09 : Leask v Commonwealth[1996]HCA29 Extracts Re Money Head Of Power

Leask v Commonwealth [1996] HCA 29

(5 November 1996)
(1996) 187 CLR 579; (1996) 140 ALR 1; (1996) 70 ALJR 995



RE: Legislative power – Taxation – Currency, coinage, and legal tender
Characterisation – Appropriate and adapted – Proportionality
Whether offence of avoiding reportable cash transactions
within legislative power.
Money and Currency –
Offence to be party to certain non-reportable transactions
which avoid obligation to report – Nature of mens rea.
Commonwealth Constitution s 51(ii), (xii).
Financial Transaction Reports Act 1988 (Cth)


The Commonwealth seeks to support the validity of s 31(1) in reliance on the legislative powers conferred by s 51(ii) (“taxation …”) and s 51(xii) (“currency, coinage, and legal tender”).

The plaintiff contends that the provisions of s 31(1) are not supported by either of those powers and are invalid.

The Parliament’s definition of the principal object of the Act does not by itself establish its validity as a law with respect to taxation. It is not the declared object but the operation and effect of the Act which can give it the character of a law with respect to a head of power. The character of an Act is determined by its operation and effect[9]: its operation by reference to the rights, duties, powers or privileges that the Act creates or affects[10]; its effect by reference to its operation in the circumstances to which it applies[11]. The statutory declaration of the object of an Act is relevant to the construction of a provision the construction of which would otherwise be ambiguous[12], but the declaration is not sufficient by itself to affect the operation and effect of the Act.

The Parliament cannot legislate a measure into power merely by declaring its measure to be enacted for a valid object.

When the operation and effect of an Act are ascertained, its connection or lack of connection with the subject matter of a head of power can be determined. Sometimes, as I pointed out in Cunliffe v The Commonwealth[13], “a connexion with a head of power may be revealed more clearly by stating the purpose or object which the law is appropriate and adapted to achieve than by describing the law’s effect and operation on particular rights, duties, powers and privileges”.

But, as Dawson J points out, “purpose” in this context refers to the purpose of the law, not the purpose of the head of power[14]. The purpose of a law is the end or object which a law achieves or, putting it another way, it is the effect of a law expressed by reference to a field of activity, relationship or status. As Dawson J says, the purpose of a law is an aspect of “what the law does in fact” so that the basic test of validity remains one of sufficient connection between the operation and effect of the law on the one hand and the head of power on the other.

If the head of power is itself purposive (for example, the defence power), the existence of a connection may be determined more easily by comparing the purpose of the law and the purpose of the power. But if the relevant head of power is non-purposive (as the taxation and currency powers are non-purposive) the validity of the law is more likely to be determined by reference to its operation and effect.

The question for determination is therefore whether s 31(1), by its operation and effect, reveals a sufficient connection with either “taxation” or “currency, coinage, and legal tender”. The operation of s 31(1) must be collected from its terms.

The two paragraphs of s 31(1) contain distinct elements of the offence created by the subsection. Paragraph (a) prescribes the elements constituted by the conduct of the offender; par (b) prescribes the quality of the cash transactions to which the offender became a party. The plaintiff points to the clause “it would be reasonable to conclude” in par (b) to show that the elements of that paragraph may be satisfied irrespective of the actual purpose of the offender in conducting the cash transactions referred to in par (a) in the manner and form in which they were conducted. As the actual purpose of an alleged offender is not an element of the offence created by s 31(1), it is said that s 31(1) purports to create an offence of strict liability without the ordinary requirement of mens rea[15] and that, in the absence of an intent to impair the effectiveness of the taxation laws, the connection between such an offence and the subject of taxation is too tenuous or remote to attract the support of s 51(ii) of the Constitution.

This submission was supported by an argument that s 31(1) is not “reasonably proportionate” to the purpose of preventing tax fraud or money laundering. The submission encounters a number of difficulties which, for reasons presently to be mentioned, need not be finally decided. But as some stress was laid on the supposed absence of mens rea and the notion of proportionality, I refer to these points.

The term “mens rea” may be used to connote not only the voluntary doing of an offender’s act but his concurrent knowledge of the circumstances in which it is done, his appreciation of the nature and quality of his act done in those circumstances and a specific intention that any result of his conduct prescribed as an element of the offence should be achieved.

But the mens rea required for criminal responsibility for the commission of a statutory offence has to be ascertained by reference to the text which creates the offence.

The mens rea required by s 31(1) is confined, in my opinion, to the elements of the offence prescribed in par (a). A person who engages in the conduct mentioned in s31(1)(a) is liable to conviction only if he voluntarily conducted the two or more “nonreportable cash transactions” therein mentioned and knew the facts which gave the transactions the character of “non-reportable cash transactions”.


The fact that the legislative powers conferred upon the Commonwealth Parliament by s51 of the Constitution are expressed to be with respect to subject-matters means that a law is within power if the acts, facts, matters or things upon which it operates fall within the description of one or more heads of power.

As McHugh J said in Re Dingjan; Ex parte Wagner[63]:
“In determining whether a law is ‘with respect to’ a head of power in s 51 of the Constitution, two steps must be taken. First, the character of the law must be determined. That is done by reference to the rights, powers, liabilities, duties and privileges which it creates[64]. Secondly, a judgment must be made as to whether the law as so characterised so operates that it can be said to be connected to a head of power conferred by s 51. In determining whether the connection exists, the practical, as well as the legal, operation of the law must be examined[65]. If a connection exists between the law and a s 51 head of power, the law will be ‘with respect to’ that head of power unless the connection is, in the words of Dixon J[66], ‘so insubstantial, tenuous or distant’ that it cannot sensibly be described as a law ‘with respect to’ the head of power.”

The purpose of a law passed pursuant to a head of power is a different thing from the purpose of the head of power. In Cunliffe[74] Mason CJ, whilst recognising that most of the heads of power in s 51 are not of a purposive nature, thought that: “that does not mean that faithful pursuit of purpose is a relevant or critical element only in those cases in which one is concerned with the reach of an implied incidental power in conjunction with a specific power which is truly purposive”[75].

However, to speak of the purpose of a non-purposive power is merely to speak of its subject-matter. To take this case, the purpose of the power to make laws with respect to currency can be nothing more than the authorisation of legislation upon the subject of currency.

For these reasons, it is my view that the relevant test of the validity of a law made under one of the substantive heads of power in s 51 of the Constitution is that of sufficiency of connection with its subject-matter. That is so whether or not in characterising the law it is necessary to invoke the implied incidental power.

As I said in Cunliffe[83], the disproportion of a law to an end asserted to be within power may suggest that the law is actually a means of achieving another end which is beyond power. And no doubt there is a question of judgment involved in deciding whether a law exhibits a sufficient connection with the subject-matter of a head of power.

But that does not involve a judgment as to the desirability of legislation, and the danger with expressing the test in terms of proportionality is that it suggests that the Court is concerned with the desirability of legislation. The Court does not for the purpose of determining validity under s 51 inquire into whether a law either is necessary to achieve an end or infringes fundamental values in a manner not justified by the pursuit of that end[84]. That is not, of course, to deny that, before construing a law as interfering with basic common law freedoms, the Court requires the clearest expression of intent[85]. Whatever the position may be in other legal systems, the terms “appropriate and adapted” and “reasonable proportionality” are best avoided when enunciating a test to determine whether a law exceeds a non-purposive head of power under s 51 of our Constitution.


As Gibbs J observed in Milicevic v Campbell[104]:
” The parliament may, when legislating with respect to a subject within the ambit of its powers, validly enact laws prescribing the rules of evidence and procedure to be observed in any legal proceedings, whether criminal or civil, arising in relation to that subject matter and may in particular cast the onus of proof upon either party to those proceedings. Of course, the parliament may not, by enacting legislation which purports to be merely procedural, extend the operation of its laws to subjects beyond its power; it cannot, in other words, expand the boundaries of its powers by its own enactments.”

The relevance of proportionality as a criterion of validity is perhaps expressed most broadly by Mason CJ in Nationwide News Pty Ltd v Wills[113] where his Honour said that:
“in characterising a law as one with respect to a permitted head of power, a reasonable proportionality must exist between the designated object or purpose and the means selected by the law for achieving that object or purpose. The concept of reasonable proportionality is now an accepted test of validity on the issue of ultra vires.”


Courts may, for good reason, be reluctant to construe legislation, especially criminal legislation, as reversing the onus of proof[206] or creating an offence without need to establish a guilty intention[207]. However, such provisions certainly exist in legislation enacted by the Parliament and undoubtedly within power. Of themselves, these features of a law will not deprive it, if otherwise within power, of constitutional validity. They merely show that the Parliament has chosen a drastic remedy for an attack on the problem which is the subject of the enactment. Of course, a point may eventually be reached where the drastic turns into the invalid. The law, or part of it, may lose the quality of sufficient connection with the constitutional head of power. Put another way, it may be so disproportionate to the legitimate attainment of the subject-matter of the grant of power as to take it outside that grant. When that happens the boundary of constitutional validity will have been passed. This Court is the ultimate guardian of that boundary[208]. By the Constitution it has been entrusted with the responsibility of identifying where the boundary lies.



Chapter I—The Parliament
Part V—Powers of the Parliament
51—Legislative powers of the Parliament
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:

The Parliament is a legislative body capable only of exercising enumerated powers. Its powers are determined and limited by actual grants to be found within the Constitution. Anything not granted to it is denied to it.

We the people “of the Commonwealth” voted in 1900 to become a CONSTITUTIONAL MONARCHY. This was achieved on the first January 1901 the birth of the Commonwealth of Australia. In 1999 we the people “of the Commonwealth” voted to stay as a CONSTITUTIONAL MONARCHY under the Commonwealth of Australia Constitution Act 1901 Proclaimed and Gazetted.