Dam Case [1983] HCA 21; (1983) 158 CLR 1 at 152, 245; Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 315.
[12] s 15AA of the Acts Interpretation Act 1901 (Cth).
[13] [1994] HCA 44; (1994) 182 CLR 272 at 319.
[14] See per Dawson J in Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 352.
[15] He Kaw Teh v The Queen [1985] HCA 43; (1985) 157 CLR 523.
[16] The different forms of mens rea are discussed in He Kaw Teh v The Queen [1985] HCA 43; (1985) 157 CLR 523 at 569-582.
[17] [1994] HCA 44; (1994) 182 CLR 272 at 317-326.
[18] [1994] HCA 44; (1994) 182 CLR 272 at 321.
[19] See, for example, Cole v Whitfield [1988] HCA 18; (1988) 165 CLR 360 at 398-399.
[20] Davis v The Commonwealth [1988] HCA 63; (1988) 166 CLR 79 at 100; Australian Capital Television Pty Ltd v The Commonwealth (ACTV) [1992] HCA 45; (1992) 177 CLR 106 at 143-144, 157, 217-218, 235, and cf 174; Castlemaine Tooheys Ltd v South Australia [1990] HCA 1; (1990) 169 CLR 436 at 473-474; Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 324.
21 [1994] HCA 44; (1994) 182 CLR 272 at 324.
[22] ACTV [1992] HCA 45; (1992) 177 CLR 106 at 157.
[23] [1992] HCA 45; (1992) 177 CLR 106 at 195.
[24] [1990] HCA 1; (1990) 169 CLR 436 at 473-474.
[25] [1992] HCA 45; (1992) 177 CLR 106 at 195.
[26] ACTV [1992] HCA 45; (1992) 177 CLR 106 at 159; Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 325.
[27] [1979] HCA 53; (1979) 144 CLR 374 at 382, 397-400, 409-410.
[28] cf the description of "money" proposed by F A Mann in The Legal Aspect of Money, 5th ed (1992) at 8.
[29] Ilich v The Queen [1987] HCA 1; (1987) 162 CLR 110 at 138-139.
[37] The name of the Act was originally the Cash Transaction Reports Act 1988 (Cth).
[38] Second Reading Speech to the Cash Transaction Reports Bill 1987, Senate, Parliamentary Debates (Hansard), 25 November 1987 at 2413.
[41] cf Ratzlaf v United States [1994] USCA9 667; (1994) 126 L Ed (2d) 615.
[42] [1985] HCA 43; (1985) 157 CLR 523 at 591.
[43] [1985] HCA 43; (1985) 157 CLR 523 at 528.
[44] [1895] 1 QB 918 at 921.
[45] [1963] AC 160 at 173.
[46] [1969] 2 AC 256 at 272.
[47] [1985] AC 1 at 12-13.
[48] [1980] HCA 5; (1980) 142 CLR 342 at 346, 348.
[49] [1985] HCA 43; (1985) 157 CLR 523 at 566.
[50] [1941] HCA 28; (1941) 67 CLR 536 at 540.
[51] See also Sweet v Parsley [1969] UKHL 1; [1970] AC 132 at 152; Gammon Ltd v Attorney-General (Hong Kong) [1985] AC 1 at 14.
[52] [1985] HCA 43; (1985) 157 CLR 523 at 570.
[53] (1819) 17 US 159 at 206.
[54] See Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth [1943] HCA 12; (1943) 67 CLR 116 at 133-134 per Latham CJ.
[55] (1819) 17 US 159 at 202.
[56] (1819) 17 US 159 at 205.
[57] [1994] HCA 44; (1994) 182 CLR 272 at 296.
[58] See Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 356-357; Minister for Resources v Dover Fisheries [1993] FCA 366; (1993) 43 FCR 565 at 575 per Gummow J.
[59] Art 3b.
[60] R v Minister for Agriculture, Fisheries and Food; Ex parte FEDESA [1990] 5 ECR I-4023.
[61] [1990] 5 ECR I-4023 at I-4063.
[62] [1990] 5 ECR I-4023 at I-4063-I-4064.
[63] [1995] HCA 16; (1995) 183 CLR 323 at 368-369.
[64] The Commonwealth v Tasmania (the Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1 at 152.
[65] Herald & Weekly Times Ltd v The Commonwealth [1966] HCA 78; (1966) 115 CLR 418 at 440; the Tasmanian Dam Case [1983] HCA 21; (1983) 158 CLR 1 at 152.
[66] Melbourne Corporation v The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 at 79.
[67] [1952] HCA 30; (1952) 86 CLR 169 at 179.
[68] [1966] HCA 78; (1966) 115 CLR 418 at 437.
[69] [1994] HCA 44; (1994) 182 CLR 272 at 318.
[70] Bank of NSW v The Commonwealth (the Bank Nationalization Case) [1948] HCA 7; (1948) 76 CLR 1 at 354 per Dixon J.
[71] Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 319 per Brennan J.
[72] Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 354.
[73] Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 351-352.
[74] [1994] HCA 44; (1994) 182 CLR 272 at 296.
[75] cf Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 356 where I expressed the view that there is no real scope for any implied incidental power in relation to a truly purposive power.
[76] [1994] HCA 44; (1994) 182 CLR 272 at 296-297.
[77] [1994] HCA 44; (1994) 182 CLR 272 at 296.
[78] [1936] HCA 52; (1936) 55 CLR 608 at 674.
[79] See Victoria v The Commonwealth (1996) 70 ALJR 680 at 690, 739; 138 ALR 129 at 147, 215.
80 [1983] HCA 21; (1983) 158 CLR 1.
[81] [1983] HCA 21; (1983) 158 CLR 1 at 259.
[82] See Victoria v The Commonwealth (1996) 70 ALJR 680 at 739; 138 ALR 129 at 215.
[83] [1994] HCA 44; (1994) 182 CLR 272 at 352.
[84] cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 31 per Mason CJ; Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 297 per Mason CJ.
[85] See Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 at 183; Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 363.
[86] See Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 354.
[87] See Victoria v The Commonwealth (1996) 70 ALJR 680 at 739; 138 ALR 129 at 215.
[88] See Richardson v Forestry Commission [1988] HCA 10; (1988) 164 CLR 261 at 326.
[89] [1992] HCA 45; (1992) 177 CLR 106 at 195.
[90] Compare the approach of the European Court of Justice to the validity of measures providing for the forfeiture of deposits in the context of regulating a common agricultural market: eg, Buitoni v FORMA [1979] 1 ECR 677 at 685; Atalanta v Produktschap voor Vee en Vlees [1979] 2 ECR 2137 at 2151. On the distinction between "principal" or "primary" obligations and "incidental" or "secondary" obligations in relation to forfeiture of deposits, see Emiliou, The Principle of Proportionality in European Law: A Comparative Study, (1996) at 212-223.
[91] See the definition in s 3(1).
[92] See the definition in s 3(1).
[93] The Australian Transaction Reports and Analysis Centre, established by s 35.
[94] "Both 'coinage' and 'legal tender' involve quite specific and narrow concepts, the former being concerned with coins as money and the latter with the prescription of that which is, at any particular time, to be a lawful mode of payment within a polity.": Watson v Lee [1979] HCA 53; (1979) 144 CLR 374 at 398 per Stephen J.
[95] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 27 per Mason CJ.
[96] Grannall v Marrickville Margarine Pty Ltd [1955] HCA 6; (1955) 93 CLR 55 at 77 per Dixon CJ, McTiernan, Webb and Kitto JJ.
[97] [1995] HCA 16; (1995) 183 CLR 323 at 352.
[99] [1979] HCA 53; (1979) 144 CLR 374 at 410.
[100] Northern Suburbs General Cemetery Reserve Trust v The Commonwealth [1993] HCA 12; (1993) 176 CLR 555 at 569-570 has some relevance in that regard.
[101] [1994] USCA9 667; (1994) 126 L Ed (2d) 615; 16 F (3d) 1078.
[102] United States v Thompson [1979] USCA5 1686; (1979) 603 F 2d 1200 at 1203; United States v Tobon-Builes [1983] USCA11 670; (1983) 706 F 2d 1092 at 1097-1099.
[103] United States v Varbel [1986] USCA9 69; (1986) 780 F 2d 758; United States v Anzalone [1985] USCA1 277; (1985) 766 F 2d 676.
[104] [1975] HCA 20; (1975) 132 CLR 307 at 316.
[106] s 38(1)(d); see also s 38(3) and (4) and s 41.
107 (1995) 64 SASR 280.
[108] (1995) 64 SASR 280 at 293.
[109] Commonwealth, (Senate), Parliamentary Debates, 25 November 1987 at 2413.
[110] See generally Lee, "Proportionality in Australian Constitutional Adjudication", Lindell (ed), Future Directions in Constitutional Law, (1994) at 126.
[111] [1994] HCA 44; (1994) 182 CLR 272.
[112] [1994] HCA 44; (1994) 182 CLR 272 at 371-372.
[113] (1992) 177 CLR 1 at 29.
[114] (1992) 177 CLR 1 at 89.
[115] [1994] HCA 10; (1994) 179 CLR 270.
[116] See [1994] HCA 10; (1994) 179 CLR 270 at 285-286 per Deane and Gaudron JJ, 294-295 per McHugh J.
[117] The Commonwealth v Tasmania (The Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1 at 260 per Deane J; Polyukhovich v The Commonwealth (War Crimes Act Case) [1991] HCA 32; (1991) 172 CLR 501 at 592 per Brennan J; Nationwide News (1992) 177 CLR 1 at 30-31 per Mason CJ; Ex parte Lawler [1994] HCA 10; (1994) 179 CLR 270 at 286 per Deane and Gaudron JJ; Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 296-297 per Mason CJ.
[118] [1994] HCA 44; (1994) 182 CLR 272 at 376.
[119] [1994] HCA 44; (1994) 182 CLR 272 at 320.
[120] And see Victoria v The Commonwealth (1996) 70 ALJR 680 at 690; 138 ALR 129 at 147.
[121] Cunliffe [1994] HCA 44; (1994) 182 CLR 272 at 377-378.
[122] Victoria v The Commonwealth (1996) 70 ALJR 680 at 690, 707; 138 ALR 129 at 146-147, 170.
[123] See the discussion by Kirby P in State of NSW v Macquarie Bank Ltd (1992) 30 NSWLR 307 at 321-324, also Minister for Resources v Dover Fisheries Pty Ltd [1993] FCA 366; (1993) 116 ALR 54 at 64.
[124] Soering v United Kingdom [1989] ECHR 14; (1989) 11 EHRR 439 at 468.
[125] Handyside v United Kingdom [1976] ECHR 5; (1976) 1 EHRR 737 at 754-755. See generally Harris, O'Boyle and Warbrick, Law of the European Convention on Human Rights, (1995) at 11-12.
[126] Mathieu-Mohin and Clerfayt v Belgium (1987) 10 EHRR 1 at 16; Fayed v United Kingdom [1994] ECHR 27; (1994) 18 EHRR 393 at 415-416.
[127] See the cases mentioned by Kirby P in State of NSW v Macquarie Bank Ltd (1992) 30 NSWLR 307 at 323. See generally Emiliou, The Principle of Proportionality in European Law: A Comparative Study, (1996).
[128] (1992) 177 CLR 1 at 47 per Brennan J.
[129] [1992] HCA 57; (1992) 177 CLR 292 at 300 per Mason CJ and McHugh J.
[130] [1994] HCA 46; (1994) 182 CLR 104 at 130 per Mason CJ, Toohey and Gaudron JJ.
[131] [1995] HCA 26; (1995) 184 CLR 348 at 367-368 per Brennan CJ, Deane, Dawson and Toohey JJ.
[132] (1992) 177 CLR 1 at 93-94.
[133] Burton v Honan [1952] HCA 30; (1952) 86 CLR 169 at 179; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 101.
[134] (1992) 177 CLR 1.
[135] (1992) 177 CLR 1 at 88.
[136] In addition, specific provision for the issue of paper money is made by s 51(xiii). This confers legislative power with respect to:
"Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money".
Section 115 is directed to the States. It reads:
"A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts."
[137] Section 36(1) is a valid law of the Commonwealth: Re Skyring's Application (No 2) (1985) 59 ALJR 561; 58 ALR 629.
[138] (1995) 64 SASR 280 at 286.
[139] Pub L 99-570, Title I, Subtitle H, SS1354(a). The provision was construed by the Supreme Court in Ratzlaf v United States [1994] USCA9 667; (1994) 126 L Ed (2d) 615; 16 F (3d) 1078, and then amended by Pub L 103-325, Title IV, SSSS411, 413.
[140] [1964] HCA 15; (1964) 113 CLR 207 at 225-226.
[141] (1908) 6 CLR 309 at 367, 368.
[142] [1995] HCA 16; (1995) 183 CLR 323 at 368-369.
[143] [1947] HCA 26; (1947) 74 CLR 31 at 79.
[144] See also Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 315 per Brennan J.
[145] [1986] HCA 41; (1986) 161 CLR 376 at 387-388.
[146] [1982] HCA 23; (1982) 150 CLR 169 at 192-194.
[147] [1979] HCA 53; (1979) 144 CLR 374 at 410.
[148] [1979] HCA 53; (1979) 144 CLR 374 at 382, 398-399.
[149] See Jolley v Mainka [1933] HCA 43; (1933) 49 CLR 242 at 259-261, 266-269.
[150] Burton v Honan [1952] HCA 30; (1952) 86 CLR 169 at 179.
[151] [1986] HCA 41; (1986) 161 CLR 376 at 388-389.
[152] [1944] HCA 36; (1944) 69 CLR 457 at 471; see also Australian Communist Party v The Commonwealth [1951] HCA 5; (1951) 83 CLR 1 at 192-193.
[153] Murphyores Incorporated Pty Ltd v The Commonwealth [1976] HCA 20; (1976) 136 CLR 1 at 11-12, 20; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 89; Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 323, 355.
[154] See Australian Communist Party v The Commonwealth [1951] HCA 5; (1951) 83 CLR 1 at 192-194.
[155] At 17-18.
[156] At 20-22.
[157] [1994] HCA 44; (1994) 182 CLR 272 at 296-297.
[158] [1975] HCA 20; (1975) 132 CLR 307.
[159] [1975] HCA 20; (1975) 132 CLR 307 at 315-316.
[160] [1975] HCA 20; (1975) 132 CLR 307 at 318-319; cf He Kaw Teh v The Queen [1985] HCA 43; (1985) 157 CLR 523 at 545-546, 587-588.
[161] See also [1975] HCA 20; (1975) 132 CLR 307 at 321 per Jacobs J. It has been suggested that there are indications in the judgments of Mason J and Jacobs J that the need to establish a reasonable suspicion might well provide a sufficient connection with s 51(i) of the Constitution to have supported s 233B(1)(ca): Lindell, "Duty to Exercise Judicial Review" in Zines (ed), Commentaries on the Australian Constitution, (1977) at 181. It is unnecessary to explore the application of that reasoning to the law in question in the present case.
[162] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 29.
[163] Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; (1994) 179 CLR 270 at 295.
[164] See Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 297.
[165] Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; 179 CLR 270 at 286; cf Minister for Resources v Dover Fisheries [1993] FCA 366; (1993) 43 FCR 565 at 575 per Gummow J.
[166] Pub L 91-2508, Title II; 84 Stat 1118; 31 USC SS5311-5325.
[167] Royal Commission on the Activities of the Federated Ship Painters and Dockers Union (the Costigan Royal Commission), Final Report (1984).
[168] Costigan Royal Commission, Final Report (1984) vol 1 at par 7.018. See also Royal Commission of Inquiry into Drug Trafficking (Stewart Royal Commission), Report (1983).
[169] Costigan Royal Commission, Final Report (1984) vol 1 at par 8.036; vol 4 at par 9.026.
[170] Hewett and Kalyk, Understanding the Cash Transaction Reports Act, (1990) at 10-11.
[171] Australia Card Bill 1986 (Cth).
[172] House of Representatives, Parliamentary Debates (Hansard), 4 June 1987 at 3956.
[173] Senate Standing Committee on Legal and Constitutional Affairs, Report on the Cash Transaction Reports Bill 1987, (1988). See also Australian Law Reform Commission, Privacy, ALRC Report No 22 (1983) at 1195.
[174] Senate Standing Committee on Legal and Constitutional Affairs, Report on the Cash Transaction Reports Bill 1987, (1988) at xi.
[175] Hewett and Kalyk, Understanding the Cash Transaction Reports Act, (1990) at 15.
[176] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash - A Report on the Effectiveness of the Financial Transaction Reports Act 1988, (1993).
[177] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash - A Report on the Effectiveness of the Financial Transaction Reports Act 1988, (1993) at par 10.34 (submission of the Victorian Council for Civil Liberties).
[178] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash - A Report on the Effectiveness of the Financial Transaction Reports Act 1988, (1993) at par 10.36.
[179] Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash - A Report on the Effectiveness of the Financial Transaction Reports Act 1988, (1993) at par 10.38.
[181] [1994] USCA9 667; (1994) 126 L Ed (2d) 615 at 619.
[183] Second Reading Speech on the Cash Transaction Reports Bill 1987, Senate, Parliamentary Debates (Hansard), 25 November 1987 at 2413.
[184] Bostock, "Observations on the Cash Transactions Legislation" (1989) 18 Australian Tax Review 147 at 154. Other critical observations appear in Senate Standing Committee on Legal and Constitutional Affairs, Checking the Cash - A Report on the Effectiveness of the Financial Transaction Reports Act 1988, (1993).
[185] Hewett and Kalyk, Understanding the Cash Transaction Reports Act, (1990) at 49. The authors say that by early 1989 there had been a successful prosecution of an offence against s 24 as a result of an account being opened in a false name: "Significantly, an amount of approximately $1.7 million of unpaid taxes was recovered as a by-product of the prosecution."
[186] (1995) 64 SASR 280.
[187] (1995) 64 SASR 280 at 292-293 per Doyle CJ with Prior and Nyland JJ concurring.
[188] Worthing v Rowell and Muston Pty Ltd [1970] HCA 19; (1970) 123 CLR 89 at 130.
[189] Actors and Announcers Equity Association v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR 169 at 192; Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 295.
[190] Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 369.
[191] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 26.
[192] British Medical Association v The Commonwealth [1949] HCA 44; (1949) 79 CLR 201 at 274-275; Burton v Honan [1952] HCA 30; (1952) 86 CLR 169 at 177; Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 319; cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 86, 93.
[193] Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 319-320, 351, 376; cf Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 27-28, 86, 93.
[194] Fairfax v Federal Commissioner of Taxation [1965] HCA 64; (1965) 114 CLR 1 at 7; cf Rogers v The Queen (1995) 64 SASR 280 at 291.
[195] Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 315, 319.
[196] Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 338, 354.
[197] Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 347.
[198] Australian Communist Party v The Commonwealth [1951] HCA 5; (1951) 83 CLR 1 at 190.
[199] Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518. But Ministerial statements may be taken into account as was done in Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 358 per Dawson J.
[200] The Commonwealth v Tasmania (The Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1 at 260; Richardson v Forestry Commission [1988] HCA 10; (1988) 164 CLR 261 at 311-312. cf Marcus Clark & Co Ltd v The Commonwealth [1952] HCA 50; (1952) 87 CLR 177 at 226; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 28-29; but compare at 88.
[201] Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 322, 351.
[202] Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; (1994) 179 CLR 270 at 286. In Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 296, Mason CJ explained that what was meant was that the law in question was reasonably considered to be appropriate and adapted to the achievement of the purpose or object, as defined. A "faithful pursuit" of the purpose or object is a valid application of the express and implied incidental powers.
[203] [1965] HCA 64; (1965) 114 CLR 1 at 7.
[204] State of NSW v Macquarie Bank Ltd (1992) 30 NSWLR 307 at 321; Reg v Home Secretary; Ex parte Brind [1991] UKHL 4; [1991] 1 AC 696 at 767; Lewis, "The European Convention, Proportionality and the Broadcasting Ban" [1991] Cambridge Law Journal at 211; cf Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 356-357.
[205] Re Director of Public Prosecutions; Ex parte Lawler [1994] HCA 10; (1994) 179 CLR 270 at 296. See also Herald & Weekly Times Ltd v The Commonwealth [1966] HCA 78; (1966) 115 CLR 418 at 437 per Kitto J with the concurrence of Taylor, Menzies, Windeyer and Owen JJ; Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 318 per Brennan J.
[206] Milicevic v Campbell [1975] HCA 20; (1975) 132 CLR 307 at 314, 316, 318-319.
[207] Williamson v Ah On [1926] HCA 46; (1926) 39 CLR 95.
[208] cf Cunliffe v The Commonwealth [1994] HCA 44; (1994) 182 CLR 272 at 338-339 per Deane J.
[209] Rogers v The Queen (1995) 64 SASR 280 at 292 per Doyle CJ.
[210] Ratzlaf v United States [1994] USCA9 667; (1994) 126 L Ed (2d) 615.
[211] See Fisse and Fraser, "Smurfing: Rethinking the Structured Transaction Provisions of the Cash Transaction Reports Act" in Fisse, Fraser and Coss, The Money Trail. Confiscation of Proceeds of Crime, Money Laundering and Cash Transaction Reporting (1992) at 173.
[212] Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 30.
[213] cf Watson v Lee [1979] HCA 53; (1979) 144 CLR 374 at 382, 399-400, 410. Quick and Garran The Annotated Constitution of the Australian Commonwealth (1976) at 572-576.
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