HIGH COURT OF AUSTRALIA

                   Federated Municipal & Shire Council Employees' Union of Australia

                                                           Vs.

                                                 City of Melbourne

                (Griffith C.J., Barton, Isaacs, Higgins, Gavan Duffy, Powers and Rich JJ.)

                                                      19.05.1919

                                                    JUDGMENT

GRIFFITH C.J.

This case raises the question of the existence and extent of the immunity of municipalities as
instrumentalities of Government of the States. The matter came before the High Court in Federated
Engine-Drivers and Firemen's Association of Australasia v. Broken Hill Proprietary Co. [No. 1][1]
in 1911, when the Court intimated that, in its opinion, if a municipal corporation chooses to engage
in what has lately been called "municipal trading," and joins the ranks of employers in industries, it
is liable to the same Federal laws as other employers engaged in the same industries.

In that case various decisions of the Supreme Court of the United States of America were cited. This
Court left undecided, without expressing any opinion upon it, the question whether, and how far, a
municipality is subject to the jurisdiction or award of the Arbitration Court.

The principal American cases cited were the following:-- The Mayor v. Ray[2] , in which the Court
said:--"A municipal corporation is a subordinate branch of the domestic government of the State. It
is instituted for public purposes only; and has none of the peculiar qualities and characteristics of a
trading corporation, instituted for purposes of private gain, except that of acting in a corporate
capacity. Its objects, its responsibilities, and its powers are different. ... Our system of local and
municipal government is copied, in its general features, from that of England... They are not trading
corporations and ought not to become such." Meriwether v. Garrett[3] :--"Municipal corporations
are mere instrumentalities of the State for the more convenient administration of local government.
Their powers are such as the Legislature may confer ... This is common learning, found in all
adjudications on the subject of municipal bodies and repeated by text writers." Stoutenburgh v.
Hennick, in which Fuller[4] :--"It is a cardinal principle of our system of government, that local
affairs shall be managed by local authorities, and general affairs by the central authority, and hence,
while the rule is also fundamental that the power to make laws cannot be delegated, the creation of
municipalities exercising local self-government has never been held to trench upon that rule. Such
legislation is not regarded as a transfer of general legislative power, but rather as the grant of the
authority to prescribe local regulations, according to immemorial practice, subject of course to the
interposition of the superior in cases of necessity." Pollock v. Farmers' Loan and Trust Co., in which
Fuller[5] : "A municipal corporation is the representative of the State and one of the
instrumentalities of the State government." And the important case of South Carolina v. United
States[6] .

The present case was argued at the September sittings of the Court, when argument on the main
point was concluded, and the Court reserved judgment on it, leaving for further argument after
judgment the application to the different forms of municipal activity of any general rule which it
might lay down.

The matter now comes for our determination, and I will give my opinion.

I regard these decisions of the Supreme Court of the United States as to the immunities of municipal
corporations rather as historical expositions of the unwritten law which the thirteen colonies had
brought with them from the Mother Country and carried with them into the Union than as
interpretations of the Constitution of that Federation. As such, they are entitled to very great weight.
In the view of those eminent men, who were after all only stating matters of common knowledge, it
was part of the unwritten law and of the system of English government which the colonists brought
with them to America, that the functions of government were divided between the central
Government and the local or municipal bodies, and that certain powers were allocated to these latter,
not as agents or servants of the central Government, but as independent authorities, created by the
Legislature, and subject of course to it, but who were entitled as independent organs of the
Government of the Colony to equal freedom in the performance of their functions. And they did not
find anything in the Federal Constitution which authorized any interference with this freedom. The
doctrines of the law of master and servant, and of principal and agent, deal with matters on a lower
plane, and are wholly beside the question.

In my opinion, this exposition of the law is historically applicable to the Australian Colonies. And it
follows, in my opinion, that a municipal authority, in the discharge of that portion of the general
mass of State functions which had been entrusted to it at the date of Federation, is entitled to the
same immunity from Commonwealth interference as the State itself would be in the discharge of
similar functions.

Barton J

. read the following judgment:--

My learned brother Powers, as Deputy President of the Commonwealth Court of Conciliation and
Arbitration, asks the Bench to determine a question of great moment from the aspect of the relations
between Commonwealth and State in the Australian Federation. A dispute between the parties is
before him in that Court.

The claimant is a registered organization of employees. There are six hundred and fifty-eight
respondents, consisting mainly of city, municipal, borough and shire councils, which, for
convenience, are in the case grouped under the name of municipal corporations. Each of them exists
under the statutory law of one or other of the States of the Commonwealth. They are now
constituted under one or other of the Local Government Acts of Victoria, New South Wales or
Tasmania. The claims are in respect of work done by members of the organization employed by the
municipal corporations in municipal works which are not carried on for "municipal trading"
purposes. The organization contended that even in the case of such operations the Arbitration Court
had jurisdiction. The respondents denied this contention, their ground being that the municipal
corporations are instrumentalities of the States under which they are constituted.

The question originally submitted for the opinion of this Court was this: "Has the Commonwealth
Court of Conciliation and Arbitration power or jurisdiction to determine by an award the dispute
between the organization and the municipal corporations, constituted under or subject to the
provisions of the three Acts mentioned, so far as the dispute relates to such operations of the said
municipal corporations as do not consist of municipal trading?" During the argument, the learned
Deputy President, who was one of the Court, altered this question, with the approbation of the rest
of us, by striking out the final words, "as do not consist of municipal trading," and putting in their
place these words: "as consist of the making, maintenance, control and lighting of public streets or
any of them" --meaning, of course, the public streets of the municipality concerned. The arguments
followed in the main the lines of the contentions described in the case stated. Besides the parties to
the dispute, we had the advantage of hearing counsel for the Commonwealth and for each of the
States concerned, who had all obtained leave to intervene.

Apparently the question as altered, in its inclusion of street lighting, refers to the ordinary lighting
for public convenience, supported by municipal taxation, and not to the special lighting of places of
business and residences, &c., undertaken by contract with individuals and for profit. I mean that the
question includes only that lighting which it is contended is part of the governmental work of the
municipality, as distinct from that which is a mere commercial undertaking for pay or reward.
Although the principle at issue was touched in a previous case, as I shall point out, it now comes
before us for the first time as matter for decision. In the elaborate argument that we heard, many
cases were cited and discussed, but I propose to refer only to a few, comparatively, which may help
me in the process of elucidating the real question.

First, it is sufficient merely to mention such cases as D'Emden v. Pedder[7] ; Baxter v.
Commissioners of Taxation (N.S.W.)[8] ; The Railway Servants' Case[9] (a decision which, as the
Court intimated in the course of the present case, it would be a waste of time to attack). Taken
together, these cases, and indeed others, completely establish, as a necessary implication from the
whole scheme of the Constitution, the immunity of the Commonwealth or a State and the
instrumentalities or agencies of its government from interference at the hands of the other authority,
whether by way of taxation or otherwise; an immunity, as the last-mentioned case establishes, not in
any wise affected in the case of the States by the terms of sub-sec. XXXV. of sec. 51 in the
Constitution. I have no doubt that municipal corporations are such instrumentalities in respect of the
governing functions committed to them, and I propose to make that clear presently.

But it would be going a good deal further to say that municipal corporations are entitled to this
immunity from interference by the Commonwealth in respect of all of their operations. If they are
not, then it must be ascertained whether the immunity extends to such operations as are the subject
of the question raised by the case stated. The contention for the claimant is that municipal
corporations stand altogether outside this immunity, which is confined, they urge, to the case of the
directly governmental operations of the State itself; that municipal corporations are not in that sense
instrumentalities or agencies of the State, but independent bodies created for certain purposes and
not subject to the control of the State. Their position was likened to that which arose in Mersey
Docks v. Cameron[10] , Gilbert v. Corporation of Trinity House[11] , and similar cases, on which
much reliance was placed. But these cases do not apply to such a position as the present one. They
go to show the liability of certain corporations (not municipal), (1) to be taxed by the State to which
they belong, (2) to be sued for negligence by subjects of that State--in each case on the ground that
the corporation could not be held to share the immunity from liability of the Government of that
State. The corporation in the first-named case claimed immunity from taxation on the ground that
the Crown does not tax itself. The corporation in the Trinity House Case claimed immunity in an
action for negligence on the ground that "The King can do no wrong," since legislation, where the
Crown is not expressly mentioned, is held to apply to the subject and not to the Government. In both
instances the claim was rejected. But these corporations were not defending themselves from the
Government of any sphere extraneous to that of their own State on the ground that they were free
from interference from that quarter. The question of liability as between State and State or between
Commonwealth and State stands on wholly different grounds. It is not because the State may tax or
the citizen of that State may sue that the Commonwealth may tax or its citizens outside the State
may sue. The question has to be determined on different considerations. If, for instance, it were
admitted that the State of Victoria could tax its own municipal corporations, it would not follow that
the Commonwealth could for that reason tax the municipal corporations of Victoria. If the
Commonwealth could impose such taxation, which I am far from saying, it could only be by reason
of power given by the Constitution as in sec. 51 (II.). But power to interfere with municipal
corporations is not given anywhere by the Constitution. Indeed by the direct implication of sec. 51
(XX.) such corporations are protected from the legislative power of the Commonwealth. There is,
above all things, a prohibition underlying the whole of the Constitution, which, it is to be
remembered, is sedulous in preserving the respective spheres of State and Commonwealth. It is a
prohibition of action on the part of either tending to invade or impair, by means not distinctly
authorized, the powers of the other in the sphere allotted to the one or preserved to the other. And it
is in each case to be determined in which sphere is included the matter over which power is claimed.
Is, then, the control of municipal corporations within the sphere of the Commonwealth, or within
that of the State which creates them, and under which they subsist in the sense that their granted
powers can be increased, or diminished, or abolished at the will of the grantor, the Parliament of the
State? That question can only be answered in the negative. The cited case of Powell v. Apollo
Candle Co.[12] has nothing to do with this question so far as the main point decided is concerned;
though where the Judicial Committee held that duties levied by the Order in Council there in
question were really levied by the authority of the Legislature, and not that of the Executive, they
may have provided the present respondents with a useful analogy. These municipal bodies are
independent only in the sense that they may exercise the powers allotted to them without
interference save on the part of the State Legislature. They have power to pass subsidiary legislation
such as by-laws (in the case of some shires ordinances), but they are distinctly subordinate to the
powers of the State; they move entirely within the sphere of, and are subject to, its laws. But these
matters are no doubt of concern to the State, and, in fact, within its ambit, equivalent to national
matters. Such are, for instance, the making, maintenance, and control of communications. Of these
the State attends to railways, telegraphs, and main roads; the municipalities, to roads not main ones,
within their boundaries, and to streets. They are all part of one great concern. One may apply to the
State the words of Cockburn J. in Purcell v. Sowler[13] :--"The Court below seems to have
distinguished between the general and the local administration of the poor law, holding that the
general administration was a matter of national concern, while the administration in a particular
district was not. But it seems to me that whatever is a matter of public concern when administered in
one of the Government Departments, is matter of public concern when administered by the
subordinate authorities of a particular district. It is one of the characteristic features of the
government of this country that, instead of being centralized, many important branches of it are
committed to the conduct of local authorities. Thus the business of counties, and that of cities and
boroughs, is, to a great extent, conducted by local and municipal government. It is not, therefore,
because the matter under consideration is one which in its immediate consequences affects only a
particular neighbourhood that it is not a matter of public concern." True, these words were used in
deciding a libel case, but they are aptly descriptive of the relation of local authorities to the
government of the country concerned. And anyone, more especially if he has compared the Federal
Constitution with that of the State and considered the legislation of the latter, will admit that the
country concerned is in this connection the State and not the Commonwealth.
I turn to some American cases in addition to those cited by the learned Chief Justice. I refer to them
because the statements seem to me to be accurate and the reasoning cogent. In Ottawa v. Carey[14] ,
in 1883, Waite C.J. said:--"Municipal corporations are created to aid the State Government in the
regulation and administration of local affairs. They have only such powers of government as are
expressly granted them, or such as are necessary to carry into effect those that are granted. No
powers can be implied except such as are essential to the objects and purposes of the corporation as
created and established... To the extent of their authority they can bind the people and the property
subject to their regulation and governmental control by what they do, but beyond their corporate
powers their acts are of no effect." In other words, the State has granted to the corporation, during
the pleasure of the Legislature, some of its powers, and it retains the rest.

In United States v. Railroad Co.[15] it was held that a municipal corporation is a part of the
sovereign power of the State, and is not subject to taxation by Congress upon its municipal
revenues. Clifford and Miller[16] that "private property held by a corporation in a proprietary right,
and used merely in a commercial sense for the income, gains, and profits," which they thought the
subject of the litigation was in effect, might be taxable just the same as property used by an
individual or by any other corporation. That is, I think, undeniable. But the principle laid down by
the judgment of the Court stands unimpaired. In delivering it, Hunt[17] :--"A municipal
corporation like the City of Baltimore, is a representative not only of the State, but is a portion of its
governmental power. It is one of its creatures, made for a specific purpose, to exercise within a
limited sphere the powers of the State. The State may withdraw these local powers of government at
pleasure, and may, through its Legislature or other appointed channels, govern the local territory as
it governs the State at large. It may enlarge or contract its powers or destroy its existence. As a
portion of the State in the exercise of a limited portion of the powers of the State, its revenues, like
those of the State, are not subject to taxation" (i.e.[18] :--"Was it exercised for the benefit of the
municipality, that is, in the course of its municipal business or duties? In other words, was it acting
in its capacity of an agent of the State, delegated to exercise certain powers for the benefit of the
municipality called the City of Baltimore? Did it act as an auxiliary servant and trustee of the
supreme legislative power?" If it were so acting, the bonds were not taxable by Congress.

In Atkin v. Kansas[19] , where the decision was that it was within the power of a State,
notwithstanding the 14th amendment of the United States Constitution, to prescribe the conditions
on which it would permit public work to be done on behalf of itself or its municipalities, the Statute
impeached dealt with hours of labour, rates of wages, &c. The precise question decided is not in
issue here, nevertheless the case is important on the present question by reason of some passages in
the judgment of the Court, delivered by Harlan J., as to the relation existing between a State and its
municipal corporations. "Such corporations," [20] , "are the creatures, mere political subdivisions,
of the State for the purpose of exercising a part of its powers. They may exert only such powers as
are expressly granted to them, or such as may be necessarily implied from those granted. What they
lawfully do of a public character is done under the sanction of the State. They are, in every essential
sense, only auxiliaries of the State for the purposes of local government. They may be created, or,
having been created, their powers may be restricted or enlarged, or altogether withdrawn at the will
of the Legislature; the authority of the Legislature, when restricting or withdrawing such powers,
being subject only to the fundamental condition that the collective and individual rights of the
people of the municipality shall not thereby be destroyed."

The judgment cited a previous case of Williams v. Eggleston[21] , in which the Court had said: "A
municipal corporation is, so far as its purely municipal relations are concerned, simply an agency of
the State for conducting the affairs of government, and as such it is subject to the control of the
Legislature." [22] :--"Municipal corporations owe their origin to, and derive their powers and rights
wholly from, the Legislature. It breathes into them the breath of life, without which they cannot
exist. As it creates, so it may destroy. If it may destroy, it may abridge and control. Unless there is
some constitutional limitation on the right, the Legislature might, by a single act, if we can suppose
it capable of so great a folly and so great a wrong, sweep from existence all of the municipal
corporations of the State, and the corporations could not prevent it. We know of no limitation on
this right so far as the corporations themselves are concerned. They are, so to phrase it, the mere
tenants at will of the Legislature." [23] , "it is one of the functions of government to provide public
highways for the convenience and comfort of the people. Instead of undertaking that work directly,
the State invested one of its governmental agencies with power to care for it. Whether done by the
State directly or by one of its instrumentalities, the work was of a public, not private, character." I
fully adopt that proposition.

These strong passages harmonize in reason with the decision in Flint v. Stone Tracy Co.[24] ,
following South Carolina v. United States[25] , that the exemption from Federal taxation of the
means and instrumentalities employed in carrying on the governmental operations of the States does
not extend to State agencies and instrumentalities used for carrying on business of a private
character. This limitation of an admitted principle, of course, covers the operations of municipal
corporations which are conducted by municipal bodies for commercial or trading purposes: for
those of gain or profit and not for those of government.

It has been pointed out more than once from this Bench that when it cites American decisions it is
fully conscious that they are not authorities by which it is bound. But it is entitled to adopt the
reasoning adduced in support of such decisions when it is convinced of the soundness of the reasons
and when they are applicable to the facts of the case in hand. And in that conviction I apply to this
case the quotations I have made.

My views, as well as those of the learned Chief Justice and the late O'Connor J., as to the limitations
mentioned, are expressed, though extra-judicially, in Federated Engine-Drivers and Firemen's
Association of Australasia v. Broken Hill Proprietary Co. [No. 1][26] . I adhere as a matter of
decision to what, with my colleagues, I then put as an opinion invoked by the parties.

So far, then, as its "municipal trading" or the carrying on of business commercially for purposes of
gain and profit is concerned, a municipal corporation is, in my view, in no better position than a
private trading corporation, or indeed an individual, would occupy, and cannot claim immunity
from the exercise of Federal powers to any greater extent than such a company or person. But to the
extent that its functions which are exercised under the statutory authority of the State are
governmental, in the sense shown by the above observations and quotations, the municipal
corporation shares the immunity of the State itself from Federal interference, just as the
Commonwealth and its instrumentalities may not be undermined or impaired by the State.

The operations described in the question stated are, in my opinion, clearly governmental, and I
therefore hold that the Arbitration Court can no more interfere with the respondent municipal
organizations in these respects than could its creator, the Parliament of the Commonwealth.

I must therefore answer the question stated in the negative. This answer applies to the first branch of
the argument. As the majority of the Bench are of a different opinion, argument is to be taken on the
second branch--whether there can be an industrial dispute extending &c. between the municipal
corporations and their employees in respect of the operations mentioned, regard being had to par.
XXXV. of sec. 51 of the Constitution and also to the Conciliation and Arbitration Act of the
Commonwealth.

Isaacs and Rich JJ

. (read by Isaacs J.):--

As the case stands amended, the question of law stated for the opinion of this Court is whether the
Commonwealth Court of Conciliation and Arbitration has jurisdiction to settle a dispute as to wages
and hours, and other conditions of employment, between municipal corporations and such of their
employees as are employed in the construction and maintenance of the public streets of the
municipalities.

The argument upon this question has been divided into two branches. The first branch is whether the
words "industrial disputes" in pl. XXXV. of sec. 51 of the Constitution are limited to disputes in "an
industry" in the sense of a specific business or avocation in which both employer and employees are
engaged, or whether they extend to cover all disputes of an industrial nature--that is, for instance,
where the employees are engaged in industry in the broad sense by working in the service of the
employers and the dispute is as to the conditions of employment either as between employers and
employees or as between different classes of employees, such as demarcation disputes. The second
branch is whether, supposing the words "industrial disputes" have the wider connotation,
municipalities are subject to the jurisdiction of the Commonwealth tribunal, having regard to their
relation to the State system of government. The argument so far--though something was said as to
the first branch--was ultimately limited to the second branch, leaving the first to be argued out in
the event of the opinion of the Court on the second branch making that course necessary.

If municipalities, on the true construction of the Constitution, are outside the sphere of
Commonwealth jurisdiction, in relation to their construction and repair of roads, by reason of their
position as an "instrumentality," as it is called, of State government, it matters not whether road
construction or maintenance can or cannot be considered "an industry" in the narrower sense. The
language of pl. XXXV., read as part of sec. 51, is as follows: "The Parliament shall, subject to this
Constitution, have power to make laws for the peace, order, and good government of the
Commonwealth with respect to ... (xxxv.) Conciliation and arbitration for the prevention and
settlement of industrial disputes extending beyond the limits of any one State." No express
limitation is placed on the class of disputants in the placitum itself or elsewhere in the Constitution.

The laws, therefore, that may be made under that specific power, so far as any express limitation is
concerned, extend to all industrial disputes in the Commonwealth extending beyond the limits of
any one State. And covering section V. of the Constitution Act makes the Constitution itself, and all
laws made under it "binding on the Courts, Judges, and people of every State and of every part of
the Commonwealth, notwithstanding anything in the laws of any State." Any constitutional
exemption of municipalities from the operation of such laws must, therefore, rest upon some
implication of law, which when applied to pl. XXXV. excludes their industrial disputes from the
words "industrial disputes" there found.

It has already been decided by this Court (Federated Engine-Drivers and Firemen's Association of
Australasia v. Broken Hill Proprietary Co. [No. 2][27] ) that a municipal corporation in Victoria so
far as it engages in trading occupation, is subject to the jurisdiction of the Arbitration Court. This
shows that the mere fact that a corporation may be created or abolished by the State is no reason for
exemption from Commonwealth jurisdiction. A distinction was drawn in that case between trading
and non-trading operations, but, although trading operations were held to fall within the jurisdiction
of the Court, the decision did not lay down "trading" as the discrimen. It was not necessary to do so.
The question of how far non-trading operations attracted the jurisdiction was left undetermined. In
that case, "trading" and "governing" were contrasted; but there are municipal functions which are
neither the one nor the other. The care of parks and the establishment of free libraries could not
properly be brought under either head. We have now to consider the true line of demarcation, if
there is one. The question, then, as to the implied exclusion of non-trading operations from the
arbitral jurisdiction of the Commonwealth is this: Where do we find the restrictive implication of
law? It is suggested, using American terminology, that municipalities are "State instrumentalities."
Tested by British standards--which are the only legitimate standards--such a term, to have any
meaning which would attract a legal implication restricting the meaning of the words "industrial
disputes," must denote that municipalities are, in relation to the subject matter of disputes, true
functionaries of the State Government, that is, the King's Government.

A clear distinction must be noted and preserved between the expression "the Government of the
country" in the sense of the King's representatives or agents in the concrete sense, and the
expression "the government of the country" in the abstract sense of the process of governing the
country in whole or in part. The first denotes the persons who act, and the second denotes acts done.
Again, the functions performed by "the Government" in the concrete sense, including in that term
those who represent the Government pro hac vice, are the acts of the General Government, that is,
theoretically, the Crown; but there may be functions coming under the second head which are not in
any real sense acts of the General Government. For instance, as early as the reign of Queen Anne,
the Court of King's Bench said, speaking of a case concerning the City of London, "a corporation is
properly an investing the people of the place with the local government thereof, and therefore their
law shall bind strangers" (Cuddon v. Eastwick[28] ). A "by-law" is a law (Hopkins v. Swansea[29]
and London Association of Shipowners and Brokers v. London and India Docks Joint Committee[30]
). In Arnold on Municipal Corporations (1851), at p. 3, there is the following definition: "A
municipal corporation, therefore, is a civil corporation aggregate, established for the purpose of
investing the inhabitants of a particular borough or place with the power of self-government, and
with certain other privileges and franchises." Royal Charters creating municipal corporations and
investing them with powers were not imposed on the locality, but were offered and might be
accepted or rejected; and, if accepted, it was taken that every person who chose to be or to come
within the area of the powers granted subjected himself to the control conferred. Indeed, municipal
corporations were the creation not merely of the Crown, but also of subjects who had jura regalia.
(See fully on this subject, Grant on Corporations, particularly pp. 10 et seqq.) The Act of 1835 (5 &
6 Will. IV. c. 76), which was referred to in argument, did not destroy the old corporations; they
remained, but under new governmental powers (Attorney-General v. Corporation of Leicester[31] ).
The charters creating new corporations were still issued under the royal prerogative, although, when
once created, the new municipality is pro tanto invested with the statutory functions and powers
(Grant, p. 16).

By various later English enactments, many municipal corporations were enabled to undertake works
some of which may usefully be referred to here; as, for instance, the establishment of museums of
art and science, the providing of baths and wash-houses, the removal of nuisances, the appointment
of police constables, and the establishment of salaried police magistrates. They may, at common
law, be liable to repair highways and bridges, and may make rates for the purpose; they could in
some instances supply water, and impose water rates. All these instances and others, with the
appropriate authorities and references, are to be found in Grant on Corporations, passim, and in the
article "Municipal Corporations" by Mr. Manson in the Encyclopoedia of the Laws of England (2nd
ed.), vol. ix., pp. 466 et seqq. The later English legislation does not affect the fundamental character
of the system. To borrow Mr. Manson's quotation, the motto is "Spartam nactus es, hanc exorna."
The duties and functions of the corporation are, at least in the main, entirely local and for the benefit
and advantage of the inhabitants of the locality or persons transiently coming there.

The distinction between the functions of such bodies and those of the General Government has been
very clearly marked by the Courts. The fundamental case is Coomber v. Justices of Berks[32] . But,
before quoting the ruling passage from that case, reference should be made to some other cases. In
R. v. Mayor of Sheffield[33] Blackburn J. refers to the reason why the Act of 1835 was passed,
namely, to control the corporations, to cut down their ownership of the municipal property, and to
check their expenditure by appropriating the fund to certain purposes such as debts, police expenses,
prosecutions, payment of constables, &c., and any surplus "for the public benefit of the inhabitants
and improvement of the borough" --deficiencies to be made good by rates. This view was adopted
by Jessel M.R. in Attorney-General v. Mayor of Brecon[34] [35] , "is part of the municipal
government of the town," and "is vested in the corporation for the benefit of the town as part of the
government of the town; and he who seeks to interfere with the privileges and duties connected with
the regulations must be resisted, and, of course, resisted at the expense of the corporation."

This all tends to show, both by its affirmative propositions and negatively by the absence of any
reference to the Crown or the Attorney-General, that the municipality was regarded in relation to its
rights and powers as independent of the General Government acting for the whole country. Then the
Courts have also had to consider the position of municipalities from the standpoint of their
obligation to contribute to rates. Prior to the Act of 1835, municipalities were liable to the poor rate
(R. v. Mayor of York[36] ). In 1839 and 1840 the Court of Queen's Bench held them no longer liable,
having regard to the provisions of the Act of 1835, sec. 92, and the public nature of their functions
(R. v. Mayor of Liverpool[37] and R. v. Inhabitants of Exminster[38] ). Lord Denman C.J., in the
Liverpool Case[39] , spoke of the "public" purposes as in "extent and approximation to something
like national benefit." Parliament, however, in 1841, by Act 4 & 5 Vict. c. 48 promptly rejected the
notion of any such intention on its part in passing the Act of 1835. After reciting the decisions, it
declared the expediency of the municipal corporations being rateable, and enacted that they should
be rated.

There was, of course, always the Crown exemption, because the Crown was not included expressly
or by necessary implication. In County Council of Middlesex v. St. George's Union[40] it was
expressly argued for the County Council, whose property was sought to be assessed, that it was
exempt because "the government of each county is none the less administered by the Sovereign
according to the theory of the Constitution because it is administered through local agencies." On
the other hand, it was contended for the Assessment Committee that "it is not enough that it should
be used for purposes of government; it must be used for the purposes of that part of the government
of the country which is theoretically administered by the Crown." In delivering judgment Cave[41]
that in the authorities "a distinction has been drawn between Crown or Imperial purposes, such as
the administration of justice, and purposes of local government." The learned Judge also observed:
"whether a municipal authority be created by charter or by Statute, its purposes must equally be
local." Wills[42] the arguments were repeated and the judgment affirmed. There is, however, one
passage in the judgment of Lopes[43] which deserves special notice. The Lord Justice first refers to
Lord Westbury's judgment in Mersey Docks v. Cameron[44] , where that learned Lord uses the
phrase "the Government of the country" in the concrete sense of the King's Government. Then
Lopes L.J. states the inclination of his opinion that prior to 1888 the whole of the building would
have been exempt "because at that time the administrative business of the county was done by the
justices in Quarter Sessions assembled as such, and by virtue of the authority which they derived
from the Crown." "But," proceeds the learned Judge, "in 1888 a great change took place. The
judicial business of the county continued to be performed by the justices in Quarter Sessions, but the
administrative business was transferred to the County Council, who in performing their functions do
not act by virtue of any judicial office, or as being servants of the Crown." And so he held that so
much of the building as was occupied for Crown purposes was not rateable; but so much as was
occupied by the County Council for administrative or municipal purposes was rateable.

These decisions applied the principle of Coomber's Case[45] , which is stated most clearly by Lord
Watson at p. 74. The learned Lord adopted Lord Chancellor Westbury's view that the exemption of
the Crown extends "not only to the immediate and actual servants of the Crown but to all other
persons, not being servants of the Crown, whose occupation was ascribable to a bare trust for
purposes required and created by the Government of the country." Then Lord Watson proceeded to
say: "Seeing that, in my opinion, the administration of justice, the maintenance of order, and the
repression of crime, are among the primary and inalienable functions of a constitutional
Government, I have no hesitation in holding that Assize Courts and police stations have been erected
for proper government purposes and uses, although the duty of providing and maintaining them has
been cast upon county or other local authorities." Here we have the discrimen of Crown exemption.
If a municipality either (1) is legally empowered to perform and does perform any function
whatever for the Crown, or (2) is lawfully empowered to perform and does perform any function
which constitutionally is inalienably a Crown function--as, for instance, the administration of
justice--the municipality is in law presumed to represent the Crown, and the exemption applies.
Otherwise, it is outside that exemption, and, if impliedly exempted at all, some other principle must
be resorted to. The making and maintenance of streets in the municipality is not within either
proposition.

It is true, as observed by the Privy Council in Farnell v. Bowman[46] , that "the local Governments
in the Colonies, as pioneers of improvements, are frequently obliged to embark in undertakings
which in other countries are left to private enterprise, such, for instance, as the construction of
railways, canals, and other works." In New South Wales and Victoria, as in other Australian States,
the railways are governmental undertakings, and the Commissioners, for such a purpose as the
present, represent the Crown. But the undertaking of railways is not what Lord Watson calls "an
inalienable function of a constitutional government." The Deniliquin and Moama Railway is a
private enterprise; the Hobson's Bay Railway in Victoria was a private enterprise; the Mount Lyell
Railway in Tasmania is a private railway. Government tramways are assumed as governmental
functions; while municipal tramways are not, notwithstanding rules and regulations which govern
the traffic upon them. In Australia, when settlement began, the Government was obliged to
construct roads in the new country; but when municipal institutions arose that function was for local
purposes handed over to the municipalities, and where they did not exist the Government retained
the function. Where the transfer, however, took place, the municipality, as a matter of principle,
stood in relation to that function exactly as a municipality stood in England to the same function--
namely, it was simply local government as distinguished from general or Crown government, and
the rights, powers and privileges of the municipality depended on Statute. The passage above quoted
from the judgment of Lopes L.J. in the County Council of Middlesex Case[47] has close application.

What doctrine of construction, then, can by implication exclude municipalities in relation to such a
function from the constitutional purview of pl. XXXV. of sec. 51? Apart from the doctrine that the
Crown is not bound by Statute unless included by express words or clear intendment (Attorney-
General for New South Wales v. Curator of Intestate Estates[48] ), ordinary British law offers no
canon of construction which would have that effect. This is a doctrine as well recognized in
America in both Federal and State Courts as it is in our own jurisprudence. For instance, in Jones v.
Tatham[49] Lewis J. says: "The general business of the legislative power is to establish laws for
individuals, not for the Sovereign; and when the rights of the Commonwealth are to be transferred
or affected, the intention must be plainly expressed or necessarily implied." The Supreme Court of
the United States affirmed the principle in Guarantee Co. v. Title Guaranty Co.[50] . This
constitutional doctrine effectively guards the State Governments, and, under that denomination,
guards their agents and representatives within the terms of Lord Watson's judgment from coercion
by Federal law except where the State Government is expressly named in the Constitution or where
its subject matter indicates that the State Government also must be bound. But apart from that, the
question is one of conflict between two laws--Federal and State--both assumedly within respective
powers, and both in terms operating on the same persons or other subject matter. If power is
wanting cadit quæstio. But if the power exists in general terms and the law is passed in general
terms, then, apart from implied exclusion from the general term, it comes to a question of
supremacy.

The constitutional doctrine of the actual decision in D'Emden v. Pedder[51] is founded on the
principle of supremacy, and on nothing else (see pp. 110-111). It applied sec. 109 of the
Constitution; it assumed the power in each Parliament, so far as its own Constitution was concerned,
to pass the respective laws; it further assumed, as is the truth, that all executive power of a self-
governing Colony is ultimately referable for its authority to some legislative provision: it then
placed the true ultimate legislative authorities in juxtaposition, and declared in case of conflict the
supremacy of the Federal Constitution or Federal Act. That is precisely what Marshall C.J. said, in
McCulloch v. Maryland[52] , in these words: "There is a plain repugnance in conferring on one
government a power to control the constitutional measures of another, which other, with respect to
those very measures, is declared to be supreme over that which exerts the control." The same point
was very distinctly put, with respect to Federal officers' freedom from State control, in Ohio v.
Thomas[53] .

Stress, it is observed, is here laid on the fact that D'Emden v. Pedder[54] is an application of the
constitutional declaration of supremacy in sec. 109 of the Constitution, which itself rests for its
binding force on covering section V. of the Act--that section being, after all, the controlling
provision of the Imperial Parliament. And the reason stress is laid on that fact is that, although the
case itself declared the inability of the State to fetter Commonwealth agencies, it was argued that the
principle of the decision in that case must be reciprocal. As soon as it is perceived that the principle
of the decision is "supremacy," it is manifest that there can be no reciprocity. D'Emden v. Pedder,
therefore, can be laid aside so far as this case is concerned. Any application of the doctrine of
reciprocity must depend on some decision other than D'Emden v. Pedder, applying rightly or
wrongly the actual decision in that case. The only possible ground for excluding municipalities from
arbitral jurisdiction in any given case, is utter want of Federal power, apart from any opposing State
enactment. If the power exists, D'Emden v. Pedder annihilates the opposing enactment; if the power
does not exist, the case is inapplicable. The position is simply stated. The Constitution connotes the
continued existence unimpaired of both the Commonwealth and the States as governing bodies in
their respective spheres of jurisdiction. The King is the same King throughout Australia (Williams v.
Howarth[55] ). But his powers are not the same in every sphere of jurisdiction; and they are
exercised by different agents, differently constituted and authorized, according to the sphere of
jurisdiction in which they are to operate. The Constitution preserves the most absolute freedom of
action--legislative, executive and judicial--in every sphere, but subject to this qualification: that,
wherever there would otherwise be a conflict if the two agencies met on the same field, there shall
be no conflict, because, to the extent of interference with the operation of Commonwealth action,
State law shall be invalid--which also invalidates everything dependent upon it. Municipal powers,
which are the creation of State law, are not, as such, within the sphere of Commonwealth
jurisdiction, and therefore, in the main, conflict is not possible. But the lines of municipal powers
and action may at some points intersect Commonwealth powers, and, where they do,
Commonwealth law must prevail. This does not interfere with State legislative power, except to the
extent expressly stated by the Constitution; it does not interfere with State action at all, because the
municipal council is not a part of the State General Government, any more than an individual would
be if he were authorized by State law to make roads and charge tolls. On the basis of British
precedent, therefore, the jurisdiction is given by general words, which no other part of the
Constitution, on ordinary principles of construction, restricts, and which, therefore, according to R.
v. Burah[56] , no Court is entitled to limit.

Reliance, however, is placed on American authorities to the effect that municipalities are State
"instrumentalities." Those authorities cannot prevail here, if opposed to the principles underlying
our own jurisprudence. But a short reference to them may be desirable. The general principle of
State action is well established by the decisions in America. Perhaps, for the present purpose, it is as
well stated as anywhere in Ex parte Virginia[57] , where it is said:--"A State acts by its legislative,
its executive, or its judicial authorities. It can act in no other way." It is also a basic principle in
American jurisprudence that the power of the various State organs cannot be delegated. This
principle, however, as pointed out in Willoughby on the Constitution (vol. ii., sec. 774, p. 1317), is
subject to one exception. "The exception," says the learned author, "is with reference to the
delegation of powers to local governments." He says the exception is based on the antiquity of the
Anglo-Saxon practice of local government antedating the adoption of the Constitution. This view
may receive support from the judgment of Gray C.J. in Hill v. Boston[58] . Cooley on Constitutional
Limitations, 6th ed., chap. viii., pp. 226-227, expresses the matter somewhat differently. There we
find expressions which modify the notion that the municipality can be regarded in the same light as
the State. It is said, "The Legislature ... is not regarded as delegating its authority, because the
regulation of such local affairs as are commonly left to local boards and officers is not understood
as to belong properly to the State."

Undoubtedly we find various expressions to the effect that "public corporations are but parts of the
machinery employed in carrying on the affairs of the State" (Cooley, p. 229, note 2, quoting from
the judgment of a State Court). But the judicial opinions we meet with are varied in form. Some are
very close to the English view already cited. For instance, in Walla Walla City v. Walla Walla Water
Co.[59] Brown J., in delivering the unanimous opinion of the Court (which included the present
Chief Justice, the late Chief Justice Fuller and other eminent Judges) said:--"It may be conceded as
a general proposition that there is a substantial distinction between the acts of a municipality as the
agent of the State for the preservation of peace and the protection of persons and property, and its
acts as the agent of its citizens for the care and improvement of the public property and the
adaptation of the city for the purposes of residence and business." At p. 10 the learned Justice refers
to a case, where it was held that "a contract to put electric wires under ground was ... for the private
advantage of the city as a legal personality, distinct from considerations connected with the
government of the State at large, and that with reference to such contracts the city must be regarded
as a private corporation." Another case is referred to as to waterworks. No mention is made of
trading in electricity or water. Indeed, the observations on p. 11 show that trading is immaterial,
because the Court says, with reference to the case in hand, that the city might furnish the water free
of charge to its citizens and raise the necessary funds by a general tax. When other cases which were
referred to during the argument such as Vilas v. Manila[60] are considered in conjunction with the
Walla Walla Case[61] , they are not insusceptible of reduction to the same view as is taken in
England. Government control of the conduct of individuals is undoubtedly of a different nature
from trading functions, and both are distinct from power to contract for road making.

Sufficient has been said to indicate that American opinion cannot be said to be clearly and decidedly
opposed to the English rule: it always professes to follow the English notion of municipal status,
and nowhere is it based on any difference of result owing to the Federal system. Perhaps one of the
clearest cases illustrating the distinction between the State and the local public is Barree v. City of
Cape Girardeau[62] , citing Bullmaster v. City of Joseph[63] . But that case expressly treats the
making and care of streets as private municipal matters, and not as governmental.

In this situation the law as appearing from considerations of British law, as here understood, should
prevail, and the question should be so answered as to affirm the jurisdiction of the Court of
Conciliation and Arbitration over municipalities in respect of street construction and maintenance,
subject to the other branch of the respondents' argument with reference to the meaning of "industrial
dispute."

Higgins J

. read the following judgment:--

The question as amended relates only to persons employed by the municipalities in "the making,
maintenance, control and lighting of public streets" : Can there be an award as between the Union
and the municipalities?

It has been decided in the Railway Servants' Case[64] that the Court of Conciliation and Arbitration
has no powers either of conciliation or of arbitration as to disputes between State railway
commissioners and their employees--that a railway servants' union cannot even be registered.
Counsel for the Union attempted to impugn the decision in this case; but, as the majority of my
learned colleagues intimated that the attempt would be futile, counsel refrained from further
argument on the subject. In this judgment I treat the decision as binding.

The American cases cited as to interference with State "instrumentalities" (the term is not familiar in
English law) relate, in most cases, to taxation; and taxation is, in very nature, a burden on the person
taxed. For my part, I am not satisfied that the essential nature of the power conferred by sec. 51
(XXXV.) of the Constitution, and exercised by the Act made thereunder, has been sufficiently
considered. Conciliation is not necessarily a burden; arbitration, even if it end in a compulsory
award, is not necessarily a burden. These processes are primarily meant to aid both parties to the
dispute--meant as an aid to industrial peace, to the peaceful prosecution of the industries needed by
the public. Under the Act, the first duty of the Court, as to an industrial dispute of which it gets
cognizance, is to try to reconcile the parties, to get an agreement. It has no right to make an award
except to the extent that it cannot get an agreement (secs. 23, 24). It is found, indeed, that as the
principles of the Court become known the number of agreements is increasing, the number of
awards decreasing. Such an Act as our Australian Act is not, I think, dealt with in any American
cases. Under English law, Acts of Parliament do not bind the Crown unless by express words or by
necessary implication; but there is an exception when the Act is made for the public good, the
advancement of religion and justice, and to prevent injury and wrong (Bacon's Abridgment, 7th ed.,
vol. vi., p. 462; per Jessel M.R., Ex parte Postmaster-General[65] ).
But I shall assume that the Act is a burden in the same way that a tax is a burden. Who is exempt
from the burden? I shall first consider the matter on the lines of the English law. Does the Act bind
the Crown; and, if it does not bind the Crown, are municipalities agents of the Crown within the
rule exempting agents of the Crown as well as the Crown itself? The Crown is not bound by a
Statute unless by express words or necessary implication. This is a mere rule of construction--a rule
which yields to the clearly expressed intention of Parliament. In the case of this Act there is no
doubt as to the intention of Parliament to bind the Crown's undertakings; for, by sec. 4, an
"industrial dispute" of which the Court may take cognizance includes "any dispute in relation to
employment in an industry carried on by or under the control of the Commonwealth or a State, or
any public authority constituted under the Commonwealth or a State." There is no doubt, therefore,
that, if there be a two-State dispute in relation to employment in an industry carried on by or under
the control of a State or any public authority constituted under the State, the State--or the Crown in
right of the State--was not meant to be exempt from the provisions of the Act. But even if the
Crown and its agents were immune from the Act, municipalities are not agents of the Crown so as to
share in the immunity. The fact that municipalities exist for public purposes does not make them
immune. In England they have always been held liable to church rates, to sewers rates, to poor rates,
to income tax, to land tax (see Rawlinson, Municipal Corporation Act 1883, 8th ed., p. 220). The
same principle is applied to municipal corporations as to the trustees of the Mersey docks (Mersey
Docks v. Cameron[66] ), to the University of Edinburgh (Greig v. University of Edinburgh[67] ), to
Trinity House (Gilbert v. Trinity House[68] ). The distinction between governmental purposes and
purposes of local government is emphatically shown in the case of the County Council of Middlesex
v. Assessment Committee of St. George's Union[69] . In that case, the guild-hall of a county council
was used for a double purpose--the administration of justice (quarter sessions), and municipal
purposes; and it was held that the guild-hall was rateable so far as it was occupied for municipal
purposes, not rateable so far as it was occupied for the administration of justice--a strictly
governmental purpose, a function of the Crown. Therefore, so far as the English authorities are
concerned, there seems to be no possible ground for the contention that municipalities are not
subject to this Act.

But certain American authorities are invoked which treat municipal corporations as being "agencies"
or "instrumentalities" of the State, and as being, therefore, immune from the operation of Federal
laws. The immunity of the State itself from the operation of Federal laws does not rest on mere
construction; it is an immunity which no Act of the Federal Congress can take away. There is
nothing express in our Constitution in favour of the immunity. On the other hand, there is an express
provision that the Commonwealth shall not "impose any tax on property of any kind belonging to a
State" (sec. 114). At first sight, this express immunity ought to be treated as excluding any
implication of immunity from laws as to conciliation and arbitration. Under the covering section V.,
"all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on
the Courts, Judges, and people of every State ... notwithstanding anything in the laws of any State" ;
and under sec. 109 of the Constitution, when a law of a State is inconsistent with a law of the
Commonwealth the latter shall prevail. Under sec. 106, the whole Constitution of the State is
subject to the Federal Constitution--subject to the powers conferred by the latter Constitution on
the Federal Parliament with regard to the subjects specified. But I must treat the Railway Servants'
Case[70] as binding, and as involving the immunity of the State Ministers and the managers of State
railways from laws as to conciliation and arbitration. The question remains: Does the immunity
extend to municipalities?

Now, the Supreme Court of the United States speaks of such a corporation as being "a political
division of the State" (Van Brocklin v. State of Tennessee[71] ). "A municipal corporation is, so far
as its purely municipal relations are concerned, simply an agency of the State for conducting the
affairs of government" (Atkin v. Kansas[72] ). "A municipal corporation is the representative of the
State and one of the instrumentalities of the State Government" ; and therefore the property and
revenues of the municipality have been held to be not subject to Federal taxation (Pollock v.
Farmers' Loan and Trust Co.[73] ). Expressions of this sort are very numerous; but I cannot find
that they have any basis in our law, or that they are consistent with the history of English municipal
corporations. I have not had the time to satisfy myself as to the origin of this doctrine; but it would
seem to have found ready acceptance in a country in which, as de Tocqueville points out, municipal
officials collect the State taxes and carry out most of the State Statutes (Democracy in America
(1862), vol. i., p. 68). According to Ashley (Federal State, chap. xxi.), almost all the laws of the
State are carried out by local officials--Judges, sheriffs, health officers. But whatever may be the
history of the doctrine, it appears that the tendency of recent decisions is to draw a sharp line
between the ordinary activities of a municipality and the activities of a strictly governmental
character--such as the judiciary, the administration, the Legislature of the State. In the case of the
United States v. Railroad Co.[74] the Court said:--"The right of the States to administer their own
affairs through their legislative, executive, and judicial departments, in their own manner through
their own agencies, is conceded by the uniform decisions of this Court and by the practice of the
Federal Government from its organization. This carries with it an exemption of those agents and
instruments from the taxing power of the Federal Government." In the case of South Carolina v.
United States[75] , a State having taken up the business of selling intoxicating liquors, and the
question being whether its agents were liable to the Federal licence tax, the Court summed up the
position by saying that "the exemption of State agencies and instrumentalities from National
taxation is limited to those which are of a strictly governmental character." In the case of Flint v.
Stone Tracy Co.[76] the Court, after reviewing the cases, said:--"The cases unite in exempting from
Federal taxation the means and instrumentalities employed in carrying on the governmental
operations of the State. The exercise of such rights as the establishment of a judiciary, the
employment of officers to administer and execute the laws and similar governmental functions,
cannot be taxed by the Federal Government." [77] :--"It is no part of the essential governmental
functions of a State to provide means of transportation, supply artificial light, water and the like. ...
The true distinction is between the attempted taxation of those operations of the States essential to
the execution of its governmental functions, and which the State can only do itself, and those
activities which are of a private character." In Vilas v. Manila[78] the Court spoke of "the dual
character of municipal corporations. They exercise powers which are governmental and powers
which are of a private or business character. In the one character a municipal corporation is a
governmental subdivision, and for that purpose exercises by delegation a part of the sovereignty of
the State. In the other character it is a mere legal entity or juristic person. In the latter character it
stands for the community in the administration of local affairs wholly beyond the sphere of the
public purposes for which its governmental powers are conferred." I know of no American case
which lays it down that municipalities are exempt, as agents of the State or otherwise, from a
Federal Statute which purports to bind them--I mean, of course, a Federal Statute made within the
scope of the Federal powers--in matters outside the State's essential functions of legislation,
administration and the judiciary. No ground whatever has been adduced for treating the immunity of
State agencies as being wider in Australia than in the United States, as extending to the making,
maintenance, control and lighting of the public streets. These are not matters of the "strictly
governmental character" referred to in the American cases.

I very much doubt, also, whether it is proper, under our law, to call a municipality an agent of the
State at all. The municipality is created by the State, no doubt; but not everything created by the
State, even for the benefit of the people of a locality, is an agent of the State. There is an oak-tree--
a forbidden tree; it must not be touched--its fruit, or its leaves, or its wood. But the tree drops an
acorn which takes root. The young tree is not within the prohibition. To be a product is not to be an
agent. In the United States I find that State universities are called "agencies" of the State; but under
our law they would not be "agents" of the State in any relevant legal sense. The axiom Qui facit per
alium facit per se is inapplicable; the acts of such agencies are not the acts of the State as principal.
Are we prepared to follow the Courts of the United States in the corollaries of their doctrine that
municipalities are "political subdivisions" or "agencies" of the State? An employee who is injured
by the negligence of county asylum authorities (in regard to a steam mangle) has no remedy
(Hughes v. Co. of Munroe[79] ). A citizen is injured by the negligence of a municipality in blasting;
he has no cause of action (Howard v. Worcester[80] ). A child is injured by the neglect of the city to
keep a sound staircase for its school; an action will not lie (Hill v. Boston[81] ). Under our law,
municipalities are liable in damages for causing nuisances to a highway, or for neglect to repair a
sewer grating (Borough of Bathurst v. Macpherson[82] ; and see Municipal Council of Sydney v.
Bourke[83] ; Municipal Council of Willoughby v. Halstead[84] ). If the King is the principal, and the
municipality is his agent, how comes it that no attempts are made to treat municipal debentures as
Government debentures, to treat the Government as liable for the wages of street cleaners, or to treat
the Government as liable for the torts of municipalities? Under the Statutes of most of the
Australian States, and of the Commonwealth (Judiciary Act, secs. 56, &c.) the King is liable in
action of tort as well as of contract. In my opinion, there is nothing in the decided cases, either
American or English, to justify the proposition that municipalities are exempt from the operation of
Federal laws, or, in particular, from the operation of laws made under sec. 51 (XXXV.) of the
Constitution.

Gavan Duffy J.

I agree in the opinion of the majority of the Court, but I do not propose to deliver any reasoned
judgment until we have dealt with the whole matter.

Powers J.

I agree with my learned brothers who hold that municipal corporations established under State laws
are not, with regard to the making, maintenance, control or lighting of public streets,
instrumentalities of State Government, and, therefore, are not, in respect of such operations, exempt
from Commonwealth legislation under sec. 51 (XXXV.) of the Constitution.

Question answered in the affirmative.

Solicitors for the claimant organization, Farlow & Barker.

Solicitors for the respondents, Malleson, Stewart, Stawell & Nankivell; Maddock, Jamieson &
Lonie; T. W. K. Waldron; E. J. D. Guinness, Crown Solicitor for Victoria; J. V. Tillett, Crown
Solicitor for New South Wales; A. Banks-Smith, Crown Solicitor for Tasmania.

H C of A

20 June 1919

Barton, Isaacs, Higgins, Gavan Duffy, Powers and Rich JJ.
Bryant and Owen Dixon, for the claimant organization.

Starke and Stanley Lewis, for the City of Melbourne and certain Victorian municipalities.

Mann and Eager, for the Commonwealth, intervening.

Stanley Lewis, for the Municipal Council of Sydney.

Sir Edward Mitchell K.C. and Davis, for the State of Victoria, intervening.

J. A. Browne, for the State of New South Wales, intervening, and for the Sydney Harbour Trust,
intervening.

Cussen, for the State of Tasmania, intervening.

May 19, 1919

Griffith C.J.

read the following judgment:--

This case raises the question of the existence and extent of the immunity of municipalities as
instrumentalities of Government of the States. The matter came before the High Court in Federated
Engine-Drivers and Firemen's Association of Australasia v. Broken Hill Proprietary Co. [No. 1][85]
in 1911, when the Court intimated that, in its opinion, if a municipal corporation chooses to engage
in what has lately been called "municipal trading," and joins the ranks of employers in industries, it
is liable to the same Federal laws as other employers engaged in the same industries.

In that case various decisions of the Supreme Court of the United States of America were cited. This
Court left undecided, without expressing any opinion upon it, the question whether, and how far, a
municipality is subject to the jurisdiction or award of the Arbitration Court.

The principal American cases cited were the following:-- The Mayor v. Ray[86] , in which the
Court said:--"A municipal corporation is a subordinate branch of the domestic government of the
State. It is instituted for public purposes only; and has none of the peculiar qualities and
characteristics of a trading corporation, instituted for purposes of private gain, except that of acting
in a corporate capacity. Its objects, its responsibilities, and its powers are different. ... Our system of
local and municipal government is copied, in its general features, from that of England... They are
not trading corporations and ought not to become such." Meriwether v. Garrett[87] :--"Municipal
corporations are mere instrumentalities of the State for the more convenient administration of local
government. Their powers are such as the Legislature may confer ... This is common learning,
found in all adjudications on the subject of municipal bodies and repeated by text writers."
Stoutenburgh v. Hennick, in which Fuller[88] :--"It is a cardinal principle of our system of
government, that local affairs shall be managed by local authorities, and general affairs by the
central authority, and hence, while the rule is also fundamental that the power to make laws cannot
be delegated, the creation of municipalities exercising local self-government has never been held to
trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but
rather as the grant of the authority to prescribe local regulations, according to immemorial practice,
subject of course to the interposition of the superior in cases of necessity." Pollock v. Farmers' Loan
and Trust Co., in which Fuller[89] : "A municipal corporation is the representative of the State and
one of the instrumentalities of the State government." And the important case of South Carolina v.
United States[90] .

The present case was argued at the September sittings of the Court, when argument on the main
point was concluded, and the Court reserved judgment on it, leaving for further argument after
judgment the application to the different forms of municipal activity of any general rule which it
might lay down.

The matter now comes for our determination, and I will give my opinion.

I regard these decisions of the Supreme Court of the United States as to the immunities of municipal
corporations rather as historical expositions of the unwritten law which the thirteen colonies had
brought with them from the Mother Country and carried with them into the Union than as
interpretations of the Constitution of that Federation. As such, they are entitled to very great weight.
In the view of those eminent men, who were after all only stating matters of common knowledge, it
was part of the unwritten law and of the system of English government which the colonists brought
with them to America, that the functions of government were divided between the central
Government and the local or municipal bodies, and that certain powers were allocated to these latter,
not as agents or servants of the central Government, but as independent authorities, created by the
Legislature, and subject of course to it, but who were entitled as independent organs of the
Government of the Colony to equal freedom in the performance of their functions. And they did not
find anything in the Federal Constitution which authorized any interference with this freedom. The
doctrines of the law of master and servant, and of principal and agent, deal with matters on a lower
plane, and are wholly beside the question.

In my opinion, this exposition of the law is historically applicable to the Australian Colonies. And it
follows, in my opinion, that a municipal authority, in the discharge of that portion of the general
mass of State functions which had been entrusted to it at the date of Federation, is entitled to the
same immunity from Commonwealth interference as the State itself would be in the discharge of
similar functions.

Barton J

. read the following judgment:--

My learned brother Powers, as Deputy President of the Commonwealth Court of Conciliation and
Arbitration, asks the Bench to determine a question of great moment from the aspect of the relations
between Commonwealth and State in the Australian Federation. A dispute between the parties is
before him in that Court.

The claimant is a registered organization of employees. There are six hundred and fifty-eight
respondents, consisting mainly of city, municipal, borough and shire councils, which, for
convenience, are in the case grouped under the name of municipal corporations. Each of them exists
under the statutory law of one or other of the States of the Commonwealth. They are now
constituted under one or other of the Local Government Acts of Victoria, New South Wales or
Tasmania. The claims are in respect of work done by members of the organization employed by the
municipal corporations in municipal works which are not carried on for "municipal trading"
purposes. The organization contended that even in the case of such operations the Arbitration Court
had jurisdiction. The respondents denied this contention, their ground being that the municipal
corporations are instrumentalities of the States under which they are constituted.

The question originally submitted for the opinion of this Court was this: "Has the Commonwealth
Court of Conciliation and Arbitration power or jurisdiction to determine by an award the dispute
between the organization and the municipal corporations, constituted under or subject to the
provisions of the three Acts mentioned, so far as the dispute relates to such operations of the said
municipal corporations as do not consist of municipal trading?" During the argument, the learned
Deputy President, who was one of the Court, altered this question, with the approbation of the rest
of us, by striking out the final words, "as do not consist of municipal trading," and putting in their
place these words: "as consist of the making, maintenance, control and lighting of public streets or
any of them" --meaning, of course, the public streets of the municipality concerned. The arguments
followed in the main the lines of the contentions described in the case stated. Besides the parties to
the dispute, we had the advantage of hearing counsel for the Commonwealth and for each of the
States concerned, who had all obtained leave to intervene.

Apparently the question as altered, in its inclusion of street lighting, refers to the ordinary lighting
for public convenience, supported by municipal taxation, and not to the special lighting of places of
business and residences, &c., undertaken by contract with individuals and for profit. I mean that the
question includes only that lighting which it is contended is part of the governmental work of the
municipality, as distinct from that which is a mere commercial undertaking for pay or reward.
Although the principle at issue was touched in a previous case, as I shall point out, it now comes
before us for the first time as matter for decision. In the elaborate argument that we heard, many
cases were cited and discussed, but I propose to refer only to a few, comparatively, which may help
me in the process of elucidating the real question.

First, it is sufficient merely to mention such cases as D'Emden v. Pedder[91] ; Baxter v.
Commissioners of Taxation (N.S.W.)[92] ; The Railway Servants' Case[93] (a decision which, as the
Court intimated in the course of the present case, it would be a waste of time to attack). Taken
together, these cases, and indeed others, completely establish, as a necessary implication from the
whole scheme of the Constitution, the immunity of the Commonwealth or a State and the
instrumentalities or agencies of its government from interference at the hands of the other authority,
whether by way of taxation or otherwise; an immunity, as the last-mentioned case establishes, not in
any wise affected in the case of the States by the terms of sub-sec. XXXV. of sec. 51 in the
Constitution. I have no doubt that municipal corporations are such instrumentalities in respect of the
governing functions committed to them, and I propose to make that clear presently.

But it would be going a good deal further to say that municipal corporations are entitled to this
immunity from interference by the Commonwealth in respect of all of their operations. If they are
not, then it must be ascertained whether the immunity extends to such operations as are the subject
of the question raised by the case stated. The contention for the claimant is that municipal
corporations stand altogether outside this immunity, which is confined, they urge, to the case of the
directly governmental operations of the State itself; that municipal corporations are not in that sense
instrumentalities or agencies of the State, but independent bodies created for certain purposes and
not subject to the control of the State. Their position was likened to that which arose in Mersey
Docks v. Cameron[94] , Gilbert v. Corporation of Trinity House[95] , and similar cases, on which
much reliance was placed. But these cases do not apply to such a position as the present one. They
go to show the liability of certain corporations (not municipal), (1) to be taxed by the State to which
they belong, (2) to be sued for negligence by subjects of that State--in each case on the ground that
the corporation could not be held to share the immunity from liability of the Government of that
State. The corporation in the first-named case claimed immunity from taxation on the ground that
the Crown does not tax itself. The corporation in the Trinity House Case claimed immunity in an
action for negligence on the ground that "The King can do no wrong," since legislation, where the
Crown is not expressly mentioned, is held to apply to the subject and not to the Government. In both
instances the claim was rejected. But these corporations were not defending themselves from the
Government of any sphere extraneous to that of their own State on the ground that they were free
from interference from that quarter. The question of liability as between State and State or between
Commonwealth and State stands on wholly different grounds. It is not because the State may tax or
the citizen of that State may sue that the Commonwealth may tax or its citizens outside the State
may sue. The question has to be determined on different considerations. If, for instance, it were
admitted that the State of Victoria could tax its own municipal corporations, it would not follow that
the Commonwealth could for that reason tax the municipal corporations of Victoria. If the
Commonwealth could impose such taxation, which I am far from saying, it could only be by reason
of power given by the Constitution as in sec. 51 (II.). But power to interfere with municipal
corporations is not given anywhere by the Constitution. Indeed by the direct implication of sec. 51
(XX.) such corporations are protected from the legislative power of the Commonwealth. There is,
above all things, a prohibition underlying the whole of the Constitution, which, it is to be
remembered, is sedulous in preserving the respective spheres of State and Commonwealth. It is a
prohibition of action on the part of either tending to invade or impair, by means not distinctly
authorized, the powers of the other in the sphere allotted to the one or preserved to the other. And it
is in each case to be determined in which sphere is included the matter over which power is claimed.
Is, then, the control of municipal corporations within the sphere of the Commonwealth, or within
that of the State which creates them, and under which they subsist in the sense that their granted
powers can be increased, or diminished, or abolished at the will of the grantor, the Parliament of the
State? That question can only be answered in the negative. The cited case of Powell v. Apollo
Candle Co.[96] has nothing to do with this question so far as the main point decided is concerned;
though where the Judicial Committee held that duties levied by the Order in Council there in
question were really levied by the authority of the Legislature, and not that of the Executive, they
may have provided the present respondents with a useful analogy. These municipal bodies are
independent only in the sense that they may exercise the powers allotted to them without
interference save on the part of the State Legislature. They have power to pass subsidiary legislation
such as by-laws (in the case of some shires ordinances), but they are distinctly subordinate to the
powers of the State; they move entirely within the sphere of, and are subject to, its laws. But these
matters are no doubt of concern to the State, and, in fact, within its ambit, equivalent to national
matters. Such are, for instance, the making, maintenance, and control of communications. Of these
the State attends to railways, telegraphs, and main roads; the municipalities, to roads not main ones,
within their boundaries, and to streets. They are all part of one great concern. One may apply to the
State the words of Cockburn J. in Purcell v. Sowler[97] :--"The Court below seems to have
distinguished between the general and the local administration of the poor law, holding that the
general administration was a matter of national concern, while the administration in a particular
district was not. But it seems to me that whatever is a matter of public concern when administered in
one of the Government Departments, is matter of public concern when administered by the
subordinate authorities of a particular district. It is one of the characteristic features of the
government of this country that, instead of being centralized, many important branches of it are
committed to the conduct of local authorities. Thus the business of counties, and that of cities and
boroughs, is, to a great extent, conducted by local and municipal government. It is not, therefore,
because the matter under consideration is one which in its immediate consequences affects only a
particular neighbourhood that it is not a matter of public concern." True, these words were used in
deciding a libel case, but they are aptly descriptive of the relation of local authorities to the
government of the country concerned. And anyone, more especially if he has compared the Federal
Constitution with that of the State and considered the legislation of the latter, will admit that the
country concerned is in this connection the State and not the Commonwealth.

I turn to some American cases in addition to those cited by the learned Chief Justice. I refer to them
because the statements seem to me to be accurate and the reasoning cogent. In Ottawa v. Carey[98] ,
in 1883, Waite C.J. said:--"Municipal corporations are created to aid the State Government in the
regulation and administration of local affairs. They have only such powers of government as are
expressly granted them, or such as are necessary to carry into effect those that are granted. No
powers can be implied except such as are essential to the objects and purposes of the corporation as
created and established... To the extent of their authority they can bind the people and the property
subject to their regulation and governmental control by what they do, but beyond their corporate
powers their acts are of no effect." In other words, the State has granted to the corporation, during
the pleasure of the Legislature, some of its powers, and it retains the rest.

In United States v. Railroad Co.[99] it was held that a municipal corporation is a part of the
sovereign power of the State, and is not subject to taxation by Congress upon its municipal
revenues. Clifford and Miller[100] that "private property held by a corporation in a proprietary right,
and used merely in a commercial sense for the income, gains, and profits," which they thought the
subject of the litigation was in effect, might be taxable just the same as property used by an
individual or by any other corporation. That is, I think, undeniable. But the principle laid down by
the judgment of the Court stands unimpaired. In delivering it, Hunt[101] :--"A municipal
corporation like the City of Baltimore, is a representative not only of the State, but is a portion of its
governmental power. It is one of its creatures, made for a specific purpose, to exercise within a
limited sphere the powers of the State. The State may withdraw these local powers of government at
pleasure, and may, through its Legislature or other appointed channels, govern the local territory as
it governs the State at large. It may enlarge or contract its powers or destroy its existence. As a
portion of the State in the exercise of a limited portion of the powers of the State, its revenues, like
those of the State, are not subject to taxation" (i.e.[102] :--"Was it exercised for the benefit of the
municipality, that is, in the course of its municipal business or duties? In other words, was it acting
in its capacity of an agent of the State, delegated to exercise certain powers for the benefit of the
municipality called the City of Baltimore? Did it act as an auxiliary servant and trustee of the
supreme legislative power?" If it were so acting, the bonds were not taxable by Congress.

In Atkin v. Kansas[103] , where the decision was that it was within the power of a State,
notwithstanding the 14th amendment of the United States Constitution, to prescribe the conditions
on which it would permit public work to be done on behalf of itself or its municipalities, the Statute
impeached dealt with hours of labour, rates of wages, &c. The precise question decided is not in
issue here, nevertheless the case is important on the present question by reason of some passages in
the judgment of the Court, delivered by Harlan J., as to the relation existing between a State and its
municipal corporations. "Such corporations," [104] , "are the creatures, mere political subdivisions,
of the State for the purpose of exercising a part of its powers. They may exert only such powers as
are expressly granted to them, or such as may be necessarily implied from those granted. What they
lawfully do of a public character is done under the sanction of the State. They are, in every essential
sense, only auxiliaries of the State for the purposes of local government. They may be created, or,
having been created, their powers may be restricted or enlarged, or altogether withdrawn at the will
of the Legislature; the authority of the Legislature, when restricting or withdrawing such powers,
being subject only to the fundamental condition that the collective and individual rights of the
people of the municipality shall not thereby be destroyed."

The judgment cited a previous case of Williams v. Eggleston[105] , in which the Court had said: "A
municipal corporation is, so far as its purely municipal relations are concerned, simply an agency of
the State for conducting the affairs of government, and as such it is subject to the control of the
Legislature." [106] :--"Municipal corporations owe their origin to, and derive their powers and
rights wholly from, the Legislature. It breathes into them the breath of life, without which they
cannot exist. As it creates, so it may destroy. If it may destroy, it may abridge and control. Unless
there is some constitutional limitation on the right, the Legislature might, by a single act, if we can
suppose it capable of so great a folly and so great a wrong, sweep from existence all of the
municipal corporations of the State, and the corporations could not prevent it. We know of no
limitation on this right so far as the corporations themselves are concerned. They are, so to phrase it,
the mere tenants at will of the Legislature." [107] , "it is one of the functions of government to
provide public highways for the convenience and comfort of the people. Instead of undertaking that
work directly, the State invested one of its governmental agencies with power to care for it. Whether
done by the State directly or by one of its instrumentalities, the work was of a public, not private,
character." I fully adopt that proposition.

These strong passages harmonize in reason with the decision in Flint v. Stone Tracy Co.[108] ,
following South Carolina v. United States[109] , that the exemption from Federal taxation of the
means and instrumentalities employed in carrying on the governmental operations of the States does
not extend to State agencies and instrumentalities used for carrying on business of a private
character. This limitation of an admitted principle, of course, covers the operations of municipal
corporations which are conducted by municipal bodies for commercial or trading purposes: for
those of gain or profit and not for those of government.

It has been pointed out more than once from this Bench that when it cites American decisions it is
fully conscious that they are not authorities by which it is bound. But it is entitled to adopt the
reasoning adduced in support of such decisions when it is convinced of the soundness of the reasons
and when they are applicable to the facts of the case in hand. And in that conviction I apply to this
case the quotations I have made.

My views, as well as those of the learned Chief Justice and the late O'Connor J., as to the limitations
mentioned, are expressed, though extra-judicially, in Federated Engine-Drivers and Firemen's
Association of Australasia v. Broken Hill Proprietary Co. [No. 1][110] . I adhere as a matter of
decision to what, with my colleagues, I then put as an opinion invoked by the parties.

So far, then, as its "municipal trading" or the carrying on of business commercially for purposes of
gain and profit is concerned, a municipal corporation is, in my view, in no better position than a
private trading corporation, or indeed an individual, would occupy, and cannot claim immunity
from the exercise of Federal powers to any greater extent than such a company or person. But to the
extent that its functions which are exercised under the statutory authority of the State are
governmental, in the sense shown by the above observations and quotations, the municipal
corporation shares the immunity of the State itself from Federal interference, just as the
Commonwealth and its instrumentalities may not be undermined or impaired by the State.

The operations described in the question stated are, in my opinion, clearly governmental, and I
therefore hold that the Arbitration Court can no more interfere with the respondent municipal
organizations in these respects than could its creator, the Parliament of the Commonwealth.
I must therefore answer the question stated in the negative. This answer applies to the first branch of
the argument. As the majority of the Bench are of a different opinion, argument is to be taken on the
second branch--whether there can be an industrial dispute extending &c. between the municipal
corporations and their employees in respect of the operations mentioned, regard being had to par.
XXXV. of sec. 51 of the Constitution and also to the Conciliation and Arbitration Act of the
Commonwealth.

Isaacs and Rich JJ

. (read by Isaacs J.):--

As the case stands amended, the question of law stated for the opinion of this Court is whether the
Commonwealth Court of Conciliation and Arbitration has jurisdiction to settle a dispute as to wages
and hours, and other conditions of employment, between municipal corporations and such of their
employees as are employed in the construction and maintenance of the public streets of the
municipalities.

The argument upon this question has been divided into two branches. The first branch is whether the
words "industrial disputes" in pl. XXXV. of sec. 51 of the Constitution are limited to disputes in "an
industry" in the sense of a specific business or avocation in which both employer and employees are
engaged, or whether they extend to cover all disputes of an industrial nature--that is, for instance,
where the employees are engaged in industry in the broad sense by working in the service of the
employers and the dispute is as to the conditions of employment either as between employers and
employees or as between different classes of employees, such as demarcation disputes. The second
branch is whether, supposing the words "industrial disputes" have the wider connotation,
municipalities are subject to the jurisdiction of the Commonwealth tribunal, having regard to their
relation to the State system of government. The argument so far--though something was said as to
the first branch--was ultimately limited to the second branch, leaving the first to be argued out in
the event of the opinion of the Court on the second branch making that course necessary.

If municipalities, on the true construction of the Constitution, are outside the sphere of
Commonwealth jurisdiction, in relation to their construction and repair of roads, by reason of their
position as an "instrumentality," as it is called, of State government, it matters not whether road
construction or maintenance can or cannot be considered "an industry" in the narrower sense. The
language of pl. XXXV., read as part of sec. 51, is as follows: "The Parliament shall, subject to this
Constitution, have power to make laws for the peace, order, and good government of the
Commonwealth with respect to ... (xxxv.) Conciliation and arbitration for the prevention and
settlement of industrial disputes extending beyond the limits of any one State." No express
limitation is placed on the class of disputants in the placitum itself or elsewhere in the Constitution.

The laws, therefore, that may be made under that specific power, so far as any express limitation is
concerned, extend to all industrial disputes in the Commonwealth extending beyond the limits of
any one State. And covering section V. of the Constitution Act makes the Constitution itself, and all
laws made under it "binding on the Courts, Judges, and people of every State and of every part of
the Commonwealth, notwithstanding anything in the laws of any State." Any constitutional
exemption of municipalities from the operation of such laws must, therefore, rest upon some
implication of law, which when applied to pl. XXXV. excludes their industrial disputes from the
words "industrial disputes" there found.
It has already been decided by this Court (Federated Engine-Drivers and Firemen's Association of
Australasia v. Broken Hill Proprietary Co. [No. 2][111] ) that a municipal corporation in Victoria so
far as it engages in trading occupation, is subject to the jurisdiction of the Arbitration Court. This
shows that the mere fact that a corporation may be created or abolished by the State is no reason for
exemption from Commonwealth jurisdiction. A distinction was drawn in that case between trading
and non-trading operations, but, although trading operations were held to fall within the jurisdiction
of the Court, the decision did not lay down "trading" as the discrimen. It was not necessary to do so.
The question of how far non-trading operations attracted the jurisdiction was left undetermined. In
that case, "trading" and "governing" were contrasted; but there are municipal functions which are
neither the one nor the other. The care of parks and the establishment of free libraries could not
properly be brought under either head. We have now to consider the true line of demarcation, if
there is one. The question, then, as to the implied exclusion of non-trading operations from the
arbitral jurisdiction of the Commonwealth is this: Where do we find the restrictive implication of
law? It is suggested, using American terminology, that municipalities are "State instrumentalities."
Tested by British standards--which are the only legitimate standards--such a term, to have any
meaning which would attract a legal implication restricting the meaning of the words "industrial
disputes," must denote that municipalities are, in relation to the subject matter of disputes, true
functionaries of the State Government, that is, the King's Government.

A clear distinction must be noted and preserved between the expression "the Government of the
country" in the sense of the King's representatives or agents in the concrete sense, and the
expression "the government of the country" in the abstract sense of the process of governing the
country in whole or in part. The first denotes the persons who act, and the second denotes acts done.
Again, the functions performed by "the Government" in the concrete sense, including in that term
those who represent the Government pro hac vice, are the acts of the General Government, that is,
theoretically, the Crown; but there may be functions coming under the second head which are not in
any real sense acts of the General Government. For instance, as early as the reign of Queen Anne,
the Court of King's Bench said, speaking of a case concerning the City of London, "a corporation is
properly an investing the people of the place with the local government thereof, and therefore their
law shall bind strangers" (Cuddon v. Eastwick[112] ). A "by-law" is a law (Hopkins v. Swansea[113]
and London Association of Shipowners and Brokers v. London and India Docks Joint
Committee[114] ). In Arnold on Municipal Corporations (1851), at p. 3, there is the following
definition: "A municipal corporation, therefore, is a civil corporation aggregate, established for the
purpose of investing the inhabitants of a particular borough or place with the power of self-
government, and with certain other privileges and franchises." Royal Charters creating municipal
corporations and investing them with powers were not imposed on the locality, but were offered and
might be accepted or rejected; and, if accepted, it was taken that every person who chose to be or to
come within the area of the powers granted subjected himself to the control conferred. Indeed,
municipal corporations were the creation not merely of the Crown, but also of subjects who had jura
regalia. (See fully on this subject, Grant on Corporations, particularly pp. 10 et seqq.) The Act of
1835 (5 & 6 Will. IV. c. 76), which was referred to in argument, did not destroy the old
corporations; they remained, but under new governmental powers (Attorney-General v. Corporation
of Leicester[115] ). The charters creating new corporations were still issued under the royal
prerogative, although, when once created, the new municipality is pro tanto invested with the
statutory functions and powers (Grant, p. 16).

By various later English enactments, many municipal corporations were enabled to undertake works
some of which may usefully be referred to here; as, for instance, the establishment of museums of
art and science, the providing of baths and wash-houses, the removal of nuisances, the appointment
of police constables, and the establishment of salaried police magistrates. They may, at common
law, be liable to repair highways and bridges, and may make rates for the purpose; they could in
some instances supply water, and impose water rates. All these instances and others, with the
appropriate authorities and references, are to be found in Grant on Corporations, passim, and in the
article "Municipal Corporations" by Mr. Manson in the Encyclopoedia of the Laws of England (2nd
ed.), vol. ix., pp. 466 et seqq. The later English legislation does not affect the fundamental character
of the system. To borrow Mr. Manson's quotation, the motto is "Spartam nactus es, hanc exorna."
The duties and functions of the corporation are, at least in the main, entirely local and for the benefit
and advantage of the inhabitants of the locality or persons transiently coming there.

The distinction between the functions of such bodies and those of the General Government has been
very clearly marked by the Courts. The fundamental case is Coomber v. Justices of Berks[116] . But,
before quoting the ruling passage from that case, reference should be made to some other cases. In
R. v. Mayor of Sheffield[117] Blackburn J. refers to the reason why the Act of 1835 was passed,
namely, to control the corporations, to cut down their ownership of the municipal property, and to
check their expenditure by appropriating the fund to certain purposes such as debts, police expenses,
prosecutions, payment of constables, &c., and any surplus "for the public benefit of the inhabitants
and improvement of the borough" --deficiencies to be made good by rates. This view was adopted
by Jessel M.R. in Attorney-General v. Mayor of Brecon[118] [119] , "is part of the municipal
government of the town," and "is vested in the corporation for the benefit of the town as part of the
government of the town; and he who seeks to interfere with the privileges and duties connected with
the regulations must be resisted, and, of course, resisted at the expense of the corporation."

This all tends to show, both by its affirmative propositions and negatively by the absence of any
reference to the Crown or the Attorney-General, that the municipality was regarded in relation to its
rights and powers as independent of the General Government acting for the whole country. Then the
Courts have also had to consider the position of municipalities from the standpoint of their
obligation to contribute to rates. Prior to the Act of 1835, municipalities were liable to the poor rate
(R. v. Mayor of York[120] ). In 1839 and 1840 the Court of Queen's Bench held them no longer
liable, having regard to the provisions of the Act of 1835, sec. 92, and the public nature of their
functions (R. v. Mayor of Liverpool[121] and R. v. Inhabitants of Exminster[122] ). Lord Denman
C.J., in the Liverpool Case[123] , spoke of the "public" purposes as in "extent and approximation to
something like national benefit." Parliament, however, in 1841, by Act 4 & 5 Vict. c. 48 promptly
rejected the notion of any such intention on its part in passing the Act of 1835. After reciting the
decisions, it declared the expediency of the municipal corporations being rateable, and enacted that
they should be rated.

There was, of course, always the Crown exemption, because the Crown was not included expressly
or by necessary implication. In County Council of Middlesex v. St. George's Union[124] it was
expressly argued for the County Council, whose property was sought to be assessed, that it was
exempt because "the government of each county is none the less administered by the Sovereign
according to the theory of the Constitution because it is administered through local agencies." On
the other hand, it was contended for the Assessment Committee that "it is not enough that it should
be used for purposes of government; it must be used for the purposes of that part of the government
of the country which is theoretically administered by the Crown." In delivering judgment Cave[125]
that in the authorities "a distinction has been drawn between Crown or Imperial purposes, such as
the administration of justice, and purposes of local government." The learned Judge also observed:
"whether a municipal authority be created by charter or by Statute, its purposes must equally be
local." Wills[126] the arguments were repeated and the judgment affirmed. There is, however, one
passage in the judgment of Lopes[127] which deserves special notice. The Lord Justice first refers to
Lord Westbury's judgment in Mersey Docks v. Cameron[128] , where that learned Lord uses the
phrase "the Government of the country" in the concrete sense of the King's Government. Then
Lopes L.J. states the inclination of his opinion that prior to 1888 the whole of the building would
have been exempt "because at that time the administrative business of the county was done by the
justices in Quarter Sessions assembled as such, and by virtue of the authority which they derived
from the Crown." "But," proceeds the learned Judge, "in 1888 a great change took place. The
judicial business of the county continued to be performed by the justices in Quarter Sessions, but the
administrative business was transferred to the County Council, who in performing their functions do
not act by virtue of any judicial office, or as being servants of the Crown." And so he held that so
much of the building as was occupied for Crown purposes was not rateable; but so much as was
occupied by the County Council for administrative or municipal purposes was rateable.

These decisions applied the principle of Coomber's Case[129] , which is stated most clearly by Lord
Watson at p. 74. The learned Lord adopted Lord Chancellor Westbury's view that the exemption of
the Crown extends "not only to the immediate and actual servants of the Crown but to all other
persons, not being servants of the Crown, whose occupation was ascribable to a bare trust for
purposes required and created by the Government of the country." Then Lord Watson proceeded to
say: "Seeing that, in my opinion, the administration of justice, the maintenance of order, and the
repression of crime, are among the primary and inalienable functions of a constitutional
Government, I have no hesitation in holding that Assize Courts and police stations have been erected
for proper government purposes and uses, although the duty of providing and maintaining them has
been cast upon county or other local authorities." Here we have the discrimen of Crown exemption.
If a municipality either (1) is legally empowered to perform and does perform any function
whatever for the Crown, or (2) is lawfully empowered to perform and does perform any function
which constitutionally is inalienably a Crown function--as, for instance, the administration of
justice--the municipality is in law presumed to represent the Crown, and the exemption applies.
Otherwise, it is outside that exemption, and, if impliedly exempted at all, some other principle must
be resorted to. The making and maintenance of streets in the municipality is not within either
proposition.

It is true, as observed by the Privy Council in Farnell v. Bowman[130] , that "the local Governments
in the Colonies, as pioneers of improvements, are frequently obliged to embark in undertakings
which in other countries are left to private enterprise, such, for instance, as the construction of
railways, canals, and other works." In New South Wales and Victoria, as in other Australian States,
the railways are governmental undertakings, and the Commissioners, for such a purpose as the
present, represent the Crown. But the undertaking of railways is not what Lord Watson calls "an
inalienable function of a constitutional government." The Deniliquin and Moama Railway is a
private enterprise; the Hobson's Bay Railway in Victoria was a private enterprise; the Mount Lyell
Railway in Tasmania is a private railway. Government tramways are assumed as governmental
functions; while municipal tramways are not, notwithstanding rules and regulations which govern
the traffic upon them. In Australia, when settlement began, the Government was obliged to
construct roads in the new country; but when municipal institutions arose that function was for local
purposes handed over to the municipalities, and where they did not exist the Government retained
the function. Where the transfer, however, took place, the municipality, as a matter of principle,
stood in relation to that function exactly as a municipality stood in England to the same function--
namely, it was simply local government as distinguished from general or Crown government, and
the rights, powers and privileges of the municipality depended on Statute. The passage above quoted
from the judgment of Lopes L.J. in the County Council of Middlesex Case[131] has close
application.

What doctrine of construction, then, can by implication exclude municipalities in relation to such a
function from the constitutional purview of pl. XXXV. of sec. 51? Apart from the doctrine that the
Crown is not bound by Statute unless included by express words or clear intendment (Attorney-
General for New South Wales v. Curator of Intestate Estates[132] ), ordinary British law offers no
canon of construction which would have that effect. This is a doctrine as well recognized in
America in both Federal and State Courts as it is in our own jurisprudence. For instance, in Jones v.
Tatham[133] Lewis J. says: "The general business of the legislative power is to establish laws for
individuals, not for the Sovereign; and when the rights of the Commonwealth are to be transferred
or affected, the intention must be plainly expressed or necessarily implied." The Supreme Court of
the United States affirmed the principle in Guarantee Co. v. Title Guaranty Co.[134] . This
constitutional doctrine effectively guards the State Governments, and, under that denomination,
guards their agents and representatives within the terms of Lord Watson's judgment from coercion
by Federal law except where the State Government is expressly named in the Constitution or where
its subject matter indicates that the State Government also must be bound. But apart from that, the
question is one of conflict between two laws--Federal and State--both assumedly within respective
powers, and both in terms operating on the same persons or other subject matter. If power is
wanting cadit quæstio. But if the power exists in general terms and the law is passed in general
terms, then, apart from implied exclusion from the general term, it comes to a question of
supremacy.

The constitutional doctrine of the actual decision in D'Emden v. Pedder[135] is founded on the
principle of supremacy, and on nothing else (see pp. 110-111). It applied sec. 109 of the
Constitution; it assumed the power in each Parliament, so far as its own Constitution was concerned,
to pass the respective laws; it further assumed, as is the truth, that all executive power of a self-
governing Colony is ultimately referable for its authority to some legislative provision: it then
placed the true ultimate legislative authorities in juxtaposition, and declared in case of conflict the
supremacy of the Federal Constitution or Federal Act. That is precisely what Marshall C.J. said, in
McCulloch v. Maryland[136] , in these words: "There is a plain repugnance in conferring on one
government a power to control the constitutional measures of another, which other, with respect to
those very measures, is declared to be supreme over that which exerts the control." The same point
was very distinctly put, with respect to Federal officers' freedom from State control, in Ohio v.
Thomas[137] .

Stress, it is observed, is here laid on the fact that D'Emden v. Pedder[138] is an application of the
constitutional declaration of supremacy in sec. 109 of the Constitution, which itself rests for its
binding force on covering section V. of the Act--that section being, after all, the controlling
provision of the Imperial Parliament. And the reason stress is laid on that fact is that, although the
case itself declared the inability of the State to fetter Commonwealth agencies, it was argued that the
principle of the decision in that case must be reciprocal. As soon as it is perceived that the principle
of the decision is "supremacy," it is manifest that there can be no reciprocity. D'Emden v. Pedder,
therefore, can be laid aside so far as this case is concerned. Any application of the doctrine of
reciprocity must depend on some decision other than D'Emden v. Pedder, applying rightly or
wrongly the actual decision in that case. The only possible ground for excluding municipalities from
arbitral jurisdiction in any given case, is utter want of Federal power, apart from any opposing State
enactment. If the power exists, D'Emden v. Pedder annihilates the opposing enactment; if the power
does not exist, the case is inapplicable. The position is simply stated. The Constitution connotes the
continued existence unimpaired of both the Commonwealth and the States as governing bodies in
their respective spheres of jurisdiction. The King is the same King throughout Australia (Williams v.
Howarth[139] ). But his powers are not the same in every sphere of jurisdiction; and they are
exercised by different agents, differently constituted and authorized, according to the sphere of
jurisdiction in which they are to operate. The Constitution preserves the most absolute freedom of
action--legislative, executive and judicial--in every sphere, but subject to this qualification: that,
wherever there would otherwise be a conflict if the two agencies met on the same field, there shall
be no conflict, because, to the extent of interference with the operation of Commonwealth action,
State law shall be invalid--which also invalidates everything dependent upon it. Municipal powers,
which are the creation of State law, are not, as such, within the sphere of Commonwealth
jurisdiction, and therefore, in the main, conflict is not possible. But the lines of municipal powers
and action may at some points intersect Commonwealth powers, and, where they do,
Commonwealth law must prevail. This does not interfere with State legislative power, except to the
extent expressly stated by the Constitution; it does not interfere with State action at all, because the
municipal council is not a part of the State General Government, any more than an individual would
be if he were authorized by State law to make roads and charge tolls. On the basis of British
precedent, therefore, the jurisdiction is given by general words, which no other part of the
Constitution, on ordinary principles of construction, restricts, and which, therefore, according to R.
v. Burah[140] , no Court is entitled to limit.

Reliance, however, is placed on American authorities to the effect that municipalities are State
"instrumentalities." Those authorities cannot prevail here, if opposed to the principles underlying
our own jurisprudence. But a short reference to them may be desirable. The general principle of
State action is well established by the decisions in America. Perhaps, for the present purpose, it is as
well stated as anywhere in Ex parte Virginia[141] , where it is said:--"A State acts by its legislative,
its executive, or its judicial authorities. It can act in no other way." It is also a basic principle in
American jurisprudence that the power of the various State organs cannot be delegated. This
principle, however, as pointed out in Willoughby on the Constitution (vol. ii., sec. 774, p. 1317), is
subject to one exception. "The exception," says the learned author, "is with reference to the
delegation of powers to local governments." He says the exception is based on the antiquity of the
Anglo-Saxon practice of local government antedating the adoption of the Constitution. This view
may receive support from the judgment of Gray C.J. in Hill v. Boston[142] . Cooley on
Constitutional Limitations, 6th ed., chap. viii., pp. 226-227, expresses the matter somewhat
differently. There we find expressions which modify the notion that the municipality can be
regarded in the same light as the State. It is said, "The Legislature ... is not regarded as delegating its
authority, because the regulation of such local affairs as are commonly left to local boards and
officers is not understood as to belong properly to the State."

Undoubtedly we find various expressions to the effect that "public corporations are but parts of the
machinery employed in carrying on the affairs of the State" (Cooley, p. 229, note 2, quoting from
the judgment of a State Court). But the judicial opinions we meet with are varied in form. Some are
very close to the English view already cited. For instance, in Walla Walla City v. Walla Walla Water
Co.[143] Brown J., in delivering the unanimous opinion of the Court (which included the present
Chief Justice, the late Chief Justice Fuller and other eminent Judges) said:--"It may be conceded as
a general proposition that there is a substantial distinction between the acts of a municipality as the
agent of the State for the preservation of peace and the protection of persons and property, and its
acts as the agent of its citizens for the care and improvement of the public property and the
adaptation of the city for the purposes of residence and business." At p. 10 the learned Justice refers
to a case, where it was held that "a contract to put electric wires under ground was ... for the private
advantage of the city as a legal personality, distinct from considerations connected with the
government of the State at large, and that with reference to such contracts the city must be regarded
as a private corporation." Another case is referred to as to waterworks. No mention is made of
trading in electricity or water. Indeed, the observations on p. 11 show that trading is immaterial,
because the Court says, with reference to the case in hand, that the city might furnish the water free
of charge to its citizens and raise the necessary funds by a general tax. When other cases which were
referred to during the argument such as Vilas v. Manila[144] are considered in conjunction with the
Walla Walla Case[145] , they are not insusceptible of reduction to the same view as is taken in
England. Government control of the conduct of individuals is undoubtedly of a different nature
from trading functions, and both are distinct from power to contract for road making.

Sufficient has been said to indicate that American opinion cannot be said to be clearly and decidedly
opposed to the English rule: it always professes to follow the English notion of municipal status,
and nowhere is it based on any difference of result owing to the Federal system. Perhaps one of the
clearest cases illustrating the distinction between the State and the local public is Barree v. City of
Cape Girardeau[146] , citing Bullmaster v. City of Joseph[147] . But that case expressly treats the
making and care of streets as private municipal matters, and not as governmental.

In this situation the law as appearing from considerations of British law, as here understood, should
prevail, and the question should be so answered as to affirm the jurisdiction of the Court of
Conciliation and Arbitration over municipalities in respect of street construction and maintenance,
subject to the other branch of the respondents' argument with reference to the meaning of "industrial
dispute."

Higgins J

. read the following judgment:--

The question as amended relates only to persons employed by the municipalities in "the making,
maintenance, control and lighting of public streets" : Can there be an award as between the Union
and the municipalities?

It has been decided in the Railway Servants' Case[148] that the Court of Conciliation and
Arbitration has no powers either of conciliation or of arbitration as to disputes between State
railway commissioners and their employees--that a railway servants' union cannot even be
registered. Counsel for the Union attempted to impugn the decision in this case; but, as the majority
of my learned colleagues intimated that the attempt would be futile, counsel refrained from further
argument on the subject. In this judgment I treat the decision as binding.

The American cases cited as to interference with State "instrumentalities" (the term is not familiar in
English law) relate, in most cases, to taxation; and taxation is, in very nature, a burden on the person
taxed. For my part, I am not satisfied that the essential nature of the power conferred by sec. 51
(XXXV.) of the Constitution, and exercised by the Act made thereunder, has been sufficiently
considered. Conciliation is not necessarily a burden; arbitration, even if it end in a compulsory
award, is not necessarily a burden. These processes are primarily meant to aid both parties to the
dispute--meant as an aid to industrial peace, to the peaceful prosecution of the industries needed by
the public. Under the Act, the first duty of the Court, as to an industrial dispute of which it gets
cognizance, is to try to reconcile the parties, to get an agreement. It has no right to make an award
except to the extent that it cannot get an agreement (secs. 23, 24). It is found, indeed, that as the
principles of the Court become known the number of agreements is increasing, the number of
awards decreasing. Such an Act as our Australian Act is not, I think, dealt with in any American
cases. Under English law, Acts of Parliament do not bind the Crown unless by express words or by
necessary implication; but there is an exception when the Act is made for the public good, the
advancement of religion and justice, and to prevent injury and wrong (Bacon's Abridgment, 7th ed.,
vol. vi., p. 462; per Jessel M.R., Ex parte Postmaster-General[149] ).

But I shall assume that the Act is a burden in the same way that a tax is a burden. Who is exempt
from the burden? I shall first consider the matter on the lines of the English law. Does the Act bind
the Crown; and, if it does not bind the Crown, are municipalities agents of the Crown within the
rule exempting agents of the Crown as well as the Crown itself? The Crown is not bound by a
Statute unless by express words or necessary implication. This is a mere rule of construction--a rule
which yields to the clearly expressed intention of Parliament. In the case of this Act there is no
doubt as to the intention of Parliament to bind the Crown's undertakings; for, by sec. 4, an
"industrial dispute" of which the Court may take cognizance includes "any dispute in relation to
employment in an industry carried on by or under the control of the Commonwealth or a State, or
any public authority constituted under the Commonwealth or a State." There is no doubt, therefore,
that, if there be a two-State dispute in relation to employment in an industry carried on by or under
the control of a State or any public authority constituted under the State, the State--or the Crown in
right of the State--was not meant to be exempt from the provisions of the Act. But even if the
Crown and its agents were immune from the Act, municipalities are not agents of the Crown so as to
share in the immunity. The fact that municipalities exist for public purposes does not make them
immune. In England they have always been held liable to church rates, to sewers rates, to poor rates,
to income tax, to land tax (see Rawlinson, Municipal Corporation Act 1883, 8th ed., p. 220). The
same principle is applied to municipal corporations as to the trustees of the Mersey docks (Mersey
Docks v. Cameron[150] ), to the University of Edinburgh (Greig v. University of Edinburgh[151] ),
to Trinity House (Gilbert v. Trinity House[152] ). The distinction between governmental purposes
and purposes of local government is emphatically shown in the case of the County Council of
Middlesex v. Assessment Committee of St. George's Union[153] . In that case, the guild-hall of a
county council was used for a double purpose--the administration of justice (quarter sessions), and
municipal purposes; and it was held that the guild-hall was rateable so far as it was occupied for
municipal purposes, not rateable so far as it was occupied for the administration of justice--a
strictly governmental purpose, a function of the Crown. Therefore, so far as the English authorities
are concerned, there seems to be no possible ground for the contention that municipalities are not
subject to this Act.

But certain American authorities are invoked which treat municipal corporations as being "agencies"
or "instrumentalities" of the State, and as being, therefore, immune from the operation of Federal
laws. The immunity of the State itself from the operation of Federal laws does not rest on mere
construction; it is an immunity which no Act of the Federal Congress can take away. There is
nothing express in our Constitution in favour of the immunity. On the other hand, there is an express
provision that the Commonwealth shall not "impose any tax on property of any kind belonging to a
State" (sec. 114). At first sight, this express immunity ought to be treated as excluding any
implication of immunity from laws as to conciliation and arbitration. Under the covering section V.,
"all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on
the Courts, Judges, and people of every State ... notwithstanding anything in the laws of any State" ;
and under sec. 109 of the Constitution, when a law of a State is inconsistent with a law of the
Commonwealth the latter shall prevail. Under sec. 106, the whole Constitution of the State is
subject to the Federal Constitution--subject to the powers conferred by the latter Constitution on
the Federal Parliament with regard to the subjects specified. But I must treat the Railway Servants'
Case[154] as binding, and as involving the immunity of the State Ministers and the managers of
State railways from laws as to conciliation and arbitration. The question remains: Does the
immunity extend to municipalities?

Now, the Supreme Court of the United States speaks of such a corporation as being "a political
division of the State" (Van Brocklin v. State of Tennessee[155] ). "A municipal corporation is, so far
as its purely municipal relations are concerned, simply an agency of the State for conducting the
affairs of government" (Atkin v. Kansas[156] ). "A municipal corporation is the representative of the
State and one of the instrumentalities of the State Government" ; and therefore the property and
revenues of the municipality have been held to be not subject to Federal taxation (Pollock v.
Farmers' Loan and Trust Co.[157] ). Expressions of this sort are very numerous; but I cannot find
that they have any basis in our law, or that they are consistent with the history of English municipal
corporations. I have not had the time to satisfy myself as to the origin of this doctrine; but it would
seem to have found ready acceptance in a country in which, as de Tocqueville points out, municipal
officials collect the State taxes and carry out most of the State Statutes (Democracy in America
(1862), vol. i., p. 68). According to Ashley (Federal State, chap. xxi.), almost all the laws of the
State are carried out by local officials--Judges, sheriffs, health officers. But whatever may be the
history of the doctrine, it appears that the tendency of recent decisions is to draw a sharp line
between the ordinary activities of a municipality and the activities of a strictly governmental
character--such as the judiciary, the administration, the Legislature of the State. In the case of the
United States v. Railroad Co.[158] the Court said:--"The right of the States to administer their own
affairs through their legislative, executive, and judicial departments, in their own manner through
their own agencies, is conceded by the uniform decisions of this Court and by the practice of the
Federal Government from its organization. This carries with it an exemption of those agents and
instruments from the taxing power of the Federal Government." In the case of South Carolina v.
United States[159] , a State having taken up the business of selling intoxicating liquors, and the
question being whether its agents were liable to the Federal licence tax, the Court summed up the
position by saying that "the exemption of State agencies and instrumentalities from National
taxation is limited to those which are of a strictly governmental character." In the case of Flint v.
Stone Tracy Co.[160] the Court, after reviewing the cases, said:--"The cases unite in exempting
from Federal taxation the means and instrumentalities employed in carrying on the governmental
operations of the State. The exercise of such rights as the establishment of a judiciary, the
employment of officers to administer and execute the laws and similar governmental functions,
cannot be taxed by the Federal Government." [161] :--"It is no part of the essential governmental
functions of a State to provide means of transportation, supply artificial light, water and the like. ...
The true distinction is between the attempted taxation of those operations of the States essential to
the execution of its governmental functions, and which the State can only do itself, and those
activities which are of a private character." In Vilas v. Manila[162] the Court spoke of "the dual
character of municipal corporations. They exercise powers which are governmental and powers
which are of a private or business character. In the one character a municipal corporation is a
governmental subdivision, and for that purpose exercises by delegation a part of the sovereignty of
the State. In the other character it is a mere legal entity or juristic person. In the latter character it
stands for the community in the administration of local affairs wholly beyond the sphere of the
public purposes for which its governmental powers are conferred." I know of no American case
which lays it down that municipalities are exempt, as agents of the State or otherwise, from a
Federal Statute which purports to bind them--I mean, of course, a Federal Statute made within the
scope of the Federal powers--in matters outside the State's essential functions of legislation,
administration and the judiciary. No ground whatever has been adduced for treating the immunity of
State agencies as being wider in Australia than in the United States, as extending to the making,
maintenance, control and lighting of the public streets. These are not matters of the "strictly
governmental character" referred to in the American cases.

I very much doubt, also, whether it is proper, under our law, to call a municipality an agent of the
State at all. The municipality is created by the State, no doubt; but not everything created by the
State, even for the benefit of the people of a locality, is an agent of the State. There is an oak-tree--
a forbidden tree; it must not be touched--its fruit, or its leaves, or its wood. But the tree drops an
acorn which takes root. The young tree is not within the prohibition. To be a product is not to be an
agent. In the United States I find that State universities are called "agencies" of the State; but under
our law they would not be "agents" of the State in any relevant legal sense. The axiom Qui facit per
alium facit per se is inapplicable; the acts of such agencies are not the acts of the State as principal.
Are we prepared to follow the Courts of the United States in the corollaries of their doctrine that
municipalities are "political subdivisions" or "agencies" of the State? An employee who is injured
by the negligence of county asylum authorities (in regard to a steam mangle) has no remedy
(Hughes v. Co. of Munroe[163] ). A citizen is injured by the negligence of a municipality in
blasting; he has no cause of action (Howard v. Worcester[164] ). A child is injured by the neglect of
the city to keep a sound staircase for its school; an action will not lie (Hill v. Boston[165] ). Under
our law, municipalities are liable in damages for causing nuisances to a highway, or for neglect to
repair a sewer grating (Borough of Bathurst v. Macpherson[166] ; and see Municipal Council of
Sydney v. Bourke[167] ; Municipal Council of Willoughby v. Halstead[168] ). If the King is the
principal, and the municipality is his agent, how comes it that no attempts are made to treat
municipal debentures as Government debentures, to treat the Government as liable for the wages of
street cleaners, or to treat the Government as liable for the torts of municipalities? Under the
Statutes of most of the Australian States, and of the Commonwealth (Judiciary Act, secs. 56, &c.)
the King is liable in action of tort as well as of contract. In my opinion, there is nothing in the
decided cases, either American or English, to justify the proposition that municipalities are exempt
from the operation of Federal laws, or, in particular, from the operation of laws made under sec. 51
(XXXV.) of the Constitution.

Gavan Duffy J.

I agree in the opinion of the majority of the Court, but I do not propose to deliver any reasoned
judgment until we have dealt with the whole matter.

Powers J.

I agree with my learned brothers who hold that municipal corporations established under State laws
are not, with regard to the making, maintenance, control or lighting of public streets,
instrumentalities of State Government, and, therefore, are not, in respect of such operations, exempt
from Commonwealth legislation under sec. 51 (XXXV.) of the Constitution.

Question answered in the affirmative.

Solicitors for the claimant organization, Farlow & Barker.

Solicitors for the respondents, Malleson, Stewart, Stawell & Nankivell; Maddock, Jamieson &
Lonie; T. W. K. Waldron; E. J. D. Guinness, Crown Solicitor for Victoria; J. V. Tillett, Crown
Solicitor for New South Wales; A. Banks-Smith, Crown Solicitor for Tasmania.
1. [1911] HCA 31; 12 C.L.R., 398.
2. [1873] USSC 103; 86 U.S., 468, at pp. 475-476.
3. 102 U.S., at p. 511.
4. 129 U.S., at p. 147.
5. 157 U.S., at p. 584.
6. [1905] USSC 184; 199 U.S., 437.
7. [1904] HCA 1; 1 C.L.R., 91.
8. [1907] HCA 76; 4 C.L.R., 1087.
9. [1906] HCA 94; 4 C.L.R., 488.
10. [1865] EngR 610; 11 H.L.C., 443; 11 Eng. Rep., 1405.
11. 17 Q.B.D., 795.
12. 10 App. Cas., 282.
13. 2 C.P.D., at p. 218.
14. 108 U.S., 110, at p. 121.
15. [1872] USSC 164; 17 Wall., 322.
16. 17 Wall., at p. 334.
17. 17 Wall., at p. 329.
18. 17 Wall., at p. 330.
19. [1903] USSC 192; 191 U.S., 207.
20. 191 U.S., at pp. 220-221.
21. [1898] USSC 81; 170 U.S., 304, at p. 310.
22. 191 U.S., at p. 221.
23. 191 U.S., at p. 222.
24. [1911] USSC 40; 220 U.S., 107.
25. [1905] USSC 184; 199 U.S., 437.
26. [1911] HCA 31; 12 C.L.R., 398.
27. [1913] HCA 71; 16 C.L.R., 245
28. 1 Salk., 192.
29. [1839] EngR 122; 4 M. & W., 621, at p. 640.
30. (1892) 3 Ch., 242, at p. 252.
31. [1846] EngR 597; 9 Beav., 546.
32. 9 App. Cas., 61.
33. L.R. 6 Q.B., 652, at p. 661.
34. 10 Ch. D., 204.
35. 10 Ch. D., at p. 219.
36. [1837] EngR 468; 6 A. & E., 419.
37. [1839] EngR 371; 9 A. & E., 435.
38. [1840] EngR 261; 12 A. & E., 2.
39. 9 A. & E., at p. 442.
40. (1896) 2 Q.B., 143.
41. (1896) 1 Q.B., at p. 146.
42. (1897) 1 Q.B., 64.
43. (1897) 1 Q.B., at pp. 70-71.
44. 11 H.L.C., at p. 505.
45. 9 App. Cas., 61.
46. 12 App. Cas., 643, at p. 649.
47. (1897) 1 Q.B., at p. 71.
48. (1907) A.C., 519, at p. 523.
49. 20 Pa. St. Rep., 398, at p. 411.
50. [1912] USSC 93; 224 U.S., 152.
51. [1904] HCA 1; 1 C.L.R., 91.
52. 4 Wheat., at p. 431.
53. [1899] USSC 59; 173 U.S., 276, at p. 284.
54. [1904] HCA 1; 1 C.L.R., 91.
55. (1905) A.C., 551.
56. 3 App. Cas., 889, at p. 905.
57. [1879] USSC 52; 100 U.S., 339, at p. 347.
58. 122 Mass., 344.
59. [1898] USSC 156; 172 U.S., 1, at p. 8.
60. 220 U.S., at p. 356.
61. [1898] USSC 156; 172 U.S., 1.
62. 114 Am. St. Rep., 763, at p. 767.
63. 70 Mo. App., 60.
64. [1906] HCA 94; 4 C.L.R., 488.
65. 10 Ch. D., 595, at p. 601.
66. [1865] EngR 610; 11 H.L.C., 443.
67. L.R. 1 H.L. (Sc.), 348.
68. 17 Q.B.D., 795.
69. (1896) 2 Q.B., 143; affd. on app., (1897) 1 Q.B., 64.
70. [1906] HCA 94; 4 C.L.R., 488.
71. 117 U.S., at p. 178.
72. 191 U.S., at p. 221.
73. 157 U.S., at p. 584.
74. 17 Wall., at p. 327.
75. 199 U.S., at p. 461.
76. 220 U.S., at pp. 157-158.
77. 220 U.S., at p. 172.
78. 220 U.S., at p. 356.
79. 147 U.S., 49.
80. 153 Mass., 426.
81. 122 Mass., 344.
82. 4 App. Cas., 256.
83. (1895) A.C., 433.
84. [1916] HCA 80; 22 C.L.R., 352.
85. [1911] HCA 31; 12 C.L.R., 398.
86. [1873] USSC 103; 86 U.S., 468, at pp. 475-476.
87. 102 U.S., at p. 511.
88. 129 U.S., at p. 147.
89. 157 U.S., at p. 584.
90. [1905] USSC 184; 199 U.S., 437.
91. [1904] HCA 1; 1 C.L.R., 91.
92. [1907] HCA 76; 4 C.L.R., 1087.
93. [1906] HCA 94; 4 C.L.R., 488.
94. [1865] EngR 610; 11 H.L.C., 443; 11 Eng. Rep., 1405.
95. 17 Q.B.D., 795.
96. 10 App. Cas., 282.
97. 2 C.P.D., at p. 218.
98. 108 U.S., 110, at p. 121.
99. [1872] USSC 164; 17 Wall., 322.
100. 17 Wall., at p. 334.
101. 17 Wall., at p. 329.
102. 17 Wall., at p. 330.
103. [1903] USSC 192; 191 U.S., 207.
104. 191 U.S., at pp. 220-221.
105. [1898] USSC 81; 170 U.S., 304, at p. 310.
106. 191 U.S., at p. 221.
107. 191 U.S., at p. 222.
108. [1911] USSC 40; 220 U.S., 107.
109. [1905] USSC 184; 199 U.S., 437.
110. [1911] HCA 31; 12 C.L.R., 398.
111. [1913] HCA 71; 16 C.L.R., 245
112. 1 Salk., 192.
113. [1839] EngR 122; 4 M. & W., 621, at p. 640.
114. (1892) 3 Ch., 242, at p. 252.
115. [1846] EngR 597; 9 Beav., 546.
116. 9 App. Cas., 61.
117. L.R. 6 Q.B., 652, at p. 661.
118. 10 Ch. D., 204.
119. 10 Ch. D., at p. 219.
120. [1837] EngR 468; 6 A. & E., 419.
121. [1839] EngR 371; 9 A. & E., 435.
122. [1840] EngR 261; 12 A. & E., 2.
123. 9 A. & E., at p. 442.
124. (1896) 2 Q.B., 143.
125. (1896) 1 Q.B., at p. 146.
126. (1897) 1 Q.B., 64.
127. (1897) 1 Q.B., at pp. 70-71.
128. 11 H.L.C., at p. 505.
129. 9 App. Cas., 61.
130. 12 App. Cas., 643, at p. 649.
131. (1897) 1 Q.B., at p. 71.
132. (1907) A.C., 519, at p. 523.
133. 20 Pa. St. Rep., 398, at p. 411.
134. [1912] USSC 93; 224 U.S., 152.
135. [1904] HCA 1; 1 C.L.R., 91.
136. 4 Wheat., at p. 431.
137. [1899] USSC 59; 173 U.S., 276, at p. 284.
138. [1904] HCA 1; 1 C.L.R., 91.
139. (1905) A.C., 551.
140. 3 App. Cas., 889, at p. 905.
141. [1879] USSC 52; 100 U.S., 339, at p. 347.
142. 122 Mass., 344.
143. [1898] USSC 156; 172 U.S., 1, at p. 8.
144. 220 U.S., at p. 356.
145. [1898] USSC 156; 172 U.S., 1.
146. 114 Am. St. Rep., 763, at p. 767.
147. 70 Mo. App., 60.
148. [1906] HCA 94; 4 C.L.R., 488.
149. 10 Ch. D., 595, at p. 601.
150. [1865] EngR 610; 11 H.L.C., 443.
151. L.R. 1 H.L. (Sc.), 348.
152. 17 Q.B.D., 795.
153. (1896) 2 Q.B., 143; affd. on app., (1897) 1 Q.B., 64.
154. [1906] HCA 94; 4 C.L.R., 488.
155. 117 U.S., at p. 178.
156. 191 U.S., at p. 221.
157. 157 U.S., at p. 584.
158. 17 Wall., at p. 327.
159. 199 U.S., at p. 461.
160. 220 U.S., at pp. 157-158.
161. 220 U.S., at p. 172.
162. 220 U.S., at p. 356.
163. 147 U.S., 49.
164. 153 Mass., 426.
165. 122 Mass., 344.
166. 4 App. Cas., 256.
167. (1895) A.C., 433.
168. [1916] HCA 80; 22 C.L.R., 352.
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