Hornsby Shire Council v Commonwealth of Australia & Anor

[2022] HCATrans 116

[2022] HCATrans 116

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S202 of 2021

B e t w e e n -

HORNSBY SHIRE COUNCIL

Plaintiff

and

COMMONWEALTH OF AUSTRALIA

First Defendant

THE STATE OF NEW SOUTH WALES

Second Defendant

GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON TUESDAY, 21 JUNE 2022, AT 10.00 AM

Copyright in the High Court of Australia

HIS HONOUR:   In accordance with the protocol for remote hearings, I will announce the appearances of the parties.

MS R.L. SEIDEN, SC appears with MR M.A. ROBINSON, SC for the plaintiff.  (instructed by Diamond Conway Lawyers)

MR S.P. DONAGHUE, QC, Solicitor‑General of the Commonwealth of Australia, appears with MR G.A. HILL, SC and MS M.A. JACKSON for the first defendant.  (instructed by Australian Government Solicitor)

MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales, appears with MR M.O. PULSFORD for the second defendant.  (instructed by NSW Crown Solicitor’s Office)

HIS HONOUR:   Yes, Ms Seiden.

MS SEIDEN:   Thank you, your Honour, and thank you for the time to get our house in order.  If I could provide an update to your Honour and identify several matters that we anticipate will allow these proceedings to progress in an orderly manner.  The first, your Honour, is that the plaintiff has provided examples of relatively recent transactions with supporting material to the defendants.  We trust that, for at least a subset of these transactions, it will be agreed as between the parties that these are indeed examples of property of the plaintiff, and further, that if notional GST is a tax, then the GST on those supplies would be a tax on property in the constitutional sense.  We will include those transactions in the writ.

Second, your Honour, the plaintiff will amend – will seek to amend its writ to articulate the basis of the claims for relief and split the legislative scheme into the relevant time periods, your Honour.  The plaintiff anticipates being in a position to finalise the amended writ by Monday, subject to the transactions being agreed as between the parties.  It is anticipated that we will continue to communicate with our learned friends and that there will be some agreement about these transactions going forward.  Once the amended writ has been finalised then it is a matter of timetabling, your Honour, subject to the Court’s convenience.  The defences and then a refined special case particularly targeted to recent transactions could be finalised, your Honour.

HIS HONOUR:   When you refer to “transactions”, does that extend to the circumstances of the calculation and payment of any notional GST?

MS SEIDEN:   At the moment, your Honour, we have identified – your Honour, if your Honour could just excuse me for a moment, I think it is anticipated that that will be done, to the extent, but I am just not sure that

that material has been given to our learned friends yet, if I could just be excused for one second and I will get some instructions on that.

HIS HONOUR:   Yes.  As I understand your case, you are saying that this is what, I think Sir John Latham referred to as a forced benevolence.

MS SEIDEN:   Indeed.

HIS HONOUR:   What is put against you is, no, this is voluntary – or at least it has been voluntary up until very recently, when you have taken this point.  So, at the last directions hearing, when I was talking about, or raising a concern about the question of voluntariness, I had in mind the discussion that one sees in David Securities, which you have probably looked at, but it is 175 CLR 353, at pages 372 to 374. The parties should be cognisant of the topic dealt with at those pages in formulating the agreement as to the facts for the special case. Thank you, Ms Seiden. Mr Donaghue.

MR DONAGHUE:   Your Honour, can I add a couple of things?  First, it is implicit in what my learned friend just said to your Honour that when your Honour raised last week a preference both for a proper formulation on the pleadings and for the possibility of a narrowing of the special case within the case, that that is the path that we anticipate going down.

So, when Ms Seiden is referring to identifying some transactions, what we had in mind – as I understand that the parties have in mind – is to identify quite a small number of transactions that are a subset of the restitutionary case that the plaintiff seeks to bring, perhaps one or two involving real property sold by the Council and one or two involving other property sold by the Council, and having the plaintiff plea those sales and the calculation of the notional GST with respect to those sales, and also plead their restitutionary case to the extent that it turns on the state of fact or payment under protest or other type matters.

So, that would all be there as a subset within the overall case, and this Court could then rule on the validity question that is the precondition of the restitutionary claim and the restitutionary claim in respect of those two or three or four transactions, and then the balance of the matter – if there is a balance of the matter – could be remitted to be dealt with elsewhere.  So, that is what we have in mind.  If that does not accord with what your Honour had in mind, then we will need to revisit that.

As to the particular transactions, our friend Ms Seiden said, if you give us material yesterday, and we are quite hopeful that we should be able to identify a couple of transactions that meet the criteria that I have just outlined.  But, obviously, in terms of timing, Ms Seiden indicated that could be found, hopefully, next week, if we can agree to transactions, that will obviously need to include the pleading for restitutionary claim, I assume our friends have factored that in.

We anticipate we could plead in response probably within a fortnight, but it is hard to be definitive about that without having seen the amended pleading – but that is what we would anticipate we should be able to do.  Having done that, we will then need, as I apprehend it, to amend the special case to reflect the factual details of the particular transactions that have just been pleaded, and we would do that, I think, in place of 58 and 59 of the special case – which were the paragraphs that drew your Honour’s attention last time, including pleading, including in the special case any facts that are said to be relevant to the restitutionary claim.

We think we will then also need to revisit the questions in the special case.  Your Honour expressed some reservations about question (1) of the last directions hearing, but your Honour did not particularise them.  I have some possible theories about what your Honour’s concerns might have been, but if your Honour wanted to give us any guidance in that respect, that would be . . . . . received.

HIS HONOUR: Yes. The question rolls up an aspect of question (2) dealing with section 114 of the Constitution, so, in that respect – in respect of question (1)(a), it was not apparent to me what it added to question (2), why there were two questions formulated, effectively.  In respect of question (1)(b), it struck me as the wrong question in this sense, you need to look at Air Caledonie v The Commonwealth and, if it is a problem with section 55, then it has to be framed by reference to the validity of the amending Act rather than this provision.

MR DONAGHUE:   Yes.  I understand.

HIS HONOUR:   I mean, I am not giving you a quote, here, Mr Solicitor.

MR DONAGHUE:   No, no, I was not asking for one, your Honour ‑ ‑ ‑ 

HIS HONOUR:   I am giving you my impression ‑ ‑ ‑ 

MR DONAGHUE:   ‑ ‑ ‑ what your Honour had in mind ‑ ‑ ‑ 

HIS HONOUR:   ‑ ‑ ‑ and my recollection of problems that occurred to me when I looked at this before.

MR DONAGHUE:   Yes.

HIS HONOUR:   But if we are talking about problems generally – and again, without giving a quote – it struck me that there were many aspects of the special case that were perhaps superfluous – I mean, I really could not see why they were there – and there were aspects of the special case that were ambiguous in the sense that it was not clear to me whether they were meant to be convenient summaries of the law – and I was not sure that they were always accurate summaries of the law – but I was not sure that they were meant to be convenient summaries of the law or statements of fact.

I would appreciate the parties looking carefully at the contents of the special case with that in mind.  I will give you an example:  paragraph 38.  Does paragraph 38 include notional GST?  Does notional GST that is included in a GST return give rise to an enforceable debt due to the Commonwealth?  I do not know what you are saying.

MR DONAGHUE:   I understand.

HIS HONOUR:   Perhaps you are saying that.  I do not know.  But it seems to be important and ambiguous.

MR DONAGHUE:   Thank you.  I understand, your Honour.  Thank you.  And thank you for that indication, though I was not seeking to put your Honour on the spot, I was hoping to avoid a need for another round of directions hearing if we ‑ ‑ ‑ 

HIS HONOUR:   Of course.  I am not promising anything in that respect, but I am hoping that we are moving towards a special case.  But it may well be that this really is just a case that needs to go to trial, Mr Solicitor.  I am not sure.

MR DONAGHUE:   I understand that that is possible, your Honour.  I should also say that, as I understand it, the plaintiff’s proposed particular examples, which will go into the special case, are all relatively recent examples, all within the last six‑year period, so it may be that we can confine the special case – certainly for my part, I would think we could confine the special case to the current regime, and that all of the historical material about previous regimes might either come out or go more clearly by way of background, but that is a matter I have not yet discussed with our friends.

So, it may – but I understand what your Honour has said about narrowing and refocussing on the special case, and we will certainly take that on board.  There would also need to be revisions to question (1) to get rid of the historical references and to question (3) to link the question about relief just to the transactions that will have been particularised in the special case, rather than any broader ‑ ‑ ‑ 

HIS HONOUR:   To the extent that the claim that is dealt with in the special case is said by one party or another to turn on what might be in somebody’s mind in making a payment, that is not something – if it is contested – that I would think would be appropriate to be dealt with on the special case.  Unless that can be agreed, I doubt that we can move forward using this procedure, if it is relevant to the way your case is framed.

MR DONAGHUE:   Yes.  In that regard, your Honour, it might be worth exposing this issue.  The plaintiff’s restitution case, as we understand it, is advanced on three separate bases.  One is by analogy with some Canadian case law to say that there is a constitutional right to restitution of an invalidly‑paid tax.  One is on the basis of Woolwich and one is on the basis of more traditional David Securities‑type restitution principles that might involve a mistake.  For example, the possible unjust factor.

If the concern your Honour just raised would obviously not be relevant to the first two of those restitutionary bases, but would be relevant to the third, for my part I confess to having had some concern about this Court ruling on two of the possible restitutionary bases out of a group of three, because if your Honours were to find that the David Securities‑type basis were made out, you would not ever get to the constitutional or the Woolwich issue.

So, it seemed to me that they should all travel together.  If what your Honour was just saying about state of mind suggests that your Honour would be comfortable with the constitutional and the Woolwich issues but not the David Securities issue being before the High Court, then we can obviously take that on board, but at the moment, I must say, for my part, I would not anticipate dividing the case up in that way.

HIS HONOUR:   No.  It is, for the moment, something for you and Ms Seiden and Mr Sexton to bear in mind as you are going forward, or attempting to go forward, according to this procedure.  I did also have a concern that the motivation for payment has a bearing on the question whether we are dealing with tax at all, and – I think I raised this at an earlier stage, or at the last directions hearing – I am really not sure how the David Securities analysis of voluntary payment relates to the question of whether what appears, on one view, to be a voluntary payment, is in truth a tax.  They are not exactly the same question, but they are pretty close to the same question, and factually they may overlap so much that they cannot meaningfully be divided up procedurally.

MR DONAGHUE:   Thank you, your Honour.  I appreciate that.  We will bear all of that in mind in our ongoing discussions.  So, my submission, your Honour, would be that in terms of orders today, if your Honour wishes to set a – the parties, I think, would be content to continue to work this out

between themselves, but if your Honour is minded to put some structure around it then it could be appropriate to give orders for the plaintiff to file an amended writ of summons next week – I think my friend proposed 28 June, as I understand it, for the first and second defendants to file an amended defence two weeks later, which would be 11 July, the parties to file an agreed special case on or before 25 July, further directions on or after 2 August – I say that really just by way of – as a possible timetable, but if your Honour is minded to take that approach, but equally, as I say, we have been negotiating fruitfully between ourselves and if your Honour just wanted to adjourn it for a future directions hearing, for my part, I would be equally content with that course.

HIS HONOUR:   Thank you.  Mr Solicitor, do you want to say anything else?

MR DONAGHUE:   I do not, your Honour, no.  Thank you.

HIS HONOUR:   Thank you.  Mr Solicitor for the State of New South Wales.

MR SEXTON:   Thank you, your Honour.  We do not really have anything, I think, to add to what my learned friend from the Commonwealth has said, except to say that we are certainly in agreement with him, and I think with the plaintiff, to try and confine this case as narrowly as possible for the parties as well as for the Court.  The only other thing I would add is that if there was going to be a timetable, for certain logistic reasons that we have, it would be helpful to us to have three weeks to file the amended defence rather than the two weeks that the Commonwealth has mentioned, but that depends, of course, if your Honour is going to make a timetable at all.  I think that is all we need to add, your Honour.

HIS HONOUR:   Thank you.  Ms Seiden, did you want to respond to any of that?

MS SEIDEN:   Your Honour, only by way of identifying that, having heard that, we perhaps were a little ambitious in relation to when we might have the amended writ, and if we could perhaps work off the date of 5 July, if that is convenient – however, we would certainly accept what our learned friends have said, that we have been engaging rather fruitful discussions and we will happily continue that, your Honour.

HIS HONOUR:   Yes.  Ms Seiden, I do not think that I will impose a timetable on the parties today.  If this is to have a chance of proceeding by a special case, I think you need to have a considerable period of time to think it through.  As I said, it may well be just a case that needs to go to trial, and I am not expressing any concluded view in saying that.  I would like a

timetable formulated, and what I will ask the parties to do is to agree a timetable that will include the amendment the pleadings and the filing of a draft special case, and if that could be provided to me, I will be happy to make the appropriate directions in chambers.

For the moment, I think I will adjourn to a fixed date, just to keep the matter in my diary, but if that date gets overtaken by the directions that I make later today, then so be it, we can just change the date.  For the moment, I think I will choose a date in the September sittings of the Court, and I will nominate Monday 5 September at 10.00 am.  I will be in Canberra then, and we can decide in due course whether it goes ahead on that day and, if so, whether it goes ahead in person or remotely.  For the moment, the only order that I will make is that:

1. The directions hearing is adjourned until 10.00 am on Monday 5 September 2022.

Very well.  Thank you very much.

AT 10.23 AM THE MATTER WAS ADJOURNED