Commissioner of Taxation for the Commonwealth of Australia v Tomaras & Ors

[2018] HCATrans 143

[2018] HCATrans 143

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B9 of 2018

B e t w e e n -

COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

Appellant

and

TOMARAS

First Respondent

TOMARAS

Second Respondent

OFFICIAL TRUSTEE IN BANKRUPTCY

Third Respondent

KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 10 AUGUST 2018, AT 9.45 AM

Copyright in the High Court of Australia

____________________

MR S.B. LLOYD, SC:   If it please the Court, I appear with MR L.T. LIVINGSTON, for the Commissioner.  (instructed by Australian Government Solicitor)

MR M.L. ROBERTSON, QC:   If the Court pleases, I appear with MR S.J. CARIUS, for the first respondent.  (instructed by Hartnett Lawyers)

KIEFEL CJ:   Mr Lloyd, I take it that the parties received the communication from the Court about the question of what is property.

MR LLOYD:   I think so, yes, your Honour.  I am not sure how much assistance I will be, but I will try and be of assistance on the subject.

KIEFEL CJ:   Yes, thank you.  Yes, Mr Lloyd.

MR LLOYD:   We will be proceeding in accordance with our outline of submissions and what I proposed to start with is something which we did not address in writing, which is say some things about the Family Law Act and what the family law provisions that we are looking at do.  We have handed up a bundle which is marked “Family Law Act” on the front.  It has some provisions which were not in the filed bundle.  If I could go to that in the first instance, there is a definition of “matrimonial cause” which appears on page 14 of the bundle and there is a paragraph to that, paragraph (ca) which is a paragraph which identifies as a kind of matrimonial cause which are:

proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings –

and then it identifies some of those proceedings.  The key elements here is that the proceedings are between the parties to the marriage and that the proceedings are with respect to the property of the parties to the marriage.  Then that concept of property to the parties of the marriage is, of course, defined and that can be found on page 23 of the bundle.

GORDON J:   I think some of us are working off the actual Act, Mr Lloyd.  So if you could just tell us, are you looking at the definition within section 4?

MR LLOYD:   I am, yes, your Honour.

GORDON J:   Thank you.

MR LLOYD:   If you have the same version of the Act, it is on page 23 of the Act as well.  So that has a definition and that definition has been said to look at property to which people are presently entitled and includes all of the legal and equitable interest in property.  And it is said not to be limited to any type of property or any circumstances as to when the property was acquired.

Now, the definition of “property” would not, we would say, extend to liabilities owed by a party to the marriage, so would not include debts owed by one or other party to the marriage unless the debt was owed immediately to the other party to the marriage, because then the debt of that spouse would be the property of the other spouse.  The definition of “property” would seem  not to extend to superannuation interests that may ultimately come to be payable at some time in the future.

Now, the term “matrimonial cause” is used principally as a sort of touchstone for the jurisdiction of the courts that exercise Family Court jurisdiction.  Section 31 confers original jurisdiction on the Family Court and one sees the expression used in 31(1)(a).  It also can be seen in section 39, which confers or allows her the institution of proceedings in the Family Court and the Supreme Court of a State or Territory.

Now, against that background, I would go to section 90AD.  Section 90AD is in the first volume of materials and is on page 52 of that volume, which is under tab 2.  Looking at 90AD(1) and, for the moment, putting aside the first six words, it says:

a debt owed by a party to a marriage is to be treated as property –

And, then, specifically:

for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.

We would say that does not expand the definition of “property” in any other context and it also does not expand the definition of “property” even as that word is used in Part VIIIAA.  Its function is to expand the definition of “matrimonial cause” so that the courts vested with jurisdiction under sections 31 and 39 will be able to make orders pertaining to debts owed by a party to the marriage as empowered by Part VIIIAA.

If I then return to the first six words, this kind of expression is sometimes used to limit the scope of an expanded definition to the instances where that definition is used in the part.  So, for example, for the purposes of this part, this word has this extended definition might mean that where the expression “matrimonial cause” is used in the part it has that definition, however, the expression “matrimonial cause” is not used in Part VIIIAA at all, other than in that section which changes the definition.  So, it seems that those words do not have that meaning.

We contend that the opening words are sufficient to confer jurisdiction on the courts to make orders of this kind provided for in this part.  So, when considering the jurisdiction to make these orders, the defined terms are as used in section 31 and 39 with the expanded meaning.  So, in a sense, it expands the jurisdiction when a court is looking at exercising power conferred under Part VIIIAA.

If I turn back to section 90AA – this is another case that one object of the Part VIIIAA is to allow a court determining a matter under section 79 to make orders that are directed to or alter third‑party “rights, liabilities or property interests”.  This, in a sense, adds a significant additional power to what could otherwise be done under section 79.  It is readily apparent that when a power of this kind is exercised, the court may order a person to do something that requires deviation from a contract or a trust deed or a law governing contracts or trust deeds because it might be ordering somebody who is contractually bound to substitute somebody who is not contractually bound.  We say section 90AC operates to ensure that orders made under Part VIIIAA have effect despite any contrary pre‑existing constraint in a law or instrument.

Thus, when a third party acts – one sees this in 90AC(2) – in compliance with the part – that is the language of the provision – when something is done in compliance with the part – we apprehend that that means in compliance with an order made pursuant to the part because there is no provisions in the part that would require things to be done.  It is the orders made under it.  So, when a third party acts in compliance with the part, the action is not “to be treated as resulting in a contravention of a law or instrument” which might otherwise have been the case.

Section 90ACA operates to exclude superannuation annuities from orders under Part VIIIAA.  If I return to the family law bundle – if I just observe that there is a separate part of the Act which deals specifically with superannuation matters.  So, really, what 90ACA is doing is saying that superannuation matters would be done under that part.

If one goes to page 41 of the bundle, section 90MD of the Act, there is a definition there of “eligible superannuation plan” and that includes a superannuation annuity, in paragraph (e) of that definition.  The definition of “eligible superannuation plan” is then adopted and used in the definition of “superannuation interest” which is on 43 of the bundle.  And then “superannuation interest” is then used in some operative provisions such as section 90MS which is on page 45 of the bundle.

Section 90MS has some similarities, also some differences, but some similarities with section 90AE in its structure. It is in the proceedings under section 79, omitting some irrelevant words:

the court may, in accordance with this Division, also make orders in relation to superannuation interests –

And then there are other orders that can be made under 90MT as well. 

GORDON J:   Mr Lloyd, may I just ask a question.  The Act upon which you are working which is included in this bundle, is as at the 2 January 2018.  These provisions were inserted after the events the subject of this matter. 

MR LLOYD:   But Part VIIIB was prior, as I understand it.  It was prior to ‑ ‑ ‑

GORDON J:   I see.

MR LLOYD:   ‑ ‑ ‑ Part VIIIAA being enacted.  The main reason I go there is not so much as to make the point about 90ACA, but just to draw the Court’s attention to the fact that there is a similar structure and, for example, going back to section 90MC one sees a similar formulation as to section 90AD in relation to a superannuation interest “is to be treated as property for the purposes of paragraph (ca)”.

So, that formulation has been sort of considered in some cases in the Family Court, and it is – that consideration we say is consistent with what we have said 90AD does.  So, the result of that is that the effect of section 90AD is to confer a new power on part – on the Court which can be exercised in the context of a proceeding ‑ a property settlement proceeding under section 79. 

Now, if I go to section 90AE which is the section critically relevant to this case, 90AE(1)(a) and (b) provides for orders “directed to a creditor”. If it is of assistance to the Court, I can indicate that Part VIIIB was added in 2001 by Act number 61 of 2001, as I think Part VIIIAA was added in 2003.

GAGELER J:   Is it still there?

MR LLOYD:   Is it still there? 

GAGELER J:   Yes.  It is just that we have – some of us are working from a version of the Family Law Act that just does not have it. 

MR LLOYD:   I think our version is as of 2 January 2018.  We might check that in the morning tea break.

KIEFEL CJ:   Which will be at 11 o’clock, I should have mentioned to the parties.

MR LLOYD:   Thank you, your Honour.

KIEFEL CJ:   At least three of us are working from a version current at 1 September 2017.

MR LLOYD:   Thank you.

GAGELER J:   I think, Mr Lloyd, it is a problem with the numbering.  It is not sequential, at least in our version of the Act.

MR LLOYD:   I see.

GAGELER J:   It is there, but it is not in alphabetical order.

GORDON J:   It goes from 90WA to 90MA – Commonwealth drafting.

MR LLOYD:   They must have run out of letters.

KIEFEL CJ: Mr Lloyd, in relation to section 90AE(1) and (2), are the powers intended to be “directed to a creditor” to do something rather than as here where the Court effects the substitution itself? It is “directed to a creditor . . . to substitute”, whereas the order 8 which is the subject of this matter just orders the substitution itself?

MR LLOYD:   Yes, that may be a difficulty with the form of the ‑ ‑ ‑

KIEFEL CJ:   Order.

MR LLOYD:   ‑ ‑ ‑ form of the order.  I think the answer of the Full Court sought to rectify that, so their answer was I think proposed – it is my recollection their answer proposed a slight qualification.  Yes, it is dealt with in paragraph 60 of the reasons, or one can see the answer on page 32 of the core appeal book, so I think that is to address that issue.

Having said that, what might underlie your Honour’s question is exactly how 90AE works in the sense of when the creditor is directed to substitute somebody, what does that actually do?  It certainly would seem to bind the creditor to make the substitution.  We apprehend that the legislative intention is that it also changes the debt status of the persons affected, so it is not just telling the creditor as part of their paperwork to cross out a name and put in another name but it actually means that if, say, in this case the wife’s debt was – if the husband was substituted for the wife, then the husband would at law have the debt and the wife would no longer have the debt.

One gets that a bit more from paragraph (c) which is in a slightly different form, but one would assume that – I mean, (a) and (b) deal with in a sense simply swapping of the identity of people in the debt, (c) deals with changing the proportion of the debt and one would assume that an order directed to the creditor to change the proportion would actually change the underlying proportion of the debts held by the parties to the marriage.

That is certainly how we proceed, we think that is how the Act is intended to operate, and we do not say that is wrong, although one might have thought that – if I can say this – when I looked at it, I thought maybe there was some other order done under section 79 which changes the actual underlying liabilities. But, at least, in practice, the orders made in relation to section 90AE are not seen as being operative of their own. So, they are not coupled with any other orders designed to effectuate the position of the parties to the marriage in relation to the debts.

GORDON J:   So, if that is right and you say it is not an independent power, then the position is, is it not, that unless there are property falling within property interests giving rise to proceedings under 79, there is no ability to substitute debt.  So, assume for the moment, that the parties do not have any assets, they have just got debts.

MR LLOYD:   I understand what your Honour says.  I expect that, technically, if you had not any assets whatsoever, then the step into this power is – you will not have a proceeding under section 79, then, that would allow for this to be done.

GORDON J:   The reason being is you can use the general powers under section 80 to direct payments to be made, or the like.

MR LLOYD:   Indeed.  So, it was said in the Court below, that in relation to this particular kind of debt, one reason why it should not be directed to the Minister is that there is already power to allow one party of the marriage to be ordered to pay an authority on behalf of the other party of the marriage.

GORDON J:   It is express power under 72 – I am using 80, I think it is HA or one of those provisions.

MR LLOYD:   I think it is section 80 was what I had in mind.

GORDON J:   Yes.

KIEFEL CJ: In a case like this, why would not an order simply be made requiring the husband to pay the debt as a part of the settlement of the property rights? I am just a bit – I am not sure why section 90AE is utilised.

MR LLOYD:   It does not seem to be utilised all that often, in fact.

KIEFEL CJ:   Well, probably for good reason.  You would not want to interfere with third‑party rights unless you absolutely had to.

MR LLOYD:   Indeed.

KIEFEL CJ:   So, why would not section 80 be the first port of call?

MR LLOYD:   I suspect it is the first port of call but ‑ ‑ ‑

EDELMAN J: Section 90AE(3)(a) would require it to be an earlier port of call, would it not?

KIEFEL CJ:   Yes, it has to be necessary, which would imply that it cannot be affected under other powers.

MR LLOYD:   Yes, yes, that is so.

GORDON J:   Especially in relation to a tax debt which has got GIC accruing at an extraordinary rate of interest.

MR LLOYD:   Indeed.  It may well be ‑ ‑ ‑

GORDON J:   It seems this matter has an amazing sort of structure which one wonders whether it is artificial in itself.

MR LLOYD:   I suppose the principal concern of my client is that my client believes that there cannot have been an intention – and was not an intention – to have tax debts, as it were, substituted in – I will come to it – but there are many reasons why it is problematic under the tax legislation to have substitution orders and so, therefore, my client’s ultimate position is that the presumption – if I use that language – should apply so that the power does not even extend ‑ ‑ ‑

KIEFEL CJ:   But, would you not look first to see if there is an answer pursuant to the structure of the Act, how it operates, before you go to the presumption?  I mean, if the order is not necessary – if the desired settlement of properties between the husband and the wife can be effected under powers.

MR LLOYD:   It may well be ‑ ‑ ‑

KIEFEL CJ:   That would not involve the Commissioner at all.

MR LLOYD:   I understand what your Honour puts to me ‑ ‑ ‑

KIEFEL CJ:   That might also be part of an argument in relation to the operation of the presumption, of course.

MR LLOYD:   Indeed.

GORDON J:   I mean, the reason why that is important, is it not, Mr Lloyd, is this:  that the Commissioner often or, at least, on occasion intervenes as a creditor in family law proceedings under Part VIII.  One has to look to see how Part VIII works, upon which Part VIIIAA rides.

MR LLOYD:   We entirely accept that.  It is part of our case that that should all be done and, when we get to it, we will say that the court below erred in the way that it approached that question.

EDELMAN J:   Except this vehicle – this case is concerned with a question which, under (3)(a), is whether there is power to make an order only where that order is reasonably necessary or reasonably appropriate.  There may be very large questions as to whether (3)(a) is even engaged in this case.  The Chief Justice referred to other powers, but you also have the fact that there are a number of assets that are involved in this case.  There is cash, bank accounts, shares, superannuation policies, motor vehicles – that property can be allocated before substitution orders are made in relation to debts.

MR LLOYD: It can be or it could be done at the same time. If section 79 allowed this, then 90AE could be put into the balance of orders that could also be made – I accept, as you say, if the making of the order is reasonably necessary. Of course, an order under section 80 to direct one party to pay somebody else’s debt does not give rise to a liability under tax legislation for that person who is the subject of the order. So 90AE, if, as the court below says, it does apply and it is available, then it is still doing something different. I cannot say how many cases there will be where it is necessary to have the different effect that section 90AE has. If all you want is one party, the spouse, to pay the debt of the other party then that would have that effect. But you might want, for example, one party to be substituted. I am not saying in relation to tax debts but in relation to other kinds of debts and you want a slightly different result because that has different consequences.

GORDON J:   But we are not dealing with that.  We are not dealing with a property owned – a family home subject to a mortgage where part of the property settlement is that the property is given to the wife and for reasons, children or otherwise, takes on the mortgage herself and you need to adjust the interest in that way under 90AE.  That is what that is dealing with.  One can understand that.  But this is a tax debt and not only are there powers under section 80 but assume for the moment the orders are not met for the payment, then you just apply to set it aside and alter it, do you not, under 79A, where someone has defaulted in carrying out an obligation?  You just adjust it in that manner.

MR LLOYD:   Yes, I accept that those things can be done.  But we say when it comes to – I mean, the question of whether or not the presumption applies has to be determined as a question of statutory construction, not related necessarily to the facts of this case.  It has to have regard to the effect that power, if it did apply to the Crown, would have on the Crown property or the Crown interest.

We say tax debts are as central to the heart of the Crown interest as anything and so we say that the question is whether or not section 90AE should even be construed as being able to apply. Now, if it is not able to apply, then my client cannot be made the subject of an order and cannot be taken to the court in order to – I mean, if it can be directed to my client then my client would have to obviously, if an order was going to be made against him, be made a party, be a necessary party to the proceeding, and then he would have to become involved in the proceeding.

That is different to the position under section 79(10), and I am going to come back to this, but under section 79(10) which of course predates by quite a long time this entire p, it is concerned with a situation where the changing of property interests under an order under section 79 might denude an unsecured creditor of value, and so it confers an entitlement to become a party on somebody in those circumstances to say that the property order being proposed would threaten the ability of that creditor to get their costs.  That is a conferral of a procedural fairness interest and an entitlement.

Under section 90AE my client is made a party in a sense and is found to be the subject of an order. It does something quite different and an order under section 79 to which section 79(10) applies is an order which could in the real world have an effect adverse to a creditor, but the order does not have the adverse effect. It is the taking away of the assets from the debtor which indirectly has an adverse effect, whereas under section 90AE it is an order directed to the creditor, binding on the creditor and which changes the rights and obligations of the creditor.

EDELMAN J:   But not necessarily adversely under 90AE(3)(b).

MR LLOYD:   Certainly not necessarily.  I accept that there is ‑ ‑ ‑

EDELMAN J:   But not even foreseeably adversely.

MR LLOYD:   Well, let me answer your Honour’s question.  I was going to get to this as well but it is a convenient time to deal with it now.  Because tax debts are different to other kinds of debts, different issues arise.  So one of the most important differences in which tax debts are is that there is a difference between the process of collecting the debt, which can be done on the basis of an assessment, and the determination of the amount of the debt.

For all other debts if one is suing for it, it goes to the court, they determine the amount of the debt and then one collects pursuant to that.  With tax debts one can collect on the basis of an assessment while Part IVC proceedings are taking place; maybe before Part IVC proceedings have ever taken place.  More importantly, the Commissioner has the power, say, for fraud or evasion to amend an assessment after the event.  So it may well be that ‑ ‑ ‑

GORDON J:   But are not all of those matters – accept all those matters as established by the legislation, are not each of those matters, matters taken into account in the spousal maintenance and property order proceedings provided for in Part VIII ‑ adjourn, come back, readjust.  Tax debts are one of the debts which are actually, in effect, more certain.

Once you have got an assessment you have got the debt, and the whole structure of Part VIII is to address those very things.  Either adjourn it while we wait to see what happens to the Part IVC, if it is an extremely large tax debt ‑ if it is not a large tax debt, then it can be adjusted.  I mean, all those powers are set out in Part VIIIA, using both the spousal maintenance provisions and the property provisions, and that is what the Commissioner does.  He goes along to the Family Court and says, “Stop.  I have just issued an assessment and I want to be able to recover”.

MR LLOYD:   I appreciate that, and maybe I am misapprehending your Honour’s point, but we entirely accept that Part VIII makes appropriate and adequate provision in relation to tax debts.  What we say is Part VIIIAA if it applied in relation to tax debts would make adverse impacts on tax debts.  If an order under 90AE was made directed to the Commissioner then, for example, to further answer Justice Edelman’s question, if after the order is made ‑ so it might not be foreseeable at the time that the order is made – but after the order is made, an amended assessment issues, then it may well be at that point in time that the problems arise.

Now foreseeability, which is an issue in (3)(b), carries with it a different concept in relation to non‑tax debts where the quantum of the debt will be seen prior to any action to collect it or recover it. 

EDELMAN J:   But the amended assessment would not operate upon the substituted party.  The amended assessment, to the extent that it is amended, would operate on the original party, would it not.

MR LLOYD:   Well, that itself is not entirely clear because, of course, the tax legislation was not drafted with this provision in mind.  We would certainly say that the amended assessment would be issued to the actual taxpayer.

EDELMAN J:   Yes.

MR LLOYD:   Now, if, depending upon the form of the 90AE order as to whether it says you owe the person’s tax for the year such and such or you owe the tax under the assessment ‑ in either case, perhaps different – depending on how the order was made, two different things could flow.

Either one, the substituted person might become liable for the amended amount.  If that happened that would be deeply problematic because that person would have no rights under Part IVC to object or review, because they do not fall within the definition of a dissatisfied taxpayer and so that would ‑ ‑ ‑

EDELMAN J:   It is hard to see how that could apply consistently with the purpose of 90AE.

MR LLOYD:   Well, maybe it could be avoided by the terms of it.  But if one goes the other way, then the amended assessment becomes the assessment under which the taxpayer owes the money and the ‑ the spouse who was ordered to pay the money is then, in effect, relieved of the debt because the debt under that assessment is now gone, because the debt now arises under a different assessment, not the subject of a 90AE order.  So ‑ ‑ ‑

GAGELER J:   Mr – I am sorry.

MR LLOYD:   Sorry, your Honour.

GAGELER J:   No, when you are finished. 

MR LLOYD:   I was just going to say, so however the tax legislation would work in regard to different forms of the 90AE order, we say there are problems with its operation if 90AE applies to tax debts.

GAGELER J:   Mr Lloyd, I just want to try to establish the level at which you put your argument. Your argument is about the presumption that legislation does not bind the Crown. Is what you are saying that a debt to the Crown is not a debt within the meaning of the extended jurisdiction conferred by section 90AD(1)? So that where you have a debt to the Crown, the court simply does not have jurisdiction in a matrimonial cause to entertain an application for an order under section 90AE. If it is, I understand it, but if it is not, I am not sure what your argument is.

MR LLOYD:   Well, that would certainly be a consequence of our view that debt should be construed by reference to the presumption to not include tax debts. 

GAGELER J:   So, it goes to the jurisdiction of the court.  It simply cannot make these orders. 

MR LLOYD:   Indeed.  The way your Honour put it, might then make what we have also said, that the idea that creditor would also be read down, perhaps, unnecessary.

GAGELER J:   It would flow through.  It would have the equivalent meaning.  But, your point would be jurisdictional rather than simply at the level of power, I think.

MR LLOYD:   That is so, your Honour.

GAGELER J:   So, what you are saying, as I understand it, is where you have a debt to the Crown, you do not get into Part VIIIAA at all.

MR LLOYD:   Yes.

GAGELER J:   Is that right?

MR LLOYD:   I see that we probably have not put it in exactly those terms.  But, that flows – that is completely consistent with what we would say would happen as a result of the presumption.

GAGELER J:   All right.  If that is the way you put it, why are we focusing on the detail of the tax legislation.  There are many possible debts to the Crown in its many manifestations.  Why are we looking at the Tax Act?

MR LLOYD:   Because the case law which talks about what one has regard to says one has to have regard to the nature of its effects on the government and, obviously, many of the debts owed to the Commonwealth are tax debts and so by illuminating what the impact of the presumption being displaced would be, informs – it seems in the cases to do two things.  One is, it is relevant to whether or not the presumption applies at all.

So, for the presumption to apply there has to be a law which regulates the conduct or property in a particular way, or regulates a conduct or property, in terms that would, being broad, potentially apply to the Crown.  And, we say, that is met here.  Then, it is also relevant at the level saying whether there is an intention to displace the presumption one has regard to what the consequences of it not being displaced would be to help inform the balance and so ‑ ‑ ‑

GAGELER J:   It is very blinkered, though, is it not?  Because we could be talking about rates or stamp duty and we would be looking at quite different consequences.  I just have great difficulty if your argument is put at the level of debt and Crown.  I have difficulty in isolating one set of supposed adverse consequences to the Crown without looking more broadly.

MR LLOYD:   I suppose we do say that – I mean, the cases seem to indicate that when one looks at the concept of the Crown, the presumption might apply, for example, to the Governor‑General but not to people way below the Governor‑General.  It can have different levels.  We have focused upon the position of tax debts collected by my client.

EDELMAN J:   If your focus is just on tax debts, then is not the argument really one of construing two otherwise inconsistent statutes consistently with each other?

MR LLOYD:   We do say in our submissions that one can look at it from that perspective, but I do not know that is the starting point.  I mean in Bruton Holdings, that is explained in two ways.  One as a special regime overriding a more general regime, and then there is a second way that, I think, Chief Justice French referred to it, as being just as it is possible to read two bits of legislation as able to be read together and to be reconciled, and that that process could be done. 

Now, that was not discussed in the context of the presumption.  We say, the starting point – all the presumption is, is a starting point as a rule of construction.  But the starting point is that where a provision would regulate or affect Crown offices or Crown property, then the presumption is that the general words will not apply.

Now, that can be displaced and we would say, to give an example, is assuming that the presumption applied to 79(10), it would be displaced there because 79(10) is the section which confers an entitlement on creditors to become a party in section 79 proceedings.  And that is just, in effect, conferring a benefit in order to do natural justice or to facilitate natural justice.  There is no reason to think that Parliament would have intended that the Crown not have that entitlement to come along and have natural justice in relation to its debts so it would be displaced in that context. 

In the context of section 90AE, the orders have a somewhat different effect or consequence and it changes aspects of the rights of the creditor. And so then different issues arise and it is true, we point to issues that arise in relation to tax debts. It may be that – I mean it is enough for us to say that the presumption is displaced in relation to tax debts. It may be that it is broader and it includes every kind of Crown debt. We do not need ‑ ‑ ‑

KEANE J:   In that regard, if you look at section 90AE(4), which follows from 90AE(3)(e), that the court has to be satisfied that the order it makes “takes into account the matters mentioned in subsection (4)”, and you look at (4)(b) “the taxation effect (if any) of the order on the third party”. Now, there are two things really about that.

The first is its taxation effect which is not limited to the income taxation effect.  It is the taxation effect generally and, at the most general, that would seem to mean taxes in the sense that imposts imposed by governments on the governed.  And the second thing is that (4)(b) is talking about the taxation effect on the third party.  It does seem to be awkward, to say the least, to speak of the taxation effect of an order on the government to whom tax is owed. 

That might suggest that the regime under Part VIIIAA is not a regime about those sorts of debts at all.  But it is not limited to income tax.   It is about a regime in which there is a taxation effect that can flow from an order as between the third party and the spouse, or the party of the marriage. 

MR LLOYD:   I think in the court below my client sought to make a point to similar effect to that and that is addressed in paragraphs 21 to 31 on page 40, and it was said to be a reason why the presumption would not be seen to be displaced.  The court, in paragraph 31, accepted that it was at least theoretically possible for the substitution of certain tax debts to themselves have tax effects.  And the example given there – it may be that, for the taxpayer, the payment of the GIC would be deductible from their income but, if the spouse were substituted, it would not be deductible from her income.

KEANE J:   But how is that a taxation effect on the Commissioner, as the third party?

MR LLOYD:   No, that is only a taxation effect on one of the substituted parties, I accept.  It is difficult to see how there could ever be a taxation effect on the Commissioner.

KEANE J:   And the regime contemplates – I mean, yes, it is true it may not occur, in practice, but the regime contemplates that it may.

MR LLOYD:   That is so, although I suspect it will be put against me that it does not say that there has to be one in every case.  But I understand what your Honour says and, as I say, my client relied upon that as an indicia in its favour in the court below.

KEANE J:   But it is not limited to the Commissioner of Taxation; it is any tax creditor, any authority, being the Crown ‑ ‑ ‑

MR LLOYD:   That collects taxes.

KEANE J:   ‑ ‑ ‑ whether it is State or federal.

MR LLOYD:   That is so.  If I could just have a moment to see where I am up to.  The first issue we take is that the court below erred in paragraph 16 at court book 37 in relation to the dichotomy that it drew into how it approached the presumption.  If I might start by first taking the Court to a decision of this Court in Bass v Permanent Trustee.  It is to be found in volume 1, at page 323, which is under tab 10.  Then if I could go, in particular, starting on page 335 of the volume, 346 of the case, paragraph 15.  Paragraph 15 sets out the old expression of how the presumption was explained or described as being:

the Crown is only bound by statute –

And then paragraph 16 describes the more flexible approach taken and explained in Bropho.  And then in paragraph 18, over the page – I will not read it – but one sees there that the focus is more on whether the legislation regulates:

the conduct of the members, servants and agents of the executive government –

or separately regulates property of the government.  There are other enunciations, but we say that 90AE, if directed to the Commonwealth debts or tax debts, would readily fall within that concept.  The approach taken in the court below was to draw this dichotomy between whether it imposes an obligation or whether it imposes a benefit.

Justice Aldridge addressed that issue and that is the area in which his Honour departed from the majority judgment.  At paragraph 66 through to 71 really his Honour explains the development of the principles in relation to that and his Honour concludes at 71 that the notion of benefit or burden is something to be considered in determining whether or not the Crown is bound.  It is not a threshold issue.  So we say, respectfully, that their Honours erred in paragraph 16 in their exposition of…..presumption applies.

KIEFEL CJ:   Do I take it from Justice Aldridge’s reasons at paragraph 63 that this argument about benefit to the Crown was not raised in argument before the court?

MR LLOYD:   Yes, that is ‑ I was not there, but that is how we have approached it.  The modern rationale for the presumption was at least conveniently collected and restated in Commonwealth v Western Australia which is in volume 2 of the bundle.  It starts at page 591.  The relevant passage is at page – well, if I just note, at page 608 there was discussion of the presumption and similar matters said in relation to what I have already taken the Court to in Bass v Permanent at 33 and 34, but in terms of the explanation for it still existing when it is not based upon the royal prerogative, that is discussed in paragraph 36 over on page 610.  It is a recognition that:

legislation “may have a very different effect when applied to the government of a State from that which it has in its application to ordinary citizens”.

One of the reasons why we do direct attention to the tax legislation is because that exemplifies some of the different effects that it has in that context.

Obviously, although I use the word “presumption”, I do not mean to make it any more than it is.  We accept that it is a rule of construction.  It is only a starting point.  It can be displaced if there is material that suggests that it was not the intention of Parliament that it apply. 

Having identified the obligation benefit dichotomy, the majority justices at 17 then posit the view that section 90AE can only impose a benefit for the Crown and one looks at, say, 17(c) – we say there is no reason to construe the replacement of a wealthy spouse with a less wealthy spouse as a benefit. It may turn out that the debt is paid and it ends up not being a detriment but, unambiguously, if you replace somebody who is less wealthy – I mean replace somebody who is wealthy with someone who is less wealthy, then the risk of loss is higher and that, we say, certainly cannot be said to be only a benefit.

In paragraph 18, their Honours do conceive of at least one circumstance where the Crown could have a detriment but then rely upon (3)(b), the foreseeability issue.  In response to that, Justice Aldridge at page 47, paragraphs 72 and 73, posits reasons for thinking that that analysis is wrong, which we would respectfully adopt – what his Honour says at 72 and 73.

In addition, we would say that a requirement on a creditor to go to court to address these issues is, itself, or can itself, constitute a burden or detriment for a creditor sufficient to attract the presumption as a starting point.  And, we also have said – and do say – that for our client, the special characteristics of tax debts are affected by, or may be affected by, by 90AE orders and that further contributes to adverse consequences that could happen under 90AE.  And, the fact that there could be adverse consequences is enough to attract the presumption as a starting point. 

The next point we make is that – I should say, when I use the “Crown”, I am using it in shorthand for the way it has been used in the cases to refer to the Executive Government and its members, servants and agents.  Before turning to what the court below did in relation to the way it approached the arguments, we say that the correct approach is that there should be an identification of an intention to bind the Crown involves consideration of all the relevant circumstances – it is the language from the cases.

One should first identify the nature of the activities or property of the Executive Government that would be affected or be liable to be affected, if the provision applied to the Crown.  It is this identification which attracts the presumption, and then one must look at the legislation concerned for material that shows an intention that the provision apply to the Crown.  This would come from – may come from the text of the statute, its subject matter, the nature of the mischief to be redressed and also the general purpose and effect of the statute.

Now, in that respect, if I can just refer the Court to a decision in the ACCC V Baxter Healthcare which is in the first volume at page 284.

GORDON J:   Paragraph number, please, Mr Lloyd.

MR LLOYD:   It is paragraph 42 and there is a passage there quoted by the joint judgment which, in effect, says what I have just said.  So I obviously rely upon Justice Brennan having said it. 

KIEFEL CJ:   I am sorry, I did not quite catch what you said then, Mr Lloyd.

MR LLOYD:   Sorry, your Honour.  Paragraph 42 says what I had in effect said was the correct approach and that one looks at the nature of the activities of the Executive Government which would have been affected if the Crown is bound, and that is part of the reason why we say it is appropriate to have regard to impact on tax legislation. 

Not that that is the be‑all and end‑all, but in relation to debts of the Commonwealth, it is at least an important criteria and if it is adversely affected, even if other debts of the Commonwealth are not adversely affected, that would be enough to be weighed in the balance as to what the intention of Parliament was in relation to debts of the Crown. 

In this context, if one has accepted that the presumption has been attracted as a starting point, the logical position, we would say, is to look for indicia that show that intention is to bind the Crown.  That is not, however, what the court below did.  One sees on page 36, in paragraph 12, there is a reference there to the words “debt” and “creditor” taking their everyday meaning and then there is the discussion from 16 to 20 which is to the effect that the presumption does not apply.

Then in 21, their Honours noted that the matter was argued on the basis that it did apply, and so then therefore in case they are wrong about the position they took there, they then address whether or not there is an intention. And then what their Honours do, really from paragraph 22 through to 49, is to look at factors that the Commissioner advanced in response to a suggestion that there was an intention. So these are not factors which were trying to show – these were factors that supported the idea that section 90AE did not advance a legislative intention to bind the Crown.

What we are saying here is that there is reason to believe from the structure that what the court has done is by putting the Commissioner’s submissions first, that it in effect reversed the onus as to what intention is being looked for.  So the court looks at the various arguments advanced as to why the presumption has not been displaced before looking at the arguments as to why it has been replaced, and the arguments as to why it has been replaced really begins from paragraph 50.

Perhaps before I get to that, but just in further support of the idea that there is a suggestion that there is a reversing of the onus of proof, is that in paragraphs 46 and 47, a point is made – there is a sort of flavour that the significance to be attached to the fact that the extrinsic material did not expressly indicate that tax debts were excluded.  So the fact that the extrinsic material did not say tax debts are out seems to have been seen as significant.  But really if the extrinsic material said nothing on the point then the presumption would stay in place.  So we think that that at least supports the suggestion of the reversing of the onus.

EDELMAN J:   Is it really an onus of proof?

MR LLOYD:   I accept it is not an onus of proof.  I expressed that poorly.  It is a starting point whereby if there is no indicia one way or the other then the presumption should prevail.  But if there are indicia then one, we would say, would look at ‑ of that list of matters that Justice Brennan noted in Baxter, is there a textual indication, is there a subject matter indication that the presumption has been displaced, what is that, and then that is to be considered in the light of all of the circumstances as to what the intention of Parliament is.  If the effect were, for example, to make the Crown face criminal liability, one might want some pretty clear language before saying the presumption is excluded.  If the effect is less dramatic, maybe a lower level of indication ‑ ‑ ‑

EDELMAN J:   What you are really saying is it is not a presumption in the true sense of when one fact exists another fact is presumed.  It is only a starting point, but even then the starting point would only be relevant in a case where there is no indicia one way or the other.  Otherwise it is always just a question of legislative construction; one must always ask the question is the Crown intended to be bound?

MR LLOYD:   I think I accept that, your Honour, save for perhaps the word “only”.  I would say that a court should work on the assumption that Parliament knows the presumption and will know that if there is no other indicia, Parliament is intending to rely upon it.

So, coming back then, at 50 and 51, one sees the applicant’s submissions which rely upon 79 and the link between 79 and 90AE.  We will come to that separately.  I have already foreshadowed that apart.  Then there is the Commissioner’s response in 52 and 53 which is perhaps and maybe even – and then 54 is the court’s analysis.  One might get to the end of 54 and thought that they had found an indicia in favour, although at the beginning of 55, it says:

We acknowledge though that the real issue is –

something else.  So, it is not clear whether 54 was treated by the majority as, itself, sufficient.  Then, they find a matter in 55, and then they come to this position in 56:

The failure of Parliament to include such a provision –

like 90ACA.  So, 90ACA expressly says the Part does not apply to superannuation annuities.  So, the failure of the Parliament to include a provision that expressly excludes, relevantly, tax debts:

is a strong indication –

using the language of their Honours:

that there is a legislative intention that the Commissioner be bound –

We say, that if the starting point is that absent anything the Commissioner is not to be bound, then the absence of that thing is not a strong indication that the Commissioner is to be bound. 

So, we say, when the reasons are read fairly but structurally, having started by considering the strength of the Commissioner’s argument, only then to look at it other way, it carries with it a suggestion of an error in approach.  Whether that error – I mean, it might be an error in approach but I accept that even if the Court were agreed that it reflected an error in approach, it does not actually tell the Court what the answer to the substantive construction question is.  It just might be a reason for not adopting that approach.

So, what I propose to do now is address the three remaining issues.  The first relates to the nature of tax debts.  I will say some things about that and the impact of 90AE on tax debts.  The second, as I return to section 90AC and the significance, if any, that it has and then, lastly, I look at whether or not section 79 and the way their Honours have dealt with it at 54 and 55 reveals error and that if it was approached the correct way, in a sense – even apart from the tax debts issues – the Court should have answered in an opposite way.

GORDON J:   Is the position right, though, that if you deal with what you do not deal with secondly, i.e. the general question about whether the Crown presumption is displaced, you never get to the tax debts question?

MR LLOYD:   It is true that on our argument in relation to 79 and 79(10) and the presumption that the significance of the tax debts is not decisive because there is nothing sufficient to displace the presumption in any of it.  So the presumption is there.  The only thing relied upon – perhaps I will do it in the other order; it is probably more consistent with the point I have just made.

If you go to what their Honours said in the court below about this, the court really only identified one indicia going to statutory intent and that is really in paragraphs 54 and 55.  The court noted that the words “creditor” and “debtor” were used in both section 79A and 90AE and that these provisions are textually linked.  Both of those points are made in paragraph 54.

We acknowledge that the words are used in both sections but contend, as acknowledged by the court in paragraph 52 and also 54, that the same word can have different meanings in different provisions – that is the first proposition – and that the same words can have different meanings because the presumption is displaced in one instance of its usage but not in the other.

Now, it may be accepted that the linkage of the provisions in which they appear might make it more likely that the same words have the same meaning, so we do not deny that that is a principle, which is described in paragraph 54, as I said, of one not carrying much weight.  However, we say the correct approach is to see what work is done by the two provisions where the words are used and then apply the presumption approach to both of them – or maybe I should say to each of them – and see whether the considerations for displacing the presumption apply equally in both cases.

So, in the context of section 79, the words “creditor” and “debt” are used, relevantly, in 79(10) and they are there to confer an entitlement on creditors to become a party to a proceeding “if the creditor may not be able to recover” the debt.  Section 79A(4), which is also relied upon, is in the same category of usage.

We say neither section 79 nor 79A regulates the property of the creditor; rather, it provides a measure of procedural fairness to creditors.  We would say it would be surprising if Parliament had intended that the Commonwealth or the Commissioner should not have the opportunity to protect its debts.  There is thus a clear subject matter basis arising from the procedural fairness goal of section 79(10) to displace the presumption if it was attracted in that circumstance at all.

In section 90AE the words are used in the context of a creditor who is going to be the subject of orders. It would ordinarily follow that the creditor would need to be joined as a party. The creditor would not need separate, specific statutory entitlement to become a party. So 79(10) is not really applying in the context of 90AE because under 90AE the person would have to be a party and the creditor must also be accorded procedural fairness under section 90AE(3)(c), I think it is.

So in section 90AE the power does allow for the Commonwealth’s interest in its tax debts to be varied in specified ways, ways in which, in many cases, may clash with what is otherwise a comprehensive and exhaustive regime otherwise governing tax debts.

We say the presumption in this case is clearly engaged and the reasons for displacing it that were applicable in section 79, which is that the Commonwealth should be entitled to procedural fairness as with any other creditor, do not apply here.  So the same basis for displacement is not there.  We say it was not sufficient simply to give weight to the existence of a link, the whole test should have been applied. 

Now, as I said earlier, it is not clear that their Honours thought the link was enough because at the end of 54, their Honours seemed to think it is the analysis in 55 that made the difference, the so‑called real issue.  We would respectfully say that the test at the end of the first sentence of 55 is not the correct test. 

One does not need to find an intention that the Crown is caught by one provision and not the other.  That might be the result of the process but it is not the intention you are looking for.  You do not look at the two provisions together and have to find that specific intention.  One rather looks at each – the provision each in turn while looking at, in each case, appreciating the totality of the Act and the role played.             One is not looking at them as some kind of joint test. 

We say the error in the court’s approach is made clearer in the next sentence.  The court, it seems to us, has essentially said that the presumption was displaced in respect of the words “creditor” and “debtor” when section 79 and 79A was enacted. 

So when it was enacted, those words – the presumption did not apply to those words for reasons that are not controversial and then, subsequently, when those words were used, they had to have been used in a context where the meaning had already been somehow predetermined.  That seems to have this idea then that if the first time an Act uses a word, the presumption would be displaced then any similar usage, or any usage of the same word later, is somehow affected by that.

We say that that whole approach is wrong, that one should apply – one should not see the presumption as spent if it is displaced once, but each time there is an amendment to the Act, one looks at the Act as a whole and considers each of the usages that raise the issue.

EDELMAN J:   It is not quite what the judgment is saying at 55, is it?  Is not the point being made it is not just the repeated use of the word “creditor”?  It is the fact that the whole regime in 79 is being expanded in 90AE?

MR LLOYD:   Yes, but it says:

Parliament must be taken to have known that the Commissioner has always been treated as a “creditor” –

So the notion there seems to be, well, it is not an issue that in the existing usage of the word “creditor” the presumption either did not apply or was displaced.  Then the proposition is:

Had Parliament intended to exclude the Commissioner ‑

In a sense, from that point onwards, because the presumption had once been displaced, you would then need express language to change that.  What we say is that that is wrong as a matter of principle, that the presumption applies each time and that for the exact reason which the court accepts is the position – the court below accepted was the position, that the presumption might be engaged in one usage of the word but not in another usage because there were different reasons that engaged the presumption or not engage it, or displace it or not displace it, then that is the position.

One should not say, well, because the Commissioner had been treated as a creditor in the past, therefore Parliament had to know that he would be a creditor.  We say that Parliament was entitled to think ‑ or the presumption would apply as it always applies and if the presumption is not displaced, it should apply.

We say that if one approached it in that way, one would not do what their Honours did in 56 and say that the absence of an express provision is indication of a legislative intent that the Commissioner be bound. We would say that that is wrong, that you just start from scratch, one would have regard to what is being achieved by section 90AE, what impacts it has on the Crown and answer that question, and we would say if you answered that question you would not say that the presumption was displaced.

GAGELER J:   Mr Lloyd, these days we take a purposive approach to interpretation; indeed, Bropho was all about that. Accepting that the legal position of the Crown is affected by being subject to an order under section 90AE, is not the question one of looking at the legislative policy informing Part VIIIAA and asking whether it is intended to be comprehensive of third party rights that relate to the property of a marriage – of the parties to a marriage – or whether it admits of a carving‑out of those debts that might be owed by one party or another to the Crown? Consistently with Bropho, that I think is the way to approach it.  Simply to point out that the interests of the Crown are affected is just to get you to the threshold.  It does not apply the presumption to the provisions in question.

MR LLOYD:   Well, I think I understand what your Honour is putting to me, but my answer to that I think is that we do not say that a purposive approach should not be taken, but if one starts with the presumption as the starting point and then says, well, is there an intention that when it says “debts” that means every conceivable debt, or does it mean debts but not perhaps Crown debts, then there is not a purposive indication that it is meant to include Crown debts.

KIEFEL CJ:   That might be a convenient time.  The Court will adjourn for 15 minutes.

AT 11.02 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.17 AM:

KIEFEL CJ:   Yes, Mr Lloyd.

MR LLOYD:   I think before the break, your Honour Justice Gageler had asked me about the purposive approach.  I suppose my answer is that our approach is consistent with that but starts with the presumption and if there was something in the Act which suggested that all debts are to be included, that may be an indicia against it, but it cannot just be the use of the general word “debts” because that is what the presumption weighs against.  So, we say, the purposive approach is not contrary to the outcome we seek in this case.

The next issue that I would address is section 90AC.  So, this is a matter which is put against us.  We say that, as I have indicated earlier, it is designed to ensure the effectiveness of the part and, in particular, to compliance with orders and the kind of ability to comply with orders made under the part.  In that sense, it does not address the question as to what can be done under 90AE.  It just ensures that what can be done 90AE will not be hampered by other laws.  We say the presumption applies to 90AE.  That being so, if it does apply in 90AC, it is not an indicia against the presumption, it just means that the slightly narrower range of 90AE orders will have less impact, or will not have to engage 90AC.

If I can go to the nature of tax debts as, obviously, the matter of which my client is principally concerned.  We address this – and I do not propose to go through it in detail – but we address it in detail from paragraph 35 to paragraph 47 of our submissions.  I just want to highlight a few matters from those paragraphs.  Paragraph 37, we refer to the legislation which shows that the debts under the tax legislation are debts due to the Commonwealth.  My client recovers them but they are Commonwealth debts which are relevant to the nature of this being Commonwealth property. 

In paragraph 38, a passage from Broadbeach is included emphasising the special kind of statutory debt that is created.  In 39, it is observed that tax debts are different to commercial debts in that commercial debts, or most debts I suppose, somebody extends credit in one form or another and in tax, the debt arises by operation of the legislation. 

Then we identify a number of special incidents attaching to tax liabilities.  In 41, the ability to issue assessments that are at least determinative for the purposes of recovery proceedings.  That is obviously different to other kinds of debts. 

Paragraph 42 emphasises that debts can be recovered while the amount of – or the correct determination of the amount of the debt is still being yet to be determined, in Part IVC proceedings.  That is also different to other kinds of debts. 

One of the reasons why I emphasise the tax debts, because obviously that is the focus of my client’s concern, but also because the court – established authorities say that one is to look at the nature and effect of the laws and so we identify the underlying circumstances to which 90AE would apply if it did extend to tax debts.

In paragraph 43 we identify a number of special recovery powers in relation to tax related liabilities.  I will come back to that later.  In 45 – I will not address that.  Then in paragraphs 46 and 47 there is a point that I sought to make earlier.  This relates to something said by the judgment of the court below at paragraph 41, which is on page 42, the bottom half of that, their Honours say:

Furthermore, Part IVC of the Taxation Administration Act 1953 (Cth) expressly confers the rights of objection on “a person who is dissatisfied with an assessment, determination, notice or decision”. This is arguably a wider class than the person against whom the assessment was made ‑

Now, to the extent that that was significant to their Honours, we say that that reveals error.  If I can make that good by going to Part IVC which is in the first volume under tab 8, section 14ZL is on page 197.  So, this is the bit which their Honours quoted:

This Part applies if a provision of an Act or of regulations . . . provides that a person who is dissatisfied with an assessment –

et cetera.  So, that is what their Honours saw.  That then turns on what the provisions say.  One can give an example of such a provision in section 175A which is on page 90 of this same volume under tab 4.  It says:

A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer –

So, although the word “person” is used in ZL, it is actually only a taxpayer who is given the right to engage Part IVC.  “Taxpayer” is defined – and I probably do not need to take the Court to it – but there is an error in the volume ‑ ‑ ‑

KIEFEL CJ:   Forgive me, Mr Lloyd, could you remind me that in the determination of whether the provisions of 90AE and the part apply to the Crown’s debts is a matter of construction of that statute?

MR LLOYD:   It is a matter of construction ‑ ‑ ‑

KIEFEL CJ:   Why are we looking at the details of the Tax Act?

MR LLOYD:   Because one of the indicia was the nature and effect that it has.  So, this is one of the nature and effects that it has, is the effect on the tax legislation.  So, in the same way as if the nature and effect was to lead to the Crown facing imprisonment – I mean, that would engage a number of other sections and criminal laws and things, but one would have regard to it – well, that is the effect if this provision binds the Crown.

KIEFEL CJ:   That brings us back to the question that Justice Gageler put to you earlier which is – I mean, at what level and how generally do we answer the question which you raise which, of course, is not expressed as a question on the question stated.  It is a question which has been raised below.  I mean, are we saying that, in effect, you will be asking us to say that Part VIIIAA does not bind the Crown generally or does not bind just the Commissioner of Taxation.  What are you asking the Court to actually state?

MR LLOYD:   We are going to firstly indicate that we are not making any submissions about the Crown in the right of States or Territories. 

GAGELER J:   You cannot do that, can you?  I mean, your submission has to encompass them, does it not?

MR LLOYD:   In my respect, no, because, as indicated by that example I have given before from Bropho, the nature of the presumption may apply to ‑ for example, may benefit the Governor‑General but not benefit instrumentalities of the Crown in some cases but not in other cases.  So, who would be affected by it may vary according to it.  

So we say the Commissioner has the advantage because the Commissioner is collecting the debts of the Crown. That is enough to come within the protection of the presumption. But we do not say the Court has to make a finding which extends to the Crown in every capacity and at every kind of Crown debt. We are not saying the Court could not do that but we are saying ‑ the way we advance it is to say one looks at the nature and effects of section 90AE applying relevantly here in this case to tax debts and if it applies here and has these nature and effects then the presumption could be engaged.

GORDON J:   Can I just ask a question about that aspect of it?  Do you include in that every debt owed to the Commissioner, or do you exclude and carve out of it something for which the Commissioner has taken security over the property of the marriage?

MR LLOYD:   That is a good question, your Honour.  I had not turned my mind to that.  I was relating to tax debts, so debts owed to the Commonwealth.  I would have to look at whether or not ‑ ‑ ‑

GORDON J:   I understand that, but that is the reason why I asked, because it is a label without meaning at the moment.  It is not a defined term for the purposes of ‑ ‑ ‑

MR LLOYD:   The question before the Court pertains to tax‑related liabilities.

GORDON J:   I know, but we are trying to work out this presumption and we are trying to work out whether or not Part VIIIAA has any application at all, whether or not it has a confined application, whether there is a carve‑out.  In practice, the Commissioner often takes security over the property of a marriage in order to secure tax debts.

MR LLOYD:   What I was unsure of is whether the status of that is as a debt to the Commonwealth.  It probably would be, but it might have a different status.  That is why I did not want to specifically address that.  But insofar as – we would say it at least embraces every tax debt constituting a debt to the Commonwealth; that the presumption extends at least that far.

Now, I apprehend the Court wants to know, maybe it goes further.  It may well go further.  We are identifying that there are problems in relation to the effect that it would have in relation to the tax legislation and in order to answer the question, which is to go back to the core book, the question is on page 15, which is whether or not the grant of:

power to make Order 8 of the final orders sought in the amended initiating application –

Or sorry, does section 90AE grant the court the power to do that? Then the order 8 is a bit further up the page in paragraph 18.

GORDON J:   Well, it is actually more specific than that, is it not?  It is 90AE(1) to (2) which is the reason why we raise whether we are not even getting through the threshold when we have not got included 90AE(3).  A very artificial question.

MR LLOYD: Section 90AE(3) does not confer a power.

GORDON J: Section 90AE(3) provides the court may only make an order under (1) and (2) in particular circumstances, so it conditions, at least.

MR LLOYD:   I accept that.

GORDON J:   So one cannot look at (1) and (2) without looking at (3). 

MR LLOYD:   I entirely accept that.  All I am trying to say is I do not think the question is asking the Court to look at 90AE and ignore every other provision of the Act.  We accept that the Court should look at every provision of the Act and the conferral of power under 90AE is constrained by 90AE(3), but a specific order is being sought, which is in paragraph 18, which pertains to indebtedness arising in respect of tax related liabilities, and so the question that the court below faced was directed to that.  Now, I suppose all I am trying to say is, in my submission, the Court can answer that question without necessarily having to say the absolute limits of every kind of Crown debt that might be covered. 

KIEFEL CJ:   Well, the Court could also answer the question by construing 90AE(1) and (2) by reference to subsection (3) and say that it is not reasonably necessary, therefore the power does not arise, in a speaking answer, without getting to your argument about presumptions. 

MR LLOYD:   Well, I suppose if the answer was apropos the ambit of the power, my client would probably be content with that answer because it would mean ‑ ‑ ‑

KIEFEL CJ:   Which might suggest that resort should not be had to this section until the rest of the Act is properly gone through.

MR LLOYD:   The only difficulty with that is that whether or not it is reasonably necessary it might involve consideration of the facts, or a broader range of facts.  The approach that was taken in the court below was much more at a jurisdictional level, to say there is simply no power in relation to tax‑related liabilities at all.

KIEFEL CJ:   It is a rather large question to want to address when you have got a sensible commonsensical approach which might be taken. 

MR LLOYD:   I understand, your Honour.  I am not sure I can say much further about that.

KIEFEL CJ:   No.  I understand.

MR LLOYD:   So I think I had just gone to 14ZL and then to section – yes, I was going up to the definition of “taxpayer”.  We set out the definition of “taxpayer” actually in paragraph 46.  That is the totality of it.  In footnote 37, there is a reference to where that section is found.  If I can just indicate that in our volume we made a mistake - we included section 6‑1 of the 1997 Act, not section 6(1) of the 1936 Act, and that is in the bundle, but I do not otherwise – in the little handout handed up today in relation to the 1936 Act. 

But the point being that the taxpayer is the person who derived the income or profits or whatever, and then one goes back to the Part IVC on page 201 in the volume and then, bearing in mind that the person who can be dissatisfied is the taxpayer, then 14ZU which does say “a person making a taxation objection must” and then specifies things, but that person, the person who may make a tax objection, is the taxpayer.  Then that flows through then to 14ZY, which is on pages 210 to 211, that the Commissioner must decide it and must give the person notice of it in subsection (3) and then, if that person is dissatisfied with the Commissioner’s objection under 14ZZ, they then have rights of review and appeal. 

All of that is, in fact, limited to the taxpayer and does not extend to a substituted spouse, we say, under the terms of the tax legislation and, to that extent, it at least allows for the possibility of an incontestable tax if the substituted person does not have appeal rights in relation to it. 

Then we address what the impact is on these features by section 90AE. We address that in paragraph 48 through to 60 and also in our submissions in reply from 11 to 15. I would seek now just to identify some key aspects of those.

EDELMAN J:   Mr Lloyd, if the original taxpayer made an objection after substitution of the tax debt and the objection were successful, do you say that that would necessarily have the effect extinguishing the tax debt rather than, perhaps, if the two pieces of legislation are construed together, leaving the original tax debt as substituted and the increased amount with the original taxpayer?

MR LLOYD: If after a section 90AE order has been made saying, for example, that the husband has to pay the wife’s tax debt, the wife then – as could happen in this case, although my friend says it is spent; it is not actually spent – if the wife in this case found some reason to not pay it and she decided to seek an extension of time and seek an amendment of that assessment and if that extension of time was granted and if the assessment was varied so as to remove the debt, that would have the consequence that the husband would no longer have to pay that debt because the debt would not be owed anymore because ‑ ‑ ‑

EDELMAN J:   Would it?  Would it have that consequence if the substituted had then been the basis of the adjustment of property rights under the Family Law Act? 

MR LLOYD:   From the Commissioner’s point of view, it would have that effect because my client would say, “Well, there is no debt here anymore so we wouldn’t be seeking anyone to pay that debt”.  Can I come to the GIC provisions?  The GIC provisions turn upon the underlying existence of a tax debt from the point in time that it was payable and not paid.  If in fact after an assessment it was shown that it was never liable to be paid, all of that GIC would be washed away.  In this case, half or more of the debt is GIC money, so that debt would then go.  It would not be $256,000 which would be, presumably, what is weighed in the balance under section 79.  In the circumstances of this case, there would be not that.

Then that leaves the judgment debt.  The judgment debt is in a slightly different position.  It involves itself some GIC, but also some principal amounts of tax liability.  My client would say, if none of those liabilities were extant, it would obviously not seek to ever enforce payment of a judgment debt that was done on the basis of an assessment which was, in effect, set aside.  So, in substance, the husband in those circumstances would get a windfall profit unless there is some subsequent variation.  In reality, however, depending upon how ‑ ‑ ‑

EDELMAN J:   That could happen in theory with any debt though, could it not if, for whatever reason, a creditor subsequently decided not to enforce a debt or decided that there had been a miscalculation of the debt and did not enforce it against the substituted debtor?

MR LLOYD:   That could happen, in any case.  Any creditor could always randomly do it, but in this case, of course, there are appeal rights and facilities to challenge the quantum of the debt which is unlike every other case.  I was going to take the Court to the Commissioner v Brown which is in volume 2 at page 721.  The relevant passage is at 738. 

GORDON J:   What page number is that, Mr Lloyd?

MR LLOYD:   I am sorry, page 49 of the judgment.

GORDON J:   Thank you.

MR LLOYD:   So, one sees at about point 3 on the page, a reference to Official Receiver where Justice Williams is saying:

I venture to repeat, mutatis mutandis, what I said . . . to the effect that the Assessment Act is an Act which provides a complete and exhaustive code of the rights and obligations of the commissioner and other officers of his department to members of the general public who are subject to its provisions and of those members of the general public to his department.  In my opinion, the whole scheme of the Act . . . is to confine the liability to pay income tax to persons who can be assessed under the Act and upon whom is conferred the right of appeal against the assessment either by way of reference to a board of review –

So you have this part of the scheme, and over the next page about six lines down from the top after referring to a number of provisions which is on the balance of the previous page:

All these provisions, it will be seen, operate and operate only between the commissioner and some particular member of the public.

Creating of course the tax liability to that member.  Over the page onto page 51 at the very bottom:

In my opinion the liability of any person to pay a debt for unpaid income tax is conditional upon the right of the commissioner to assess that person and upon the correlative right of that person to appeal against the assessment.

So, obviously for reasons I have already indicated, we say that that basic link of the structure of the legislation is ripped asunder by 90AE where the substituted person does not have the correlative rights to appeal the assessments.

We also draw attention to what is said in Moorebank which is also in the same volume.  It starts on page 765 of the volume and the relevant passages start on page 774, which is page 64 of the book.  Now, in this case there was a question as to whether or not a State scheme would be picked up under section 64 of the Judiciary Act.  I will not read it all.  The relevant passages go from 64 through to about 67.  But the points that I would make from it is towards the bottom of page 64 it says:

It would be surprising if, within that general scheme, there was room left for the application of whatever the laws of a particular State might provide ‑

There is the idea of it being surprising there and then over the page on page 67 it says:

The intrusion of State Limitation Acts provisions would undermine other aspects of the coherent scheme –

We say there is a parallel – obviously this is not a section 64 case, but we say there is a parallel here between section 90AE tending to undermine what is otherwise a coherent scheme, and that is a factor to be weighed when one looks to see whether Parliament did intend that 90AE apply in relation to tax debts.

We say that an order under section 90AE to substitute debtors in tax liabilities would mean that tax liabilities are no longer limited to the person who is the subject of the assessment with the objection and review and appeal rights, and also the knowledge that might be required to displace the onus of proof which is imposed upon them.

So even if in a particular case somebody who had a liability under a tax assessment which had been substituted to that person was able to get an order from the Family Court for the other party to lodge an objection, the substituted person might not have the knowledge to actually meet the onus requirements of the Act. 

We submit that the general powers in Part VIIIAA and the special exhaustive tax regime can be reconciled and read together if the presumption is not displaced.  The plurality in the court below could see no reason why the substituted tax laws could not be construed so as to confer on the substituted party all the rights of the taxpayer with the tax debt.  That is at paragraph 41 they say that. 

And what I seek to do now is to identify four problems with that view.  The first relates to all of the powers that pertain to tax‑related liabilities, the special powers which I drew the Court’s attention to earlier.  They all turn on – or at least mostly turn on, whether something is a tax‑related liability.  That itself is a concept which is defined in section 255‑1 of the Administration Act which is on page 233 of volume 1.  So one sees there:

A tax‑related liability is a pecuniary liability to the Commonwealth arising directly under a taxation law (including a liability the amount of which is not yet due and payable).

And then, turning backwards in pages, one sees over several pages a large table and that table is a table that specifies the sections under which tax liabilities arise. We place emphasis on the words “arising directly under taxation law”. That at the very least if a substitution order is made under section 90AE, there would at least be serious doubt as to whether or not liability of the substituted person with a liability that arose directly under the taxation law as opposed to a liability that arose under the Family Law Act. 

The second point we make is in relation to general interest charge.  The provision that regulates it is section 8AAB which is in the same tab on page 187.  It says:

There are certain provisions of this Act and other Acts that make persons liable to pay the general interest charge.  Subsection (4) lists the provisions.

Now, the short answer perhaps is that none of those list of provisions include section 90AE. But even if it said, well, one somehow can go beyond that, if one looks at subsection (2):

A person is only liable to pay the charge on an amount if a provision specifies that the person is liable to pay the charge on the amount.

If one looks at the table on page 188 and sees item 12, that deals with unpaid income tax.  I use that as an example; that is what this case is about.  That refers to section 5‑15 of the 1997 Act and there was handed up this morning an extract from that Act which has 5‑15 on the bottom of the penultimate page.  It says:

If an amount of income tax or shortfall interest charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the general interest charge on the unpaid amount for each day –

Then, in effect, this provision crystallises on a day‑by‑day basis, determining what the general interest charge is for the day.  But the provision operates on the assumption that the “you” is the person who was liable to pay it before it became due and that that person has – remains unpaid, in effect, by that person.  It is not clear at all that this provision can readily be adopted to a situation where the general interest charge is to be paid by a substituted person, but that is exactly what the order that is sought in this case seeks to do.

So if one looks at page 15 of the core appeal book, the order is to cover tax‑related liabilities of $256,078.32 plus general interest charge.  So because the underlying tax debts of the wife continue to give rise to her, at least, or used to give rise or would give rise to her absent a 90AE order under 5‑15, it is at the least highly questionable whether those provisions would operate if a 90AE order were to be made.

Thirdly, I have given this example already, but the making of an order under 90AE will have uncertain and problematic impacts in relation to later amended assessments.  So if there is an assessment, then a 90AE order and then a subsequent amended assessment, that amended assessment can only under the tax legislation be given to the original taxpayer, which then raises issues which may depend upon the form of any 90AE order.

One possibility is that it is ordered in a way that the person is liable for the person’s tax liability for a specified period, in which case that person might become liable for the amended assessment; or, alternatively, it is not ordered that way and it is just in relation to an amount in a specified assessment and then if there is an amended assessment that person would then cease to have that liability, which seems to be contrary to the purposes of the Family Law Act having a just and equitable outcome.

So, we say all of these matters show that if 90AE was capable of applying in relation to tax debts and tax‑related liabilities, there would be significant difficulties in relation to that Act which are the kind of matters which could be taken into account to ask whether Parliament would have intended such difficulties to arise, so that is having regard to the nature and effect of the provisions.  We say that the Court can have regard to those matters and, if it does, that would support the view that there is nothing in the Family Law Act, or certainly nothing sufficient in the Family Law Act, to displace the presumption such that the word “debt” in perhaps 90AD or the words “debt” and “creditor” and/or “third party” all exclude at least, if I put it that way, tax debts, tax‑related liabilities or the Commissioner.

GAGELER J:   Mr Lloyd, on that last point, “third party” is defined in section 90AB to mean:

a person who is not a party to the marriage.

MR LLOYD:   We would pick it up in the word “person”.

GAGELER J:   Yes, of course, which is dealt with in section 2C(1) of the Acts Interpretation Act, and there it is said that the reference to a person includes a body politic.  How do you deal with that?

MR LLOYD:   I accept that the word “person” is capable of including a body politic, but where it is used in a context of a provision which regulates the property or conduct of governments, one needs to find – then the presumption is attracted so, to that extent, it is likewise affected by the presumption.

GAGELER J:   My memory might be faulty but I thought that was the answer to the presumption that prevailed in Baxter Healthcare.

MR LLOYD:   Your Honour, I might have to have a look at that and perhaps I will address that in reply.

GAGELER J:   Thank you.

KIEFEL CJ:   Yes, Mr Robertson.

MR ROBERTSON:   If the Court pleases.  The wife sees this issue as a matter of statutory construction of the Family Law Act in its conjunction with the Tax Act and that these submissions on Crown immunity if they are made have to be made at the high level of generality that has been identified, and one gets that from the decision of Justice Rich in Minister for Works (WA) v Gulson which is at page 1051 in the third volume of authorities.  Justice Gordon, that is page 356 of the CLR volume.

GORDON J:   Thank you.

MR ROBERTSON:   At point 1, Justice Rich says:

It has been decided by the highest authority that, in constitutional theory, the Crown is one and indivisible . . . It is by the Crown that all legislative and administrative authority is exercised throughout the Empire . . . so that, legalistically, it would be more strictly accurate to speak of the State of Western Australia in the right of the Crown than of the Crown in the right of the State of Western Australia.

At the bottom of the page, he talks about how that gels into questions of statutory construction.  At point 8:

The theory of the unity of the Crown produces, in relation to the rule now in question for the construction of statutes, the two‑fold result that, first, the Crown in all its capacities is prima facie not bound by a statute made in any part of the Empire unless this is provided for expressly or by necessary implication, and second, a provision that a statute binds the Crown binds it prima facie in all its capacities unless a contrary intention appears.

So, if we are going to explore this problem of Crown immunity here, we do have to look at the Payroll Tax Act.  We have to look at every Crown debt or every debt that is owed to the Crown in its one and indivisible form.

What I want to do is address the meaning of “property”, as requested, and have specific regard to the mischief to which these new provisions were directed as identified by this Court in Ascot Investments v Harper.  That case is not on the bundle of authorities and I will have to hand it up now to the Court.

While that is being done, everything my learned friend has said about the jurisdiction of the Family Court and property, we agree with, and that “property” for the purpose of 79 is gross property; it is not liabilities.  However, this Court in Kennon v Spry dealt with what it meant in section 79 and Chief Justice French said:

The word “property” in s 79 is to be read as part of the collocation “property of the parties to the marriage”.  It is to be read widely and conformably with the purposes of the Family Law Act.

Your Honours, do you all have the Ascot Case?

KIEFEL CJ:   Yes, thank you Mr Robertson.

MR ROBERTSON:   So before this new division was introduced, we just had section 79 and the court was given the power to alter the interests in property.  In that case, the husband owned shares in a company, Ascot Investments, and it was ordered to transfer the shares to the wife.

The husband refused to do that and the court ordered the registrar, in place of the husband, to sign the share transfer.  But then Ascot Investments intervened or took action and said that the Family Court order could not bind it.  It was a third party and by the memorandum and articles of association, it was for the directors of the company to decide whether they should have the company register the transfer of the shares. 

This Court said it was terribly unfair to the wife, however, that was the problem with section 79.  There were certain types of property that were inalienable of their nature or could only be transferred with the consent of the third party, and the power under section 79 did not extend to ordering a third party to do what the husband could not do by himself. 

Justice Gibbs gave the leading judgment in the case and gave some examples of problems, as did Justice Murphy.  If I could please take your Honours first to page 355 and the judgment of Justice Gibbs with whom all members of the Court agreed.  Chief Justice Barwick gave a separate concurring judgment apart from Justice Murphy who dissented on the power.  At point 2, his Honour says:

Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it.  The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it.  To take two obvious example, the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party. 

And, as the shares in Ascot Investments contained a restriction on transfer, that prevented the Court from being able to order that transfer.

Justice Murphy held in dissent that the Family Court had the power under 79 to compel third parties to effect the transfer.  He gave some other examples at page 359, if I could take your Honours to that, of other items of property that might be acquired that would defeat the purposes of Parliament in enacting section 79 and providing for the just and equitable division of property.  At point 9:

A host of inalienable proprietary rights could be acquired - the right to be provided for lengthy periods, even for life, with meals and accommodation, transport -

et cetera.  So, that was the mischief that this division ‑ ‑ ‑

KIEFEL CJ:   When did Part VIIIAA come into effect?  It was 2003, was it not?

MR ROBERTSON:   Yes, your Honour.

KIEFEL CJ:   Why did it take so long to address the ‑ I mean, if that is the mischief that it was addressing, you would expect the legislature to have done something rather sooner.  I raise that because, looking at the second reading speech in relation to the Family Law (Amendment) Bill of 2003, it does not seem to refer to Ascot Investments.  It refers instead to provisions applying to creditors, whether they are family friends or financial institutions.

MR ROBERTSON:   When one looks at 90AE itself, one sees an express power given to the Family Court to order a company or the directors to register the transfer of shares.  So, the very section addresses the very ratio of Ascot Investments.  I have no explanation for the delay in time, but one sees from 90 ‑ ‑ ‑

KIEFEL CJ:   Well, put the delay in time to one side, we just wonder whether the second reading speech identifies a wider concern than just the Ascot Investments problem.

MR ROBERTSON:   There is a wider concern, because we also have this novel power to deal with liabilities. 

KIEFEL CJ:   And we do not know where that comes from, what the genesis of that is?

MR ROBERTSON:   We do not know what the genesis of that is other than, like all the other powers in 90AE, they can only be exercised for the purpose of section 79 and dividing the property of the marriage, and only if it is necessary or reasonably appropriate to do so.  So, this is (a) a remedial section, in that it addresses the Ascot Investments problem.  It goes further, but only goes further for the specified purpose in 90AE(3).  It does not allow the Court to enlarge the property of the parties to the marriage.  It only can be exercised to effect the division of the property as identified by the Court.  So, it cannot be exercised to forgive a debt of the party to a marriage because that would be to enlarge the property.

Now, dealing with property, if I could just take a simple example of a chose in action - a Commonwealth bond.  A husband might own a Commonwealth bond.  It might be the major income‑producing asset of the marriage, and the Family Court might under section 79 consider it just and equitable that the wife should receive an interest in 60 per cent of that Commonwealth bond.  However, as we know from Re Steel Wing, choses in action cannot be divided in half or in part, so we would have this inalienable problem that Justice Murphy identified.

What 90AE(2) allows the court to do is to order the liability of the Commonwealth under the bond to be paid 60 per cent to the wife and 40 per cent to the husband and also to direct the Commonwealth to issue two certified bonds in that effect.  So, if the court thinks it is just and appropriate that both parties should share in this income‑producing asset, there are impediments in the law, in Re Steel Wing, and 90AE(2) facilitates that division.

So, the Commonwealth, which has a liability only to the husband, as a result of the order would have to issue two new bonds, one as to 60 per cent and one as to 40 per cent, to husband and wife.  That facilitates what the court would have had to have considered the necessary or appropriate division of property under section 79.

KIEFEL CJ:   And it would normally only do that if it could not get the same effect in terms of the allocation and division of property under section 79 or 80.

MR ROBERTSON:   Exactly.  A bond, for example, is a long‑term instrument, and so there may not be a situation where - this is an example.  The court would not have the power to force the Commonwealth to repay the bond early, because that would be enlarging the property of the marriage.  So the court is stuck with the property still and cannot exercise an ordinary power under section 80 to force a payment to be made out of other assets.  So that would be a situation where it is constrained.

Note, however, what we have here is the Commonwealth as the third party. Our submission is that what “third party” means in section 90AE in relation to choses in action is that the corollary of what is property of the marriage or a liability of the marriage within section 79. So, if the property of the marriage is a chose in action against a third party, then the liability of the third party is in section 90AE. It is the obligation to pay that amount. So they are one and the same, and that applies, we say, in reverse.

If there is a liability of a party to the marriage, for the purposes of section 79, then section 90AE when it refers to the assets of a third party is talking about the person to whom that liability is owed, simple as that, and that this provision is a very facilitative provision which simply allows the Court to overcome difficulties in circumstances where there are problems. Your Honour mentioned section 80 – or I mentioned section 80 – that, in many circumstances an order under 90AE would not be necessary because a court, for example, could order – a husband might have a term deposit which the husband is capable of breaking. The Court might order the husband to break the term deposit and pay the cash, or 60 per cent of the cash, to the wife under an ordinary section 80 order.

However, the Family Court – Ascot Investments is an example – the Family Court is full of recalcitrant parties who have a history of getting money into their hands and not complying with court orders.  So, in a circumstance like that, given the court’s duty under section 81 to finalise financial interests and ensure the parties are not continuing to go back to the Family Court, it may be considered necessary by the Family Court that the asset of the husband be transferred to the wife, even though it might be in readily realisable form. 

KIEFEL CJ:   In the present case, consideration of whether or not it was necessary to make an order of this kind was not reached, was it, because, as I understand the history of it, the order of the kind referred to in paragraph 7 of the majority judgment – the “paragraph 8 order”, I will call it ‑ was sought by the husband and then there was a simple referral about ‑ ‑ ‑

MR ROBERTSON:   Sought by the wife.

KIEFEL CJ:   Yes.

MR ROBERTSON:   The Court has not given any consideration ‑ ‑ ‑

KIEFEL CJ:   To the practicalities of the question.

MR ROBERTSON:    ‑ ‑ ‑to 90AE(3), yes.

KIEFEL CJ:   And has not given consideration to whether or not, yes, that is necessary, which would take you back to the more general powers under section 80.

MR ROBERTSON:   That is right.  This has been treated by both parties as a situation where one does not get to 90AE(3) until one decides the jurisdictional question, whether the Commonwealth is a third party or a creditor for the purposes of subsections (1) and (2).  If it is not, we do not get to (3).  So that has not been considered by the Court.  But on the facts that are in the case stated, we can see the wife’s argument as to why she would submit that 90AE(3) would be satisfied in the circumstances of this case.

What we have is one valuable asset of the parties to the marriage for the purposes of section 79.  That is a right to an income protection policy.  That is the sole valuable asset.  It is owned by the husband.  What the wife has is no assets; however, a massive taxation debt.  Now, that taxation debt is sterile in the sense that the Commissioner has no possibility of recovery from it as the situation presently stands because the wife has no assets.

The wife’s case – and it is only an allegation; there has been no evidence or finding – is that this situation came about because the husband derived all the property and all the income of the marriage and wasted a lot of it, but left her under some partnership income‑splitting arrangement with all the tax liability.

If an ordinary order were made by the Family Court under section 79 to transfer the property of the marriage, being the income protection policy to the wife or for the wife’s benefit, then suddenly that asset would be swallowed up by her tax liability.  The Commissioner has not forgiven it.  It is resting there.

So, if the Court considers by reason of these circumstances that it is just and equitable that the wife share in some of the property to the marriage, which is presently owned wholly by the husband, then that order would be defeated because the Commissioner would then be suing as a creditor of the wife and that asset would have to be sold and there would be nothing for her.

GORDON J:   But that is to take just one aspect of the entire picture, is it not, because both Part VIII and Part VIIIAA direct attention to whether or not, not only will the debt be paid, and you say here that the Commissioner gets the benefit because it might be paid, but whether or not the possibility is of that being a realistic event?  If there are no other assets, one is shifting a debt to achieve what?  The whole reason for that analysis is to work out whether it is absolutely necessary and to work out whether or not what you are putting to us is able to be achieved.  No one has stopped to work that out, have they?

MR ROBERTSON:   Well, yes, because when one looks carefully at the proscription from shifting the debt from the wife to the husband, the proscription is that that shifting cannot occur if the making of the order would result in the debt not being paid in full.

KIEFEL CJ:   Is there evidence that the husband has $256,000?

MR ROBERTSON:   No, the husband has nothing except this income protection policy.  But the words have to be looked at very carefully.  It is not that the debt has to be paid in full; it is that the making of the order would result in the debt not being paid in full.  Now, the debt is not going to be paid at all as the situation presently stands.  So the making of the order does not alter that state of affairs.  It does not put the Commissioner in any worse position than he presently is in, on the facts of this case.

KIEFEL CJ:   But the proceeds of the income disability insurance policy are not something that the wife can draw upon?

MR ROBERTSON:   Well, it is an income disability policy for the benefit of the husband at the moment. 

EDELMAN J:   It is a causation point you are relying on; it is the resulting.

MR ROBERTSON:   It is the resulting of the making of the order does not place the creditor in any worse position than it is presently in.  The creditor cannot get paid at all so, therefore ‑ ‑ ‑

KIEFEL CJ:   At the moment.

MR ROBERTSON:   At the moment.

KIEFEL CJ:   But this is to release the wife’s indebtedness for the future, effectively.

MR ROBERTSON:   Yes, because at the moment the Court is in a position in separating the interests of the parties where if it does nothing, the husband walks away with the entire asset of the marriage. 

GORDON J:   That is an assumption which is, I think, wrong.  At the moment, that is the order that is sought that is - as I understand it, is to substitute the income insurance policy for the debt.  That is the order that is sought, i.e. swap, wife gets ‑ ‑ ‑

MR ROBERTSON:   Swap the tax debt.  Yes, that is right, to swap.

KIEFEL CJ:   Under the final orders sought in the core appeal book, page 27, the wife is to retain that income protection policy ‑ ‑ ‑

MR ROBERTSON:   “Retain” is probably the wrong word.  It is ‑ ‑ ‑

KIEFEL CJ:   ‑ ‑ ‑ and then the order sought in paragraph 8 of those orders has the effect that Justice Gordon is referring to.

MR ROBERTSON:   Yes, that is right.  So, at the moment, the husband has the income protection policy.  That is the existing state of the property of the parties to the marriage.  Treat that as the only substantial property.  The court does not think that is a just and equitable position to leave, so it wants to make an order under section 79 to divide the property of the marriage, being about asset only, in an effective manner having regard to all the factors set out in sections 75 and 79.

If it simply says, well, all these factors mean that – if the Court accepts the submission of the wife that there has been all this additional property of the marriage which has been wasted by the husband, the Court may consider a just and equitable that the entire proceeds of the policy be transferred to the wife.  In that case, there will be nothing left for the wife because then the wife will have to pay the unsecured creditor.

So the court effectively wants to benefit the wife but is stuck because all it can do is either leave the property with the husband or have the Commissioner of Taxation paid out in full – or paid out to the extent of the policy.  That is what we say is something that the Court can do and is within 90AE(3), or that will be the submission that will be made.  It has not been made.

GORDON J:   I was going to say there has been no consideration of this in any of this.

MR ROBERTSON:   That is right.  There has been no consideration because – ‑ ‑

GORDON J:   And it has been isolated out from paragraph 11, which is spousal maintenance.

MR ROBERTSON:   Yes. 

GORDON J:   And the income stream available to the husband.

MR ROBERTSON:   That is right. So the Court, when it considers this, is going, first of all, to be guided, obviously, and binding on this Court, as to whether it has the jurisdiction to consider it. If it does, and if it does have the power to consider shifting a tax liability, then these other considerations, the ordinary considerations under section 80 and spousal maintenance, are all going to be considered for the purposes of determining whether section 90AE(3) is satisfied.

KIEFEL CJ:   It might have been more helpful if the Court had in fact considered the course it might take if it is going to be subject to a jurisdictional question. 

MR ROBERTSON:   Yes. 

KIEFEL CJ:   The jurisdictional question could be answered, and the Court then determine that it is not an appropriate course.  What a waste of time that is. 

MR ROBERTSON:   On the facts of this case it would be a waste of time.  I think my learned friend mentioned in the special leave application that these “Tomaras orders” are being sought around the country at the moment, so it is an important question for the administration of the tax legislation for the Commissioner.  We would respectfully agree that it is not a waste of time in that sense. 

KIEFEL CJ:   Perhaps on a different basis the question might more properly arise.

MR ROBERTSON:   Yes, your Honour.

KIEFEL CJ:   It is a question whether this is really an appropriate vehicle, I think. 

MR ROBERTSON:   There is.  Both parties did not lean on the Family Court to consider, on the assumption that it did have jurisdiction, whether 90AE(3) would be satisfied.  So it has not been considered at all.  But I join my learned friend in saying that that goes not to jurisdiction but to power on the circumstances of this case. 

KIEFEL CJ:   I appreciate that. 

MR ROBERTSON:   But we also submit, from what I have outlined as the argument, that that is a reasonable argument that can be put to the Family Court, and they might accept it. 

If I can return to property under section 79 and the rights, liabilities and property interests of third parties within section 90AE(2), they are the two sides of the same coin when it comes to choses in action, we say. If it is accepted, as we say it must be, that the Commonwealth is a third party in relation to section 90AE(2) in relation to its Commonwealth bond obligation to pay, then it cannot be carved out of 90AE(2) as a third party.

Section 90AE(2) talks about a third party in respect of its assets, liabilities and property interests in relation to the marriage. So, whether the Commonwealth is owed money or owes money, it is the third party within section 90AE(2) because that conforms with the section 79 property of the parties to the marriage and the liabilities that the Court must take into account in working out an effective division of that property.

We say that 91AC is inserted to prevent the fear that Justice Murphy expressed about arguments that would prevent the transfer from being made.  In the case of the Commonwealth bond that I am talking about, it could be argued – without section 91AE – that Re Steel Wing applies and that the Court only has a power to shift an asset, property of the marriage or divide an asset, if that asset were, of its own nature, capable of being divided.  We say 91AC is to prevent that argument from arising.

If the property of the marriage includes a right to money – which it obviously does – then it is no answer to the Court seeking to carve up that right to money that, as a matter of common law, it is inalienable.  Section 91AC, we say, overrides that common law rule. 

We say the same thing arises with statutory rights to money.  A statutory right to money, especially a right to a tax refund, is property of the marriage under section 79, but it is a right which is personal, or close to personal, to the taxpayer.  It is not an ordinary chose in action that can be assigned by the taxpayer to a third party. 

If the Court ordered the Commonwealth or the Commissioner of Taxation to pay a tax refund due to the husband, to the wife, then the Court would be met with resistance on the basis that the Commissioner of Taxation only has a statutory duty to pay money to the taxpayer.  It is not the obligee under an ordinary chose in action.

When one goes through the tax provisions, one sees that the Commissioner’s obligation to pay a tax refund can only be made into the bank account of the taxpayer or the taxpayer and someone else:  i.e. the taxpayer’s bank account or a joint account.  The Court might consider, because of the recalcitrance of the husband, that that is not appropriate and that it would rather have the tax refund directed straight to the wife, the other party. 

We say that section 91AC has two effects.  If we can just look at the words of the section, your Honours.  We say that the first thing that 91AC does is to override the law that the Commonwealth, or the Commissioner, is only to pay a tax refund to the taxpayer or to the joint account of the taxpayer and someone else as nominated by the taxpayer.

We say that subsection (2), which does not limit the overriding effect of subsection (1), ensures that the Commissioner cannot be seen to be in breach of its obligation by reason of paying the money to the wife, even though it can only, under the tax law, pay the money to the taxpayer or into a joint account.  So it provides the remedy, or it sweeps away the objections that would otherwise apply to inalienable property or property that can only be transferred for certain things or, in this case, statutory rights to money which, by their nature, are not themselves transferrable property or property that can be divided up as a matter of common law. 

Our submission is that there is no problem whatsoever.  If the Family Court can – and it can – direct a husband to tell the Commissioner in the approved form that his tax refund should be paid into a joint account of the husband and the wife, we say that this section goes further and allows the Family Court – because it might consider it expedient if the husband is recalcitrant or an inveterate gambler – to simply direct the Commissioner to pay the money straight to the husband.

Parliament has done this in the child support area, so the registrar of child support, if it considers a husband is recalcitrant, can direct the Commissioner of Taxation to pay a refund to the registrar of child support.  This is not unique or a novel construction.  We say it is there because it provides for the effective division of the property of the marriage and it may be necessary in circumstances where there is a history of wasting of assets.

I want to now move to tax liabilities of the marriage rather than tax assets of the marriage but there is no difference in principle between the two because it is now a modern feature of taxation that the operation of the Tax Acts can produce, and in many occasions will produce, a right to money rather than a liability to tax.  That simply depends on the taxable facts.

KIEFEL CJ:   Mr Robertson, is your argument following your outline?

MR ROBERTSON:   This is one ‑ ‑ ‑

KIEFEL CJ:   I am not quite sure where you are.

MR ROBERTSON:   I see.  Yes, if we go to paragraph 6 of my outline on page 1.

KIEFEL CJ:   Yes, I see, thank you.

MR ROBERTSON:   So, the design of the Tax Acts means that a taxpayer often has a statutory right to be paid money.  Section 166 of the Income Tax Assessment Act is the basic assessing section.  One sees when one looks at it that the Commissioner must assess refundable tax offsets.  The Thomas Nominees Case is a perfect example where Mr Thomas claimed he had a statutory right to be paid money and the Commissioner claimed that Mr Thomas had an obligation to pay tax.

KIEFEL CJ:   I do not think there would be any dispute that this would – what you are discussing at paragraph 6 would be property of the marriage, but that is not what we have here. 

MR ROBERTSON:   Yes.  No, well what we have – there is some dispute that it is property of the marriage because it is like a tax liability equally susceptible to challenge by the Commissioner which has to be resolved in Part IVC proceedings.  So if we go over to paragraph 7 on the next page of my oral outline, your Honours, a party might claim in a tax return or a BAS an entitlement to $1 million from the Commonwealth.  The Commissioner may dispute that claim, and issue an assessment admitting a claim of only $300,000. 

So, immediately we have a dispute about property of the marriage which is a tax statutory right.  And, as Justice Gordon mentioned, like any other dispute, the Court can adjourn the section 79 proceedings until the actual amount of the property is determined.

GORDON J:   You have got it on your ‑ that hypothetical, you have got an admitted property of $300,000.

MR ROBERTSON:   Yes, but the taxpayer is claiming $1 million.

GORDON J:   That might be right, but we are still dealing in that paragraph with property of the marriage.

MR ROBERTSON:   Yes, that is right.  It is as a dispute.  Well, the Commissioner could claim that, in fact, the taxpayer owes $300,000 instead of has an entitlement to $1 million.  So the Family Court is uncertain at that point in time what the actual property of the marriage is or whether it is a liability of the marriage.

That does not mean that it is not property of the marriage or that it is not a liability.  It has got nothing to do with it.  The fact that it is being disputed is simply a factor that the Court is going to take into account in working out whether it should make interim orders, or whether it should adjourn the proceedings until the dispute is sorted out. 

Our submission is the fact that there is a special dispute regime for tax rights and tax liabilities is irrelevant to the issues before the Court.  Every chose in action can be disputed.  The Family Court just asked the question, “This claim for $1 million, is it being disputed by the Commissioner or not?”  If the court is told by both parties that it is not in dispute it will then deal with that as property of the marriage, and we will get to what happens later.  If, after orders have been made under section 79, the Commissioner comes along and amends the return ‑ I will deal with that question shortly.

This division is simply about dividing the interests in the property effectively and it allows the court to order third parties to pay money to different parties of the marriage, or it allows the court to order third parties to receive money from different parties to the marriage contrary to their legal rights.  It can only be exercised if it is for the effective division of the existing property of the marriage, not for any broader purpose.  So there is no basis whatsoever to exclude the Commissioner of Taxation or tax debts or tax assets from this regime.  It is just about shifting money between the parties.

When one goes to section 79 one sees that Parliament is very concerned with orders that it might make that affect the interests of creditors.  Section 79(10) allows the creditors to intervene.  That is reflected in this division as well.

If the Court is going to make such an order, we have exactly the same protection to the creditor or the same concern of Parliament and we see that in subsections 90AE(3) and (4) where the Court cannot make an order if the making of that order, like the making of a 79 order, might result in the creditor not being paid in full.

So, there is nothing in that regime, with respect, we say requires the word “creditor” to exclude the Commonwealth, nothing in the regime excludes the Commonwealth as a third party.  The considerations that affect all other creditors are precisely the same considerations that affect the Commissioner when it is trying to recover a debt, subject to what my learned friend says about the objection and appeals regime which I will get on to in a moment. 

In fact, I will get on to it now because what is put against us is there is a special difference for tax debts or tax assets, as the case may be, in that subsequent to a property order under 79 the Commissioner might have meant an assessment and the amount of tax might change.  Subsequent to a section 79 order there might be a change in law and a husband who has provided full and proper disclosure to the Family Court as part of the division of property might still be within time to object against the assessment and get a refund of tax.

Now, we are dealing with a situation where, in the meantime, there has been an amount of money which the wife has owed to the Commissioner, say $100,000, for tax which has been shifted over to the

other party to the marriage.  Now, we say, what happens subsequent to a section 79 order is utterly irrelevant and the position is precisely the same whether a 79 order is carried out in the orthodox section 80 way or in the shifting of money rights and liabilities way that this division permits.

In both cases, the parties have got to the end result.  Money has got where the Family Court wants it to be.  Property is now where it is supposed to be.  So, whether that occurs under a traditional section 80 order – that the husband pay money to the wife – or because there has been a 90AE(1) or (2) order that instead of that, the husband pay the wife’s tax debt – we get to the same result.

So, when the Commissioner, later on, assesses or reassesses one of the parties, that is a new right, or a new liability, that has come into existence, imposed upon a taxpayer or conferred upon a taxpayer, and the Family Law Act and the Family Court deals with situations where assets have been discovered after property settlement proceedings have been finalised and might ask the question, well, at the time of the division of the property, did you, the husband, have an intention to object against your tax return which you did not disclose to the Family Court as part of the property settlement.  The husband answers, no, I had no intention, the law changed after that point in time.  Then, the husband would keep the refund.  These considerations do not distort or corrupt the income tax regime and the assessment and appeals regime in any way.  

EDELMAN J:   They are not considerations that are unique to a tax regime.

MR ROBERTSON:   No.  Every creditor might later on deny a claim that had been listed as an asset of the parties to the marriage.  All these are matters which are part and parcel of the business of the Family Court.  Assets go up and assets go down.  Tax is no different. 

KIEFEL CJ:   Mr Robertson, the Court will sit on until one o’clock and then – today.  I take it that you were speaking to your outline paragraphs 19 and 20.

MR ROBERTSON:   And then my signature. 

KIEFEL CJ:   Yes. 

MR ROBERTSON:   And I will sign off, if the Court pleases. 

KIEFEL CJ:   Thank you.  Yes, Mr Lloyd.

MR LLOYD:   I did not have the opportunity over lunch to have a look at the Baxter Case.

KIEFEL CJ:   Would you prefer it if we did take the adjournment now and resumed earlier?

MR LLOYD:   That would allow me to have a look at that issue.

KIEFEL CJ:   I think Justice Gageler also wishes to speak to you before we do rise. 

GAGELER J:   My memory was faulty, Mr Lloyd.  I had in mind that Bass v Permanent Trustee in the paragraphs around the one you took us to in submissions.  They are really quite inconclusive when you seek to apply the reasoning here, but I would appreciate your submissions on the effect, if any, of the definition of “person” in section 2C of the Acts Interpretation Act. 

MR LLOYD:   Thank you.

KIEFEL CJ:   Well, in that event, we might adjourn then until quarter to two.

AT 12:46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 1.45 PM:

KIEFEL CJ:   Yes, Mr Lloyd.

MR LLOYD:   First, responding to Justice Gageler’s question, I think what we would say in relation to provisions like that considered in Bass v Permanent Trustee Company, which is set out at 336 of the first volume and is otherwise reported at (1999) 198 CLR 334, is that the function of that kind of provision is to clarify or make subject to contra‑intention general words like “person”, “party”, “anyone”, “someone”, be able to include a body politic or corporation where those words might not otherwise have that meaning.

We would say that that kind of provision in the Acts Interpretation Act should not be understood as repealing the presumption in relation to where those words are used.  If it does not do that then it is a definition which makes it clear that the words are capable of including “body politic” but leaves it subject to the presumption as and when it otherwise applies.  So we would say that this kind of definition in an Act of that kind does not provide any insight into whether the use of the word “person” should or should not be read down in a particular place by reference to the presumption.

GAGELER J:   Did you find any authority on that?

MR LLOYD: I have not, no, your Honour. In response to my friend’s submissions, he started with the proposition that the Crown is indivisible. That perhaps is more important for his case than it might otherwise seem, because most of his submissions were directed to instances where the Commissioner or the Commonwealth was the debtor rather than was the creditor. Then he uses that to say, “It is either all in or all out.” But we do say, first of all, that the Crown is not indivisible. I do not have the case, but I refer the Court to Sue v Hill (1999) 199 CLR 462 at paragraphs 90 to 91.

KIEFEL CJ:   I might have misunderstood Mr Robertson, but I thought that submission was in aid of the notion that the Commissioner is but one aspect of the Crown seen as a whole, the matter which had been the subject of discussion with the Bench earlier today.

MR LLOYD:   If that is what he is saying, I will get on to that response, but it was put in the submissions and we responded to it in our reply.  It seemed to be relying upon an older line of cases about the Crown being wholly indivisible.

KIEFEL CJ:   Yes.

MR LLOYD:   Insofar as it has the more nuanced question, which is that the Commonwealth, as it were, is wholly indivisible, we would say that that is inconsistent with, I think, Bropho and the line of cases which indicate that, in some cases, the presumption might protect the Governor‑General but not protect people below the Governor‑General.  It is an ability for the presumption to act in relation to some instrumentalities, we would say, and not others.  So we do not have to show that it applies to everything, we say.

GAGELER J:   In relation to that, is Bropho the only authority you can point to? 

MR LLOYD:   I think Bropho, in relation to that point, is referred to in ACCC v Baxter, in paragraph 41, so that same passage of Bropho is cited again.  At various points my friend said things going to sort of what might be called the underlying facts of this particular case, about whether the wife would pay amounts of money and that kind of material.  We would say that at least some of what was said is outside the ambit of the special case, and to that extent the Court should not assume that what he said is either in the special case or uncontroversial. 

KIEFEL CJ: I think what some of the nature of the orders themselves sought, if one has a look at the suite of orders that was put forward by, I think, the wife, what it does point up is that, accepting that jurisdictional questions are usually the first that are considered, normally when a large jurisdictional question is posed for a reference you would expect a trial judge to think, what will be the practical outcome? Will this actually arise? Is this the way that I would actually take the matter? That is the difficulty that, speaking for myself, I find myself in. This could be, on one view of it, completely hypothetical, if one has a look at subsection (3) of section 90AE.

MR LLOYD:   From a matter point of view, we would resist the suggestion that it was hypothetical.

KIEFEL CJ:   I meant in a practical sense, not in the constitutional sense.

MR LLOYD:   I certainly accept that if we were unsuccessful and the matter were remitted there is obviously every possibility my client would successfully resist an order. 

KIEFEL CJ:   It is just that sometimes the practical outcomes should be the first thing considered before one goes into the expense of larger questions.  I am not being critical of the parties or of the primary judge who was obviously faced with a question that she thought needed to be answered.

MR LLOYD: I understand. Then, my friend made submissions about Commonwealth bonds where, of course, the Commonwealth – I mean, Commonwealth bond held in favour of people, of members of the family, would not be a debt. So, it gives no insight as to the meaning of the word “debt” as we put it in relation to section 190AD. An order could be made of the kind which my friend seeks, I think, referred to there under section 90AE(2)(a), so direct a third party to do a thing in relation to the property of the marriage.

Well, if the tax refund or the interest from the bond is being made, then 90AE(2)(a) could be directed to that.  Our concern is principally in reading down the word “debt” in 90AD and correspondingly in 90AE(1)(a), (b) and (c) and that consequently means that the Commissioner would not be a creditor as well but probably the reading down of the debt achieves the same end.

GAGELER J:   So, you accept the Commissioner as a third party?

MR LLOYD:   We accept that there is – that for the purposes of (2)(a), where the Commissioner has been directed to do something in relation to the property of the marriage, the Commissioner – the presumption would not seem to apply in that context because it is not doing anything to the Crown’s property.  It is doing something to the property of the parties to the marriage.

KIEFEL CJ:   Can you have a partial application of the presumption when you are in a statutory scheme?

MR LLOYD:   Well, as I was saying, we think it is sufficient for us if in 90AD the word “debt” is read down. That would mean the definition of “matrimonial cause” would not extend to debts owed by the marriage which would mean, under section 90AE(1)(a), (b) and (c), that would not include tax debts and under 90AE(2)(b), even if the Commissioner were a third party, or the Commonwealth was a third party, it would not include the right to a property of the Commonwealth or the Commissioner comprised by tax debts. So the jurisdiction of the Court would not be extended to cover that. That is sufficient for us.

So, to that extent, it is not essential for our case, although we did, I accept, put it earlier, that “third party” be read down.  It is not an essential limb.  We can succeed and get the answer that my client seeks simply on the basis of the word “debt” being read down, so as not to include tax debts.  From that point of view then, the tax refund and the example and the bond example do not present any problem. 

KIEFEL CJ:   I might have misunderstood Mr Robertson, but I understood him to say that if the Commissioner can be directed to provide a refund then, on the flip side, the rest of the statutory scheme must apply as well.

MR LLOYD:   He may have submitted that, but we do not say that.

KIEFEL CJ:   You have already dealt with that, I think.

MR LLOYD:   We say that the Commissioner could be directed to do something in relation to the property of the marriage.  If the Commissioner owes them money by way of a refund, that does not suggest that if the Commissioner can do that then therefore the Commissioner can have the Commissioner’s debts or the Commonwealth’s debts adjusted – they are different questions – and the presumption is ‑ ‑ ‑

GORDON J:   Is that 90AE(2)?  Is that what you are using to do that?

MR LLOYD:   No, 90AE(2)(a) would be the power to direct the third party to do something in relation to the property of the marriage.  The refund of the marriage, or the bond example, would be done under (2)(a), which is not anything to do with tax debts.

GORDON J:   I think I asked you before, Mr Lloyd – I notice it was raised in Mr Robertson’s submissions – where, for example, you have the Commonwealth having taken security over property of the marriage to secure a tax debt, what is the Commissioner’s position in relation to that?

MR LLOYD:   I think the Commissioner would say that that debt as well would still be a debt owed by a party to a marriage and would therefore come within the presumption and be excluded.  That is something that could not be the subject of a 90AE order.

Finally, my friend made submissions about how tax debts are just like any other debts so it could apply.  Maybe I am not doing his submission justice in that, but there seemed to be this idea that if it could apply – the whole premise of the presumption is you have got language which, on its face, can apply generally.  The question is:  should it apply when it affects the Crown?  The mere fact that it could apply is not a reason for saying that there is an intention that it should apply.

So, in every case when the premise arises, it only arises because some general language is being used and then one directs attention to what the nature and effect of it would be.  Could it apply?  Well, there are numerous problems of the kind I have tried to take the Court to but our point is that the presumption is there, the problem should be taken into account in identifying whether or not the presumption is displaced and it should be not displaced and then, in those circumstances, the mere fact that it could have applied is, we say, a distraction from the test.  Unless the Court has anything further, they are our submissions.

KIEFEL CJ:   Thank you.  The Court reserves its decision in this matter and adjourns to 10.00 am on Tuesday, 14 August in Canberra.

AT 1.58 PM THE MATTER WAS ADJOURNED