G Global 120e T2 Pty Ltd as trustee for the G Global 120e Aut v Commissioner of State Revenue

[2025] HCATrans 33

[2025] HCATrans 033

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 WEDNESDAY, 7 MAY 2025, AT 10.02 AM

Copyright in the High Court of Australia

____________________

GAGELER CJ:   There will be no need for the announcement of appearances.  The transcript will record the appearances as set out in the Court list. 

MS F.I. GORDON, KC appears with MR T.M. WOOD and MS A.I. WHARLDALL for the appellants in B48/2024, B49/2024 and B50/2024.  (instructed by PricewaterhouseCoopers)

MR G.J.D. DEL VILLAR, KC (Solicitor‑General of the State of Queensland) appears with MS F.J. NAGORCKA, MR M.J. HAFEEZ‑BAIG and MR K.J.E. BLORE for the respondent in B48/2024, B49/2024 and B50/2024.  (instructed by Crown Law (Qld))

MR J.T. GLEESON, SC appears with MR S.H. HARTFORD DAVIS, MR S.J. HOARE and MR H.A.X. ROGERS for the plaintiff in M60/2024.  (instructed by Johnson Winter Slattery)

MR S.P. DONAGHUE, KC (Solicitor‑General of the Commonwealth of Australia) appears with MS A. LORD and MR G.B. AYRES for the first defendant in M60/2024, and on behalf of the Attorney‑General of the Commonwealth of Australia, intervening in B48/2024, B49/2024 and B50/2024.  (instructed by Australian Government Solicitor)

MR A.D. POUND, SC (Solicitor‑General for the State of Victoria) appears with MR C.P. YOUNG, KC, MR A.C. ROE and MR L.L. CHIRCOP for the second defendant in M60/2024, and on behalf of the Attorney‑General for the State of Victoria, intervening in B48/2024, B49/2024 and B50/2024.  (instructed by Victorian Government Solicitor’s Office)

MR M.J. WAIT, SC (Solicitor‑General for the State of South Australia) appears with MR J.F. METZER on behalf of the Attorney‑General for the State of South Australia, intervening in all four matters.  (instructed by Crown Solicitor’s Office (SA))

MR C.S. BYDDER, SC (Solicitor‑General for the State of Western Australia) appears with MR S.J. COBBETT on behalf of the Attorney‑General for the State of Western Australia, intervening in all four matters.  (instructed by State Solicitor’s Office (WA))

MR J.G. RENWICK, SC appears with MR M.O. PULSFORD on behalf of the Attorney‑General for the State of New South Wales, intervening in all four matters.  (instructed by Crown Solicitor (NSW))

GAGELER CJ:   Mr Gleeson.

MR GLEESON:   Thank you, your Honours.  Your Honours, our first proposition concerns the inconsistency between the Commonwealth Act and the Land Tax Act (Vic), which is now conceded.  The issue raised by Victoria under the Melbourne Corporation principle having been abandoned, we take it, finally.  I only wish to highlight some aspects of the argument even though it is conceded ‑ ‑ ‑

GAGELER CJ:   Why?

MR GLEESON:   Why?  Firstly, you cannot do anything by concession, but you can read, so that is not a good enough reason.  More importantly, when we come to the real battleground, which is acquisition of property, and in particular what is left of the Commonwealth law if we are correct that it offends section 51(xxxi), arguments are then revived – particularly by Victoria and by the Commonwealth, relying upon Peverill and such cases – that all the Commonwealth law is doing is correcting an unintended defect that emerged.

What I want to show your Honours – we will have the position fairly quickly – there was no unintended defect.  The purpose of the Commonwealth law from 2010 was to bring into force the New Zealand‑Australia double tax treaty – according to its tenor – in full, and to do so consistently with international law principles, where the promise was being made by the Commonwealth on behalf of the Commonwealth, the States and the Territories, and therefore, that Article 24, the key article of non-discrimination, was always intended, as a matter of international law and Australian domestic law, to bind Victoria, inter alia, and to prevent Victoria passing these provisions of the Land Tax Act which have imposed higher tax on persons by reason of their New Zealand nationality.

Therefore, when the Commonwealth, on 8 April 2024, passes the law which we seek to challenge, whose direct effect is to extinguish the causes of action which exist going back six years prior to that date, that is a law with respect to the acquisition of property.  Its purpose is to destroy the essential element of our cause of action.  It is not an adjustment of claims between three or four different parties, as per Peverill or Mutual Pools.

It is acquisitive, and it is acquisitive of property, because a common law claim to recover money paid by reason of a tax invalidly imposed under the Constitution – including mistake, or whatever extra element is needed – is property, protected by the Constitution (Cth), and therefore, immediately after the 8 April 2024, the Commonwealth amending law was invalid, it exceeded the external affairs power, as we would put it, to the extent it is a law with respect to the acquisition of property.

The question, then, when we get to question (4), is going to be:  what, if anything, is left, validly, of this Commonwealth law when the next step occurs, which is Victoria purports to impose 106A to impose the same taxes for the past, payable in the past, et cetera.  So, where we see the ultimate battleground is going to be, I need to persuade you that it is an acquisition of property – the defendant polities do not want to talk much about that topic, we say it is essential to understand why it is an acquisition of property – then to do the exercise in Spence, which is what is left of this Commonwealth law after we know it offends 51(xxxi).

Our position is simple.  What is left is that the Commonwealth has now validly permitted future past State laws to impose future taxes, that is, for future periods, even if they are discriminatory under the Convention, that is valid, but nothing is left for the States lawfully to do with respect to past taxes and past tax periods.  If we are right on that, then we would succeed under question (4).

If we are wrong on that, and somehow you can get out of the remaining Commonwealth law this strange operation where it is prospective-retrospective, as they put it, that it is somehow authorising the states to go back into the past and reimpose the very same taxes that were invalid, if you can get to that through some form of severance or reading down – we say you cannot, applying Spence – they still have an acquisition of property problem.

It is an acquisition of property under Commonwealth law for this very simple reason:  it is the reason dealt with in Smith v ANL.  On and from 8 April 2024, even on their view of the construction of the statute, an infirmity was attached to our causes of action.  On and from that date, according to their construction, our causes of action were now liable to be defeated at the unfettered election of Victoria, if it chose to pass the statute.  That infirmity meant a transfer of value of our cause of action – perhaps most, perhaps, all of it – but at least a substantial transfer of value from us to Victoria on 8 April under the Commonwealth law.  So, even on their construction of the law, it remains exposed as acquiring our property.

The net result of all of that put together is if you take the Commonwealth law on its face, what it is purporting to do is to say, we go back into the past, we remove the inconsistency, your causes of action are destroyed immediately.  That is an acquisition of property.  If you take it in their reconstructed form, it is still acquiring the property, because on and from that date the infirmity has been attached to our choses in action which previously did not exist.

Your Honours will appreciate from that summary that, as we see it, the Metwally issue is not one that this case needs to resolve.  The way we approach it – we do not, of course, seek to overturn Metwally, we do not need Metwally; the Commonwealth law, in its past operation, may well have offended the Metwally principle as well, there is nothing wrong with the law being invalid or ineffective on more than one ground, but the one that matters for us and, we would submit, for you, is the acquisition of property ground.

EDELMAN J:   At some stage in your submissions, maybe at point 3 in your outline, it would just assist me if there is just a little bit more clarity on what you mean by the property right.  I think at some stage you talked about the restitutionary claim that you had; and, alternatively, you talk about the chose in action.  Is it necessary to put the case any higher than to say that it is a chose in action, whether or not that chose in action would be successful, but it is one that is more than colourable?  Then the question of the strength of the chose in action might go to its value, which is not a matter before the Court.

MR GLEESON:   Yes.  To be property, constitutionally protected, it needs to be a chose in action of the kind your Honour has described, which is:  it is not colourable; it is not liable to be struck out; it is one that can be pleaded, as it has been, and is fit to go forward for a trial.  Now, your Honour’s question, with respect, is important, because in our outline, jumping ahead, at paragraph 7, to the extent these issues matter before you – they might matter in the Federal Court – Victoria has denied us the character of constitutional property because they want to run some defences in the Victorian court.

The first defence is they want to say that the claims which were brought within a year of their accrual – they are all okay under the Limitation Act – they want to say the earlier claims cannot be brought.  But to do that, they have to overcome section 27, which we rely upon in Victoria to say the claim is postponed where we can prove mistake.  That, we would submit, is a classic issue that does not deny the character of property, and your Honours could, if so minded, say that that issue does not arise before you at the moment.  Indeed, in Georgiadis, as your Honours will recall, the form of the order was:  to the extent the claims are not statute‑barred, then so‑and‑so follows.

Now, the next one, which is 7(b), is the same problem, but even in larger dimensions.  Victoria and the Commonwealth supports them, seeks to argue that we do not have property because it is said that section 96(2) of the Victorian Administration Act means that the Federal Court either cannot exercise jurisdiction or has no powers in that jurisdiction.

Now, that, in its own right, is a half‑a‑day constitutional case.  The argument is wrong, because once one works through Rizeq, the Victorian Parliament cannot control that exercise of federal jurisdiction, but conceptually, that is an argument designed to say:  we do not have property; it cannot achieve that objective.  So, again, it is for your Honours whether you decide it.  If you decide the question, hopefully our way, then we will be put out of our misery for that issue in the Federal Court proceedings, but we have to squarely identify that these arguments do not go to property.

The third one in paragraph 7, which is the most offensive, is raised only by the Commonwealth.  It is not raised against us by Victoria in the pleadings.  It is offensive because the Commonwealth, as is its practice now in these matters, chooses not to put on defences to statements of claim, contrary to the Rules; they rely upon the special case, and then, at the stage of the submissions, they say we can run arguments that are not run on the pleadings.

So, we would ask your Honours not to consider sections 17 and 127. If you did, again, the short answer to them is: these arguments are about the validity of the assessment, they do not destroy the character of our property. At most, they are arguments about how the proceeding is to go forward, depending on which court it is in. Again, it will involve section 79 of the Judiciary Act.  There is a half‑a‑day constitutional case in paragraph 7(c), if your Honours permit it to be heard.

So, the approach we would be urging on your Honours is, put broadly, that the inconsistency is established as per paragraph 2 of the outline.  As per paragraph 3, and to come back to your Honour’s question, the property is the chose in action, which has value, even if it faces certain defences.  That is the primary way of viewing the property.  It is property which has arisen at common law, but by reason of the unconstitutional exaction being an essential element of the claim, so, it is property which we are seeking to vindicate in federal jurisdiction.

It is also open, as we have submitted, to view the statutory immunity, which we have, by reason of section 5 and Article 24, as either a part of our property – being part of the bundle of rights – or as a source of our Constitutional property.  On either view, any Commonwealth statute which destroys the immunity is directly or indirectly destroying our property and, therefore, is a law with respect to acquisition of property.

STEWARD J:   Mr Gleeson, I meant to ask you before.  When you get to dealing with sections 17 and 127, will you address us on the possible impact those provisions have on whether you do have a cause of action?  Namely, that the assessment is deemed to be correct and valid unless and until it is set aside for the objection process, or – concordantly with Futuris – was issued in bad faith or was tentative?

MR GLEESON:   Yes.  If the issues are before your Honour, we will be addressing that.  Our first submission will be that Futuris does not exhaust the categories where something which presents as an assessment is not a statutory assessment.  It dealt with two easy cases:  a provisional assessment and conscious maladministration.

STEWARD J:   It has been normally accepted as exhaustive in the past.

MR GLEESON:   And that is an error, because ‑ ‑ ‑ 

STEWARD J:   All right – you will demonstrate that.

MR GLEESON:   I will just give your Honours the summary now.  The primary point it is making ‑ ‑ ‑ 

STEWARD J:   I do not want to put you off – just as long as you address it at some point.

MR GLEESON:   We will deal with that, your Honours.

EDELMAN J:   Is not your primary point that, as long as it is arguable, you have property?  Your property is the chose in action, which is a reasonably arguable claim that can be vindicated.

MR GLEESON:   That is the entry point, that is all we need, and unless the section 17, 127 argument is clear beyond doubt to a General Steel standard as destroying our property, then we succeed under 51(xxxi).

GAGELER CJ:   Mr Gleeson, I may have misheard you, but are you putting some argument that the statutory immunity itself is property?

MR GLEESON:   It is either property, or it is as part of the bundle of rights, or it is a source of the property.

GAGELER CJ:   Being?

MR GLEESON:   Being the chose in action, and so, to destroy the immunity by law is to destroy the chose in action.

GAGELER CJ:   Not prospectively, it is the retrospective element of it, is it?

MR GLEESON:   Not prospectively – to the extent the Parliament says for future taxes, the States can trump the treaty, there is no problem we raise with that.  But to the extent that Parliament says, if that is what they are saying, on and from 8 April, States can now pass laws in the future which reach back into the past and deem taxes to be payable in the past which were not then payable, that that is an acquisition of property, because our chose in action, which we had on 7 April ‑ ‑ ‑ 

GAGELER CJ:   I get the chose in action thing, I am just trying to understand this other element.

MR GLEESON:   Yes.  I do not need the immunity as separate property, but ‑ ‑ ‑ 

GAGELER CJ:   Well, if you are putting it, I have to understand it.

MR GLEESON:   Yes.  I am certainly putting that it is a source of the property, it is the source of the chose in action ‑ ‑ ‑ 

GAGELER CJ:   Yes.

GORDON J:   What difference does that have to your arguments, though?

MR GLEESON:   Very little, your Honour.

GORDON J:   Well, then, I do not understand it.

GAGELER CJ:   That is two of us.

EDELMAN J:   Three.

GORDON J:   The reason why it is important, I think, and why I ask you to clarify it, is because at the end of the day, we have to construe the relevant legislation and identify what is the property that you say is the subject of it, because it is put against you, as I read the submissions, that the thing that does the destruction is not the Commonwealth law; it is the State law.  So, that focuses two questions.  One is: what is the property?  And, second:  what is the proper construction of the relevant legislation?

MR GLEESON:   Yes, and I am coming to the legislation now, but ‑ ‑ ‑

GORDON J:   So, the first question is what I am asking about.

MR GLEESON:   We have two aspects of the legislation we have to deal with.  The first is:  did the Commonwealth acquire our property on 8 April, irrespective of whether anything further happened in the future?  One strand that is pressed by the Commonwealth and Victoria is that the effect of the Amending Act was to re‑enliven the original tax assessments in Victoria which were, at that point in time, invalid by reason of section 109.

Now, our property, for that purpose, is at least the chose in action that we held on 7 April and, on that effect of the law, which is its purported operation, the essential element of our chose in action was destroyed on 8 April.  It was destroyed by the Commonwealth, and it was destroyed to the financial advantage of Victoria, because from that date, if this law were valid, they now had a complete answer to our claim they did not previously have.  That is question (3).

When we get to question (4), the construction entry point is, once we are right on question (3), what can be left of the Commonwealth law?  Does it only operate in what I am calling a wholly prospective manner, in which event, when 106A is passed, there is a new section 109 inconsistency and 106A is invalid for that reason, or is it possible to tease out of the Commonwealth law some form of operation where it is permitting future State laws to reach back in time and impose taxes in the past which were not payable in the past?

We say it cannot have that effect, as a matter of construction.  But if it could, it still has the 51(xxxi) problem at Commonwealth level.  The problem is that on and from that date, our cause of action now has this new infirmity attached, that it is liable to be defeated at the unfettered election of Victoria, and its value has been diminished and has been transferred to the financial benefit of Victoria.

GAGELER CJ:   That is still relying on the cause of action as the property.

MR GLEESON:   It is relying on the cause of action.

GAGELER CJ:   I understand that.

MR GLEESON:   All right.

BEECH-JONES J:   You will come to this, but that has the proposition that the law of the Commonwealth attaches what you describe as a vulnerability or an infirmity to a piece of property to be defeated by State legislation – that is an acquisition.

MR GLEESON:   That is an acquisition, on and from that date.

BEECH‑JONES J:   Okay.

MR GLEESON:   And it is an acquisition whether or not the State legislation is passed – it is confirmed once the State legislation is passed, but on and from that date, if one was asking, what value could I get if I sought to assign the fruits of the chose in action, the answer would be very little, because the purchaser would say: this is liable to be rendered worthless by the State, and what was previously a limitation on State power preventing them doing that has now been removed by the Commonwealth.

GORDON J:   So, there is a temporal question.  At that point, in relation to the question posed to you by Justice Beech-Jones, there is only a potential infirmity.

MR GLEESON:   We would put it, it is an actual infirmity.

GORDON J:   That is the debate.  The debate at that point is whether it is actual or potential.

MR GLEESON:   Yes.  And so, the closest case is Smith v ANL, because in Smith v ANL, to attach a new, shortened limitation period to a cause of action which is constitutionally‑protected property is an acquisition of property, and that is whether or not the defendant relies upon the shortened cause of action.  And the reason it is an acquisition there and then is that it has transferred at least some of the value of the cause of action into the hands of the defendant.  This is even stronger than a shortened limitation period, this has given them the complete ability, uncontrolled by law, to destroy the cause of action as and when they wish.  That, we submit, is the acquisition of property by the Commonwealth ‑ ‑ ‑

EDELMAN J:   It is a contingent burden, on your case.

MR GLEESON:   It is a contingent burden, but one that we now have no right to stop, whereas immediately before that date, we had the Constitution to stop it.  So, your Honours, in terms of the statutes, the original Commonwealth Act is in volume 1, at page 70.  Section 5(1) says:

Subject to this Act, on and after the date of entry into force of a provision of an agreement mentioned below, the provision has the force of law according to its tenor.

The New Zealand agreement is identified on page 72, that is the New Zealand Convention which has been earlier defined on page 63 as the relevant treaty.  The words “Subject to this Act” are not there to indicate that this is a right and a liability which is inherently defeasible.  They have this work, rather – your Honours will see from the table on page 72, you do not have all the referenced provisions but, for example, for the New Zealand Convention, section 6B, that is a particular provision indicating how a particular part of the Convention is to come into force.

Next, I will go to the double tax treaty, which is also in volume 1, commencing at page 266.  Article 2 defines the covered taxes, and they are Commonwealth income and fringe benefits taxes, and many of the provisions of the treaty extend to those covered taxes, but the particular provision, Article 24 on page 293 of the book, is broader.  You have the non‑discrimination obligation in Article 24(1).  We observe that it applies in this form – it creates a mandatory command, you:

shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith –

So, it extends beyond taxation to “more burdensome” administrative requirements than those imposed:

on nationals of that other State in the same circumstances –

And, critically, Article 24(7) says that the provisions of the Article apply, notwithstanding Article 2:

to taxes of every kind and description imposed on behalf of the Contracting States, or their political subdivisions.

So, Article 24(7) is what means that the command applies to Victoria when it imposes discriminatory land tax, and it is hard to think of words that could make that point more clearly.  The explanatory memorandum for this Act is found in volume 19.  It commences at page 7241.

GORDON J:   Do you mind giving us the tab number, please, Mr Gleeson?

MR GLEESON:   Yes, tab 127, page 7241.

GORDON J:   Thank you.

MR GLEESON:   At 7244, paragraph 2.323 refers to Article 24 and says:

The Australian tax system is generally non‑discriminatory.

It:

provides that certain features of the Australian tax system –

do not come:

within the Article’s terms . . . The measures identified can be characterised as being an integral part of the administration . . . and the collection of their taxes.

So, that is reference to the exceptions in Article 24(5) for particular collection and administrative mechanisms which are not subject to the non‑discrimination command.  They are not relevant to our case.  Then paragraph 2.325 makes clear that the command applies to taxation and requirements connected therewith, including:

discrimination in the administration of the tax law –

That point is made further clear at 2.330 and 2.331.  At 2.355, on page 7250, it is made clear that it extends:

to taxes of every kind and description imposed on behalf of the Contracting States, or their political subdivisions.

That is Article 24(7).  Paragraph 2.356, last sentence, again makes clear that it extends:

to taxes imposed by the Australian states and territories.

Over the page, 5.81, the States and Territories were:

consulted through the Commonwealth/State Standing Committee on Treaties.

So, the suggestion made by Victoria at paragraph 54 that it is an unintended result of the original law that their discriminatory land tax should be rendered invalid under Article 24 cannot stand with the text of the treaty and it cannot stand with the perfectly clear statement to the Parliament.

This Court dealt with a similar provision in Addy v FCT (2021) 273 CLR 613, which is volume 3, tab 30, page 651. Importantly, at paragraph 16 of that judgment, the Court cited Klaus Vogel on Double Taxation Conventions that the effect of these provisions is to disapply the:

domestic taxing provision which imposes different or more onerous tax treatment –

and to apply:

the more advantageous domestic rules laid down for a state’s own nationals or residents –

The Victorian tax, which is then struck down by reason of the command of section 5, Article 24 and section 109 of the Constitution is found in the Land Tax Act, which is in volume 1 at page 143.

JAGOT J:   What tab?

MR GLEESON:   Tab 9.

JAGOT J:   Tab 9.

MR GLEESON:   There are a series of provisions which give the Act its general operation, such as the definition of “owner”, “taxable land”, “tax year”, and so on.  There are then the special provisions for the definition of the “natural person absentee”, on page 12 of the Act.  Section 35, on page 56 of the Act, imposes land tax in accordance with Schedule 1, and the discriminatory effect can be seen by comparing, for example, page 240 of the Act, or 183 of the book.

GORDON J:   Some of us are working off hard copies, could you just give us the section you are looking at?

MR GLEESON:   I am now looking in Schedule 1, section 1.4.

GORDON J:   Thank you.  So, this is picked up by section 35?

MR GLEESON:   This is picked up by section 35.  That page shows you what the national pays, and then if you compare it to 4.1 and following, you see the higher rates paid by the non‑national, and that is what generates the breach of Article 24 and generates the inconsistency.  And the effect, then, of section 109, understood in the way explained by the Court in Addy, is that, in effect, the stencil that is required to be applied over the Land Tax Act (Vic), any references to obligations on the non‑absentee owners and the higher rates of tax are struck out, and then what would be left is they would be liable to pay tax under the ordinary rates.

Then, your Honour, if I come to paragraph 3, which is the claims that we say arose.  Can I go first to British American Tobacco (2003) 217 CLR 30, volume 5, tab 41, page 1514, at paragraphs 39 to 45. Paragraph 39 makes clear that the claim arose under the Constitution in jurisdictional sense because the obligation would not exist but for the operation of section 90. Paragraph 41 makes clear that the claim is a “common law action”, so, as property, it is a chose in action, now a chose in action in restitution, but it:

attracts federal jurisdiction –

because it is:

“arising under” . . . the Constitution –

There is then a citation from Justice Fullagar in Antill Ranger, which is a relevant analogy to the present case. In that case, the claim arose by reason of the contravention of section 92 of the Constitution, but the same point applies here:

“The right . . . is a common law right, but an essential element in the cause of action is that the moneys . . . were unlawfully exacted from –

the person:

the unlawfulness . . . depends on the Constitution.

So, that is the essential property that we then rely upon to ground the section 51(xxxi) claim, and I would simply refer your Honours, without going to it now, to your recent discussion in Redland City Council, which is in volume 17, tab 11, about the nature of the claim in restitution for recovery of moneys paid as and for invalid taxes – of course, in that case, it was a procedural difficulty.

Here, it is a constitutional problem that grounds the action – and to Chief Justice Mason’s discussion in Commissioner of State Revenue v Royal Insurance, which is volume 5, tab 49, about the fundamental principle of law tracing back to the Bill of Rights, that taxation cannot be extracted without valid law.

GAGELER CJ:   Mr Gleeson, have you defined these claims with precision somewhere?  They are not pleaded, are they?

MR GLEESON:   Yes – in the Federal Court, we have pleaded the claim.

GAGELER CJ:   Yes.

MR GLEESON:   In the special case book, all of the claims have, as an element, the point I have mentioned that section 5 has brought Article 24 into law and has rendered the State law inoperative.  But, in terms of what is the – on page 108 of the special case book, as but one example, there is a plea that the payments were made under a mistake; and then on 109, there is an alternative plea based on failure of basis, and there is an alternative plea at paragraph 47; further or alternative at 49.

So, in effect, in the Federal Court proceedings, the simplest case will be mistake consistent with Redland City Council, as that was decided here.  To the extent we need it, we will be arguing failure of basis, and I do not wish to excite your Honours this morning, but Woolwich may come back via this case in the Federal Court, but we may not need it.

BEECH‑JONES J:   But that is all premised on it being an unlawful extraction.

MR GLEESON:   The unlawful extraction is at the core of it.  So, if a law removes the unlawfulness of the extraction, every cause of action is dead.

STEWARD J:   Can I ask you, if production of the notices of assessment in the Federal Court proceedings were a complete answer to your cause of action, would you still say you had more than a colourable chose in action?  I know you are going to argue the Futuris point, but just assuming you do not win that and that, as is conventionally the case, the production of the notices of assessment shows that they are a conclusive proof of the validity and correctness of the assessments, would you still say you had more than a colourable cause of action?

MR GLEESON:   I would.  But the reason will actually take us, your Honour, into what I have called one of the half‑a‑day constitutional cases, because the line of cases your Honour is thinking of, with respect, are cases that do not have, at the heart of them, claims to tax arising under constitutionally invalid statutes.

STEWARD J:   Well, this is your extension of Futuris point.

MR GLEESON:   This is the extension of Futuris.  But if you think of it this way:  on the face of it, before we get to the validity of the assessment clause, we have a non-colourable clause of action.  It is a common law cause of action, but it has arisen by virtue of the Constitution.  It is an action in federal jurisdiction.

Jurisdiction has been vested by the Judiciary Act in the Federal Court of Australia, in the Supreme Court of Victoria, and could be vested in this Court as well.  That is a grant of federal jurisdiction in that matter.  If and to the extent the validity of the assessment point is being run, to say that that federal jurisdiction cannot be exercised in any court in the country ‑ ‑ ‑

STEWARD J:   Well, it does not go to jurisdiction in terms of denying jurisdiction.

MR GLEESON:   If the logic of the point is you do not have constitutionally‑protected property because your claim cannot be heard in any court in Australia, then the section is ‑ ‑ ‑ 

STEWARD J:   Your claim can be heard; it is just that section 127 will have the evidentiary effect.

MR GLEESON:   Yes.

STEWARD J:   That is what they said in Futuris.  It is not a privative clause, it is an evidentiary clause.  Anyway, perhaps come to it when you get to it.

MR GLEESON:   What I want to come back to is, even if this were being litigated in the Supreme Court of Victoria, our claim would be in federal jurisdiction, and so the statutory objection procedure which ultimately leads you to an appeal – which is a judicial review appeal under section 111 of the Victorian Assessment Act – that entire statutory procedure will be subsumed into the matter in federal jurisdiction in which the court has been vested.

So, once you start to think of it that way, the clause saying the assessment has validity on its face has to be looked as to how it operates in such a proceeding.  And in such a proceeding, we would be submitting, non‑colourably, you could not rely upon section 17 to defeat ‑ ‑ ‑

STEWARD J:   It is really 127, I think.

MR GLEESON:   And 127, to defeat that federal claim being heard, and that will lead to some arguments, firstly, of construction – do 17 and 127 really intend to apply at all to the claim in federal jurisdiction for recovery of unlawfully extracted tax?

That is a construction question, it has not been teased out by the Commonwealth – and then there is a very important question under section 79 of the Judiciary Act, that the Victorian Supreme Court will not be exercising jurisdiction under State law, it will only be exercising it under federal law, and is section 79 intended to pick up these provisions? And we would submit it is not. So, through all those reasons, which I will then advance ‑ ‑ ‑

STEWARD J:   And that gets you over “colourable”?

MR GLEESON:   That gets over “colourable”.

STEWARD J:   All right.  I understand the point.

MR GLEESON:   Your Honours, can I then come to paragraph 4, which is the Amending Act, which is volume 1, tab 7, page 119.  Section 2 says that the whole of the Act commences on 8 April 2024, and section 3 says:

Legislation that is specified in a Schedule . . . is amended or repealed –

as per the Schedule. So, in terms of the temporal operation of the new section 5(3), it forms part of the corpus of Commonwealth law on and from 8 April. So, what the Parliament has not done, which is sometimes done with retroactive laws, is purport to say that the operation of the amending provision commenced back in the past. This provision’s operation commences on 8 April.

However, Schedule 1 clause 2 purports to regulate the temporal application of the amendment, which is to say that section 5(3) applies to all taxes or tax periods other than Australian tax – that is, income tax and fringe benefits tax, which are carved out – payable on or after 1 January 2018 or tax periods ending after that date. In, for example, Spence, between paragraphs 32 to 34, the Court discussed that the first step with these questions is to look at the purported operation, what is it that it claims to do legally and practically, and then one can assess whether it is sufficiently connected to a head of power or whether it offends a constitutional limitation.

What this Act purports to say is, relevantly for all State and Territory taxes and all Commonwealth taxes other than income tax and fringe benefits tax, if you go back in time to 2018, that is six years, the non‑discrimination obligation is no longer brought into domestic law in full, it is brought in only subject to the Commonwealth, State or Territory choosing to observe it.  So, metaphors are difficult but, leaving aside income tax and fringe benefits tax, it is a complete roll-back of the international law obligation that was, at the time, brought into domestic law.

In effect, Article 24 has been rendered worthless, save in respect to income tax and fringe benefits tax, for that six‑year period.  Now, the Commonwealth taxes that this might apply to are things like fees under the Foreign Acquisitions and Takeovers Act, the wine equalisation tax, some other important but smaller taxes than income tax and fringe benefits tax.  But what it purports to do is to say, from six years in the past, the non‑discrimination norm does not have application in domestic law unless – if the Parliament does not want it to.

Now, you then ask the question:  why did they choose six years?  If you had no other material, one could draw a fairly ready inference that it is six years because standard limitation periods in many cases are a six‑year period.  So the reason they have gone back six years is so causes of action which currently exist and are available for litigation – indeed, are being litigated in the Federal Court – which otherwise are triable will now be rendered non‑triable on and from 8 April without need for any further action.  When I say that is an ordinary inference, it is then confirmed by a statement in the ‑ ‑ ‑

BEECH-JONES J:   So, Mr Gleeson, that statement only applies to the extent that this provision could be said to reinvigorate the previous – a State law, as it were?

MR GLEESON:   Yes.  So, to be clear, my submission is if you are ascertaining the purported operation of this law ‑ ‑ ‑

BEECH-JONES J:   It is doing that.

MR GLEESON:   That is what it presents as purporting to do.  That then raises the important questions:  by doing that, is it acquiring your property?  That is the one we focus on.  It would raise another question in respect to Metwally, assuming Metwally is correct:  is this circumventing the operation of section 109 of the Constitution?  But the one that is important, for our argument, is:  if that is its purported operation, is it acquiring our property?  So, in the explanatory memorandum ‑ ‑ ‑

GORDON J:   Can I just ask one question, which you may be coming to.  If item 2 of schedule 1 was not there, would you have the same argument?

MR GLEESON:   Yes, we do.  So, if it is not there, which is what we say is the effect of the Constitution, it will be struck out, clause 2 of Schedule 1 will be struck out, what we will then have is a law which comes onto the statute books on 8 April 2024.

In accordance with all ordinary presumptions of statutory construction and there being nothing in this legislation to say otherwise, you would say, well, what the Parliament is doing is saying, going forward, in respect to taxes for future periods, the position now is we no longer bring the international norm into domestic law – it means we place ourselves in breach of international obligations with New Zealand, but forget that.  Under domestic law, from this date forward, for any new taxes, then it is now open to the Commonwealth, State or Territory not to observe the non‑discrimination norm.

BEECH-JONES J:   I can see that with future taxes, but why would it also mean future taxes and you add the words “for future periods”?  Why, just if 5(3) stood alone, would it preclude a State passing a tax operating on past periods?

MR GLEESON:  For a wholly closed past period, yes.  So, the reason  ‑ ‑ ‑

GORDON J:   So, “yes” means, they can do it?

MR GLEESON:   No, they cannot do it.  It would preclude that.  So, the reason it would preclude that is that we are then in the territory – we can develop it – of the ordinary presumptions of does a Parliament intend to reach back in time and alter the provisions of the law as it stood at that point in time without using sufficiently clear language to that effect?

So, if you take the Native Title Act precedent, the Native Title Act works because the Parliament has said, in explicit terms, while we leave the Racial Discrimination Act intact and we leave its effect under 109 intact, we now validate – we give legal force – to prior invalid Commonwealth Acts and we do that for all times going back into the past, and we do it with just terms, which is critical.

The Native Title Act was an example of the Parliament confronting the fact that if we are to go back into the past and defeat the law as it stood at the time, (a), we need to explicitly confront – that is what we are doing – and take responsibility for it; but (b); we are going to provide just terms.  This scheme, the reason it fails is it has not sufficiently confronted that past operation and it has not provided just terms, if that is what it is intending to do.

So, your Honours, I just want to make good the point about why the six years is chosen.  The explanatory memorandum is volume 19, tab 126, page 7194, relevantly at 7232 and following.

BEECH-JONES J:   I am sorry, Mr Gleeson, what page was that?

MR GLEESON:   Page 7232 and following.  The critical paragraph we rely upon here is paragraph 3.9.  The first sentence restates clause 2 of Schedule 1.  The second sentence can be politely called euphemistic – it:

provides certainty for affected taxpayers –

in the sense that your claim is extinguished.  When it says it is:

preserving the status quo that these taxes have been validly imposed and collected.

This is where I say Victoria is trying to seize on some of this material to say this is a Peverill‑type case, we are just correcting, we are just bringing things into line with what they were, that is the exact opposite of what the law is doing.  What the law is doing is dealing with taxes that were invalidly imposed and collected and purporting to give them validity:

The retrospective period broadly aligns with the six‑year statute of limitation periods generally provided under state and territory legislation.

Then you are told again that gives you “certainty”.  Well, it gives you certainty in the sense that your property is destroyed.  So, we know from what the Parliament was told that the six years was deliberately chosen so that all claims which might otherwise be within time would now be destroyed by reason of the operation of clause 2 of Schedule 1.

BEECH-JONES J:   Is that passage not directed to clause 2(b) of the item, not 2(a)?

MR GLEESON:   Your Honour, I think it is both, because of the first sentence of section 3.9, which has captured the whole ‑ ‑ ‑

BEECH-JONES J:   Yes, I understand.

MR GLEESON:   Then your Honours see 3.11.  Again, this is a case where the explanatory memorandum is of no assistance under the Acts Interpretation Act, because what it does not do is accurately describe the legislation.

GORDON J:   On your construction.

MR GLEESON:   Yes.  So, we take the original legislation, there is:

no unintended expansion of the Agreements Act which may undermine other Australian taxation regimes and the intended policy position.

Well, it is the exact opposite of that.  And the “intended policy position”, that has been described at the top of the page at 3.7.  That is the policy position of the Executive, in 2024:

that Australian Commonwealth, state and territory taxes, other than income taxes and fringe benefits taxes, prevail in the case of any inconsistency –

So, what has happened is that the Executive in 2024 have come to a policy position which can politely be described as they do not like the terms of the treaty and they do not like the fact that it has been brought into domestic law, and it has been in operation for 14 years.  Without in any way removing the treaty obligation, the Executive says:  we would like the Parliament to pass a law which brings the law into line for the past with what we wish it had been, even though it was not.

So, apart from this explanatory memorandum confirming what you would infer, that it has been chosen to match the limitation period, the rest of it will not be of great assistance to you, because it has not accurately described the legal operation and effect of the law.  The number of times “certainty” is mentioned in the explanatory memorandum is quite remarkable.  The certainty they are being given, as taxpayers, is that the claims that they have will be destroyed.

So, your Honour Justice Beech‑Jones, further to my answer to your question as to whether some form of backward‑looking operation can be inferred or preserved, even if the one I am attacking cannot, we rely upon what the Court said in Stephens v The Queen, which is volume 14, tab 92, page 5316, at paragraph 33.

STEWARD J:   Mr Gleeson, you do not quibble with the proposition that the States can impose retrospective taxes, as a power?

MR GLEESON:   No.

STEWARD J:   So, if the Victorian Parliament had not passed section 108A or whatever in the Land Tax Act, but instead passed a special income tax – which it can do – to impose the same quantum of tax on these non‑resident taxpayers, but in the form of an income tax, you would quibble with that?

MR GLEESON:   No, definitely, we would, we would.  So, if the premise ‑ ‑ ‑

STEWARD J:   What if they simply said:  in the past you owed us – let us say $100 – we now are going to propose an income prospectively of $100 for the current year of income.  Would that be problematic?

MR GLEESON:   So, I need to clarify, with respect your Honour’s example.  Can we go to section 106A, to see that it does not match your Honour’s example?

STEWARD J:   I know it does not – I accept that.  I am just trying to get to the power issue, here.

MR GLEESON:   Yes.  So, the part of the vice of 106A and of the Commonwealth law purporting to authorise it is 106A – which you will find in ‑ ‑ ‑

STEWARD J:   I have it.

MR GLEESON:   Yes.  In the book it is in volume 1, at page 177.  So, it starts on a premise that there was a purported imposition of tax and, critically, under paragraph (1)(d):

the purported imposition . . . was invalid only because –

of the very problem we have.  Paragraph (2) then says we impose a tax, so, it is a new imposition of tax.  Then (3) says this liability:

is taken to have arisen, and to have always arisen, at the same time –

the previous liability would have arisen, had it been valid.  Paragraph (4) says it:

is payable . . . and is taken to have always been payable –

if it had been valid:

(5)The amount . . . is the same . . .

(6)The rights and liabilities . . . are . . . the same . . .

(7)Any act or thing done or omitted –

is “the same”.  Then that is purportedly backed up by a new provision in the Administration Act, which is at page 263, section 135A, that the assessment – that is, the assessment that was invalid at the time – is now taken to have been valid and always have been valid, and so on.

So, the 106A model – which is in the most extreme category of retroactive law, to the extent classifications matter – says:  we are going to impose, in the past, a command of liability, a command of payment, and if you have not paid, we are imposing civil and criminal consequences upon you in the past.  Your Honour’s example was different.  Your Honour says, to the extent the State can impose an income tax, we would impose a new tax on income where the liability will arise in the current year, it will arise in respect to the current year and the payment will be in the current year.

Now, that may raise a series of issues in its own right, firstly, as to States imposing income tax and whether that is an income tax, because it might not be by reference to income, it might be by reference to something else.  But leaving all those issues aside, that is a world away from the law that this is grappling with.

STEWARD J:   This is this issue, which I think you have a difference of view with, for instance, the Commonwealth Solicitor‑General about, whether 106A seeks to change the past or whether 106A prospectively creates fresh liabilities by reference to past events.  There is a construction issue there, I understand that.

MR GLEESON:   Yes, and it is the last bit of your Honour’s question that matters.  Of course, it is by reference to past events – it says, in terms, the past event is the invalid imposition in the past.  But what it does is to go the next step and say:  we are now creating a command of liability in the past, that you were under in the past, a payment obligation in the past, and civil and criminal consequences if you did not pay it and, by that means, it is said 106A can destroy the cause of action, if that has not already happened.

In Stephens, the Court said that classifications may be important, but they should not drive issues of principle.  And we put that submission, that you are dealing with constitutional guarantees, you are dealing with construction of legislation, these are important matters that should not be merely resolved on classification, but to the extent classifications matter, the Commonwealth’s submission does not capture 106A.

What is interesting from the submissions of the Commonwealth and Victoria is that when they try and save the Commonwealth law and use it to support 106A, they do so solely on the basis your Honour Justice Steward just put to me.  They say because this is merely imposing a new tax in respect to past events, then they say our case collapses.  We say our case works without that, but if you do have to look at it, their conception of 106A does not capture what the law actually does.

EDELMAN J:   It is more the interpretation of 135A, rather than 106A, that is driving this, because 106A is the response to 135A.

MR GLEESON:   Yes, 135A, which is at page 263, says the piece of paper that was issued in the past – which, on this hypothesis, had no legal validity because it was based on a law which had no constitutional operation – is now taken to have validity in the past, from that time.

EDELMAN J:   Yes.  All I am saying is the meaning of 106A has to be understood in light of what it is trying to do, and what it is trying to do is respond to the ground that was cleared by 135A.

MR GLEESON:   Yes, but together, that is what they are trying to do, and this – we have given your Honours, in volume 19, tab 137, at page 7348, Dr Juratowitch’s discussion of retroactivity using the approach of Driedger, where the:

retroactive statute is one that operates as of a time prior to its enactment.  A retrospective statute . . . operates for the future only.  It is prospective but it imposes new results in respect of a past event.  A retroactive statute operates backwards.

I am sorry, do your Honours have that page, 7348?

JAGOT J:   Page 73?

MR GLEESON:   Page 7348.

STEWARD J:   What was the tab – the volume, sorry?

MR GLEESON:   It is tab 137, volume 19.

STEWARD J:   Thank you.

EDELMAN J:   In most of the cases where the distinction is drawn, it makes no difference.  This is one of the rare cases where, on your submission, it really makes a difference whether it is retroactive or retrospective.

MR GLEESON:   It may make a difference, because the Commonwealth and Victoria pin their case on it being retrospective and not retroactive.  They do not propound any way in which, if it is truly retroactive, it can be supported by a valid Commonwealth law.  And so, in this case, if all that was going on was it imposes new results in respect of a past event, then you might call it retrospective.  But if it operates for the past, then it is retroactive.

That is what leads to the discussion, at page 7358, of Lon Fuller’s example in The Morality of Law.  Fuller’s example is, I think, close to your Honour Justice Steward’s example to me, that if you simply pass a law:

in 1963, imposing a tax on your financial gains realized in 1960 –

when they were not subject to tax, Fuller says that is not in the retroactive territory, because its requirement upon you is operating “only prospectively”.  And then Fuller says, perhaps presciently:

We do not, in other words, enact tax laws today that order a man to have paid taxes yesterday, though we may pass today a tax law that determines the levy to be imposed on the basis of events occurring in the past.

Now, what Fuller said we do not do is the very thing 106A does, because it is a law saying you are ordered, in the past, in that six‑year past period, to have been under a liability to pay tax and to pay those taxes, and to pay interest and criminal penalties if you do not pay them.

GORDON J:   It is the next paragraph, though, when he identifies the criminal law, is that – and the liability to pay a fine.

MR GLEESON:   But what Juratowitch teases out here is:

Although the obligation to pay in Fuller’s example is, and can only be, created by the new statute, that obligation arises because gains not subject to tax at the time they were realised are deemed to have been subject to tax at that time.  Presumably in Fuller’s example and certainly in some actual legislation of its kind, the quantum of the obligation to pay is calculated on the basis that liability is deemed to have arisen at the time of the event said to trigger liability.  When describing the relevant law it would be artificial to sever the legislative command of liability (which is deemed by the law to have accrued at an earlier time) from the legislative command to pay (which arises at the time that it is imposed).

So, Juratowitch is qualifying Fuller’s example by saying, well, if what the law is really doing is saying the liability arose in the past, then it would be a retroactive law.  And after some further discussion on the next page, 7359, he says:

It is one thing for affairs set in place in reliance on one legislative regime to be subjected to a new and different regime, effective from its commencement, regardless of when the affairs were set in place.  Such a regime . . . would not be . . . retroactive –

GAGELER CJ:   There is a footnote at the previous page to SCI Operations.  My recollection is that there was some discussion of these concepts in that case, by reference to some writings of Sir Frederick Jordan.  Have you looked at those?

MR GLEESON:   We will have to try assist your Honours on that, if we can.

GAGELER CJ:   It is very interesting academic writing, but these ideas have been explored in our own jurisprudence, to some extent.

MR GLEESON:   Yes.  We will seek to come back to that, your Honour.  Could I just conclude on 7359, and we put this as our submission:

It is a different thing for a law, say a tax law, commencing in 2008 to apply to transactions occurring in 1998 so as, in 2008, to create tax liability deemed to have accrued at the time of the transactions and payable, for the first time, in 2008.  That would be retroactive.

So, in Juratowitch’s terminology – and this is still not our law, this is less offensive than section 106A – if you deem the liability to have been created in the past but you make the payment obligation fall due today, that is still retroactive because the liability has been placed into the past.  Section 106A goes the next step and says, in the past, the invalid assessment is now valid in the past, the liability invalid in the past is now valid, the payment obligation in the past invalid is now valid, and all that is backed by civil and criminal liability.

So, the form of retroactivity that we have is beyond even anything that was being contemplated in the debate between Fuller and Juratowitch. The question is whether there is any way one can properly construe section 5(3) after we succeed on question (3), which would authorise a provision like 106A, and if you could find such a way, would it be an acquisition of property?

GAGELER CJ:   Thank you, Mr Gleeson, we will take the morning adjournment.

AT 11.18 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.31 AM:

GAGELER CJ:   Mr Gleeson.

MR GLEESON:   Your Honour, the reference in Juratowitch to SCI Operations, which we will provide your Honours a copy of in a moment, was in this sense, the cf. was because the particular law construed in SCI was not construed in the way Juratowitch was contemplating.  The law was construed as not imposing a liability in the past, it was only imposing a liability in the future.  So, it was not a difference in principle, it was to say that is a law falling outside my area.

The reference to Sir Frederick Jordan is in a case which is in the materials, which is Coleman v Shell Company of Australia, which is volume 17, tab 106, particularly at page 6235 to 6236, and the discussion there, we would submit, is consistent with the submissions we are putting, save that the more precise term “retroactive” is now being used.  If your Honours pick it up at the bottom of page 30 of the State Reports, there is a reference to “retrospective” sometimes being used in one sense:

impairing an existing right or obligation or creating a new –

one, and then, by reference to Lord Justice Buckley in West v Gwinne, one of the famous cases:

an Act is retrospective if it provides that as at a past date the law shall be taken to have been that which it was not.

That is now what we are now terming “retroactive”.  What is said over the page is:

There is no presumption that interference with existing rights is not intended; but there is a presumption that an Act speaks only as to the future.

Then it is said:

Upon a consideration of the authorities, I think that, as regards any matter or transaction, if events have occurred prior the passing of the Act which have brought into existence particular rights or liabilities in respect of that matter or transaction, it would be giving a retrospective operation to the Act to treat it as intended to alter those rights or liabilities –

That is 106A:

but it would not be giving it a retrospective operation to treat it as governing the future operation of the matter or transaction as regards the creation of further particular rights or liabilities.

Your Honour Justice Steward, that is the critical distinction between the two examples.  Section 106A is not creating “further particular rights or liabilities”, it is purporting to reinvigorate that which in the past was legally invalid.  So, that is the paragraph where Sir Frederick discusses the proper conception of retrospectivity, which we would now say is retroactivity.  Then coming to the next question, your Honour Justice Beech‑Jones’ question about what presumptions might apply here, at the foot of the page:

The next question is whether the Act should be treated as intended to operate in the way contended for on behalf of the plaintiff, notwithstanding that this operation would be retrospective.

We would say retroactive, and it says at the foot of the page:

It has been held that although, in the absence of some reasonably clear indication of intention to the contrary, an Act should not be construed so as retrospectively to affect particular rights or liabilities which had crystallised . . . an Act which merely alters the procedure –

et cetera, does not attract that problem. So, we would submit there is a clear recognition within the Australian law of the same principles of classification as have been discussed academically. Section 106A is in the most extreme form of a retroactive law, and the question is whether one can sensibly construe section 5(3), once 51(xxxi) has done its work, to authorise a retroactive law like 106A. Your Honours, in terms of the outline ‑ ‑ ‑

BEECH-JONES J:   Is another way of saying that:  look, if clause 2 goes, and you are left with 3, it would not authorise 106A in terms?

MR GLEESON:   Yes.  And, your Honour, further to that ‑ ‑ ‑

GORDON J:   And why not?

MR GLEESON:   Because once clause 2 has gone, it can be seen that Parliament’s only attempt to do the thing that would ordinarily not be presumed – which is deem the law in the past to be different to what it was – has failed and it is gone, so, what is left is a provision which, under ordinary principles, speaks to the future, not to defeat reasonable expectations, as per Stephens, and in that form, says:  for taxes which are to be imposed going forward, with the liability and the payment in the future, we have now wound back the treaty.

Your Honours, can I also say on that, and further to your Honour Justice Beech‑Jones’ question, if you have the Commonwealth’s written submissions at paragraph 46, what is proposed is that:

if the retroactive operation of cl 2 of Sch 1 in relation to State taxes is invalid, it should be read down or disapplied, not severed –

We would say it should just be severed.  But if you look at the form of reading down contemplated by the Commonwealth, it is a distributive differential obligation.  What is proposed is that you somehow read 5(3) with respect to Commonwealth taxes with a full operation, that is, an operation back for six years.  But then with State taxes you read it as having a prospective application to a category of State taxes which are said to include retrospective State taxes.

So, what has happened on this proposed reading down, which we submit you cannot get out of this provision any criterion by which this reading down is possible, the Commonwealth is trying to say, in respect to our taxes under, say, the Foreign Acquisitions and Takeovers Act, 5(3) ‑ ‑ ‑

BEECH-JONES J:   I am sorry, Mr Gleeson, which paragraph of their submissions are you, again?

MR GLEESON: Paragraph 46. They are trying to say that with application to a Commonwealth tax like the FATA fees, section 5(3) validly has its full operation in its terms and therefore every tax levied since January 2018, even if discriminatory, is now retroactively validated, but in respect to State taxes it does not have that operation, if we are correct on 51(xxxi), but what it does is it has a different operation, which is it prospectively authorises future State taxes which are retrospective.

Now, in Spence, this Court dealt with the limits beyond which the judicial power can rewrite provisions after invalidity has been established – and there are clear limits.  The relevant limit – this is in Spence, volume 14, tab 91, page 5147.

GAGELER CJ:   The Commonwealth Law Report reference, please?

MR GLEESON:   It is 268 CLR 355, at 87 to 89. The limits of judicial power to do this reading‑down exercise, as per Chief Justice Latham in Pidoto, 15A of the Interpretation Act:

“does not authorize the Court, by adopting a standard criterion or test merely selected by itself, to redraft a statute or regulation so as to bring it within power and so preserve its validity”.

Then the attempted reading‑down in paragraph 88 from the Commonwealth had the very problem their current reading down has, that it would have produced differential operation in different cases, with there being no guide in the statute to allow that to occur.  So, the very thing that the Court said Spence cannot be done is what the Commonwealth is urging you to do in paragraph 46.

GLEESON J:   Just coming back to Justice Beech‑Jones’ question about the scope of clause 1 of Schedule 1, I think that perhaps the language that his Honour used was about authorising section 106A and, of course, that section does not operate as an authorisation.  I am wondering whether what you were saying was just that it is not expressed sufficiently clearly to contemplate a law of the kind of section 106A.  Or was there something more?

MR GLEESON:   No, that is what I am trying to say.  It is expressed sufficiently clearly to contemplate removing the limitation on State power for wholly future‑looking laws.  It is not sufficiently clearly expressed to remove what is currently a limitation on State power in respect to that past period where the Constitution has descended and rendered the taxes invalid.  Another way of putting that is to say that Parliament’s only attempt to express clarity on the topic is clause 2, and if that has failed, then they are left with nothing.  Your Honours, in terms of the outline ‑ ‑ ‑ 

GORDON J:   If you are wrong about that, will you address the temporal question that I raised earlier, then?  Were you going to come to that?

MR GLEESON:   No – I should do it now.

GORDON J:   Only when you are ready, Mr Gleeson.

MR GLEESON:   The temporal application we are submitting can survive 51(xxxi)’s operation is that if the tax is said to be payable on and after 8 April 2024, in particular, in respect to an event or transaction after that date, then that is covered by 5(3).  If the tax period ends after that date, that is covered by 5(3).  But what is not covered are laws which purport to command that tax be payable in the past or in respect to past periods.

So, what that would mean practically is Victoria has, I think, a calendar year land tax, as is typical, although it is imposed on 31 December, so one would just have to work through exactly when the tax period starts and ends, but it certainly means that for the periods which have truly, completely expired and where the original tax was invalid, you cannot use this provision to impose a new tax, which ‑ ‑ ‑ 

GORDON J:   No, my question was more directed – if you are wrong about the construction in your answer to Justice Gleeson, and that it is sufficiently clear that it extends to remove the past invalidity or remove the hurdle, what are the consequences, temporally, for you?

MR GLEESON:   The consequence then is that we fall back to our 51(xxxi) argument and say, as and from 8 April – this is Smith’s Case that I am coming to – there is sufficient infirmity now attached to our cause of action involving a transfer of value to Victoria that, there and then, the acquisition has still occurred under the Commonwealth law.

It is Smith 204 CLR 493, volume 13, tab 89, page 5001 of the book. From the headnote, Smith involved two provisions operating together:  section 57 of the Seafarers Act purported to take away the right to bring the relevant action for damages for injury; and then section 13 purported to allow the action to be brought under a shortened limitation period of six months.  In the judgment of Chief Justice Gleeson, we rely upon paragraph 7, which commences with the recognition that:

The legislation did not operate immediately to divest the appellant of his right of action . . . However, it had the effect that –

after a further six months, he could not bring the action:

The combined legal effect of the two provisions . . . was that the appellant’s pre-existing common law right was modified; and a corresponding benefit was conferred on the respondent.  Once it is accepted . . . that a chose in action is a species of property to which s 51(xxxi) applies, and that the constitutional guarantee is not to be narrowly confined, then modification of a right to bring an action, in circumstances where a corresponding advantage accrues to the party against whom action may be brought, would ordinarily involve an acquisition of property.

So, in the present case, on and from 8 April, the relevant modification to which we draw attention is that, unlike the position on 7 April, Victoria now has it in its unfettered ability to destroy the essential element of our cause of action.

In the judgment of Justices Gaudron and Gummow, we rely upon paragraph 19 for the point mentioned earlier, that the mere existence of defences to an action does not take away the character of property, but for the present purpose, at paragraphs 20 to 22 is the critical part.  It starts with the claims of Mr Smith at general law, being choses in action, which were constitutional property:

Such choses in action might immediately be turned to account by, for example, assigning –

the fruit of the chose in action, citing Glegg v Bromley and Norman v FCT:

The relief from what otherwise would be the measure of liability in respect of an accrued cause of action will be an acquisition of property –

citing WMC Resources, particularly at paragraphs 81 to 83 – that is Justice Gaudron.  Then in the next paragraph there was an argument for ANL that you should only focus on the right enforceable by action, but their Honours said:

a law might leach the economic value of a plaintiff’s chose in action whilst conferring a financial benefit upon the defendant by mitigating the duration, nature or quantum of the defendant’s exposure to the plaintiff.

Even if it leaves:

the plaintiff “legally free” to exercise that right by instituting –

the action, it would not necessarily take it outside 51(xxxi). So, even on the opposing construction, section 5(3) leaches the economic value of the chose in action on and from 8 April to the financial benefit of Victoria by placing Victoria in a position where it can lawfully do that which it previously could not do, which is destroy the cause of action.

GAGELER CJ:   When you use the word “Victoria” in this submission, are you conflating the Victorian Executive with the Victorian legislature, or have you got some more sophisticated argument?

MR GLEESON:   I understand your Honour’s question.

GAGELER CJ:   Yes.

MR GLEESON:   The proceeding that is currently in the Federal Court joins the State of Victoria as the second defendant – they are the party represented before you here today.

GAGELER CJ:   The constitutional organ, of course, is the Executive.

MR GLEESON:   The constitutional organ is the Executive, which acts for the polity, which is the State of Victoria.  So, I can make the submission more precise:  on and from 8 April, the polity – the State of Victoria, which is the legal defendant – now has the benefit transferred to it that it is able to leach the cause of action of all of its value through the law which would be proposed by the Executive and passed by the Parliament.

GAGELER CJ:   As you know, Mr Gleeson, there is that whole line of cases about when a State law might be said to acquire property within the meaning of section 51(xxxi), but you are not relying on that line of case law, as I understand it.

MR GLEESON:   No, no.  This submission takes it at the anterior point.  This says my cause of action is against the polity, Victoria.  On 7 April, I have my unjust factor or my qualifying factor, which arose because of the operation of section 109, which rendered the previous tax inoperative, because the law was inoperative.  So, as of 7 April – when I faced the State of Victoria opposite me in the Federal Court of Australia – I have to face some other arguments, but I know that, on that argument, I have my essential element of my cause of action.

What happens on this construction of section 5(3), that we do not embrace, is on and from 8 April, the defendant – the polity – has it within its – what has happened is, is that the limitation upon its – perhaps I was not quite clear. What has happened is that the limitation on its power, which arises by reason of the continued presence of section 5(1) bringing Article 24 into law in Australia ‑ ‑ ‑

GAGELER CJ:   Power and property seem to be merging – at least as I am understanding your argument.

MR GLEESON:   They are not merging, your Honour, but I am trying to identify – so the property is the cause of action.

GAGELER CJ:   Yes.

MR GLEESON:   That is there.  I am trying to identify how it is acquired by the law on 8 April.

GAGELER CJ:   Yes.

MR GLEESON:   And the way it is acquired is to view it in this sense:  immediately prior to 8 April, not only have we got our property, which is our cause of action, but under continuing Commonwealth law, which is section 5(1), Victoria currently has a limitation or denial on its power.  Victoria cannot, at that point in time, pass a new law seeking to impose tax for the past.  Why?  Because that would generate a second section 109 inconsistency.

So, that is why Victoria has what we would call a limitation or denial on power, and that has generated the original 109 inconsistency, and it would continue to generate 109 inconsistencies for as long as 5(1) remains on the books.  What the Commonwealth is doing by 5(3), on this construction, is removing that limitation on power.

GAGELER CJ:   And you equate the removal of the limitation on the power to a present diminution of property, do you?

MR GLEESON:   Yes.

GAGELER CJ:   I see.

MR GLEESON:   Because if one was trying to assign the fruits of the chose in action, what is this chose in action worth?  What it is now facing is the real potential that Victoria, freed of this limitation on its power, can now find an answer, which it currently does not have, to your chose in action.

GORDON J:   And it is a removal of a limit on power which – I think Justice Edelman described it as contingent, because it still requires a step to be taken by the State in order to effect it.

MR GLEESON:   It requires a step by the State to complete the ultimate acquisition, so that is true.  But what has happened through the removal on limitation of power is that it has been placed wholly in the hands of the State to, on this hypothesis, pass a law like 106A, whereas, previously, it could not lawfully do so.  That is why the Commonwealth is involved, because it is the Commonwealth doing that on 8 April.

STEWARD J:   And you say that on that date, even though it is contingent, your cause of action is now in peril and has lost value?

MR GLEESON:   Yes.

STEWARD J:   Yes, I see.

EDELMAN J:   Why is the State Act necessary to complete the acquisition, if that argument is right?

MR GLEESON:   If the argument is right, it is not – the acquisition has occurred whether or not the State does it, because if you were trying to sell it, it is worth a lot less.

GAGELER CJ:   But it cannot be the measure though, can it?

MR GLEESON:   Sorry?

GAGELER CJ:   It cannot be the value of the property.  It cannot be the value of the property that tells you whether the thing is property.

MR GLEESON:   No.

BEECH‑JONES J:   A diminished in value cannot be just – that cannot be enough for an acquisition per se.

MR GLEESON:   The property is the cause of action.

GAGELER CJ:   Yes.

MR GLEESON:   I am relying upon Smith to say, when we get to the acquisition stage, can we see that this Commonwealth law in its legal and practical operation has leached economic value ‑ ‑ ‑ 

GAGELER CJ:   But how can that be the test?  Leaching economic value?

MR GLEESON:   It is language to flesh out the type of issue that your Honour dealt with in Cunningham.

BEECH‑JONES J:   Any Commonwealth law that impacted on the society security payback in personal injury, for example, would leach economic value from thousands of causes of action around the country.  That would not be an acquisition, though, would it?

MR GLEESON:   But then one would be in a different territory because you might be failing on the property aspect, because you have a pure statutory right and you have a right which may be liable to variation over time.

BEECH‑JONES J:   No, but that could be just – for want of a better phrase – a standard common law damages claim for motor vehicle or personal injury, the Commonwealth comes along and says, well, we are going to require a further payback from the insurers of social security benefits.  That would diminish the value of that common law cause of action.

MR GLEESON:   That may well be an acquisition of property, if that is being done for – there has to be a Commonwealth purpose to bring it within a head of power.  But in the same way as in Smith, the Commonwealth says:  we think it is beneficial to reduce you to a six‑month limitation period; I am simply taking you to the passages which indicate that that can effect an acquisition of property.

I want to refer to what your Honour the Chief Justice said in Cunningham on this topic, because it is cited by the Commonwealth, around paragraph 39. So, it is Cunningham 259 CLR 536, volume 7 at page 2481.

GORDON J:   What tab was that, I am sorry?

MR GLEESON:   Tab 56.

GORDON J:   What paragraph number?

MR GLEESON:   Paragraph 58. The Commonwealth at paragraph 39 seizes upon your Honour’s words, which we would submit are general rather than narrow and prescriptive, to say that one of the basic conditions is that the law must:

“authorise or effect” an acquisition of property.

Now, we would urge that sentence should not be read as ignoring or compressing an entire debate that occurred in cases such as Magennis, the very argument that was put and rejected about the nature of the connection.  Your Honour is not addressing that, with respect.

GAGELER CJ:   That was really lying behind my earlier question to you, nor are you relying on the Magennis‑type line of cases.

MR GLEESON:   Magennis is my final argument that I will come to.  I have not gotten there yet.

GAGELER CJ:   I see.

MR GLEESON:   I do not need it on my primary argument.  I am going to come to Magennis as the alternative.

GAGELER CJ:   All right.

MR GLEESON:   But what we would submit your Honour is there saying is explained by the colon.  Your Honour is emphasising that:

the law must provide for –

both:

the taking . . . and . . . the conferral of a corresponding interest . . . on the Commonwealth or on another person –

So, it must provide for – the way it provides for it, that could be multifarious, including circuitous devices and the like.  Then, in the next paragraph, 59, when your Honour is now referring to both the conditions, you say it:

is a question of substance which can involve considerations of degree.  Whether a legislative alteration of a right of property takes property from one person and confers a corresponding interest in property on another person, so as to constitute an acquisition of property, turns in part on the characteristics of the right and in part on the extent of the alteration.

And at footnote (79), your Honour cites Smith at the very paragraphs I am going to, which is 22 and 23, as well as Telstra and JTI.  So, leaching is not of itself some freestanding test, but it is an illustration that the extent of the alternation is likely to be relevant along with the characteristics of the right in determining whether there is an acquisition of property.

In our case, we say the property is the chose in action.  The extent of the alteration is that a chose in action, which on 7 April did not face this infirmity but does face it on 8 April, has suffered a sufficiently real and tangible alteration to the benefit of the polity Victoria for that to be an acquisition of property.

Of course, when your Honour goes on at paragraph 62 to cite Justice Dixon in the Bank Nationalisation Case, including the famous Latin maxim about circuitous device, none of that is intended, we would submit, to suggest a narrow view be taken of this fundamental constitutional guarantee.  The language of “circuitous devices” is resonant in this case because if the Commonwealth law directly extinguished the cause of action, it would clearly be invalid.

What it is doing by this device is to achieve, effectively, the same result as seen by the fact that our Federal Court proceeding, if it is correct, will now inevitably fail. Your Honours, if your Honours have that paragraph 39 of the Commonwealth submissions, we would urge some caution with it. You will see a sentence about five lines down, with:

That obstacle removed, State tax law could have whatever effect it would otherwise have had.  Here, that meant that the relevant provisions of the VLTA –

and then it is in quotes:

“resumed the full force and effect which [they] had” with effect from 1 January 2018.

Citing Butler (1961) 106 CLR 268 at 274, Justices Fullagar and then Menzies at 286. We have separately given your Honours Butler.  That does not provide you with an accurate statement of what Justice Fullagar was saying, but Butler was the case where the Commonwealth law rendered the State law invalid.

The Commonwealth law expired because the defence power no longer supported it in the mid‑1950s.  The question was whether when that happened, then, in respect to future events in 1959, could the State law resume the force it had previously had?  Clearly, it could under existing law.  There is nothing in Butler to support the idea – that is in paragraph 39.

As to paragraph 40, where Georgiadis, Mewett and Smith are cited, we would submit that those cases directly support the logic of the case we are running.  There is no requirement that the Commonwealth legislation, in terms, must operate directly to distinguish or limit a cause of action.  That would be one example of an acquisition but it will not be every example, and it is not to the point that the Commonwealth law does not require Victoria to acquire the property in the same way as in the Native Title Act.  The Commonwealth law does not require the States to validate the invalid Acts, but what it does is remove a limitation on State power to enable that to occur but, in doing so, requires just terms.

Your Honours, can I put this submission on the Native Title Act precedent, which you will have in volume 2, tab 18, page 480. Unfortunately, you only have incomplete extracts. Under section 2(2) the Act commenced on a date which was 1 January 1994. Under section 7, which was discussed in the Native Title Act Case, the operation of the Racial Discrimination Act into the past was not directly affected by this Act.  But you will see under subsection (3) that any preservation of the RDA was not to:

affect the validation of past acts or intermediate period acts –

Then, after the key provisions of 10 through to 13, section 14, which you do not have, is the direct validation of Commonwealth past acts, and then critically section 19 said:

If a law of a State or Territory contains provisions to the same effect as sections 15 and 16 –

it:

may provide that past acts attributable to the State or Territory are valid, and are taken always to have been valid.

So, what was occurring here was the operation of the RDA to render inconsistent State laws or acts invalid is, on the one hand, treated as the premise for section 19, but what is then being done is a rolling back of what the RDA would otherwise have done for the future, which is impose a limitation on State power and prevent those acts being validated.

It has rolled it back by saying you may provide those acts are valid and are taken always to have been valid.  That is a true retroactive law that is being authorised.  Namely, the States can say the law in the past was different to what it was at the time; previously the acts were invalid, we are not going to directly upset the past operation of the RDA, but we are going to allow you in the future to go back and say those Acts were now valid.

Critically, that was under section 20, subject to the creation of a right of compensation against the State; and section 51, it is compensation on just terms; and section 53 contains the fallback that if for any other reason the compensation in the Act does not meet the constitutional standard, then you can get fallback compensation.  Here, it would be from the Commonwealth.

What we say about the native title precedent is that if one is going to use this route – which is sometimes described as the Metwally exception – of synchronous Commonwealth and State legislation to create past law different to what it was at the time, the essential premise is that the Commonwealth law must be valid in doing so.  In particular, if an acquisition of property is going to occur via the synchronous laws route, just terms must be provided by the Commonwealth law. 

BEECH-JONES J:   You say “must”, do not we just get from this that they chose?  That is what the legislature chose to do?  We do not know whether that was required in this circumstance. 

MR GLEESON:   I accept your Honour’s correction.  My submission is, “must” in the sense that the Commonwealth law has to be valid before you can have synchronous operation.  That is straightforward.  For it to be valid it must comply with 51(xxxi) where applicable.  My submission is that if, through the synchronous scheme, the Commonwealth is permitting the State to validate what was invalid in the past, and if that does involve and acquisition of property ‑ ‑ ‑

BEECH-JONES J:   By the State.

MR GLEESON:   If it involves an acquisition of property for which the Commonwealth has relevantly provided through its law, then you must have just terms.  When the Native Title Act Case was decided, the issue your Honours decided recently in Yunupingu had not been decided.  Namely whether native title was property.  We now know that native title is property, and our submission would be that the Native Title Act scheme only operated validly because of the conclusion of just terms.  If it had not had just terms in there, it would have been exposed as an invalid law. 

BEECH-JONES J:   But your proposition was that the premise of this was that the rolling back of the restrictions on the Racial Discrimination Act and the permission to the States to validate past acts amounted to an acquisition of property by the Commonwealth, which could only be fitted on just terms.  To decide this case, we need to decide that issue. 

MR GLEESON:   You do not need to decide that issue because I have narrower arguments.  I have given your Honours that as our submission.  Your Honours, can I come to paragraph 6 of the outline.  If there is a prima facie acquisitive character, it is not displaced by any of the arguments raised.  I should be able to deal with this summarily.  Victoria raises two arguments which the Commonwealth correctly does not embrace.  Victoria’s first argument is to say that the law – that is, section 5, subsection 3 – concerns taxation, and there is an antinomy between taxation and just terms.

The short answer for that is the antinomy cases were discussing taxation laws under section 51(ii) of the Constitution – federal taxation – that is clear from Tape Manufacturers.  Here, the law is sought to be supported only under the external affairs power.  It is certainly not a law about federal taxation, and there is no antinomy between the external affairs power in its treaty implementation limb and section 51(xxxi) when the Commonwealth seeks to do what it does here.  So, your Honours should dismiss that argument.

Victoria’s second argument is to say that the law is an attempt to genuinely adjust claims, citing Mutual Pools and Peverill.  As your Honours know, the genuine adjustment line of cases arise where one has a multi‑party situation – in Mutual Pools there were three parties, in Peverill there were four parties – and the purpose of the law was to effect an adjustment where property rights would move in different directions around the ring in order to achieve a valid Commonwealth purpose.  One cannot analogise that to a two‑party situation where the purpose of the law is simply to destroy our property for the benefit of Victoria.

The third argument which is raised by both Victoria and the Commonwealth is to suggest that the inherent defeasibility line of cases has something to say about the present matter.  The first answer to that is that the property that we are advancing is the common law property arising through the operation of the Constitution.  We are not in the territory of a pure statutory rights case.  The statute, section 5, has played an important role in the background in the generation of our property, but we are simply not in the territory of the inherent defeasibility case, and if your Honours think of ‑ ‑ ‑

GAGELER CJ:   But you are, really – at least on one version of our argument, I think, Mr Gleeson – because one way you put your argument is to say, well, you have this common law cause of action that has this statutory immunity on 7 April from State legislative extinguishment and what is taken away is the statutory immunity on 8 April, and therefore there is a diminution in the package that comprises the common law cause of action as formally protected by the statute.  That is one version of your argument.

MR GLEESON:   Yes.  Common law – and I could not move to my next argument, was that even if we open those cases to see what relevance they may have, and I was then going to contrast Chaffey and Cunningham and other cases.  The central point about bringing the provisions of an international treaty into domestic law is to generate rights which do not have the sort of inherent defeasibility that one sees in schemes like Chaffey and the like.

The central point of a double taxation treaty – I am focusing on the non-discrimination obligation, but you can think of the whole treaty – is to give taxpayers the surety and the protection of the provisions which will operate as the tax periods and the tax circumstances unfold.  So, if you think of a typical provision in a tax treaty – this one, it is Article 7 – which says if you were a New Zealander, you are only taxed on your profits if you conduct the business in Australia or you have a permanent establishment in Australia.

While this treaty is in force, the point of that is to give you a vested right.  It is to enable you to know that if I conduct my affairs appropriately, and I do not establish a permanent establishment in Australia – in the 2008 tax year, for example – I will have a protection from tax on that event.  So, the type of property we are dealing with, and that is why we have separately handed your Honours Article 70 of the Vienna Convention on the Law of Treaties.  Article 70, which is consistent with customary international law, deals with the termination of a treaty and says:

the termination of a treaty –

. . . 

(b)does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.

“unless”:

the treaty otherwise provides or the parties otherwise agree –

There is no such “otherwise” here.  So, the whole purpose of section 5 was to give people the assurity that while the treaty is in force and while it is brought into domestic law, you do have the protection of that right in respect to the period of time as it unfolds in a tax period or a tax year.

GORDON J:   Is that your answer to paragraph 41 of the Commonwealth’s submissions, because I had understood their argument to be both statutory‑based within the Act itself as well as addressing the items you just identified?

MR GLEESON:   Yes, it is the answer, your Honour.

GORDON J:   One of the arguments they put in a very – I do not seek to dismiss it, but in a simplistic level is that one recognised within the Act itself that it was subject to the Act and subject to amendment.

MR GLEESON:   At a high level, that is going to true of almost every Commonwealth Act, which your Honour the Chief Justice discussed in Cunningham.  That is not enough to say you are in this territory of inherent defeasibility, that is something you look further in the Act and see:  is it something like parliamentary allowances, which are described as referrable to the current sitting salary of a parliamentarian?  Is it a scheme of benefits which necessarily will need to be revised up and down over their life?  Is it like in Chaffey, a special statutory right to compensation to see you through to 65, which will need adjustment up and down?

My point is that where one is in the territory of a treaty being brought into domestic law, which is Article 70, particularly where one is in the context of a double tax treaty – the whole purpose of a double tax treaty is to give people the assurity that if they conduct their affairs lawfully and appropriately, they will have the protections of that treaty for that period.  So, for a State retroactively to say:  even though you had that protection under law at the time, we are going to impose a different legal outcome, would be a breach of the treaty international law, and it would not be a construction you would lean to under domestic law unless you had the clearest of indications.

EDELMAN J:   It is a little bit different in cases like Chaffey or Cunningham, or any of the intellectual property cases, in that, here, what the relevant right is, or immunity, that is being extinguished is something that applies only between the Commonwealth and the relevant party.  It is not like Chaffey, where it is third party rights that are involved, or intellectual property cases, where it is rights against, effectively, the rest of the world that are involved.

MR GLEESON:   It is not identical to that, but Article 24 is giving you a right against every polity in Australia – Commonwealth, State and Territory.  None of them can subject you to a tax which is discriminatory.  The other provisions of the double tax treaty have that character to them as well.  So, it is ‑ ‑ ‑

BEECH-JONES J:   Mr Gleeson, you refer to Article 70, and you just said Article 24 confers on your rights.  As you read that out, I thought it talked about the rights of parties to the treaty.  Am I right in understanding that is just the government entities?

MR GLEESON:   So, your Honours should – we should have handed it up, but it says:

does not affect any right, obligation or legal situation of the parties –

Yes, that is the State parties.

BEECH-JONES J:   The State parties.

MR GLEESON:   But it does not affect their obligations.

BEECH-JONES J:   It is not really true to talk about treaties in terms of the rights of taxpayers, is it?

MR GLEESON:   What the treaty directly does is impose obligations between Australia and New Zealand, but they are obligations which call for performance in favour of the individuals.  I should refer your Honour – if you go back to the treaty which is in volume 1, it does in fact confer a right of arbitration upon individuals if ‑ ‑ ‑

STEWARD J:   I was going to ask you about that.  Has your Honour client invoked the mutual agreement procedure in Article 25?

MR GLEESON:   Does your Honour have Article 25 ‑ ‑ ‑

STEWARD J:   Yes.

MR GLEESON:   ‑ ‑ ‑ page 295, subarticle 6 in particular?  Subarticle 6 is conditional.  If you have presented your case to the competent authority ‑ ‑ ‑

STEWARD J:   Under (1).  Article 25(1).

MR GLEESON:   Under (1), and if they have not resolved it between themselves, there can be an arbitration and you have the right as the individual not to accept the result of the arbitration but, subject to that, it will be binding on the contracting States.  So, that is an entire procedure that is available.  That is not to prevent the individual from relying upon the section 5(1) right, which has been brought into domestic law, to say Victoria owes me the obligations which are specified in Article 24.

STEWARD J:   In any event, do we know whether your client has invoked the procedure?

MR GLEESON:   I am told they have not.

STEWARD J:   All right, thank you.

MR GLEESON:   But it indicates, Justice Beech‑Jones, the primary parties are the States, but there are corelative obligations created in favour of individuals and there are ultimately several forms of remedies available to individuals.  One is the fallback arbitration, but another is to rely upon your rights under domestic law implementing the treaty.  If you are in a system that did not require domestic law implementation, the individuals would be saying:  I have direct rights under the treaty to ensure performance of the obligations.  Your Honours, in terms of paragraph 7 ‑ ‑ ‑

GAGELER CJ:   Mr Gleeson, I think I heard you say earlier that you had a fallback acquisition of property argument based on Magennis.  Is that something you are coming to?

MR GLEESON:   Yes, it is really what I was alluding to in the Native Title Act discussion, that if the current legal position is that there is a relevant limitation upon a State’s power to acquire property – so, this not Magennis per se.  In Magennis, the State of New South Wales had full legal power to acquire property.

The argument was that if you accept the terms of the grant and you properly construe the Commonwealth law in its full legal and practical operation as requiring you to then exercise your power of acquisition on unjust terms, by that means, the Commonwealth law has offended the provision even though the actual acquisition is occurring at State level.  We are not in that territory, per se.

We rely upon Magennis to indicate the breadth of the situations where there can be an acquisition occurring at Commonwealth level, even though there can be something happening at State level as well.  But the way we put it is, if there is a limitation or a denial of State power to acquire property and if the legal and practical operation of Commonwealth law is to remove that limitation upon State property, that is capable of being characterised as 51(xxxi) territory.

It employs the breadth of Magennis, but it is not the facts situation of Magennis.  It is, in a sense a more direct situation.  One way of viewing it is – if your Honours have ICM 240 CLR 140, which is volume 8, tab 65, page 2907, at paragraph 32, in the middle:

in P J Magennis Pty Ltd v The Commonwealth Latham CJ rejected the proposition that a federal statute giving financial assistance to States was for that reason not a law with respect to the acquisition of property.  The Court did not accept the submission for the defendants that a law could not be with respect to the acquisition of property unless it (a) directly acquired property by force of its own terms, (b) created a previously non-existing power in some person to acquire property, or (c) came into operation upon the acquisition of property.

Chief Justice Latham is then cited to say no doubt those three examples:

would be laws with respect to the acquisition of property.

But they do not exhaust the universe.  Now, in the situation I am identifying, what the State law has done is to remove a limitation on power in Victoria to acquire property.

We would submit that is perilously close to category (b), and if it is not in category (b), it is within the broader concept of acquisition of property, particularly when one has regard to circuitous devices.  Of course, the other judgement dealt with the question of Magennis in a slightly different fashion, that was to make the four points between paragraphs 131 and following.

GAGELER CJ:   And it makes no difference to this argument that a more precise characterisation of what is going on would be the removal of a limitation on the capacity of the Parliament of Victoria to levy a tax – you said “acquire property” earlier.

MR GLEESON:   Yes, that is embraced in the argument.

GAGELER CJ:   Yes, I see.

MR GLEESON:   Your Honours, moving to paragraph 7, I have put our primary submission that none of these arguments render the claim colourable and therefore deny the character of property.  If your Honour reaches the arguments, for the Limitation Act argument, the claims which are within the one‑year period do not face this argument.

For the other claims, the statute is the Limitations of Actions Act 1958, volume 1, tab 8.  In section 20A, subsections (1) and (2) impose two somewhat overlapping commands that the action must be commenced within a 12‑month period.  Subsection (4) is a bar upon a court making orders extending time, but that is all it is – it is a bar upon orders, it is not a bar upon extensions occurring without court order.  Then section 27, says that:

Where . . .

. . .

(c)the action is for relief from the consequences of a mistake –

which is one of our grounds of action:

the period of limitation shall not . . . run until –

the mistake has been or could have been discovered.  So, section 27 does not attract the barrier in section 20A(4), because it is an automatic extension and does not require the court to make any order.

The Court dealt with the interaction between these provisions briefly in obiter in Commissioner of State Revenue (Vic)  v ACN 005 057 349 261 CLR 509, volume 5, tab 48, at page 1875, paragraph 75 of the report. In the judgment of Justices Bell and Gordon – which was relevantly agreed in by the other Justices at paragraphs 1 and 92 – the Court was discussing a different provision, section 90AA, and whether section 27 could be availed of in the face of 90AA. The Court said:

However, section 27 of the Limitation Act only applies in relation to a period of limitation prescribed by the Limitation Act – here, relevantly, section 20A(1) of the Limitation Act.  Section 20A(1) did not apply to these appeals –

for a certain reason.  So, in obiter, there is a statement of the Court that section 27 is available in an action which faces section 20A(1), and we would submit that the same would apply to section 20A(2).

BEECH-JONES J:   So, what we get from that is therefore this is an extinguishment provision, not a complete bar to the remedy?

MR GLEESON:   It is not a complete bar to the remedy, it does not extinguish the cause of action; it is a defence which can be pleaded, and to the extent it is pleaded, this is our answer to it:  that time can be ‑ ‑ ‑

BEECH-JONES J:   Extended?

MR GLEESON:   Postponed, it is – it does not need a court order – to the extent the mistake could only have been discovered recently, as is the allegation.

EDELMAN J:   It is not put against you that this makes your claim hopeless, is it?

MR GLEESON:   It is.  It is said that they ask you – Victoria, not the Commonwealth, correctly – Victoria says they want you to decide that section 27 is not available to us as a matter of law, so we can never get a postponement, so, therefore, every claim that is beyond the 12 months is doomed to failure.

EDELMAN J:   Whether or not that argument is right is a different question from saying that you do not even have a cause of action that is other than colourable because of the operation of section 27.

MR GLEESON:   I am furiously agreeing with your Honour, but Victoria is saying ‑ ‑ ‑

EDELMAN J:   All right, but they have not brought any strike‑out application or any summary judgement application?

MR GLEESON:   I agree with your Honour.  We have given you the reference to the Supreme Court decision – this is in 7(a) of our outline – in FII (No 2) [2022] AC 1. You do not need to go to it, that simply confirms that a provision like section 27 operates on its terms and does not require a court order. Can I then go to the argument at 7(b), which is run by Victoria and the Commonwealth.

GAGELER CJ:   Mr Gleeson, we will sit until 1 o’clock.  Would that be sufficient for you to finish the balance of your submissions?

MR GLEESON:   Yes, your Honour, thank you.

GAGELER CJ:   Thank you.

MR GLEESON:   So, the Taxation Administration Act is in volume 1, tab 10, and I will go straight to section 96, which is on page 243 of the book.  Subsection (1)(a) confers a power to:

lodge a written objection if –

you are:

dissatisfied with—

(a)an assessment –

An “assessment” has been earlier defined, in section 3(1), as:

an assessment made by the Commissioner under Part 3 of the tax liability –

There is a group of interlocking provisions, but a tax liability is a liability to pay tax under a taxation law, which includes the Land Tax Act.  Now, section 96(2) says:

No court –

relevantly:

has jurisdiction or power to consider any question concerning an assessment . . . except as provided by this Part.

Victoria says that that provision bars the Federal Court of Australia from exercising jurisdiction to consider our claim for money had and received.

BEECH‑JONES J:   Including that it inconsistent, if it is premised on an inconsistency under section 109?

MR GLEESON:   Yes – cannot consider it.  So, they say, read this literally, the Federal Court must strike out the matter, you have no jurisdiction to consider our claim.  Now, it is ‑ ‑ ‑ 

GORDON J:   The way it was done in Richard Walter was to bring the constitutional proceeding here and to leave the fight under the Taxation Administration Act back in the Federal Court, and that was the way in which it was dealt with, which meant that the operation of the equivalent of 96(2) operated according to its terms, and the High Court determined the constitutional question.

MR GLEESON:   Yes.  And we are trying to spare your Honours, if possible, the – something – but was that necessary, is really the question.  It raises these issues.  First of all, we have a provision of a Victorian statute which cannot, of its terms, apply in federal jurisdiction, because of Rizeq.  So, we have a claim in the Federal Court which has jurisdiction under section 39B of the Judiciary Act; Victoria holds up section 96(2).  The first question is, it cannot, as merely a Victorian statute, have anything to say about that federal jurisdiction.  There has to be some federal law which compels or permits the Federal Court to even open this section.

GAGELER CJ:   Mr Gleeson, what is said to be the question concerning an assessment?

MR GLEESON:   We say there is none.  As a statutory construction, our question does not concern the assessment.  Our question concerns that which I have laboured too much ‑ ‑ ‑

GAGELER CJ:   But what is said – the argument you are meeting, in that argument, what is said to be the question concerning an assessment?

MR GLEESON:   They say, well, the assessment asked you to pay $200; you say, once the treaty is implemented, you should only have been exposed to $100, so your question is a complaint about $100 excess tax.  That is the question, as they put it.  Our short answer to the entirety of this is that section 96(2) is not concerned with our question.  Our question is the one whether, through the combined operation of federal law, 109, the common law of money had and received, we are entitled to our money back.  So, therefore, our first answer is this section, in its terms, does not speak to our question.

GORDON J:   The argument that is put against you is that the entitlement to the money back is based upon the fact that you paid it under an assessment.

MR GLEESON:   The assessment – the thing that says it is an assessment is there, but it will not assist by me repeating what we say is the question has the elements I have just put to your Honour the Chief Justice.  So, if that is right, the effect as a pure matter of construction is 96(2) in terms does not say anything about the jurisdictional power of the federal court in the class action.

And it would also follow, coming back to what I put to your Honour Justice Steward earlier, it would also say nothing about the jurisdiction of the Victorian Supreme Court.  The Victorian Supreme Court would have its full jurisdiction to exercise over our question under section 39(2) of the Judiciary Act.  In fact, what would happen in Victoria is that the Victorian Supreme Court could look at our question in federal jurisdiction.

The whole matter is then in federal jurisdiction, and so the objection proceeding and the appeal would then be subsumed into the larger federal matter, and that is how it could all work quite comfortably in Victoria.  That is the first answer to it.  If that is correct, your Honours can close section 96(2).

The next answer is, let it be assumed that the defendants are correct and the question we raise can be collapsed into the description concerning an assessment.  In that event, we start to get to rather profound territory – profoundly bad, that is.  We have a Victorian statute saying that the question of recovery of the unconstitutional tax can only be dealt with through this Part 10 route.

GAGELER CJ:   It is not hard to read this as referring to a valid assessment.

MR GLEESON:   That is how we read it. 

GAGELER CJ:   Yes.

MR GLEESON:   Certainly, where the issue of valid or invalid is of the dimension we are speaking of – that is, that the piece of paper you issued was issued under a valid provision of Victorian law. If that is right, that is the end of it, but your Honour, I do just have to say that if you were to read it in any other way – which you should not – it would not be picked up under section 79 of the Judiciary Act, either in the Federal Court or in the Supreme Court of Victoria.

That is because this is not a law – even on this construction – purporting to regulate the exercise of jurisdiction. What it is doing is denying the Federal Court jurisdiction and denying it any power to deal with the matter in federal jurisdiction. So, the result then would be, it is not picked up under section 79, either in the Federal Court or in the Victorian Court.

We have given your Honours one authority – I will not go to it – which is Solomons 211 CLR 119, volume 13, tab 90, at paragraph 23, which makes the correct point that section 79 only operates where one has a valid vesting of federal jurisdiction, and a provision which purports to divest the Federal Court of its federal jurisdiction is just completely outside section 79. Further, if you needed to go any further, we have mentioned in outline 7(b) that there would be inconsistency between this provision and sections 22, 23 and 33Z of the Federal Court, because they are the provisions which says the Federal Court unsurprisingly has full jurisdiction and power to consider the matters that are before it.

Nothing in 79(2) to (4) is to the contrary of that.  Those provisions do not deal with inconsistencies with anything other than the Judiciary Act.  Your Honours, that leaves only sections 17 and 127.  Our first answer to section 17, which is on page 221 of the book, just as a matter of construction, is that it simply does not apply to our case.  Section 17 says:

validity . . . is not affected because a provision of a taxation law has not been complied with.

Our complaint is not that there is a provision of the Land Tax Act which has not been complied with, it is more fundamental.  It is that the provisions said to underpin the assessments do not form part of the body of taxation law of Victoria, and so a validity‑type provision like that simply has no application to a complaint such as the present.

Section 127 is evidentiary supporting section 17 and cannot take it any further.  So, that is an answer at the level of construction.  If one has to go beyond the construction, one gets into some of the questions I was addressing under section 96.  If you see the way the Commonwealth puts this argument – and Victoria does not put it in this Court, which is helpful – the Commonwealth, at paragraph 43 concludes by saying the effect of this provision is that:

The Plaintiff had no cause of action in restitution . . . those payments were made “in discharge of a legally enforceable obligation to pay”.

On the one hand, we have a cause of action, which is property and where it is Federal jurisdiction, and we have a vesting of that jurisdiction in the Federal Court.  Then we have the Commonwealth saying, because of section 17, the effect of that provision is that a piece of paper which purports to be given under a law, which in fact is not operative on the statute book of Victoria, creates a debt.

When you paid it, you discharged a legally enforceable obligation to pay it.  Apparently, you have no cause of action at all, you have nothing – this argument says – you have no property.  Now, that can only be an argument directed to saying the cause of action cannot be vindicated by any means or anywhere.

In respect of Futuris, Justice Steward, I have foreshadowed the submission.  When you read the case carefully, the general point being made was that these types of provisions only apply to creatures which meet the statutory concept of an assessment.  Futuris then dealt with two instances where it was not a statutory assessment.

We would have thought this is even more fundamental, where the piece of paper is given under, purportedly, a law which does not form part of the statute book of Victoria.  What is also problematic about the Commonwealth submission is that, if they say we have no property at all, they appear to be saying we have nothing that can be vindicated in any court, even the Supreme Court of Victoria.

If that is where this argument is ultimately going – we have explained this briefly in writing – this would generate yet a further 109 inconsistency, because you will recall I started this morning that the protection under Article 24 is against more burdensome taxes and other requirements.  What this is doing, inconsistently with that statutory immunity, is destroying our property and, at best, somehow funnelling it into the Supreme Court of Victoria in a way that has not been adequately explained how it could possibly work.

Your Honours, the material in paragraphs 8 and 9, I have covered in the course of our argument.  I only wish to emphasise again that the logical steps we would take is – firstly, 8(a) – that clause 2 of Schedule 1 must be severed, and there is no acceptable way to read it down in the way the Commonwealth suggests.  Secondly, 8(b), once clause 2 of Schedule 1 is gone, there is no acceptable textual basis to read down or disapply 5(3) so that it tolerates future State laws of the kind that 106A demonstrates.

BEECH‑JONES J:   If you have 5(3) without 2, I thought your argument was you cannot expand it – you could not read it as authorising 106A.

MR GLEESON:   You cannot read it just doing that, no.

BEECH‑JONES J:   Yes, but is that a different point to what you are saying there?

MR GLEESON:   No, it is the same point.

BEECH‑JONES J:   Because you are talking about reading down and disapplying, but I thought your starting point was, well, it is not about reading down, you cannot read it out so they could do that.

MR GLEESON:   Yes, that is what we are saying.

BEECH‑JONES J:   Yes.

MR GLEESON:   And then the alternative is paragraph (c).  If you are to read 5(3) as somehow authorising 106A, that has its own ANL problem.  Now, if we are right on either of those strands, then it is straightforward at paragraph 9 that 106A alters, impairs or detracts from the continuing operation of Commonwealth law.  Then paragraph 10 is, as I have mentioned, there is no attempt by the defendants to say that if 106A properly is characterised as retroactive, then that is authorised by a valid Commonwealth law.  That is the proper way to characterise this law.

I have made the submission in paragraph 11.  Your Honours, I think for paragraph 12 we can rely upon our written submissions that if we were so fortunate as to get to paragraph 12, you would not send us away with reasons alone.  To the extent that there is some suggestion by Victoria that we are burdening too many courts with the same matter, we think it is tolerably obvious that the reason we had to start this proceeding was, at the time we were in the federal court, Victoria were raising several arguments that could only be satisfactorily addressed by this Court.

One of them was they asked for Metwally to be overruled.  That is one reason why we had to come here.  As soon as the new Commonwealth Act was passed on 8 April, we had a whole further realm of constitutional arguments, which is why we are here.  So, we would respectfully submit that you would answer the questions, and thereby give us the relief, if we were to get that far.

BEECH‑JONES J:   Mr Gleeson, can I overstay my welcome by just asking you very quickly about the questions in the special case book at pages 55 and 56.

MR GLEESON:   Yes.

BEECH‑JONES J:   Now, my understanding is question (1), you effectively said, is common ground, as it were.

MR GLEESON:   Yes.

BEECH‑JONES J:   I understand your argument to be:  go to question (3) before question (2), is that correct?

MR GLEESON:   Yes.

BEECH‑JONES J:   Then, if question (2) is answered, it is invalid.  You then go to question (4), and I think you say if that is right, well, then the taxes fall, as it were.

MR GLEESON:   Yes.

BEECH‑JONES J:   If question (3) is answered:  it is valid, I think you then say go to question (2), which is paragraph 11 of your outline, is that right?

MR GLEESON:   Yes.

BEECH‑JONES J:   If you answered that favourably to you, do you then go to question (4)?

MR GLEESON:   Yes.

BEECH‑JONES J:   Does that mean there may be, just from your perspective, a slight problem with the opening words to question (4) in that you would not be in a position where the answer to question (3) is yes or unnecessary to answer, you might be there through a no to (3) but a yes to (2)?

MR GLEESON:   We thought that was covered by if question (3) is unnecessary to answer.

BEECH‑JONES J:   I see.

MR GLEESON:   May it please the Court.

GAGELER CJ:   Thank you, Mr Gleeson.  The Court will adjourn until 2.00 pm.

AT 12.59 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 1.59 PM:

GAGELER CJ:   Ms Gordon.

MS GORDON:   Your Honours, just in terms of timing, if I could signal that we still intend to have finished by the allocated finishing time at 3.45 pm.  I will start by, as briefly as I can, introducing the legislative scheme applicable in the G Global appeal and, in particular, focusing on those respects which are dissimilar.  In many respects, the overarching architecture is similar to the provisions at issue in Stott.

If I could take your Honours, first, to the Convention which is at issue in G Global, that is the German agreement which your Honours will find at tab 21 of the joint book, volume 1.  The non‑discrimination rule is found in Article 24, and that is at page 35 of the agreement.  In this case, it was Article 24, paragraph 4, that applied to the appellants.  They were subject to a surcharge applicable because their capital was owned by one or more residents of Germany.  Could I ask your Honours to note paragraph 5 of Article 24, which is in similar terms to the equivalent in the New Zealand Convention:

The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Of course, as we have noted in our written submissions, that extension to taxes of every kind and description beyond the taxes captured in Article 2 is deliberate.

I do not need to take your Honours to this, but could I note the extract from Klaus Vogel that we have included in volume 16 of the bundle, tab 105.  In particular, the explanation which the authors give of the non‑discrimination rule and the importance of the extension of relevant taxes.  In particular, it:

ensures that countries cannot circumvent their non‑discrimination obligations by subjecting the taypayer to taxes not covered by Article 2 –

GLEESON J:   Ms Gordon, does the expression “connected requirements” in Article 24(1) cover rights and liabilities in relation to land tax?

MS GORDON:   I am sorry, your Honour, Article 1?

GLEESON J:   Article 24(1) refers to “taxation and connected requirements”, and I am wondering whether the language of “connected requirements” encompasses things like rights and liabilities in relation to land tax.

MS GORDON:   It may, your Honour, and if I could come back to that, but just to note that in this agreement, it is paragraph 4 that is the relevant paragraph of the article.  It also includes that language, your Honour.

Now, as Mr Gleeson explained, on the face of the amendments to the Tax Agreements Act, we have gone from a position in which the non‑discrimination rule in Article 24 had the force of law to one in which the non‑discrimination rule in Article 24 has the force of law subject to anything inconsistent with the provision contained in a law of the Commonwealth or of the State or Territory that imposes tax other than Australian tax.

As Mr Gleeson explained in the context of the New Zealand agreement, the explanatory memorandum to the 2016 Bill that gave the force of law to the German agreement also made it very clear that it was well understood and intended that this provision would apply to State taxes.  The relevant explanatory memorandum is at tab 98.  I should say, the wrong excerpt was included at tab 98, but I am hoping that your Honours have the correct explanatory memorandum.

GORDON J:   Is that reference to the explanatory memorandum to paragraph 1.415, to say that it applies to every tax?

MS GORDON:   Yes, your Honour, and that really goes, your Honour, just to the point being made against us, or the point – the narrative that one finds in the more recent explanatory memorandum, this is all about clarifying what was always intended to be the case.

GORDON J:   Thank you.

MS GORDON:   That, in broad terms, is the Commonwealth’s position, analogous in all respects, except with that we are dealing with the German agreement and a provision applicable by reason of capital.

Now, in terms of the State legislative scheme, your Honours will find the provisions that imposed a surcharge in fact paid by the appellants in 2021 and 2022 in the Land Tax Act behind tab 8, and in particular, your Honours, if you go to page 10 of the reprint, your Honours will find sections 6 to 8, which effect the imposition, and then the particular surcharge rate – which is acknowledged now to have been discriminatory – is found at page 31 of the reprint.

BEECH-JONES J:   What section is that, Ms Gordon?

MS GORDON:   It is section 32(1)(b)(ii).

BEECH‑JONES J:   Thank you.

MS GORDON:   Your Honours will see that the applicable surcharge – the surcharge applied:

if the company or trustee is a foreign company or a trustee of a foreign trust –

and then, when one goes back to 18B and 18C, one finds the definition of “foreign company” and “foreign trust”.  In terms of the new provisions, your Honours, section 104 of the Land Tax Act is the equivalent of 106A of the Victorian Act to which your Honours were taken this morning, and that is at page 106 of the reprint.  That works in relevantly the same way as was explained by Mr Gleeson in connection with the Victorian analogue.

STEWARD J:   I have not checked word for word, Ms Gordon, but is it exactly the same or are there wording, textual, differences?

MS GORDON:   My notes to myself were no relevant difference, but I will double‑check whether it is verbatim and answer your Honour.

STEWARD J:   And do you adopt Mr Gleeson’s construction of it, that it is retroactive?

MS GORDON:   Yes, your Honour.

STEWARD J:   Okay, thank you.

MS GORDON:   And its companion in the Taxation Administration Act is section 189, and your Honours will find that behind tab 9 of volume 2, it is page 123 of the reprint.  Again, your Honours, I can adopt, respectfully, what Mr Gleeson had to say about section 135A of the Victorian Administration Act, because they operate in the same way.

Just to close this off, could I refer your Honours to the explanatory memorandum for the Queensland amendments, which is at volume 16, tab 101, and I do not need to take your Honours there, I would simply make the submission that it underscores that the provisions are intended to operate for the past.

BEECH-JONES J:   What was that tab again, sorry?

MS GORDON:   Tab 101.

BEECH-JONES J:   Thank you.

MS GORDON:   Those are really, your Honours, the key provisions at stake.  There are other provisions relied on by the Commissioner and the interveners to argue that at least by 8 April 2024, when the Commonwealth Amendment Act commenced, the appellants did not have a cause of action in restitution, but I will come to those later, in the context of acquisition of property.

Could I move, then, to our first argument, which is an argument about head of power and, in particular, external affairs.  This is question (2) in the special case questions.  Today I will focus on the treaty implementation aspect.  There is an argument briefly made in, I think, the Commonwealth’s submissions, about matters external to Australia.  That is addressed in writing, and we will rely on those, subject to anything in reply.

To be a law with respect to external affairs, in that treaty implementation dimension, a statutory provision must be reasonably capable of being considered and adapted to implementing an obligation in the treaty.  And as we have explained in writing, that has a purposive dimension.  The validity of the law depends on whether its purpose or object is to implement the treaty.

The starting point, in my submission, for this issue, is really the answer to question (1).  It is accepted that the foreign surcharge was inconsistent with Article 24 of the German agreement as given the force of law by section 5 of the International Tax Agreements Act. The effect of section 5(3), if valid, is to permit taxes that are inconsistent with Article 24 of the German agreement.

Indeed, a criterion for the operation of section 5(3) is inconsistency and, of course, item 2 of Schedule 1 of the Commonwealth Amendment Act provides for the retroactive operation back to 2018 – a backdating that has no obvious connection to treaty implementation. In our submission, that at least provokes the question: how is this reasonably capable of being considered appropriate and adapted to implementing an obligation in the treaty?

The Commissioner and interveners really rely on two broad arguments against us:  the first is that the power to make a law includes the power to unmake it, and secondly, that it is permissible for the Commonwealth only partially to implement a treaty, and that that is what is occurring here.  I will address each of those in turn.  Turning first to the power to unmake or repeal.  The principal case relied on against us is Kartinyeri (1998) 195 CLR 337, it is at volume 8, tab 61 of the bundle.

This is the case relied on by those against us to say because we are dealing with a repeal, necessarily within power – that is the broad outline.  I just wanted to take the Court to Kartinyeri to make the submission that not only did Kartinyeri concern a different head of power and a different kind of amending law, which had no other effect than to reduce the ambit of the provisions in the statute, it does not stand for any sweeping proposition that an amendment or repeal of an Act that is within power will necessarily, itself, be the power.

Kartinyeri concerned the validity of what is referred to in the judgements as the Bridge Act, which restricted the operation of a pre‑existing Act – the Heritage Protection Act – so that no step could be taken towards the making of a ministerial declaration that would prohibit the construction of a bridge in the Hindmarsh Island bridge area.  Really, the effect – the Bridge Act, in its operation on the Heritage Protection Act, had no effect other than to reduce the ambit of the Heritage Protection Act.

In that context, and approaching the issue on the basis that the operation and effect of the Bridge Act had to be ascertained only by reference to the Heritage Protection Act, it was apparent why a reduction in the ambit of the Act did not alter the connection between the Act and, in that case, section 51(xxvi).  No member of the Court endorsed the proposition that an Amendment Act will necessarily be within power because the original Act was within power, if that is the submission put against us.

If I could ask just your Honours to go to a couple of paragraphs in the judgment.  The first one is paragraph 15 in the judgment of Chief Justice Brennan and Justice McHugh.  I would ask your Honours in particular to note the passages from paragraphs 15 to 18, but could I highlight the following – I am starting in the second sentence of paragraph 15:

To the extent that a law repeals a valid law, the repealing law is supported by the head of power which supports the law repealed unless there be some constitutional limitation on the power to effect the repeal in question.

And that is a limit that is, in fact, later picked up by Justice McHugh in Pacific Coal:

Similarly, a law which amends a valid law by modifying its operation will be supported unless there be some constitutional limitation on the power to effect the amendment.

And there is a reference to Air Caledonie.  Then, the last sentence:

It is not necessary to consider the hypothetical case postulated by Mr Jackson QC of a repealing or amending Act which so changed the character of an earlier Act as to deprive that Act of its constitutional support.

Then, just to underscore the point, their Honours go on to consider both the result that is reached by asking about the effect of the Bridge Act on the Heritage Protection Act, and then, at 18:

The same result is reached by asking whether the Bridge Act has the character of a law “with respect to . . . the people of any race for whom it is deemed necessary to make special laws”.

BEECH-JONES J:   Ms Gordon, if the Commonwealth had originally enacted the International Tax Agreements Act but said that they would only implement Article 24 to the extent that it concerns Australian taxes, would that have been valid on the external affairs power?

MS GORDON:   I think the answer to that is, no, your Honour.

BEECH-JONES J:   So, it does not turn on whether there is a difference between a repeal and a partial enactment of the treaty obligations.

MS GORDON:   I will come to the partial implementation point, and the submission I will seek to advance, your Honour, is that there is a line – we accept partial implementation, on the authorities, is permissible, but there is a line established in the authorities between partial implementation and inconsistency.

BEECH-JONES J:   I see.

MS GORDON:   At the moment, I am really just seeking to address the first point put against us – that somehow, if one applies the label “repeal”, one can securely conclude that the statute remains within power.  The other passages which I wished to note for your Honours are paragraphs 47 and 49 of the judgment of Justice Gaudron.  In particular, starting at the bottom of page 368, in paragraph 47, her Honour says:

Subject to two matters shortly to be mentioned, a plenary power to legislate on some topic or with respect to some subject matter carries with it the power to repeal or amend existing laws on that topic or with respect to that subject matter.  The first qualification to that proposition is that the power is subject to any validly enacted applicable manner and form –

that is not relevant here, but:

The second is that, in the case of the amendment or partial repeal of a law enacted under s 51, a question may arise whether the law, as it stands after its alteration, retains its character as a law with respect to a matter within Commonwealth legislative power.

GORDON J:   That is really the question.  That last sentence is the core question.

MS GORDON:   Precisely.  I agree with your Honour.  The only reason for going to these in some detail is that, as I gather, that is not, perhaps, accepted by at least the Commonwealth.  Then, if I could just give your Honours one more reference, without taking your Honours there, but it is to the judgment of Justices Gummow and Hayne at paragraphs 66 to 70.

Having said I would not take you there, I will just note a couple of aspects of that.  Your Honours will find, there, a discussion of the relevance of “amendment” and “repeal”.  And then, at paragraph 70 – I will not read that, but I would invite your Honours to do so, and then:

These considerations may bear upon but cannot dictate the course of inquiry as to the validity of the Bridge Act.  If it be invalid, then there is no scope for the process of conflation referred to above.

And I will come back to that point a little later, but then their Honours go on to determine the question of validity of the Bridge Act, and that is made clear that that is the relevant question in paragraph 73.  So, to come back to the proposition I seek to draw from Kartinyeri, it is really the proposition put by your Honour Justice Gordon that one has to address – one cannot simply apply a label – “repeal” – and go no further; one has to address the question posed by Justice Gaudron.

Moreover, this case is plainly distinguishable from Kartinyeri, partly because one is dealing with external affairs in its purposive dimension, so that where there is a reduction in ambit, the question of purpose is squarely raised; and partly because, on our submission, this law cannot be characterised as one which merely reduces the ambit.  We say what it does is permit something inconsistent with the treaty that is purported to be implemented.

If I could now come to the partial implementation line of argument, which is that – first step – a law of the Commonwealth Parliament may be supported by the treaty aspect of the external affairs even if not every obligation in the treaty is implemented.  Then the argument goes on, because it would have been open to Parliament to implement only parts of the treaty at the outset, it is open to bring about that position now.

While, as I have said, we accept in principle that Parliament may modify the way in which it implements a treaty, and that is in our written submissions at 25, we say there is a difference between partial implementation and doing something, permitting something that is prohibited by the treaty, and that that line has been crossed in this case.  We say that we are dealing with the kinds of provisions that were considered in Burgess’ Case.

I will come to Burgess in a moment, but could I first deal with the authorities on partial implementation put against us, to demonstrate their limits.  The first is Tasmanian Dams Case 158 CLR 1, that is in the joint bundle at tab 47, volume 6. Of course, the issue in that case was whether the external affairs power justified a law that permitted the proclamation of certain property by the Commonwealth, and then prevented interference or damage to that property; relevantly in that case, the construction of the Franklin Dam.

It is worth – if I could just, because it is useful context, refer your Honours to pages 224 to 225 in the decision of Justice Brennan, where his Honour sets out the articles that were at issue.  There is a trick to reading this, but if your Honours start at about point 2 on page 224, your Honours will see a description of Article 4:

Article 4 of the Convention states that each State Party recognizes that there is a duty belonging primarily to a State on whose territory property being cultural or natural heritage is situated to ensure its “identification, protection, conservation, presentation and transmission to future generations”.

His Honour then discusses what “presentation” means.  That will then help make sense of the articles that are then set out from the bottom of page 224.  Your Honours will see Article 4, which is a promise to:

do all it can to this end –

being the end I noted earlier:

to the utmost of its own resources and, where appropriate, with any international assistance –

et cetera, and then Article 5, in particular (d):

to take the appropriate legal, scientific, technical, administrative and financial measures necessary for the identification, protection, conservation, presentation and rehabilitation of this heritage –

I just took your Honours there because one is not dealing with the kind of prohibition one finds in Article 24; it is quite a different kind of obligation in which their Honours came to consider partial implementation.  Then, when one goes to the passages relied on against us, one sees a distinction between partial implementation and legislation that contains provisions that are inconsistent with the terms of the treaty.

There are two principal passages, your Honours.  One is the judgment of Justice Brennan at pages 233 over to 234, and his Honour makes the point – and I will paraphrase – that:

It is no objection to the validity –

that the Wilderness Regulations:

implements the Convention only in part.

Indeed, his Honour makes a point that it might be expected that:

the function of protecting and conserving the Parks . . . devolves chiefly upon the director of the National Parks . . . of Tasmania –

Then, over the page, his Honour goes on to say that an exception to the permissibility of partial implementation is a law which:

on its true construction, could not fairly be regarded as “sufficiently stamped with the purpose of carrying out the terms of the convention” –

referring to Burgess’ Case, to which I will come.  Then the passage from Justice Deane is at page 268.  The first full paragraph on that page is the key paragraph.  Justice Deane notes the submission by Tasmania that it could not be regarded as treaty implementation because it was partial.  He did not accept that all of the obligations of a treaty had to be implemented.  Then his Honour went on, in about the middle of the paragraph, to say:

On the other hand, if the relevant law “partially” implements the treaty in the sense that it contains provisions which are consistent with the terms of the treaty and also contains significant provisions which are inconsistent with those terms, it would be extremely unlikely that the law could properly be characterized as a law with respect to external affairs on the basis that it was capable of being reasonably considered to be appropriate and adapted to giving effect to the treaty.  That was the position in Burgess’ Case –

And there, Justice Deane refers to the judgment of Chief Justice Latham.  Then, if I could just give your Honours a reference to the Industrial Relations Act Case 187 CLR 416, which is volume 13, tab 84 of the bundle, where their Honours again embrace the permissibility of partial implementation but contrast permissible partial implementation with inconsistency. In particular, at the top of page 489, your Honours, if you have it:

Deficiency in implementation of a supporting Convention is not necessarily fatal to the validity of a law; but a law will be held invalid if the deficiency is so substantial as to deny the law the character of a measure implementing the Convention or it is a deficiency which, when coupled with other provisions of the law, make it substantially inconsistent with the Convention.

Now, the principal case where the issue of consistency has arisen is Burgess’ Case 55 CLR 608, and I do need to take the Court to that. That is at volume 10, tab 71. This, of course, was a seminal decision in the journey to an expansive view of the external affairs power and the treaty implementation aspect in particular, but it was a case in which the implementation failed.

The issue was the Commonwealth power to regulate flying operations within a single State.  The case turned on a regulation‑making power in a Commonwealth statute, but because of the terms of the regulation‑making power, it was the same inquiry which your Honours have to make in the present case.  Your Honours will find the regulation‑making power on page 626, towards the top of the page.

This was a case where the regulations were so replete with inconsistencies that the whole of the regulation was held invalid, but the Chief Justice in particular goes through an examination of particular regulations and explains why they are inconsistent with the Convention at issue in that case.  That is the analysis in particular on which we rely for present purposes.

Now, in terms of taking your Honours through the judgment of the Chief Justice as quickly as possible, at page 645, his Honour moves to the question presently relevant:

there being power in the Commonwealth Parliament to pass a law to carry the convention into effect –

were the regulations:

to be made under that power and particularly reg. 6 –

valid?  Regulation 6 concerned the licencing of aircraft personnel, which affected the – I am just wondering if it was Mr Burgess, but it affected the matter in that case.  Then his Honour, in addressing that question over the page, at the bottom of 646, goes on to say, and I am reading from the last paragraph on the page:

It is at this point, in my opinion, that the respondent’s case breaks down.  The regulations largely follow the convention—most of them being taken verbatim from the convention—but some of the regulations are in conflict with fundamental principles of the convention.

And then what his Honour does is address the validity of particular regulations.  I will not take your Honours to each of them, but the first one his Honour addresses is regulation 17 and whether the requirement in regulation 17(a) could:

be regarded as carrying out the requirement of the convention that only Australian nationals can be registered in Australia as owners of aircraft.

Your Honours will see at page 647, about a third of the way down the page, there is “(a)”, and his Honour sets out there the requirements of the Convention.  In particular, requirements going to nationality.  Then he says:

The regulation dealing with this matter is reg. 17, which is as follows –

And I only need to draw your Honours’ attention to the first part of that, but:

“Unless the Minister otherwise directs, a certificate of registration shall not be granted in respect of any aircraft unless it is owned wholly either—(a) by British subjects or persons under His Majesty’s protection –

And if your Honours then skip forward a few pages, you will find the conclusion towards the bottom of page 651.

EDELMAN J:   Do you accept that there would not have been a relevant inconsistency if the amendment had provided that only some British nationals would be covered, or British nationals fulfilling certain criteria would be covered?

MS GORDON:   Well, the first part of the answer to your Honour is that there were two reasons for finding regulation 17 inconsistent, and the first of those was the general dispensing power, which I read, and your Honour will see over the page, at the top of page 652, the Chief Justice says:

This general dispensing power is absolutely inconsistent with the convention.

That is the power – that was the opening words to regulation 17:

Unless the Minister otherwise directs –

So, that was reason one, and we say that general dispensing power is analogous to the section 5(3), which simply permits inconsistent laws to override, here, the non‑discrimination law.

In terms of your Honour’s particular question about had the law identified particular British subjects, would that have been a partial answer to his Honour’s concern?  Perhaps.  It is a little complicated to answer and perhaps unnecessary, given the other reason for finding regulation 17 invalid, but the crux of the reasoning really seemed to be that one had to have a rule about nationality that did not depend on a concept of British subject untethered to an independent rule about nationality.

BEECH-JONES J:   The effect of it was to go beyond what the treaty said, was it not?  In this respect, because it purported to bind or do things about persons who were British subjects, or persons under His Majesty’s protection, as opposed to a different class of Australian nationals.

MS GORDON:   Yes.  As I say, it is partly that dispensation aspect of regulation 17 on which we place emphasis.  Without getting too much into the weeds, his Honour then goes on to conduct the same exercise with respect to regulation 4, and then regulation 6, and then finds at 654, two‑thirds of the way down the page, in connection with – and I hope I mentioned that regulation 6 was the important regulation for this particular matter, and the Chief Justice finds:

that reg. 6(c) . . . is invalid –

And then his Honour goes on to say, at the bottom of page 654:

The matters to which I have specially referred—the registration of aircraft, the extent of the application of the convention to aircraft in Australia, and the licensing of personnel—govern the convention to such an extent that in my opinion the regulations as a whole must be held to be invalid.

So, the disconformity was so significant that there was no possibility of reading down.  We do not rely on that kind of reasoning.  What we really rely on is the Chief Justice’s analysis of the individual regulations, and why they were inconsistent with the treaty obligations which they were purporting to implement.

As we have flagged in our written submissions, your Honour, we also rely on the observations of Justice Brennan in Gerhardy v Brown.  I will not take your Honours to that case, because it is not factually on point, and we rely on it really for the proposition.  It is at paragraph 13 of our submissions:

When the Commonwealth Parliament, in performance of an international treaty obligation, introduces the provisions of an international convention into Australian municipal law, it is beyond the limits of the power conferred by s. 51(xxix) . . . for the Commonwealth Parliament to enact a law that operates, or that permits a State law to operate, in a manner inconsistent to any substantial extent with the operation which international law intends the Convention provisions to have.

We say again, as we have said in writing – in our submission, section 5(3), by permitting state laws to operate inconsistently with Article 24 entirely within that proposition put by Justice Brennan, which is entirely consistent with the approach taken by the Chief Justice in Burgess’ case.

STEWARD J:   Ms Gordon, would that mean that section 4(3) of the International Tax Agreements Act is also out?  That is the provision that says that, for example, the general anti‑avoidance rules in Part IVA of the Income Tax Assessment Act override the treaties where there is inconsistency.  You might want to think about it.

MS GORDON:   Your Honour, I might think about it.

STEWARD J:   Yes.

MS GORDON:   The answer that occurs to us most immediately is that that provision probably does not rely on the external affairs power because it would be supported by ‑ ‑ ‑

STEWARD J:   By 51(2).

MS GORDON:   Yes.

STEWARD J:   Yes, all right.  And just remind me why you say 51(2) does not support 5(3) again?

MS GORDON: Because of its application to the States, which is the – your Honour may recall, the particular question, question (2) in the special case is the operation of section 5(3) with respect to State taxation laws or some such, I am not exactly – but, in that application, the external affairs power is necessary because the taxation law does not support it.

STEWARD J:   Maybe in part.  I mean, 5(3) might support applications of the Petroleum Resource Rent Tax Assessment Act, which is a Commonwealth Act, and that might be supported by 51(2).

MS GORDON:   Quite, your Honour, which is why the question of the special case – and perhaps if I get it up for your Honour ‑ ‑ ‑

STEWARD J:   No, that is all right, I understand the point.

MS GORDON:   Yes.

EDELMAN J:   Ms Gordon, you do not say that the treaty is one which, on its proper interpretation, is effectively to be implemented in an all or nothing way.

MS GORDON:   No.

EDELMAN J:   Nor do you say, as I understand it, that the distributive operation of the treaty in its implementation cannot be amended by cutting back that distributive operation.

MS GORDON:   That is right, your Honour.

EDELMAN J:   But you say that this is more than just a cutting back of a distributive operation, it is a creation of a positive inconsistency.

MS GORDON:   Yes, and we say that one really needs to look at each rule that has been given the force of law in Australia, in this case Article 24, and ask the question whether that rule as given force under Australian law is supported by the treaty.

BEECH‑JONES J:   But you would say Article 24 has to be fully implemented, would you not?  That is a logical consequence of your argument?

MS GORDON:   Yes, your Honour.

GORDON J:   Could you exclude any other taxes from it?

MS GORDON:   Your Honour, no, not if one is relying on treaty implementation and the external affairs power, because it is a obligation not to discriminate and an obligation that applies in respect to taxes of all kinds and descriptions.

BEECH‑JONES J:   Like local government taxes?

MS GORDON: Yes, your Honour. Sorry, your Honour, I was just nodding. I think I have largely dealt with this, but applying the authorities just discussed, we say that section 5(3) is the kind of provision identified by Justice Brennan because it permits a State law to operate in a manner inconsistent to a substantial extent with, here, Article 24, and is not therefore reasonably capable of being considered as appropriate and adapted to a treaty implementation purpose, and I think sufficiently explained why that is so.

Could I address one last topic on external affairs, which is the result that would ensue if we were right about the invalidity of section 5(3) and make clear that there is no challenge to section 5 as it stood before that amendment, because it is put against us – by at least the Commissioner – that quite what would follow if section 5(3) were invalid is unclear. We say it is not unclear. All that would follow is that section 5(3) would be invalid ab initio, leaving the International Tax Agreements Act as it stood before the purported amendment.

If I could just take your Honours to two authorities to make that good.  The first is the case of Clyne 100 CLR 246, which is at volume 5, tab 43 of the bundle. This case, relevantly, was about the validity of section 79A of the Assessment Act, and section 79A allowed deductions for people living in particular areas in Australia. Your Honours will find that description – the explanation of the provision at issue on page 264.

The defendant in that case, who was the one contesting the tax, was not affected by section 79A but argued that it was inconsistent with the non‑discrimination and preference provisions in the Constitution, and argued that that brought down the whole Act of which it was a part.  This is the aspect of the reasoning that we rely on.  Could I ask your Honours to go page 267 of the judgment of Chief Justice Dixon, with whom Justices Taylor and Webb agreed.

His Honour describes the position which I have just summarised for your Honours and – sorry I should begin the discussion with page 266, if I could ask your Honours to go back there.  His Honour effectively decides it is not:

necessary to decide whether s. 79A involves or carries with it a forbidden preference or discrimination.

His Honour assumes that it would but says that the only result of that would be the invalidity of section 79A.  The passage we particularly rely on for present purposes is the passage beginning at about point 6 on page 267.  This would:

affect the validity of the Taxing Acts only if s. 79A ever became part of the Assessment Act upon which the Taxing Acts operated.  In my opinion this hypothesis or condition never was fulfilled.

Because, to paraphrase, the Act introducing section 79A would have been void ab initio.  The other authority that makes the same point – there are a number of authorities that make the same point, but the one to which I wish to refer your Honours is Pacific Coal 203 CLR 346, tab 74, volume 11 of the bundle.

This was a case about amending legislation that reduce the ambit of the legal effect given to awards.  The question was whether that meant that the law was no longer a law with respect to conciliation and arbitration within 51(xxxv).  The majority held that the law retained that character – and that comes back to that issue of Justice Gaudron’s, that the relevant test does not retain the character.  But, most relevantly for present purposes, the minority held that the law was not – the character of the law would be changed, and that gave rise to the issue of the consequence.

For present purposes, if I could ask your Honours to go to the judgment of Justice McHugh at paragraphs 169 to 170, where his Honour says:

In determining the constitutional validity of an amending Act, the process of characterising the amending provisions must be determined with reference to their substantive operation.  But as amending provisions do not have any substantive operation other than altering the operation of existing provisions, as a practical matter, the character of the amending provisions must be determined by determining the character of the provisions as amended.

That is the exercise that we have sought to engage in, in some detail, in writing.  Then his Honour poses the question with which I am most immediately concerned:

If those provisions as amended do not have a character within a s 51 head of power, do the provisions as amended fall in their entirety, or do only the amending provisions fall?

In my opinion, it is only the amending provisions which fall.

His Honour goes on to explain by reference to similar reasoning to that to which I have just taken your Honours in the judgment of Chief Justice Dixon.  I can give your Honours the reference to the similar analysis of Justice Gaudron, without needing to take your Honours there, it is at paragraphs 77 to 80.

In our oral outline, we have also noted Air Caledonie 165 CLR 462 and given the page references 471 to 472. It is not in the bundle, we have just referred your Honours to that case because it makes the same point. All of that was simply in answer to the doubt or the point put against us – what happens if we are right about the effect of section 5(3)? We say all that happens is that it would be section 5(3) that would go, leaving intact the International Tax Agreement as it stood before the purported amendment. Your Honours, could I now move to acquisition of property.

GAGELER CJ:   Could I just ask a question about Metwally?

MS GORDON:   Yes.

GAGELER CJ:   Are we going to hear anything about that case?  From anyone?

MS GORDON:   I am not sure if I can answer the question in those broad terms.  For today’s purposes, my plan was to address the acquisition of property argument largely by adopting the submissions of Mr Gleeson, and then come and address, really, what makes us different, which is the particular provisions in the Queensland Act that are said to deny our cause of action.  We otherwise respectfully embrace the order of analysis put to your Honours by Mr Gleeson.

GAGELER CJ:   Does that involve, at any stage, the proposition that section 5(3) is invalid or inoperative because it is trying to do something that cannot be done consistently with section 109?

MS GORDON:   Yes, it does, as an alternative to the acquisition of property.  It either cannot be done retrospectively ‑ ‑ ‑

GAGELER CJ:   So, you are relying on Metwally are you?  Or not?

MS GORDON:   Could I come back to that question, your Honour, because we rely on it in a contingent way, and I would prefer to come to that at the end, if I could.

GAGELER CJ:   All right.

MS GORDON:   Your Honours, in terms of acquisition of property, the issues are very largely the same as between the two proceedings, and I would respectfully adopt the submissions which Mr Gleeson made this morning on those issues.  The main matter that differentiates us is the particular provisions in the Queensland statute which are relied on, as I mentioned, to say that at least by 8 April, when the Commonwealth law came into force, the appellants did not have a cause of action.

BEECH‑JONES J:   So, this all goes to property?

MS GORDON:   It does, it does.  So, there are really two overarching issues with acquisition.  The first is:  by 8 April, was there anything to acquire?  If there was, did what happened constitute a taking?  As to that second element, there is nothing different about the appellants’ case in G Global as compared to that in the Stott proceeding, but with respect to the question of was there anything left to acquire, that is where we have different provisions which are relied on against us.

If I could take your Honours to the relevant provisions.  The first set of provisions are section 36(2) and section 188 of the Taxation Administration Act.  That Act, just to remind your Honours, is tab 9, volume 2.  Section 36(2) is at page 30 of the reprint.  Your Honours will see section 36:

(1)A person is not entitled to a refund of any amount paid, or purportedly paid, under a tax law other than under this division.

Then, a provision which was later inserted, inserted in June 2023:

(2)No cause of action, right or remedy is available at common law for the refund or recovery of any amount paid or purportedly paid under a tax law.

That has to be read with section 187 and 188, which are at page 122 of the reprint.  Those provisions, 187 and 188, distinguish between the position where a proceeding had already begun and where, as at the commencement of these provisions, a person had not started the proceeding.  Where a person had not started the proceeding, section 188(2) reiterates that:

Section 36(2) extinguishes the cause of action, right or remedy and the proceeding may not be started.

So, we have those provisions ‑ ‑ ‑ 

EDELMAN J:   You have started a proceeding in the federal court.

MS GORDON:   Yes, the appellants are class members in a class action that has been started.

EDELMAN J:   And there has been no attempt, as I understand it, to strike out that proceeding or to seek summary judgment of that proceeding.

MS GORDON:   That is correct, your Honour.

EDELMAN J:   So, how is this issue live before us?  It has not been suggested in any court below that your claim is colourable.

MS GORDON:   It is put against us – well, it is put against us differently, but on one formula, the Commonwealth’s approach has put against us that these really apply to prevent any cause of action, regardless of what might occur in the federal court proceeding.

EDELMAN J:   In other words, we are effectively to decide at first instance that summary judgment could be granted, or should be granted, even though no such application has been made in the federal court.

MS GORDON:   Yes, your Honour.

EDELMAN J:   Has this Court ever taken that approach before, in relation to any acquisition of property case – said that there is no property because there is no cause of action, despite the fact that no court below has adjudicated upon that question?

MS GORDON:   I will have that checked, your Honour.  The authorities I have in mind are to the contrary effect, but in respect, largely, of limitation provisions, and on, arguably, limitations provisions of a different effect.

The other provision is a limitation provision.  So, that is the other category of provision relied on.  It is in the Limitation of Actions Act 1974, and that is at volume 3, tab 15.  The relevant provision is section 10A.  I should have said that is at page 13 of the bundle.  Your Honours will see that section 10A is a provision that applies a particular limitation period for actions to recover tax.  The first provision applies a one-year period, and then significantly, subparagraph (3) provides:

The period of limitation prescribed by subsection (1) can not be extended and, if an action for the recovery of an amount is not brought within the period, the right to recover the amount ends.

There is provision for postponement in case of fraud or mistake, and that is provided for in section 38, but that is not a provision which applies in the G Global proceeding.

There is a threshold question of whether the provisions apply in federal jurisdiction by their own force or fall within the purview of section 79 of the Judiciary Act.  The Commissioner and the Commonwealth take different positions on this.  The Commissioner contends that the provisions to which I have just taken your Honours regulate the exercise of jurisdiction, in other words, they bar the remedy.

Your Honours will find that in the Commissioner’s submissions at paragraph 41.  We say, if that is right, then they are not the kind of provisions that would destroy a cause of action – and that is Mewett’s Case.  The Commonwealth contends that the provisions operated of their own force to extinguish the cause of action.  Your Honours will see that in the Commonwealth’s submissions at paragraph 43.

This is where we get to the argument we make, which is different to any argument you heard this morning.  We say that if that is right, they were inconsistent with section 64 of the Judiciary Act and invalid under section 109 of the Constitution.  That is the contention on which I wish to focus in oral argument.  Section 64 provides that:

In any suit to which the Commonwealth or a State is a party, the rights of the party shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject.

In short, the appellants’ submission is that it would be inconsistent with section 64 for the State to have the benefit of those provisions – being section 36(2) and the particular taxing limitation period – because those provisions would not be available to any subject facing a claim in restitution.  I will develop this argument primarily by reference to British American Tobacco v Western Australia, because that is the case we say is on all fours with this case.

Now, in British American Tobacco, which is tab 40, volume 5 of the bundle, British American Tobacco had commenced a proceeding in the Supreme Court of Western Australia against the State of Western Australia seeking an order for repayment of licence fees which had been levied contrary to section 90 of the Constitution (Cth). Western Australia had argued, and the Supreme Court below had accepted, that the plaintiff’s claim was barred by section 6 of the Crown Suits Act (WA).  Your Honours will see the relevant provisions – the most convenient place to find them is in the headnote – but the key feature for present purposes was that:

Section 6(1) provided that no right of action lay against the Crown unless –

certain notice and timing conditions had been satisfied, for example, notice to the Crown Solicitor within three months of accrual of the cause of action.  The first path of reasoning in British American Tobacco was that because the Constitution (Cth) or the Judiciary Act rendered the States subject to federal jurisdiction, section 5 was not necessary to remove Crown immunity from suit and, therefore, the restrictions on section 5 in section 6 were neither here nor there.

But what we rely on is the second pathway relied on by their Honours, and the second pathway is most clearly seen at paragraph 69, where their Honours articulate the submission which they are accepting.  Your Honours will see:

To apply s 6(1) –

that being the provision that, on Western Australia’s argument, prevented BAT bringing its proceeding:

To apply s 6(1), by dint of s 79 of the Judiciary Act, as a surrogate federal law in the Supreme Court would deny the requirement by s 64 that the rights of BAT and the State in that action be as nearly as possible the same as those in a suit between subject and subject.  That submission should be accepted and those to the contrary by the State and its supporting interveners should be rejected.

And it is a like submission that we make in this case.  If I could develop this submission by reference to the joint judgement of Justices McHugh, Gummow and Hayne, but also note that Justice Callinan in a separate judgement reasoned to the same effect, if I could note the following aspects of the reasoning in the joint judgement.  First, paragraph 71:

The significance of s 64 was seen by O’Connor J in Baume to lie in its emphasis upon “the equality of subject and Crown in litigation”.

We say that equality is denied if the State has the benefit of provisions like section 36(2) which would not be available to a subject.  Their Honours then address arguments that were made against the application of section 64 in that case.  Your Honours will see that they echo the kinds of arguments that are being put to the Court in this matter.

If your Honours go to paragraph 76, your Honours will see three principal objections – I should say that preceding 76 was a discussion of an application for leave to reopen Maguire and Evans Deakin, and there is no such application here, we can proceed on the footing that Maguire and Evans Deakin are good law, but their Honours then go on to address three other arguments that were put by Western Australia as to why, nevertheless, section 64 did not apply.  The first was:

that s 64 could only apply where there existed a “validly constituted suit” to which the Commonwealth or a State was a party.

That is, because section 5 and 6 prevented – on the argument of Western Australia – the commencement of a suit, how could there be a validly constituted suit in which section 64 could apply?  Of course, that is answered by Evans Deakin, and that is what their Honours in 76 refer to.  There:

“The Supreme Court is given jurisdiction to entertain a suit . . . by the combined effect of s 39(2) of the Judiciary Act and s 75(iii) of the Constitution. When an action is brought against the Commonwealth in the Supreme Court the condition of the operation of s 64 is satisfied . . .Once the suit is commenced the substantive rights of the parties shall be, as nearly as possible, as in a suit between subject and subject.”

Just so here, because there would be a suit, any restitutionary claim would be in federal jurisdiction, that would be sufficient to give rise to a validly constituted suit, and s 64 would apply.  The next argument ‑ ‑ ‑ 

STEWARD J:   Sorry, Ms Gordon, is that going so far as to say that “suit” in section 64 means just a suit in fact commenced, as an historical fact?

MS GORDON:   I am not sure if this answers your Honour’s question, but once the suit is commenced, section 64 applies and the rights – be they substantive or procedural – are to be “as nearly as possible” the same as they would be as in a suit between subject and subject.

STEWARD J:   Thank you.

BEECH‑JONES J:   Did I understand you to say your client has a suit?

MS GORDON:   It does, yes.

BEECH‑JONES J:   It has commenced one?

MS GORDON:   As part of a – it is a group member of a class action.

BEECH‑JONES J:   I see.  What is the counterfactual case between subject and subject that we are to compare it with?

MS GORDON:   Well, a restitution claim based on, in the appellants’ case, duress or absence of consideration, but that is the countervailing – or that is the comparison.

BEECH‑JONES J:   And therefore, we do not apply those provisions of the Taxation Administration Act or the Limitation Act that you took us to – is that the argument?

MS GORDON:   That is the submission.

BEECH‑JONES J:   So, instead, you get the general moneys had and received Limitation Act?

MS GORDON:   Yes, which is six years.

EDELMAN J:   Does section 10A operate in the same way as section 10(1) – I think – or do you accept that 10A excludes the right and not merely the remedy?

MS GORDON:   Well, as I mentioned, the ‑ ‑ ‑ 

EDELMAN J:   Subject to all your arguments about section 64.

MS GORDON: Yes. Most likely, it extinguishes the right, but we do note the Commissioner has taken a view which is inconsistent with that, that these provisions fall within that class of provisions that has to be – it falls within section 79.

EDELMAN J:   Why does 10A extinguish the right, when section 10 does not?  I think in Brisbane City Council v Amos it was held that section 10 does not.

MS GORDON:   Yes.  I am just going to get section 10.

EDELMAN J:   This is obviously relevant because, I mean, we know from cases like Verwayen, a cause of action that is statute‑barred, where the remedy is barred, but not the right, it still has value.

MS GORDON:   Yes, quite, your Honour, and that is Mewett, and we do not – we embrace that, but we do say that the language of section 10(1) is quite different and does not contain that provision of 10A, which is ‑ ‑ ‑ 

EDELMAN J:   Except 10A begins with subject to section 10(1).  It is a matter for you, whether you take the view or premise your argument on the basis that section 10A extinguishes the right.

MS GORDON:   As I said earlier, the Commissioner takes the view, on our understanding, that it does not, and we embrace that, as I said, because ‑ ‑ ‑ 

BEECH-JONES J:   So, it does not extinguish the right?

MS GORDON:   Yes, it does not.  The Commonwealth says it does ‑ ‑ ‑ 

EDELMAN J:   Yes, but that that starting point, that it does not extinguish the right.  If that is right, you could just stop there.

MS GORDON:   We could, yes, and that is the way we put it in writing.

EDELMAN J:   And even if it is arguably right, you could stop there, could you not?  You have a litigation funder standing behind you that obviously thinks there is something of value, that the cause of action has some value.

MS GORDON:   Yes, and I should say that, to the extent that the Commissioner is right, we have tried to have our cake and eat it too, in writing.  We say if the Commissioner is right and section 10A does not extinguish the right, we embrace that and we say the consequence is the cause of action is not extinguished, and one does not have an argument about the chose in action ceasing to be property.

If, on the other hand, the Commonwealth is right and one does have the extinguishment of the cause of action, we say even in that scenario, they would not apply, because of section 64.  Does that answer your Honour’s question?

EDELMAN J:   Yes.  Thank you.

MS GORDON:   Just to complete, your Honours – just checking for time – to complete the discussion of BAT, the next argument addressed in the joint judgment is really the argument that because this is a proceeding for the recovery of an invalid tax, there is no analogue, and this ties in with the proposition which Justice Beech‑Jones just put to me, and that somehow means there is no room for the application of section 64, relying in particular on the words “as nearly as possible”.

I have already answered that question in part, but could I ask your Honours to go to the answer their Honours give in this case, which is that the application of section 64 in a case like this furthers an important public purpose.  So, at 83, your Honours will see, having just been discussing this argument:

The truth of the matter is to the contrary.  Auckland Harbour Board reflects the fundamental constitutional principle prohibiting the Executive Goverment from spending public funds except under legislative authority. Further, that authority of the legislature, in Australia, will be absent where the legislation relied upon is invalid, here by reason of the operation of s 90 of the Constitution. The action by BAT is in furtherance of rather than in opposition to the operation of basic constitutional principle.

So, their Honours are tackling a similar argument to the one advanced in this case, that this is a particular species of litigation inconsistent with the operation of section 64, an argument that was rejected in this case.  The last argument addressed is one about power.  This is addressed from paragraph 85 on.  Your Honours will see:

Whilst it is well settled that s 64 applies only to suits in federal jurisdiction, even within that field of operation of the section there are statements in the authorities which question the valid operation of s 64 in suits to which the State is a party, particularly (which is not the case here) the moving party.

Then their Honours go on to explain why both there is no issue of power in the BAT Case – authorised by section 78 of the Constitution, and so forth – and then in the last submission of South Australia:

(iv) s 64 could not be “read down” other than by excluding the States from its operation and therefore wholly fails –

their Honours say that:

Submission (iv) should be rejected, thereby making it unnecessary to rule upon the preceding submissions. The Commonwealth correctly submitted that that upon the hypothesis presented by South Australia, s 64 might be read down to operate differentially between the Commonwealth and the States, and to apply to the suits a federal jurisdiction, including those based upon s 76(i) of the Constitution, in which the State has the character of a defendant.

I will come back to that point in a moment, about power, because it is raised against us in this case.  But before I do, I just did want to note something that I forgot to mention about the BAT judgment, in 29, a passing reference in paragraph 29 of the joint judgment to the fact that in the BAT Case, a provision of Western Australian law:

provided that fees payable under the Franchise Act were debts due to Her Majesty and payable to the Commissioner of State Taxation –

I mention that only in passing because the fact that there were statutory debts in that case did not operate to preclude the action at issue in British American Tobacco.

I have already mentioned the argument made against us that there is a difficulty in applying section 64 in a case involving the State such as this, because of power.  If I could just – I have already referred your Honours to the joint judgment in BAT, but if I could also just take your Honours to the judgment of Justice Mason in Maguire v Simpson.

BEECH‑JONES J:   Sorry, is someone mounting the argument that there is no legislative power of the Commonwealth for section 64 to operate in the way you say it is?

MS GORDON:   Yes.

BEECH‑JONES J:   Who is mounting that argument, again?

MS GORDON:   The Commonwealth, the Commissioner, and the State of South Australia.

BEECH‑JONES J:   Lots of people.

GLEESON J:   And we have to deal with that on the General Steel basis?  I mean, the issue is raised in relation to the colourability of the chose in action?

MS GORDON:   We say it is not colourable.

GLEESON J:   Yes.  That is how the issue comes up.

MS GORDON:   Potentially, your Honour.  The way I was addressing it was simply in response to an argument that section 64 could not apply in the way we are articulating, but your Honour may well be right that the question is addressed at a lesser level or a different level of analysis.

Yes, it was just to take your Honours to the judgment of Justice Mason in Maguire 139 CLR 362, which is at volume 9, tab 63. In particular, the passage in his Honour’s judgment at 401, over the page to 402. Maguire was partly about whether section 64 applied both to procedural and substantive rights, and it was held that it applied to both, which is why, incidentally – part of the reason why – Rizeq does not stand in the way of our reliance on section 64.

Another part of the reason why is that these seminal decisions, Maguire, Evans Deakin and BAT are not challenged.  But the point that his Honour Justice Mason makes is to discuss whether the application of section 64 to the rights of a State should cause a doubt or cause him to change his mind about the proposition that 64 applies both to substantive and procedural rights.  Your Honours will see his Honour reasons:

The extent to which the Commonwealth may legislate so as to affect the substantive rights of a State in the exercise of federal jurisdiction is an unexplored question.

Then his Honour goes on:

Even so, this is not to my mind a sufficient reason for confining the operation of s. 64 to procedural matters.  The section can, and if need be should, be read as applying to all such rights as lie within the reach of the legislative power.

His Honour there is making a similar point to the point made in BAT, that to the extent that it can apply, it should, and that it can apply to all such rights as lie within the reach of the legislative power.

BEECH‑JONES J:   And that is the external affairs power here, is it?

MS GORDON:   Yes.  The other case to which we have referred in our oral outline is the case of Huynh, which was the case about section 68 of the Judiciary Act.  Not directly on point, but I just wanted to refer your Honours to a similar approach taken there to the source of power for section 68, and in particular, paragraph [47] of that decision:

Section 68(1) is an exercise of the legislative power conferred on the Commonwealth Parliament by s 51(xxxix) of the Constitution and of such other conferrals of legislative power as might be exercised by the Commonwealth Parliament to create the offences charged.

So, that was a case about the law applicable in the context of a proceeding for an offence against a Commonwealth law, and the question was whether a particular facility in New South Wales legislation would apply.  In that context, a similar approach was adopted to understanding the basis in the legislative power for the way section 68 operated or was held to operate in that case.

Your Honour, I have now addressed all the aspects of our oral outline.  Otherwise, in respect of acquisition of property, as I have said earlier, we respectfully adopt the submissions of Mr Gleeson, including the submission he made this morning about Metwally, but we may need to say more about that in reply, and will do so if need be.

GAGELER CJ:   Can I ask you a question about what provisions of the Land Tax Act are currently operative?

MS GORDON:   Yes.

GAGELER CJ:   If you go to section 104 of the Act.

MS GORDON:   I am sorry, your Honour, it is taking me a while.  Yes.

GAGELER CJ:   Subsection (1) says:

This section applies if –

(a) and (b) and (c).  I take it now to be common ground that (a), (b) and (c) are all fulfilled in the circumstances of this case.

MS GORDON:   Yes.  Slightly two‑part answer, your Honour.  We understand that that is right, because question (1), in a sense, gives the answer.

GAGELER CJ:   That answers it, does it not?

MS GORDON:   Yes, and my only hesitation was the repetition of the phrase “purportedly imposed” and “purportedly payable”, only because I think one of the arguments put against us is there is no such thing as “purportedly payable”; once one has an assessment, it is payable.  So, that is the only – but otherwise, yes.

GAGELER CJ:   Subject to that wrinkle.

MS GORDON:   Yes, subject to that wrinkle.

GAGELER CJ:   And it is not your wrinkle; it is put against you.  You accept that subsection (1) is fulfilled and, therefore, the section is engaged?

MS GORDON:   Yes.  The other wrinkle is Metwally, because if Metwally were overruled, section 109 would not have the operation that is assumed by these provisions.

BEECH‑JONES J:   I thought that was a reference to the position pre‑April 2024.  Is that the postulate we are talking about?  That is not a Metwally ‑ ‑ ‑ 

MS GORDON:   Yes – I think the way it works is this, your Honour, but apologies if I have misunderstood your question.  If Metwally is overruled, then, subject to the effect of the Commonwealth Act, subject to its validity, et cetera, in its retrospective operation, it would be effective to revive the original imposition.

BEECH‑JONES J:   I see, I see.

MS GORDON:   Whereas, this is premised on that not being case.

BEECH‑JONES J:   On it not being revived without a fresh exercise of power – I am sorry, yes, I understand.

GAGELER CJ:   All right, but you are not putting the Metwally argument?  I mean, I am actually finding it very hard to follow who is arguing what, here.

MS GORDON:   Yes, and part of – it may reflect, if this is not dodging responsibility, the way it is put against us, because some of the arguments against us are that we do not get there.  We also say we do not get there, because one would resolve it at the level of power, at the level of either the external affairs power or acquisition of property.  In our submissions in chief, we said it was correct, and we said that was an alternative way in which one would get to the position where the Commonwealth law could not validly or effectively apply retrospectively.

GAGELER CJ:   All right.  Just dealing with your case, and ignore what is put against you for the moment, your case, I think, is that subsection (1) is engaged, meaning the section is engaged ‑ ‑ ‑ 

MS GORDON:   Yes.

GAGELER CJ:   ‑ ‑ ‑ meaning that, under (2):

Land tax at the surcharge rate is imposed on the taxable land.

So, on your case, that is the currently operative provision, assuming – if it is otherwise valid.

MS GORDON:   Yes.

GAGELER CJ:   And that, as a later and specific provision, applies to the exclusion of the more general provisions that purportedly supported the assessment in the first place.  Is that so?

MS GORDON:   Yes.

GAGELER CJ:   So, why are we looking – why are we going to question (4) rather than question (4B)?

MS GORDON:   I will just take up the questions, your Honour.

GAGELER CJ:   Is not the acquisition of property argument necessarily directed to the current position under State law?

MS GORDON:   Sorry, I think I missed the start of your Honour’s ‑ ‑ ‑ 

GAGELER CJ:   I am perhaps getting a little confused as to how these provisions are understood to be currently operating, but your acquisition of property argument, as I understand it, is focused on the position that you were in under the previously‑invalid provisions of – by reference to the previously‑invalid provisions of the State Land Tax Act, correct?

MS GORDON:   Yes, and the acquisition of property depends on – yes, the comparison of what happened, the position before 8 April 2024, when the Commonwealth law came into effect, and the position after that, and the effect that that Commonwealth law had.

GAGELER CJ:   Not taking into account section 104?  So, that is a ‑ ‑ ‑ 

MS GORDON:   Yes.

GAGELER CJ:   I see.

GORDON J:   Is that right?  I mean, you are taking it into account, because 104 has given you something which you did not like.  So, 104 is relevant, at least in the end analysis.

MS GORDON:   It might be that I am getting a little confused now, but 104, we say, operates retroactively on a field that has not been validly cleared by the Commonwealth.

BEECH‑JONES J:   And if you are wrong about that, is there any – so, is (4A) dependent upon you somehow knocking over 104?

MS GORDON:   Yes.

BEECH‑JONES J:   And if you are not, then the answer is they do – the appeals have to be disallowed?

MS GORDON:   Yes, they do.

GAGELER CJ:   Thank you.

MS GORDON:   May it please the Court.

GAGELER CJ:   Now, is it the Solicitor-General for Victoria?

MR POUND:   It is, your Honour.  Your Honours, can I start with a brief overview of our submissions and the way we say the question should be answered.  We accept that, prior to 8 April 2024, the land tax surcharge provisions of the Land Tax Act (Vic), in their operation with respect to the plaintiff, were inconsistent with section 5(1) of the International Tax Agreements Act (Cth), to the extent that they imposed on the plaintiff an obligation to make what the plaintiff has defined in its statement of claim and what is defined in the special case as the LTS payments.

We accept that by reason of the operation of section 109 of the Constitution, the provisions were to that extent invalid or inoperative in relation to the plaintiff.  For that reason, we accept that question (1) should be answered yes.  I have referred to the definition of LTS payments.  The way it is defined in both of those documents is that it is the difference between the amount of tax that was paid by the plaintiff and the amount of tax that he would have paid if he had been assessed at the general rate, and I will come back ‑ ‑ ‑

GORDON J:   It is a surcharge.

MR POUND:   That is right.  So, the surcharge, or the LTS payments as they are defined in the question, is just the difference, your Honour.  To answer your Honour the Chief Justice’s question, I will be addressing Metwally in the course of making our first submission.  The Commonwealth Amendment Act, we say, was valid and effective to clear the way for the State Amendment Act to impose, retrospectively, a new land tax on the plaintiff.

We say that because that – or we will address Metwally in the course of making that submission, because that submission relies on the application of Metwally as good law.  If the Court accepts that first submission, there would be no reason to go on to consider whether Metwally should be overruled or whether section 51(xxxi) is engaged by the terms of the Commonwealth Amendment Act.

BEECH-JONES J:   Well, that second proposition – why, because does not the whole clearing the way presuppose that the Commonwealth law is valid?

MR POUND:   It does, your Honour, and I will address why we say the Commonwealth law is invalid, but that depends on the proper application of Metwally first in the order of events than section 51(xxxi).

BEECH-JONES J:   I must say I am struggling with that, but you come to it in your order.

MR POUND:   I will come to it, your Honour.

GORDON J:   I need to ask a question about that.  So, Metwally, on your argument, the Commonwealth Act clears the way.  Why is it, then, one does not have to look at 51(xxxi) in short compass?  Is that because you say it is the way in which the Commonwealth International Agreements Act works?  There is no acquisition?

MR POUND:   No, your Honour, it is because, applying Metwally, the Commonwealth Act is valid, but it is ineffective to remove the past inconsistency.  It is ineffective to revive the operation of the past State taxes, but nevertheless it clears the way for the reasons given by Justices Murphy and Deane in Metwally, and the joint judgment in the Native Title Act Case for the State to legislate to impose a new tax for the future, albeit with retrospective effect.

STEWARD J:   And what has happened to the chose in action?

MR POUND:   The chose in action is untouched, your Honour.  Instead, there is a new tax, the legal incidence of which ‑ ‑ ‑

STEWARD J:   Just so, does that mean potentially – sorry, Mr Solicitor – the class action could win, but it would be a pyrrhic victory, because they have to pay the new tax.

MR POUND:   On one view, yes, your Honour, but one would anticipate the new tax would be an issue in the class action and there would be an order.

STEWARD J:   Going to relief, or what?

MR POUND:   Going to relief, your Honour.  Yes.

STEWARD J:   I see, all right.  Thank you for that.

GAGELER CJ:   But you must say that section 106A is engaged.  You do put that.

MR POUND:   We do, your Honour.

GAGELER CJ:   And so, the only taxation liability of the taxpayer is, relevantly, that imposed by 106A, is it not?

MR POUND:   Yes, your Honour.

GAGELER CJ:   It operates to the exclusion of the more general provisions.

MR POUND:   Well, it operates in a circumstance where the other provisions, the surcharge provisions, remain invalid – inoperative – in their application to the plaintiff.

GAGELER CJ:   Well, it is enough, is it not, for 106A to be engaged that they were invalid or inoperative in past tense.

MR POUND:   Yes, your Honour.

GAGELER CJ:   That being so, 106A operates of its own force to the exclusion of any other liability that may or may not exist under the general provisions.

MR POUND:   Yes.

GAGELER CJ:   Yes.

MR POUND:   It is for that reason that we say questions 2 and 3 would be unnecessary to answer.  Our second submission only arises if the Court considers it necessary to reach the correctness of Metwally and decides to overrule it.  In that circumstance, we say that the Commonwealth Amendment Act would be effective of its own force, retroactively, to remedy the past invalidity by reviving the old State tax.  That is what Metwally said the Commonwealth could not do, but if Metwally is overturned that is what we say the Commonwealth Amendment Act does.  Of course, it would be then ‑ ‑ ‑ 

GORDON J:   You say it does, and should do?

MR POUND:   Pardon, your Honour?

GORDON J:   You say it does, and should do?  You need to say no, it does not do that.  You say that is valid.

MR POUND:   Yes, your Honour, yes.

GORDON J:   Because you want to rewrite Metwally ‑ ‑ ‑ 

MR POUND:   Yes, that submission ‑ ‑ ‑ 

GORDON J:   ‑ ‑ ‑ on your alternative argument.

MR POUND:   Yes, your Honour.  That submission would only be subject to the plaintiff’s section 51(xxxi) argument, so we accept that that arises at that point, but we say, for the reasons that we will come to, no acquisition of property occurred.

STEWARD J:   Do you accept in that alternative world that there is a chose in action, or that the effect of amending the past under an overruled Metwally is that no chose in action ever arose?

MR POUND:   That is certainly one possible interpretation, your Honour, or one possible outcome ‑ ‑ ‑

STEWARD J:   But in any event, no acquisition, yes.

MR POUND:   ‑ ‑ ‑ and I think the Commonwealth have made that submission in their submissions in the G Global proceeding.  The plaintiff, I think from its written submissions, would say that is circular, because before one decides whether the chose in action has been removed from existence by the Commonwealth Amendment Act, one must first decide the question of 51(xxxi) validity.

STEWARD J:   Yes, I see.

MR POUND:   Our third submission, your Honours, if neither Amendment Act remedies the situation brought about by section 109, the Court should nonetheless decline to grant the relief sought by the plaintiff as a matter of discretion, and question (5) would be answered:  none.  Can I turn to our first submission.  As I have said, it turns on the complementary effect of both the Commonwealth Amendment Act and the Victorian Amendment Act.

In short, we say that the Commonwealth Amendment Act was valid and effective to clear the way for a State law to give new legal consequences to past acts or events; and second, that the Victorian Amendment Act did just that – it imposed a new land tax by reference to the past purported but invalid imposition of land tax at the surcharge rate on the plaintiff. Can I start by asking your Honours to turn, firstly, to the Commonwealth Amendment Act, which can be found in either tab 4, which is the consolidated version of the Agreements Act, the Amendment Act itself is in tab 7 of the joint book, and ask your Honours to look at section 5(3).

I know your Honours have been taken to this already.  All I wanted to emphasise was that what that section is doing is to state a circumstance in which section 5(1) will not give force of Commonwealth law to current international tax agreements.  Subsection (3) applies where a provision of a current agreement is inconsistent with a provision of a Commonwealth, State or Territory law:

that imposes a tax other than Australian tax –

We say it is that operation in relation to the adjustment of the Commonwealth law relating to the extent to which an international treaty has been incorporated into domestic law and its consequential operation on State laws, relevantly, that impose taxes is important for the analysis, in particular in relation to section 51(xxxi), which we will come to.

The second aspect of the Amendment Act, your Honours, is the temporal aspect introduced by clause 2 of Schedule 1.  I do not need take your Honours to that.  Before I turn to the effect of the Commonwealth Amendment Act, it is helpful to say something about the terminology that we have used, and the parties have used, by referring to “retroactive”, “retrospective” and “prospective” laws.  We adopt the description of those terms in Stephens v The Queen 273 CLR 635, in particular, at paragraph 29 in the judgment of Justices Keane, Gordon, Edelman and Gleeson.

Consistent with the description in that paragraph, we use the term – only as convenient labels, your Honour, but we use the term “retroactive” to describe what was said in Stephens to be “the only ‘true’” form of retrospective law, being a law that operates backwards and changes the law from what it was from an earlier date.  We use the term “retrospective” in the “‘extended’ sense” described in Stephens, in that it operates “for the future only” but imposes new legal consequences in respect of past events.  We refer to a “prospective” law as one that changes the law for the future in respect of future events.

Applying that terminology to the Commonwealth Amendment Act, the parties and interveners have either positively submitted or assumed, for the purposes of argument, that clause 2 of Schedule 1 purports to give section 5(3) a retroactive operation. On that construction, the clause would be understood as effectively deeming section 5(3) to have commenced on 1 January 2018 and to have been the law ever since.

We are content to make our primary submissions on that basis. However, if it was necessary to preserve its validity, we say that clause 2 of Schedule 1 could be read down to be construed as retrospective only. We have addressed the reasons for that at paragraph 31 of our submissions. In short, clause 2 does not in terms deem section 5(3) to have commenced from 1 January 2018; it states that the taxes and tax periods to which section 5(3) relates include taxes and tax periods in the past.

BEECH‑JONES J:   If that were right, though, then 106A would have a problem, though, would it not?  Because it purports to say:  back in 2018, you owed this money, and you should have paid it.

MR POUND:   Only in a world where Metwally has been overturned, your Honour, because even though the Commonwealth law is retroactive, we say that applying the Metwally principle means that it is ineffective to revive the old State law.  So, section 106A ‑ ‑ ‑

EDELMAN J:   I think the question is a bit different, though, as I understand it.

MR POUND:   I am sorry, your Honour?

EDELMAN J:   The question is a little bit different from that.

BEECH‑JONES J:   Your State law is retroactive.

MR POUND:   The State law, we say, is retrospective, your Honour.

GORDON J:   By way adopting this construction on clause 2, it is treating – or possibly open to treat – 106A as retroactive.  That is the point that has been put against you.

MR POUND:   If the Commonwealth law had cleared the way retroactively, your Honour, then there may be no impediment to that, but we say that the State law is clearly retrospective, and I will come to the reasons why.

EDELMAN J:   It is a bit curious, though, is it not, on your primary submission, to have a retroactive Commonwealth law that is implemented and intended to be implemented by a State when the path is cleared by a retrospective State law?

MR POUND:   We say it is consistent with ‑ ‑ ‑

EDELMAN J:   One would expect that the State law is intended to operate in the way that the path had been cleared by the Commonwealth law.

MR POUND:   Not necessarily, your Honour.  It would depend on the intention of the Victorian Parliament, which would have to be ascertained independently, we say.  The short point is, whether clause 2 of Schedule 1, is construed as retroactive or retrospective, the ultimate outcome, we say, at least for the purposes of the validity of the Victorian Amendment Act, is the same – the Commonwealth Amendment Act was effective to clear the way.

To be precise, what we mean by “clearing the way” is that the Commonwealth Act ensured that no section 109 inconsistency could arise between section 5(1) of the Agreements Act and any State law enacted after the Commonwealth Amendment Act, including a retrospective law giving new legal consequences to past acts.

I want to take your Honours briefly to each of Metwally, the Native Title Act Case and Doyle v Queensland to explain how we say those propositions operate.  Could I ask your Honours to turn first to Metwally 158 CLR 447. Your Honours are no doubt familiar with the facts. Mr Metwally brought a complaint against the University of Wollongong under the Anti‑Discrimination Act 1977 (NSW). While his complaint was pending, this Court decided in Viskauskas v Niland, that the New South Wales Act was invalid by force of section 109 because it was inconsistent with the Racial Discrimination Act (Cth).

While his complaint was still pending, the Commonwealth Parliament amended the Racial Discrimination Act to introduce a new section 6A that provided that the Act is not intended and should be deemed never to have been intended to exclude or limit the operation of a relevant State or Territory law.  Mr Metwally’s complaint was then decided in his favour.  The University appealed to the Court of Appeal and the matter was removed into the High Court.  The key question in the High Court was whether 6A, the new provision, was effective to overcome the past operation of section 109 on the New South Wales Act, and by a four‑three majority, the Court held that it was not.

There are three relevant points of principle that we say emerge from the reasoning of the majority Justices.  The first is what has come to be known as the Metwally principle.  That is, that a retroactive Commonwealth law is not effective on its own to undo the past invalidating effect of section 109 on an inconsistent State law.  That appears, in particular, at pages 458 in the judgment of Chief Justice Gibbs, 469 in the judgment of Justice Murphy, 475 in the judgment of Justice Brennan and 479 in the judgment of Justice Deane.

By that, their Honours meant that the Commonwealth law would not be effective to give the inconsistent provisions of the State law a valid operation in the period before the enactment of the amending Commonwealth law.  In formulating that principle, their Honours described the Commonwealth law as “retrospective” and did not distinguish between “retroactivity” and “retrospectivity” in the way that the Court has subsequently – in particular, in Stephens – but as apparent from the nature of the Commonwealth law that amended the Racial Discrimination Act, that was retroactive. 

The second principle is that the majority Justices recognised that while a retroactive Commonwealth law was ineffective to undo the past operation of 109, the Commonwealth law was not itself invalid.  That can be seen from the way the majority answered the questions reserved.  If I could ask your Honours to go first to page 487 of the report, where the questions and answers are set out.  The first question was whether the Commonwealth law was beyond power, or, in other words, invalid.  The second question was whether, in the event of an affirmative answer to the first question, the State Act was invalid prior the enactment of the Commonwealth law.

The majority judges considered that the first question was not necessary to answer.  That can be seen, in particular, at page 459 in the judgment of Chief Justice Gibbs.  Justices Brennan and Deane in separate judgments agreed with the Chief Justice at pages 475 and 481 respectively, and, in particular, it appears from the judgment of Justice Murphy at page 470.  If I could ask your Honours to turn back to that, in the last paragraph on the page, his Honour acknowledged that:

The wording of the questions creates a difficulty.  Parliament is entitled to spell out its intention retrospectively –

and by that, we think he means “retroactively”:

and to enact what it might validly have enacted originally.  The purported retrospective operation or effect of the provisions of s. 3 –

that was section 3 of the Amendment Act ‑ ‑ ‑ 

BEECH-JONES J:   Sorry, what page are you on, again?

MR POUND:   Page 470, your Honour – in the last paragraph on the page.

BEECH-JONES J:   Yes.

MR POUND:   What his Honour said was that section 3 of the Amending Act:

does not deny the operation of s. 109, and s. 3 and is not invalid for such a reason.  Strictly therefore, the answer to question 1 should be “No”.

But his Honour considered that to answer the question in that way:

and therefore not to answer question 2 –

which was premised on an affirmative answer to question (1) –

would be misleading.

In answer to the second question – and, again, your Honours might wish to turn back to the end of the report, at page 487 where the second question is set out – the majority judges declared that the State Act was invalid prior to the enactment of the Commonwealth amending law and the Commonwealth amending law did not give the State Act a valid operation prior to the date of the Commonwealth amending law.

I am paraphrasing, of course, your Honour, to make clear which Acts are being referred to, but there was no suggestion in any of the judgments that the Commonwealth Parliament did not have power to legislate retroactively or that the Commonwealth amending law was therefore invalid.

BEECH‑JONES J:   Did anyone raise, as is raised here, some other objection to the power of the Commonwealth Parliament to do so?  Here, it is just terms.  There was no such suggested restriction in Metwally.

MR POUND:   That is correct, your Honour, there was none, but for reasons I will come to, we say that the Metwally principle should be applied first to determine the legal character and operation of the Commonwealth Amendment Act in this case before one turns to 51(xxxi).

BEECH‑JONES J:   Do you mean as some manner of construction?

MR POUND:   Yes, your Honour, it is a matter of characterisation of what the law is doing before one decides whether the law, having that character, or the law having that legal operation and effect, is invalid because it contravenes some constitutional prohibition.  I will take your Honours next to the Native Title Act Case, but that sequence of analysis is apparent from that Act too, we say.

GORDON J:   From that decision?

MR POUND:   From that decision, your Honour, yes.  The point I was making was that the Commonwealth Act – or that there was no suggestion in Metwally that the Commonwealth Amending Act was in any way invalid.  The point was that it was simply effective on its own to revive the invalid State law for the past.  That can be seen most clearly from the judgment of Justice Brennan at page 475 and, in particular – if I could ask your Honours to turn to it – from the judgment of Justice Deane at page 479, at about point 5 on the page where, about eight lines from the end of the first paragraph on that page, his Honour begins, having stated what I have referred to as the Metwally principle, his Honour says:

So to say is not to construe s. 109 of the Constitution as imposing a restriction on Commonwealth legislative power. It is simply to recognize that while the Commonwealth can retrospectively legislate for itself it cannot retrospectively impose as State law the provisions of a law which the Constitution has said was invalid because of contemporaneous inconsistency which has subsequently been removed. That is something which, if it is to be done, must be done retrospectively by the relevant State.

That last sentence leads to a third principle that we say emerges from Metwally, that is, a limit on the extent of the Metwally principle that was recognised by Justices Murphy and Deane that although a Commonwealth law cannot, of its own force, undo or reverse the past invalidating effect of section 109 on a State law, a Commonwealth law can clear the way for a new State law to give new legal consequences to past events.

If your Honours would turn over the page to page 480 of Justice Deane’s judgment, at the start of the first full paragraph on the page, his Honour says:

The second matter is that it should be clear that the foregoing does not involve a denial of the competence of the Parliaments of the Commonwealth and of a State, in combination, to legislative retrospectively for the purpose of remedying an unintended operation of the provisions of s. 109 of the Constitution.

His Honour then describes how the two Parliaments may have legislated, and about 15 lines from the bottom of the page, your Honours may see a sentence beginning with:

That being so, the provisions of s. 109 would operate to render such a subsequent State law invalid only if, and to the extent that, there was some present inconsistency with subsisting Commonwealth law.  Such a situation would be quite different in nature to that for which the respondents have contended in the present case in that it would be the Parliament of New South Wales which would have legislated to give retrospective operation to provisions of its own law and in that, while the citizen would have been subjected to the operation of retrospective legislation, the provisions of s. 109 would nonetheless have operated to ensure that there was, in fact, no time at which he was accountable to both a law of the Commonwealth and an inconsistent law of a State.

The Court then returned to the limits on the Metwally principle in the Native Title Act Case 183 CLR 373. Could I ask your Honours to go to that. Again, your Honours are no doubt familiar with the background to this case. It concerned, among other things, whether the Native Title Act was valid insofar as it purported to give effect to past legislative and executive acts at the Commonwealth and State level which would have extinguished native title in Western Australia but for the Racial Discrimination Act.

The relevant provisions – my learned friend Mr Gleeson took your Honour to them this morning, but they are apparent also from the report beginning at page 453, at about 12 lines from the bottom of the page, halfway through that paragraph.  The joint judgment refers to:

s 7(1) of the Native Title Act provides that nothing in that Act “affects the operation of the RacialDiscrimination Act 1975” –

but then there was a carve‑out in section 7(2) – I think that is the carve‑out that now appears in subsection (3), your Honour, to which Mr Gleeson took you to this morning, from the 2024 reprint of the Act, but it has the same effect:

s 7(2) declares that s 7(1) “does not affect the validation of past acts by or in accordance with this Act.”

So, it is establishing a carve‑out to section 7(1). Sections 15 and 16 are described at pages 455 and 456, they provided for the validation of past acts that affected native title that were attributable to the Commonwealth. On page 456, about a third of the way down the page, the Court sets out section 19(1), which provided that:

“If a law of a State or Territory contains provisions to the same effect as sections 15 and 16, the law of the State or Territory may provide that past acts attributable to the State or Territory are valid, and are taken always to have been valid.”

For present purposes, it is sufficient to focus on the way that the Court characterised the relevant provisions of the Native Title Act to assess whether it was supported by a head of power.  The relevant aspects of that analysis start at page 451 in the first paragraph, where the Court is here referring to section 5(1) of the Western Australian Act, and their Honours say, about eight lines from the bottom of the paragraph:

Section 5(1) is concerned to confirm the validity of grants of title made after the Racial Discrimination Act came into operation where those grants purported to extinguish . . . native title.  If native title was protected then by the Racial Discrimination Act, only a law of the Commonwealth could be effective to modify the operation of the Racial Discrimination Act and then only for the future: the effect of s 109 of the Constitution cannot be retrospectively undone.

Their Honours refer to Metwally in the footnote.  At page 452, in the heading at the top of the page, their Honours turn to the question of the constitutional character of the Native Title Act.  So, they are engaged here in the exercise of ascertaining the legal operation and effect of the relevant provisions of the Native Title Act for the purposes of characterising that law.  At page 454, six lines from the bottom of the page, their Honours say that:

Section 19(1) permits State and Territory laws enacted in the future to confer (or confirm, if only to remove doubt) validity on the past acts of the State or Territory.  The Queensland Coast Islands Declaratory Act 1985 (Q) is excluded –

In the next paragraph their Honours say:

The provision authorising the future validation of past acts attributable to a State is not affected by the principle that a law of the Commonwealth cannot retrospectively avoid the operation of s 109 of the Constitution on a State law that was inconsistent with a law of the Commonwealth.

Then, turning to section 19, their Honours say that it:

does not purport to deny the overriding effect of the Racial Discrimination Act upon any inconsistent law of a State in the past.

What section 19 does, their Honours say, is:

removes any invalidating inconsistency between, on the one hand, a State law enacted in the future that purports to validate past acts attributable to a State and, on the other, the Racial Discrimination Act or any other law of the Commonwealth (including the Native Title Act itself).

And thirdly, turning to the effect of the State law, their Honours say that:

The validation of past acts attributable to a State is effected by a State law which, at the time of its enactment, is not subject to an overriding law of the Commonwealth. The force and effect of a past act consisting of a State law which was “invalid” by force of s 109 of the Constitution because of inconsistency with the Racial Discrimination Act is recognised only from and by reason of the enactment of the future State law but, from that time onwards, the

force and effect of the past act is determined by the terms of the State law enacted in conformity with s 19.

Your Honours will have seen – I passed over it, but at footnote (304) in that paragraph their Honours refer again to the Metwally principle.

GAGELER CJ:   Is that as much as you want to say about that case?

MR POUND:   It is, your Honour, and I see the time.  I am happy to resume tomorrow.

GAGELER CJ:   Very good.  The Court will adjourn until 9.45 am tomorrow.

AT 4.15 PM THE MATTERS WERE ADJOURNED
UNTIL THURSDAY, 8 MAY 2025