Australian Tape Manufacturers Association Ltd v Commonwealth ("Blank Tapes Levy case") [1993] HCA 10; (1993) 176 CLR 480 (11 March 1993)

HIGH COURT OF AUSTRALIA

AUSTRALIAN TAPE MANUFACTURERS ASSOCIATION LTD AND OTHERS v. THE COMMONWEALTH OF AUSTRALIA [1993] HCA 10; (1993) 176 CLR 480
FC 93/004

Constitutional Law (Cth)

HIGH COURT OF AUSTRALIA
MASON CJ(1), BRENNAN(1), DEANE(1), DAWSON(2), TOOHEY(2), GAUDRON(1) AND McHUGH(3) JJ

CATCHWORDS

Constitutional Law (Cth) - Powers of Commonwealth Parliament - Copyrights - Taxation - Levy imposed on sales of blank tapes - Payable by vendors to collecting society - Copyright owners members of society - Whether royalty provisions law with respect to copyrights - Whether tax - Private copying of published sound recording declared not to be infringement of copyright - Whether acquisition of property - The Constitution (63 & 64 Vict. c. 12), ss. 51(ii), (xviii), (xxxi), 55 - Copyright Act 1968 (Cth), Pt Vc (Copyright Amendment Act 1989 (Cth)).

HEARING

1991, February 26; 1992, March 10, 11; 1993, March 11. 11:3:1993

DECISION

MASON C.J., BRENNAN, DEANE AND GAUDRON JJ. We are in agreement with so much of the reasons for judgment prepared by Dawson and Toohey JJ. as supports the conclusions: (1) that Divs 3 and 4 of Pt VC and s.153E of the Copyright Act 1968 (Cth) ("the Act") are, for the purposes of s.51(xviii) of the Constitution, laws with respect to copyright; and (2) that s.135ZZM(1) is not a law with respect to the acquisition of property. However, in our view, the "royalty" levied on the vendors of blank tapes by s.135ZZP(1) is a tax and this conclusion entails the consequence that, by reason of non-compliance with s.55 of the Constitution, Pt VC of the Act is invalid. If we had not reached the conclusion that the "royalty" was a tax, we would have been of the view that the imposition of the obligation to pay it involved an unconstitutional acquisition of property on other than just terms. The legislative scheme

2. Part VC is a legislative scheme designed to deal with the problem presented by the widespread practice here and overseas of private and domestic taping of sound recordings. In the past, this practice has constituted an infringement of the copyright in the sound recordings. For all practical purposes, however, the owners of those copyrights were left without any effective remedy since they were unable to prove infringement and recover damages from the multitude of infringers who engaged in private taping of sound recordings. The principal elements of the legislative scheme are as follows:
(1) A "royalty" is payable for each blank tape first sold, let for
hire or otherwise distributed in Australia ((1) s.135ZZN(1)), the
royalty being payable by the vendor who first sells, lets for hire
or otherwise distributes the tape in Australia ((2) s.135ZZP(1)).
(2) The amount of the royalty is determined by the application of a
formula prescribed by s.135ZZN(2). One component in the formula
is "the amount per minute determined by the Copyright Tribunal
under section 153E". That section makes provision for the
determination of the amount referred to in the formula by
application to the Copyright Tribunal by any person who has a
relevant interest in the determination, including the collecting
society, a vendor or a relevant copyright owner. The Tribunal
is to take into account all relevant matters including the extent
to which blank tapes are used for the purpose of making copies
of eligible sound recordings and eligible works for private and
domestic use.
(3) A vendor is bound to pay to the collecting society within 21 days
of the end of each quarter an amount equal to the sum of the
amounts of royalty payable on the tapes first sold, let for hire
or otherwise distributed by the vendor in that quarter ((3)
s.135ZZP(2)).
(4) The collecting society is a company limited by guarantee declared
by the Attorney-General to be the collecting society. All the
relevant copyright owners, or their agents, must be entitled to
become members. The rules of the collecting society must be such
as to prohibit the payment of dividends and to ensure that the
interests of the members who are relevant copyright owners, or
their agents, are protected adequately, including provisions
about the collection of royalties from vendors, the payment of
the administrative costs of the society out of amounts collected,
the distribution of amounts collected, the holding on trust of
amounts for relevant copyright owners who are not members and
access to society records by members ((4) s.135ZZU).
(5) Copyright in a published sound recording, or in any work included
in a published sound recording, is not infringed by making on
private premises a copy of the sound recording if the copy is on
a blank tape for the private and domestic use of the person who
makes it ((5) s.135ZZM(1)).
3. The effect of the scheme is that private and domestic recording, as just described, is not an infringement of copyright. Nonetheless, the amount levied on the vendors of blank tapes is described as a royalty and is paid to the collecting society, the net proceeds being distributed to the relevant copyright owners by the society. The amount of the royalty is calculated, at least in part, by reference to the extent to which blank tapes are used for the purpose of making copies of eligible sound recordings and eligible works for private and domestic use. But the ultimate payment received by the relevant copyright owners from the collecting society is not related to any right, permission or consent granted by those owners in relation to the reproduction or purpose of their copyright work. At the risk of stating the obvious, we should say that the amounts levied on the vendors of blank tapes are not paid, and are not directed to be paid, into the Consolidated Revenue Fund. This fact is material to the validity of Pt VC. The levy is not a royalty

4. In the first instance, it is convenient to dispose of the suggestion that the levy imposed upon the vendors of blank tapes is a royalty or something analogous to a royalty. In the context of mineral royalties, patent and copyright royalties and royalties in respect of rights to cut and remove timber, it is of the essence of a royalty that the payments should be made in respect of the exercise of a right granted and should be calculated in respect of the quantity or value of things taken, produced or copied or the occasions upon which the right is exercised ((6) Stanton v. Federal Commissioner of Taxation [1955] HCA 56; (1955) 92 CLR 630, at p 642; Federal Commissioner of Taxation v. Sherritt Gordon Mines Ltd. [1977] HCA 48; (1977) 137 CLR 612, at p 626.).

5. It is clear that the levy imposed in respect of the sale of blank tapes does not fit this conception. The vendor receives no right, benefit or advantage in consideration of the levy or payment of the levy. The payment is not made in consideration of the grant of a licence to sell blank tapes; nor is it made in respect of the particular exercise of any right, benefit or advantage obtained by the vendor.

6. It is not the case that, in consideration of payment of the levy, the vendor is permitted to do something which would otherwise amount to an infringement of copyright. The sale of a blank tape does not constitute an authorization by the vendor to infringe copyright. That is principally because the vendor has no control over the ultimate use of the blank tape ((7) University of New South Wales v. Moorhouse [1975] HCA 26; (1975) 133 CLR 1, at pp 12-13, 20-21; RCA Corporation v. John Fairfax and Sons Ltd. (1981) 1 NSWLR 251, at pp 257-259; WEA International Inc. v. Hanimex Corporation Ltd. (1987) 77 ALR 456; CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. [1988] UKHL 15; (1988) AC 1013, per Lord Templeman at pp 1052-1055.). In CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. ((8) [1988] UKHL 15; (1988) AC 1013.) the House of Lords held that, although the vendors of hi-fi systems with facilities for recording at high speed from pre-recorded cassettes on to blank tapes might facilitate the copying by purchasers of material in breach of copyright, they did not authorize it within the meaning of s.1(1) of the Copyright Act 1956 (U.K.). Likewise, in Sony Corporation of America v. Universal City Studios Inc. ((9) [1984] USSC 14; (1984) 464 US 417.), the Supreme Court of the United States rejected the contention that the sale of home videotape recorders constituted contributory infringement of the copyrights in television programmes reproduced by means of use of such recorders. In arriving at this conclusion, Stevens J. (writing for the majority) stated that there could be no infringement if the product sold was "capable of substantial noninfringing uses" ((10) ibid., at p 442). Earlier, his Honour had pointed out that, in cases in which vicarious liability had been imposed, the contributory infringer ((11) ibid., at p 437):

"was in a position to control the use of copyrighted works
by others and had authorized the use without permission from
the copyright owner".

7. It follows that manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article ((12) A and M Records Inc. v. Audio Magnetics Incorporated (U.K.) Ltd. (1978) 5 FSR 1, at pp 7, 9-10; RCA Corporation (1981) 1 NSWLR, at pp 259-260; CBS. Songs Ltd. (1988) AC, at p 1055.). It was the absence of such control in C.B.S. Songs Ltd. that constituted the critical distinction between the decision in that case and the decision in University of New South Wales v. Moorhouse ((13) [1975] HCA 26; (1975) 133 CLR 1.), where the University had power to control what was done by way of copying and not only failed to take steps to prevent infringement but provided potential infringers with both the copyright material and the use of the University's machines by which copies of it could be made ((14) ibid., at p 21). Accordingly, in Moorhouse, authorization was made out.

8. A second reason for rejecting the notion that the levy imposed on the sale of blank tapes is a royalty is that, although the net proceeds of the levy are distributed through the medium of the collecting society to copyright owners, that payment is not in consideration of, or associated with, the grant of a right to copy copyright work or the exercise by anyone of such a right. That is because the Act provides that home copying of sound recordings for private and domestic purposes is not an infringement of copyright.

9. The Commonwealth contends that the purpose of Pt VC and s.153E is to recompense copyright owners in respect of home copying of sound recordings on terms that are consistent with the public interest. So much may be accepted without acknowledging that the existence of this statutory purpose stamps the imposition of the levy with a character inconsistent with that of a tax. As we have just pointed out, the statutory purpose of recompensing relevant copyright owners does not entail the provision of compensation to them for any right granted by them. Rather, the statutory purpose is to provide compensation by means of the levy because the Act deprives the relevant copyright owners of what was formerly an exclusive right which was an element in their copyright, albeit one which was, in practical terms, incapable of enforcement. Section 135ZZM(1): no "acquisition of property"

10. However, as Dawson and Toohey JJ. have demonstrated in their reasons for judgment, s.135ZZM(1) is not a law with respect to the acquisition of property. The sub-section, which provides that the making on private premises of a copy of a sound recording on a blank tape for the private and domestic use of the person who makes it is not an infringement of copyright, does not acquire from the copyright owners the whole or part of the exclusive right conferred by s.31(1)(a) of the Act to reproduce the copyright work in material form. Instead, s.135ZZM(1) provides that something which was formerly an infringement of copyright is not an infringement. To that extent, the Act reduces the content of the exclusive right conferred by s.31(1)(a). It does not, however, effect an "acquisition" of property for the purposes of s.51(xxxi) of the Constitution. As Mason J. observed in The Commonwealth v. Tasmania (The Tasmanian Dam Case) ((15) [1983] HCA 21; [1983] HCA 21; (1983) 158 CLR 1, at p 145; see also per Brennan J. at pp 247-248; per Deane J. at pp 282-283):

"To bring the constitutional provision into play it is not
enough that legislation adversely affects or terminates a
pre-existing right that an owner enjoys in relation to
his property; there must be an acquisition whereby the
Commonwealth or another acquires an interest in property,
however slight or insubstantial it may be."

It follows that the imposition of the levy and the distribution of the net proceeds through the medium of the collecting society to the relevant copyright owners does not amount to the provision of compensation for the acquisition of an interest in property which falls within s.51(xxxi). Of course, even if the distribution of the net proceeds of the levy to the relevant copyright owners could be characterized correctly as the provision of compensation for the acquisition of an interest in property, that characterization would not determine whether the levy is a tax on the vendors of blank tapes or not. There would be no antinomy in holding that the levy is a tax and that the distribution of the net proceeds to the copyright owners is compensation for the acquisition of property. After all, the imposition of a specific tax is one means of raising compensation for the acquisition of property or for some other loss which, in the judgment of the legislature, merits compensation. It is with compensation of the latter kind that we are concerned here. Section 135ZZP(1) imposes taxation

11. That brings us to the questions whether the levy is a tax and whether Pt VC or any part of it and s.153E constitute a law imposing taxation for the purposes of s.55 of the Constitution. The argument that the levy is not a tax rests on the broad propositions that it is not exacted by a public authority, nor is it exacted for public purposes. The two propositions are based on the influential statement by Latham C.J. in Matthews v. Chicory Marketing Board (Vict.) ((16) [1938] HCA 38; (1938) 60 CLR 263, at p 276) that a tax "is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered". Although the elements in this statement have been recognized as the positive and negative attributes of a tax ((17) Browns Transport Pty. Ltd. v. Kropp (1958) 100 CLR 117, at p 129), this Court has held that the statement is not an exhaustive definition of what is a tax and has attached important qualifications to the statement ((18) Air Caledonie International v. The Commonwealth [1988] HCA 61; (1988) 165 CLR 462, at p 467).

12. One such qualification relates to the propositions on which the Commonwealth relies to support its contention that the levy is not a tax. In Air Caledonie International v. The Commonwealth, the Court said ((19) ibid):

"(T)here is no reason in principle ... why the compulsory
exaction of money under statutory powers could not be
properly seen as taxation notwithstanding that it was by
a non-public authority or for purposes which could not
properly be described as public".

That approach was implicit in the reasons given by Dixon J. in Vacuum Oil Co. Pty. Ltd. v. Queensland ((20) [1934] HCA 5; (1934) 51 CLR 108) for rejecting the contention that the obligation imposed upon sellers of petrol to purchase and pay for a specified quantity of power alcohol at a specified price was a tax. His Honour said with reference to the compulsory payment ((21) ibid., at p 125):

"It is not a liability to the State, or to any public
authority, or to any definite body or person authorized by
law to demand or receive it." (emphasis added)

13. It would seem to be a remarkable consequence if a pecuniary levy imposed for public purposes by a non-public authority acting pursuant to a statutory authority falls outside the concept of a tax simply because the authority which imposes the levy is not a public authority, when the amount of the levy is to be expended on public purposes, more particularly, if those purposes are Commonwealth purposes. It is scarcely to be contemplated that the character of the impost as a tax depends upon whether the authority is a public authority, unless it be a case in which the character of the authority will be relevant and influential in deciding whether the purposes on which the moneys raised are to be expended are themselves public. Of course, it is a misnomer to describe an authority as non-public when one of its functions is to levy, demand or receive exactions to be expended on public purposes. To that extent, at least, the authority should be regarded as a public authority. But the better view is that it is not essential to the concept of a tax that the exaction should be by a public authority.

14. The next question is whether it is necessary that the exaction should be for public purposes if the exaction is to be characterized as a tax. In the United States, it has been held that a tax is an exaction for the support of government. In United States v. Butler, Roberts J., writing for the majority, said ((22) [1936] USSC 11; (1936) 297 US 1, at p 61):

"A tax, in the general understanding of the term, and as
used in the Constitution, signifies an exaction for the
support of the Government. The word has never been thought
to connote the expropriation of money from one group for the
benefit of another. We may concede that the latter sort of
imposition is constitutional when imposed to effectuate
regulation of a matter in which both groups are interested
and in respect of which there is a power of legislative
regulation. But manifestly no justification for it can be
found unless as an integral part of such regulation."

Applying this principle, the majority held that the "processing and floor-stock taxes" sought to be imposed upon processors of farm products by the Agricultural Adjustment Act 1933 (U.S.) to be expended by making payments to farmers who reduced acreage and crops were not taxes.

15. The Supreme Court has taken the same view of a revenue Bill within the meaning of the origination clause in the United States Constitution ((23) Art.1, s.7, cl.1, which provides: "All Bills for raising Revenue shall originate in the House of Representatives".), notwithstanding that the language of that clause differs from that of the taxing and spending clause ((24) Art.1, s.8, cl.1, which confers power "(t)o lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States".). "(R)evenue bills are those that levy taxes in the strict sense of the word, and are not bills for other purposes which may incidentally create revenue" ((25) Twin City Bank v. Nebeker [1897] USSC 136; (1897) 167 US 196, at p 202, citing Story, Commentaries on the Constitution of the United States, 5th ed. (1891), vol.1, pp 642-643, Section 880.). Applying this principle, the Supreme Court has held that levies described as taxes which were imposed as part of specific development programmes, not for the general use of government, were not "taxes in the strict sense of the word" ((26) Twin City Bank v. Nebeker (a charge imposed on banking associations in proportion to the circulation of their notes in order to encourage a national currency); Millard v. Roberts [1906] USSC 113; (1906) 202 US 429 (a levy imposed on property owners in the District of Columbia in order to pay for railway projects in the District).). Very recently, in United States v. Munoz-Flores ((27) [1990] USSC 75; (1990) 109 LEd. 2d 384), the Supreme Court rejected a challenge to the validity of a statute creating a "Crime Victims Fund" to which was paid moneys from assessments made in the sentencing of offenders. The Court did not accept the argument that there is a requirement that a Bill must benefit the payer to avoid classification as a revenue Bill. The Court said ((28) ibid., at p 399):

"(A) statute that creates a particular governmental program
and that raises revenue to support that program, as opposed
to a statute that raises revenue to support Government
generally, is not a 'Bil(l) for raising Revenue' within the
meaning of the Origination Clause".

16. Likewise, in Massey-Ferguson Industries Ltd. v. Government of Saskatchewan ((29) (1981) 127 DLR (3d) 513), the Supreme Court of Canada held that levies imposed to create and maintain a compensation fund to support a limited form of insurance for farmers who purchased agricultural implements were not taxes. Laskin C.J., writing for the Court, said ((30) ibid., at p 528):

"The levies, as monetary exactions, are liquidating premiums
to satisfy farmers' claims ... and the policy of the Act is
to relate the assessments to the compensation awards and to
administrative expenses ... There is here no collection of
money to go into a consolidated revenue fund which is then
chargeable with satisfying awards of compensation. Although
the scheme is a public one, created under a public statute,
its beneficiaries and obligors are circumscribed by the
particular activity or enterprise in which they are
engaged."

In this passage, Laskin C.J. identifies two factors as indicative of absence of public purpose. One is the imposition of a levy to provide compensation for a circumscribed category of farmers. The other is that the levy was not paid into a consolidated revenue fund.

17. In Australia, the fact that a levy is directed to be paid into the Consolidated Revenue Fund has been regarded as a conclusive indication that the levy is exacted for public purposes ((31) R. v. Barger; The Commonwealth v. McKay [1908] HCA 43; (1908) 6 CLR 41, per Isaacs J. at p 82: "(T)he imposition of a tax on any person or thing for the benefit of the Consolidated Revenue is taxation, and taxation within the meaning of the Constitution"; Moore v. The Commonwealth [1951] HCA 10; (1951) 82 CLR 547, per Latham C.J. at p 561: "The moneys collected are paid into consolidated revenue ... The moneys can then be spent for any purpose for which the Commonwealth may lawfully appropriate money"; see also per McTiernan J. at p 572. See also Dennis Hotels Pty. Ltd. v. Victoria ; [1960] HCA 10; (1960) 104 CLR 529, per Dixon C.J. at p 548.). But neither principle nor Australian authority provides any support for the converse proposition that an exaction is not a tax if it is not to be paid into the Consolidated Revenue Fund. The requirement imposed by s.81 of the Constitution that all revenue or moneys raised or received by the Executive Government form one Consolidated Revenue Fund is not, and cannot constitute, a criterion for what is a tax. The purpose of s.81, like that of its Imperial ancestor 27 Geo. III c.13 (1787), was to ensure that the revenues of the Crown, including taxes, were brought together in one Consolidated Revenue Fund ((32) Northern Suburbs General Cemetery Reserve Trust v. The Commonwealth, unreported, 11 March 1993, at p 14.) under the control of Parliament. To hold that revenues or moneys that are not treated in accordance with the requirements of s.81 cannot be taxes to which s.81 applies is circuitous reasoning and deprives s.81 of any effective content.

18. In the present case, it was not contended that, if an exaction does not form part of the Consolidated Revenue Fund, it cannot be said that it was raised for public purposes and therefore is not a tax. But it is necessary to deal with the argument. The essence of the argument is that the expression "public purposes" is to be equated to "governmental purposes" ((33) "The primary meaning of 'taxation' is raising money for the purposes of government by means of contributions from individual persons" (emphasis added): Barger (1908) 6 CLR, per Griffith C.J., Barton and O'Connor JJ. at p 68.). It is sought by the use of the adjective "governmental" to convey the notion that the critical purposes are such that they can be effectuated only with the expenditure of moneys standing to the credit of the Consolidated Revenue Fund. If that proposition be correct, then an exaction not raised or received by the Executive Government, for example, an exaction raised and received by an independent statutory authority pursuant to a power conferred by statute, could not constitute a tax. As Parliament has power to authorize a statutory authority to levy and receive a tax, that general proposition must be rejected.

19. Furthermore, it is inconsistent with the passage earlier quoted from the judgment in Air Caledonie to the effect that an exaction for non-public purposes may be a tax ((34) (1988) 165 CLR, at p 467). Although that passage is to be found in the context of a general discussion of what are the attributes of a tax, the discussion and the passage related directly to the meaning of the expression law or laws "imposing taxation" as used in ss.53-55 of the Constitution. The judgment is therefore at odds with the notion that a law which levies an exaction on one group in the community to be expended for the benefit or advantage of another group in the community is not a law imposing taxation.

20. The only possible reason, apart from those already rejected, for holding that the provision in question in this case is not a law imposing taxation is that an expropriation from one group for the benefit of another as an incident of legislative regulation of interests on a subject-matter within power, with a view to bringing about what is conceived to be an equitable outcome, is not an exaction for public purposes and is therefore not a tax. In one sense it may be said that the purpose is private in that it concerns the interests of the two groups only. But, in truth, the legislative solution to the problem proceeds on the footing that it is imposed in the public interest. Indeed, the purpose of directing the payment of the levy to the collecting society for ultimate distribution of the net proceeds to the relevant copyright owners as a solution to a complex problem of public importance is of necessity a public purpose.

21. In terms of public purpose, the present case may be compared with Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. ((35) [1937] HCA 3; (1937) 56 CLR 390) where the Flour Acquisition Act 1931 (N.S.W.) purported to expropriate flour and vest it in the Crown on terms that the owners were entitled to compensation at a fair and reasonable price, a price fixed by a committee under the Act, and were entitled to buy the flour back at the standard price, a higher price fixed by the Governor-in-Council. The difference, after deduction of expenses, was to be paid into a special fund for the relief of necessitous farmers. The Flour Acquisition Act was held to impose a duty of excise and to contravene s.90 of the Constitution. Starke J. observed ((36) ibid., at p 408.):

"Here the effect and operation of the Act is to levy upon
or extort from the owners of flour a sum of money or its
equivalent in value, not in exchange for any service
rendered to them but for a government purpose, namely, the
relief of necessitous farmers. Such a charge is properly
described as a tax or duty".

The case differs from the present case in that the difference between the standard price payable by the owner and the compensation to the owner was to be paid to the State and not to a body whose function it was to distribute the net proceeds to necessitous farmers. However, the difference does not amount to a relevant distinction. The question in that case, as in this case, was whether the purpose on which the moneys raised were to be expended was to be characterized as a public purpose. Just as, in that case, the relief of necessitous farmers was a public purpose so, in this case, the compensation of relevant copyright owners arising out of what has been a complex problem of public importance is a public purpose.

22. By the end of the seventeenth century, the Crown had lost whatever power it had had to impose taxes without parliamentary sanction ((37) Holdsworth, A History of English Law, vol.6, pp 47-49.) and, although revenue raised by taxes imposed by the Parliament was in theory vested in the Crown ((38) Halsbury's Laws of England, 4th ed., vol.8, par.1364.), its expenditure came under the control of Parliament ((39) Maitland, The Constitutional History of England, (1908), pp 309-310.). That control was facilitated by the establishment of a Consolidated Fund into which all revenue raised by taxation was to be paid and out of which no payments could lawfully be made without parliamentary sanction ((40) See Northern Suburbs General Cemetery Reserve Trust, at pp 14-15.). Subject to some exceptions, the British constitutional arrangement of fiscal power was implemented by ss.53-56 and ss.81-83 of the Constitution. In particular, the Consolidated Revenue Fund prescribed by s.81 of the Constitution is the fund "into which flows every stream of the public revenue, and whence issues the supply for every public service" ((41) Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901), p 812.).

23. It is essential to the validity of a law or proposed law "imposing taxation" for the purposes of ss.53-55 of the Constitution that the moneys raised by such a law shall form part of the Consolidated Revenue Fund whence they shall be appropriated by law "for the purposes of the Commonwealth". The principle adopted by the Constitution is that revenues or moneys raised shall form part of that Fund from which they can be appropriated only for Commonwealth purposes and only by law. That principle finds expression in s.81. It is supplemented by s.83 which forbids the drawing of money from the Treasury except under appropriation by law.

24. In that scheme of things, the Constitution plainly contemplates that revenues or moneys raised by a law which levies a tax shall form part of the Consolidated Revenue Fund, even if it be intended to distribute the moneys among a particular group in the community rather than in meeting the ordinary expenses of the Executive Government. Moneys raised by means of a tax levied by a law of the Parliament would not cease to be "revenues or moneys raised by the Executive Government" because it is desired, and because the purported law directed, that they be paid directly to an agency for a particular group in the community which Parliament wished to benefit. Equally, such a law would not cease to be a law "imposing taxation". In order to comply with the relevant provisions in Ch.IV of the Constitution, however, it is necessary that the moneys raised by the imposition of the tax form part of the Fund from which they must be appropriated by law.

25. The purpose of s.81 would be circumvented readily if a law which imposed a tax on one group for the benefit of another group in the community was not a law "imposing taxation" and, on that account, the moneys raised by the law were not "revenues or moneys raised or received by the Executive Government". The moneys raised would then stand outside s.81. They would also stand outside s.82, which directs that the revenue of the Commonwealth shall, in the first instance, be applied to the payment of the expenditure of the Commonwealth. They would also stand outside s.83.

26. The last paragraph of s.55 provides a further and persuasive indication that a law which imposes a tax to be applied for the benefit of a particular group in the community is nonetheless a law "imposing taxation". That paragraph provides:

"Laws imposing taxation, except laws imposing duties
of customs or of excise, shall deal with one subject of
taxation only; but laws imposing duties of customs shall
deal with duties of customs only, and laws imposing duties
of excise shall deal with duties of excise only."

The paragraph treats laws "imposing duties of customs or of excise" as laws "imposing taxation". It would be ludicrous to deny to a law imposing duties of customs or of excise that description simply because the law provided or sought to provide that the duties were to be paid, not to the Consolidated Revenue Fund, but to an agency for distribution to a particular group in the community.

27. In the result, we are of the opinion that the levy is a tax. It does not fall within any of the well-recognized descriptions of fees or charges which stand outside the concept of a tax. It is not a fee for a licence or privilege or for a service rendered; it is not a charge for the acquisition or use of property; and it is certainly not a fine or penalty. Moreover, it has the characteristics of an excise; it is imposed upon the vendors of blank tapes in respect of the sale of the tapes and it is a charge which the vendor will, in the ordinary course of business, pass on to the purchaser ((42) "(A) tax payable on the occasion of the sale of goods is also an internal revenue duty by way of indirect taxation amounting to an excise duty (The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1926] HCA 47; (1926) 38 CLR 408)": Homebush Flour Mills Ltd. (1937) 56 CLR, per Latham C.J. at p 401; see also Vacuum Oil Co. Pty. Ltd. (1934) 51 CLR, per Dixon J. at p 124.).

28. The consequence of the conclusion that the levy is a tax is that Act No.32 of 1989 which inserts Pt VC and s.153E into the Act was a law imposing taxation and therefore contravened s.55 of the Constitution. The operation of that section in relation to an amending Act which sought to introduce a law imposing taxation into an existing Act not dealing with the imposition of taxation was considered in Air Caledonie. The Court observed that, in such a case, the amending Act seeks to bring about something that the Constitution forbids. The Court went on to say ((43) (1988) 165 CLR, at p 472.):

"In such a case, one cannot disregard the barrier of the
constitutional injunction against a law dealing both with
the imposition of taxation and other matters on the basis
that, once the result which that injunction forbids has
been achieved, the second limb will rectify the breach by
invalidating all the other provisions of the principal Act.
The injunction of the first limb constitutes a restriction
on legislative power. Its effect in the present case is to
invalidate the relevant provisions of the amending Act and
one never reaches the situation where the second limb
operates to strike down all of the provisions of the
principal Act dealing with matters other than the imposition
of taxation."

29. Whether all the provisions in Div.3 of Pt VC and s.153E, together with so much of Div.1 as is relevant to those provisions, are to be considered as laws imposing taxation was a question not dealt with in argument. However, this difficulty may be put to one side because Div.3 of Pt VC and s.153E are, in our view, inseverable from Div.2 which deals with copying with blank tapes and Div.4 dealing with the collecting society. The provisions dealing with copying with blank tapes and the collecting society are integral elements in the legislative scheme introduced by Act No.32 of 1989. It would make no sense at all to retain the taxing provisions and give them an operation in isolation from the other provisions with which the taxing provisions were intended to operate. Indeed, it would give the taxing provisions an operation inconsistent with the expressed intention of the legislature and when that is the effect of an application of s.55, "the whole Act must fail of effect" ((44) Barger (1908) 6 CLR, per Griffith C.J., Barton and O'Connor JJ. at p 78.). Section 135ZZP(1) and Constitution, s.51(xxxi)

30. A law which is in truth a law imposing taxation escapes the requirement of s.51(xxxi) of the Constitution that an "acquisition of property ... for any purpose in respect of which the Parliament has power to make laws" be "on just terms" ((45) See, e.g., Federal Commissioner of Taxation v. Barnes [1975] HCA 61; (1975) 133 CLR 483, at pp 494-495; MacCormick v. Federal Commissioner of Taxation [1984] HCA 20; (1984) 158 CLR 622, at pp 638, 649.). The reason that this is so is that the relationship between the legislative powers conferred by s.51(ii) and s.51(xxxi) of the Constitution necessarily involves antinomy between what constitutes "taxation" (for the purposes of s.51(ii)) and what constitutes an "acquisition of property" (for the purposes of s.51(xxxi)): of its nature, "taxation" presupposes the absence of the kind of direct quid pro quo involved in the "just terms" prescribed by s.51(xxxi) ((46) See Commissioner of Taxation v. Clyne [1958] HCA 10; (1958) 100 CLR 246, at p 263.). It follows that our conclusion that the "royalty" purportedly imposed by s.135ZZP(1) is in truth a tax makes it strictly unnecessary that we consider whether, if it were not a tax, its imposition would be invalid as an unconstitutional "acquisition of property" on other than just terms. It is, however, desirable that we indicate our view that it would.

31. It is now well established that the plenary grant of legislative power contained in s.51(xxxi) enjoys the status of a constitutional guarantee of just terms ((47) See, generally, Minister of State for the Army v. Dalziel [1944] HCA 4; (1944) 68 CLR 261, at pp 276, 284-285.) and "is to be given the liberal construction appropriate to such a constitutional provision" ((48) Clunies-Ross v. The Commonwealth [1984] HCA 65; (1984) 155 CLR 193, per Gibbs C.J., Mason, Wilson, Brennan, Deane and Dawson JJ. at pp 201-202.). In the context of that guarantee, the word "property", which has been said to be "the most comprehensive term that can be used" ((49) The Commonwealth v. New South Wales [1923] HCA 34; (1923) 33 CLR 1, per Knox C.J. and Starke J. at pp 20-21), must be construed as extending "to every species of valuable right and interest including real and personal property, incorporeal hereditaments ... and choses in action" ((50) Dalziel (1944) 68 CLR, per Starke J. at p 290; and see also at pp 276, 284-285, 295.). In the context of s.51(xxxi), the word "property" must also be construed as extending to money and the right to receive a payment of money. If it were otherwise, money or the right to receive money could compulsorily be acquired for any purpose in respect of which the Parliament has power to make laws and without compensation, provided the money or the right to receive it was not revenue raised by taxation, a proviso which might be satisfied whenever the relevant purpose was to confer a private and direct benefit on a person or group. The guarantee which s.51(xxxi) was intended to give in protection of property would then largely be illusory.

32. The answer to the question whether a legislative imposition of an obligation to pay money involves an "acquisition of property" for the purposes of s.51(xxxi) of the Constitution must depend upon the context in which the obligation is imposed. If, for example, a law did no more than provide that a particular named person was under an obligation to pay to the Commonwealth an amount of money equal to the total value of all his or her property, the law would effect an acquisition of property for the purposes of s.51(xxxi), notwithstanding the fact that it imposed merely an obligation to pay money and did not directly expropriate specific notes or coins. In that regard, the comment of a majority of the Court in MacCormick v. Federal Commissioner of Taxation that a tax is "no more than the imposition of a pecuniary liability" ((51) (1984) 158 CLR, at p 638) must be understood in context and does not constitute authority for a general proposition that the imposition of an obligation to pay money can never constitute an "acquisition of property" for the purposes of s.51(xxxi). Section 51(xxxi)'s guarantee of just terms is not to be avoided by "a circuitous device to acquire indirectly the substance of a proprietary interest" ((52) Bank of New South Wales v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, per Dixon J. at p 349.). In a case where an obligation to make a payment is imposed as genuine taxation, as a penalty for proscribed conduct, as compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity, it is unlikely that there will be any question of an "acquisition of property" within s.51(xxxi) of the Constitution ((53) See, generally, Attorney-General (Cth) v. Schmidt [1961] HCA 21; (1961) 105 CLR 361, at pp 372-373.). On the other hand, the mere fact that what is imposed is an obligation to make a payment or to hand over property will not suffice to avoid s.51(xxxi)'s guarantee of "just terms" if the direct expropriation of the money or other property itself would have been within the terms of the sub-section. Were it otherwise, the guarantee of the section would be reduced to a hollow facade.

33. Nor does the fact that the obligation imposed by s.135ZZP(1) is to pay the levy to an entity, other than the Commonwealth, nominated by the Attorney-General preclude the imposition of the obligation to pay the levy from being an "acquisition of property" for the purposes of s.51(xxxi) ((54) See, generally, McClintock v. The Commonwealth [1947] HCA 39; (1947) 75 CLR 1, at pp 23, 36; Trade Practices Commission v. Tooth and Co. Ltd. [1979] HCA 47; (1979) 142 CLR 397, at pp 424-425, 427, 451-452; Clunies-Ross (1984) 155 CLR, at p 202.). As Latham C.J. said in PJ. Magennis Pty. Ltd. v. The Commonwealth ((55) [1949] HCA 66; (1949) 80 CLR 382, at pp 401-402):

"The constitutional provision is not limited in terms
to laws providing for the acquisition of property by the
Commonwealth itself. The words are general - 'with respect
to the acquisition of property.' It is obvious that the
constitutional provision could readily be evaded if it did
not apply to acquisition by a corporation constituted by the
Commonwealth or by an individual person authorized by a
Commonwealth statute to acquire property. Further, the
present case shows that the constitutional provision would
be quite ineffective if by making an agreement with a State
for the acquisition of property upon terms which were not
just the Commonwealth Parliament could validly provide
for the acquisition of property from any person to whom
State legislation could be applied upon terms which paid
no attention to justice. The question whether the
constitutional requirement applies to acquisitions in
pursuance of Commonwealth law other than acquisition by the
Commonwealth itself was mentioned in the case of Real Estate
Institute of New South Wales v. Blair ((56) [1946] HCA 43; (1946) 73 CLR 213,
at p 224). In McClintock v. The Commonwealth ((57) (1947) 75
CLR, at pp 23, 36.), Starke J. and Williams J. held
that it applied in the case of acquisition of property
authorized under Commonwealth law though the Commonwealth
itself did not acquire the property. Williams J. applied
the principle in Jenkins v. The Commonwealth ((58) [1947] HCA 41; (1947) 74 CLR
400). See also Bank of New South Wales v. The Commonwealth
((59) (1948) 76 CLR, at p 250), per Rich and Williams JJ.
I agree that, as legislation with respect to the subject of the
acquisition of property can be enacted by the Commonwealth
Parliament only by virtue of the power conferred by s.51(xxxi.),
all such Commonwealth legislation must affirmatively provide just
terms for such acquisition whether the acquisition be by the
Commonwealth or by a State or by any other person."

34. Payment of the "royalty" imposed by s.135ZZP(1) would, if the sub-section were valid, involve a compulsory transfer of property (i.e., money) by the payer to the recipient for a purpose in respect of which the Commonwealth Parliament has power to make laws, namely, as compensation for disadvantage sustained under a law with respect to copyright. As has been seen, that compulsory transfer of property by the person obliged to make it is neither a quid pro quo for any benefit or advantage received by that person nor accompanied by any countervailing compensation to that person. If it were not a tax, that compulsory transfer of property would constitute an "acquisition of property" by the transferee from the transferor. Notwithstanding a submission of the Commonwealth to the contrary, the Act would not, if that were so, provide "just terms" in the sense in which that phrase is used in s.51(xxxi). That being so, the law imposing the obligation to make it and conferring the entitlement to receive it would be unconstitutional by reason of the absence of the "just terms" which the Constitution guarantees.

35. In the result, we would answer the questions reserved as follows:

1. Are Divs 3 and 4 of Pt VC and s.153E of the Copyright Act 1968
(Cth) ("the Act") invalid because:
(a) they do not constitute a law with respect to copyrights
within the meaning of s.51(xviii) of the Constitution of the
Commonwealth of Australia;
(b) (i) they constitute a law with respect to taxation within
the meaning of s.51(ii) of the Constitution and a law
imposing taxation within the meaning of s.55 of the
Constitution; and
(ii) the Copyright Amendment Act 1989 (Cth) and/or the
Act as amended by that Act deal or deals with the
imposition of taxation as well as with other matters;
(c) they effect an acquisition of property from vendors of blank
tapes:
(i) otherwise than on just terms; or
(ii) other than for any purpose in respect of which the
Parliament has power to make laws
contrary to the provisions of s.51(xxxi) of the
Constitution; or
(d) they effect a fiscal exaction from vendors of blank tapes
and do not constitute a tax within the meaning of s.51(ii)
of the Constitution or an acquisition of property within the
meaning of s.51(xxxi) of the Constitution?
Answers: 1(a) No.
1(b)(i) and (ii) Yes.
1(c) No.
1(d) No.
2. Are Divs 2 and 4 of Pt VC of the Act invalid because they effect
an acquisition of property from copyright owners:
(i) otherwise than on just terms; or
(ii) other than for any purpose in respect of which the
Parliament has power to make laws
contrary to the provisions of s.51(xxxi) of the Constitution?
Answer: No.

36. As the plaintiffs did not initially rely upon the only arguments upon which they have succeeded, the appropriate order as to costs is that the defendant pay one-half of the plaintiffs' costs of the questions reserved.

DAWSON AND TOOHEY JJ. Under s.89 of the Copyright Act 1968 (Cth) ("the Act"), copyright subsists in a sound recording which is made by a qualified person, which is made in Australia or (where the sound recording is a published sound recording) which is first published in Australia. A qualified person is, under s.84, a person who is an Australian citizen, an Australian protected person, a person resident in Australia or an Australian corporation. The nature of copyright in sound recordings is set out in s.85. It is the exclusive right to make a copy of the sound recording, to cause the recording to be heard in public or to broadcast the recording. Notwithstanding the existence of copyright, the private or domestic taping of sound recordings has become widespread and there has hitherto been no practical means by which the owners of the copyright in them could control this practice or obtain compensation for the use of their material. Material ((60) For example, U.K., Report of the Committee to Consider the Law on Copyright and Designs, Copyright and Designs Law, (1977) Cmnd 6732 (the "Whitford Report"); Canada, House of Commons, Second Report of the Sub-committee on the Revision of Copyright, A Charter of Rights for Creators, (October 1985); Dillenz, "The Remuneration for Home Taping and the Principle of National Treatment", (1990) Copyright 186; U.S. Congress, Office of Technology Assessment, Copyright and Home Copying: Technology Challenges the Law, (October 1989).) placed before the Court without objection ((61) See Wilcox Mofflin Ltd. v. State of N.S.W. [1952] HCA 17; (1952) 85 CLR 488, at p 507; Australian Communist Party v. The Commonwealth [1951] HCA 5; (1951) 83 CLR 1, at p 196.) indicates that the practice is world-wide and, although there is no evidence before us of its exact extent in Australia, it is clearly the mischief at which the legislation is aimed. In the United Kingdom the practice was described in vivid terms by Lord Templeman in CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. ((62) [1988] UKHL 15; (1988) AC 1013, at p 1060):

"From the point of view of society the present position
is lamentable. Millions of breaches of the law must be
committed by home copiers every year. Some home copiers may
break the law in ignorance, despite extensive publicity and
warning notices on records, tapes and films. Some home
copiers may break the law because they estimate that the
chances of detection are non-existent. Some home copiers
may consider that the entertainment and recording industry
already exhibit all the characteristics of undesirable
monopoly - lavish expenses, extravagant earnings and
exorbitant profits - and that the blank tape is the only
restraint on further increases in the prices of records.
Whatever the reason for home copying, the beat of Sergeant
Pepper and the soaring sounds of the Miserere from unlawful
copies are more powerful than law-abiding instincts or
twinges of conscience. A law which is treated with such
contempt should be amended or repealed."

2. Part VC of the Act, which was inserted by the Copyright Amendment Act 1989 (Cth), represents a scheme to deal with the problem. It will be necessary to refer to the provisions of that Part in some detail, but for the moment it may be said that the scheme allows the home copying of a sound recording on a blank tape for private and domestic use without infringement of copyright. However a levy, described as a royalty, is imposed upon certain vendors of blank tapes in Australia. This royalty is to be paid to an authorized collecting society of which copyright owners may be members and the collecting society is to distribute the funds raised by way of royalty to its members. Those entitled to become members of the collecting society, and so be eligible in the distribution of its funds, include, as well as the owners of the copyright in the sound recordings, other copyright owners such as composers, lyricists and music publishing companies whose copyright is in the literary, dramatic or musical works from which the sound recordings are made.

3. The plaintiffs attack this legislative scheme in a number of respects. First, they say that it does not fall within the power conferred upon the Commonwealth Parliament by s.51(xviii) of the Constitution to make laws with respect to copyrights. Next they say that it imposes taxation and, since the Copyright Amendment Act and the Act itself deal with matters other than the imposition of taxation, those provisions of the Copyright Amendment Act that are said to impose taxation are of no effect because of s.55 of the Constitution ((63) See Air Caledonie International v. The Commonwealth (1988) 165 CLR 462.). Then they say that it effects an acquisition of property from the vendors of blank tapes or from the owners of copyright otherwise than on just terms or other than for a purpose in respect of which the Parliament has power to make laws, contrary to s.51(xxxi) of the Constitution. Finally, the plaintiffs submit that the levy upon the sale of blank tapes simply falls outside the power of Parliament, being neither a law with respect to copyrights nor a tax within the meaning of s.51(ii) of the Constitution nor an acquisition of property within the meaning of s.51(xxxi) of the Constitution.

4. Part VC is headed "Use of Blank Tapes for Private and Domestic Copying" and comprises ss.135ZZJ to 135ZZZB. Also inserted by the Copyright Amendment Act is s.153E, which deals with the determination of the amount of the blank tape royalty by the Copyright Tribunal. A "blank tape" is defined by s.135ZZJ as a tape, other than an exempt tape, "that is of a kind ordinarily purchased or hired for use for making copies of sound recordings, whether or not any sounds are embodied in the tape". An "exempt tape" is defined by the same section to include a number of kinds of tape that would commonly be used for purposes other than making copies of sound recordings such as "a microcassette of a kind ordinarily used for making sound recordings of dictated material".

5. Division 2 of Pt VC (comprising s.135ZZM) is entitled "Copying with blank tapes". Its principal provision is contained in sub-s.(1) of s.135ZZM which provides:

"Copyright subsisting in a published sound recording, or
in any work included in a published sound recording, is not
infringed by making on private premises a copy of the sound
recording if the copy is made on or after the proclaimed day
on a blank tape for the private and domestic use of the
person who makes it."

The scheme has not yet been implemented. A sound recording is a "published sound recording" where "records embodying the recording or a part of the recording have been supplied (whether by sale or otherwise) to the public": s.29(1)(c).

6. Division 3 of Pt VC (comprising ss.135ZZN to 135ZZT) is entitled "Blank tape royalty". Section 135ZZN(1) (read in conjunction with s.135ZZJ) provides that a royalty is payable for each blank tape first sold (whether by wholesale or retail), let for hire or otherwise distributed by way of trade in Australia on or after the proclaimed day. The royalty is payable by the vendor who first sells, lets for hire or otherwise distributes the tape in Australia (s.135ZZP(1)), a "vendor" being defined as a person who, in the usual course of his or her business, sells, hires or otherwise distributes blank tapes (s.135ZZJ). Under s.135ZZP(2) a vendor is required to pay an amount equal to the sum of the amounts of royalty payable in respect of each quarter of a calender year to a body declared by the Attorney-General under s.135ZZU to be the collecting society for this purpose. The amount so payable is recoverable from the vendor as a debt due to the collecting society: s.135ZZQ(1).

7. The amount of the royalty payable for a blank tape is prescribed by s.135ZZN(2) as:

"A X NM
where:
A is the amount per minute determined by the Copyright Tribunal
under section 153E; and
NM is the number of minutes of normal playing time of the tape".

The amount designated as "A" in this formula is determinable by the Copyright Tribunal upon application by any person who has an interest in the matter, including the collecting society, a vendor or a relevant copyright owner: s.153E(2), (3). Any person or organization who has an interest in the matter may be made a party to the application: s.153E(4), (5). The Tribunal is to make an order determining, or making provision for determining, the amount designated as "A", and in making its order it is to take into account all relevant matters, including the extent to which blank tapes are used for the purposes of making copies of eligible sound recordings and eligible works for private and domestic use: s.153E(6), (7).

8. A "relevant copyright owner" is defined in s.135ZZJ to mean the owner of the copyright in an eligible sound recording or in an eligible work. That section defines an "eligible sound recording" as a sound recording the maker of which was, at the time the recording was made, an Australian citizen, an Australian protected person, a person resident in Australia, an Australian corporation or "a citizen, national or resident of a foreign country, or a body corporate incorporated under a law of a foreign country, being a foreign country that was at that time, or afterwards became, an eligible foreign country". An "eligible work" is defined to mean a literary, dramatic or musical work the author of which was, at the time the work was made, an Australian citizen, an Australian protected person, a person resident in Australia or "a citizen, national or resident of a foreign country, being a foreign country that was at that time, or afterwards became, an eligible foreign country". The reference in these definitions to an "eligible foreign country" is a reference to a foreign country declared by regulation to be an eligible foreign country for the purposes of Pt VC (s.135ZZJ) and a foreign country will only be so declared where "the Governor-General is satisfied that adequate payments are, or will be, made to owners of copyright under the Act in sound recordings and in literary, dramatic or musical works as part of a blank tape royalty scheme operating in that country" (s.135ZZZB).

9. Provided that the vendor supplies certain particulars to the collecting society, he or she is not liable to pay the royalty imposed by s.135ZZN(1) in respect of any blank tapes that he or she sells to a prescribed organisation or to an exempt body: s.135ZZR. A "prescribed organisation" is an organization that is prescribed by regulation and, under the Copyright Regulations 1990 (Cth), includes such organizations as the Australian Broadcasting Corporation and the Special Broadcasting Service. An "exempt body" is a body or organization other than a prescribed organisation that is declared by the collecting society to be an exempt body upon the collecting society being satisfied that that body or organization does not use blank tapes, or make blank tapes available to any of its members, for the purpose of making copies of sound recordings in which copyright subsists unless the body, organization or member (as the case may be) is the owner or licensee of the right to make such copies: s.135ZZT. Further, where a prescribed organisation or an exempt body purchases a blank tape from a vendor who is liable under s.135ZZR to pay the royalty in respect of that blank tape then, on the provision by the prescribed organisation or the exempt body of certain particulars to the collecting society, it is entitled to a payment from the collecting society of an amount equal to the amount of the royalty payable for the tape, whether or not that amount of royalty has been paid: s.135ZZS(1), (2). Such an amount is also payable by the collecting society to a person or body (other than a prescribed organisation or an exempt body) who purchases a blank tape from a vendor where that person or body provides to the collecting society, amongst other things, a statutory declaration that the person or body will not use the tape, or cause or permit it to be used, or make it available to any person for use, for the purpose of making a copy of a sound recording in which copyright subsists unless the person or body is the owner or licensee of the right to make a copy of the sound recording: s.135ZZS(3).

10. Division 4 of Pt VC (comprising ss.135ZZU to 135ZZY) stipulates, amongst other things, the requirements which a body must meet before it can be declared to be the collecting society under s.135ZZU. One of these requirements is that all relevant copyright owners or their agents must be entitled to become members of that body: s.135ZZU(3)(b). In addition, s.135ZZU(3)(d) provides that the rules of the body must contain:

"such other provisions as are prescribed, being provisions
necessary to ensure that the interests of the collecting
society's members who are relevant copyright owners or their
agents are protected adequately, including, in particular,
provisions about:
(i) the collection of amounts of royalty from vendors;
(ii) the payment of the administrative costs of the society out of
amounts collected by it;
(iii) the distribution of amounts collected by it;
(iv) the holding on trust of amounts for relevant copyright owners
who are not its members; and
(v) access to records of the society by its members".

11. The collecting society is given power to inspect such records of a vendor who is liable to pay the royalty imposed under s.135ZZN(1) as relate to the sale, letting for hire or distribution of blank tapes by the vendor or as are relevant to the assessment of the amount of royalty payable by the vendor to the society: s.135ZZY(1).

12. The plaintiffs contend that the essential operation of the provisions of Pt VC and s.153E of the Act is to impose upon the first seller of blank tapes a liability to pay an amount described as a "royalty" and that, in so doing, these provisions do not constitute a law with respect to copyrights. The fact that the moneys collected are to be paid to the owners of copyright in sound recordings and in the works from which the sound recordings are made does not, so the plaintiffs submit, make the relevant provisions, particularly those imposing the royalty, a law with respect to copyrights.

13. Even if the amounts levied upon the distribution of blank tapes cannot, with strict accuracy, be called royalties, it is not difficult to discern why the draftsman of the legislation chose the term "royalty". That term in its modern application is apt to describe the payments which the grantees of monopolies such as patents and copyrights receive under licence ((64) See Stanton v. Federal Commissioner of Taxation [1955] HCA 56; (1955) 92 CLR 630, at p 641.) and the scheme of the legislation discloses an intention, however general, to compensate the owners of copyright in sound recordings for a use of the recordings which would, without the dispensation which the legislation confers, be an infringement of their copyright.

14. Nevertheless, the plaintiffs deny any relevant relationship between the levy and the use of the blank tapes upon the distribution of which the levy is imposed. They point to the fact that the vendors of the blank tapes have no control over the use of the tapes after distribution and submit that the law imposing the levy is no more a law with respect to copyrights than would be a law which sought to impose an exaction on the first sale of paper upon the basis that it could be employed to reproduce a literary work in breach of copyright.

15. But it is apparent that in imposing a royalty upon the sale of blank tapes, the legislation has a sharper focus. Whilst it may be accepted that not all blank tapes which are purchased are used for the purpose of the private copying of sound recordings, it is obvious that those which are used for this purpose must result in loss to copyright owners because of the loss of sales of sound recordings which would otherwise have taken place. The royalty imposed by the legislation is imposed only upon the sale of blank tapes which are ordinarily used for the purpose of copying sound recordings and sales of blank tapes of a type which are ordinarily used for other purposes are excluded from the levy. And the vendor upon whom liability to pay the royalty is imposed is restricted to a person who sells, hires or otherwise distributes blank tapes of the specified kind in the course of his or her business. Moreover, a mechanism, cumbersome though it may be, is provided for persons who purchase blank tapes which are not in fact used for the purpose of copying sound recordings to recover any royalty payable upon the sale of the tapes to them.

16. True it is that, notwithstanding the efforts of the legislature, royalties may in some instances be paid upon the sale of blank tapes which are not used for the purpose of copying sound recordings, but having regard to the obvious practical difficulty in attempting to attach obligations to the use of blank tapes in the hands of the user, the selection of the first point of distribution as the point at which to impose the levy does not, in our view, sever the connection between the imposition and the use of blank tapes for the purpose of copying sound recordings. The net is not cast so wide that the connection ceases to be plainly discernible.

17. It may also be safely assumed that the levy imposed upon the vendor of blank tapes will enter into the price of the product to the extent that market forces allow it to be passed on. This assumption is to be seen in the provision for repayment of the royalty to the purchasers of blank tapes who do not use them for copying sound recordings. But apart from that, the likely use of the tapes is a sufficient connection between the royalty and the copying of sound recordings.

18. In addition, the method laid down for the calculation of the royalty and the use to which the funds generated are to be put by the collecting society provide a clear connection between the legislation and copyright in sound recordings. As we have said, the amount of the royalty depends on the normal playing time of the tape, and the extent to which blank tapes are used for the purposes of making copies of eligible sound recordings and eligible works for private and domestic use is to be taken into account in the calculation by the Copyright Tribunal of the amount per minute of normal playing time of a blank tape.

19. Further, the royalties are to be paid to the collecting society declared by the Attorney-General. Copyright owners' organizations or collecting societies are a recognized means by which the individual owners of copyright, particularly where performing rights are involved, may combine to negotiate terms with those wishing to use their works, to license the use of those works and to collect the fees payable ((65) See generally Ricketson, The Law of Intellectual Property, (1984), ch.15.). It is, therefore, not surprising that the legislation provides for a collecting society to collect the royalty which it imposes and to distribute the amounts raised to the relevant owners of copyright in sound recordings. Protection is afforded by the legislation to the relevant copyright owners in that the Attorney-General may only declare a body to be the collecting society if its rules adequately protect the interests of the copyright owner members by providing for, amongst other things, the collection of royalties and the distribution of the amounts so collected. The method by which the distribution of royalties is to be effected is otherwise left to the collecting society and must presumably entail some form of sampling or other form of analysis of the relative frequency with which individual sound recordings are copied so as to be related in some way to the infringement of copyright in those sound recordings that is, but for s.135ZZM, presumed to occur through the use of blank tapes. The legislation provides that the Attorney-General may revoke the declaration of a body as a collecting society if he is satisfied that it is not functioning adequately or is not acting in accordance with its rules or in the best interests of those of its members who are relevant copyright owners or their agents: s.135ZZV(a), (b). And clearly a collecting society which did not equitably distribute an adequate proportion of the royalties collected to the relevant owners of copyright would not be acting in their best interests. Moreover, the rules of the collecting society must provide for a proportion of the royalties collected to be held on trust for those copyright owners who are not members of the collecting society: s.135ZZU(3)(d)(iv).

20. In affording a fair measure of compensation to those owners of copyright in sound recordings whose copyright would, apart from s.135ZZM, be infringed by copying, the legislation no doubt fails to achieve an exact correlation between the copying which occurs, the royalties which are levied and the compensation which is paid. But it is apparent that it is the practical impossibility of doing so which has led to the adoption of the scheme embodied in the legislation. The legislation nonetheless, in our view, constitutes a law having a clear "relevance to or connection with" ((66) See Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55, at p 77.) the subject of copyrights. Divisions 3 and 4 of Pt VC and s.153E of the Act therefore constitute a law with respect to copyrights within the meaning of s.51(xviii) of the Constitution.

21. Under s.55 of the Constitution it is provided that "(l)aws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect". Section 53 also refers to proposed laws imposing taxation and provides that a proposed law shall not be taken to impose taxation "by reason only of its containing provisions for the imposition ... of fines or other pecuniary penalties, or for the demand or payment ... of fees for licences, or fees for services under the proposed law". Clearly, the phrase "laws imposing taxation" must mean the same thing in s.53 and s.55 ((67) See Air Caledonie International v. The Commonwealth (1988) 165 CLR, at p 468.) and for that reason, if for no other, a law requiring the payment of a royalty properly so-called is not a law imposing taxation. A royalty may be a fee for a licence; indeed, as we have already pointed out, the term "royalty" embraces fees paid to the owners of copyright for licences granted by them ((68) See McCauley v. Federal Commissioner of Taxation [1944] HCA 18; (1944) 69 CLR 235, at pp 243-244; Stanton v. Federal Commissioner of Taxation (1955) 92 CLR, at pp 639-642.).

22. Under the legislation in question the owners of the copyright in sound recordings do not grant a licence for the copying of the recordings. Section 135ZZM(1) renders a licence unnecessary. Nor is any fee extracted compulsorily from those who copy sound recordings in an exercise which, apart from s.135ZZM, would be an infringement of copyright. No doubt, as we have observed, to the extent that market forces allow it to be done, the amount of the levy imposed upon the first distribution of a blank tape will be passed on in the cost to the ultimate purchaser, who is likely to be the user of that tape. But that is the only relationship between the levy imposed and the person who performs the copying authorized by s.135ZZM(1). For these reasons it is clear that the levy imposed by the legislation is not a royalty properly so-called and does not constitute a fee for a licence within the meaning of s.53 of the Constitution. This does not, however, lead to the conclusion that the levy is a tax.

23. The three features generally held to impart the character of a tax to a levy are that it is a compulsory exaction of money by a public authority for public purposes, that it is enforceable by law and that it is not a payment for services rendered ((69) See Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd. (1933) AC 168, at p 175; Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263, at p 276.). In addition, it must not be by way of a penalty or be arbitrary ((70) See MacCormick v. Federal Commissioner of Taxation [1984] HCA 20; (1984) 158 CLR 622, at p 639; Deputy Federal Commissioner of Taxation v. Truhold Benefit Pty. Ltd. [1985] HCA 36; (1985) 158 CLR 678, at p 684.). But these features do not provide an exhaustive definition of a tax and some of them are not indispensable. It was observed in Air Caledonie International v. The Commonwealth ((71) (1988) 165 CLR, at p 467.):

"(T)here is no reason in principle why a tax should not
take a form other than the exaction of money or why the
compulsory exaction of money under statutory powers could
not be properly seen as taxation notwithstanding that it was
by a non-public authority or for purposes which could not
properly be described as public".

24. However, that observation cannot be taken too far. Even putting to one side penalties and fees for services, not every exaction enforceable by law is a tax. If it were, there would be no need to point to other identifying features. Those characteristics of a tax which require it to be levied by a public authority for public purposes are important in that they reflect the general conception of a tax as a means of raising revenue for government (even if the aim of the tax is also to encourage or discourage behaviour of a particular kind). In consequence, the fact that an exaction is to be paid into a consolidated revenue fund is sufficient indication that the exaction is for a public purpose, hence a tax ((72) See R. v. Barger [1908] HCA 43; (1908) 6 CLR 41, per Isaacs J. at p 82; Moore v. The Commonwealth [1951] HCA 10; (1951) 82 CLR 547, per Latham C.J. at p 561; Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229, per Dixon J. at p 258.). By inference, the strongest indication that an exaction does not constitute a tax is that the moneys raised do not form part of such a fund. However, as we point out later, the fact that moneys are not paid into such a fund is not necessarily conclusive.

25. Under s.81 of the Constitution all revenues or moneys raised or received by the Executive Government of the Commonwealth form one Consolidated Revenue Fund to be appropriated for the purposes of the Commonwealth. If an exaction is a tax, the moneys which it raises are revenue and must form part of the Consolidated Revenue Fund by reason of s.81. That is to say, if in the present case the royalty constitutes a tax, the legislative provisions which make it payable to the collecting society to be distributed by it fail for reasons more fundamental than are to be found in s.55 of the Constitution. They fail because the moneys raised must form part of the Consolidated Revenue Fund and can only, under ss.81 and 83 of the Constitution, be received by the collecting society after appropriation by law for the purpose of payment to it.

26. If these considerations involve practice rather than principle then the observation in Air Caledonie International v. The Commonwealth that there is no reason in principle "why the compulsory exaction of money under statutory powers could not properly be seen as taxation notwithstanding that it was by a non-public authority or for purposes which could not properly be described as public" may stand. But we doubt whether s.81 of the Constitution can in this context be regarded as a machinery provision and, consequently, it now seems to us that the passage which we have cited may be too wide. Read in its widest sense that passage does suggest that any exaction enforceable by law may be a tax in the constitutional sense and that is, as we have said, to regard as dispensable that feature of a tax which is, in truth, indispensable, namely, that the moneys raised be government revenue. Indeed, if all that is required for a tax is that there be an exaction enforceable by law, s.51(ii) assumes unforeseen proportions. Any compulsory exaction of money under statutory power would need no other constitutional warrant.

27. The notion that taxes involve the raising of revenue by government is not confined to the Commonwealth Constitution. In the United States the distinction probably still exists between a revenue measure which may be validly contained in a federal statute under the constitutional power to lay and collect taxes (Art.1, s.8) and a regulatory measure which does not fall within the power to tax even though it may achieve its purpose by the exaction of money ((73) See, e.g. Bailey v. Drexel Furniture Co. [1922] USSC 98; (1922) 259 US 20; Hill v. Wallace [1922] USSC 103; (1922) 259 US 44; United States v. Constantine [1935] USSC 200; (1935) 296 US 287; United States v. Butler [1936] USSC 11; [1936] USSC 11; (1936) 297 US 1; cf. United States v. Munoz-Flores [1990] USSC 75; (1990) 109 LEd.2d 384.). The distinction has little if any practical relevance in the United States today because the Supreme Court has in more recent decisions held that a tax may, as well as being designed to raise revenue, have a purpose which is plainly regulatory and has refused to inquire into congressional motives ((74) See Sonzinsky v. United States [1937] USSC 68; (1937) 300 US 506, 514.). Moreover, an expansive modern interpretation of the commerce clause has produced the result that even if a measure is regulatory it is likely to be within power without reliance upon the power to tax ((75) See Tribe, American Constitutional Law, 2nd ed. (1988), pp 319-320.). But the distinction which has been drawn nevertheless emphasizes that a revenue-raising function is an important element of a tax.

28. In Canada it has from time to time been necessary for constitutional purposes to determine whether an impost is or is not a tax (and, if a tax, whether it is direct or indirect). Again, the revenue-raising function of a tax - identified by whether the moneys raised form part of consolidated revenue - has been a decisive consideration in that exercise. In Massey-Ferguson Industries Ltd. v. Government of Saskatchewan ((76) (1981) 127 DLR (3d) 513) the Supreme Court of Canada upheld the validity of the Agricultural Implements Act 1968 (Sask.) which gave power to a board to pay compensation to farmers out of a fund for losses suffered "due to an unreasonable delay in the availability of a repair" of a farm implement and gave power to the same board to impose levies upon distributors of farm implements upon the basis of a percentage of gross sales in order to constitute and maintain the fund. Laskin C.J.C., who delivered the judgment of the Court, made the following observation ((77) ibid., at p 528):

"I am not persuaded that the assessments to create and
maintain a compensation fund should be characterized as
taxes within s.92(2) of the British North America Act, 1867.
The levies, as monetary exactions, are liquidating premiums
to satisfy farmers' claims under s.6D and the policy of the
Act is to relate the assessments to the compensation awards
and to administrative expenses. They are designed to
support a limited form of insurance for the benefit of
farmers who purchase agricultural implements, related to
their use of such implements. There is here no collection
of money to go into a consolidated revenue fund which is
then chargeable with satisfying awards of compensation.
Although the scheme is a public one, created under a public
statute, its beneficiaries and obligors are circumscribed by
the particular activity or enterprise in which they are
engaged." (emphasis added)

29. The royalty imposed by the legislation in this case is not an exaction by a public authority for public purposes. The moneys exacted do not form part of the Consolidated Revenue Fund and understandably so because they do not form part of government revenue. They are to be collected by the collecting society and distributed or retained by it in accordance with its rules. The collecting society is not a public authority but a private organization, albeit endowed with certain statutory powers. The royalty is not exacted by way of penalty. Conversely, it is enforceable by the collecting society as a debt.

30. If the mechanism which the legislation sets up were merely a colourable device with which to by-pass the Consolidated Revenue Fund with what was, in truth, government revenue, then the royalty would, if it could survive at all, be properly characterized as a tax and s.81 would nonetheless apply. But the actual purpose of the royalty shows that it is part of a scheme, designed to compensate copyright owners for the use of their copyright material, which does not involve the raising of government revenue. Rights and obligations are imposed by statute as part of the scheme and in that sense the scheme is a public one. But is not sufficient in our view to constitute the moneys raised by way of royalty under the legislation public moneys, which they would of necessity be if the royalty were a tax.

31. As we have said, the legislation is plainly prompted by the practical impossibility of controlling the copying of sound recordings or of obtaining any fee directly from those who engage in that practice. The provision in s.135ZZM(1) that the copying of a sound recording on to a blank tape for private and domestic use does not constitute an infringement of copyright has the effect of authorizing the making of such a copy. It is not practically possible to require the person making the copy to pay a royalty to the owner of the copyright for the exercise of the right to do so without infringement, but it is possible with reasonable certainty to identify at the first point of distribution those blank tapes which will be used for copying sound recordings. At that point a levy is made which will have the tendency to be passed on in the price of the blank tape. The moneys raised by the levy are payable to a collecting society comprising relevant owners of copyright in sound recordings. A collecting society is a conventional vehicle for the collection and distribution of royalties where it is possible to charge royalties for rights such as performing rights. The moneys raised are to be distributed by the collecting society amongst the relevant copyright owners in such a way as to provide adequate recompense for the loss suffered by them by reason of what would, apart from s.135ZZM, be an infringement of their copyright. The legislative scheme is such as to ensure that, within reasonable limits, the amount, the incidence, the collection and the distribution of the moneys exacted are all referable to the copying of copyright material. Whilst the imposition cannot, strictly speaking, be regarded as a royalty, it is exacted in lieu thereof and for the same ultimate purpose, namely, the payment to copyright owners for the use of their copyright material. Accordingly, the essential similarities are with fees for licences rather than with a tax and we would not regard the legislation as a law imposing taxation within the meaning of s.55 of the Constitution.

32. The plaintiffs also submitted that the royalty was incontestable and hence arbitrary and beyond the taxation power of the legislature (s.51(ii)) because of the wide discretion given to the Copyright Tribunal to determine the value of "A" in the formula set out in s.135ZZN(2). But the discretion vested in the Tribunal is not so unlimited as to render the liability to pay the royalty incontestable. The royalty is payable only in the circumstances specified in the legislation and, even in determining "A" as an essential component in the amount of the royalty, the Tribunal is not at large but is required to take into account all relevant matters. The imposition of the royalty is by reference to ascertainable criteria with a sufficiently general application and is not the "result of some administrative decision based upon individual preference unrelated to any test laid down by the legislation" ((78) See Deputy Federal Commissioner of Taxation v. Truhold Benefit Pty. Ltd. (1985) 158 CLR, at p 684.). Accordingly it is not arbitrariness which precludes the royalty from being a tax.

33. Section 51(xxxi) of the Constitution provides that the Commonwealth Parliament may make laws for the acquisition of property on just terms for any purpose in respect of which the Parliament has power to make laws. That paragraph must be treated "as abstracting from other heads of power (including the incidental power) all content which would otherwise have enabled the compulsory acquisition of property, and as subjecting the power with respect to the acquisition to an obligation to provide just terms" ((79) Trade Practices Commission v. Tooth and Co. Ltd. [1979] HCA 47; (1979) 142 CLR 397, at p 445.). And it is now settled that the paragraph may apply where the compulsory acquisition of property is by some person other than the Commonwealth or an agency of the Commonwealth ((80) See Jenkins v. The Commonwealth [1947] HCA 41; [1947] HCA 41; (1947) 74 CLR 400, at p 406; McClintock v. The Commonwealth [1947] HCA 39; (1947) 75 CLR 1, at pp 23, 36; PJ. Magennis Pty. Ltd. v. The Commonwealth [1949] HCA 66; (1949) 80 CLR 382, at pp 401-402, 411, 423; Trade Practices Commission v. Tooth and Co. Ltd. (1979) 142 CLR, at pp 427, 451-452.). The argument that Pt VC and s.153E of the Act involve an acquisition of property otherwise than on just terms is put by the plaintiffs in two ways. First, it is said that there is an acquisition of property from the vendors of blank tapes. Secondly, it is said that there is an acquisition of property from the owners of copyright in sound recordings.

34. We do not think that the first argument can be sustained. It has never been thought that the imposition of a tax amounted to the acquisition of property ((81) See Moore v. The Commonwealth [1951] HCA 10; (1951) 82 CLR 547, at p 549; Commissioner of Taxation v. Clyne [1958] HCA 10; (1958) 100 CLR 246. at p 263; Federal Commissioner of Taxation v. Barnes [1975] HCA 61; (1975) 133 CLR 483, at pp 494-495, 500.). Whilst the levy imposed by s.135ZZN is not a tax, the principle which leads to the conclusion that a tax does not entail an acquisition of property also leads to the conclusion that the imposition of the levy in this case is not the acquisition of property. As Aickin J. said in Trade Practices Commission v. Tooth and Co. Ltd. ((82) (1979) 142 CLR, at pp 453-454.):

"Taxation involves the compulsory payment of money to
the Commonwealth according to prescribed criteria applicable
to persons who fall within the specified categories in a
manner capable of testing in the courts. Its imposition
creates a debt but does not compulsorily acquire property.
No doubt when payment is made property in the cas(h) or
cheque passes to the Commonwealth but it is not a process
capable of being categorized or described as 'acquisition of
property', save in a very unusual sense of that expression."

See also MacCormick v. Federal Commissioner of Taxation ((83) (1984) 158 CLR, at pp 638, 649.).

35. Of course, it is possible to go on and say, as Dixon C.J. did in Commissioner of Taxation v. Clyne ((84) (1958) 100 CLR, at p 263.), that the very purpose of the taxation power (s.51(ii)) "is to acquire money for public purposes", but it remains true to say that the effect of the imposition of a tax is to create a debt which is met by the payment of money. The debt itself is a chose in action the creation of which does not involve the acquisition of property from any person. Nor does the discharge of the liability by the payment of money, which is not transferred in specie but as a medium of exchange, involve the acquisition of property in any relevant sense.

36. The royalty which is payable upon the first distribution of blank tapes is a debt due to the collecting society ((85) See s.135ZZQ(1)). And payment of money in discharge of the debt by the vendor to the collecting society does not amount to the acquisition of property by the collecting society. Accordingly, the law creating the debt is not a law with respect to the acquisition of property.

37. Nor do we think that there is any force in the plaintiffs' second argument. Copyright consists of the exclusive right to do all or a number of acts with respect to the subject-matter of the copyright ((86) See ss.31, 85). For present purposes the most important is the right to make a reproduction or a copy. Copyright is capable of ownership ((87) See ss.35, 97.) and is designated by the Act as personal property which is transmissible by assignment, by will and by devolution by operation of law ((88) See s.196(1)). There can be no doubt that copyright constitutes property within the scope of s.51(xxxi) of the Constitution ((89) See Pacific Film Laboratories Pty. Ltd. v. Federal Commissioner of Taxation [1970] HCA 36; (1970) 121 CLR 154, at pp 165-166.). Section 135ZZM(1) provides that copyright is not infringed by the copying of a sound recording on to a blank tape for private and domestic use. The effect of that section is to diminish the exclusive rights conferred elsewhere in the Act by way of copyright but it does not result in the acquisition of property by any person. All that the section does is to confer a freedom generally to do something which previously constituted an infringement of another's proprietary right. Moreover, s.135ZZZA provides that despite any other provision of the Act, "the making of a copy of a sound recording that is not an infringement of copyright under (Pt VC), does not vest copyright in any work or other subject-matter in any person".

38. Whilst the word "property" in s.51(xxxi) is to be construed liberally so that it extends to "innominate and anomalous interests" ((90) Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at p 349.), for the paragraph to apply it must be possible to identify an acquisition of something of a proprietary nature. The mere extinction or diminution of a proprietary right residing in one person does not necessarily result in the acquisition of a proprietary right by another ((91) See Reg. v. Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation [1985] HCA 84; (1985) 159 CLR 636, at p 653; The Commonwealth v. Tasmania (The Tasmanian Dam Case) [1983] HCA 21; (1983) 158 CLR 1, at pp 145, 181, 247, 283; Australian Capital Television Pty. Ltd. v. Commonwealth (No.2) [1992] HCA 46; [1992] HCA 46; (1992) 66 ALJR 695, at pp 714, 728; [1992] HCA 46; 108 ALR 577, at pp 615, 640.).

39. Section 135ZZM(1) confers nothing upon any person which may be described as being of a proprietary nature. If the immunity which the section confers can correctly be described as a right, it is a right which is applicable to all but arises only on the occasions upon which copying takes place. It is not a right which is of a permanent character or capable of being assigned to third parties, those being usual characteristics of a right of property ((92) See National Provincial Bank Ltd. v. Ainsworth [1965] UKHL 1; (1965) AC 1175, at pp 1247-1248; Reg. v. Toohey; Ex parte Meneling Station Pty. Ltd. [1982] HCA 69; (1982) 158 CLR 327, at pp 342-343; Australian Capital Television Pty. Ltd. v. Commonwealth (No.2) (1992) 66 ALJR, at pp 714-715, 729; 108 ALR, at pp 615-616, 641-642.). It is not a right which can be described as being by way of copyright or of a licence under copyright since it entirely lacks exclusivity. It does not, in our view, amount to an interest in property. Section 135ZZM(1) is not, therefore, a law with respect to the acquisition of property.

40. In the light of these reasons, it is sufficient to say in answer to the questions reserved for the consideration of the Court that Divs 2, 3 and 4 of Pt VC and s.153E of the Copyright Act are validly enacted by the Parliament of the Commonwealth.

McHUGH J. I agree generally with the reasons which lead Dawson and Toohey JJ. to conclude that Pt VC of the Copyright Act 1968 (Cth) is a valid exercise of the power conferred on the Parliament of the Commonwealth to make laws with respect to copyrights and that it does not constitute an acquisition of property within the meaning of s.51(xxxi) of the Constitution. I also agree with their Honours' conclusion that no tax is imposed by s.135ZZP, which requires a royalty for a blank tape to be paid by the vendor "who first sells, lets for hire or otherwise distributes the tape in Australia".

2. A compulsory exaction of money by a public authority for public purposes which is enforceable by legal process will be classified as a tax unless the exaction is a reasonable payment for services rendered to or on behalf of the payee or unless the exaction is a penalty for a breach of the law ((93) Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263, at p 276; Air Caledonie International v. The Commonwealth [1988] HCA 61; (1988) 165 CLR 462, at pp 466-467.). However, in Air Caledonie International v. The Commonwealth ((94) (1988) 165 CLR, at p 467), this Court said, by way of dicta, that "there is no reason in principle ... why the compulsory exaction of money under statutory powers could not be properly seen as taxation notwithstanding that it was by a non-public authority or for purposes which could not properly be described as public".

3. I am unable to accept the proposition that a compulsory exaction of money under a statutory power may be a tax although it is not raised for public purposes. A compulsory exaction of money under statutory authority is not by itself sufficient to constitute a payment of tax. If it was, any compulsory transfer of money from one person to another, pursuant to a statutory scheme, would constitute taxation. Moreover, so far as I am aware, no case has yet decided that a compulsory exaction could be a tax even though it was not raised for public purposes. In Air Caledonie, the amount of the fee imposed on travellers, although collected by the airlines, was a debt due to the Commonwealth by the airlines whether or not the fee had been or could be collected from the traveller. In United States v. Butler ((95) [1936] USSC 11; (1936) 297 US 1, at p 61), the Supreme Court of the United States said:

"A tax, in the general understanding of the term, and as
used in the Constitution, signifies an exaction for the
support of the Government. The word has never been thought
to connote the expropriation of money from one group for the
benefit of another."

This passage emphasises that the chief feature of a tax is that it is raised to finance government expenditure. It is raised "for the benefit of the Consolidated Revenue" ((96) R. v. Barger [1908] HCA 43; (1908) 6 CLR 41, at p 82). In a Canadian case ((97) Massey-Ferguson Industries Ltd. v. Government of Saskatchewan (1981) 127 DLR (3d) 513.), which held that a levy imposed on the distributors of farm implements to compensate farmers was not a tax, Laskin C.J.C. said ((98) ibid., at p 528):

"There is here no collection of money to go into a
consolidated revenue fund which is then chargeable with
satisfying awards of compensation."

4. Before a compulsory exaction of money under statutory authority can constitute a tax, it must, in my opinion, be raised for some public, that is, governmental, purpose. In the setting of the Constitution, it must be raised for the purposes of the Commonwealth to "be applied to the payment of the expenditure of the Commonwealth" ((99) Constitution, s.82; see also s.81.).

5. In the context of Pt VC of the Copyright Act, the levy imposed by s.135ZZP does not constitute a tax. It is not paid into Consolidated Revenue, and it is not imposed for the purposes of government or of any public or statutory authority. Neither the Commonwealth nor its agents nor any public authority is involved in the exaction of the payments or, for that matter, the distribution of the funds raised by those payments. The levy is collected by, and is the property of, a private collecting society which is administered and controlled by the copyright owners. It is imposed as part of a scheme which makes lawful the domestic copying of copyright works by the use of blank tapes and provides for the compensation of the copyright owners by means of a fund, financed by imposing a levy on the vendors of blank tapes.

6. It is true that a number of features of the "royalty" imposed by s.135ZZP are indicative of a tax. Thus, it subjects the vendor of blank tapes to a compulsory exaction of money and it is not imposed as a penalty for any breach of the law. Furthermore, the vendor receives no service or other consideration for the payment. Although the Act describes the payment exacted by s.135ZZP as a "royalty", it is not a royalty as that term is ordinarily understood((100) Stanton v. Federal Commissioner of Taxation [1955] HCA 56; (1955) 92 CLR 630, at pp 641-642; Federal Commissioner of Taxation v. Sherritt Gordon Mines Ltd. [1977] HCA 48; (1977) 137 CLR 612, at p 626. A royalty is a payment "made in consideration of the grant of a right" ((101) Federal Commissioner of Taxation v. Sherritt Gordon Mines Ltd. (1977) 137 CLR, at p 626.)). The levy imposed by s.135ZZP is not a payment made in consideration of the grant of a right to the vendor to copy or to authorise the copying of copyright works onto a blank tape, and the sale of a blank tape to a person who subsequently uses it to record copyright material is not itself an authorisation of the copying((102) CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc. [1988] UKHL 15; (1988) AC 1013, at pp 1053-1055; Sony Corporation of America v. Universal City Studios Inc. [1984] USSC 14; (1984) 464 US 417.). A common feature of a tax is that it is a compulsory exaction of money, enforceable at law, which does not purport to be a penalty imposed for a breach of the law and for which the payee receives no service or other consideration. Nevertheless, this feature is not enough, in my opinion, to characterise the "royalty" exacted by s.135ZZP as a tax. This is because the payment is exacted to finance the private scheme of compensation which Part VC authorises and is not imposed for public purposes.

7. Unauthorised recording of copyright works by the use of tape recordings has been a worldwide phenomenon which has reduced the sales of those works and the royalties which would otherwise be earned from them((103) U.K., Report of the Committee to Consider the Law on Copyright and Designs, Copyright and Designs Law, (1977) Cmnd 6782, p 75; US Congress, Office of Technology Assessment, Copyright and Home Copying: Technology Challenges the Law, (1989), p 3; C.B.S. Songs Ltd. (1988) AC, at p 1060.). Although, prior to the enactment of Pt VC, the owner of the copyright had a right of action against the copier for infringement, for practical purposes the right was worthless. The widespread nature of the copying and the cost and difficulty of obtaining evidence of infringement meant that in practice the copyright owner could neither restrain the infringements nor receive compensation for the breach of his or her rights. In CBS. Songs Ltd. v. Amstrad Consumer Electronics Plc.((104) ibid.), Lord Templeman commented that, from society's point of view, the position was "lamentable", with "(m)illions of breaches of the law" being committed each year by domestic copiers. Part VC remedies this state of affairs by making the domestic copying of recordings lawful and by providing a mechanism to compensate the owners of copyright for the loss of revenue arising from the decline in sales of copyright works as the result of domestic copying.

8. Thus, the purpose of the payment exacted by s.135ZZP is not to raise revenue to meet the expenses of government or public authorities. It is to compensate the owners of copyright for the loss of revenue which they suffer as a result of the widespread use of blank tapes to record copyright material. The end for which the payment is imposed is private, not public. Furthermore, the scheme enacted by Pt VC is a private scheme controlled, administered and enforced by a private collecting society. The "royalty" exacted by s.135ZZP is a debt payable to the collecting society which is recoverable from the vendor by the society in the Federal Court of Australia((105) s.135ZZQ). The "royalty" forms no part of the revenues of the Commonwealth. Nor, after collection, is it paid to or at the direction of the Commonwealth. Amounts payable to the society in accordance with the provisions of Pt VC are the property of the society, which holds or distributes those amounts in accordance with its rules((106) s.135ZZU(3)(d)).

9. The government's role in the scheme enacted by Pt VC is supervisory. The Attorney-General is empowered to declare a body named in the Gazette to be the collecting society((107) s.135ZZU) and to revoke the declaration on one or more of four specified grounds((108) s.135ZZV.). The collecting society must also prepare a report of its operations at the end of each financial year and send a copy of the report to the Attorney-General who is required to lay it before each House of Parliament((109) s.135ZZW.). A copy of the rules of the society must also be sent to the Attorney-General within 21 days of any alteration to the rules together with a statement setting out the effect of the alteration and the reasons why it was made((110) s.135ZZX). However, the Commonwealth neither collects nor distributes the payments. Nor does it determine how or to whom they are to be distributed.

10. It is true that Pt VC has been enacted in the public interest to make lawful the previously unlawful activities of domestic copiers and to raise funds to compensate the owners of copyright works for the loss of revenue brought about by domestic copying. Part VC thus serves a public purpose. But the money exacted by s.135ZZP is not raised for a public purpose as that concept is understood in the context of determining whether or not a compulsory exaction of money is a tax for the purpose of the Constitution. In that context, public purpose is synonymous with the "purposes of the Commonwealth".

11. I agree with the orders proposed by Dawson and Toohey JJ.

ORDER

Answer the questions reserved for the consideration of the Court as follows:

l. Are Divs 3 and 4 of Pt VC and s.153E of the Copyright Act 1951
(Cth) ("the Act") invalid because:
(a) they do not constitute a law with respect to copyrights within
the meaning of s.51 (xviii) of the Constitution of the
Commonwealth of Australia;
(b) (i) they constitute a law with respect to taxation within the
meaning of s.51 (ii) of the Constitution and a law imposing
taxation within the meaning of s. 55 of the Constitution;
and
(ii) the Copyright Amendment Act 1989 (Cth) and/or the Act as
amended by that Act deal or deals with the imposition of
taxation as well as with other matters;
(c) they effect an acquisition of property from vendors of blank
tapes:
(i) otherwise than on just terms; or
(ii) other than for any purpose in respect of which the
Parliament has power to make laws
contrary to the provisions of s.51(xxxi) of the Constitution; or
(d) they effect a fiscal exaction from vendors of blank tapes and do
not constitute a tax within the meaning of s.51 (ii) of the
Constitution or an acquisition of property within the meaning of
s.51 (xxxi) of the Constitution?

Answers: 1(a) No.

1(b) (i) and (ii) Yes.
1(c) No.
1(d) No.

2. Are Divs 2 and 4 of Pt VC of the Act invalid because they effect
an acquisition of property from copyright owners;
(i) otherwise than on just terms; or
(ii) other than for any purpose in respect of which the
Parliament has power to make laws
contrary to the provisions of s.51(xxxi) of the Constitution?

Answer: No.

Order that the defendant pay one-half of the plaintiffs' costs of the questions reserved.