G Global 120E T2 Pty Ltd as trustee for the G Global 120E AUT v Commissioner of State Revenue

[2025] HCATrans 34

[2025] HCATrans 034

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B48 of 2024

B e t w e e n -

G GLOBAL 120E T2 PTY LTD AS TRUSTEE FOR THE G GLOBAL 120E AUT

Appellant

and

COMMISSIONER OF STATE REVENUE

Respondent

Office of the Registry
  Brisbane  No B49 of 2024
  No B50 of 2024

B e t w e e n -

G GLOBAL 180Q PTY LTD AS TRUSTEE FOR THE G GLOBAL 180Q AUT

Appellant

and

COMMISSIONER OF STATE REVENUE

Respondent

Office of the Registry
  Melbourne  No M60 of 2024

B e t w e e n -

FRANCIS STOTT

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

First Defendant

THE STATE OF VICTORIA

Second Defendant

GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 8 MAY 2025, AT 9.45 AM

(Continued from 7/5/25)

Copyright in the High Court of Australia

____________________

GAGELER CJ:   Mr Solicitor.

MR POUND:   Your Honours, can I start by going to the third of the cases that we rely on in support of our argument in favour of the validity of the State Amendment Act.  It is Doyle v Queensland 249 FCR 519, it appears at volume 17, tab 109 of the bundle. The Full Court here was concerned with a challenge to a Queensland Act made in the wake of the Native Title Act and purporting to validate acts that had occurred in the past that would have extinguished native title by reason of inconsistency with the Racial Discrimination Act.

I do not need to take your Honours to very much of the judgment.  You will see that the court sets out passages from Metwally and the Native Title Act.  The key part of its analysis appears from paragraph 48 on page 530 of the report.  In the first sentence of that paragraph, the court says:

However, it is not every alteration of past rights which makes a statute retrospective and the forms of retrospectivity are diverse.

Their Honours then refer to the Metwally principle, and they say in the last sentence:

It does not speak to a legislative alteration of rights and liabilities by reference to events which occurred in the past.

In paragraph 50, the court says that:

neither s 19 of the NT Act nor s 8 of the NTQA purport to alter the provisions in force in the period between the enactment of the RD Act in 1975 and the enactment of the NTQA in 1993. Nor do they purport to reverse the past operation of s 109. On the contrary, they . . . leave that operation intact. Instead, s 8 attaches a new legal significance to past acts and then provides that the new legal significance is to be taken to have attached to the acts at the time they occurred.

Their Honours then say that:

Section 8 has an effect which is similar to that described by Stephen J . . . in R v Humby –

and over the page they refer in paragraph 52 to “numerous examples” of legislation of that kind which has been upheld in cases such as Re Macks and Australian Education Union v General Manager of Fair Work Australia.  In our submission, these principles are directly applicable to the Commonwealth and Victorian Acts in this case.

Applying the Metwally principle, the Commonwealth Amendment Act would be ineffective on its own to undo the past effect of section 109 on the surcharge provisions of the Land Tax Act (Vic), and therefore ineffective to revive those provisions for the past in their operation to the plaintiff. It would nevertheless be valid and effective to remove any present inconsistency between the Commonwealth law and a State law enacted in the future, thereby clearing the way for a future State law to operate retrospectively.

Our submission is that the Commonwealth Amendment Act has that effect whether clause 2 of Schedule 1 is construed to be retroactive or retrospective in the extended sense – the State can legislate in the future retrospectively to give new legal consequences to past invalid acts. The validity of the new State law would then only fall to be assessed against the subsisting Commonwealth law that is in fact on the statute book at the same time – that would be the Commonwealth law as amended to incorporate section 5(3). We say that is what the Victorian Act does. Can I turn to the provisions of section 106A.

EDELMAN J:   If the Victorian Act were, contrary to your submissions, retroactive, would that, in combination with the Commonwealth Act, contravene the Metwally principle?

MR POUND:   We do not think so, your Honour.  We have put our submissions – and I think all of the parties have put their submissions – on the basis that the Commonwealth Amendment Act is intended to be retroactive, so, it would clear the way for a retroactive State Act.  But we say we do not need to go that far, even if one were to read down the Commonwealth Amendment Act, if necessary to preserve its validity, to be retrospective only.  That would be sufficient to clear the way for the State Act because, in our submission, contrary to your Honour’s question, we say the State Act is clearly retrospective.

BEECH-JONES J:   Mr Solicitor, the law in Metwally was a law that actually purported to restate the intention of the Commonwealth Parliament in enacting an earlier law at an earlier time.

MR POUND:   Yes, your Honour.

BEECH-JONES J:   This Act – 5(3) – does not purport to do that.  Are you treating Metwally as nevertheless governing the form of this type of legislation?

MR POUND:   We would say ‑ ‑ ‑ 

BEECH‑JONES J:   The Metwally principle, as you say ‑ ‑ ‑ 

MR POUND:   I am sorry, your Honour?

BEECH-JONES J:   You have referred to the Metwally principle, you are treating it as covering the form of this form of Act as well?

MR POUND:   Yes, your Honour.  We would say it is broad enough to embrace this form of Act.  If what your Honour is putting to me is that the Commonwealth Amendment Act is properly construed to be retrospective only, we would say that then puts us on all fours with the legislation in the Native Title Act Case, which was, properly construed, retrospective rather than retroactive.

BEECH-JONES J:   Leaving aside those labels, I am just wondering whether the Metwally principle is directed to legislation that purports to restate the intention as opposed to legislation that purports to restate the substantive effect.  I am only querying that.

MR POUND:   Yes, well, I want to be careful when I answer a question about the Metwally principle, your Honour.  We say that the Metwally principle itself is the principle that the Commonwealth Parliament cannot retroactively undo the past invalidating effect of section 109 so as to revive the operation of the old State law or the existing State law for the past.  What we are really talking about here is the limit on that principle or the carve‑out, if you want to put it like that, that was articulated by Justices Murphy and Deane and then extended or returned to in the Native Title Act Case.

EDELMAN J:   There have been cases since Metwally that have stated the principle in pretty similar terms to the way you have just put it, have they not?

MR POUND:   In the first way I have put it, your Honour?

EDELMAN J:   Yes.

MR POUND:   As not capable of reviving ‑ ‑ ‑

EDELMAN J:   As a principle that is against undoing constitutional consequences – so, undoing a constitutional effect.

MR POUND:   Yes, your Honour.  Principally, we rely on the Native Title Act Cases stating the Metwally principle in those terms, and correctly. If I can turn, then, to section 106A. This was introduced by the State Taxation Further Amendment Act2024, which appears in volume 2, at tab 25 of the bundle.  That Act commenced on 4 December 2024.  Your Honours will see that subsection (1) states the conditions for the operation of the section.  It relevantly:

applies if—

(a)      land tax was purportedly imposed –

at the surcharge rate, but the imposition of that land tax was:

to any extent invalid or inoperative –

by reason of section 109 of the Constitution.  Subsection (2) then imposes a new land tax:

on the taxable land to which subsection (1) applies.

GLEESON J:   Are you saying that all of section 106A is capable of being understood as reviving an operation of a past law?

MR POUND: No, your Honour, we do not say that at all. We say section 106A accepts that the imposition of the land tax surcharge on the plaintiff in the past was and remains invalid. That is the condition that is set out in subsection (1).

GLEESON J:   So in what sense are you treating Metwally as broad enough to cover section 106A?

MR POUND:   We say that the Metwally principle prevents the Commonwealth Amendment Act from having revived the old or existing State law, if I can put it like that. That is the limit of the principle. What the Commonwealth has then done is to legislate to clear the way for the State to legislate in the future. The State then legislates in the future by imposing, in subsection (2), a new tax. Nothing about section 106A purports to revive the operation of the other provisions in relation to the plaintiff.

EDELMAN J:   The retroactive operation of the Commonwealth Act, in your terminology, clears the path, but it does so for either retrospective or retroactive State legislation.

MR POUND:   Yes, your Honour.

EDELMAN J:   Your point is that this is just retrospective.

MR POUND:   Yes, your Honour.

GORDON J:   Just to be clear, there are two aspects to that.  That means that there is no alteration of the invalidity for the period by reference to the old law?

MR POUND:   Yes, your Honour.

GORDON J:   But there is a new tax imposed on the enactment of 106A?

MR POUND:   Yes, your Honour, by subsection (2).

GAGELER CJ:   What is the effect on the restitutionary cause of action that has already been pleaded against the State in existing proceedings? How does section 106A answer that existing claim?

MR POUND: Well, one way it might respond to the existing claim, your Honour, is to say that it does not touch the existing claim because the existing claim or an element of it is predicated on the invalidity of the past imposition of the surcharge on the plaintiff. Nothing about section 106A changes that.

What it does is to impose on the plaintiff a new tax, the legal incidence of which are, in substance, the same as the old tax.  So, the State might, for example, have a set‑off or a counterclaim that would, as I think Justice Steward suggested yesterday, ultimately mean that in the Federal Court proceeding the plaintiff might make good its claim but it would be entitled to no monetary relief.

EDELMAN J:   Your case would be stronger than that, because if you are right about the other defences to the restitutionary claim, you get to claim the tax twice.

MR POUND:   We would not get to claim the tax twice, your Honour, no, because those ‑ ‑ ‑

EDELMAN J:   Tax has been paid, it is met in the restitutionary claim by a separate defence – not a counterclaim or a set‑off, it is met by a separate defence, and the defence, on your argument, is successful.  Then you have also got the 106A tax separately.

MR POUND:   No, your Honour.

STEWARD J:   What would happen is that the original assessments on this basis would be, in a tax appeal, held to be wholly excessive and then there would be new assessment under 106A, which would then raise the tax again, but there would be no double tax.

MR POUND:   Yes, your Honour, we accept that.

STEWARD J:   Whether, practically, you just get to keep the money or not, I do not know, but technically there would be a refund back to the taxpayer with interest and then there would be a new tax assessment under 106A raising the same tax again.

MR POUND:   Yes, your Honour.

JAGOT J:   Would subsection (7) not operate?

MR POUND:   I am sorry, your Honour?

JAGOT J: Section 106A(7), the effect of which seems to try to be that having paid, you paid – the:

thing done . . . in relation to the purported land tax . . . is taken to –

be done.  So, if you paid it, it is taken to have been done in respect of the new liability under subsection (2).

MR POUND:   That is right, your Honour.

JAGOT J:   So, the liability is:  if, in fact the person paid, which they did in this case, the liability is discharged.

MR POUND:   That is right, your Honour, the payment – the past payment – discharges any liability under the new tax.

JAGOT J:   So, there cannot be a double?

MR POUND:   No, that is right, your Honour.

GAGELER CJ:   Nor a cross‑claim, is it?

MR POUND:   That may be right, your Honour.  I was going to go on to say the other way of articulating it is that 106A essentially answers the restitutionary claim in a way that says the liability has been – the new liability – the old liability is invalid, the new liability is satisfied by that past payment.  And that is the effect of 106A(7).

GAGELER CJ:   I am just trying to put that into a legal pigeonhole.  I am sure it is an answer, but is it a set-off or is it a kind of a demurrer?

MR POUND:   We had conceived that it could operate in either way, your Honour.  It could operate as a set-off, but the claim would be satisfied by the past payment.  It could operate as a separate defence to the restitution claim – for example, it might remove an unjust factor or it might provide good consideration.

GORDON J:   You say there are two routes home, do you not?  You say there is either a statutory mechanism provided by 106A or, if one is looking at the payments in the way that Justice Jagot just put it to you, then there is a complete set‑off.

MR POUND: Yes, your Honour. If your Honours have no further questions on 106A, could I turn briefly, then, to section 135A of the Taxation Administration Act, which was introduced at the same time.  I have that in the consolidation of the Administration Act at page 263 of the bundle.

GORDON J:   Sorry, where are you, Mr Pound?  Just the section number, please.

MR POUND: I am in section 135A.

GORDON J:   Thank you.

MR POUND:   Subsection (1) of that Act makes clear that it:

applies if—

(a)either of the provisions applies –

One of those provisions is:

(ii)section 106A of the Land Tax Act 2005; and

(b)an assessment of a tax liability was made or purportedly made under this Act –

What the remaining provisions of section 135A then do is to ensure that an assessment or a purported assessment:

has, and is taken to have always had, the same force and effect as if it were made in respect of –

the new land tax imposed under section 106A.

JAGOT J:   Well, (5) is the equivalent of (7) – section 135A(5) is the equivalent, the mirror to 106A(7).

MR POUND:   Yes, your Honour.  That is correct.

JAGOT J:   Yes.

MR POUND: We say there are three important features of the Victorian Amendment Act, and I am principally referring here to section 106A. The first is that, contrary to the plaintiff’s submissions, it is retrospective rather than retroactive. The Acts, as I have said, commenced on 4 December 2024 and imposed a new tax that operates on and from that date. It looks backwards in the limited sense that liability for the new tax is determined by reference to past events and that new legal consequences are attached to past events, but it does not deem the law that operated in Victoria prior to 4 December 2024 to be anything other than what it was.

STEWARD J:   You say it is deeming prospectively about past events.

MR POUND:   Yes, your Honour.

STEWARD J:   Yes.

BEECH‑JONES J:   Even though it is deeming that liability to have existed at an earlier time.

MR POUND:   Yes, your Honour.  All it is doing is deeming that liability to have existed, it is not imposing that liability in the past.

BEECH‑JONES J:   Does all this suggest that maybe getting hung up about “retroactive” versus “retrospective” may not be that useful?

MR POUND:   It may not be, your Honour, because we say that the outcome would be the same in either event.  The second important feature of the Victorian Amendment Act is that it does not contravene the Metwally principle because it does not deny the past invalidity of the imposition of the surcharge on the plaintiff in the past.

It assumes that section 109 of the Constitution did apply in the past to render that imposition inoperative, and then it operates upon the factum of that invalidity or inoperativeness and it then imposes the new tax which attaches new legal consequences to past events.  In this sense, as the Full Court observed in Doyle, the Victorian Act is of much the same character as the Acts considered in cases like Humby, Re Macks and AEU.

The third important feature is that there is no section 109 inconsistency between section 106A and the Commonwealth Agreements Act. Applying the reasoning in the Native Title Act Case, any potential inconsistency between section 5(1) of the Agreements Act and a future State law was removed by the introduction of section 5(3) of the Agreements Act.

The validity of section 106A or the inconsistency of section 106A with any Commonwealth law then falls to be determined by reference to the Commonwealth law subsisting at the same time. One looks to the laws on the statute book at the same time, as Justice Deane said at page 480 of Metwally. In those circumstances, the validity of section 106A has to be assessed against a Commonwealth law that includes the roll‑back provision in section 5(3). The result is that: one, the Commonwealth amendment cleared the way; and two, the State then legislated to impose a new tax, giving new legal consequences to past events.

BEECH-JONES J:   So, on your submissions, the only reason to occasion or necessity to reconsider Metwally is if anyone contends that the old tax was revived.

MR POUND:   That is correct, your Honour.

BEECH-JONES J:   Which I understand is the Commonwealth, but not you.

MR POUND:   It is not our position, your Honour.  I think I may have answered a question from your Honour Justice Gordon – or may have misunderstood your Honour’s question – about what we say about Metwally.  We do not contend, on our alternative submission, which I will come to, that Metwally should be overruled.  We make no submission about that.  All we say is that if the Court decides that it needs to reach that question and does overrule Metwally, then the same consequences follow, and I can take your Honours to why.

BEECH-JONES J:   So, when you mean the “same consequences follow”, the consequences would be 106A is not engaged at all, would it?

MR POUND:   Yes, your Honour.

BEECH-JONES J:   Yes.

MR POUND:   Yes, yes.  I have addressed the position that we say obtains if the Metwally principle applies and the Commonwealth Act is construed retroactively or, as your Honour Justice Beech-Jones said, retrospectively – it may not make any difference.  We say, and we are supported by the Commonwealth in this proposition, that the two Acts would have that operation – would be effective – even if the Commonwealth Amendment
Act were purely prospective.

We say this would only arise on the plaintiff’s argument that clause 2 of Schedule 1 is invalid and must be severed and what is left is a Commonwealth law that is purely prospective.  But, as explained in the Native Title Act Case, all that is required to clear the way is a Commonwealth law that operates for the future.

GORDON J:   Another way of putting that submission is one can put clause 2 to one side and your argument still holds.

MR POUND:   Yes, your Honour, because once section 5(3) is enacted – putting clause 2 to one side – there is no subsisting inconsistency between any Commonwealth law and any subsequent State law imposing a tax.  Both operate for the future, and at the time that the question of inconsistency falls to be determined, it has to be determined by reference to the roll‑back provision in 5(3).

If your Honours accept our principal submission, we say that is sufficient to dispose of the proceeding and the Court would not need to decide either the Metwally question or the acquisition of property question.  There are two reasons for that.  The first is that the plaintiff’s submission that the Court must start with the acquisition of property question is wrong in principle.

To illustrate why, can I return to the Native Title Act Case 183 CLR 375. I asked your Honours yesterday to note the heading on page 453, which indicated that the Court was, at that point in its judgment, addressing the question of characterisation of the relevant provisions of the Native Title Act.

I then took your Honours to passages at pages 454 and 455 where, as part of that characterisation exercise, the joint judgment ascertained the legal operation and effect of the Act by applying the Metwally principle – that appeared at page 455 in footnote (304).  Can I then ask your Honours to turn to page 459.  In the second‑last paragraph on the page, about 10 lines from the bottom, their Honours then turned to the question of head of power:

Having referred to the salient feature of the Native Title Act for the purpose of determining its constitutional character, it is now necessary to examine the scope of the constitutional power relied on for its support.  The operation of an Act for which the support of a power is invoked is one question; the scope of a power is another.

That makes clear, we say, that the exercise of characterising a law by reference to its legal operation and effect is necessarily anterior to considering whether the law has a sufficient connection to a head of legislative power in section 51.

GORDON J:   Is another way of putting your argument to say that one cannot consider – either 51(xxxi) assumes a Commonwealth valid power before you consider whether or not there has been an acquisition?

MR POUND:   Yes, your Honour, I think that would be a correct way of putting it.  One is assuming that, having characterised the legal operation and effect of the law, that it would otherwise be valid to do that thing.

GORDON J:   Then one might say, well, then there is a separate question about whether or not, on its proper construction, giving rise to its operation and scope, there has been a contravention of 51(xxxi).

MR POUND:   Yes, your Honour, and that really is a question about the head of power, because as the Court said, or the joint judgment said at paragraph 17 in Yunupingu, where a party asserts that a law purports to be an acquisition of property otherwise than on just terms, the only head of power that might support that is 51(xxxi), any other head of power then becomes irrelevant – but either way, it is a head of power question.

We would also refer to what the Court said unanimously in Plaintiff S156/2013 v Minister for Immigration and Border Protection 254 CLR 28. I do not need your Honours to go to that. At paragraph 23, the Court unanimously observed that:

Before the question of connection –

and I interpolate, connection between a law and a head of power:

is considered, it may be necessary to characterise the law, by construing it and determining its legal operation and effect.

Now, that is an orthodox proposition.  So, to return to the question that your Honour Justice Beech‑Jones asked me yesterday about the proper order of analysis, as the Native Title Act Case shows, where the Metwally principle applies, it informs the analysis of the legal operation and effect of the Commonwealth law and, for that reason, the application of the Metwally principle arises as part of that exercise of characterisation before one comes to the head of power question.

BEECH-JONES J:   This may not be disagreeing with you, but this is because you are actually relying on the Metwally exception, rather than the Metwally principle.  And so, what you are seeking to do – your references to Metwally are part of the process of characterising what the Commonwealth law is purporting to do.

MR POUND:   Yes, your Honour.

BEECH‑JONES J:   Right.  I understand.

MR POUND:   Yes.  We say, applying the Metwally principle here, the Commonwealth Amendment Act cannot have the effect that the plaintiff says it has, that is, of extinguishing its cause of action by re‑enlivening the operation of the older, existing State law with respect to the plaintiff.  That is precisely what Metwally says the Commonwealth Parliament cannot do.  The plaintiff’s submission about this emerges very clearly from its reply submissions in particular.  At paragraph 8, line 14, the plaintiff says:

the direct legal effect of the amendment is to remove “an essential element” of the exigent restitutionary claims available for suit within the six year period by invigorating, effectuating or enlivening the discriminatory taxes that were otherwise legal nullities by force of s 109.

Then, paragraph 11, line 18, the plaintiff says:

the amendment –

that is, the Commonwealth amendment:

extinguishes the “immunity” against State discrimination and, with it, the Unjust Enrichment Claims –

And, at paragraph 12, described the Commonwealth law as:

A law which removes from a restitutionary claim the circumstance that renders the conferral of a benefit unjust –

and says that:

The relevant acquisitive effect arises directly from Commonwealth law, without the need for a State action.

So, in other words, the plaintiff’s section 51(xxxi) submission is that the Commonwealth Amendment Act was effective of its own force to revive the operation of the State law with respect to the plaintiff for the past, and thereby acquired his cause of action. But that is the very thing, as I have said, that Metwally says the Commonwealth cannot do.

GORDON J:   Can I put this really simply?  You opened by saying there was no way – you do not get to Metwally or acquisition of property, but both of those concepts and ideas are part of your practical and legal operation of the law.  You rely on the Metwally principle in terms of the construction and operation of the two provisions and that, by itself, as the result of the questions the Chief Justice put to you, identifies on your argument why there is no acquisition of property.

MR POUND:   Yes, your Honour, yes.

GORDON J:   It is not that they do not arise.  They are part of, on your analysis and approach, once you identify, as I understand it, the proper construction of the operation of the Commonwealth law and the State law, that necessarily engages the Metwally principle, on your argument, and it necessarily answers the acquisition of property argument.

MR POUND:   Yes, your Honour.  In our submission, in order for the plaintiff’s submission to arise, he has to overturn Metwally, but he does not seek to do so, and not only does he not seek to do so, he argues positively that it is correct.

GAGELER CJ:   We are talking about Mr Gleeson?

MR POUND:   Yes, your Honour, the Stott plaintiff.

GAGELER CJ:   As I understood Mr Gleeson’s argument, he put the acquisition argument on two bases, assuming your construction of section 5(3). One basis, as I understand it, was he said that section 5(1) had some element of permanency about it, and it gave a protective statutory shield to the common law cause of action in restitution.

Taking that statutory shield away, he said, in some way diminished the property right, that is one way he put it.  Another way he put it was, in my hearing, a little vague, but in some way he said that the clearing away to allow the State to retrospectively raise a tax offended the principle that underlay the Magennis line of cases.

MR POUND:   Yes.

GAGELER CJ:   They are the two ways I understood him to have put it.

MR POUND:   Yes.  I am addressing what we understood to be the plaintiff’s principal argument and, in fact, his only argument until the plaintiff’s submissions yesterday, and that is that the Commonwealth Amendment Act operated of its own force to revive the State law and acquire his cause of action.  The two arguments that your Honour has referred to, which appear at paragraphs 8(c) and (d) of the plaintiff’s outline, we say are new, but we also say they cannot be right.

The first is the plaintiff’s infirmity argument, which was based on Smith v ANL.  Smith v ANL is a very different case.  It concerned a law that directly affected the circumstances in which a claim could be brought.  The Commonwealth Amendment Act is fundamentally different in character.  What the Act is doing here is only to change the Commonwealth law in a way that means that a future State law imposing a tax will not be inoperative by reason of an inconsistency with the Commonwealth Amendment Act.  In and of itself, that could not affect the value of the plaintiff’s cause of action and, moreover, the concept of an acquisition ‑ ‑ ‑

EDELMAN J:   That cannot be right, that it could not affect the value of the plaintiff’s cause of action.  If you look in the market and you test the question of what is the value of the plaintiff’s cause of action with the so‑called immunity and without the immunity, it is less.

MR POUND:   Well, we say there is no immunity that arises, your Honour, there was no unalterable, continuing immunity, because ‑ ‑ ‑

EDELMAN J:   However you characterise it, it is something that is of less value after the legislation than it was before the legislation.

MR POUND:   Yes.  Even accepting that, your Honour, it would still not be sufficient to characterise the Commonwealth law as a law in relation to the acquisition of property, because what it is fundamentally doing is simply operating, amending, altering the Commonwealth law with respect to the implementation of international tax treaties.

The corollary, of course, of an acquisition and any diminution in the value of the plaintiff’s cause of action is that there has to be an acquisition or a receipt of some corresponding benefit or financial advantage to another party.  The benefit that the plaintiff identified yesterday was that the State now has power to legislate to impose taxes afresh on the plaintiff.  We say that cannot be right.  As your Honour the Chief Justice observed, that is confusing or conflating concepts of the value of property with power and, in particular, legislative power.

BEECH‑JONES J:   Is that a way of saying that a law that permits the State to impose taxation is not a law with respect to the acquisition of property in the same way that a Commonwealth law that imposes taxation is not a law with respect to the acquisition or property?

MR POUND:   Yes, your Honour, and I do not want to get too far into that question because I anticipate it will be addressed by Queensland and the Commonwealth, in particular Queensland made the point at paragraph 11(b) of their oral outline and make that point that your Honour has just made by reference to Theophanous at paragraph 60. We would also refer to Mutual Pools at pages 196 to 197 in the judgment of Justices Dawson and Toohey.  But the other reason I was coming to that this could not be an acquisition is that it cannot be right that the State has somehow acquired something of financial value merely because the Commonwealth has changed its law.  The State has always had power to impose taxes on its land.

STEWARD J:   Can I ask you, Mr Solicitor, does all of this mean that clause 2 of Schedule 1 was really unnecessary?  I mean, the State did not need permission from the Commonwealth to pass a retrospective tax.

MR POUND:   That is correct, your Honour.

STEWARD J:   All it needed was for the inconsistency to be removed prospectively, and then it can do whatever it can do under its Constitution.

MR POUND:   Precisely, your Honour.  We would embrace that proposition.  The reason why we have started with a slightly narrower proposition is the Commonwealth law does contain clause 2 ‑ ‑ ‑ 

STEWARD J:   Yes, I see.

MR POUND:   ‑ ‑ ‑ and we are dealing with the laws as they are written, but if that clause were severed, it would operate in the way your Honour has suggested.  If I can return to my submission about the States’ legislative power ‑ ‑ ‑ 

GORDON J:   Have you finished with why it is not an acquisition, or are you coming back to that topic?

MR POUND:   I will have to come back to it, your Honour, because I wanted to address the Chief Justice’s question about the two different ways – or the two alternative ways, I think these are both two fallbacks – that the plaintiff now puts its acquisition of property case.  The second was the Magennis line of cases.

GORDON J:   All right.  I will keep my questions for then.

MR POUND:   Thank you, your Honour.  We would say that this is, essentially, the same argument as the infirmity Smith v ANL argument.  The plaintiff has put this argument in terms of the Commonwealth Amendment Act authorising the State to legislate in a particular way.  But the Commonwealth Amendment Act is doing no such thing.

All it is doing, as I have said, is changing the Commonwealth law in a way that means it would remove any invalidating inconsistency between a State law enacted in the future and section 5(1) of the Commonwealth Agreements Act, and the States do not need the Commonwealth’s authorisation to impose land tax. It is simply a question of: if and when the State legislates, is there an inconsistency with subsisting Commonwealth law?

The plaintiff also put this argument on the basis that the Native Title Act means that it is essential for the validity of the State Act that it provided just terms.  As your Honour Justice Beech-Jones observed, insofar as the Native Title Act did that, it may have been no more than a matter of the Commonwealth’s legislative policy, but if there were any such requirement in that case, it would have arisen because the Native Title Act was expressly authorising the validation by the States of acts that had operated to extinguish pre‑existing property consisting of native title rights.  The Commonwealth Amendment Act here is not authorising the acquisition of anything; it is simply altering the Commonwealth law.

GAGELER CJ:   I am not sure you can take it quite so far.  I understand the argument based on it being a State tax and therefore not properly characterised as an acquisition of property.  But take this scenario – it might be far-fetched, it might not – take a patent protected by Commonwealth legislation from any State law which would seek to diminish the property right.  If the Patents Act were amended in a way similar to section 5(3) to allow a State law in the future to diminish the property right created by the Commonwealth legislation, that would look like a scheme of the Magennis type, would it not?

MR POUND:   Well, it may depend on the precise form of the Commonwealth law in question and the proper characterisation of what it is doing, your Honour.  If it merely did what the Commonwealth Act did in this case and altered the Commonwealth law in a way that simply left space for State legislation to operate, we would say that would not engage the Magennis line of authority.  If the Commonwealth law were expressly authorising or purporting to authorise the future State act that somehow then could acquire some of the valuable rights that resided in the patent, then that might be different.  But that is not this case, your Honour.

GAGELER CJ:   Yes – I am just testing the width of the principle that you are advancing, that is all.

MR POUND:   Yes.

STEWARD J:   In that respect, Mr Solicitor, do we know whether every State has passed an equivalent to 106A?  We know Queensland has.

MR POUND:   I am not able to assist your Honour as to whether the other States have done so.

STEWARD J:   All right.  Perhaps those other States that are here might tell us, at some point.

MR POUND:   Yes.

EDELMAN J:   Is there any other difference between the patent example and the facts of this case than your argument that, effectively, this type of legislation is of the character that one might describe as inherently defeasible?  Putting that type of argument aside, what is the difference between a chose in action that is going to be extinguished by State legislation and a patent that might be impaired or extinguished by State legislation?

MR POUND:   There may be no difference in the chose in action, your Honour.  The argument or the submission I made in response to the Chief Justice’s question, I intended to be more concerned with the proper characterisation of the Commonwealth law in a situation like that and whether it was properly characterised as setting up a scheme that authorised the State to acquire property.  It might just be more appropriately characterised as a law about patents which had the effect that there is then room for State legislation to operate validly.

I think the inherent defeasibility argument is somewhat different.  We make that argument too – I do not intend to make any submissions about it, but we would adopt, essentially, the formulation in our written submissions, in the Commonwealth’s written submissions and in the question that your Honour the Chief Justice put to Mr Gleeson yesterday about why the plaintiff was in the territory of inherent defeasibility.

BEECH‑JONES J:   The inherent defeasibility idea may be bound up in the idea that we are talking about a taxpayer, because anything subject to taxation is always – so it might be said – inherently likely to be changed.

MR POUND:   Yes, your Honour.

BEECH‑JONES J:   Are they not just part and parcel of that same concept?  There is something different to taxation, as opposed to the Chief Justice’s example of acquiring patents.

MR POUND:   Yes, your Honour.  That, I think is a better answer to the Chief Justice’s question, with respect ‑ ‑ ‑

GORDON J: But also, there is an additional element, is there not? And here, you have the terms of the Act itself. If you go to section 5, it tells you that it is subject to the Act; it tells you, on its terms, that it differentiates between different types of international agreements – it treats one article of the United States agreement very differently from others. Why? Because there are negotiations, and they reflect bilateral agreements between foreign States, and they necessarily change over time.

MR POUND:   Yes, your Honour.

GORDON J:   It is reinforced here by the nature of the underlying arrangement as to tax.

MR POUND:   Yes, your Honour.  And we would add that when section 5(3) is added to that mix, it is referring to Commonwealth, State and Territory laws that impose a tax – they were the words that I sought to emphasise yesterday.  That is what the character of the law is.  That is what the law is about.  It is not at all about acquisition of property or the authorisation of the States acquiring any property.

Your Honours, in the division of time between ourselves and Queensland, I have run out of time.  I have, I think, made submissions as to why we say that, on any view, there is no need to consider the Metwally question because even if Metwally were overruled, there could only be two outcomes.  The first possible outcome is that 51(xxxi) is engaged and it is, for that reason, invalid in its retroactive operation.  In that case, we say it could be read down either to be retrospective and there would be no difficulty, or clause 2 of Schedule 1 could be severed, and there would still be no difficulty, for the reason that Justice Steward put to me.

The other outcome is that your Honours decide that the Commonwealth Amendment Act was not acquiring any property.  The Commonwealth Amendment Act would then be valid in its retroactive operation to revive the State laws, or the operation of the old State laws, and the new State tax would not have any operation.  Your Honours, I think I have covered the characterisation argument in relation to acquisition of property, and I think I have covered the plaintiff’s two new arguments.

The only other submissions I wanted to make were with respect to our submissions about why there is no property. I will not go into those in any detail because I have run out of time and I need to let my learned friends stand up, your Honour, but we maintain the submission that we make in our written submissions about the effect of section 96(2) of the Administration Act, and that being an exclusive procedure for the resolution of any question concerning an assessment, and we say the plaintiff’s restitution claims clearly concerned an assessment because the way the plaintiff’s claims are framed, they are, in substance, that the assessments issued to them were excessive.

At the start of my submissions yesterday, I highlighted the way the words “LTS payments” are defined in the statement of claim and the special case.  They are only the difference between the surcharge rate and the general rate.  What the plaintiff says is that the old or existing Land Tax Act provisions were inoperative to impose on him the obligation to pay that differential amount.  So, there are still assessments, they can be regarded as assessments in fact for the reasons that your Honour Justice Gageler gave in the ACN Case – I think at paragraph 104 – and they are properly and appropriately dealt with through the Part 10 procedure.

EDELMAN J:   Mr Solicitor, one difficulty with all of these types of argument that I have is that we know that, as a matter of fact, there is presently a cause of action, and we know that, as a matter of fact, in the world, that cause of action is regarded as being valuable – it is valuable enough to fund a group action, and so on.  These submissions may have force – they may have great force – but, as a matter of fact, there is an existing cause of action, and that existing cause of action is certainly regarded as property in the wider sense.

MR POUND:   We would resist the proposition, your Honour, that as a matter of fact the claims have value and that that is enough to constitute property for the purposes of the constitutional guarantee in 51(xxxi).  Their requirement of just terms, we say, means that there has to be, in law, some value that attaches to those claims in law.

We would not, for example, embrace the propositions put yesterday in argument about a non‑colourable claim being enough, because that – and we apprehend that is drawn from Citta – that is really about whether the claims are sufficient to attract jurisdiction.  They say nothing about whether, for example – so, they rely on how the plaintiff frames its case.  They say

nothing about whether the claims might be met by a complete defence in law.  That is why we say a better threshold for the operation of 51(xxxi) ‑ ‑ ‑

EDELMAN J:   But that cannot be right, because a limitation defence is a perfect defence in law, but we know that a claim that can be met by a limitation defence is still capable of amounting to property.

MR POUND:   That might depend on the limitation defence in question, your Honour.

EDELMAN J:   Properly so called, that bars the remedy but not the right.

MR POUND:   Yes – your Honour is referring to Mewett, and we would say that Mewett is somewhat different because there, there was that facility for the court to extend that period and, as yet that, question had been undetermined.  We say, for the reasons in our submissions, section 20A cannot be extended but, more importantly, it is a specific limitation period, intentionally introduced to limit the period in which claims for an invalid tax could be made.

And when one is assessing the value of a claim for an invalid tax, one must have regard to the fact that that is almost certainly – and I would say certainly – going to be pleaded.  Your Honours, I would rely on our written submissions on those points; I would also rely on what the Commonwealth will say about the question of whether there is any property.

If your Honours have no further questions, those are our submissions.

GAGELER CJ:   Thank you.  The Solicitor-General of Queensland.

MR DEL VILLAR:   Your Honours, I thought it might be helpful if I set out the questions and the approach that Queensland or the Commissioner takes to those questions in order avoid some of the issues which arose yesterday.

Having regard to the agreement of the parties on question (1), that question can be dealt with. There is agreement that there was an inconsistency between section 32(1)(b)(ii) and that it was invalid in its application to the appellants. The second question is concerning the head of power, and in our submission, section 5(3), insofar as it applies to State taxes, is a valid law with respect to external affairs. I will also be developing that in a little bit.

Question (3), your Honours have dealt with this morning. That asks whether section 5(3) of the International Tax Agreements Act (Cth) is effective to remove the inconsistency. Having regard to the oral outline of the Commonwealth, in my submission, I would say this: if the Court does not reopen and overrule Metwally, question (3) should be answered “no”.  We would adopt the relevant submissions made by the Solicitor‑General for Victoria on that.

Question (4) is whether section 5(3) of the International Tax Agreements Act is a law for the acquisition of property on other than just terms.  The appellants had initially argued that it was on the basis, in effect, that Metwally was incorrectly decided, that is, that one could say that the Commonwealth law of its own force revived the earlier State laws.  For the reasons outlined by my learned friend the Solicitor‑General for Victoria, in our submission, that issue should not be determined in that way, but we will address that briefly.

A number of those submissions on question (4), the substance of them has been addressed by my learned friend the Solicitor‑General for Victoria, and we would adopt those. That leaves questions (4A) and (4B). These concern the new Queensland provisions which are equivalent to section 106A of the Victorian Act. These provisions are section 104 of the Land Tax Act and 189 of the Taxation Administration Act.  In short, our submission is that the new Queensland provisions are engaged.

They reimpose the State tax and they validate the assessment notices. They are not inconsistent with section 5(1) of the International Tax Agreements Act and they require the appellants’ appeals to be disallowed.  Can I turn first to the head of power of issue, your Honours, which is question (2).

BEECH‑JONES J:   Mr Solicitor, does that mean that the argument or discussion about what I have referred to as the Metwally exception, whether these laws could be characterised in that way, and the argument about acquisition of property on the assumption that the old law is not revived, in your thinking, merge into questions (4A) and (4B)?

MR DEL VILLAR:   No, your Honour, the issue about acquisition of property is dealt with in question (4).

BEECH‑JONES J:   I understand that, but you said – you only addressed that on the basis that Metwally was overruled to revive the old tax, as I understand it.

MR DEL VILLAR:   I perhaps should have been clearer, your Honour.  There are a number of arguments raised against us, but the first argument seems to be Metwally is, in effect, wrong and that the Commonwealth law revives the earlier tax.  Our point is, (4A) and (4B) – my submission will be that they are the relevant provisions that are engaged; there has been no revival of section 32, and there cannot be, unless the Court were to overturn Metwally.

BEECH‑JONES J:   I see.

MR DEL VILLAR: Your Honours, could I address the issue of the external affairs power in section 5. Could I ask your Honours to turn to section 5 of the International Tax Agreements Act.

GAGELER CJ:   I am sorry, what are we addressing now?

MR DEL VILLAR:   The external affairs power issue, your Honour, which is question (2).

GAGELER CJ:   I see.

MR DEL VILLAR: The relevant provision, your Honour, is found in tab 5 of the bundle of authorities and starts at page 240. Your Honours, as I understand the position put forward by the appellants yesterday, it is contended that section 5(3) has the result that section 5(1) is no longer reasonably appropriate and adapted or capable of being seen to be reasonably appropriate and adapted to the purpose of implementing Article 24 of the German Agreement.

In making that case, the appellants accept that the legislative power in section 51(xxix) extends to implementing treaties in part, but they contend, however, that section 5(3) does not produce a partial implementation, but what it does is it introduces an impermissible disconformity with the treaty because it permits inconsistent State laws, and because, in answer to your Honour Justice Beech‑Jones, it was put Article 24 is a provision that must operation in full.

Now, those submissions should not be accepted. All that section 5(3) does, in my submission, is to amend section 5 so that it now implements the German agreement, and Article 24 in particular, insofar as it applies to income tax and fringe benefits tax, those being the relevant definition of Australian tax in the International Tax Agreements Act.

Your Honours, to make good that point, can I take your Honours to the German agreement.  Parts of it have been extracted in the joint bundle, beginning at tab 21, volume 3, but I understand that a full copy of the agreement has been provided to your Honours.  If I could ask your Honours to turn to page 2 of the agreement, your Honours will see in the chapeau that it talks about:

Intending to conclude an Agreement for the elimination of double taxation with respect to taxes on income and on capital –

and so on. Leaving aside Article 24, which I will come to later, your Honours will see from Article 1 – which is on page 3 – it applies to:

persons who are residents of one or both of the Contracting States –

GAGELER CJ:   Do we need to drill down to this level of detail in the international agreement?  I know the argument is only put in your case, but would it really apply differently if we were concerned with the New Zealand agreement?

MR DEL VILLAR:   There is one difference with the New Zealand agreement, in that they rely on Article 24 – if we are talking about natural persons, it would be Article 24(1), as opposed Article 24(4), in our case, which is dealing with enterprises. But, relevantly, the other provisions are very similar.

The reason I was taking the Court to these provisions, your Honour, is to demonstrate firstly that the bulk of the agreement is about taxes on income and capital – that it is about, essentially, federal Australian taxes – and that most of the articles in the agreement deal with matters such as salary and wages in one State, remuneration and how that is taxed – matters which are not touched by 5(3), except – matters which are not taxed by Article 24. Article 24 is a quite separate provision that deals with a different topic.

GAGELER CJ:   I think that is accepted, is it not?

MR DEL VILLAR:   I will go on, then.

GORDON J:   The point that you seek to make or answer is that: is the amendment brought about such that you cannot say that, in effect, the Convention has been picked up in a form which is implementing the Convention? In other words, it has been rewritten in such a way that you are not implementing the Convention. And you say, as I understand the points you were just seeking to make, no, Article 24 is in its own bucket.

MR DEL VILLAR:   That is right.

GORDON J:   If one looks at these agreements as a whole, they cover a variety of topics.  The principal focus is income and capital, including salary and wages and other things, and they remain unaffected.

MR DEL VILLAR:   They remain largely unaffected because those topics are dealt with in the concept of Australian taxes.

GORDON J:   That is my point.

MR DEL VILLAR:   Exactly, your Honour.

STEWARD J:   Is Article 24 the only article that could apply to a State tax?

MR DEL VILLAR:   In my understanding, yes.

GAGELER CJ:   So, I think the argument, insofar as you need to meet it, is really based on Article 24(5), which says that it applies to:

taxes of every kind and description.

MR DEL VILLAR: We have two answers in relation to this, your Honour. Firstly, Article 24(5) – this amendment in section 5(3) has the effect, we would say, of ensuring that Article 24(5) and the rest of the Convention is only implemented with respect to Australian taxes. But that, nonetheless, can be seen to serve the purpose of Article 24 and the other provisions of the Convention, because going some way to implement the purpose to prevent discrimination with respect to Australian taxes is nonetheless to take a step forward in implementing the purpose of Article 24. That is one reason.

EDELMAN J:   The point is a pretty short one. Your point ultimately is that Article 24 is distributive and it can be applied in whole or in part and, therefore, it can be amended in whole or in part.

MR DEL VILLAR: Precisely. My learned friend’s alternative proposition comes down to saying Article 24 is all or nothing – it literally has to be applied so as to apply to all taxes at all levels, otherwise one is not giving a full effect to it, and in my submission, that just should not be accepted. In my submission, the point can be reinforced when one has regard to all of the other articles in the Convention, most of which are concerned – in fact, almost all of which are concerned – with income and capital. They are still being given effect to, largely, by virtue of 5(3).

That leads to the submission that 5(3) in those circumstances cannot be said to be a law that does not give effect or that does not have the purpose of implementing the Convention. With regard to all of the other articles it plainly does, in my submission, and even with regard to Article 24, it still goes some way towards implementing the obligation.

STEWARD J: Could I ask you, Mr Solicitor, save for Article 24 insofar as it applies to State laws, is the International Tax Agreements Act otherwise supported by section 51(ii) of the Constitution, being a law with respect to taxation?

MR DEL VILLAR: Section 51(ii), and section 122 with respect to Territory taxes, yes.

STEWARD J:   We only need the 51 external affairs power to the extent – to this little bit?

MR DEL VILLAR:   That is correct.

STEWARD J:   Using “little” in your sense.

MR DEL VILLAR:   That is correct.  But I should also add, your Honour, just for completeness, the other provisions are also supported by the external affairs power – you can have 51(ii) and the external affairs power.

STEWARD J:   Which other provisions, sorry?

MR DEL VILLAR: The implementation of the other Articles, apart from Article 24, that deal with, for instance, income tax – they would be supported by 51(ii), but they are also supported by the external affairs power.

STEWARD J:   I see.

MR DEL VILLAR: Your Honours, because section 5 operates in the way that I have described, in my submission, there is no analogy with R v Burgess; Ex parte Henry.  Your Honours were taken to that case yesterday.  Reliance was said to be placed on the judgment of his Honour Chief Justice Latham.  I will simply make the point that Burgess was dealing with a particular convention – a particular set of regulations.

Here we are dealing with another Convention and a different law.  The fact that his Honour Chief Justice Latham thought that, in that particular case, there was an inconsistency between Regulation 4 and Article 30 of the relevant Convention there does not say very much about whether there is an inconsistency here.

GAGELER CJ: So, as I understand it, you frame this argument by reference to the effect of section 5(3) on section 5(1). But your starting point is that section 5(1), before section 5(3), was a complete implementation of Article 24.

MR DEL VILLAR:   Subject to some qualifications, yes.

GAGELER CJ:   Basically.  And then, along comes 5(3), and I suppose you would say one could just rely on the Kartinyeri principle.

MR DEL VILLAR:   We would, certainly.

GAGELER CJ:   It really would not matter whether 5(3) breaches the agreement, for constitutional purposes.  What you have left, then, with 5(3), is a partial implementation, and that, you say, is not itself – the partial implementation that is left is not a breach of the treaty.

MR DEL VILLAR:  Precisely. Your Honours, can I deal with the issue of what I will call the severance issue in relation to this argument, because the appellants have said, in effect, well, if 5(3) does not implement Article 24, then it is wholly invalid in relation to State taxes, or at least it is wholly invalid and it is void ab initio.

My learned friends took the Court yesterday to Clyne and Pacific Coal to support that contention.  Could I ask your Honours to turn to Pacific Coal 203 CLR 346, because we want to make a few submissions in relation to it. Your Honours will find that in volume 11 of the authorities, at tab 74. Your Honours were taken to the decision of his Honour Justice McHugh at paragraph 170 of the judgment in Pacific Coal, and could I ask your Honours just to turn to that – it is at page 401 of the report.

His Honour, who was in the minority, was explaining why, in his view, the relevant amendments should be regarded as failing.  His Honour there expressed, in the second sentence:

if the conclusion is reached that the provisions as amended are not of a character within a s 51 head of power, then it must follow that the substantive effect of the amending provisions is to deprive a previously valid law of its link to a s 51 head of power.  That being so, the amending provisions must be characterised as being outside a s 51 head of power –

and so on.  But the key, in my submission, to what is being said there is his Honour is talking about an amendment which would have the effect of depriving a provision of legislative power, not simply of depriving a provision of one of a number of heads of power or otherwise limiting its operation in that way.  His Honour is talking about an amendment which would result in invalidity of the provision.

GAGELER CJ:   So, where you are going with this is to say, if section 5(3) – if there is invalidity, it is invalidity of section 5(1), is that right? Is that where this argument is going?

MR DEL VILLAR:   Not quite, your Honour.

GAGELER CJ:   Can you tell me where it is going?

MR DEL VILLAR:   The argument is that these cases are all about cases in which the amendment will result in an Act or a provision which would be completely beyond power.  That is not the case here.

GAGELER CJ:   Yes, but what is the consequence?

MR DEL VILLAR:   The consequence is that the reliance on this line of cases should not be accepted because what they are effectively inviting the Court to say is, well, by reference to these cases where the amendment would result in a provision that is completely invalid, your Honour should say 5(3) is also completely invalid, and in my submission, that is not the case, because 5(3) is going to be supported at the very least by the taxation power in relation to Commonwealth taxation, by section 122, and, in my submission, with respect to at least all the other articles in the German agreement ‑ ‑ ‑ 

GAGELER CJ:   Does it help you, in this case?

MR DEL VILLAR: Well, it does in this sense, that if all they can demonstrate is that section 5(3) has some sort of problem because it does not implement Article 24, in my submission, the relevant answer is to read down section 5(1) so as to not engage or implement Article 24 and, section 5(1) otherwise operates in its terms.

BEECH‑JONES J:   You mean, not to engage Article 24 with respect to State taxes.

MR DEL VILLAR: Yes – or, alternatively, not to engage Article 24 at all. But either way, what my learned friends cannot end up with is the conclusion that 5(3) is invalid in toto.

GAGELER CJ:   But you can end up with the position that it is invalid enough to answer your case.

MR DEL VILLAR: If it is invalid enough to answer my case – let me just, your Honour, take that point. If, for instance, Article 24 were not implemented by 5(1), then the result would be that there would be nothing left to prevent the enactment of any future Queensland law imposing land tax.

GAGELER CJ:   That is where I thought you were going.

MR DEL VILLAR:   That is where I am going.

GAGELER CJ:   Then I thought you disavowed it.

MR DEL VILLAR:   I did not think I had, your Honour.

GAGELER CJ:   No, very well.

MR DEL VILLAR:   Your Honour, that is really the argument on the bulk of the external affairs power point.  In its written submissions, the Commonwealth argues in the alternative that section 5(3) can be supported as a law with respect to external affairs even if it does not implement the German Convention or agreement because it is concerned with the rights and duties of foreign nationals.

So, that is the permission in Commonwealth law for such a State law to exist without generating a 109 inconsistency, subject to just terms and so on.  So, if that is what the model had been sought to be achieved, it is not reflected in the language that your Honours have before you, it has – and so, the attempt to retrofit the Native Title Act model onto section 5 we would ask you to reject. If that is right, then that is one route by which the plaintiffs succeed in both matters.

BEECH-JONES J:   Just to be clear, you are saying you cannot read clause 2’s application down so it is limited to laws passed after 8 April, because that would be, you say, inconsistent with what the Commonwealth wanted for its laws and what is revealed by the secondary materials.

MR GLEESON:   Yes, and what was sought to be done under this model in 5(3), when it speaks of “a law of”, it was not confining the laws by reference to the time they came on to the statute book, what it was confining the exercise by was the object of those laws, which is taxes payable in the six‑year period on the one hand, or taxes payable into the future on the other hand.

That is why it is wholly retroactive combined with wholly prospective, without having this prospective‑retrospective work to do.  So, that is one path by which your Honours would then say that there is then, obviously, an inconsistency under question (4) between the Commonwealth law as it now sits on the books and the Victorian and Queensland laws as they came onto the books in recent times.

The second point I want to make in reply was by reference to the Victorian Act, and your Honours’ questions, Justice Gordon and Justice Steward, and the submissions you heard this morning which were that this is retrospective, not retroactive.  That was Victoria’s submission.  What that submission tended to overlook about 106A, which is on page 177 to 178 is, assuming the premise of the provision in paragraph (1)(d), it is not just under subsection (2) that a tax is imposed, that is, a new tax is imposed that was not previously on the books.

But it is what follows in (3), (4), (5), (6), (7) that give us the true character of the tax.  The character, under (3), is that the liability arose “at the same time” in the past as the purported tax liability; under (4), the payment obligation arose at the same time in the past as the purported payment obligation; under (5), “the amount” of the tax is and always has been “the same”.  Subsection (6) is critical:

The rights and liabilities . . . in relation to –

the 106A tax, at all times from the past, have been:

the same as if –

the invalid tax had been valid.  And for that reason, under (7), as your Honour Justice Jagot pointed out, that is the provision which seeks to link it in and say if you paid money in the past by reference to the invalid tax, that is given the force as if it was done in respect to the valid tax.

So, you could not get a more retroactive law than this law.  What it is doing is purporting to enact a new tax which wholly replicates the invalid tax in the past, and then 135A confirms that exercise by allowing the invalid assessment to link to the invalid tax and the invalid payment.  That is a retroactive law.  So, the second strand by which the plaintiffs can win ‑ ‑ ‑

GAGELER CJ:   Mr Gleeson, you may be coming to this, but to get there you have to grapple with the Solicitor‑General’s application to reopen Metwally to determine whether paragraph (d) is satisfied, do you not?  That is, if Metwally were to be reopened and the fully retroactive operation were to be given to section 5(3) of the Commonwealth Act, then paragraph (d) of subsection (1) of 106A would not be fulfilled.

MR GLEESON:   Your Honour is correct.  In that scenario, though, we are then back‑facing the old tax.  We are not facing the new tax.

GAGELER CJ:   Yes.

MR GLEESON:   So, in that scenario, these are the steps that we have to lose on in order to lead with nothing.  Firstly, you have to reopen and overrule Metwally.  We have put our submissions in writing against that, we do not repeat that – you have to do that.  Secondly, you would have to reject our 51(xxxi) argument, which is directed squarely to that, as well.  So, we have to lose on both those points.

Thirdly, there is an issue as to how exactly you deal with the whole Metwally topic after you have reopened it, because one thing that can be said in favour of Metwally is by the way the High Court dealt with it in the Native Title Act Case and that model, which is different to our modal.  It has been given a workable application simply requiring, contrary to the Commonwealth’s submissions, both Parliaments to confront the consequences of them altering the past.  We would say, where the Commonwealth is party to that scheme – I will use the word “scheme” – providing just terms.

Now, the Metwally exception, as it is called, which founded the Native Title Act Case, as your Honours have seen from discussion today, it is not entirely clear what types of laws the High Court had in mind when they were talking about retroactive laws or retrospective laws, and one possibility is that the Metwally exception, particularly if you consider how Justice Murphy and Justice Deane contemplated it, was not intending to go so far as sanctioning dual retrospective, dual retroactive laws, because what Justice Murphy said at page 469 looked perilously like a retroactive law, that:

Parliaments can legislate . . . so that a fresh State law would come into existence giving present legal force to the procedures which have been followed and the remedies which have been obtained –

That looks like a retrospective law, not a retroactive law.  And when Justice Deane contemplated it at page 480 at greater length, his Honour was concerned that even in the synchronous model it was essential that at no time should a person be:

accountable to both a law of the Commonwealth and an inconsistent law of a State.

Now, one possible reading, which is why the defendants have been so anxious to make 106A retrospective and not retroactive, is that they recognise that if you restate Metwally in any fashion and you say it is permissible for the two Parliaments together to pass wholly retroactive laws, you may be, in fact, at that point, tipping over to the problem which even Chief Justice Mason recognised in Metwally, that the higher level principle is neither Parliament can control or interfere with the operation of section 109.  Indeed, Chief Justice Mason at page 460 stated that principle before he then went on to say he did not think it was offended.

In one sense, Metwally might be an outlier, because at the highest level of constitutional principle, no Judges disagreed with that proposition.  Where they disagreed was how you apply it when you start to see the particular law in that case and you start to think about retrospectivity – and all of that was done without the focus we now have on retroactivity.  So, we would submit to your Honours that if you reopen Metwally – we say you should not, and you also do not need to go there, if you have found for us on 51(xxxi) – those questions will be of some importance, and ‑ ‑ ‑ 

EDELMAN J:   Those questions themselves, however, may be a good reason to reopen Metwally, in the sense that it is leaving very large questions open, and the whole premise of it does not draw a distinction between retrospective and retroactive.

MR GLEESON:   Yes, and that may be so, if that issue becomes central in the case.  We have sought to give your Honours the pathways by which we can succeed which do not require you to do that extra burden.  So, one pathway is our construction of the Commonwealth law.  The second pathway is the construction of the Victorian law, which is properly exposed as retroactive and thereby outside whatever it is the defendants are seeking to get out of the Commonwealth law.  So, they are two pathways.

We do need to persuade you on acquisition of property, because that is an important element in deactivating one of the Commonwealth’s arguments, and we do urge you that, if you are reconsidering when and how synchronous State and federal laws can do something that looks perilously like getting around 109, that you maintain what I call the first order principle, that nothing can be sanctioned which allows the parliaments to contradict the constitutional command of section 109, and then it is how that first order principle is to be applied.  I think your Honours have said that we do have that ‑ ‑ ‑

GAGELER CJ:   Mr Gleeson, if you were given five more minutes orally, would you be able to supplement what you want to say in writing?

MR GLEESON:   Yes.  Yes, thank you, your Honours.  The next point I wanted to touch, Justice Gordon, was Victoria’s submission that 106A does not touch the cause of action.  The submission slid around.  At one point, it was an acceptance of our proposition that it may destroy the juristic element of the cause of action.  At another point, it was a defence, it was a set‑off, it was a crossclaim.  We would say it is far simpler than all of that.

If you look at the pleading in the special case book, at page 130, paragraph 14(c)(i), that is the current extant plea by Victoria that brings any of these issues to the Court. It is in response to our paragraph 14, which has pleaded on page 98 that the tax is one to which Article 24 applies. The pleading that Article 24 applies to tax payable on or after the 2018 date, by reason of section 5(3) and subclause (ii), passing over a few words:

is relevantly subject to anything inconsistent with those Provisions contained in a law of a State that imposes a tax other than Australian tax . . . unless expressly provided –

That is the plea which has joined the issue.  So, what Victoria is embracing is that the Commonwealth law, after 8 April, has the scope that is there set out, and that it is a valid law, and – exactly as I put in terms of its retroactive application – its relevant scope is to disapply 5(1) for the six‑year period.  For that reason, Victoria says, if they are correct on that, they then deny all of our allegations about restitution, for example, at page 134, paragraph 24(e)(i), there was no mistake because there was an obligation to pay by reason of the matters – relevantly, the matter at paragraph 14.

So, what would happen in the Victorian proceeding, in the Federal Court proceeding, is that it is the essential answer that Victoria has made and continues to make to our restitution claim, and that answer, as it were, embraces both the old tax law and the new tax law because they both can build off this answer if it be a good answer.  We say it is not a good answer.  So, it is not a question of defence; it is not a question of set‑off or cross‑claim.  The juristic basis of our cause of action is said by Victoria to be denied because of the Commonwealth law that was passed on 8 April in those provisions.

Your Honours, I think just two last things, orally.  While your Honours have the pleading, your Honour Justice Steward asked some questions about the Commonwealth’s property argument and your Honour Justice Edelman asked about whether it is a defence which does not destroy the property.  The relevant plea is on page 139 at paragraph 37(c).

It is pleaded as a defence that, if we are correct, there is a relevant inconsistency that is, even now, after 106A.  Then, by reason of a smorgasbord of provisions which includes some that you have been addressed on orally, some in writing, but looking at the whole of the Act, the argument is that that imposed a legal liability to pay which defeats the restitutionary claim.  So, it should be characterised merely as a defence.  It does not destroy the property.

May it please the Court.

GAGELER CJ:   Thank you, Mr Gleeson.  Subject to the leave you have to file supplementary submissions, the Court will reserve its decision in these matters and will adjourn until 10.00 am next Tuesday.

AT 4.22 PM THE MATTERS WERE ADJOURNED