High Court of Australia Barwick C.J. Gibbs, Stephen, Mason, Jacobs and Murphy JJ. Bevelon Investments Pty Ltd v City Of Melbourne [1976] HCA 49 ORDER Application for order nisi to review refused with costs. Cur. adv. vult. The following written judgments were delivered:— Sept. 28 Barwick C.J. The respondents, upon complaint laid before a stipendiary magistrate in Melbourne, sought to recover from the applicant the sum of $132,647.34 for unpaid rates levied under s. 267 of the Local Government Act 1958 Vict. ("the Act") and interest on such unpaid rates. The applicant is the owner in fee simple of land upon which is erected a multi-storied building known as 235-251 Bourke Street, Melbourne. The ground floor of that building at relevant times was occupied by some twenty-seven different persons, firms or companies under leases or tenancies from the applicant. The first to the fifteenth floors of the building were at those times occupied by the Commonwealth of Australia under a lease for a term of five years granted by the applicant. The purpose of the Commonwealth in entering into the lease of those floors of the building was to house elements of various departments of the Australian Government and of the Australian Postal Commission and Australian Telecommunications Commission. The levying of a rate upon occupancy of land within the city of Melbourne is authorized by ss. 251 and 254 of the Act, read with other statutes giving powers to the City of Melbourne. The levy of such a rate upon the Commonwealth in respect of its occupancy of the subject premises would offend and be forbidden by s. 114 of the Constitution. Consequently, by reason of the operation of s. 3 of the Acts Interpretation Act 1958 Vict., the imposition of a rate upon the occupancy by the Commonwealth is not authorized by the Act. As the Commonwealth was not liable as an occupier of land to pay any rate in respect of the parts of the building occupied by it, the applicant as owner of the building comprising ratable land became by virtue of s. 267 of the Act liable to pay the rates assessed in accordance with the Act. It is not disputed that, if the applicant is liable to rates in respect of the parts of the building occupied by the Commonwealth, the amount claimed by the respondents is the correct amount payable in accordance with the Act. The applicant raised before the magistrate the contention that s. 267(1) of the Act was void in so far as the liability to rates depended upon the circumstance detailed in sub-par. (ii) of par. (b), because it was in conflict with s. 52 of the Australian Constitution and with s. 114 thereof. The magistrate rejected these contentions and entered judgment for the respondents for the amount claimed. The applicant thereafter applied to the Supreme Court of Victoria for an order nisi to review the decision of the magistrate pursuant to the provisions of Div. 3 of Pt V of the Justices Act 1958 Vict.. Thereupon the application for an order nisi was removed into this Court by virtue of s. 40A of the Judiciary Act 1903 Cth, as amended. That application was directed, pursuant to s. 18 of the Judiciary Act, to be argued before a Full Court. The basis of the removal into this Court of the application for an order nisi to rescind the magistrate's decision was that the grounds of the application raised a question inter se within the meaning of s. 74 of the Constitution and s. 40A of the Judiciary Act. The inter se question was said to be involved in the challenge made to the validity of s. 267(1) as being a law with respect to a place acquired by the Commonwealth for public purposes within the meaning of s. 52(i.) of the Constitution: and, further, as being a law imposing a tax on property of the Commonwealth. After consideration, I have come to the conclusion that the submission contained in the first of these grounds of invalidity of the State statute did raise a question inter se. The question whether a State law infringes an exclusive legislative power of the Commonwealth does, in my opinion, involve a question as to limits inter se: Dennis Hotels Pty. Ltd. v. Victoria [1] . That being so, there is no need for me to express any concluded opinion upon the more difficult question whether the submission that a State law offends a prohibition in the Constitution, e.g. s. 114, does give rise to a matter inter se of the respective constitutional powers of Commonwealth and States. It certainly does not do so in the case of s. 92. In my opinion, the application for an order nisi was properly removed into this Court. We now have to consider the submissions made by the applicant in support of the application for an order to review. 1. (1961) 104 C.L.R. 529; [1962] A.C. 25. The applicant begins with the proposition that the floors of the building leased by the Commonwealth for a term of five years constituted a place acquired by the Commonwealth for public purposes. I might mention in passing at this point that, by the terms of the lease, the Commonwealth covenanted "to pay all telephone gas electricity charges and excess water rates (if separately metered) assessed in respect of the premises", such premises being described in par. 2 of the schedule to the lease as the result of a variation of the lease as "the area outlined in red on the plans annexed hereto and the exclusive use areas being each floor from the first to the fifteenth floor (both inclusive) and part of the ground floor at Tivoli Court, 235-251 Bourke Street, Melbourne". The applicant as lessor covenanted, subject to due performance by the lessee of its covenants, to "pay all rates taxes charges costs and expenses now or hereafter payable in respect of the building " It is apparent to me that the Commonwealth did not, in any sense, acquire the building or any part of it. At most, it acquired a term in the land. It may be that such a term is not land within the meaning of the definition of land in the Acts Interpretation Act. No other definition of land is available in or with respect to the Act. So to say, however, is not to deny that as a termor the Commonwealth occupied land, namely, the premises as defined in the lease as varied. Neither the leasing of those premises nor its occupancy of them would, in any case, in my opinion, give to the Commonwealth legislative power to pass an Act in the terms of s. 267(1). Nor, in my opinion, would s. 52 of the Constitution on the supposition that the leasehold interest of the Commonwealth in the premises constitutes a place within that section deny the State the power to pass s. 267. Whether made by Commonwealth or State, a law in terms of s. 267 would not be a law with respect to a place acquired by the Commonwealth for public purposes. Section 267 is not, in my opinion, a law about the premises occupied by the Commonwealth. It is a law, as it affects to be, imposing a liability to pay rates upon the owner of the ratable property. Tested by the usual criteria of the subject matter of a statute, namely, its substantial relevance to the head of power, such a law is not upon the subject matter of the premises subject to the lease, but is upon the subject of rating ratable property, which, as I have said, by reason of s. 3 of the Acts Interpretation Act and s. 114 of the Constitution, cannot include any property of the Commonwealth. In my opinion, therefore, the submission that s. 267 is a law with respect to a place occupied by the Commonwealth is misconceived and insupportable. In other words, whatever the right conclusion whether the Commonwealth had relevantly acquired any place in the applicant's building, s. 267 does not in any respect invade the area of exclusive legislative power of the Commonwealth. It will be appreciated that, in the light of that conclusion, I have no need to decide whether, by taking a lease of premises for a term of years, the Commonwealth relevantly acquired a place. But it may be observed that it would seem that, if by a lease for a term of years of parts of a building something can be held to be acquired within the meaning of s. 52(i.), what is acquired, in my opinion, is no more than a term of years in the defined premises. The "acquired" term of five years can scarcely be held to be a place within s. 52(i.). Whatever legislative power the creation of a term in the premises may attract, it is not, in my opinion, a legislative power with respect to the premises which are the subject of the lease as a place acquired. The applicant's second submission was that s. 267 infringed s. 114 of the Constitution. It had, of course, to be conceded that in terms the section did not impose a tax on any property of the Commonwealth: further, that it could not. Certainly it did not in terms purport to tax the Commonwealth in respect of any property of the Commonwealth. Nor does the section tax the owner in respect of the Commonwealth property: it taxes the owner in respect of the ratable property it owns. But, according to the applicant's argument, by taxing the owner because the occupant of the property is not liable to be taxed in respect of that occupancy, the statute places an impediment in the way of the Commonwealth when it needs or desires to lease property. It was asserted by counsel as notorious that if the intending lessor was liable to pay rates in respect of the premises intended to be leased, the asking rental would for that reason be higher, at least by the amount expected to be paid for rates. Of this there was no evidence. Nor can I accept it as a proposition judicially known. I suppose the factors which determine rental are multifarious; there may possibly be a discount offered rather than a premium demanded for an occupancy by the Commonwealth of a large number of floors in a building under a single lease. But however that may be, by no stretch of reasoning can it properly be concluded that, because due to the section an owner may ask a higher rental than otherwise he might, a tax is thereby imposed on the intending lessee, in this instance the Commonwealth, upon or in respect of the subject matter of the lease. Parenthetically, it may be said that, in this case, the agreed rental is fixed upon terms that the applicant should pay whatever is properly demanded for rates. The relevant operation of s. 267(1) ends with the owner being liable for the rate and the Commonwealth not liable for the rate in respect of the Commonwealth's occupancy of the premises under the lease. In my opinion, this submission also should be rejected. I would refuse the application for a rule nisi to review the decision of the magistrate. Gibbs J. The question that falls for decision in this case is whether the respondent, The Lord Mayor, Councillors and Citizens of the City of Melbourne, validly made and levied upon the applicant a rate upon the value of portion of a building in Melbourne owned by the applicant but occupied by the Commonwealth of Australia under a lease from the applicant for a fixed term expiring on 31st May 1978 with an option of renewal for a further five years. Part only of the building (the first to the fifteenth floors) was so occupied but it was accepted in argument that portion of a building occupied by a tenant under a lease is liable to be separately rated: see In re Horwitz; Ex parte Boberski [2] . It was common ground that the Commonwealth took the lease to enable the demised premises to be occupied by two departments of government and by the Australian Postal Commission and the Australian Telecommunications Commission. Under s. 267 (1) (b) of the Local Government Act 1958 Vict. (as amended in 1969) ("the Act") every general rate is to be levied upon the occupier, but if, inter alia, the occupier is the Crown in right of the Commonwealth, it is to be levied upon the owner of the ratable property. That provision applies to the City of Melbourne—s. 267(2). The applicant's contentions were (1) that the rate was a tax imposed by a State on property belonging to the Commonwealth contrary to s. 114 of the Constitution; and (2) that s. 267 of the Act was a law with respect to a place acquired by the Commonwealth for public purposes and therefore with respect to a subject with respect to which the Commonwealth's legislative power is made exclusive by s. 52(i.) of the Constitution. 1. (1901) 26 V.L.R. 500. The respondent obtained judgment for the amount of the rate against the applicant in the Magistrates' Court at Melbourne and the applicant thereupon applied to the Supreme Court of Victoria for an order to review the decision of the magistrate. No order was made since the view was taken that the cause was removed to this Court by virtue of s. 40A of the Judiciary Act. That view was correct—the contention that a provision of the State statute was invalid because it sought to deal with a matter in respect of which the Commonwealth is exclusively vested with legislative power raised an inter se question: Dennis Hotels Pty. Ltd. v. Victoria [3] . It is unnecessary to decide whether a challenge to State legislation on the ground that it is contrary to s. 114 also raises an inter se question—it appears to have been assumed in Municipal Council of Sydney v. The Commonwealth [4] that such a challenge would raise an inter se question, but the correctness of that assumption must be regarded as very doubtful in the light of subsequent decisions. 1. (1961) 104 C.L.R. 621; [1962] A.C. 25. 2. (1904) 1 C.L.R. 208, at p. 242. Neither of the contentions made by the applicant can be accepted. It is true that the prohibition contained in s. 114 extends to the imposition of a tax by a delegated authority, with the consequence that a municipal rate cannot be levied upon Commonwealth property: Municipal Council of Sydney v. The Commonwealth [5] ; Essendon Corporation v. Criterion Theatres Ltd. [6] . Moreover, a rate is a tax imposed on property within the section even if it is not made a charge on the land: Municipal Council of Sydney v. The Commonwealth [7] . But the question is whether the rate in the present case was a tax on the property of the Commonwealth. 1. (1904) 1 C.L.R., at pp. 230-231, 240-241. 2. (1947) 74 C.L.R. 1, at pp. 13-14, 17. 3. (1904) 1 C.L.R., at pp. 231-232. On behalf of the applicant it was conceded that the Act did not impose any liability on the Commonwealth to pay the rate. However, it was said that the rate was a tax on the land, and that this meant that it was a tax on every interest in the land, including the leasehold interest that had been carved out in favour of the Commonwealth, and that it was therefore a tax on the property of the Commonwealth, notwithstanding that the Commonwealth is not liable to pay it. Reliance was placed on the dicta of Latham C.J. in Essendon Corporation v. Criterion Theatres Ltd. [8] in support of the contention that an interest of a lessee is property within s. 114. It is quite unnecessary to discuss whether those dicta should be followed; it may be assumed (without deciding) that the leasehold interest was property within s. 114. However, the Act does not tax that leasehold interest. When s. 267 imposes a tax on the owner, instead of the occupier, it must refer to the owner of the freehold. Counsel for the applicant referred to the definition of owner of any property in s. 3(1) of the Act, namely, "the person for the time being entitled to receive, or who if the same were let to a tenant at a rack rent would be entitled to receive the rack rent thereof". He argued, on the authority of London Corporation v. Cusack-Smith [9] , that if the Commonwealth had taken a lease of the land at less than a rack rent it would have been an owner within that definition. It was not suggested that the land in the present case was not let at a rack rent and it is therefore difficult to appreciate how this argument would assist the applicant, but in any case the definition in s. 3 only applies "unless inconsistent with the context or subject-matter", and it would defeat the object of s. 267(1) (b) to construe that provision as meaning that where the Commonwealth was occupier under a lease under which less than a rack rent was payable the Commonwealth should be deemed to be the owner for the purposes of the paragraph. Section 267(1) (b) expressly states that the rate is levied upon the owner of the ratable property; it is implicit in this statement that the owner is levied in respect of his own interest and not in respect of the interest of someone else. The applicant is rated by reference to the value of its own property, and not by reference to the value of the Commonwealth's leasehold interest. I should, however, make it clear that I do not suggest that if the rate had been imposed by reference to the value of the Commonwealth's interest it would have been a tax on the property of the Commonwealth. In my opinion a tax on A, quantified by reference to B's property, is not a tax on B's property, unless A stands in some relationship to that property and the tax is imposed by reference to that relationship. 1. (1947) 74 C.L.R., at pp. 13-14. 2. [1955] A.C. 337. No property of the Commonwealth was charged with the rate in the present case. Counsel for the applicant drew our attention to s. 387 of the Act which provides that all rates which have become due in respect of any property shall be a charge upon such property. Clearly the effect of that section was to charge the property of the applicant and not the leasehold interest of the Commonwealth. Counsel also suggested that a municipality, by rating land leased by the Commonwealh, might indirectly impose a burden upon the Commonwealth. It is sufficient to answer this contention in the words of Griffith C.J. in Attorney-General (Q.) v. Attorney-General (Cth) [10] : "The question of the ultimate incidence of the burden of taxation is an interestng and sometimes a difficult one, but it has no bearing on the construction of sec. 114." 1. (1915) 20 C.L.R. 148, at p. 162. The second of the applicant's contentions depends on the proposition that the portion of the building leased by the Commonwealth was a place acquired by the Commonwealth within s. 52(i.). It was settled by the decision in Worthing v. Rowell and Muston Pty. Ltd. [11] that the words "places acquired" in s. 52(i.) refer to places acquired as property, but neither in that case, nor in the cases that have followed it (Attorney-General (N.S.W.) v. Stocks and Holdings (Constructors) Pty. Ltd. [12] and Reg. v. Phillips [13] ) was it necessary to decide whether portion of a building can be a place, or the taking of a lease an acquisition, within the meaning of that section. In Worthing v. Rowell and Muston Pty. Ltd., Windeyer J. did discuss these questions, and there said [14] : As I understand it, "places" here means fixed localities. Whether or not a "place" must be part of the earth's surface together with any structures thereon, is an unnecessary question for the decision of the present case. If I had to answer it, I would be inclined to think that an upper storey of a building held by a strata title could be a place acquired for public purposes. But I doubt the proposition that obtaining a leasehold interest or a temporary licence to occupy a place would amount to acquisition in the relevant sense. Certainly I would not agree that the hiring of a hall for use as a polling booth on election day—as was mentioned in argument—or the use of a city park for an afternoon's military ceremonial would amount to an acquisition of a place by the Commonwealth for the purposes of s. 52. In short, as I understand s. 52, "places acquired by the Commonwealth" means places which upon acquisition the Commonwealth holds by virtue of a proprietary right. Since in my opinion the doubt expressed by Windeyer J. was well founded, and the Commonwealth does not acquire a place simply by taking a lease of it, I do not need to express any opinion on the further question whether a portion of a building, to which a separate title can be obained, is a place within s. 52(i.). When the Commonwealth takes a lease of a place it does not "acquire" the place; what it acquires is a leasehold interest. A place will be acquired by the Commonwealth within s. 52(i.) only if the Commonwealth has, in one way or another, acquired the place itself, that is, has acquired full property in respect of the place. The words of s. 52(i.) stand in marked contrast to those of s. 51 (xxxi.). The latter provision refers to the acquisition of "property", a comprehensive term which of course includes leasehold interests. Section 52(i.) refers to "places" which have been "acquired". A constitutional provision whose effect, as has been held, is that when a place is acquired by the Commonwealth for public purposes the State in which the place is situated is deprived of the power to make a law with respect to that place and the operation of State laws formerly applicable within the place is terminated, is not likely to have been intended to apply whenever the Commonwealth obtains a right, however temporary, to occupy a place for public purposes—if the provision had such an application it would tend to throw the administration of the law into great confusion. But apart from that consideration the words "places acquired" do not, in their ordinary and natural sense, have the same meaning as "places in respect of which an interest is acquired". 1. (1970) 123 C.L.R. 89. 2. (1970) 124 C.L.R. 262. 3. (1970) 125 C.L.R. 93. 4. (1970) 123 C.L.R., at p. 124. The grounds on which the applicant seeks an order nisi to review the decision of the magistrate have not been established and the order nisi should be refused. Stephen and Mason JJ. The Chief Justice has set out the circumstances in which this matter has reached the Court under s. 40A of the Judiciary Act 1903, as amended, and, in so doing, has expressed the opinion, with which we agree, that the challenge to the validity of s. 267(1) (b) of the Local Government Act 1958 Vict. ("the Act") gives rise to an inter se question to the extent to which it is based on the ground that the sub-section is a law with respect to a place acquired by the Commonwealth under s. 52(i.) of the Constitution and is therefore an intrusion into a sphere of Commonwealth exclusive power. Accordingly, it is unnecessary to consider whether the challenge, so far as it is based on s. 114 of the Constitution, also gives rise to an inter se question. In our view neither of the two grounds of attack upon s. 267 (1) (b) can be sustained. Section 114 of the Constitution prohibits, without the consent of the Commonwealth Parliament, the imposition by a State (or by a municipal council with the authority of a State—see Municipal Council of Sydney v. The Commonwealth [15] ) of a tax upon any property of any kind belonging to the Commonwealth. Section 267(1) of the Act provides that every general rate shall be made and levied by the council— (b) upon every person who occupies any rateable property whatsoever within the municipal district, or if there is no occupier, or if the occupier is— (i) any person or body referred to in paragraph (a) of sub-section (1) of section 251 and is using the land exclusively for public or municipal purposes; or (ii) the Crown in right of the Commonwealth of Australia or any public statutory body constituted under the law of the Commonwealth of Australia or any trustees appointed pursuant to an Act of the Commonwealth of Australia and is not liable to pay municipal rates in respect of that occupancy— then upon the owner of that rateable property. 1. (1904) 1 C.L.R. 208 No doubt the sub-section was drawn with the decision of Essendon Corporation v. Criterion Theatres Ltd. [16] very much in mind, the object of the draftsman being to avoid the perils of s. 114 by throwing the liability for rates upon the owner of the ratable property where that property is occupied by the Commonwealth. But for the Byzantine complexity of the provisions contained in Pt X of the Act dealing with "Rates" there could be little doubt that the draftsman suceeded in his object because the rate in question is not payable by the Commonwealth, nor is it payable out of, or charged on, the Commonwealth's leasehold interest. However, it has been argued that when the mysteries of Pt X are explored it emerges that the rate which is levied against the owner of ratable property is in truth a rate in respect of the Commonwealth's leasehold interest in that property. The next step in the argument was to say that such a rate is a tax upon property belonging to the Commonwealth, notwithstanding that the Commonwealth is not liable for the rate and that it is not charged on, or payable out of, the Commonwealth's interest in the land as lessee. 1. (1947) 74 C.L.R. 1. By s. 251 of the Act "All land" is "rateable property" subject to exceptions which are immaterial for present purposes. "Land" is not defined by the Act but it is defined by s. 17 of the Acts Interpretation Act 1958 Vict. so as to include "messuages tenements and hereditaments houses and buildings, unless there are words to exclude houses and buildings or to restrict the meaning to tenements of some particular nature". Land in s. 251 therefore includes buildings erected on land. The rate levied in this case was a rate levied upon the "net annual value" of each ratable property in accordance with the provisions of s. 254(14) and (15) of the Act. In making his valuation under Pt X of the Act of the premises known as 235/251 Bourke Street, the valuer was required to divide the land and building into portions according to its separate occupations because under s. 267(1) (b) it is the occupier who is primarily or generally liable for the rate (see In re Horwitz; Ex parte Boberski [17] ) and because the Act contemplates that any part of a multi-storey building which is adapted to separate occupation or which is separately occupied, is a single ratable property. See par. (aa) of the definition of net annual value in s. 254 which is directed to the case of "any single rateable property being a house flat or unit " When attention is given to the definition of "unit" in the same section, these words must be taken to apply to a flat or unit in a multi-storey building, separated from other flats or units above and below it. 1. (1901) 26 V.L.R. 500, at pp. 507-508. Consequently that part of the premises which is leased to the Commonwealth is a separate ratable property. Indeed, if it is adapted to separate occupation floor by floor it constitutes a number of separate ratable properties but that is not a matter which we have occasion to pursue. The expression "net annual value" of any property, so far as it is relevant, is defined by s. 254(1) to mean (a) except in the case of the lands described in paragraphs (aa) and (b)— (i) the estimated annual value of the property; or (ii) five per centum of the capital improved value of the property— (whichever is the greater). The expression "estimated annual value" of any property is defined by the same section to mean the rent at which the property might reasonably be expected to be let from year to year, free of all usual tenants' rates and taxes and deducting therefrom the probable annual average cost of insurances and other expenses (if any) necessary to maintain such property in a state to command such rent. It was upon this definition that the applicant relied to support his argument that the levy was imposed in respect of the Commonwealth's leasehold interest as a tenant. We are unable to see that the definition supports the argument. Neither "the rent at which the property might reasonably be expected to be let from year to year " nor "five per centum of the capital improved value of the property" can be regarded as a measure exclusively referable to the value of the occupier's occupation or leasehold interest computed on an annual basis. In our opinion each element in the definition of "net annual value" can be regarded with equal accuracy as a measure of the net annual value of the ratable property to the owner. Thus, the definition, when taken in conjunction with the imposition of liability for the rate on the owner of the ratable property, indicates that the levy is imposed not in respect of the tenancy or interest of the occupier but in respect of the annual value of the ratable property to the owner. We acknowledge that in Essendon Corporation v. Criterion Theatres Ltd. Latham C.J., when referring to the similar definition of net annual value contained in s. 252(2) of the Local Government Act 1928 Vict., said [18] : Thus the rates are imposed in respect of what is normally the value of the land to a tenant occupier. In the present case, therefore, they would be assessed in respect of the value of the occupation by the Commonwealth. Even where a tax is assessed by reference to a percentage of the capital value, the tax may still be a tax upon the interest of the occupier: See City of Montreal v. Attorney-General (Canada) [19] . His Honour was directing his remarks to s. 265(b) of the 1928 Act which, in his view, imposed a liability for the rate on the Commonwealth as the occupier of land. Where the tenant or occupier is liable for the rate and it is imposed in respect of the annual rental value of the land or on a percentage of the annual capital value, as in City of Montreal v. Attorney-General (Canada), it may be correct to say that the rate is levied upon the interest of the occupier. But it is otherwise where, as here, the occupier is not liable for the rate and the owner is made liable. 1. (1947) 74 C.L.R., at p. 14. 2. [1923] A.C. 137. The view expressed by Latham C.J. was not shared by the other members of the Court in Essendon Corporation v. Criterion Theatres Ltd. [20] . As we are confronted with a different question it is unnecessary to examine the correctness of what the Chief Justice said; it is sufficient for present purposes to say that it is distinguishable and that it does not deny that in circumstances such as the present the rate is a tax on the owner's estate or interest in the ratable property. 1. (1947) 74 C.L.R. 1. On this aspect of the case it remains only for us to say that the provisions of Pt XII of the Act dealing with "Payment and Recovery of Rates" do not subject the Commonwealth or the Commonwealth's proprietary interest as a lessee to any liability for unpaid rates for which the owner of the ratable property is liable. Essentially the remedies conferred upon a council where the owner does not satisfy his liability enable a council to sue an owner to judgment, to execute against his estate or interest in the land and to sell that estate or interest. The conclusion already reached alone disposes of the applicant's case to the extent to which it is based on s. 114 of the Constitution. Quite independently of this conclusion we should have decided the point adversely to the applicant on the ground that even if the levy was calculated by reference to the value of the Commonwealth's leasehold interest, the rate was not a "tax upon property of any kind belonging to the Commonwealth". A rate may constitute a tax upon property of the Commonwealth if it is expressed to be payable by the Commonwealth or is payable out of, or charged upon, its property. But if it is a rate which by the statute the Commonwealth is not liable to pay or recoup and it is not payable out of, or charged on, Commonwealth property it cannot in our view constitute a tax upon property of the Commonwealth within the meaning of s. 114. The second ground of attack upon s. 267(1) (b) may be shortly disposed of. If part of the building occupied by the Commonwealth is a "place acquired" by the Commonwealth within the meaning of s. 52(i.)—and this to our mind is a doubtful assumption in view of the limited leasehold interest (a term of five years) which the Commonwealth has in the premises (see Worthing v. Rowell and Muston Pty. Ltd. [21] , per Windeyer J.)—s. 267(1) (b) is not a law with respect to that place. In determining in a particular case what are the limits of the exclusive power which the Commonwealth enjoys by virtue of s. 52(i.) one must have regard to the extent of the rights and powers which the Commonwealth possesses in relation to the place which it has acquired. The area of exclusivity cannot be divorced from the extent of, and the limitations affecting, the rights of property which the Commonwealth has acquired. Once this is borne in mind it becomes apparent that a law which authorizes the levying of a rate upon the owner of ratable property in respect of his estate or interests in that property is not a law with respect to a place acquired by the Commonwealth when the Commonwealth's interest in the premises is a leasehold interest for a term of five years. 1. (1970) 123 C.L.R., at p. 124. In the result we would refuse the application for a rule nisi to review the decision of the magistrate. Jacobs J. The authority of the Melbourne Corporation to make rates derives from the Act, 27 Vict. No. 178 (Vict.). Section 42 provides for the making of an assessment. 42. From and after the passing of this Act the councils of the said city and town respectively from time to time, after estimating as correctly as may be what amount in addition to the town fund will be sufficient for the payment of the expenses to be incurred in carrying into effect the provisions of the several Acts relating to the corporations of the said city and town respectively, shall have full power and authority to order and direct an assessment to be made of all land beneficially occupied in any manner whatsoever within the limits of the said city or town as the case may be according to its full fair and average annual value clear of all outgoings, together with all land not belonging to the Crown within the said city or town as the case may be although there may be no building thereon, and all land attached to and held in conjunction with any building. Provided always that in any such assessment the annual value of unimproved land shall not be estimated at a higher rate than Six per centum upon the average net value of the land. Section 43 authorizes the making of rates and requires them to be on the assessment made under s. 42. 43. That upon the assessment so made it shall be lawful for the said councils, and they are hereby respectively, empowered, to make such town rates lighting rates and other rates as to the said councils respectively shall from time to time seem necessary and such as the said councils are now by law empowered to order and declare; and that the said councils of the said city and town shall have all and the like powers in enforcing rates upon assessments made under the provisions of this Act as if the same had been made under the authority and in conformity with the provisions of the hereinbefore recited Acts or any of them. The "annual value" referred to in s. 42 is by virtue of s. 254 (16) of the Local Government Act 1958 Vict. to be read and construed and to take effect as if it were a reference to the net annual value within the meaning of s. 254(1). The assessment i.e. valuation under s. 42 may be made of all land beneficially occupied together with all land (not belonging to the Crown) within the city although there may be no building thereon and all land attached to and held in conjunction with any building, but the rate may only be made on the assessment of that land which is ratable property within the meaning of s. 251(1). The general rate, which the Corporation is by the Act, 27 Vict. No. 178 authorized to make, is required by s. 267(1) of the Local Government Act 1958 to be made by it— upon every person who occupies any rateable property whatsoever within the municipal district, or if there is no occupier, or if the occupier is— (i) any person or body referred to in paragraph (a) of subsection (1) of section 251 and is using the land exclusively for public or municipal purposes; or (ii) the Crown in right of the Commonwealth of Australia or any public statutory body constituted under the law of the Commonwealth of Australia or any trustees appointed pursuant to an Act of the Commonwealth of Australia and is not liable to pay municipal rates in respect of that occupancy— then upon the owner of that rateable property. This last provision displaces s. 5 of Act, 11 Vict. No. 17 (N.S.W.) which provided that the occupier of any house or other property or person in possession at the time when such rates shall be demanded, or in case of a change in such possession in the meantime the person occupying the premises when the warrant of distress shall be executed, shall be deemed to be and be the person primarily liable to the payment of rates under the said recited Acts in respect of any house or other property assessed; and in case the premises shall be vacant for a period less than six months and there shall not be sufficient distress found therein, then the proprietor or landlord shall be liable. The general or town rate of Melbourne Corporation is thus made on the assessments and the assessments may, it would appear, be made on all land. The word "land" includes "buildings" unless there are words to exclude this meaning. See s. 17 of the Acts Interpretation Act 1958 Vict.. At common law ownership of land includes prima facie ownership of all buildings thereon. Laybourn v. Gridley [22] . Buildings therefore pass on a conveyance of the land unless a contrary intention appears. If a contrary intention does appear then there can be a severance in the ownership in fee simple of the surface of the soil and part of a building from the air space occupied by a portion of a building. Coke upon Littleton, 17th ed. (1817), 48b: "A man may have an inheritance in an upper chamber, though the lower buildings and soile be in another, and seeing it is an inheritance corporeall it shall passe by livery." Sheppard's Touchstone, 8th ed. (1826), p. 205: "A feoffment may be made of an upper chamber over another man's house beneath." Such a part of a building is capable of ownership as a corporeal hereditament, and by s. 17 "land" includes "hereditament". Therefore the upper floors of the building are land within the meaning of s. 251(1). 1. [1892] 2 Ch. 53. There is no express statutory provision which requires any land or building or part of a building which is separately occupied to be separately rated. In the case of an office building the full fair and average net annual value will be the estimated annual value or five per centum of the capital improved value, whichever is the greater. See s. 254(1) and the definitions of "net annual value", "estimated annual value" and "capital improved value". Section 254(3) provides for the determination of the capital improved value of part of a property where the property is divided among several occupiers as follows: 214. (3) Where it is necessary to determine the capital improved value, the site value or the unimproved capital value of any rateable property in respect of which any person is liable to be rated but which forms portion of a larger property, the capital improved value the site value and the unimproved capital value of each such portion shall be as nearly as practicable the sum which bears the same proportion to the capital improved value, the site value and the unimproved capital value respectively of the whole property as the estimated annual value of the portion bears to the estimated annual value of the whole property. This provision envisages the necessity of determining the value of a portion of a larger property and, taken together with the exigencies of s. 267(1) (b), makes sufficiently clear the legislative intention that portions of a building separately occupied, and possibly those portions adapted to separate occupation, should be assessed separately. However, what is assessed and then rated under 27 Vict. No. 178 and s. 251(1) of the Local Government Act 1958 is not the occupancy but the portion of the building. Assessment and rating are preliminary to the imposition of an obligation to pay the rate. Assessment is not related directly to rents paid but to full fair and average net annual value. Where there is an assessment and a rating of the portion of the building, and the imposition on the occupier of an obligation to pay that rate, then it may be said that the assessment is on the occupancy or the interest of the occupier. Cf. City of Montreal v. Attorney-General (Canada) [23] ; Essendon Corporation v. Criterion Theatres Ltd. [24] . However, in cases where the obligation is not imposed on the occupier but on the owner of the building, there is no relation between the portion of the building assessed and rated and the occupier. The fact that the assessment will be made according to estimated annual value in certain cases, namely, where the estimated annual value exceeds five per centum of the improved capital value, provides no such relation. The estimated annual value has not even a necessary relationship to the rent which happens to be paid by the particular occupier. 1. [1923] A.C. 136. 2. (1947) 74 C.L.R. 1. In these circumstances I am unable to conclude that the rate is a tax on the leasehold interest, which is property of the Commonwealth. It is a tax imposed on the owner by a rate upon the assessment of the value of part of a building owned by him. It was submitted that the building or any portion thereof is the sum of any number of different interests therein, leasehold interest or mortgage or other interests, and that a tax on the portion of the building is a tax on each of those interests. The rate however is on an assessment of the value not of interests in land but of the land itself (including in that term buildings or portions thereof). The fact that land is not owned absolutely but is held for an estate does not require or justify a dissection of lesser interests when the land itself is the subject of a tax payable by its owner. If the tax had been imposed on the leasehold interest itself, and had been made payable by someone other than the owner of that interest then different questions would have arisen upon which I prefer to express no opinion. The next question is whether a place occupied by the Commonwealth under a lease for five years is a place acquired by the Commonwealth for public purposes, so that pursuant to s. 52 of the Constitution the Commonwealth has exclusive power to legislate therefor during the term of the lease. In my opinion a place occupied by the Commonwealth under a leasehold interest which depends for its existence on the land law of a State rather than the exercise of Commonwealth legislative or prerogative power to acquire a place is not a place acquired by the Commonwealth within the meaning of s. 52. Just as the Crown may be a lessee of land from an owner who holds the land in fee simple of the Crown without thereby resuming to itself the land held in fee so also the Crown in right of the Commonwealth can be the lessee of land from an owner who holds in fee simple of the Crown but does not thereby acquire anything more than an interest as lessee with a consequent right to occupy the premises during the term. It does not acquire the place. I would refuse the order nisi. Murphy J. The question is whether s. 267(1) (b) of the Local Government Act 1958 Vict. contravenes s. 52(i.) or s. 114 of the Constitution and is thereore invalid. The matter was automatically removed to this Court under s. 40A of the Judiciary Act as a question arises (at least in relation to s. 52) of the limits inter se of the constitutional powers of the Commonwealth and the State of Victoria. The application for removal under s. 40 was therefore unnecessary. Section 52(i.) gives Parliament exclusive powers to make laws with respect to "places acquired by the Commonwealth for public purposes". Floors one to fifteen (but not the basement or ground floor) of the building were leased to the Commonwealth for a term of five years. Assuming that each or all of the floors may be regarded as a place within the meaning of s. 52, the place has not been acquired within the meaning of s. 52. It would be incongruous for a lease of this term to bring about the constitutional consequences of acquisition of a place decided in Worthing v. Rowell and Muston Pty. Ltd. [25] and Reg. v. Phillips [26] . If the power under s. 51 (xxxi.) of the Constitution is used to acquire real property, it need not be held as leasehold, freehold or any other modern survival of feudal tenures. However, when the Commonwealth has a freehold or perpetual lease under State law it may be proper (despite the incongruity of the relationship) to regard it as a place acquired within s. 52. This does not apply to a lease for a short term. The words "places acquired" in s. 52 imply permanence. The applicant's contentions based on s. 52 must be rejected. 1. (1970) 123 C.L.R. 89. 2. (1970) 125 C.L.R. 93. Section 114 provides that a State shall not, without the consent of the Parliament of the Commonwealth, impose any tax on property of any kind belonging to the Commonwealth. The municipal rate is a tax imposed by the State (Municipal Council of Sydney v. The Commonwealth [27] ) but it is not imposed on the Commonwealth. The legislation deliberately avoids imposition on the Commonwealth by providing that, in relation to those parts of a building occupied by the Commonwealth, the rate shall be made and levied by the Council upon the occupier (s. 267(1)). 1. (1904) 1 C.L.R. 208. There may be a tax on the property of the Commonwealth although it is payable by someone other than the Commonwealth. The tax is not a charge upon the property. But, as Griffith C.J. said [28] : All such taxes primarily impose a personal liability upon individuals, and it is, in my opinion, immaterial whether the land does or does not itself become subject to a charge in the nature of an encumbrance. In either case the tax is in substance a "tax of property" in the sense in which these words are commonly understood, and certainly in the sense in which they are used in s. 114 of the Constitution. As Latham C.J. pointed out in Essendon Corporation v. Criterion Theatres Ltd. [29] , even a tax assessed by reference to a percentage of the capital value of land which the Commonwealth occupies may still be a tax on the interest of the Commonwealth (he cited City of Montreal v. Attorney-General (Canada) [30] ). In the present case the tax is not levied directly in relation to the leasehold interest of the Commonwealth but upon the place or places. The applicant's contention was that this imposition included (as the whole includes the part) an imposition upon the interest of the Commonwealth. It also contended, and I agree, that the natural tendency is for the burden of the rates to be passed on to the Commonwealth. The broad prohibition in s. 114 should not be defeated by technical differences in concepts of property. What Rich J. said (of the acquisition of property power in s. 51 (xxxi.) of the Constitution) also applies to s. 114. 1. (1904) 1 C.L.R., at pp. 231-232. 2. (1947) 74 C.L.R., at pp. 13-14. 3. [1923] A.C. 137. The meaning of property in such a connection must be determined upon general principles of jurisprudence, not by the artificial refinements of any particular legal system (Minister of State for the Army v. Dalziel [31] ). 1. (1944) 68 C.L.R. 261, at p. 285. The applicant's submissions on s. 114 therefore have considerable force. But there is a strong presumption that an Act of Parliament is valid. In my opinion, that presumption has not been displaced. Section 267(1) (b) of the Act is valid. The application for order nisi should be refused.